A message from the CEO
AN INTERESTING YEAR THAT BUILT FURTHER ON OUR LONG-TERM BUSINESS MODEL
Most of Mellby Gård’s companies developed favourably over the past year, in line with our expectations. It was a record year both in regards to pre-tax profit and operating profit (EBITDA), which amounted to SEK 1,513 million, an improvement from the previous year (1,276).
Feralco achieved its strongest profit to date. Cale, which was involved in a major structural transaction during the year, showed substantial improvement in earnings and also delivered record profit. Smarteyes also performed significantly better than last year through profitability improvements in all markets. It is also gratifying that Eriksberg, which we have now owned and invested in for ten yours, could now contribute positively to the Group’s operating profit.
Two companies held profit back compared with the preceding year. For several years, Roxtec’s most important market segment has been dependent on investments in the oil and gas sector, which continued to shrink during the year due to lower oil prices. Roxtec has, however, successfully realigned itself to other endmarkets and we have recently also begun to see positive trends in the Marine Oil & Gas Offshore segment. Söderberg & Haak’s market is also challenging. The situation for farmers in Sweden is tough, the company has introduced new brands and is working to get closer to end-customers. This is a conscious realignment that will take time and resources, and that will continue for some time to come. It is also worth mentioning the company’s relatively favourable development in construction equipment – a market adjacent to agricultural equipment.
One of the major changes during the year was the merger of Mellby Gård’s Cale and Parkeon of France, which together have become Flowbird. The transaction was completed in January 2018 and has already developed better than expected. Globally, Flowbird is now clearly the largest player in the market for parking solutions in urban environments.
During the year, we also increased our ownership in the listed holdings AcadeMedia and KappAhl. In AcadeMedia, we became the largest shareholder in the autumn of 2017. The Board of Directors was reorganized at that time and we assumed the principal responsibility for the company. We increased our ownership in KappAhl from about 20 percent to about 30 percent, a significant investment. In addition, just prior to the end of the financial year, we acquired the Swedish clothing company Oscar Jacobson.
Over the year, opportunities for company acquisitions continued to be characterized by high valuations and fierce competition. We are very pleased with the acquisition of Oscar Jacobson, but have not noted anything else sufficiently attractive for Mellby Gård. Our assessment is that we will remain cautious regarding major acquisitions next year. In cooperation with our portfolio companies, however, we will be open to supplementary acquisitions or structural transactions.
The reputable Oscar Jacobson brand has an illustrious 115-year history. Over the past ten years, the company has shifted in an interesting direction, creating products that appeal to several target groups. The foremost reasons for the acquisition are to continue to develop the company’s strong position in Sweden and to expand internationally. The first steps have already been taken with shops in Norway, as well as sales in Germany and at the classic Selfridges in London.
We think differently when we do business and seek to go against the grain somewhat. We dared to enter AcadeMedia when others were avoiding welfare companies because of the political debate. Many have doubts regarding parking machines and how they will stand the test of time in today’s world. We had the opportunity to leave that market, but chose instead to invest as a major shareholder in the newly formed Flowbird, now the world’s largest company its the market. We are investing even more in retail and brands with increased holdings in KappAhl, the merger of Flash and Dea Axelssons as Lund Fashion, and now the acquisition of Oscar Jacobson.
By confidently daring to think differently, you can do good business. With everyone staring at certain industries and flocking to them, valuations and competition decline in others.
This approach is only possible with a business model like Mellby Gård’s. We have a very long horizon, and do not focus on making an exit within a specific period of time.
Thinking and acting differently to build companies that are profitable long-term. Mellby Gård has been doing this for over 30 years and will continue doing so.