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First quarter of 2024 in brief
Although the Group’s net sales were in line with the first quarter of last year, the EBITA margin improved by 1.9 percentage points to 9.7%.
“Our efforts to strengthen the margin by adjusting total costs, combined with strategic price increases, have had the desired effect,” said Christer Wahlquist, Nolato President and CEO. “Adaptation of the Chinese business is going to plan and is also contributing to the positive margin trend.”
As previously announced, from the start of 2024, Nolato is reporting the Group’s operations via two business areas – Medical Solutions and Engineered Solutions.
“We are making this change because many of our customers are optimizing their resources and presence based on a global market approach and want suppliers with a globally coordinated local presence,” explained Christer Wahlquist.
Medical Solutions sales in the first quarter totaled SEK 1,355 million (1,324); adjusted for currency and acquisitions, sales grew by 2%. Operating profit (EBITA) increased to SEK 140 million (132), with an EBITA margin of 10.3% (10.0).
Most market areas experienced stable volumes. In vitro diagnostics (IVD) grew compared with a weak quarter last year. Several products within the Drug Delivery market area experienced lower volumes due to customers adjusting inventories, which continued to affect certain products in Surgery as well.
As announced on April 2, Nolato signed a long-term cooperation agreement with a major existing customer to supply medical devices to administer medication, including to support weight loss and treat diabetes. At full-scale production, within a five-year period, it is estimated that this will generate annual sales in the region of SEK 700 million for Nolato.
Engineered Solutions sales in the first quarter totaled SEK 1,087 million (1,153), a decrease of 7% adjusted for currency and acquisitions. Operating profit (EBITA) was SEK 103 million (68) and the EBITA margin rose to 9.5% (5.9).
Consumer Electronics volumes, particularly from a previously significant customer, saw a strong decline in this quarter as well. Automotive continued to see good growth, and volumes within Hygiene grew strongly compared with a weak quarter last year. The Other category also saw good growth, with the consumer discretionary sector recovering somewhat from an extended period of pressure due to economic conditions.
Operations within Materials (formerly EMC) generated sales in line with last year. A good mix of new products and areas of technology within automotive, combined with new markets, are resulting in increased market share and growth. This was offset by lower sales for telecom, with network equipment volumes slowing further during the quarter.
“Overall, Nolato’s global presence, in-depth production expertise and close, long-standing customer relationships enable us to continually harness business opportunities and advance our market positions,” said Christer Wahlquist. “Combined with the flexibility that comes from a strong financial position, we have the ability to expand alongside our customers at a good level of profitability.”