SUSTAINABILITY REPORT
JULY 1, 2021 - JUNE 30, 2022
LIST OF CONTENTS
- Important events July 1, 2021 - June 30, 2022
- CEO's comment
- Business concept, business model and values
- Duroc's Portfolio Companies - International Fibres Group
- Duroc's Portfolio Companies - Drake Extrusion
- Duroc's Portfolio Companies - Cresco
- Duroc's Portfolio Companies - Cotting Group
- Duroc's Portfolio Companies - Duroc Machine Tool Group
- Duroc's Portfolio Companies - Duroc Rail
- Duroc's Portfolio Companies - Smaller Company Portfolio
-
Our approach to sustainability
Duroc acquires and develops companies - The Duroc Group
- The Duroc Share
18 Sustainable value creation
- Examples of activities and plans
- Auditor's opinion
28 Appendix
29 Corporate governance
33 Consolidated income statement / Consolidated statement of comprehensive income
34 Consolidated balance sheet
35 Parent company income statement/Parent company statement of comprehensive income
36 Parent company balance sheet
37 Important accounting policies
38 GRI Index
For company addresses and telephone numbers, see page 40.
Unless otherwise indicated, Duroc's sustainability report was prepared in accordance with the Swedish Annual Accounts Act and covers the parent company Duroc AB and work on sustainability
issues during the 2021/2022 financial year. This is Duroc's fifth sustainability report. As before, this year's sustainability report was prepared according to the GRI Standards Core, which is described at www.globalreporting.org/standards. Also, the report is affected by EU taxonomy for the first time.
2
Duroc AB Sustainability Report July 1, 2021 - June 30, 2022
IMPORTANT EVENTS JULY 1, 2021 - JUNE 30, 2022
- Net sales increased by 14 percent during the financial year. Organic growth stood at 11 percent.
- Adjusted EBIT totaled MSEK 90.1 (125.8). The reduc- tion was mainly due to the French subsidiary Griffine, whose adjusted EBIT totaled MSEK -69.1(-14.8). Other companies presented an adjusted EBIT of MSEK 159.3, which is an increase of 13 percent from the previous year (140.7), despite the effect of the raw materials shortage, greatly increased prices for input goods and increased energy, shipping and labor costs.
- While the prevailing global situation with increased in- flation affected the companies, demand has remained good. The portfolio companies' long-term business plans indicate Duroc's earnings will be substantially strengthened in the years beyond 2022/2023.
MSEK
3,720.5
Net sales
- Portfolio company IFG continued to focus on niche products with higher growth potential, which gave good results. Restructuring in the UK aimed at streamlining production capacity was completed and has contribut- ed significantly to increased profitability.
-
Ongoing strategic process improvements in the DMT Group has helped create a sales growth of 42 percent and an increase in the EBIT margin from 7.7 percent to 9.3. The Smaller Company Portfolio underwent
successful turnaround efforts, resulting in an EBIT increase from MSEK -8.1 to MSEK 8.9. - Investments of MSEK 67.3 have been made to increase capacity and to streamline and develop operations in the portfolio companies.
- At the end of the financial year, Duroc had MSEK 205 in unutilized credit facilities and a continued low loan-to- value ratio with an equity/assets ratio of 52 percent (51).
- In the light of Duroc's strong financial position and positive earnings trend, the Board proposes that a dividend of SEK 0.25 be paid per share for the financial year 2021/22.
MSEK
90.1
Adjusted EBIT
1,099
Average number of employees
SUMMARY OF THE FINANCIAL YEAR
Group | July 2021 - June 2022 | July 2020 - June 2021 |
Net sales | 3,720.5 | 3,254.5 |
Adjusted EBIT | 90.1 | 125.8 |
Operating profit (EBIT) | 83.0 | 88.6 |
Profit after tax | 64.9 | 55.4 |
Net debt excl. liabilities from IFRS 16 | 265.7 | 139.9 |
3
A WORD FROM THE CEO
STRONG DEVELOPMENT IN THE MAJORITY OF DUROC COMPANIES - THE BOARD PROPOSES A DIVIDEND
The financial year was characterized by quarterly earnings fluctuations compared to the previous year. Full-year earnings were in line with the previous year's despite a massive MSEK 69 loss (adjusted EBIT) in Griffine SA (Cotting Group's French arm). Business during the year was characterized by continued effects from the pandemic as well as the war in Ukraine. In the light of these circumstances, the core of Du- roc delivered strong earnings, with the exception of Griffine.
The majority of the portfolio companies exceeded expectations; this was the result of long-term improvement efforts launched
a number of years ago. However, the financial year did not meet expectations in terms of Group level earnings as one company, Griffine SA, reported very large losses and an earnings trend that is not possible to remedy in the foreseeable future. The business is based on a very few major automotive customers that have been hit hard by the semiconductor shortage. Winning new projects and gaining market share in this kind of business takes years. What's more, French labor market regulations make it almost impossible to adapt organizations to new circumstances within reasonable time and at reasonable cost. As a result, we are making plans for a Duroc without Griffine.
The long-term improvement efforts that typify our working methods are now bearing fruit and the overwhelming majority of the Group's companies generated strong earnings despite the turbulent global economy.
Demand in the mechanical engineering industry was strong throughout the year, which helped DMT, the Smaller Company Portfolio and Rail perform far above expectations. IFG, Duroc's biggest portfolio company with 37 percent of Duroc's sales, noted a record year in terms of profitability despite disruptions in shipping and the supply of raw materials and energy. Operating profit increased by 470 percent and is now close to the margin that Duroc had previously set as the Group-level goal. Outstanding development efforts and conscious positioning in the market are behind these earnings.
Duroc can show many examples that signify our method of steadily striving for constant improvement and profitable growth. In particular, I would like to congratulate Duroc Machine Tool Group, which grew its business by 42 percent during the financial year while also increasing profitability. Great delivery performance and a strong focus on sales and service efforts are behind this. The return on capital employed was an excellent 128 percent.
Cresco had a great year, but is compared to a strong 2020/21. Drake Extrusion, in which Duroc has invested around MSEK 100 in increased capacity over the past five years, was a disappointment in terms of earnings.
The market has been typified by historically difficult supply chain disruptions. At the same time, mobility
and competitiveness in the American labor market put
employers under pressure and formed a bottleneck that had a negative effect on Drake's delivery performance. The company is one of the most well-invested in the industry and is well-equipped for the future. The market for furniture in e.g. outdoor spaces is enjoying long-term growth, and here Drake plays an important part as a strong supplier.
The Board proposes a dividend of SEK 0.25 per share, which reflects its and the management team's great confidence in Duroc's future opportunities and the Group's strong finances.
Outlook
Duroc is in a strong position for the future with mainly profitable and well-invested business units, a strong balance sheet and a planned deconsolidation of the loss-making Griffine operation. Our business model is based on strong decentralization, and Duroc's culture means that flexibility and an ability to adapt to new circumstances are high on the agenda in both the parent company organization and our business units.
Moving forward, the economic climate is highly uncertain and the opening months of the first quarter were affected negatively by continued high energy costs and lower volumes. It is impossible to foresee how the forthcoming quarters will develop given the instability that prevails in the world at large. An increasingly harsh financial climate with escalating inflation and interest rates can present opportunities for us to once again consider company acquisitions. The group has low borrowings and an undrawn credit facility of around MSEK 205. Duroc is
ready to take on new challenges and opportunities, and
take this opportunity
all of our capable who shoulder full sibility for successfully
driving development portfolio companies the parent company conditions for con to deliver growing holder value are
in a strong Duroc
John Häger
CEO
4
Duroc AB Sustainability Report July 1, 2021 - June 30, 2022
BUSINESS CONCEPT, BUSINESS MODEL AND VALUES
BUSINESS CONCEPT
Duroc seeks to create value through opportunistic acquisitions and long-term development of its subsidiaries.
THE DUROC WAY
RESOURCES
Financial capital
- Extensive real assets
- Low net debt
- Strong cash flow
Structural and cultural capital
- Solid market expertise
- Operational know-how
- Strong entrepreneurial spirit
- Decentralized governance
- Exchange of best practice
- Long-termapproach
Brands
Human capital
- Dedicated employees with extensive experience
ACTIVITIES
Duroc's acquisition strategy Value-creation plan
- Goal-orientedgovernance
- Sharp, effective business analysis
- Fast realization of opportunities
- Customer focus
- Innovation in all parts of the business
- Backed by the right competences
- Profitable growth
- Profitable investments
Leadership
- The right leaders
- Trust and investment in employees
- Appreciation and responsibility
VALUE
- Customer satisfaction
- Attractive employer
- Long-term,trusting business relationships
- Efficient, sustainable
businesses and products - A contributing social partner
Shareholder value
5
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Duroc AB published this content on 20 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2022 08:49:07 UTC.