COMMENTS BY THE CEO
Challenging, but also an amazing year in terms of earnings for AddLife
We have had a challenging, but also an amazing year in terms of earnings for AddLife. I am proud and filled with admiration for my employees and would like to begin by thanking them for their outstanding effort helping our customers to deal with the enormous challenges that accompanied the pandemic. Through great commitment, innovation and responsibility, we have followed our vision of improving people’s lives.
The pandemic permeated society and changed daily life for all of us. We learned new ways in which to work and socialise, and became accustomed to living with restrictions that were previously unimaginable. We have not yet seen the far-reaching effects, but I am convinced that the pandemic has strengthened a number of trends that are good for our business in the long term. The restrictions accelerated digitalisation and we have developed widespread use of digital aids and communication channels. Increased use of digital tools in health care and elder care, given the demographic trend, is essential if society is to be able to offer effective high-quality care for everyone. We also see the growing use of diagnostics to make the right medical decisions in health care. Finally, the pandemic has shown the importance of sustainable logistics chains from supplier to patient.
I am convinced that our success is due to our business model, which works even in a time of crisis. Despite major challenges, our decentralised organisation with entrepreneur-driven subsidiaries, that focus on the needs of the customer, has developed the business and found new ways to deliver products and solutions while maintaining their quality. Their efforts to help customers have made an impression, resulting in deeper customer relationships that open up new business opportunities.
Our subsidiaries in diagnostics and medical technology experienced extreme demand and growth in 2020. At the same time, subsidiaries with a focus on advanced elective surgery, home care, or research faced a more challenging market. Surgeries have been postponed, medical research projects unrelated to COVID-19 have been given lower priority and lockdown restrictions, imposed on the elderly, have made it difficult to try out and install assistive technology. However, the medical needs remain and the pandemic has created an extensive medical backlog in all countries. The COVID-19 pandemic highlighted shortcomings in elder care and we see a growing interest in digital care services for home use.
Exceptional sales and earnings growth
Sales rose SEK 1.8 billion, corresponding to growth of 52 percent, 38 percent of which was organic. Adjusted for COVID-19 related sales, we grew organically by 6 percent, which is on par with our historically average organic growth .
The increase in sales was mainly driven by demand for personal protective equipment and COVID-19-related diagnostics, where the diagnostics companies sold both instruments and reagents. The increased sales of instruments means that we have acquired a larger installed base with capacity to handle an array of different tests, which opens the door for increased sales of reagents for many years to come.
EBITA for the year rose 163 percent and the EBITA margin strengthened to 15.8 percent from 8.8 percent in 2019. Earnings growth was mainly an effect of the pronounced increase in volumes, combined with effective cost control measures. We expect continued high demand from health services with respect to both diagnostics and an increase in the number of surgical procedures to catch up on the backlog, albeit at a lower level than in 2020.
Increased acquisition opportunities
Our strategy, to grow both organically and through acquisitions, remains in place. During the year we completed six acquisitions that added sales of SEK 650 million. This year's acquisitions contributed both to developing our position in Central Europe through two acquisitions in advanced surgery and to strengthening our position in home care through two acquisitions in the Nordic region. We also made a major acquisition in January when we took over Euroclone, which is a strong supplier to cell and molecular biology research in Italy.
The acquisition of Biomedica in 2018 and the entry into the European market has clearly paved the way for many new business and acquisition opportunities. We now actively seek acquisitions in both the Nordic countries and the rest of Europe in segments where we already have a presence, as well as companies in new niches that complement our existing business. We attach great importance to get to know the companies, understanding the local business and its development opportunities and ensuring that we share similar values and sustainability goals.
Our vision, to improve people’s lives, is only possible through long-term sustainable business practices. We all have a great responsibility and for AddLife, sustainability is an integral component of business value. We accept our responsibility throughout the supply chain as an employer, producer and distributor, as well as in our role as a market participant. The environmental challenges for our industry can mainly be found in transports, as well as in the heavy consumption of disposable plastic products within health services. We are therefore conducting a shipping and logistics project to streamline transports and reduce emissions, while also actively working with our suppliers to find alternative materials wherever possible.
As I write these comments, we are still in the middle of the pandemic, but the ongoing vaccinations give some hope and I believe that we all long for a rapid return to more normal conditions. I am convinced that AddLife is correctly positioned for continued value creation and sustainable growth.
President and CEO