Latest Tagmaster financials show positive outlook

Stockholm, Sweden

Jonas Svensson, CEO, Tagmaster, comments on the company's latest interim results.

According to the latest information covering the 3rd quarter of the financials year at Tagmaster the overall picture is positive with a general over all increase in sales and margins despite a difficult trading environment.

CEO, Jonas Svensson, says that demand for the company's solutions is stable and the group's total sales increased by 8.2 percent compared to the third quarter last year. "Sales for our Segment USA increased by just under 11 percent in local currency and 33 percent in SEK, while continued disruptions in the supply chain and seasonally lower activity in England and France resulted in reduced sales by just under 12 percent for Segment Europe."

Global component shortages

Like many other technology companies, Tagmaster was affected during the quarter by a continued component shortage and by a capacity shortage at its main European supplier. And according to Svensson, "through focused sourcing and great flexibility, we still manage to maintain a high level of delivery power towards our customers."

The company was also affected by cost increases for both electronic components and consumables. "We have therefore continued to increase our component purchases via the spot market to keep our commitments to customers. With price increases and internal efficiency, we managed to reach an acceptable gross margin of just under 68 percent, which is, however, somewhat lower than in the third quarter of 2021."

"Considering the challenging purchasing situation and the deficiency of capacity in our outsourced production, we are very pleased that we continue to have such a good gross margin. So far this year, when all nine months are included, we have a slightly higher gross margin compared to last year. It shows that our offer can withstand price increases without losing attractiveness. An important reason for this is that during the long-term component shortage, we have built up an efficient and structured sourcing process that gives us relatively good delivery power, which in the long run should lead to increased market shares. We estimate that the loss in sales of delayed deliveries due to component shortages and capacity shortages corresponded to approximately 3.5 percent of sales during the quarter, which is slightly less than previous quarters."

Intensified efforts on Citilog

During the quarter, the company has increased intensity to achieve profitability in one of its latest acquisitions, Citilog. As part of that,  an efficiency programme was launched in France that aims to increase organisational efficiency, simplify structure and reduce costs while continuing to invest in the development of industry-leading products and increased commercial capacity. "These measures will result in annual cost savings amounting to just over SEK 10 million with full effect from the second quarter 2023 and net approximately SEK 7 million after increased investments in sales. Associated non-recurring costs are estimated to approximately SEK 3,5 million," says Jonas Svensson.

The group's turnover during the third quarter amounted to SEK 86.5 million, which is an increase of 8.2 percent compared to the same quarter in 2021. The Traffic Solutions business amounted to SEK 73.5 million, which is an increase of approximately 7 percent compared to the corresponding quarter 2021. During the quarter, Traffic Solutions accounted for 85 percent of sales, while Rail Solutions accounted for the remaining 15 percent.

"Our strategy and the value-creating potential have not changed due to the short-term limitations in the supply chain, and our investment in growth via innovation, commercial focus and acquisition means that we have a positive view of the company's development for the coming years," concludes Jonas Svensson.


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