The Group has had one its best quarters to date, both in respect of sales and earnings, excluding non-recurring costs. We are continuing to advance our position from a strategic perspective, and have conducted our largest acquisition to date during the year. Several of our customers are choosing to use a larger proportion of our all-inclusive offer in order to achieve a more efficient store refurbishment process, which is in line with our business concept of offering complete shop concepts. Our offer is competitive and we will continue to develop the concept in order to create more effective and more attractive shop environments for our customers.
Currency-adjusted sales, including the acquisitions made during the year, increased by 7%. Sales have developed better in Central Europe and NorthEast, while Scandinavia and the UK have been on a par with last year. The lighting area has not developed quite as well. The acquired company La Fortezza has been integrated into the Group as from 1 October, and sales during the quarter amounted to approximately SEK 300 million, which is in line with our expectations.
In order to create future synergies in conjunction with implemented acquisitions, the Group has incurred costs of a non-recurring nature totalling approximately SEK 95 million during the year. These are made up of acquisition, integration and restructuring costs, including the planned closure of the manufacturing unit in Belgium and the merger of two production units in Finland. Net profit for the year after financial items, excluding costs of a non-recurring nature, fell by 4%. La Fortezza has contributed almost SEK 20 million to profit after financial items. The poorer earnings for the whole year can primarily be explained by the sales trend at the start of the year combined with an unfavourable sales mix during the first three quarters.
The gross margin, not including non-recurring items, is continuing to strengthen, which indicates that the long-term work aimed at streamlining all parts of our operation in order to improve our offer has produced results. In order to satisfy future market requirements, we have conducted investments totalling almost SEK 182 million (110) during the year. For example, we have invested in land in China, where we are making preparations for the construction of a new production facility.
Sales have increased by 30% during the fourth quarter. Not including the acquired company La Fortezza, sales have increased by 8%. All market areas have developed better than last year, although the lighting area has not developed quite as well. Net profit after financial items, excluding costs of a non-recurring nature, increased by 29% during the fourth quarter.
Acquisitions during the year
We have completed our largest acquisition to date. La Fortezza currently holds a leading position in the southern European market, and has long-term business relations with several of southern Europe’s major retail chains.
Through the acquisition, La Fortezza can offer customer ITAB’s product portfolio with products primarily in the checkout arena and professional lighting systems. For more information about La Fortezza, see page 4.
During the year, we have conducted a number of acquisitions that complement our existing business. Through the acquisition of Pikval in Finland and MB Shop Design in Hillerstorp, Sweden, we are strengthening our expertise and market position within concept sales, primarily in the Finnish and Scandinavian market.
Through the acquisition of Lichtspiel in Germany, we are intensifying our marketing activities regarding lighting in the German and Central European market. The acquisitions are in line with the Group’s continued focus on sales of all-inclusive concepts to the retail trade.
In March 2017 we will be participating at Euroshop in Düsseldorf, one of the world’s largest retail trade fairs, where we will be one of the leading players. We will be presenting several products and solutions for the shops of the future. For example, the solutions include entirely new control of the shop environment, with lighting, sound and images integrated in a wireless network. Self-checkout for fashion is a new step for the fashion industry. We will also be presenting our next concept, which we call Pick&Go with AirFlow. Here technology is being transferred from EasyFlow out into the shop, and the system means that when the consumer picks the goods in the shop, it will be registered immediately. AirFlow and AmazonGo have much in common. We will also be demonstrating our concept within digital solutions for a uniform digital shop experience.
We are expecting good growth in future. Despite a slightly weaker start to 2016, the fourth quarter has developed better than the final quarter of last year. Our sales in the local currency in the UK have not been affected by Brexit to any appreciable extent. We are monitoring this situation carefully, however, as well as the trend in steel prices, rapid exchange rate fluctuations and the general political situation, which can change our conditions on the market.
The efficiency measures that have been conducted during the year, with particular focus on Belgium and Finland, are providing a good position ahead of 2017. We will continue our long-term work aimed at streamlining all parts of our operation, in order to improve our offer.
We have considerable confidence in our all-inclusive concept and our geographic location for the years ahead. ITAB’s global presence is becoming even more important, as several of our customers are expanding across large parts of the world. Our latest long-term agreement within lighting is a collaboration between several companies in the Group. Our global presence was decisive for the scope and length of the agreement, entailing stability for both the customer and ourselves. The acquisition of La Fortezza is another part of our efforts to strengthen our global presence. In parallel with this, we can see continued opportunities to develop our position in existing markets.
In the long term, we believe that our customers will be on the look-out for more effective solutions, both for shops but also for the process of establishing shops. We will be intensifying our work relating to sustainability and our digital solutions in future. Our all-inclusive offer, alongside our working model and geographic presence, will lead to better business both for ITAB and our customers.
Jönköping, 7 February 2017
Ulf Rostedt, CEO ITAB Shop Concept