Ambitious goals from Loomis
Confectionary company Cloetta has delivered some disappointments lately. The bright spots are in very different sectors.
Carnegie Småbolagsfond rose 1.4 percent in September, a month characterised by strong macro statistics. America’s ISM purchasing manager index registered a historically very high figure of 58.8. European purchasing manager data was also strong. The conflict between the United States and North Korea persisted, but seemed to decline in intensity at the end of the month. The US dollar strengthened. Overall this was a favourable environment for engineering companies in particular, and it was this sector that performed best. This was a month in which the big companies outperformed the small caps on the Stockholm exchange.
The fund’s holdings with engineering exposure were the best performers. Bufab, a holding that we upped over the summer, rose 13 percent in September, and Concentric, a supplier to the truck industry, gained 12 percent.
Cash management company Loomis held a capital markets day and presented ambitious goals. We have owned this share for a long time, and despite the threat of a cashless society the company continues to perform well. It is important to bear in mind that Sweden is the most advanced country in the world when it comes to cashless payments. In large parts of the world cash is still an absolute necessity. We anticipate continued good profitability for the company, favourable organic growth and good opportunities for mergers and acquisitions. The stock rose 12 percent in September.
In September, Cloetta delivered a profit warning for the third quarter and the stock fell 7 percent. The company blamed a factory fire in Belgium, input prices and exchange rates. Unfortunately this is not the first time Cloetta has delivered bad news this year, and the whole year has been characterised by profitability below expectations. It had very good profitability growth in 2016, but 2017 has so far been a disappointment. We have obviously considered the negative information and our view of this company is not as upbeat as previously.