Market situation

2023 was a strong year for equity markets, with the MSCI Nordic Small Cap Index up 12 percent in NOK terms. Interest rates rose significantly over the year, which created major differences in the returns delivered by different sectors. Inflation began to fall at the end of the year, and long-term interest rates fell from 5 percent to under 4 percent, leading to a significant rise in stock markets. Liquidity has been an important element in the markets and is one of the reasons why large companies performed significantly better than small companies in 2023. Company earnings have generally been strong despite sizeable differences between companies, and this may indicate we are heading for a soft landing for the economy.

Portfolio

Private companies

Aibel

In 2023, Aibel delivered its best year ever, with record-high revenue, EBITDA, and order backlog. The company has a wide spectrum of projects within oil and gas, electrification and offshore wind. There was a high level of activity in all areas, and the electrification and offshore wind areas accounted for more than 40 percent of the company’s overall revenue in 2023. Aibel had an order backlog of over NOK 32 billion at the end of 2023, which is more than twice its revenue over the preceding twelve months. More than 50 percent of its order backlog relates to electrification and offshore wind. Aibel’s cash flow is strong, and the company is debt-free.

Aidian

In 2023, Aidian focused on further strengthening its foothold as a leading provider of patient-centred diagnostics and saw a particularly strong increase in demand for its core product, QuikRead, over the year. Aidian expanded its presence in newly established markets such as Poland, the UK and Portugal. The company has revised and updated its strategic and development plan for the next five years. The company announced in May 2023 that it had appointed a new CEO, Juhana Rauramo, and since taking up the position in June, he has implemented a number of changes to the organisation to position the company for growth in its existing markets and expand to new geographic markets and product areas.

Brav

Brav was impacted in 2023, as in 2022, by falling demand for sports and outdoor wear. Retailers started the year with high stock levels, which led to lower demand for Brav. At the same time, consumers’ purchasing power was negatively impacted by high interest rates and cost inflation. On the plus side, the winter in both the Nordic region and the USA contributed to further growth in sales through Brav’s own stores and websites, which now account for approximately 20 percent of Brav’s revenue. Throughout the year, the company refinanced its loan agreement with its bank and carried out a reorganisation to make itself more brand-focused. The company has also changed its CEO, with Erik Sønsterud taking over as interim CEO towards the end of the year. In 2023, Brav, like the rest of the sports industry, worked on reducing its inventory and cutting costs, which will also be the focus in 2024.

Broodstock Capital

Broodstock Capital experienced an eventful year in 2023. Discussions surrounding the resource rent tax continued to impact the industry, but despite this, the companies in its portfolio still performed well. Throughout 2023 and into the beginning of 2024, Broodstock successfully executed two industrial exits. In June 2023, Ferd sold Åkerblå, a leading provider of advisory and certification services related to fish health, environmental issues and technical operations, to DNV. In February 2024, the software company Maritech was sold to the American company CAI Software. After several years as an investment company under Ferd, the four partners of Broodstock Capital bought out the remaining companies in the portfolio and will continue to manage these, as well as pursue new investments with new investors joining the team.

Fjord Line

Fjord Line focused in 2023 on returning its operations to normal after several years impacted by the Covid-19 pandemic and high fuel prices. New engines were fitted to MS Stavangerfjord and MS Bergensfjord, and both vessels resumed full operations before the peak season. Fjord Line also took difficult but strategically important decisions, which included deciding to cease to operate the route between Sandefjord and Strømstad. In addition, the company made a number of changes to its routes to strengthen its transportation offering between Norway and Denmark. With three state-of-the-art vessels, the company is now concentrating on the route between Vestlandet, Sørlandet and Denmark.

Fürst

Fürst delivered improvements in capacity utilisation despite underlying cost pressures, with an increase in the number of tests carried out both in total and as measured by tests per full-time employee. In 2023, there was also an increase in the number of doctors that use the company as their principal testing laboratory, despite the need to discontinue certain test types earlier in the year. Fürst’s subsidiary WebMed further strengthened its foothold in the Norwegian market for electronic patient journal solutions and experienced continuous growth in demand as well as extremely positive feedback from customers. In the same year, Helseapps continued to focus on developing smart interaction services in the healthcare sector, and now is experiencing interest from customer groups including pharmacies and opticians. Patogen again reported strong growth in both revenue and profitability in 2023.

Interwell

Interwell reported a record year in 2023, with turnover reaching NOK 3.2 billion, and is seeing strong growth in all regions in which it operates. The year was characterised by a high level of activity in the sector, and this had a positive effect on Interwell’s products and profitability. The company continues to grow strongly internationally, and markets outside Norway now account for 75 percent of total revenue. Interwell carried out a major strategic acquisition of the Norwegian company Iconic in 2023, which strengthens Interwell’s product portfolio and reinforces its position as a market-leading technology supplier for the global energy market. The integration of Petroleum Technology Company (PTC), which Interwell acquired in 2022, progressed well in 2023, and PTC continues to deliver strong financial performance. Interwell is seeing increasing interest in the development of new solutions for more sustainable energy sources and is well-positioned for continuing growth in both existing and new markets.

Mestergruppen

Mestergruppen delivered decent results in 2023 despite challenging market conditions. High interest rates, falling customer confidence, and new home sales have resulted in conditions the industry has not experienced since the 1990s. The year proved to be more difficult than expected, particularly in the second half. The company has an increasing number of tasks on its strategic agenda; however, its main focus in 2023 was to manage the downturn in its industry in the best way possible.

mnemonic

mnemonic reported another good year in 2023 with accelerating growth in gross profit. Whilst the broader market for IT services experienced challenging conditions, demand for mnemonic’s cybersecurity services continued to grow. The company experienced particularly strong growth in the areas of monitoring and detection, both in Norway and in international markets such as the Netherlands. The company continues to invest heavily in research and development and in international growth. This is reflected in short-term profitability being relatively low in relation to the company’s underlying potential. In 2023, mnemonic continued to demonstrate its position as the leading team for cybersecurity through its work on a number of major cybersecurity incidents and again won the ‘Great Place to Work’ award as the best workplace in Norway for medium-sized companies.

Norkart

Norkart reported profitable organic growth in 2023 across all its products and services. Important milestones included the launch of an overall strategy (including portfolio strategies), the development and implementation of a new organisational structure (Norkart LABS), investments and initiatives in IT security, investigation of acquisition opportunities, and the establishment of a new ERP and payroll system. There were several changes to Norkart’s board of directors in 2023. Grethe Viksaas, the founder of Basefarm, was appointed as the chair of the board, and, in addition, Audhild Randa and two employee representatives joined the board.

Simployer

Simployer continued to deliver growth and maintained sound profitability in 2023. Its profit margin improved somewhat in 2023 relative to 2022 as a result of cost reductions, driven in part by the reorganisation carried out in spring 2023. The reorganisation also created a clearer focus throughout the company. Rolv Erik Ryssdal, a former CEO of Schibsted and Adevinta, was appointed as the chairman of the board, and has made a strong start in this role. During the course of 2023, the company developed a simplified product model for its expert help service. This was tested towards the end of the year, and the results so far are promising. The market for HR technology and expertise is growing, which supports the outlook for long-term growth in demand for Simployer’s services.

Servi

Servi had a very good year in 2023. The company saw a good level of activity in its traditional markets in the offshore and maritime sectors, as well as increasing deliveries for offshore wind. Servi reported good top-line growth and a strong increase in profitability. During the course of 2023, the company also developed an updated strategic plan to deliver growth in the years ahead. Servi saw a high level of new orders in 2023, and the company is well-positioned for 2024.

Try

Try faced very difficult market conditions in 2023, and over the course of the year, many competing businesses have closed down throughout the year. Despite these conditions, Try delivered a good year with organic top-line growth, even though its underlying profitability was adversely impacted to some extent by the changes in market conditions. The various business units that make up the group continue to receive recognition and awards for the work they produce. In addition to winning the Byråprofil and being voted agency of the year in Kampanje’s annual awards, TRY Advertising walked away with the award for advertising agency of the year, TRY Opt took the award for media agency of the year, TRY Dig won the technology and design agency award, and Try Råd (Consulting) won second place in the PR agency category. These awards underline what a strong position the company has in the Norwegian market and demonstrate its ability to quickly build strong positions in new verticals. Try is well-positioned for further growth at the intersection of creativity, strategy, and technology but expects a continuing weak market in 2024.

Listed companies

Benchmark Holdings

Benchmark Holdings performed well across all its business areas and achieved overall top-line growth of 7 percent in 2023. The company delivered 15 percent growth in adjusted EBITDA and improved its cash flow. In December 2022, Benchmark Holdings was admitted to listing on Euronext Growth Oslo, with a plan to move to a full listing on Oslo Stock Exchange. However, this has not yet been executed. The board of directors has decided to undertake a formal review of the company’s strategic options, which may result in a sale of the company as a whole or the sale of one or more parts of the business. For more information, see Benchmark’s website and its announcement of 22 January 2024, available here.

BHG Group

As in 2022, BHG Group was affected in 2023 by a significant fall in demand due to factors including higher interest rates and low consumer confidence. However, market data indicates that BHG Group maintained or increased its market share. Its profitability came under pressure as a result of a high level of competition and high cost inflation. The company made significant structural changes in 2023 by combining some units and selling others. BHG Group, along with most competitors, entered 2023 with high stock levels after several years of record growth in demand and delays in its value chain. Significant cost reductions were implemented as well, and the company’s debt decreased by NOK 1.2 billion as a result of selling stock and carrying out structural changes. The company’s focus for 2024 is on improving its profitability in a market that is expected to still be challenging.

Boozt

Boozt delivered both growth and profitability in 2023 despite challenging market conditions. This was driven by an increase in order values, thanks to new product categories (children’s wear, sportswear and home) combined with stable rates of product returns and higher customer satisfaction. The company continued to increase its market share over the course of 2023 despite challenging market conditions for both offline and online retailers. New revenue streams, such as Booztpay, are now making a significant contribution to its strong results. The company raised its guidance twice at the end of 2023 as a result of strong sales.

Elopak

Elopak delivered a very strong 2023, having successfully navigated a challenging year in 2022. In 2023, the company delivered on the key points of its strategy. Important milestones were solid progress in the Americas segment (including announcing investment in capacity) and maintaining price increases despite the decrease in the cost of raw materials, as well as a strong performance by GLS India. Revenue was up 11 percent (9 percent organic) to EUR 1.1 billion, primarily due to price increases in Europe and growth in India and the Americas segment. Elopak delivered EBITDA of EUR 171 billion (15.1 percent margin). Its debt ratio ended the year at 1.9 x EBITDA thanks to strong cash flows and extra repayments of its long-term borrowings. In 2023, Elopak continued to expand its product portfolio, including in the non-food segment, which includes refills of cleaning fluids and packaging for mouthwash. In 2023, Elopak was awarded an EcoVadis Gold rating, meaning the company is in the top 2 percent globally. In addition, the company was awarded an A+ score for its outstanding ESG reporting by Position Green. In May 2023, Elopak announced Dag Mejdell as the new chair of its board of directors.

Lerøy Seafood

Lerøy Seafood reported strong revenue growth in 2023, driven by record-high prices for salmon combined with weakness in the NOK exchange rate. The year 2023 saw healthy levels of demand for salmon, while supply continued to be restricted by both biological and regulatory obstacles in the largest export countries. 2023 was a challenging year for Lerøy in many areas despite the strong market conditions. The fish farming divisions faced major biological challenges in a number of regions, combined with high levels of cost inflation, while at the same time having to deal with the new resource rent tax for the aquaculture industry. In total, this resulted in the adjusted profit being reduced by 19 percent from 2022. Lerøy has implemented several measures to improve its biological performance and anticipates volume growth of 12.5 percent in 2024.

Nilfisk

Nilfisk delivered a robust performance in 2023 despite macroeconomic headwinds and uncertain market conditions. Gross margins showed improvement throughout the year, supported by price increases and lower freight costs. Cash flow was driven strongly by a reduction in working capital and a positive operating result. The company’s gearing reached its lowest level since it was listed on the stock exchange in 2017. Jon Sintorn was appointed as the new CEO in December 2023 and is expected to take up his position sometime in the first six months of 2024. Its top line for 2023 is expected to be flat compared to 2022, and the company has guided for an approximate 13 percent EBITDA margin.

Trifork

Trifork delivered a strong performance for 2023, despite challenging market conditions in the Nordic IT services market. The company has maintained strong growth and has adapted to the current market conditions by increasing its investment in business development and placing greater focus on customer growth. The company carried out two smaller acquisitions in 2023: IBE and Chapter 5, and M&A continues to play an important part in the company’s strategy. With a strong capital structure, Trifork is well-positioned for further growth, both organically and through acquisitions.

Transactions

2023 was a less busy year than 2022 for Ferd Capital. In its listed investment portfolio, Ferd Capital increased its ownership interest in Mintra, while we sold our entire stakes in non-strategic investments such as Nordnet, Scatec, SATS and Link Mobility. In its private investment portfolio, Ferd Capital entered into strategic partnerships with Forte Digital and General Oceans. In addition, Ferd Capital made a number of attractive add-on investments for its portfolio companies, for example, the investment in Iconic by Interwell.

Organisation

In 2023, we strengthened the organisation with the appointment of four Investment Professionals and one Business Advisor to increase capacity in investment and ownership follow-up. Ferd Capital now has a dedicated team of 21 people.

Over the course of 2023, Ferd also strengthened its staffing in specialist functions that work well in collaboration with Ferd Capital. This applies across areas such as financing, taxation and public duties, internal auditing and reporting, and sustainability. Our investment in ‘Team Sweden’ also deliver strong results.

Future prospects

In 2024, companies will continue to face uncertainty regarding their future earnings and economic growth. Ferd Capital has a diversified portfolio of companies across various sectors, and we expect the portfolio as a whole to be well positioned to deliver growth going forward. In addition, we will work proactively on new investment opportunities and take advantage of the long-term opportunities that can arise in turbulent market conditions, both through M&A activity for our portfolio companies and by establishing new strategic positions. Our focus will be on promoting our ownership agenda at our existing portfolio companies and provide support to our existing portfolio companies.