INTERIM REPORT January-September 2014
Improvement in order intake and gross margin – restructuring initiated
- Stable sales and improved margins compared to last year and previous quarters 2014.
- Order intake increased by SEK 53 million (47%) compared to same period 2013.
- Previously announced component problems leading to label replacements have not led to any additional provisions.
- The restructuring announced in second quarter is initiated and has impacted the quarter with non-recurring costs of SEK 4.1 million.
- Jonas Vestin joined Pricer as Chief Executive Officer on August 14.
- No forecast issued for 2014.
|Order intake||SEK 166 (113) m|
|Net sales||SEK 158.3 (151.6) m|
|Gross margin||SEK 28.8% (22.1%)|
|Operating profit 1)||SEK 15.2 (6.9) m|
|Operating margin 1)||9.6% (4.6%)|
|Cash flow||SEK -34.8 (-17.4) m|
|Basic earnings per share||SEK 0.09 (0.05)|
|Order intake||SEK 426 (409) m|
|Net sales||SEK 409.8 (372.7) m|
|Gross margin 2)||25.8% (26.1%)|
|Operating profit 3)||SEK 8.7 (12.2) m|
|Operating margin 3)||2.1% (3.3%)|
|Cash flow||SEK -43.2 (4.0) m|
|Basic earnings per share||SEK -0.46 (0.08)|
1) Excluding non-recurring costs in the amount of SEK 4.1 million for Q3 2014
2) Excluding non-recurring costs in the amount of SEK 37.5 million for 2014 in Q2 2014
3) Excluding non-recurring costs in the amount of SEK 56.9 million until 30 September 2014
No significant events have occurred after Q3.
Comment from CEO Jonas Vestin
During my first months at Pricer, we have started the extensive change process initiated by the Board of Directors. However, I would like to begin by commenting on the financial performance in the third quarter. Order intake increased by 47% year-on-year, based on orders from all around the world, including a major order from French hardware store Leroy Merlin.
The net sales have stabilized and the gross margin and operating profit have increased in third quarter compared to the same quarter last year. The cash flow was SEK -34 million during third quarter as a result of a temporary increase in working capital, which we estimate will improve in fourth quarter.
During the quarter we secured the previously announced flagship order from Dairy Farm in Singapore, but we also succeeded in selling our pricing solutions to new retail segments. This broadens Pricer's market beyond the food retail industry.
My initial period at Pricer has been spent with meetings with employees, clients and partners. Our client relationships are backed by strong loyalty figures. The Pricer team has impressive technical know-how and understands the needs of our clients. This, combined with passion and pride for the Company, makes Pricer a market leader in innovations of technical solutions, in particular in implementing these solutions. Pricer's market presence is characterized by Pricer being a fundamental part of our clients’ business model.
We commenced a substantial change process in third quarter with respect to our operational work and business model. This involves becoming more efficient in our operating activities and improving control with focus on quality, working capital and sales processes. This active change process is incurring certain non-recurring costs which were estimated at approximately SEK 15 million in second quarter 2014, with SEK 4.1 million now having impacted the third quarter. The final results will be reported in the fourth quarter.
Pricer's strong technical know-how and technical ambition, together with a world leading installed base of 13,000 stores, serve as the foundation for Pricer's new strategic direction for 2015 and onwards. This direction is based on an increasingly digitalized retail industry, characterized by omni-channel (retail in store, online and with smartphone), increased needs for proactive price optimization and requirements for personal communication with the consumer.
Pricer's solutions enable retailers to guarantee desired price levels in real time simultaneously in-store and online, which enables differentiating prices versus discount systems, time of day or online shopping. From the perspective of the consumer, the same solution can provide personalized offers, recommendations and in-store navigation. This illustrates Pricer's contribution to upgrade the retail revenue model and the consumer experience.