Full Year Report January-December 2012

Increased revenue in 2012 despite deteriorating market conditions

Year-on-year 2012 comparison

  • Revenue increased 2 per cent to SEK 4,876 million (4,770)
  • Other operating income totalled SEK 40 million (0) because the actual additional purchase price from previous acquisitions deviated from the previously expected outcome
  • EBITA declined 52 per cent to SEK 110 million (227)
  • Operating profit declined 50 per cent to SEK 110 million (218)
  • EBITA margin totalled 2.3 per cent (4.8) and operating margin totalled 2.3 per cent (4.6); excluding other operating income, operating margin totalled 1.4 per cent (4.6)
  • Basic earnings per share totalled SEK 1.11 (2.02)
  • Cash flow from operating activities totalled SEK 0 million (128)    
  • The Board proposes a dividend of SEK 0.30 per share, totalling SEK 21 million
  • The Board proposes that the AGM continues to authorise buyback of company shares and to authorise the issuance of new shares as in prior years

Q4 2012 year-on-year comparison

  • Revenue decreased 7 per cent to SEK 1,199 million (1,284)
  • Other operating income totalled SEK 27 million (0) because the actual additional purchase price from previous acquisitions deviated from the previously expected outcome
  • EBITA declined 122 per cent to SEK -14 million (64)
  • Operating loss totalled SEK -14 million (55), a 125 per cent decline
  • Excluding non-recurring items, EBITA totalled SEK 9 million (64)
  • EBITA margin totalled -1.2 per cent (5.0) and operating margin totalled -1.2 per cent (4.3); excluding other operating income, operating margin totalled -3.4 per cent (4.3)
  • Basic earnings per share totalled SEK -0.06 (0.45)
  • Cash flow from operating activities totalled SEK 20 million (99) The restructuring program initiated in Q4 is expected to cut administrative expenses by SEK 200 million annually. Q4 earnings was encumbered by SEK 50 million in non-recurring costs

Financial overview

Q4 Full year Change
Group 2012 2011 2012 2011 quarter
Revenue, SEK million 1,199 1,284 4,876 4,770 -7%
Other operating income, SEK million 27 0 40 0 -
EBITA, SEK million -14 64 110 227 -122%
EBITA margin, per cent -1.2 5.0 2.3 4.8 -
Operating profit/loss, SEK million -14 55 110 218 -125%
Operating margin, per cent -1.2 4.3 2.3 4.6 -
Profit/loss after tax, SEK million -5 37 78 154 -114%
Basic earnings per share, SEK -0.06 0.45 1.11 2.02 -113%
Diluted earnings per share, SEK -0.06 0.45 1.11 2.02 -113%
Cash flow from operating activities, SEK million     20 99 0 128 -
Basic equity per share, SEK 7.46 10.27 7.46 10.27 -28%
Return on equity, per cent -0.8 5.3 12.9 22.0 -

Comments from Lars Kry, CEO

Increased revenue in 2012 despite deteriorating market conditions
After starting the year with two strong quarters, we faced a much more uncertain economic climate in September. The shift to lower demand in the second half of the year reduced full-year earnings, primarily due to increased guaranteed wage expenses and non-recurring costs. Full year 2012 was also affected by the 4.5 fewer work days than last year, which was hard on both revenue and EBITA. Despite this, revenue increased 2 per cent to SEK 4,876 million (4,770). Consolidated EBITA margin for the full year totalled 2.3 per cent (4.8).

Challenges regarding implementation of our new Enterprise Resource Planning (ERP) system affected our liquidity and profitability during the year. The situation stabilised in the third quarter, and through concrete measures and attuned processes, we achieved better cash flow and a stronger cash position.

Over the course of the year we continued to extend our successful specialisation strategy to several new areas, including Mining, Green Jobs, and Engineering. By constantly creating innovative new services and offers we increase our customers’ competitiveness and improve their ability to deal with opportunities and challenges.

Earnings in our Swedish business were strongly affected by the recession over the last two quarters as reflected in a full-year EBITA margin of 3.5 per cent (7.1) or 3.9 per cent (7.1) adjusted for non-recurring items.

Our venture in Norway is proceeding according to plan. Proffice Norway accounted for the most growth in the Group, with 2012 revenue growth at 13 per cent and a 16 per cent increase in EBITA. Our specialisation strategy continued to reap success in the Norwegian market, primarily in the Industry & Logistics and Care areas.

Our Danish operation improved its profitability during the year by breaking even. The tougher economic climate has hit Finland harder and both revenue and profitability declined in 2012. However, with the start-up of Aviation in Finland in the fourth quarter we see great potential for development of our business in the Finnish market.

Market challenges for Sweden in fourth quarter but Norway stood strong
Consolidated revenue decreased 7 per cent in the fourth quarter to SEK 1,199 million (1,284). Excluding non-recurring items, EBITA totalled SEK 9 million (64) year-on-year.

The clear slowdown in the Swedish labour market resulted in continued high restructuring costs and margin pressure in the fourth quarter. The vigorous action programme that was quickly initiated to adapt operations to the current economic situation went according to plan. To ensure future profitability, extensive streamlining is being done in the Group’s various business areas and support functions. So far, estimated annual administrative cost savings total SEK 200 million, and fourth quarter earnings were encumbered by non-recurring costs of SEK 50 million. EBITA for the quarter totalled SEK -14 million (72). Nevertheless, the underlying business in Sweden showed a profit. Excluding non-recurring items, EBITA totalled SEK 10 million (72). In parallel, intensified sales activities had a positive effect and resulted in increased customer visits. At the same time, we increased our proportion of small and medium-sized customers, leaving us in a better position to increase margins on hard-pressed market prices.

In Norway, the labour market remained favourable in the fourth quarter, and we won the confidence of new customers and cultivated many existing accounts, which resulted in a 21 per cent increase in revenue to SEK 317 million (263) and an doubled EBITA.

In the fourth quarter, Proffice signed several key agreements with customers such as PostNord and the Swedish National Board Of Health And Welfare, and entered into a Managed Service Provider agreement with AstraZeneca.

Continued reorganisation and sustained strategy for profitability and growth
We are taking a humble approach to economic trends in 2013. Nothing indicates that the market will improve in the near future, so we are readying ourselves for continued weak demand in the first half of 2013.

The action programme will also affect our earnings in the first quarter, mainly in the form of reorganisation costs. Continued high guaranteed wage expenses will also have an impact on the quarter.

The streamlining that we are now implementing will have a great effect when demand increases. That, combined with more customer visits and an increased market presence, will ready us to grow faster than the market and consolidate Proffice’s position as the leading staffing company in the Nordics.

   
Lars Kry
President and CEO
Proffice AB

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About Us

Proffice is the Nordic flexible staffing company. We have more than 10,000 employees and provide temporary staffing, recruitment services, outsourcing, and career & development programs. The Proffice share is listed on Stockholmsbörsen (Stockholm Stock Exchange).