Restructuring and temporary poor utilization affected profitability in Q2

Q2s results were affected by the major project for a German auto manufacturer, started in 2013 and involving around 100 people, ending during the quarter. Along with an order stoppage from another customer this has initially meant poorer utilization rates. Measures have been taken which impacted results with restructuring charges of SEK 6 million. Sales are however expected to increase and we expect to see positive growth in the second half of 2014.

Income and result
Second quarter
Operating income rose to SEK 679 million (637), giving organic growth of 4%. The operating profit amounted to SEK 3 million (31), giving an operating margin of 0.4% (4.9). The quarter contained one less workday than the same time last year. The major project for a German auto manufacturer, which started in 2013 and involving around 100 people ended during the quarter. Along with an order stoppage from another customer this has initially meant poorer utilization rates, having a negative impact on results. The quarter has also been affected by restructuring costs of SEK 6 million. Net financial items totalled SEK -2 million (-2), giving a profit before tax of SEK 1 million (29). Tax costs for the quarter stood at SEK - (-8). The profit after tax was SEK 1 million (21) and EPS after dilution was SEK 0.04 (1.18).

January-June
Operating income rose by SEK 120 million and amounted to SEK 1,383 million (1,263), giving organic growth of 7%. Sales growth is mainly from increased purchase of goods and services in certain projects. The operating profit amounted to SEK 44 million (66), giving an operating margin of 3.2% (5.2). The poorer operating profit is attributable to poorer utilization rates during Q2 and one less workday compared with the same period in 2013. Net financial items totalled SEK -3 million (-3), giving a profit before tax of SEK 41 million (63). Tax costs for the period stood at SEK -11 million (-16). The profit after tax was SEK 30 million (46) and EPS after dilution was SEK 1.67 (2.56).

Financial position
The operating cash flow from current activities was SEK -52 million (-14). Cash flow is seasonally weak in Q1 and Q2 but this year has, apart from poorer results, also been affected by increased tax and VAT payments by around SEK 30 million. Investments in hardware, licences, office supplies and equipment amounted to SEK 13 million (11). The Group’s liquid assets amounted to SEK 61 million (70) with additional nonutilized credit of SEK 246 million (293) as at 30 June. Shareholders’ equity amounted to SEK 626 million (592) and the equity/assets ratio was 48% (46). A shareholder dividend was paid in Q2 of SEK 45 million (36). The Group’s net debt has dropped over the past year by SEK 17 million and now amounts to SEK 109 million (126) and the debt/equity ratio was 0.2 times (0.2) with an interest coverage ratio of 21 times (26).

Staff and organisation
The headcount on 30 June was 3,032 (2,989). The number of employees in active service was 2,904 (2,871). In the respective business areas the headcount is as follows: Engineering Services Nordic 1,058 (1,072), Engineering Services Germany 1,082 (1,078), Engineering Services International 357 (300) and Product Information 535 (539).

Outlook
Customers’ development requirements remain strong with demand expected to gradually improve. Semcon expects to see positive development in the second half of 2014.

Semcon is a global company active in the areas of engineering services and product information. The Group has around 3,000 employees with extensive experience from many different industries. Semcon develops products, plants and information solutions along the entire development chain and also provides many other products and services including quality control, training and methodology development. Semcon increases customers’ sales and competitive strength by providing them with innovative and solid engineering solutions. From 2014 the business will be run in four business areas: Engineering Services Nordic, Engineering Services Germany, Engineering Services International and Product Information. The Group had sales of SEK 2.5 billion with activities at more than 45 sites in Sweden, Germany, the UK, Brazil, China, Hungary, India, Spain and Russia.

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About Us

Semcon is an international technology company that develops products based on human needs and behaviours. We strengthen our customers’ competitiveness by always starting from the end user, because the person who knows most about the user’s needs creates the best products and the clearest benefits to humans. Semcon collaborates mainly with companies in the automotive, industry, energy and life science sectors. With more than 2000 specialised employees, Semcon has the ability to take care of the entire product development cycle, from strategy and technology development to design and product information. Semcon was founded in Sweden in 1980 and has offices in over 30 locations in eight different countries. In 2016, the Group reported annual sales of SEK 1.8 billion. Read more on semcon.com

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