Weaker first quarter but new major agreement signed

The lacklustre demand that we have been seeing since the second half of 2012, mainly in Sweden has, as expected, continued into the first quarter. The quarter also contained two fewer working days compared with Q1 2012. We have taken measures that negatively affected results by SEK 6 million. Last year’s results included major revenue recognition of SEK 5 million. The Informatic business area is however showing continued healthy sales and earnings trends. It is also pleasing that we signed a major new agreement with a global German automotive manufacturer in the quarter, which will engage around 150 individuals. Demand at Design & Development is expected to gradually improve.

The operating income was SEK 621 million (685) and organic growth was -7% 

The operating profit was SEK 35 million (72), giving an operating margin of 5.6% (10.5) 

The profit after tax was SEK 25 million (50)  

Earnings per share (EPS) after dilution was SEK 1.38 (2.77) 

The equity/assets ratio was 50% (40) 

Return on shareholders’ equity was 21.4% (21.5) 

Income and result
Operating income amounted to SEK 621 m (685) and organic growth was -7%. The Design & Development and Automotive R&D business areas saw weaker demand over the quarter, particularly in Sweden. In addition, income fell by SEK 18 million due to currency effects. The quarter also had two fewer working days, equivalent to around SEK 20 million in lost income. The operating profit was SEK 35 million (72), giving an operating margin of 5.6% (10.5). The poorer result is mainly due to the weaker demand. The two fewer working days negatively impacted results by around SEK 16 million. Measures have been taken in the form of staff cuts, which negatively affected results by SEK 6 million. In Q1 2012, which was a strong quarter, major revenue recognition of SEK 5 million was reported for a project in the Automotive R&D business area. The business areas reported the following operating margins: Automotive R&D 3.3% (8.1), Design & Development 4.6% (14.6) and Informatic 13.8% (11.3). Net financial items totalled SEK -1 million (-1), giving a profit before tax of SEK 34 million (71). Tax costs for the quarter stood at SEK -9 million (-21). The profit after tax was SEK 25 million (50) and EPS after dilution was SEK 1.38 (2.77).

Financial position
The operating cash flow from current activities was SEK -17 million (32). The Group’s cash and bank balances amounted to SEK 55 million (46) with additional non-utilized credit of SEK 336 million (245) as at 31 March. The Group’s credit agreement consists of an overdraft facility of SEK 150 million (150) and a Revolving credit facility of EUR 32.8 million (32.8), which run until July 2013. There is an option available for the company to extend the revolving credit to a three-year loan before the due date. Investments in hardware, licences, office supplies and equipment, amounted to SEK 4 million (5). Shareholders’ equity amounted to SEK 599 million (492) and the equity/assets ratio was 50% (40). The Group’s net debt has fallen by SEK 120 million over the past year and amounted to SEK 81 million (201) and the debt/equity ratio was 0.1 times (0.4) with an interest coverage ratio of 24.7 times (11.4). 

Staff and organisation
The headcount on 31 March was 2,969 (2,953). The number of employees in active service was 2,867 (2,842). In the respective business areas the headcount is as follows: Automotive R&D 1,765  (1,725), Design & Development 680 (780) and Informatic 524 (448). 

Outlook
Semcon has seen a drop in demand from some customers since the second half of 2012, mainly in the Design & Development business area. The Swedish automotive industry has also shown a drop in purchase orders of product development services for 2013, while there is good demand from the global automotive industry. Customers’ need for development services remain high however with demand expecting to gradually improve, even though the market situation is difficult to predict. 

Markus Granlund, CEO Semcon AB, 46 31 721 03 11
Björn Strömberg, CFO Semcon AB,  46 31 721 03 05
Anders Atterling, IR Manager Semcon AB, 46 704 47 28 19

Semcon is a global company active in the areas of engineering services and product information. The Group has 3,000 employees with extensive experience from many different industries. We develop technologies, products, plants and information solutions along the entire development chain and also provide many services including quality control, training and methodology development.  Semcon boosts customers’ sales and competitive strength by providing them with innovative solutions, design and solid engineering solutions. The Group has sales of SEK 2.6 billion and activities at more than 45 sites in Sweden, Germany, the UK, Brazil, Hungary, India, China, 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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