YEAR-END REPORT 2016.
We reported healthy growth and better results than last year for the fourth quarter in all business areas. Business Area Engineering Services Nordic noted favourable demand and efforts are continuing, in line with the strategy, to develop its offering to become more value-based. This shift is expected to lead to further improved growth and profitability moving forward.
Business Area Engineering Services International noted favourable growth during the year, including improved results in Brazil, despite a weak market. The large number of project commitments means that we can use the expertise available in Semcon’s international organisation, which generates distinct added value for our customers.
During the year, Business Area Product Information signed new partnership agreements with global automotive customers and won new business within the telecom sector. There is continuing strong interest from companies that see the benefits of employing us to create and distribute product information digitally.
Our new communication strategy was launched in the autumn, to strengthen our brand by becoming more distinct in our communication in relation to our position and our customer offering. The reception has been positive and we have received considerable attention both from media and among customers and potential employees.
After the end of the year, we signed an agreement to divest Business Area Engineering Services Germany. The operations have reported weak profitability for some time and still face major challenges in the future. Moreover, a substantial part of operations consists of prototype and testing activities that are suited to the buyer’s offering. As a result of the transaction, we achieved a better balance between the industries in which we operate, which is one of the Group’s long-term objectives. The divestment will enable us to focus on growth in product development services on other markets and on strengthening the Group’s profitability and improving the prerequisites to achieve our financial objectives.
The figures refer to continuing operations unless otherwise stated.
• The operating income amounted to SEK 467 million (430) and the organic growth was 8%
• The operating profit amounted to SEK 32 million (9), yielding an operating margin of 6.9% (2.2)
• The profit after tax amounted to SEK 19 million (6)
• Earnings per share (EPS) after dilution amounted to SEK 1.04 (0.33)
• The operating income amounted to SEK 1,756 million (1,657) and the organic growth was 5%
• The operating profit amounted to SEK 95 million (58), yielding an operating margin of 5.4 % (3.5)
• The profit after tax amounted to SEK 68 million (43)
• Earnings per share (EPS) after dilution amounted to SEK 3.75 (2.36)
• The equity/assets ratio amounted to 45% (45)
• Return on capital employed was 22% (13)
• The Board of Directors proposes a share dividend of SEK 2.25 per share (1.25)
Income and result
Operating income amounted to SEK 467 million (430). Adjusted for currency effects, acquisitions and divestments, income increased by 8%. All business areas reported increased revenues. Operating profit amounted to SEK 32 million (9), yielding an operating margin of 6.9% (2.2). Business Area Engineering Services Nordic and Business Area Product Information reported good improvements in earnings due to stronger demand.
Net financial items amounted to SEK 1 million (-), yielding profit before tax of SEK 33 million (10). The tax expense for the quarter amounted to SEK -14 million (-4). Profit after tax amounted to SEK 19 million (6) and EPS after dilution was SEK 1.04 (0.33).
Operating income amounted to SEK 1,756 million (1,657). Adjusted for currency effects, acquisitions and divestments, income increased by 5%. Favourable growth was reported by, for example, Business Area Engineering Services Nordic with organic growth amounting to 7%. The Group’s operating profit amounted to SEK 95 million (58), yielding an operating margin of 5.4% (3.5). Business area Product Information’s operating profit was positively affected this year by recovered write-downs of accounts receivable of SEK 7 million.
Net financial items amounted to SEK - million (-1), yielding profit before tax of SEK 95 million (57). The tax expense for the year amounted to SEK -27 million (-14). Profit after tax amounted to SEK 68 million (43) and EPS after dilution was SEK 3.75 (2.36).
Financial position including discontinuing operations
Operating cash flow from current activities was SEK 33 million (27). Cash flow during the fourth quarter was lower than in the year-earlier period due to a reduction in advanced payments from customers, primarily from operations being divested. Investments in hardware, licenses, office supplies and equipment amounted to SEK 34 million (33). The Group’s cash and cash equivalents amounted to SEK 88 million (126), with additional non-utilised credit of SEK 240 million (226) as per December 31. Shareholders’ equity amounted to SEK 529 million (604) and the equity/assets ratio was 45% (45). During the second quarter, a dividend of SEK 22 million (45) was paid to shareholders. The Group’s net debt amounted to SEK 127 million (78). Excluding pension commitments, net debt amounted to SEK 43 million (10). The debt/equity ratio was 0.2 times (0.2).
The head count on December 31 was 2,044 (1,979) and the number of employees in active service was 1,956 (1,894). In the respective business areas the head count is as follows: Engineering Services Nordic 1,098 (1,098), Engineering Services International 355 (352) and Product Information 591 (529).
According to Semcon’s financial objectives a dividend long-term should be paid to shareholders and be at least one third of the profit after tax. The Board of Directors proposes a share dividend of SEK 2.25 per share (1.25), which makes up for 60% of EPS after dilution for continuing operations. Dividend amounts to SEK 40.8 million (22.6). The record day for the right to a share dividend is proposed as Friday, April 28.
This information is information that Semcon AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication at 12.50 CET on February 9, 2017.
Markus Granlund, CEO Semcon AB, + 46 (0)31-721 03 06
Björn Strömberg, CFO Semcon AB, +46 (0)31-721 03 06
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 2,000 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 continuing operations reported annual sales of SEK 1.8 billion. Read more on semcon.com