ÅF AB Interim Report January-June 2017

A strong result and continued good growth Starkt resultat med fortsatt god tillväxt

“ÅF continues to grow and shows a strong profit. We won new business during the quarter where we support our clients in the ongoing digitalisation of industry, in the development of sustainable cities and in a more efficient energy supply. This means that we have a good platform for continued growth in 2017,” says Jonas Gustavsson, President and CEO.

Second quarter 2017

• Net sales amounted to SEK 3,231 million (2,942)
• EBITA excl. items affecting comparability, was SEK 302 million (292)
• EBITA margin, excl. items affecting comparability, was 9.4 percent (9.9)
• EBITA totalled SEK 282 million (288)
• EBITA margin was 8.7 percent (9.8)
• EBIT (operating profit) was SEK 273 million (281)
• Earnings per share, before dilution: SEK 2.52 (2.75)

January-June 2017

• Net sales amounted to SEK 6,496 million (5,585)
• EBITA excl. items affecting comparability, was SEK 589 million (520)
• EBITA margin, excl. items affecting comparability, was 9.1 percent (9.3)
• EBITA totalled SEK 568 million (516)
• EBITA margin was 8.7 percent (9.2)
• EBIT (operating profit) was SEK 560 million (501)
• Earnings per share, before dilution: SEK 5.17 (4.85)
  
  

COMMENTS BY THE CEO

ÅF’s EBITA for the second quarter totalled SEK 302 million (292) excluding items affecting comparability. At the same time, we can report a stable growth of 10 percent and strong cash flow. Profit was affected negatively by the Easter holiday and by fewer working days compared with last year. Items affecting comparability are related to restructuring costs of SEK 20 million.

The industrial climate is strong in Sweden, which is reflected in the performance of the automotive industry, the pulp and paper industry, the pharmaceutical industry and other manufacturing industries. The mining and steel industries continue to show signs of increased demand, but from low levels. Investments in infrastructure in Sweden and Norway remain at a high level, while the ongoing digitalisation is resulting in a good market for embedded systems and IT. The energy market in Europe remains weak, while demand continues to grow in Southeast Asia and Africa.

The Industry Division continues to show profitable growth. Demand for end-to-end solutions is increasing and outstanding orders for fixed-price projects continued to grow during the quarter. Among other things, demand for industrial digitalisation and automation solutions is increasing. During the quarter, a number of major projects were won for production facilities in the automotive industry, as well as control and monitoring of power and lighting systems for airports.

The Infrastructure Division reports continued good profitability. However, the organic growth rate has decreased slightly in the current year. A number of major projects are being wound up, while several major investment projects are in the procurement stage. At the same time, the market for sustainable properties is growing, which drives demand for the division’s services, such as installations in properties, project management and architecture. The architect company Koncept Stockholm was acquired during the quarter, which has a leading market position in the premium segment for commercial clients. The integration of Midtconsult in Denmark is proceeding according to plan, and ÅF has been commissioned to deliver all technical installations for Denmark’s highest residential building when it is built.

Business in the International Division continued to be influenced by the weak European energy market. At the same time, the division continues to win new projects, most recently an assignment related to the construction of a new nuclear power plant in Turkey and a new hydropower plant in Egypt. Growth in the quarter is good and is largely related to the acquisition of the Swiss infrastructure company AF Toscano.

The Technology Division continues to grow with healthy profitability on an expanding market in digitalisation and embedded systems. Demand for the division’s services is strong, especially from the automotive industry, but demand is also increasing in other sectors where the need for digitalisation is significant. Several new deals were secured this quarter, including with SAAB, CEVT and Scania.

Overall, we continue to grow and our technical breadth combined with high quality and delivery reliability continues to be appreciated by our clients. In order to take further steps in ÅF’s development and thereby ensure that ÅF’s long-term targets are met, a strategy review is now being carried out, combined with a restructuring program. The implementation is expected to entail additional restructuring costs estimated not to exceed SEK 70 million and will impact profit in the third quarter.

The target for 2020 remains: ÅF will generate net sales of EUR 2 billion and achieve an operating margin of 10 percent over a business cycle.

Group Head Office:

ÅF AB (publ), SE-169 99 Stockholm, Sweden

Visitors’ address: Frösundaleden 2, 169 70 Solna, Sweden

Tel. +46 10 505 00 00   Fax +46 10 505 00 10

www.afconsult.com / info@afconsult.com

Corporate ID number 556120-6474

This information is information that ÅF AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 13 July at 11.00 am CET.

All assumptions about the future that are made in this report are based on the best information available to the company at the time the report was written. As is the case with all assessments of the future, such assumptions are subject to risks and uncertainties, which may mean that the actual outcome differs from the anticipated result.

This is a translation of the Swedish original. The Swedish text is the binding version and shall prevail in the event of any discrepancies.

The full report including tables (pdf) is available for download.

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