Interim report january - september 2001

Interim Report January - September 2001 · Third quarter sales amounted to MSEK 2,753 (2,053). Sales for the first nine months of the year totaled MSEK 8,053 (6,496) including PC LAN, which is consolidated for the period April - September with around MSEK 2,000. · In a significantly weaker market, Scribona strengthened its market shares in the three main segments; PC, IT infrastructure and document handling. · Cash flow improved considerably, rising MSEK 228 (25) in the third quarter and MSEK 126 (-313) over the nine-month period. · Due to Alfaskop's bankruptcy, the remaining goodwill item of MSEK 50 that arose in connection with Scribona's acquisition of hardware distribution to Alfaskop's customers was amortized in full during the third quarter. · Operating income before items affecting comparability in the third quarter amounted to MSEK -31 (15) and income before tax was MSEK - 96 (13). The corresponding result for the nine-month period was MSEK - 180 (124). The year-earlier figure including nonrecurring revenue was MSEK 89. · Due to the combined effects of a weak market and continued uncertainty about the future, the Group's pre-tax result for the full year is expected to be negative. · President's comment "I view of the harsh market climate, which is affecting not only Scribona but also many of our suppliers and customers, our efforts will not be focused on cutting costs and improving cash flow. The fact that we have also succeeded in strengthening our market share gives us reason for confidence about the future in spite of a very weak year so far." Integration with PC LAN The integration of Scribona and PC LAN is proceeding according to plan. This means that virtually all operations in Sweden are now based at the head office in Solna and that logistics operations are gathered under a single roof in Upplands Väsby outside Stockholm. By the end of October, operations in Norway will be brought together in a head office and a logistics center in Oslo. In Denmark, all logistics operations will be gathered in Århus by year-end and plans are underway to integrate the three large existing offices in a new joint facility in the Copenhagen area. Both costs and savings attributable to the integration are expected to lie within the previously forecasted range. The savings generated by the first two phases of the ongoing savings program are expected to reach approx. MSEK 100 on an annual basis and nonrecurring integration costs are estimated at around MSEK 50. The market Market development slowed dramatically in the second quarter and this trend continued into the third quarter of the year. One notable development is that for the first time, the drop in sales for laptop PCs, at around 6%, is as severe as for desktop models. The market for IT infrastructure and document handling products also declined. The document handling market contracted by 15 percent in terms of the number of units delivered, but by around 10 percent in value. The dealers have been adversely affected by this volume decrease and although substantial resources have been invested in improved credit monitoring, it has not been possible to avoid further losses on accounts receivable. Sales and income The Group's third quarter sales amounted to MSEK 2,753 (2,053) including PC LAN. Sales for the first three quarters totaled MSEK 8,053 (6,496), of which the second and third quarters include PC LAN's sales of around MSEK 2,000. Sales for comparable units at unchanged exchange rates fell 15%. As earlier, Brand Alliance noted the largest drop in sales, 23%, due to declining sales of laptop computers in the Toshiba Digital Media division. Sales of document handling products were on par with the preceding year, which meant that both Toshiba Document Solutions and Carl Lamm increased their market shares. Third quarter sales amounted to MSEK 629 (205) in the Solutions business area and MSEK 1,763 (1,396) in Distribution. Sales for the nine-month period reached MSEK 1,710 (664) for Solutions and MSEK 5,152 (4,336) for Distribution, in both cases including PC LAN. For comparable units (excluding PC LAN), sales for Solutions increased while sales for Distribution declined. Third quarter operating income before items affecting comparability was MSEK -31 (15). Operating income before items affecting comparability for the first nine months of the year totaled MSEK -90 (44). Earnings in Distribution and Brand Alliance were down on the preceding year while Solutions showed stronger earnings for comparable units (excluding PC LAN). Income in the Distribution business area was charged with unusually heavy accounts receivable losses of more than MSEK 40 during the period, of which MSEK 9 in the third quarter. The entire remaining goodwill item of MSEK 50 that arose in connection with Scribona's acquisition of Alfaskop was amortized during the third quarter and is reported among items affecting comparability. Net financial items for the period totaled MSEK -41 (24), including an MSEK 17 write-down of receivables in the partly-owned web development company Proventum. The year-earlier figure included a capital gain of MSEK 33 on the sale of shares. Income before tax for the period was MSEK -180 (124). Income for the preceding year included a refund of MSEK 56 from Alecta and the above- mentioned gain on the sale of shares. Development by business area Scribona Solutions Scribona Solutions started the quarter on a weak note and posted sales of MSEK 629 (205), which is lower than anticipated. Nonetheless, Solutions is expected to further improve its market shares. The heavy server segment has noted additional growth. The focus on new marketing and customer concepts, based on experience from the collaboration with Intentia, is showing continued success. Sales for the first three quarters of the year amounted to MSEK 1,710 (664) including accretive sales from PC LAN. For comparable units (excluding PC LAN), sales rose by an estimated 10%. Operating income for the quarter totaled MSEK -9 (-4). Income for the nine-month period was MSEK 7 (-12). Scribona Distribution The PC market continued to weaken during the third quarter and preliminary statistics show that the number of PCs sold in the Nordic market fell 6%. It is worth mentioning that for the first time, the market for laptop PCs declined at the same rate as the market for desktop models. In this market, Scribona Distribution has succeeded in gaining market share in the Nordic region. The merger with PC LAN has strengthened the market position via new joint customers and a broader, more comprehensive product range. The focus is now on intensifying sales and marketing activities. Alfaskop's bankruptcy gave rise to losses of MSEK 4 on accounts receivable and the above-mentioned amortization of goodwill. Sales to Alfaskop fell sharply during the third quarter and amounted to MSEK 200 for the first nine months of the year. Of this total, it is deemed possible to retain or recover the bulk via agreements with new and existing dealers. Third quarter sales reached MSEK 1,763 (1,396) and sales for the first nine months totaled MSEK 5,152 including PC LAN (4,336). Sales for comparable units (excluding PC LAN) decreased by an estimated 5%. Third quarter operating income before items affecting comparability totaled MSEK -9 (11). The corresponding result for the nine-month period was MSEK -60 (6) and included extraordinary losses on accounts receivable of more than MSEK 40. Scribona Brand Alliance The Brand Alliance business area reported a further drop in sales in the third quarter. This decrease is mainly attributable to laptop computers in the Toshiba Digital Media division. Toshiba, which has been affected by the declining laptop market, is now launching a whole new series of laptop computers. The market for document handling products has also been weak and showed a decrease of around 15% in units delivered, but around 5% in value. In this market, both Toshiba Document Solutions and Carl Lamm have increased their market shares. Third quarter sales amounted to MSEK 519 (672) and sales for the first three quarters totaled MSEK 1,711 (2,103). The business area reported an operating loss of MSEK -8 (19) for the quarter. The operating result for the nine-month period was MSEK -6 (76), a decrease largely attributable to lower sales in Toshiba Digital Media. Cash flow and financial position The Group's cash flow was MSEK 228 (25) in the third quarter. Cash flow for the first three quarters was MSEK 126 (-313). The Group's net investments reached MSEK -13 (61). This amount includes the acquisition cost for PC LAN with a deduction for PC LAN's net disposable liquidity of MSEK -25. PC LAN's disposable liquidity amounted to MSEK 61. Other net investments amounted to MSEK 12. Net financial capital at the end of the third quarter totaled MSEK 397 (-420). Key ratios Earnings per share for the first three quarters amounted to SEK -2.90 (2.54). Earnings per share over the past 12-month period, excluding items affecting comparability, totaled SEK -1.49 (2.32 for the full year 2000). Equity per share at the end of the period was SEK 18.74 (22.66). The equity ratio on 30 September was 24% (26%). Employees The number of employees on 30 September was 1,604 (1,365). Outlook for the full year The Group is expected to report a profit in the fourth quarter thanks to the effects of cost-cutting measures, additional synergies from the integration with PC LAN and traditionally stronger market demand during the quarter. However, the Group's fourth quarter earnings are not expected to be on par with the year-earlier figure. Due to a weaker than anticipated market in the third quarter and that fact that income was charged with amortization of goodwill, Scribona is expected to report a net loss for the full year. Accounting principles The accounts for the period have been adjusted to the Swedish Financial Accounting Standards Council's recommendation no. 9, Income taxes, whereby deferred tax receivables attributable to certain loss carryforwards have been reported. The effects of this are shown in the specification of changes in stockholders' equity. In all other respects, the same accounting and valuation principles have been applied as in the most recent annual report. Swedish Financial Accounting Standards Council recommendation This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation no. 20, Interim reports. Financial calendar Year-end report for January - December 2001 February 8, 2002 This report has not been examined by the company's auditors. Scribona AB Board of Directors Facts about Scribona AB Scribona is the Nordic market's leading provider of IT products and solutions, offering customers cutting-edge product expertise, the industry's leading e-commerce system, optimized product availability and a broad range of complementary services. Scribona's operations are organized in three business areas: · Scribona Solutions - value adding distribution of IT infrastructure · Scribona Distribution - effective volume distribution of IT products · Scribona Brand Alliance - exclusive agent for leading brand suppliers For additional information, please contact: Lennart Svantesson, President & CEO, telephone: +46 8 734 35 76 Lars Palm, Executive Vice President, telephone +46 8 734 37 10 Anders Bley, Executive Vice President, telephone +46 8 734 35 55 Roald Sannæs, Executive Vice President , phone +47-23 24 85 10 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/24/20011024BIT01480/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/24/20011024BIT01480/bit0001.pdf The full report