Interim report January – September 2011
Improved sales and higher earnings
* Revenue for the quarter increased 24 per cent at fixed exchange rates and 19 per cent in SEK amounting to SEK 1,696 M (1,426).
* Operating profit for the third quarter rose 21 per cent to SEK 297 M (245), corresponding to an operating margin of 17.5 per cent (17.2).
* The interim period’s profit after tax was SEK 718 M (522).
* Earnings per share for the interim period amounted to SEK 4.94 (3.59).
* Record-large product launches in conjunction with EMO trade fair in Germany, including the unveiling of the new milling tool Minimaster® Plus.
Comments from the CEO
“In seasonal terms, demand was lower in the third quarter but was otherwise on a par with the second quarter. All market regions continued to report growth during the quarter compared with the year-earlier period. The most positive trend was noted in Central and Eastern Europeas well as NAFTA. Growth in Asian markets during the quarter was lower than previously; a development that was primarily driven by the weaker performance of the Chinese market. Overall, the sales trend has levelled-off and the uncertainty regarding the future demand scenario has increased. As a result of these developments and escalating uncertainty in the market, activities aimed at reducing production rates and staffing levels were initiated during the quarter.
Operating profit improved compared with the year-earlier period and amounted to SEK 297 M (245) for the quarter, corresponding to a margin of 17.5 per cent (17.2). This improvement was largely attributable to higher volumes and a favourable price trend. Higher costs for sales and marketing activities within the framework of the Group’s expansion programme were the main reasons for the dampening effect on earnings. Earnings for the quarter were also impacted by adjusted cost accruals relating to the first six months of the year and temporarily by slightly higher production costs, primarily due to the historically large number of product launches. Overall, this meant that the underlying operating margin for the quarter was closer to 20 per cent.
Cash flow from operating activities before changes in working capital and investments remained strong and amounted to SEK 307 M (269) for the quarter. However, the continued build-up of inventory – primarily driven by high raw material prices – and a raised level of investment had a dampening effect on the cash flow trend during the quarter. As a consequence of the favourable cash flow, the net debt/equity ratio declined during the quarter from 0.66 to 0.56 (0.41 preceding year).
For Seco Tools, the EMO trade fair in Germany in September, which in global terms is the largest of its kind for the industry, was a real success. We launched a raft of new exciting products at the fair as part of the largest-ever update of our product portfolio. The commitment and energy shown by all employees in meetings with customers during this launch was hugely impressive!” says Lars Bergström, President and CEO.
The information contained herein is subject to the disclosure requirements of Seco Tools AB under the Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act. This information was submitted for publication on 1 November 2011, 7:45 a.m. CET.
For additional information, please contact Per-Lennart Berg, Director Group Communication, (tel +46 223-403 20), Lars Bergström, President and CEO (tel: +46 223-401 10) or Patrik Johnson, CFO (tel +46 223-401 20). E-mail can be sent to investor.relations@secotools.com
Previously published financial information can be found under “About Seco/Investor Relations” on the Seco Tools website (www.secotools.com). Seco Tools AB’s Corporate Registration Number is 556071-1060 and the company's address is Seco Tools AB, SE-737 82 Fagersta, Sweden. The telephone number to the Group’s head office is +46 223-400 00.
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