SECO TOOLS AB Year-end report 2011 and interim report for the fourth quarter

Improved sales and higher earnings

• Revenue for the quarter increased 19 per cent at fixed exchange rates and 17 per cent in SEK and amounted to SEK 1,850 M (1,577).
• Operating profit for the fourth quarter rose 15 per cent to SEK 370 M (322), corresponding to an operating margin of 20.0 per cent (20.4).
• Revenue for the full year increased 27 per cent at fixed exchange rates and amounted to SEK 7,043 M (5,858).
• Operating profit totalled SEK 1,408 M (1,098), corresponding to an operating margin of 20.0 per cent (18.7).
• Profit after tax for the full year was SEK 954 M (742). Earnings per share for the full year amounted to SEK 6.56 (5.10).
• The new facility for cemented carbide powder in Fagersta has now been completed and is ready to go onstream.
• As a result of the public offer from Sandvik to acquire all remaining shares in Seco Tools, Sandvik controlled about 98.7 per cent of the shares and 99.6 per cent of the votes in Seco Tools on 16 January 2012. 
  
  

Comments from the CEO

“Demand during the quarter remained strong and revenue for the full year exceeded SEK 7 billion. All market regions continued to demonstrate year-on-year growth during the quarter. While the most positive trend was noted in NAFTA, growth was also strong in Eastern Europe. Generally speaking, growth in other markets was somewhat weaker and the sales trend levelled off.

As a result of these developments and a general sense of uncertainty regarding the economic situation, production rates and staffing levels were reduced slightly during the quarter.

Operating profit improved compared with the year-earlier period and amounted to SEK 370 M (322) for the quarter, corresponding to a margin of 20.0 per cent (20.4). 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 increased costs for raw materials and again by slightly higher production costs, primarily due to the historically large number of product launches, as well as negative currency effects.

Cash flow from operating activities before changes in working capital and investments remained strong and amounted to SEK 434 M (297) for the quarter. However, the continued increase in tied-up working capital and a higher level of investment had a dampening effect on the cash flow trend during the quarter. The net debt/equity ratio declined during the quarter from 0.56 to 0.52 (0.42 in preceding year).

During the quarter, the new production facility in Fagersta for cemented carbide powder was completed. It will go onstream in gradual steps during 2012. The total value of the investment is approximately SEK 140 M over three years in property and equipment. The investment increases the Group’s production capacity and enables further steps to be made in terms of product quality and efficiency,” says Lars Bergström, President and CEO.

Fagersta, 1 February 2012

SECO TOOLS AB (publ)

BOARD OF DIRECTORS

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 February 2012, 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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