Year-end report for 2008 and interim report for the fourth quarter

- Revenue for the fourth quarter improved by 3 per cent to SEK 1,625 M (1,572). At fixed exchange rates revenues fell by 7 per cent. Operating profit was SEK 233 M (386).

- Profit for the fourth quarter was charged with one-time costs of SEK 60 M related to workforce reductions and production standstills.

- Revenue for the full year improved by 6 per cent at fixed exchange rates to SEK 6,536 M (6,034). Operating profit was SEK 1,332 M (1,491), equal to an operating margin of 20.4 per cent (24.7).

- Profit after tax for the full year was SEK 890 M (1,017). Earnings per share for the full year were SEK 6.12 (6.99), an increase of 12 per cent.

- The Board proposes a regular dividend of SEK 3.20 per share (4.20).

Comments from the CEO
Strengthened position in an uncertain market
“The vigorous revenue growth seen in the first three quarters of the year took a negative turn in the final quarter. The general demand situation has worsened rapidly in virtually all of Seco Tools’ markets.

Our decided strategic direction based on customer closeness, a solution-oriented approach and strong product innovation has been successful. Seco Tools is continuing to win market shares and stands relatively strong despite a slowing economy. Although our strategy is unchanged, a harsher market climate is forcing the Group to make significant cost adaptations in our operations.

The already initiated workforce reductions and other activities will reduce the total cost level by an estimated SEK 200 M on a yearly basis. One-time costs of SEK 60 M for these measures were recognised in the fourth quarter. The full effects of the action program are expected to visible starting at mid-year 2009.

Operating margin for the fourth quarter was 14.3 per cent including the above-mentioned one-time costs, and 18.0 per cent (24.5) excluding these. Otherwise, the decrease relative to the year-earlier period is mainly attributable to a steep drop in revenue, lower production volumes and increased costs connected to strategic marketing activities and a high level of investments.

The year’s strong revenue and high average capacity utilisation resulted in a healthy profit for 2008 as a whole. Operating margin for the full year was 20.4 per cent (24.7). Return on equity and capital employed was also good, with both at over 30 per cent.

Given the current market scenario, it is possible that additional resource and cost adaptations will be necessary in the future,” says Kai Wärn, President and CEO of Seco Tools