Interim report January-June 2017

As previously communicated, the second quarter is weak in terms of earnings due to the relatively few number of working days in the quarter. Moreover, there were three fewer working days this year compared with last year, thereby negatively impacting both growth and profitability. We noted an improved operating profit for the first six months of this year compared with the corresponding period in 2016, although the shortage of product development competence mainly in the Swedish market impeded growth during the period. However, our international operations enable us to deliver cost-efficient product development to our customers from more than 30 offices around the world. We are therefore well positioned for growth and improved profitability.
Recruiting, developing and retaining employees will remain a high priority moving forward. The appointment of a new HR Director, responsible for leading the Group’s strategic HR and sustainability, is thus an important step. We are also continuing our efforts to further strengthen the brand through a range of activities. In mid-June, we launched a new global communication campaign centred on smart and connected products. The campaign has gained significant traction in social media and several sales and recruitment-related activities based on the campaign will be launched in the third quarter.       
Technology shifts are occurring more rapidly in the industries in which we operate and demand is considered favourable moving forward. However, the third quarter will be impacted by the vacation period and fewer working days compared with the corresponding period in 2016. The calendar effect in the third quarter is estimated to negatively impact earnings by about SEK 6 million. 
Our financial position is favourable and we had net cash of SEK 118 million at the end of the quarter. We continue to see good prospects for organic growth, but are also evaluating potential acquisition candidates that can complement our offering.

Second quarter
• The operating income amounted to SEK 447 Million (473) and the organic growth was -6%
• The operating profit amounted to SEK 10 Million (26), yielding an operating margin of 2.1% (5.6)
• The profit after tax amounted to SEK 8 Million (20)
• Earnings per share (EPS) after dilution amounted to SEK 0.42 (1.09)

January-June
• The operating income amounted to SEK 922 Million (907) and the organic growth was 1%
• The operating profit amounted to SEK 50 Million (47), yielding an operating margin of 5.4% (5.2) 
• The profit after tax amounted to SEK 38 Million (35)
• Earnings per share (EPS) after dilution amounted to SEK 2.09 (1.92)
• The equity/assets ratio amounted to 55% (46)

Income and result
Second quarter
Operating income amounted to SEK 447 million (473). Adjusted for currency effects, acquisitions and divestments, income fell by 6%. The quarter had three fewer working days compared with last year, accounting for around 5% of the fall in income. Operating profit amounted to SEK 10 million (26), yielding an operating margin of 2.1% (5.6). Both Engineering Services and Product Information reported weaker earnings due to fewer working days in the quarter. Net financial items amounted to SEK - million (-), yielding profit before tax of SEK 10 million (26). The tax expense for the quarter amounted to SEK -2 million (-6). Profit after tax amounted to SEK 8 million (20) and earnings per share after dilution was SEK 0.42 (1.09).

January-June
Operating income amounted to SEK 922 million (907). Adjusted for currency effects, acquisitions and divestments, income increased by 1%. Operating profit amounted to SEK 50 million (47), yielding an operating margin of 5.4% (5.2). Engineering Services reported improved earnings while Product Information noted a deterioration. The preceding year included positive non-recurring items of SEK 7 million in Product Information’s earnings. Net financial items amounted to SEK -1 million (-1), yielding profit before tax of SEK 49 million (46). The tax expense for the period amounted to SEK -11 million (-11). Profit after tax amounted to SEK 38 million (35) and earnings per share after dilution totalled SEK 2.09 (1.92).

Financial position
Operating cash flow from current activities was SEK 73 million (-40). Investments in hardware, licenses, office supplies and equipment amounted to SEK 6 million (26). The Group’s cash and cash equivalents amounted to SEK 149 million (47). In addition, the Group had non-utilised credit of SEK 372 million (223) as of June 30.  Shareholders’ equity amounted to SEK 524 million (622) and the equity/assets ratio was 55% (46). During the second quarter, a dividend of SEK 40 million (22) was paid to shareholders.  The Group’s net cash (net debt) amounted to SEK 118 million (-170).

Employees
The head count on June 30 was 2,077 (2,023) and the number of employees in active service was 1,984 (1,951). In the respective business areas the head count is as follows: Engineering Services 1,458 (1,434) and Product Information 619 (589).

This Interim report has not been subject to review by the company’s auditors. This information is information that Semcon AB is obliged to make public  pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication at 11.30 CET on July 19, 2017.

Contact person
Björn Strömberg, CFO, Semcon AB, +46 31-721 03 06
bjorn.stromberg@semcon.com

Semcon is an international technology company that develops products based on human needs and behaviours. We strengthen our customers’ competitiveness by always starting from the end user, because the person who knows most about the user’s needs creates the best products and the clearest benefits to humans. Semcon collaborates mainly with companies in the automotive, industry, energy, life science and telecom sectors. With more than 2,000 specialised employees, Semcon has the ability to take care of the entire product development cycle, from strategy and technology development to design and product information. Semcon was founded in Sweden in 1980 and has offices in over 30 locations in eight different countries. In 2016, the Group reported annual sales of SEK 1.8 billion. Read more on semcon.com.

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