Quarterly report Jan-Sept 2011 - Demand remains good with improved profits

"2011 has been characterized by good demand with increased sales and improved results in all business areas.During the third quarter, we signed two large, interesting deals for product information and in the engine/transmission sector. In October we received another major order of around SEK 200 m for upgrading an existing car. We’re continuing with our positive outlook for future developments, even though uncertainty has grown due to the poorer economic outlook" says Kjell Nilsson.

Income and result
Q3
Operating income rose by SEK 96 million and amounted to SEK 568 million (472). Sales in local currencies rose by 23%. The sales growth is a result of the better state of the market with employee numbers up 280 on last year, of which 200 outside Sweden. The operating profit improved by SEK 27 million and amounted to SEK 24 million (-3), giving an operating margin of 4.3% (-0.6). The improvement is mainly attributable to increased sales. Net financial items amounted to SEK -2 million (-3), giving a profit before tax of SEK 22 million (-6). Tax costs for the quarter amounted to SEK -6 million (2). The profit after tax was SEK 16 million (-4) and the earnings per share after dilution was SEK 0.88 (-0.22).

January-September
The operating income rose during the period by SEK 265 million compared to last year and amounted to SEK 1,773 million (1,508). Sales in local currencies rose by 22%. The sales growth is the result of the better state of the market compared to the same period last year. The operating profit amounted to SEK 54 million (-32), giving an operating margin of 3.1% (-2.1). Although there is still a high degree of uncertainty surrounding Saab Automobile’s solvency a reserve has been made of SEK 31 million, mainly for outstanding accounts receivable. Because of this reserve there is no outstanding exposure towards Saab Automobile. The same period last year was hit by one-off costs of SEK 11 million. The operating profit, excluding these items, was SEK 85 million (-21) with an operating margin of 4.8% (-1.4). The business areas show the following operating margins, excluding one-off costs: Automotive R&D 2.1 % (-6.3), Design & Development 7.3 % (2.5) and Informatic 9.5 % (6.9). Net financial items amounted to SEK -8 million (-7), giving a profit before tax of SEK 46 million (-39). Tax costs for the year stood at SEK -13 million (11). The profit after tax was SEK 33 million (-28) and the earnings per share after dilution was SEK 1.85 (-1.55).

Financial position
The operating cash flow from current activities was SEK 14 million (-79). The Group’s cash and bank balances amounted to SEK 36 million (27) with additional non-utilized credit of SEK 162 million as at 30 September. A new credit agreement was signed at the beginning of Q3. The new credit agreement consists of an overdraft facility of SEK 150 million (100)and a revolving credit facility of EUR 32.8 million (32.8), which runs until July 2012. There is an option available for the company, before the due date, to extend the revolving credit to a three-year loan. Investments in hardware, licenses, office supplies and equipment, amounted to SEK 12 million (12). Shareholders’ equity amounted to SEK 406 million (352) and the equity/assets ratio was 35% (32). The Group’s net debt was SEK 311 million (349) and the debt/equity ratio was 0.8 times (1.0).

Staff and organization
The headcount on 30 September was 2,903 (2,623), of whom 1,480 (1,400) are in Sweden and 1,423 (1,223) abroad. The number of employees in active service was 2,786 (2,515). The average number of employees was 2,705 (2,459). In the respective business areas the number of employees is as follows: Automotive R&D 1,675 (1,516), Design & Development 805 (736) and Informatic 423 (371).

Outlook
2011 has so far been characterized by good demand with increased sales and improved results in all business areas. Semcon continues to have a positive outlook for future developments, even though uncertainty has increased due to the poorer economic outlook. 

Kjell Nilsson, CEO Semcon AB, +46-31-721 03 11
Björn Strömberg, CFO Semcon AB, +46-708-35 44 80
Anders Atterling, IR manager Semcon AB, +46-704-47 28 19

Semcon is a global company active in the areas of engineering services and product information. The Group has around 2,900 employees with extensive experience from many different industries. We develop technologies, products, plants and information solutions along the entire development chain and also provide many services including quality control, training and methodology development. Semcon boosts customers’ sales and competitive strength by providing them with innovative solutions, design and solid engineering solutions. The Group has sales of SEK 2.1 billion and activities at more than 40 sites in Sweden, Germany, the UK, Brazil, Hungary, India, China, Spain and Russia

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