Quarterly report January-March 2010

Strong market conditions despite weak start to the year

First quarter • Operating income was SEK 521 million (663) • The operating loss was SEK 5 million (-42), giving an operating margin of -0.9% (-6.3) • The loss after tax was SEK 5 million (-31) • Earnings per share (EPS) was SEK -0.26 (-1.73) • The operating cash flow from current activities was SEK -10 million (140) • The equity/assets ratio was 33% (32) “A wait-and-see attitude was clearly noticed in the first months of the year from many customers, resulting in a low utilization ratio and a weak result. The Group’s equity/assets ratio is however still in line with the financial objectives. In general terms market conditions strengthened towards the end of the quarter as more companies are sensing better business conditions. We’re seeing a dramatic increase in enquiries from all our prioritized industries, meaning we’re expecting greater business volumes and a need to recruit in a number of areas over the rest of the year.” Kjell Nilsson, President & CEO Income and result First quarter Operating income in the first quarter reached SEK 521 million (663) and organic growth was -18%. The fall in sales is mainly due to the wait-and-see attitude from customers starting new development projects in January and February, but also because employee numbers fell compared to the same period in 2009. The biggest deviation is still from units active in the automotive sector. The operating loss was SEK 5 million (-42), giving an operating margin of -0.9% (-6.3). A low utilization ratio had a negative impact on results. A cost-cutting scheme will be introduced in the second quarter which is estimated will burden Q2’s operating profit with around SEK 15 million. The planned measures are expected to lead to annual savings of around SEK 25 million. Net financial items amounted to SEK -2 million (-2). The operating loss before tax was SEK 7 million (-44). Tax revenues amounted to SEK 2 million (12). The loss after tax was SEK 5 million (-31) and EPS after dilution was SEK -0.26 (-1.73). Financial position The operating cash flow from current activities was SEK -10 million (140). The Group’s cash and bank balances amounted to SEK 30 million (252) with additional non-utilized credit of SEK 245 million. Investments in hardware, licenses and office supplies and equipment, amounted to SEK 5 million (8). Shareholders’ equity amounted to SEK 377 million (569) and the equity/assets ratio was 33% (32), which exceeded the Group’s objective of 30 per cent. Net debt amounted to SEK 302 million (297) and the debt/equity ratio was 0.8 times (0.5). Staff and organization The headcount on 31 March was 2,626 (3,166) of whom 1,490 (1,952) in Sweden and 1,136 (1,214) abroad. The number of employees actively employed was 2,481 (2,996). The average number of employees was 2,490 (3,117). The number of employees in the respective business areas was: Automotive R&D 1,467 (1,911), Design & Development 803 (859) and Informatic 356 (396). Events during the year • Semcon signs two-year contract with EuroMaint Rail for supplying construction services, meaning Semcon taking over EuroMaint Rail’s construction department in Örebro • Westinghouse appoints Semcon as a preferred supplier, enhancing cooperation in engineering services • Semcon appoints Henry Kohlstruck as the new country manager for the German business from 1 March. He joins Semcon from the German development company Edag, where he was most recently the vice president for the product/production division. Outlook The markets’ increasing needs are result in more complex products and systems, which require extensive development and documentation. Meanwhile demands are being placed on more rapid development processes and to cut development costs through more effective working models. In all, this provides more business opportunities for the Group. In general terms market conditions strengthened towards the end of the quarter as more companies are sensing better business conditions. We’re seeing a dramatic increase in enquiries from all our prioritized industries, meaning we’re expecting greater business volumes and a need to recruit in a number of areas over the rest of the year.

Tags: