Quarterly report January-September 2010
Continued improvement in results and increased orders
Third quarter
• Operating income was SEK 472 million (478)
• The operating loss was SEK 3 million (-45), giving an operating margin of -0.6% (-9.4)
• The loss after tax was SEK 4 million (-36)
• Earnings per share (EPS) was SEK -0.22 (-2.01)
January-September
• Operating income was SEK 1,508 million (1,743)
• The operating loss was SEK 32 million (-150), giving an operating margin of -2.1% (-8.6)
• The loss after tax was SEK 28 million (-119)
• Earnings per share (EPS) was SEK -1.55 (-6.55)
CEO’s statement Kjell Nilsson, President and CEO
Income and results The operating loss improved by SEK 42 million and amounted to SEK 3 million, giving an operating margin of -0.6% (-9.4). All business areas are continuing to report improved profits, even though Automotive R&D reported a loss for the period. Q3 is the quarter in which the holiday period negatively affects results. The results for the period have been burdened by SEK 3 million for carrying out the previously decided cost-cutting scheme. Last year’s results were affected by one-off items of SEK 21 million. Excluding these items the operating profit/loss was SEK 0 million (-24) with an operating margin of 0.0% (-5.1). Net financial items amounted to SEK -3 million (-5). The operating loss before tax was SEK 6 million (-50). The operating loss after tax was SEK 4 million (-36) and the EPS was SEK -0.22 (-2.01). January - September The operating loss was SEK 32 million (-150), giving an operating margin of -2.1% (-8.6). The cost of carrying out the abovementioned cost-cutting scheme affected results by SEK 11 million. Last year results were affected by one-off items of SEK 70 million. The operating loss, excluding these one-off items was SEK 21 million (-80) and the operating margin was -1.4% (-4.6). Net financial items amounted to SEK -7 million (-11). The operating loss before tax was SEK 39 million (-161). The operating loss after tax was SEK 28 million (-119) and EPS was SEK -1.55 (-6.55). Financial position Investments in hardware, licences, office supplies and equipment, amounted to SEK 12 million (17). Shareholders’ equity amounted to SEK 352 million (477) and the equity/assets ratio was 32% (35). The Group’s net debt was SEK 349 million (310) and the debt/equity ratio was 1.0 times (0.7). Events during Q3 • Semcon has been chosen as a partner for developing product information for a med-tech company in Sweden. Both parties have signed an initial 3-year contract. Events during the year • Westinghouse has appointed Semcon as a preferred supplier, enhancing cooperation in engineering services. • Semcon has appointed Henry Kohlstruck as the new country manager for the German business from 1 March. He joined Semcon from the German development company Edag, where he was most recently vice president for the product/production division. • Semcon has received yet another order from FMV worth SEK 9 million. The order was for 19 special composite containers intended for the Swedish Armed Forces and for the Swedish task forces. • Semcon has signed an order worth SEK 6 million with an auto manufacturer in Germany for safety simulations for a future car platform. Semcon’s Indian and German simulation specialists will carry out the assignment.
Staff and organization
Outlook
"Following a weak start to the first half of the year we’ve seen improvements to the market situation in Q3 even if the holiday period negatively affected results. An improved utilization ratio and order intake means we now have a positive outlook for the future. New business and more enquiries from all our sectors mean that conditions exist for a continued improvement in the results."
Third quarter
Operating income was SEK 472 million (478) and organic growth was 3% following adjustments for currency effects.
Operating income for the period was SEK 1,508 million (1,743) and organic growth was -10%. The fall in sales is mainly due to a poor start during the first months of the year with a wait-and-see attitude from customers starting new development projects. The downturn remains largest for the units active in the automotive sector, although improvements were reported in Q3.
The operating cash flow from current activities was SEK -65 million (104). The Group’s cash and bank balances amounted to SEK 27 million (69) with additional non-utilized credit of SEK 109 million as of 30 September. A new credit agreement was signed at the beginning of Q3. The credit agreement consists of a bank overdraft facility of SEK 100 million (100) and a revolving credit facility of EUR 32.8 million (42.8) to run until July 2011 with an option available for the company, before the due date, to extend the revolving credit to a three-year loan.
• Semcon has been chosen by a German auto manufacturer as its development partner for producing a new car model. The overall order is worth around SEK 150 million and will run for three years.
• Semcon has signed a two-year contract with EuroMaint Rail for supplying construction services, meaning Semcon taking over EuroMaint Rail’s construction department in Örebro.
The headcount on 30 September was 2,623 (2,741) of which 1,400 (1,597) in Sweden and 1,223 (1,144) abroad. The number of employees actively employed was 2,515 (2,586). The average number of employees was 2,459 (2,916). The number of employees in the respective business areas was: Automotive R&D 1,516 (1,600), Design & Development 736 (791) and Informatic 371 (350).
Products, plants and systems are becoming increasingly complex, requiring 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, these trends mean improved business opportunities for the Group. The improved utilization ratio and order intake mean that the company now has a positive outlook for the future. New business and more enquiries from all our industries mean that conditions exist for continued profit improvements.
Semcon is a global company active in the areas of engineering services and product information. The Group has around 2,600 employees with extensive experience from many different industries. Semcon develops products, plants and information solutions along the entire product development chain and also provides many other services including quality control, training and methodology development. Semcon increases customers’ sales and competitive strength by providing them with innovative and solid engineering solutions. The Group has sales of SEK 2.3 billion with activities at more than 40 sites in Sweden, Germany, the UK, Brazil, Hungary, India, China, Spain, Malaysia and Russia. Semcon’s shares are quoted on the Nasdaq OMX Stockholm under the SEMC ticker.
Tags: