Semcon Interim Report January-June 2022

Continued high demand and profitability.

Second quarter

• Net sales of SEK 500 million (445), up 12.4% 
• The adjusted operating profit, excluding non-recurring costs related to the separation project, amounted to SEK 43 million (40), yielding an operating margin of 8.5% (8.9)
• The operating profit amounted to SEK 35 million (40), yielding an operating margin of 7.1% (8.9)
• Profit after tax amounted to SEK 28 million (30) 
• Earnings per share (EPS) after dilution amounted to SEK 1.58 (1.69)

January-June

• Net sales of SEK 995 million (864), up 15.2% 
• The adjusted operating profit, excluding non-recurring costs related to the separation project, amounted to SEK 108 million (86), yielding an operating margin of 10.8% (9.9)
• The operating profit amounted to SEK 97 million (86), yielding an operating margin of 9.8% (9.9)
• Profit after tax amounted to SEK 75 million (64) 
• Earnings per share (EPS) after dilution amounted to SEK 4.23 (3.65)
• Net cash excluding lease liabilities amounted to SEK 168 million (198)

Comment from CEO Markus Granlund: 

The performance during the second quarter continued to be positive and growth and profitability for the rolling twelve month period remained stable at levels above the financial objectives. The internal separation of the Product Information business area has largely been completed and the timetable for a possible separate listing is becoming clearer. Our best estimate is that a listing can take place at the earliest in the first quarter of 2023.

Continued healthy demand

We continued to grow during the second quarter, driven by high demand for sustainable and digital solutions. Net sales increased 12.4 per cent to SEK 500 million (445). Growth was strong for Engineering & Digital Services and in Product Information the new and expanded business offset almost entirely the previously communicated volume decrease to a UK automotive customer. Developments in the quarter were affected by one fewer working day in the Swedish operations (76 per cent of sales) compared with the second quarter of 2021. For the rolling twelve month (RTM) period, sales growth was 15.2 per cent, remaining at a level above our financial objective.

Adjusted operating profit amounted to SEK 43 million (40) for the second quarter and the margin was 8.5 per cent (8.9). Profitability was impacted by one fewer working day in Sweden and by salary increases. Price adjustments carried out earlier in the year had some effect and I can see that further adjustments will be gradually implemented during the second half of the year. Including non-recurring costs for the internal separation project, whereby we are reorganising Semcon’s business areas into two independent companies, operating profit was SEK 35 million and margin 7.1 per cent for the second quarter. The RTM adjusted operating margin was 10.7 per cent, remaining at a level above our financial objective.

High demand in both business areas

The Engineering & Digital Services (EDS) business area continued its healthy growth during the quarter, through organic growth and contributions from acquired operations. There is a substantial need for sustainable and digital solutions and, for example, we are the strategic automation partner for Boliden in a new, exciting project where it is expanding zinc production in Norway with a minimal environmental footprint. In response to customer demand, we must further raise the pace of recruitment and we have continued to invest in our employer brand. I am, therefore, particularly pleased that we reached a new record level for our employee Net Promoter Score (eNPS) in the most recent employee survey from June. 

For the Product Information business area we are pleased to report that we have almost completely offset the previously communicated sales decrease in the UK. The performance of new and expanded businesses was favourable, which supported growth, particularly in Sweden. For example, we have a new, exciting project with Volvo Cars, where we work together to develop digital workshop information for an upcoming electric vehicle model. The acquisition of Walkgrove contributed positively to total sales growth.

During the second quarter, we were in many markets finally able to return to our offices, travel for face-to-face meetings and carry out long-awaited staff activities again. As expected, this led to a slight increase in cost levels for both Engineering & Digital Services and Product Information compared with the year-earlier period.

Timetable for separate listing

Work to split the Group into two separate parts continued successfully during the quarter, with major milestones reached in, for example, IT and the finance function. The separation project has, therefore, largely been completed and the timetable for a possible separate listing is becoming clearer. Our best estimate is that a listing of the Product Information business area can take place at the earliest in the first quarter of 2023.

Our offering is relevant and timely

Demand for our services remains favourable, driven by a high level of investments in digitalisation and sustainability. I am aware of the increased uncertainty in the world around us, but taking into account our strong offering and the strategic shift in recent years in terms of the offering and industry diversification, Semcon is more relevant than ever. Have a great summer!

Göteborg, 19 July 2022
Markus Granlund, President and CEO

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This information is such information as Semcon AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 08.00 a.m. CEST on 19 July 2022.

For more information, please contact:

Björn Strömberg, CFO, Semcon
Tel: +46 (0) 70-835 44 80 Email: bjorn.stromberg@semcon.com

Semcon is an international technology company. We turn technology into excellent user experiences by combining digital edge and engineering expertise. With diverse multi-disciplinary teams we add new perspectives creating sustainable and competitive businesses. Regardless if you aim to recharge a current product or service, reinvent new technology or reimagine future needs, our focus is always on human needs and behaviour in order to develop solutions with the clearest benefits to people and our planet. By combining our 40 years of advanced engineering, strategic innovation, digital services and product information solutions, we drive transformation in a wide range of industries with approximately 2,000 dedicated employees based in seven different countries. Read more on semcon.com