Quarterly report January-September 2010

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
"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."

Kjell Nilsson, President and CEO

Income and results
Third quarter
Operating income was SEK 472 million (478) and organic growth was 3%
following adjustments for currency effects.

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
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 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
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.

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 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 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
• 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.

• 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
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).

Outlook
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.