Interim Report Pricer AB January – June 2016

Improved operating margin and profit, weaker order intake

Second quarter 2016

  · Net sales of SEK 204.2 M (239.4), a decrease of 15 percent compared to the
same period last year
  · Operating profit of SEK 16.3 M (8.2) and profit for the period of SEK 14.6 M
(7.0)
  · Operating profit includes costs affecting comparability related to
restructuring of SEK 6.5 M (0)
  · Cash flow from operating activities improved to SEK 21.1 M (-57.9)
  · Order intake of SEK 154 M (296), a decrease of 48 percent compared to the
same period last year
  · The backlog is approximately SEK 163 M (303), whereof the majority is
expected to be invoiced in the third and fourth quarter of 2016
  · The Board appointed Charles Jackson as acting CEO of Pricer AB as per 16 May
2016 after Jonas Vestin resigned as President and CEO of Pricer AB

+--------------------+----------+---------+--------+--------+---------+
|Amounts in SEK M    |       Q 2|      Q 2|6 months|6 months|Full year|
|unless otherwise    |          |         |        |        |         |
|stated              |          |         |        |        |         |
+--------------------+----------+---------+--------+--------+---------+
|                    |      2016|     2015|    2016|    2015|     2015|
+--------------------+----------+---------+--------+--------+---------+
|Order intake        |       154|      296|     458|     565|      792|
+--------------------+----------+---------+--------+--------+---------+
|Net sales*          |     204,2|    239,4|   359,6|   382,3|    864,8|
+--------------------+----------+---------+--------+--------+---------+
|Gross margin*       |     27,6%|    18,6%|   26,6%|   20,1%|    21,8%|
+--------------------+----------+---------+--------+--------+---------+
|Operating profit    |      16,3|      8,2|    18,5|     9,1|     47,8|
+--------------------+----------+---------+--------+--------+---------+
|Operating margin    |      8,0%|     3,4%|    5,1%|    2,4%|     5,5%|
+--------------------+----------+---------+--------+--------+---------+
|Cash flow from      |      21,1|    -57,9|    41,9|   -15,9|    101,4|
|operating activities|          |         |        |        |         |
+--------------------+----------+---------+--------+--------+---------+
|Profit for the      |      14,6|      7,0|    15,7|     8,3|     37,0|
|period              |          |         |        |        |         |
+--------------------+----------+---------+--------+--------+---------+
|Earnings per share  |      0,13|     0,06|    0,14|    0,08|     0,34|
|(SEK)               |          |         |        |        |         |
+--------------------+----------+---------+--------+--------+---------+

* See Note 1 in the complete version of the interim report.
Comments from acting CEO, Charles Jackson
The second quarter showed sustained high demand from the existing customer base
but, due to the postponement of a few major project procurements, order intake
was lower than in the previous year and did not meet the company’s own
expectations. We can however be pleased of a significant strengthening of the
gross margin which, combined with good cost control, raised operating profit
compared to last year despite lower sales.
We do not consider that the order intake level during the second quarter
reflects a market slowdown but see it rather as due to the investment horizon of
individual customers combined with delayed call-offs under previously reported
framework agreements. The international grocery business is a structurally and
financially sensitive market in which investment decisions sometimes take longer
than we would like. As previously reported, major projects in individual
quarters affect the consistency of our figures.
Existing framework agreements are recognized as order intake only in the quarter
in which call-offs take place. The deliveries to our Norwegian partner
Strongpoint, relating to the Bunnpris grocery chain, were pushed back in
relation to the previously estimated timetable with only a small portion being
included in recognized order intake for the first half. The total order value is
still estimated at approximately SEK 100 M which means that we expect additional
order intake related to Bunnpris during the current year while deliveries and
installation will partly be pushed into to 2017. Furthermore, the French grocery
chain Système U did not start call-offs under its framework agreement until the
end of the second quarter, which was slightly later than expected. Order intake
under this framework agreement is now expected to continue according to plan
during the second half of 2016 and in 2017.
Net sales decreased by 15 percent compared to the same quarter in 2015, from SEK
239 M to SEK 204 M. Pricer delivered several major orders in the second quarter
of last year which was not the case this quarter. However, supported by improved
product costs and an advantageous product mix, we raised the operating margin in
the second quarter of 2016 considerably compared with the previous year, from
3.4 percent to over 11 percent if we exclude the non-recurring costs in the
quarter attributable to the change of CEO and other staff changes. Cash flow
from operating activities also improved by a full SEK 78.8 M compared with last
year as a result of less capital being tied in supply chain and inventory
combined with better control of our working capital in relation to the
fluctuations we are seeing in net sales and order backlog.
To counter these fluctuations, which to some extent are hard to predict, we work
continuously to improve our operational processes in order to achieve greater
scalability while retaining control of costs. During the past six months we have
also achieved a marked improvement of the cost structure which has both
strengthened our competitiveness and reduced the need to tie up capital in the
production chain. In parallel, we are also investing in more intensive marketing
in a number of selected geographies where we want to be in a position to land
the major projects. A market that is expected to take off in the coming years is
the USA. The USA is the world’s single largest grocery market and trends such as
increased automation, active price strategies and increased interactivity with
customers can be clearly seen here which strengthens interest in Pricer’s
solutions. Several American retail chains within both the grocery trade and the
DIY sector have ongoing test installations, a significant step in the sales
cycle.
Our strategy to expand our offer into digital services that increase store
profitability and enhance the shopper experience remains unchanged. Pricer’s aim
is to be a key partner as the world’s major retail chains develop their omni
-channel concepts. This is expected to include both global platform solutions
and local customizations. A local presence and proximity to customers are pre
-requisites to be successful. As part of this work we currently have several
test installations with strategic customers in France and Sweden, among other
countries. Here, Pricer’s platform guides consumers via an interactive digital
map of the store which will, we believe, result in enhanced shopper experience
and increased sales. This solution for product positioning is in demand in all
our geographical markets and here we intend to accelerate development in order
to meet demand from several of the major retail chains in strategically
important markets such as France and the USA.
For further information, please contact:
Charles Jackson, acting CEO, or Helena Holmgren, CFO, Pricer AB: +46 8 505 582
00.
This information is information that Pricer AB is obliged to make public
pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The
information was submitted for publication, through the agency by the contact
persons set out above, at 8:30 CET on August 19, 2016.