Significantly lower volumes but enquiries increase

Significantly lower volumes but enquiries increase 

Quartely report January - September 2009

Third quarter
• Operating income was SEK 478 million (696)
• The operating loss was SEK 45 million (+41), giving an operating margin of
-9.4 % (5.9)
• One-off items affected earnings by SEK -21 million (+10)
• The loss after tax was SEK 36 million (26) 
• Earnings per share (EPS) was SEK -2.01 (+1.45)
• The operating cash flow from current activities was SEK -43 million (+108)


January - September
• Operating income was SEK 1,743 million (2,478) 
• The operating loss was SEK 150 million (+186), giving an operating margin of
-8.6 % (7.5)
• One-off items affected earnings by SEK -70 million (+24)
• The loss after tax was SEK 119 million (119) 
• Earnings per share (EPS) was SEK -6.55 (6.62)
• The operating cash flow from current activities was SEK 104 million (105)


“The recession has hit the company hard over the year, resulting in
significantly lower business volumes, a low utilization ratio and greater price
pressure, which has impacted negatively on the company's earnings and results.
Cash flow was positive however as a result of less tied up working capital. The
staff cuts carried out, which had a negative impact of SEK 59 million on
earnings, have meant an annual drop in costs of SEK 255 million. The number of
offer enquiries is steadily increasing at the moment in the automotive, energy
and industry sectors, which are expected to increase capacity in 2010.”

Kjell Nilsson, President & CEO



Income and results

Third quarter
Operating income in the third quarter reached SEK 478 million (696) and organic
growth was -32%. A large part of the fall in sales was due to a reduction in
business volumes of around SEK 100 million from Volvo Cars and GM. The operating
loss was SEK 45 million (+41), giving an operating margin of -9.4% (5.9).
Continued reduced business volumes with a low utilization ratio and price
pressure, had a negative impact on results. The lower business volumes meant
that staff cuts were necessary in the quarter, affecting 65 individuals. The
operating loss includes one-off costs of SEK 21 million for staff cuts, reserves
for bad debts and depreciation of inventories. The operating profit for last
year included revenues attributable to the lower pension contributions due to a
discount from Alecta of SEK 10 million. The operating loss, excluding these
items was SEK 24 million (+31), giving an operating margin of -5.1% (4.4). The
loss before tax was SEK 50 million (37). Net financial items amounted to SEK -5
million (-3). The loss after tax was SEK 36 million (+26). EPS was SEK  -2.01
(1.45).  

January - September
The operating income over the period was SEK 1,743 million (2,478) with an
organic growth of -33%. The fall in sales was due to a reduction in business
volumes as a result of the recession, of which revenues from Volvo Cars and GM
alone fell by around SEK 440 million. Compared with September 2008 the number of
employees has been reduced by around 875. The operating loss was SEK 150 million
(186), giving an operating margin of -8.6% (7.5). Low utilization led to staff
redundancies, which had a negative impact of SEK 59 million on earnings. 
Overall, 380 staff redundancies were carried out during the first nine months of
the year. Additional redundancies of around 50 employees were carried out at the
start of Q4. The operating loss was also negatively impacted by SEK 11 million
for the reserve for bad debts and the depreciation of inventories. Completed
redundancies are expected to produce annual savings of around SEK 255 million.
The cost of one-off costs made in Q4 is estimated at around SEK 20 million. The
operating profit for last year included revenues attributable to the lower
pension contributions due to a discount from Alecta of SEK 24 million. The
operating loss, excluding one-off items, was SEK 80 million (+162), giving an
operating margin of -4.6% (6.5). The loss before tax was SEK 161 million (+169).
Net financial items amounted to SEK -11 million (-17) and include positive
one-off items of around 4 million. The loss after tax was SEK 119 million
(+119). EPS was SEK -6.55 (+6.62).  

Events during the year so far

• The number of Semcon AB's ordinary shares increased on 12 January 2009 by
330,000 through the conversion of the company's class C shares. After the
conversion there are 18,112,534 ordinary shares.

• Semcon streamlined the business and made around 400 employees redundant in
Sweden. 

• Semcon Project Management acquired a small German company, Triple-Constraint,
and strengthened its range of project management services in Europe. 

• JCE Group announced on 5 March 2009 that following the acquisition of 115,583
shares in Semcon, it now has a share capital in Semcon equivalent to 30.0 per
cent and that the limit for the Mandatory Bid Rule had been passed. JCE was
willing to pay SEK 14 in cash for each of the Semcon shares. A total of 92,510
shares were acquired under the offer and JCE now owns 30.5% of the shares in
Semcon.  

• Semcon is constructing and installing new electrical and control installations
at one of the energy company Fortum's power stations. 

• Semcon is investing in the offshore industry and opened a new office in
Lidköping. Fifteen specialists have been employed with extensive experience of
international offshore projects and expertise in developing accommodation
modules on oilrigs. 

• Semcon has signed an order worth SEK 50 million for a German concept car with
extreme requirements.

• Semcon is working closely with Volvo Cars, Vattenfall, ETC and the Swedish
Energy Agency to develop plug-in hybrids. 

Staff and organization
The headcount on 30 September was 2,741 (3,617) of whom 1,597 (2,390) in Sweden
and 1,144 (1,227) abroad. The average number of employees was 2,982 (3,668). The
number of employees in the respective business areas was: Automotive R&D 1,600
(2,331), Design & Development 791 (882) and Informatic 350 (404). 

Outlook
Despite the instability on the market for some industries and individual
customers, there is still a great need for development services. The long-term
trend where the market's demand to produce more products, models and versions at
an ever-increasing rate is continuing, meaning good business opportunities when
the market situation improves. The number of enquiries is steadily increasing at
the moment in the automotive, energy and industry sectors, which are expected to
increase capacity in 2010

For more information please contact:
Kjell Nilsson, CEO Semcon AB, +46 31 721 03 11
Björn Strömberg, CFO Semcon AB, +46 708 35 44 80
Anders Atterling, IR manager Semcon AB, +46 704 47 28 19