SKARPNACK, Sweden, Oct. 21, 2009 (GLOBE NEWSWIRE) --
* Net sales for January - September amounted to MSEK 1,022 (1,154).
Operating profit was MSEK 65 (110) and profit before tax was MSEK
60 (110). Net profit amounted to MSEK 40 (78).
* Net sales during the third quarter of 2009 decreased by 11
percent to MSEK 325 (367). Operating profit amounted to MSEK 26
(36) and profit before tax to MSEK 22 (38). Net profit was
reported as MSEK 13 (26) and profit per share after dilution was
SEK 0.42 (0.84).
* EBITA-margin for the first nine months was 6.3 (9.6) percent and
for the third quarter 8.1 (9.7) percent.
* Earnings per share after dilution amounted to SEK 1.31 (2.52) for
the first nine months of the year.
Statement by the CEO
HL Display has been significantly affected in 2009 by the global economic downturn. However, we have seen signs in the third quarter of having passed the worst period. Sales fell by 11 percent in the first nine months as a whole, and in the third quarter by the same percentage. Further to a successful reduction of operating expenses, the operating profit has improved quarter by quarter.
Differing trends among regions
The geographical regions are affected by the crisis to different degrees and with major fluctuations from one month to another. It is evident that being an international company is helping to balance the effects on a global level. We have been affected the hardest in Central/Eastern Europe with volumes down by around 20 percent, while Asia continues to show growth. The crisis has hit us later in Southern Europe than in the other regions. The Nordic countries still show substantial decline.
Satisfying results
Under the circumstances, it is satisfying to present a sound gross margin and rising profit level over the year. The measures we have taken in production have proven to be well-balanced and to pay off according to plan. Sales companies have also been downsized and adapted to declining market conditions. Reviews with tailored actions market by market started at the end of 2008. Rationalization and renegotiated agreements within the logistics and administrative areas have also been achieved. As a result, operating expenses fell by MSEK 38 in Q3 compared with the same period last year (corrected for currency effects), and the number of employees decreased by more than 110.
New logistics centre
As set out in the plans for 2009, we started our new logistics hub in Gyor, Hungary on 1 October. This is a further step towards the regionalization of our widespread organization. When it is fully implemented the new hub will serve six countries in the central European area, expecting to result in lower costs, better control and more professional handling of purchases and logistics.
Continued focus on innovation and acquisitions
We are now launching a new innovation - thus demonstrating that HL Display also takes the lead when implementing new technology in the stores. PowerTrack(TM) is a unique system for supplying power to the shelf. This solves a problem for our customers that wish to use new technology such as digital signage, but have so far lacked a cost-efficient and flexible means of power supply. This new infrastructure is open to all low-voltage applications, but we see a great potential when combined with Ad'lite(TM) - a new lighting system developed by HL Display.
A third important launch is the improved version of our successful merchandising system, Optimal+, which contains recycled PET as part of our "We Care" sustainability program.
We continuously evaluate possible acquisition targets that could contribute in markets and segments where we have identified unused potential.
A successful adjustment
The year so far has been characterized by actions to adjust to lower volumes. The strongest measures are now behind us, and will give further effects in the fourth quarter. Now we have a balance between capacity and demand in the financial situation we face today.
Nacka Strand in October 2009 Gerard Dubuy CEO
Interim report
Net sales and profit for the first nine months 2009
The Group's net sales amounted to MSEK 1,022 (1,154) for the first nine months, representing a fall of 11 percent compared with the same period 2008. Movement in the value of the SEK vis-a-vis the trading currencies as a whole has affected net sales positively by MSEK 52 in comparison with last year.
The operating profit for the period was MSEK 65 (110) and the profit before tax amounted to MSEK 60 (110). Movement in value of the SEK compared to last year has had a positive effect of MSEK 7 on the operating profit (see table on page 4). Financial net for the period amounted to MSEK -4.7 (-0.7) of which net interest represented MSEK -1.3 (-1.5) and exchange rate effects MSEK -3.4 (0.8). Apart from SEK, HL Display's most important trading currencies are the euro, the British pound, the Russian ruble, the Norwegian krona and the Swiss Franc.
The gross margin has remained basically unchanged, at around 49 percent. Operating expenses have decreased by MSEK 18 or 5 percent in comparison with last year. Adjusted for currency fluctuations, operating expenses have decreased by MSEK 38.
Net sales and profit for the third quarter 2009
Net sales for the Group amounted to MSEK 325 (367) for the third quarter, representing a decrease of 11 percent compared with the same period 2008. The operating profit for the third quarter was MSEK 26 (36) and the profit before tax amounted to MSEK 22 (38). Financial net for the third quarter amounted to MSEK -4.4 (2.3) of which net interest amounted to MSEK -0.8 (-0.1), and exchange rate effects to MSEK -3.6 (2.4).
Market developments
Demand for HL Display's products and solutions are largely affected by the performance of retail trade. When retail trade is healthy, demand for HL Display's products and solutions tends to rise, and vice versa. In the first nine months of the year retail trade was affected by the global economic downturn. As a consequence investment levels within the sector have been heavily reduced.
Sales by geographical segment
Sales in the Nordic region, including the Baltics and the UK, fell by 17 percent during the first nine months as compared to the same period last year. The corresponding decrease in local currencies (LC) was 19 percent. The situation in Middle Europe differed to the rest of Europe, and still showed an increase after six months- but has now been hit by the crisis and declined overall by one percent (LC -7 percent). Sales in Southern Europe resisted quite well in the beginning of the year, but after nine months have declined by 7 percent (LC -17 percent). Sales in Central/Eastern Europe fell by 24 percent (LC -20 percent). Sales in Asia/Australia increased by 11 percent (LC -7 percent).
Seasonal effects
HL Display is normally affected by seasonal variations, with lower sales in December and January. This is due to customers, who are primarily retailers, not planning for changes during the Christmas shopping period.
Investments
During the first nine months, net investments in non-current assets amounted to MSEK 20 (27). Scheduled depreciation amounted to MSEK 28 (27). The outstanding minority share of the co-owned sales company in China was acquired in the beginning of the year for MSEK 4 further to which the Group no longer holds any minority shares.
Cash flow and financial position
Cash flow during the first nine months amounted to MSEK --8 (--1). A dividend amounting to MSEK 43 (43) was paid in the second quarter. Cash flow from operating activities increased to MSEK 59 (56). as a result of improvements in receivables, payables and inventories.
Cash flow during the third quarter amounted to MSEK 13 (16), of which operating activities amounted to MSEK 21 (16).
Operating cash flow (for definition, see note 4) for the first nine months was MSEK 78 (65). The period's operating cash flow per share for the first nine months was SEK 2.53 (2.09) and for the third quarter SEK 0.82 (0.59) per share.
Liquid assets amounted to MSEK 210 (177), as of 30 September 2009, and at the beginning of the year to MSEK 221. Interest-bearing net receivables amounted to MSEK 118 (39) as per the balance sheet date.
The equity ratio as per the balance sheet date amounted to 61.3 (54.7) percent. At the beginning of the year the equity ratio was 57.3 percent.
Employees
The average number of employees during the period was 927 (987). The number of employees as per the balance sheet date was 873 (989) and at the beginning of the year 974.
Risks and uncertainty factors
Variations in raw material prices and exchange rate differences constitute uncertainty factors, but not significant risks. For a closer description of the risks and uncertainty factors facing HL Display, please see the risk and sensitivity analysis on page 32 of the Annual Report for 2008.
Parent Company
The Parent Company's profit after financial items for the first nine months of 2009 amounted to MSEK 51 (loss: -64). No significant changes have been noted in the income statement or balance sheet. For the Parent Company's contingent liabilities, see note 11.
Nomination Committee
Members of the Nomination Committee to the Annual General meeting to be held on 22 April 2010 are Johan Lannebo (Chairman), Fund Manager at Lannebo Mutual Funds, Adam Gerge, CEO Didner & Gerge Fonder, Arne Karlsson, CEO Ratos AB and Anders Remius, Chairman of HL Display AB.
Related party transactions
Please see note 5 for related party transactions.
Significant events further to the balance sheet date
Further to the balance sheet date, an ongoing discussion with the American partner in the company's two joint ventures - Trion Industries - has developed into a dispute with legal implications. A possible termination of the American co-operation could imply a non-recurring cost of MSEK 10 to 15. The Group's results have not been affected by this in the reported period.
Prospects for the remainder of 2009
As communicated in a press release on 2 April 2009 the Group's net estimated sales for 2009 will lower than 2008. The Company's long-term growth and profitability targets remain unchanged.
Nacka, October 21st, 2009
Gerard Dubuy Member of the board, Managing Director and CEO
The full report incl tables can be downloaded from the enclosed link.