Quarterly report January-March 2010

Quarterly report January-March 2010

Strong market conditions despite weak start to the year

First quarter
• Operating income was SEK 521 million (663) 
• The operating loss was SEK 5 million (-42), giving an operating margin of
-0.9% (-6.3)
• The loss after tax was SEK 5 million (-31) 
• Earnings per share (EPS) was SEK -0.26 (-1.73)
• The operating cash flow from current activities was SEK -10 million (140) 
• The equity/assets ratio was 33% (32)  

“A wait-and-see attitude was clearly noticed in the first months of the year
from many customers, resulting in a low utilization ratio and a weak result. The
Group's equity/assets ratio is however still in line with the financial
objectives. In general terms market conditions strengthened towards the end of
the quarter as more companies are sensing better business conditions. We're
seeing a dramatic increase in enquiries from all our prioritized industries,
meaning we're expecting greater business volumes and a need to recruit in a
number of areas over the rest of the year.” 

Kjell Nilsson, President & CEO

 
Income and result
First quarter
Operating income in the first quarter reached SEK 521 million (663) and organic
growth was -18%. The fall in sales is mainly due to the wait-and-see attitude
from customers starting new development projects in January and February, but
also because employee numbers fell compared to the same period in 2009. The
biggest deviation is still from units active in the automotive sector. 
The operating loss was SEK 5 million (-42), giving an operating margin of -0.9%
(-6.3). A low utilization ratio had a negative impact on results. A cost-cutting
scheme will be introduced in the second quarter which is estimated will burden
Q2's operating profit with around SEK 15 million. The planned measures are
expected to lead to annual savings of around SEK 25 million.
Net financial items amounted to SEK -2 million (-2). The operating loss before
tax was SEK 7 million (-44). Tax revenues amounted to SEK 2 million (12). The
loss after tax was SEK 5 million (-31) and EPS after dilution was SEK -0.26
(-1.73).
 
Financial position
The operating cash flow from current activities was SEK -10 million (140). The
Group's cash and bank balances amounted to SEK 30 million (252) with additional
non-utilized credit of SEK 245 million. 
Investments in hardware, licenses and office supplies and equipment, amounted to
SEK 5 million (8). Shareholders' equity amounted to SEK 377 million (569) and
the equity/assets ratio was 33% (32), which exceeded the Group's objective of 30
per cent. Net debt amounted to SEK 302 million (297) and the debt/equity ratio
was 0.8 times (0.5). 

Staff and organization
The headcount on 31 March was 2,626 (3,166) of whom 1,490 (1,952) in Sweden and
1,136 (1,214) abroad. The number of employees actively employed was 2,481
(2,996). The average number of employees was 2,490 (3,117). The number of
employees in the respective business areas was: Automotive R&D 1,467 (1,911),
Design & Development 803 (859) and Informatic 356 (396). 

Events during the year
• Semcon signs two-year contract with EuroMaint Rail for supplying construction
services, meaning Semcon taking over EuroMaint Rail's construction department in
Örebro
• Westinghouse appoints Semcon as a preferred supplier, enhancing cooperation in
engineering services 
• Semcon appoints Henry Kohlstruck as the new country manager for the German
business from 1 March. He joins Semcon from the German development company Edag,
where he was most recently the vice president for the product/production
division. 

Outlook
The markets' increasing needs are result in more complex products and systems,
which require 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, this provides more business
opportunities for the Group.  
In general terms market conditions strengthened towards the end of the quarter
as more companies are sensing better business conditions. We're seeing a
dramatic increase in enquiries from all our prioritized industries, meaning
we're expecting greater business volumes and a need to recruit in a number of
areas over the rest of the year.

For more information please contact:
Anders Atterling, IR & PR manager, Semcon AB, +46 704 472 819