SEMCON: Interim Report January-June 2016

Regulatory News:

Semcon (STO:SEMC)

We are reporting healthy growth and significantly better results than last year for Q2. It is pleasing to see all our business areas reporting improvements in results. Business area Engineering Services Nordic noted increased demand from, among others, the automotive industry, while the energy sector, in Norway especially, remained weak. Business Area Engineering Services Germany continued work on the change process that was initiated at the end of last year. With a new business structure and organisation set, the prerequisites are now in place for gradually improving results. It is positive to see that business area Engineering Services International is successively increasing deliveries from our specialists in Brazil concerning autonomous vehicles for customers in Europe. We see good growth potential for the entire Group within this area. Business area Product Information signed two new partnership agreements in Q2 with automotive manufacturers in Sweden and the UK. The projects are being delivered by our global teams and initially involve 65 employees. The market is showing great interest in our managed services offers that provide significant value for customers through higher quality, improved efficiency and lower total costs. The trend towards more connected products is very clear. Our knowledge and expertise in product development in several industries is a key element in helping our customers to create smarter products that make life simpler for the end-user. Semcon is an attractive and appreciated supplier, but in order to increase our market share and further strengthen our brand we wish to increase visibility and be even more distinct in our communication. Consequently, during the autumn we will launch our new communication strategy.

Second quarter

• The operating income amounted to SEK 700 million (632) and organic growth was 10%

• The operating profit amounted to SEK 31 million (-28), giving an operating margin of 4.4% (-4.5)

• The profit after tax amounted to SEK 22 million (-22)

• Earnings per share (EPS) after dilution amounted to SEK 1.24 (-1.21)

January-June

• The operating income amounted to SEK 1,366 million (1,309) and organic growth was 5%

• The operating profit amounted to SEK 54 million (6), giving an operating margin of 4.0% (0.4)

• The profit after tax amounted to SEK 39 million (3)

• Earnings per share (EPS) after dilution amounted to SEK 2.16 (0.15)

• The equity/assets ratio amounted to 46% (45)

Income and result

Second quarter

The operating income amounted to SEK 700 million (632). Adjusted for currency effects, acquisitions and divestments, income increased by 10%. The quarter had more working days compared with last year, which accounted for around 4% of the increase. The operating profit amounted to SEK 31 million (-28), giving an operating margin of 4.4% (-4.5). All business areas reported improved operating profit compared with the previous year. Last year business area Engineering Services Germany’s operating profit was affected by SEK 20 million in restructuring costs. Net financial items amounted to SEK -1 million (-1), giving a profit before tax of SEK 30 million (-30). The tax cost amounted to SEK -8 million (+8). The profit after tax amounted to SEK 22 million (-22) and EPS after dilution was SEK 1.24 (-1.21).

January-June

The operating income amounted to SEK 1,366 million (1,309). Adjusted for currency effects, acquisitions and divestments, income increased by 5%. The period had one extra working day compared with last year, which accounted for around 1% of the increase. The operating profit amounted to SEK 54 million (6), giving an operating margin of 4.0% (0.4). All business areas reported improved operating profit compared with the previous year. Last year the business area Engineering Services Germany’s operating profit was affected by SEK 20 million in restructuring costs. Business area Product Information’s operating profit was positively affected this year by recovered write-downs of accounts receivable of SEK 7 million. Net financial items amounted to SEK -2 million (-2), giving a profit before tax of SEK 52 million (4). The tax cost amounted to SEK -13 million (-1). The profit after tax was SEK 39 million (3) and EPS after dilution was SEK 2.16 (0.15).

Financial position

The operating cash flow from current activities was SEK -40 million (-110). Cash flow is seasonally weak in the first half of the year. Investments in hardware, licenses, office supplies and equipment amounted to SEK 26 million (23). The Group’s liquid assets amounted to SEK 47 million (55) with additional non-utilised credit of SEK 223 million (177) as at June 30. Shareholders’ equity amounted to SEK 622 million (613) and the equity/assets ratio was 46% (45). During Q2 a dividend of SEK 22 million (45) was paid to shareholders. The Group’s net debt amounted to SEK 170 million (198). Excluding pension commitments, net debt amounted to SEK 99 million (132). The debt/equity ratio was 0.3 times (0.3).

Employees

The head count on June 30 was 2,897 (2,886) and the number of employees in active service was 2,772 (2,775).In the respective business areas the headcount is as follows: Engineering Services Nordic 1,083 (996), Engineering Services Germany 874 (997), Engineering Services International 351 (338) och Product Information 589 (555). Measures taken over the past year in business area Engineering Services Germany have resulted in a fall in the number of employees.

Semcon is an international technology company within engineering services and product information. We have around 3,000 employees with extensive experience from many different industries. We develop technology, products, plant and information solutions along the entire development chain and also provide many services and products in areas such as quality control, training and methodology development. Semcon contribute to our customers’ competitive strength by providing innovative solutions, design and solid engineering expertise. Work processes and solutions are adapted to customer requirements, from taking part in the customer’s teams to in-house development projects. The Group had annual sales of SEK 2.6 billion in 2015 and activities at more than 40 sites in Sweden, Germany, the UK, Brazil, China, Hungary, India, Spain and Norway. Some of Semcon’s biggest customers include: ABB, AB Volvo, Audi, BMW, CEVT, Jaguar Land Rover, Scania, Volvo Cars and VW. Read more at www.semcon.com.

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