SEMCON: Interim Report January-March 2015

Regulatory News:

Semcon (STO:SEMC)

We expect that the measures carried out last year in the Engineering Services Nordic business area will gradually provide better results in 2015. Results however remain weak in the Engineering Services Germany business area. Further measures have been taken, which initially mean that Q2’s results are expected to be negatively affected by around SEK 20 million in restructuring costs. The change of the delivery model and adjustment of the offer in Germany mean that the business area is expected to report weak results throughout 2015. The underlying market in Germany is however strong and the German automotive industry is expected to retain its high demand of development services. Semcon has after the end of the quarter won a major development contract. We are proud to have once again been selected as an engineering partner for a European premium automotive manufacturer. The development contract is fully in line with Semcon’s strategy of being an independent partner with the expertise and capacity to deliver complex automotive projects. This project is another good example of when we successfully use the advantages of Semcon’s global infrastructure.

• The operating income was SEK 677 million (704) and organic growth was -6%

• The operating profit was SEK 34 million (41), giving an operating margin of 5.1% (5.9)

• The profit after tax was SEK 25 million (30)

• Earnings per share (EPS) after dilution was SEK 1.36 (1.63)

• The equity/assets ratio was 50% (52)

• Return on shareholder’s’ equity was 11% (15)

Income and result

The operating income amounted to SEK 677 million (704). Organic growth, adjusted for currency effects, acquisitions and divestments, amounted to -6 per cent. Last year’s sales included a large number of purchased goods and services in a number of projects. The operating profit amounted to SEK 34 million (41), giving an operating margin of 5.1 per cent (5.9). It is mainly the business area, Engineering Services Germany that is reporting a lower result. Work on adapting the offer to the market, started in December 2014, is ongoing, with measures taken that are expected to negatively affect Q2’s operating profit by around SEK 20 million in restructuring costs. Net financial items amounted to SEK -1 million (-1), giving a profit before tax of SEK 33 million (40). Tax costs amounted to SEK -9 million (-10). The profit after tax amounted to SEK 25 million (30) and an EPS after dilution of SEK 1.36 (1.63).

Financial position

The operating cash flow from current activities was SEK -52 million (-51). Cash flow is seasonally weak in Q1. Investments in hardware, licences, office supplies and equipment amounted to SEK 16 million (7). The Group’s liquid assets amounted to SEK 93 million (51) with additional non-utilized credit of SEK 263 million (309) on 31 March. Shareholders’ equity amounted to SEK 687 million (666) with an equity/assets ratio of 50 per cent (52). The Group’s net debt amounted to SEK 76 million (49). Excluding pension obligations the net debt amounted to SEK 9 million (3). The debt/equity ratio was 0.1 times (0.1). The interest coverage ratio was 24 times (14).

Staff and organisation

The headcount on 31 March was 2,935 (3,042). The number of employees in active service was 2,822 (2,902). A number of divestments and downsizing of activities was carried out last year, meaning a drop in the number of employees. In the respective business areas the headcount is as follows: Engineering Services Nordic 1,017 (1,085), Engineering Services Germany 1,012 (1,088), Engineering Services International 344 (343) and Product Information 562 (526).

Semcon is an international technology company in the engineering services and product information sectors. 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. We contribute to our customers’ competitive strength by providing innovative solutions, design and solid engineering expertise. From 2014, business activities are run via four business areas: Engineering Services Nordic, Engineering Services Germany, Engineering Services International and Product Information. 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 2.7 billion in 2014 with activities at more than 40 sites in Sweden, Germany, the UK, Brazil, China, Hungary, India, Spain and Norway. Semcon’s biggest customers include: ABB, AB Volvo, Audi, BMW, Daimler, Ericsson, Jaguar Land Rover, Scania, Volvo Cars and VW. Read more at semcon.com

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