SEMCON: Year-End Report 2015

Regulatory News:

The year ended with a weak last quarter, with business area Product Information reporting a drop in sales due to less business in the UK and China. Meanwhile, as we announced previously, there were restructuring costs in Engineering Services Germany of SEK 26 million. 2015 was a year of challenges for Semcon (STO:SEMC). The measures taken had a major negative impact on results, but are necessary for Semcon to remain competitive over the long term. The restructuring work carried out at Engineering Services Germany, to adapt the organisation to the current market situation, meant major costs, amounting to SEK 46 million over the year. The realignment to a more sales-oriented organisation will probably take more time before realizing the full effect. We signed several partnership agreements with global customers in 2015 and increased our ownership in the Norwegian company Devotek. Our largest business area, Engineering Services Nordic, begin to see the effect of working with value-based total solutions. I look with confidence to 2016 as we have efficient process, excellent employees and very high customer satisfaction. We should be able to deliver the same top quality and technical ability, but with improved profitability.

Fourth quarter

• The operating income was SEK 637 million (731) and organic growth was -12%

• The operating loss was SEK 9 million (+27), giving an operating margin of -1.5% (3.6)

• The loss after tax was SEK 8 million (+22)

• Earnings per share (EPS) after dilution was SEK -0.46 (1.23)

January-December

• The operating income was SEK 2,557 million (2,726) and organic growth was -7%

• The operating profit was SEK 10 million (102), giving an operating margin of 0.4% (3.8)

• The profit after tax was SEK 3 million (75)

• Earnings per share (EPS) after dilution was SEK 0.20 (4.16)

• The equity/assets ratio was 45% (48)

• Return on shareholder’s’ equity was 1% (12)

• The Board of Directors proposes a share dividend of SEK 1.25 per share (2.50)

Income and result

Fourth quarter

The operating income amounted to SEK 637 (731) million. Adjusted for currency effects, acquisitions and divestments, income fell by 12%. All business areas, except Engineering Services Nordic, reported a drop in income. The operating loss was SEK 9 million (+27), giving an operating margin of -1.5% (3.6). The operating loss also includes restructuring costs from the Engineering Services Germany business area of SEK -26 million (-4), for measures associated with a new business structure and fewer administrative staff. The Product Information business area’s result were negatively affected by an organic drop in sales of 25% over the quarter, due to fewer deliveries to Jaguar Land Rover and by sales to one of the larger customers in China ended in Q3. Kongsberg Devotek AS, which was consolidated from November has affected the operating profit with SEK -6 million. Net financial items amounted to SEK -1 million (-1), giving a loss before tax of SEK 11 million (+26). The tax income for the quarter amounted to SEK 2 million (-3). The loss after tax amounted to SEK 8 million (+22) and EPS after dilution of SEK -0.46 (1.23).

January-December

The operating income amounted to SEK 2,577 million (2,726). Adjusted for currency effects, acquisitions and divestments, income fell by 7%. The Engineering Services Germany business area, adjusted for currency effects, reported a drop in income of 13%, due to the transition underway in the German market. The Group’s operating profit amounted to SEK 10 million (102), giving an operating margin of 0.4% (3.8). The Engineering Services Germany business area reported significantly weaker results due to the drop in sales and restructuring costs of SEK 46 million (6). The Product Information business area’s results were negatively affected by fewer deliveries in Q4 to Jaguar Land Rover and by sales to one of the larger customers in China ended in Q3. This has negatively affected results through the writing down of accounts receivable and extra operational costs. Sales have also been weak towards the Norwegian oil and gas industry, which has also contributed towards the weaker results. Net financial items amounted to SEK -4 million (-5), giving a profit before tax of SEK 5 million (97). The tax expense for the year amounted to SEK 2 million (22). The profit after tax amounted to SEK 3 million (75) and EPS after dilution amounted to SEK 0.20 (4.16).

Financial position

The operating cash flow from current activities was SEK 27 million (82). Investments in hardware, licenses, office supplies and equipment amounted to SEK 33 million (28). The Group’s liquid assets amounted to SEK 126 million (152) with additional non-utilized credit of SEK 226 million (273) as at 31 December. The Group’s credit agreements were extended at the start of Q4 and will run until October 2018. Shareholders’ equity amounted to SEK 604 million (662) and the equity/assets ratio was 45% (48). During Q2 a dividend worth SEK 45 million (45) was paid to shareholders. In addition, share buy backs were carried out to acquire 100,000 Semcon shares for SEK 6 million. The Group’s net debt amounts to SEK 78 million (14). Excluding pension commitments, net debt amounted to SEK 10 million (net cash 55). The debt/equity ratio was 0.1 times (0.0) with an interest coverage ratio of 2.4 times (24.8).

Share dividend

According to Semcon’s financial objectives a dividend long-term should be paid to shareholders and be at least one third of the profit after tax. The Board of Directors proposes a share dividend of SEK 1.25 per share (2.50). Dividend amounts to SEK 22.6 million (45.3). The record day for the right to a share dividend is proposed as Monday, 2 May.

Staff

The headcount on 31 December was 2,936 (2,990). The number of employees in active service was 2,796 (2,891).Downsizing of business activities over the past year, mainly in Engineering Services Germany, which have resulted in a fall in the number of employees. In the respective business areas the headcount is as follows: Engineering Services Nordic 1,098 (1,038), Engineering Services Germany 957 (1,044), Engineering Services International 352 (359) and Product Information 529 (549).

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. The 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 2.6 billion with 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 semcon.com.

This information was brought to you by Cision http://news.cision.com

View source version on businesswire.com: http://www.businesswire.com/news/home/20160212005319/en/