Continued stable growth

Comments by CEO Hans Johansson

- The period has been characterised by continued good demand for Semcon’s advanced high-tech services, especially in the Vehicle and Medical sectors. Demand in the telecom sector ebbed. Semcon received two important orders during the period. These concerned the design of a pharmaceutical plant for Pharmadule Emtunga AB, an assignment comprising 14,000 engineering hours and hardware sales to Saab Automobile worth SEK 20 million.

- The operating profit before goodwill rose by 19,6% to SEK 48,7 million compared to last year, which resulted in an operating margin of 8,1 %. Considering the weaker economic conditions, we are satisfied with our results. However the business areas’ margins are not progressing favourably, mainly because of lower utilisation due to falling demand. We have now taken measures to achieve more satisfactory margins and our forecast for the full year is therefore unchanged.

- The underlying driving forces in the market for product development are long term and getting stronger. Increased technology and IT content in products, greater focus on design and environmental awareness will mean that our customers will continue to develop more products and product variations over a shorter period. Some investment decisions may be postponed, but there is considerable growth potential over the long term. These factors, combined with Semcon’s stable and far-reaching customer portfolio, its strong foothold in the Vehicle sector and a growing customer portfolio in the Medical sector, pave the way for continued positive growth.

*Excluding SEK 19.6 million refund from Alecta

Semcon is a leader in design and development in the Nordic region, with sales of SEK 1,000 million in 2000 and over 1,600 employees. Semcon’s consultants develop products, processes and people for the leading businesses in Sweden. The combination of profitable growth for 20 years and long-term relationships with leading businesses forms the basis for continued success. Semcon focuses on the telecom, medical and vehicle sectors, where development is intensive and there are large investments in R&D, product development and growth. Semcon AB (publ) is listed on the O list of the OM Stockholm Stock Exchange

Business activities
Semcon’s sales rose during the first six months of the year by 16 % to SEK 604.5 million (520.5 m). Second quarter sales contributed an increase of 14 % to SEK 317.7 million (277.8 m). Operating profit before goodwill (EBITA) rose by 19.6% to SEK 48.7 million (40.7 m), giving an operating margin before goodwill of 8.1% (7.8). Operating profit rose by 16% to SEK 45.5 million (39.2 m), giving an operating margin of 7.5% (7.5). Profits for 2000 are excluding an SEK 19.6 million refund from Alecta. The improved sales are explained by an increase in the number of employees and increased value debiting. Q2 was six working days shorter than Q1.

Semcon Industrial Design
Industrial Design focuses on the development and design of products and production systems. Our strong connection to industrial design unites people and technology in a unique way.

Sales rose by 28.6% to SEK 299.1 million (232.5 m). Operating profit increased by 12.6% to SEK 22.3 million (19.8 m). The strongest demand for the business area’s services came from the Vehicle and Medical sectors. Semcon has long-term customer relationships and a stable customer portfolio Therefore demand for the business area’s services continue to be favourable.

Semcon strengthened its position in the key-focus Medical sector through extensive co-operation with Pharmadule Emtunga AB concerning the design of module-based pharmaceutical plants. Semcon has received a design order comprising 14,000 engineering hours.

Semcon e-Design.
e-Design develops embedded IT systems for products and production systems, interactive web solutions and web design, system solutions and also supplies IT products.

Sales increased by 13.3% to SEK 255.6 million (225.5 m). The operating profit was SEK 23.1 million (25.6 m). Delayed customer decisions concerning development projects affected Q2 results. Profits were affected by a drop in demand from Ericsson and other telecom industry players. Semcon did however sign a framework agreement with Nokia during the period, which is expected to generate further assignments. Semcon acquired seven people in southern Sweden from e-Kabel, all with specialist competence in technically advanced systems development. In the Stockholm region Semcon recruited 15 consultants in electronics with specialist competence in testing and verification.

Semcon received an order worth SEK 20 million at the end of the period for IT equipment for Saab Automobile. Saab Automobile has chosen Semcon for many years as its supplier when investing in equipment for technical development. Semcon’s cooperation with Saab Automobile today also includes full responsibility for the company’s CEE environment.

Interest in telematics is sizeable, especially in western Sweden where Volvo Cars and Saab Automobiles have received Ford’s and GM’s approval to take on these issues. Semcon has extensive experience in this area.

Informatic
Informatic completed another outsourcing deal concerning technical information with ABB Flexible Automation and the partnership agreement with Volvo Car Corporation was extended by a further three years. Informatic started a new business – Zooma by Semcon, a further development of the range of interactive solutions which complements the OSIŌ concept (One Source of Information).

Semcon Technology Management
Technology Management’s activities include strategy advice, project management and change processes. The business area has a unique understanding of the technology and processes used by customers. By using the competence network that exists throughout the Semcon Group, Technology Management leads development projects that include strategies, organisations, processes, manpower and technology.

Sales rose by 113.7 % to SEK 49.8 million (23.3 m). Zipper by Semcon made a key contribution to the strong growth. The operating profit amounted to SEK 0.1 million (3.7 m). The business area turned a loss in Q1 to a profit in Q2. New projects tended to be shorter or have been postponed, especially in the telecom sector. New customers during the period included Mölnlycke Healthcare, Dellner Coupler and Kvaerner Pulping.

Zipper by Semcon
Zipper by Semcon is a part of the Technology Management business area. Activities have become profitable in less than 12 months thanks to a concept that enables customers to earn a quicker return on their IT investments. Zipper has 60 employees and is facing growing demand for its comprehensive services aimed at producing maximum efficiency from IT systems. Operations were divided into Zipper Systems and Zipper Tech to prepare for continued growth.

plus interest bearing liabilities.


This information was brought to you by Waymaker http://www.waymaker.net

The following files are available for download:


The full report
The full report