03/05/2001
- Operating income increased by 23 % to MSEK 51
- Continued profit increase expected
- Net sales MSEK 848, an increase of 23 %
Earnings trend during the first quarter
Operating income during the first quarter amounted to MSEK 50.7, which is 23 % higher than earnings during the corresponding first quarter last year (MSEK 41.2 excluding items affecting comparability). Net sales amounted to MSEK 848, an increase of 23 % (689). The French company Siaco, acquired during the second quarter last year, is included in this year’s first quarter net sales to the amount of MSEK 110.
Profit, reported as improved in the last quarter of 2000, continued to increase in the first quarter of 2001. The growth of net sales and income were both affected particularly during the second and third quarters of last year by the restructuring process at Stralfors. A temporary drop in orders from customers to the Gaming Products segment during the latter half of the year plus the intensified effort to streamline the customer structure contributed to the fall in turnover. Substantial investments were made last year in marketing and in the development and establishment of new products and services. The sums involved have now gradually diminished, and the ongoing programme to reduce costs began to show results during the first quarter this year.
Graphic Solutions
Net sales during the first quarter for Graphic Solutions, comprising the Business Areas Graphics and Labels, amounted to MSEK 441, (347). Siaco is included in the year’s first quarter net sales to the amount of 88 MSEK. Within Business Area Graphics, orders in the Gaming Products segment have returned to a normal level after the temporary decline during the latter half of last year. This segment reports an organic growth of just over 20% but a marginal drop in net sales for the labels sector, which is operating on a stagnating market. Business Area Labels reported an organic growth of 5% during the first quarter.
Operating income during the period for Graphic Solutions amounted to MSEK 39, an increase of 11% compared with the figure for the first quarter last year (35). The increase in profit derives mainly from the Business Area La-bels whose Swiss operation has again reported a satisfactory result after a decline in business last year. The fall in pulp prices has not led so far to lower prices for paper. The return on operating capital was 33% (37).
Information Logistics
The business sector Information Logistics, comprising the previous Business Areas InfoConcept and Card Solu-tions and most of IT-Development, reports nets sales of MSEK 138 for the first quarter. This is an increase of 20% compared with the figure for the first quarter last year (MSEK 115).
Stralfors acquired Telia’s output data management operation on 1 February, 2001. This means that Stralfors takes over a unit that prints and distributes telephone bills and market information for the various business areas in the Telia Group. In connection with the acquisition, Strålfors signed an agreement on collaboration and delivery to the value of MSEK 120 over a period of three years. The deal had only a marginal effect on net sales and income dur-ing the first quarter. Several of the new commissions that have come in from customers have been a charge on the business but are not yet fully reflected in the net sales. The solution for Canal Digital, for example, has now been developed. This has involved the production of smart cards and printed material, and responsibility for all the deliv-eries to subscribers in the Nordic countries of both Canal Digital’s own printed material and other equipment for receiving digital TV broadcasts. Deliveries will begin during the second quarter and will be in full swing during the third.
Operating income for the first quarter for this business sector was MSEK 10, the same as for the first quarter last year. Return on operating capital was 22% (29).
SPI, System- and Product-related Information Transfer
The third sector in the new Group structure, comprising Business Areas Lasermax and IT-Supplies, the company Stralfors TradeCom Solutions and other businesses, reports net sales of MSEK 268. This figure is MSEK 41 higher than during the first quarter last year (227). The total of net sales for the first quarter this year includes MSEK 23, which amount refers to the computer peripherals business included in Siaco.
Operating income amounted to MSEK 8, an increase of MSEK 2 compared with the first quarter last year (6). The increase in profit derives mainly from Business Area IT-Supplies, which succeeded in compensating for pressure on price margins by substantially cutting costs. Return on operating capital was 14% (12%).
Central items During the first quarter this year, the increase in costs stemming from central items was MSEK 6.5, a decrease of almost 40% compared with the first quarter last year (10.5).
The Group The operating income of MSEK 50.7 corresponds to an operating margin of 6 %: the same level as during the first quarter last year, excluding items affecting comparability. Excluding IT-Supplies and Siaco, the gross margin has improved. The lower total gross margin has been compensated for mainly by a lower relative cost level. The weakening of the Swedish krona has not affected the Group’s result to any noticeable extent. The return on operating capital during the period covered by the report was 17%, the same level as during the first quarter last year.
Income for the Group before tax amounted to MSEK 47.7, which is MSEK 0.9 higher than during the first quarter of 2000. Operating income has increased by MSEK 9.5, but the comparison with the figure for last year must take into account both earnings affecting comparability of MSEK 6.5 during the first quarter last year and that the financial net is MSEK 2.1 lower this year. The lower financial net is due to the acquisition of Siaco.
The dividend per share amounted to SEK 1.47. The corresponding figure of SEK 1.55 during the first quarter of 2000 included earnings affecting comparability of some SEK 0.20.
Cash flow, liquidity and financing The operating cash flow was MSEK 79, which is double the amount reported for the first quarter last year (38). Capital expenditure has been a charge on the cash flow of MSEK 26, an amount that can be compared with write-offs for the period of MSEK 34.
Liquid funds during the period covered by the report increased by MSEK 63, amounting at the end of the quarter to MSEK 193. In addition, at the end of the period, there were unused credit facilities totalling MSEK 514. Shareholders’ equity increased by MSEK 52 during the period of the report. MSEK 32 of this amount stem from the result for the period and MSEK 21 from translation differences. Shareholders’ equity at the end of the period was MSEK 1 059 corresponding to SEK 50 per share. The equity/assets ratio of 51% indicates a marginal increase compared with the year-end 2000/01 figure
Total assets amounted to MSEK 2 095 at the end of the first quarter, an increase of MSEK 97 compared with the year-end 2000/01 figure. The increase is due to increased liquidity and the weakening of the Swedish krona.
Outlook for 2001 The previous forecast of a continued increase in profit during the present year still holds well. Contracts for a large number of substantial orders have been signed, and much of the ongoing Group-restructuring programme will have been completed this year. These factors have been judged to outweigh the effect of a recession. A recession is not only negative, however, since a tightening of the economy means that customers are increasingly willing to let an external partner run operations that are outside the scope of the customer’s core business. This opens up opportu-nities for several deals involving an overall solution – something that would favour Stralfors.
Financial information from Strålfors Questions or queries about the contents of this Report may be addressed to Per Samuelson, Managing Director, on +46 (0)372-854 40 or to Kjell Åke Jönsson, Vice Managing Director, on +46 (0)372-852 34.
The next Report, covering the period January – June 2001, will be published on 9 August.
Business Concept Strålfors is an IT-focused Business-to Business company with a print heritage, and provides turnkey solutions within the field of information transfer. Strålfors develops, produces and delivers systems, services and products for the efficient communication of information crucial to operating a business The Group has net sales of SEK 3 billion, and operates in 11 countries with a total of 1900 employees. Strålfors ”B” shares have been quoted on the Stock-holm Stock Exchange since 1984.
Accounting principles
The same accounting principles and methods of calculation as in the last Annual Report have been used.
Review The Report has not been examined by the Company’s auditors.
Financial Informations from Stralfors
Questions or queries about the contents of this Report may be addressed to
Per Samuelson, President,on +46 (0)372-854 40 or to Kjell Åke Jönsson,
Vice President, +46 (0)372-852 34.
The next Report, covering the period January-June 2001, will be published on
9 August.
Ljungby, 3 May 2001
The board of directors