08/08/2002
Interim Report January - June 2002 (382kb)
- Operating income MSEK 44 (77) first six months
- Increase in profit for Graphic Solutions and SPI during the second quarter
- Decreased growth and lower profit within Information Logistics
Earnings trend
Stralfors reports operating income for the first six months of MSEK 44 (MSEK 77 for the corresponding period last year). Net sales amounted to MSEK 1 666 (1 662).
The weakening of the business cycle has mainly affected operations in Sweden. The slowdown particularly affected the Information Logistics division with a drop in delivery volumes to primarily the telecom industry. The division's resources had been dimensioned for a growth in turnover, which failed to materialize in May and June. This had an adverse effect on the division's result.
The Graphic Solutions and SPI divisions report increases in profit during the second quarter.
The Group's net sales during the second quarter amounted to MSEK 803 (815) and operating income to MSEK 8.3 (25.9).
Forecast for 2002
Profit for the second half of this year is expected to be higher than that for the first six months, but the assessment is that it will not be possible to recover the loss of profit made during the first six months of 2002. Continued result improvement is expected for the Graphic Solutions and SPI divisions, but the Information Logistics division will be reporting an unsatisfactory result for the second half of this year as well. It is estimated that it will not be possible to achieve the result improvement during the current year which was forecast earlier.
Graphic Solutions
The Graphic Solutions division, comprising the Business Areas Graphics and Labels, reported a 40-percent increase in profit compared with the corresponding period last year. Continued result improvement is expected during the second half of the year.
The improvement in profit during the second quarter stems mainly from Business Area Graphics Despite a drop in net sales within the Area Forms, improved margins and reduced costs have led to a clear improvement in profit. The operations in Norway and England indicate a positive earnings trend, while the weak market has had an adverse effect on operations in Sweden. In accordance with the structural plan that was decided on earlier, another French production unit was wound up during the second quarter. The original four production units in France have thereby been reduced to the planned two units. The forms production unit in Norway will be closed during the second half of the year and all production of forms in Scandinavia will thus be concentrated at the unit in Ljungby. Ongoing product development has led to new deliveries to the pharmaceutical industry and a special production unit for this niche will be set up in Ljungby during the second half of the year. The development of e-commerce, logistics and e-based products continues as planned.
Business Area Labels reports operating income for the second quarter at the same level as for the corresponding period last year. The operations in Sweden and Switzerland generate good profitability, but the result in Germany is still unsatisfactory. Intensified structural measures are expected to lead to an improved result during the second half of the year. The next step in the Business Area's development of digital printing methods will be taken during the third quarter when the Göteborg unit will start using a new type of machinery. The development of a new generation of machines for applying labels (Collamat) has been started and will be intensified during the second half of the year.
Information Logistics
Over a long period of time, the division has averaged growth of nearly 30%. Despite weak growth in the second quarter, it is estimated that there are good opportunities for continued growth in the division. A number of outsourcing deals will contribute to this. A cost level adapted to cope with expected higher volumes had an adverse effect on the result during the second quarter. Ongoing economy measures will lead to a gradually lowered cost level during the second half of the year, but it will not be possible during the remainder of the year to recoup the loss in profit during the first six months.
Operations previously run by DMdata and Stralfors are now part of Strålfors Information Logistics A/S, the newly formed Danish company (joint venture with DMdata) established on 1 January, 2002. The operations moved in May and June to new, shared premises and the effects of coordination will be reflected in the result as of the second half of the year.
SPI, System- and Product-related Information Transfer
The SPI division, comprising the Business Areas Lasermax and IT-Supplies, the company Stralfors TradeCom Solutions and other businesses, reports increases in profit both for the second quarter and for the whole of the first six months. Business Area IT-Supplies continues to indicate a positive earnings trend, and the structural measures implemented within Stralfors TradeCom Solutions have led to a satisfactory result now being reported for this operation. The market for Business Area Lasermax is weak at present in Europe and America. This has meant a drop in net sales and less profit compared with the figures for last year. The result has also been charged with a credit loss of approximately MSEK 3 attributable to a major private customer.
The new LX series in Business Area Lasermax's product range has been well received by customers. The Far East market has developed well. An enlarged customer base has led to the positive development both of sales to and of orders from this region. The Business Area's activities for adapting capacity to the weak global market will be intensified during the second half of the year.
Work is being done constantly within Business Area IT-Supplies on the development of e-commerce solutions for both customers and suppliers. This has led to economies in the purchasing and selling processes and in the handling of production information from the suppliers. A more efficient goods flow has contributed to the reduction of freight costs.
Central functions
Central costs during the second quarter amounted to MSEK 5.7, which is higher than during the corresponding period last year (1.1), but considerably lower than during the first quarter this year (12.0). The variations over time stem mainly from the exchange rate gains/losses on operating business receivables
The Group
The Group's net sales during the first six months amounted to MSEK 1 666, to be compared with MSEK 1 662 for the corresponding period last year. Operating income for the period of this interim report was MSEK 43.6 (76.7). Included in profit for the year are earnings affecting comparability of MSEK 5.4, attributable to the establishment of the new joint-venture company in Denmark. Profit before tax amounted to MSEK 36.7 (70.0) and earnings per share (after tax) were SEK 0.98 (2.16).
Cash flow, liquidity and financing
The operating cash flow during the second quarter amounted to MSEK 23, which is considerably better than during the first quarter of the year (-21), but lower than during the second quarter last year (38) owing to the negative earnings trend. The operating cash flow for the entire interim report period amounted to MSEK 3 (116).
Liquid funds during the interim report period decreased by MSEK 40, and amounted to MSEK 183 at the end of the first six months. In addition, there were unused credit facilities at the end of the period totalling MSEK 573.
Shareholders' equity at the end of the first six months amounted to MSEK 1 032, corresponding to SEK 48 per share. The equity/assets ratio remains unchanged at 51%.
Total assets have decreased since the turn of the year 2001/02 by MSEK 66 to MSEK 2 029. The decrease is due for the most part to the effect of the exchange rates attributable to the stronger Swedish krona.
Financial information from Stralfors
Questions or queries about the contents of this Report may be addressed to Per Samuelson, President and CEO, on +46 (0)372-854 40 or to Kjell Åke Jönsson, Vice-president, on +46 (0)372-852 34.
The next report, the Interim Report for the period January - September 2002, will be published on 7 November.
Business concept
Stralfors is an IT-focused Business-to-Business company with a print heritage, and provides total solutions within the field of information transfer. Stralfors 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 3.3 billion and operates in 11 countries with a total of 1850 employees. Stralfors B shares have been quoted on the Stockholm Stock Exchange since 1984.
Accounting principles
This interim report has been drawn up in accordance with the recommendations issued by the Swedish Financial Accounting Standards Council RR20 (Interim Reports). As stated in the latest Annual Report, a number of new recommendations are being applied for the financial reports drawn up for the financial year beginning
1 January, 2002. The new applications have had no appreciable effect on the financial position and performance.
General audit
This report has not been examined by the company’s auditors.
Ljungby, 8 August, 2002
The Board of Directors.