09/08/2001
- Operating income increased by 63 % to MSEK 77 (47)
- 30-percent growth within Information Logistics during the second quarter
- Continued increase in profit expected
Earnings trend during the first six months.
Operating income during the first six months amounted to MSEK 76.7, which is 63% higher than earnings during the first six months in 2000 (MSEK 47.1 excluding items affecting comparability). Net sales amounted to MSEK 1 662, an increase of 22% (1 366). The French company Siaco, acquired during the second quarter last year, is included in the net sales for the first six months of 2001 to the amount of MSEK 226, to be compared with MSEK 36 for the first six months in 2000.
The improvement in profit is due both to increased net sales and reduced costs. Gross income has increased by MSEK 47, corresponding to 13%, to MSEK 425 (377), while selling and ad-ministrative costs rose by only MSEK 23, corresponding to 7%, to MSEK 358 (335). The increase in gross income and costs has been influenced by Siaco, which was included in the Group accounts as from June 2000. For comparable units, a higher gross income and lower costs were reported for the first six months of 2001 compared with the figures for the first six months of 2000.
The programme to reduce costs implemented last year is continuing as planned, which meant a gradual reduction in costs during the first six months of 2001. A large number of substantial orders have led to an increase in net sales within Business Area Information Logistics. Growth in this area was 30% during the second quarter compared with 20% during the first quarter. As for Stralfors, the deterioration in business has mainly affected operations within Graphic Solutions.
Graphic Solutions
Net sales for Graphic Solutions, which comprises the Business Areas Graphics and Labels, amounted to MSEK 856 (699) during the first six months. Operating income for the period was MSEK 53, which is somewhat lower than the figure for the corresponding period last year (56).
Renewed contract with customers in England and France within Gaming Products secured deliveries for several years ahead, but also involved lower price levels. Greater efficiency to improve production is gradually compensating for stagnating turnover within Forms. In spite of a drop in orders from the mobile telephone industry, for example, Business Area Labels reported an improvement in profit, attributable mainly to operations in Switzerland.
The fall in income for Graphic Solutions stems mainly from France. The lower price level squeezed margins and owing to the change-over to new products within Gaming Products the restructuring measures that were initiated have been postponed.
Information Logistics
Net sales for the first six months for Information Logistics, which comprises the previous Busi-ness Areas InfoConcept, Card Solutions and most of IT-Development, amounted to MSEK 283, an increase of 25% compared with the first six months of 2000 (MSEK 226) A large number of substantial orders led to a gradual increase in growth: 30% during the second quarter to be compared with 20% during the first quarter. Operating income during the period was affected by the considerable expense of building up the logistics operation in England.
Stralfors acquired Telia’s output data management operation on 1 February. This means that Stralfors has taken 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, Stralfors signed an agreement on collaboration and delivery to the value of MSEK 120 over a period of three years. This deal had a very positive effect on both turnover and income during the second quarter. A so-called Letter-of-Intent was signed in July with Post Danmark with regard to its printing and output data management operation.
SPI, System- and Product-related Information Transfer
The third business sector in the new organization, which comprises the Business Areas Laser-max and IT-Supplies, the company Stralfors TradeCom Solutions, and other businesses, re-ported net sales for the first six months of MSEK 524. This is MSEK 84 higher than the total reported for the first six months last year (440). The total of net sales for the first six months this year includes MSEK 46 (6), which amount derives from the computer peripherals business included in Siaco.
Operating income amounted to MSEK 13, an increase of MSEK 14, compared with the figure for the first six months last year (-1). Both Lasermax and IT-Supplies reported an increase in profit. This was achieved by Lasermax mainly because of a higher turnover and improved margins, and by IT-Supplies mainly by reducing costs. Income continued to be unsatisfactory for Stralfors TradeCom Solutions owing to a weak market.
Central items
Cost savings and the transfer of certain previous central resources have diminished the charge on income from the Group central functions during the first six months to MSEK 7.4 (26.3). Exchange gains from receivables in foreign currencies have also contributed to the reduction.
The Group
The operating income for the first six months of MSEK 76.7 corresponds to an operating margin of 4.6%. Excluding items affecting comparability, the operating margin for the corresponding period in 2000 amounted to 3.4%. A weaker gross margin as a result of price pressure within the Business Areas Graphics and IT-Supplies was compensated for mainly by a lower relative cost level. The return on operating capital during the first six months was 13%, to be compared with 9% for the first six months of 2000.
Income for the Group before tax for the first six months amounted to MSEK 70. Included in the corresponding income for the first six months in 2000 of MSEK 100 were earnings affecting comparability of MSEK 55, mainly surplus funds from Alecta. The lower finance net is due to the acquisition of Siaco.
The dividend per share for the first six months was SEK 2.16. The corresponding figure during the first six months last year of SEK 3.20 included earnings affecting comparability, which corresponded to SEK 1.85 per share.
Cash flow, liquidity and financing
The operating cash flow for the first six months amounted to MSEK 116, a considerable improvement compared with the figure for the first six months last year (28). The primary reason for the improved cash flow is a reduction in operating capital. Capital expenditure has been a charge of MSEK 51 on the cash flow, an amount that can be compared with the write-offs for the period of MSEK 69.
Liquid funds during the first six months have increased by MSEK 44, and amounted at the end of the half-year to MSEK 183. In addition, at the end of the period there were unused credit facilities totalling MSEK 513.
Shareholders’ equity during the first six months increased by MSEK 41, and amounted at the end of the half-year to MSEK 1 047, corresponding to SEK 49 per share. The equity/assets ratio at the end of the period was 51%, i.e., at the same level as at yearend (2000/01 (50).
Total assets have increased since the turn of the year 2000/01 by MSEK 72 to MSEK 2 070. As mentioned above, liquid funds have increased by MSEK 44, and the weakening of the Swedish krona has led to an increase in total assets of MSEK 59. Excluding these items, the total assets have diminished by MSEK 31 owing to a reduction in tiedup capital in fixed assets and inventories.
Outlook for 2001
Despite increased uncertainty about the development of business, the previous forecast of a continued increase in profit during the present year still holds good. The substantial increase in net sales for Information Logistics is expected to continue. Cost savings are being intensified in the French operation and will continue to be implemented in the other Stralfors units.
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, Executive Vice President and CFO, on +46 (0)372-852 34.
The next Report, covering the period January – September 2001, will be published on 8 November.
Business Concept
Stralfors is an IT-focused Business-to-Business company with a print heritage, and provides turnkey 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 3.1 billion, and operates in 11 countries with a total of 1900 employees. Stralfors ”B” shares have been quoted on the Stockholm Stock
Accuonting 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.
Ljungby, 9 August, 2001
The Board of Directors