08/11/2001
- Operating income increased by MSEK 89 (49)
- 50-percent growth within Information Logistics during the third quarter
- Continued profit improvement expected
Earnings trend
Operating income during the first nine months of the year amounted to MSEK 88.9, which is 81% higher than comparable income during the corresponding period last year (MSEK 49.0 excluding items affecting comparability). Operating income for the third quarter, MSEK 12.3, has been charged with MSEK 4.3. This being the non-recurrent cost of streamlining operations at Stralfors TradeCom Solutions AB. Excluding this non-recurrent charge, income for the quarter amounted to MSEK 16.6, an improvement of MSEK 14.6 on income for the third quarter last year (MSEK 2.0, excluding items affecting comparability).
Net sales amounted to MSEK 2 403, an increase of 18% (2 030). MSEK 190 of the increase in net sales can be attributed to Siaco, the French company acquired during the second quarter last year
The improvement in income is due to both an increase in turnover and reduced costs. Gross income has increased by MSEK 58, corresponding to 11%, to MSEK 595 (537), while selling and administrative costs have only increased by MSEK 17,corresponding to 3%, to MSEK 516 (499). Siaco has influenced the increase in gross income and costs, which has been included in the consolidated accounts as of June 2000. For comparable units, a higher gross income and lower costs, compared with the corresponding period last year, were reported for the period covered by the report.
The costsaving programme implemented in 2000 is proceeding faster than planned and has resulted in a gradual reduction of costs during the year. A large number of substantial orders have led to an increase in net sales within the Business Area Information Logistics. Growth in this area was slightly more than 50% during the third quarter, to be compared with 25% during the first six months of the year. As for Stralfors, the slowdown in business is noticeable primarily within the Swedish forms and labels operations. Other operations continue to have a good flow of orders.
Up to now, the cost saving programme has had an impact mainly within the areas covered by selling activities and administration. As of next year, the co-ordinating effect of Stralfors’ new business area structure will result in cost savings primarily within production, and will lead to more efficient administration. The Group’s purchasing routines are under review, and this is expected to result in more cost savings. On the whole, this should lead to a better gross margin, which has shrunk over the last year on account of the steadily growing pressure on prices. In order to advance from the current level of profitability, a 9% return on operating capital, to the goal of 20%, there has also to be a higher growth in net sales, which is considered to be realistic unless the recession becomes too deep.
The acquisition of Siaco
During October, Stralfors acquired 95% of the number of votes for all the shares in Siaco, which entitles the company to purchase the remaining shares. The compulsory purchase procedure is now in progress and is estimated will be completed before the turn of the year.
Graphic Solutions
Net sales for Graphic Solutions, which comprises the Business Areas Graphics and Labels, amounted to MSEK 1226 (1065) for the first nine months of the year. Of the increase in turnover for this period, MSEK 150 can be attributed to the acquisition of Siaco. Operating income for the period was MSEK 66, which is MSEK 4 higher than the figure for the corresponding period last year (62). The improvement in profit stems from the first and third quarters.
As mentioned above, the decline in business has led to dampened demand primarily within the forms and labels operations in Sweden. Integration with Siaco is proceeding as planned, and the operation reported improved profit during the third quarter. The rise in profit reported for operations in Switzerland compensated for the drop in income for the Swedish labels business. There is still a good flow of orders within the Gaming Products area.
Information Logistics
During the first nine months of the year, net sales for Information Logistics, comprising the previous Business Areas InfoConcept, Card Solutions and most of IT-Development, amounted to MSEK 422, an increase of 33% on the figure for the same period last year (317). A large number of substantial incoming orders at the operations in Sweden and Norway have gradually expanded the growth of business: a growth in net sales of more than 50% was reported during the third quarter. It is estimated that the long-term rate of growth will be in the order of 25%. Operating income for this nine-month period amounted to MSEK 26, an improvement of MSEK 5 on the figure for the same period last year. The rise in profit stems from the third quarter.
SPI, System- and Product-related Information Transfer
The third block in the new organization, comprising the Business Areas Lasermax and IT-Supplies, the company Stralfors TradeCom Solutions and other businesses, reported net sales during the nine-month period of MSEK 755, which is MSEK 108 higher than the figure for the corresponding period last year (647). The computer peripherals business included in Siaco accounted for MSEK 40 of the increase in net sales.
Operating income amounted to MSEK 10; an increase of MSEK 9 compared with the total for the first nine months last year (1). The improvement in profit derives from the Business Area IT-Supplies. During the third quarter this year, operations at Stralfors TradeCom Solutions have been confined to com-prise only EDI solutions. The Internet operation run earlier has been discontinued. This measure, which has been a charge of MSEK 4.3 on income for the third quarter, will already lead to better profit from the fourth quarter this year.
Central items
Cost savings and the transfer of certain previously central resources to the business areas have resulted in a reduction of the charge on income from the Group’s central functions during the first nine months of the year from MSEK 22 to MSEK 13 (35). Exchange gains from receivables in foreign currencies have also contributed to the reduction
The Group
Income for the Group before tax during the first nine months was MSEK 79. Included in the corresponding income during the same period last year MSEK 71, were net earnings affecting comparability of MSEK 28 (mainly surplus funds from Alecta, MSEK 55, and restructuring expenditure of MSEK 27). The lower financial net this year is due to the acquisition of Siaco.
Income per share during the first nine months amounted to SEK 2.43. Included in the corresponding figure for the same period last year (2.09) were earnings affecting comparability of SEK 0.90 per share.
Cash flow, liquidity, financing
The operating cash flow for the period amounted to MSEK 89; a noticeable improvement compared with the figure for the corresponding period last year (30).
The liquid funds during the period covered by the report increased by MSEK 37, and at the end of the period amounted to MSEK 167. Also at the end of the period, there were unused credit facilities totalling MSEK 505.
Shareholders’ equity increased by MSEK 63 during the period covered by the report, amounting at the end of the period to MSEK 1 070, corresponding to SEK 50 per share. The equity/assets ratio at the end of the period was 51%, i.e. at the same level as at year-end 2000/01 (50).
Total assets have increased since the turn of the year by MSEK 114 to MSEK 2111. As mentioned above, liquid funds have increased by MSEK 37, and the weakening of the Swedish krona has led to an increase in total assets of MSEK 98. Excluding these items, total assets have diminished by MSEK 21 owing to a reduction in tiedup capital in fixed assets.
Outlook for 2001
Each quarter of the current year has contributed to an improvement in operating income compared with last year. Owing to the uncertainty of the business situation, it is difficult to estimate the expected outcome for the fourth quarter. With the information that is available, however, among other things consid-ering that our efficiency programme is proceeding better than planned, our assessment is that the figures for the final quarter of the year also will be better than those for the corresponding quarter last year (MSEK 25). This assessment means that for the whole of 2001 operating income will be in the order of MSEK 120 to MSEK 130, to be compared with MSEK 74 (excluding items affecting comparability) for 2000.
Financial information from Stralfors
Questions or queries about the contents of this Report maybe addressed to Per Samuelson, CEO and Managing Director on +46 (0)372-854 40 or to Kjell Åke Jönsson, CFO and Vice Managing Director, on +46 (0)372-852 34.
The next report, the Report on 2001 Operations, will be published on 11 February, 2002.
Business Concept
Stralfors is an IT-focused Business-to-Business company with a print heritage, and provides total solu-tions within the field of information transfer. Stralfors develops, produces and delivers systems, serv-ices and products for the efficient communication of information crucial to operating a business. The Group has net sales of SEK 3.2 billion, and operates in 11 countries with a total of 1900 employees. Stralfors ”B” shares have been quoted on the Stockholm Stock Exchange since 1984.
Accounting principles
The interim report was set up according to the recommendations of the Swedish Financial Accounting Standards Council (RR20).
During quarter three this year a reclassification was made between costs of goods sold, sales- and administration costs. Comparative figures were recalculated due to this change. As to the rest the same accounting principles and methods of calculation were used as in the annual report 2000.
Review
The Report has not been examined by the Company’s auditors.
Ljungby, 8 November, 2001
The Board of Directors