11/08/2004
- Operating income MSEK 27.4 (4.0) excluding items affecting comparability
- Operating cash flow MSEK 85 (7)
- Large Nordic agreement with Telenor
- Net sales MSEK 1 555 (1 546)
- Net income after tax MSEK 8.3 (-10.8)
- Earnings per share SEK 0.39 (-0.50
Sales volume and income
During the second quarter, sales amounted to MSEK 763, which is 4% more than during the same period last year (737). In the previous Interim Report, it was noted that the negative sales trend of the two previous years was broken during the fourth quarter. This trend has strengthened during the second quarter. The Information Logistics Division shows a sales increase of 16% during the second quarter, which can be compared with 6% during the first quarter.
Operating income excluding items affecting comparability amounted to MSEK 3.5 during the second quarter, an improvement of MSEK 15 compared with the same period last year (-11.4). The improvement derives from the Graphic Solutions and Information Logistics Divisions.
For the full interim period, sales of MSEK 1 555 (1 546) are reported. The increase derives from the Information Logistics Division, which exceeded annual sales of MSEK 700 during the period.
Operating income for the interim period excluding items affecting comparability amounted to MSEK 27.4 (4.0). The improvement in earnings derives from the Graphic Solutions and Information Logistics Divisions. Within Graphic Solutions, the improvement is primarily due to lower costs, while the improvement within Information Logistics is income-related.
The operating cash flow has developed well, and for the interim period amounted to MSEK 85 (7). Earnings have improved, while both fixed and working capital have declined.
New business
The large number of new customer orders signed during the past year has, as shown above, now begun to show through in sales. Sales activity has continued to be intensive during the second quarter, and resulted in new orders from Telenor and ATG, among others. The contract with Telenor applies to all printing and distribution of invoices for all of Telenor’s wholly-owned companies in the Nordic Area. The order, which runs over three years, with deliveries commencing at the end of 2004, involves an annual production volume exceeding 30 million mailings. The order is one of the largest of its type ever signed in the Nordic Area. This is further confirmation of Stralfors’ expansion of total solutions within information logistics. The agreement with ATG applies to free programme sheets, and means that Stralfors will also manage the entire warehousing and logistics part, both of in-house produced printed items and products from other suppliers. Since 1981, Stralfors has been supplier of lottery tickets and betting slips for ATG.
Outlook for the remainder of the year
The assessment given in earlier reports remains. A large number of newly signed customer orders will successively generate an increasing flow of income during 2004. The prospects for continued earnings improvements during 2004 are thus good.
Graphic Solutions
The Graphic Solutions Division, consisting of the Business Areas Graphics and Labels, shows operating income of MSEK 32.1 during the first half of the year, almost double that of the same period last year (16.8). Reduced tying up of capital has meant that return on operating capital has more than doubled compared with the first half of last year.
A considerable part of the earnings improvement derives from the graphic business area. Costs have continued to come down, but increasing income during the second quarter has also contributed to the earnings improvement. New products and delivery solutions within the graphics business area continue increasingly to compensate for reduced volume within the traditional forms ranges. Several outsourcing agreements, including the agreement with ATG mentioned above, have been concluded, in which Stralfors looks after the entire printing and forms requirements of the customer.
Business Area Labels has experienced stable development in Scandinavia, while demand continues to be weak in Switzerland and Germany. Cost reductions carried out in these two countries have not fully compensated for loss of income. In Switzerland, further investment is now being made in production capacity for the so-called Multi-Label, a label for large amounts of information. This product is assessed to have considerable sales potential.
Information Logistics
The Information Logistics Division shows sales of MSEK 365 for the first half of the year, which is 11% better than during the same period last year (329). The increase during the second quarter was 16%. Operating income during the interim period amounted to MSEK 16.1, an improvement of MSEK 12.1 compared with the same period last year (4.0). MSEK 3 of the earnings improvement derives from the first quarter, and MSEK 9 from the second quarter. A large part of the improvement in earnings derives from the half-owned Danish operation, which now shows good profitability.
Of the four sub-areas within the Division, paper-based output data production, cards, logistical solutions and electronic information transfer, the paper-based output data production still dominates, both in terms of sales and results. As stated above, this area has obtained a large Nordic order from Telenor during the second quarter. The progress on the card side has, however, meant that this activity increases in importance. During the second quarter, the European Health Insurance card has been delivered in large quantities, and at the end of 2004, deliveries commenced of the new EMV card (Europay/Mastercard/Visa card).
SPI, System and Product-related Information Transfer
The SPI Division, comprising the Business Areas Supplies and Lasermax, the company Stralfors TradeCom Solutions AB and other activities, shows operating income for the first half of the year of MSEK 2.7 (16.9). Sales amounted to MSEK 465 (493). The decline in sales, which mainly derives from the first quarter, is primarily currency movements related, due to considerable invoicing in Norwegian kroner and US-dollars, two currencies which have weakened in relation to the Group currency, which is Swedish kronor.
Joint resources
The joint resources, which include Group-wide currency management, have burdened the Group’s operating income during the first half of the year to the extent of MSEK 23.5, which is considerably lower than during the same period last year (33.7). This improvement is primarily due to exchange rate differences of operating receivables.
Items affecting comparability
As from 2004, items affecting comparability are no longer reported on a separate line of the income statement.Items affecting comparability for the interim period of MSEK 1.9, which apply to costs of further reductions of personnel within the operations in France and Germany, are therefore reported in the income statement as cost of goods sold (MSEK 0.7) and selling and administrations costs (MSEK 1.2). Last year’s items affecting comparability have not been given new headings in the income statement.
Group earnings
Operating income for the interim period of MSEK 25.5 (–6.0) has been burdened with financial items of MSEK 4.3 (3.8), giving a pre-tax profit of MSEK 21.2 (–9.8). Tax cost is shown at MSEK 12.9 (0.7) and the net result for the period was thus MSEK 8.3 (–10.8). This is equivalent to earnings per share of SEK 0.39 (–0.50).
The high effective reported tax rate is primarily due to deferred tax receivables applying to tax deficit deductions not being fully utilised.
Investments, cash flow, liquidity and financing
For the first half of 2004, operating cash flow of MSEK 85 is reported, which can be compared with MSEK 7 during the same period last year. Both fixed and operating capital have declined during the interim period. Investment amounted to MSEK 39, while depreciation was MSEK 72.
The positive cash flow has been used, apart from dividends (MSEK 37), for reducing financial liabilities. The Group’s net liabilities (interest-bearing provisions and liabilities minus liquid funds), amounted at the end of the interim period to MSEK 112, of which MSEK 77 applies to interest-bearing provisions.
Liquid funds during the interim period have declined by MSEK 8 and amounted to MSEK 162 on 30 June. Additionally, at the end of the interim period, there were credit facilities not utilised totalling MSEK 696.
Shareholders’ equity at the end of the interim period amounted to MSEK 945, equivalent to SEK 44 per share. The equity/assets ratio is unchanged, 51%.
Financial information from Stralfors
Questions concerning the content of this report may be addressed to Per Samuelson, President and CEO, telephone +46 (0)372-854 40, or Kjell Åke Jönsson, Vice President, telephone +46 (0)372-852 34.
The next report, the Interim Report for January – September, will be published on 4 November.
The Closing Statement for 2004 will be published on 11 February 2005, which means a change to the date stated previously (10 February). The date of the next Annual General Meeting has been fixed for 3 May 2005. On the same day, the Interim Report for January – March 2005 will be published.
Accounting principles
This report has been prepared in accordance with Recommendation RR 22 (Formulation of Financial Reports) of the Swedish Financial Accounting Standards Council. Recommendation RR 29 (Remuneration to Employees) of the Swedish Financial Accounting Standards Council has been applied from 1 January 2004. As a result of this, the total pension liability of the Stralfors Group has been reduced by 5 MSEK. This amount will, after deduction of deferred tax, be reported directly against shareholders’ equity, see Changes in Shareholders’ Equity, above. Apart from that, the accounting principles and methods of calculation presented in the Annual Report for 2003 have been applied.
General audit
This report has not been examined by the Company's auditors.
Addresses and corporate identity number
Strålfors AB (publ). Corporate identity number: 556062-0618.
Postal address: SE-341 84 Ljungby.
Visitors’ address: Helsingborgsvägen 20, Ljungby.
Tel: +46 (0)372-850 00.
Web address: www.stralfors.com
Ljungby, 11 August 2004
Per Samuelson
President and CEO
Description of our Activities
Stralfors is an IT-focused Business-to-Business company with a print heritage providing 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 billion and operates in 12 countries with a total of 1740 employees. Stralfors “B” shares have been quoted on the Stockholm Stock Exchange since 1984.