02/11/2000
- Growth area Information Logistics forms a new Business Area
- New contract with Canal Digital in the recently established business for logistics solutions
- Cost-reduction programme initiated
- Income for the period before tax: MSEK 71.1 (68.2)
Developments during the third quarter
As previously notified would be the case, the result for the third quarter was also weak. Net sales during the third quarter amounted to MSEK 664, of which MSEK 74 stem from the French company, Siaco, which was acquired during the year. Excluding Siaco, net sales during the third quarter amounted to MSEK 590, which is 2% higher than during the corresponding period last year (580).
Major customers of the graphics segment, Gaming Products, in France and Great Britain have amassed large surplus stocks over a long period. This has led to a marked decrease in orders during the second half of the year. The situation will gradually normalize during the fourth quarter this year. Stralfors’ e-commerce business in TradeCom Solutions has been adversely affected by the weakened market. The Labels business in Switzerland also experienced weak net sales during the third quarter.
By combining e-commerce technology with a central warehousing facility and the distribution of primarily the company’s own products, Stralfors offers customers efficient total solutions within the logistics area. The new business is being run in Sweden and England, and has now led to important contracts with customers. The cost of setting up the business, including the development of the system for e-commerce and Internet plus the recruitment of some 30 employees in England, has been a charge on the result for the second and third quarter respectively.
Income and net sales January-September 2000
Income before tax during the period January – September amounted to MSEK 71.1, which sum includes an item affecting comparability of net earnings of MSEK 27.8. Income of MSEK 54.8 was posted during the first six months of the year, an amount that is accounted for mainly by the surplus funds from SPP. Income for the third quarter has been charged with a restructuring cost of MSEK 27. Income before tax for the corresponding period last year amounted to MSEK 68.2, which was charged with costs affecting comparability of MSEK 20.
Net sales during the period amounted to MSEK 2 030, of which MSEK 110 refers to Siaco. Excluding Siaco, net sales amounted to MSEK 1 920, to be compared with MSEK 1 883 for the corresponding period last year.
Contracts with customers in the new business for logistics solutions
Important contracts have been concluded with Canal Digital in Scandinavia and with the National Health Service in England. The contract with Canal Digital is initially for the delivery of printed material, smart cards and other equipment for digital TV to their subscribers in Scandinavia. The contract with the National Health Service means that Stralfors will be handling the distribution primarily of graphics products to a large number of hospitals in England. Both these contracts, which will engender annual net sales amounting to a minimum of MSEK 60, are expected to lead to further business opportunities for Stralfors within the area Information Logistics.
New Group structure
Stralfors is now focusing its business on fewer and more clearly defined operations by creating three blocks: Information Logistics (with annual nets sales of approx. MSEK 425), Graphics products and services (MSEK 1 650) and System- and Product-oriented Information transfer, SPI, (MSEK 850). A comprehensive programme to cut costs is being carried out at the same time. By introducing these changes Stralfors wishes to create clarity and a way of working that is able to help its customers in every way to focus on their own core business.
The company will be a radically decentralized organization with three main areas of operation and short channels for decisions – a result of the rapid changes Stralfors has undergone in recent years. The new organization will be implemented immediately and will come into force in its entirety as of 1 January, 2001.
The block for information logistics forms a new Business Area. By utilizing a well-developed and com-plete concept, Stralfors will be offering customers service-oriented total solutions with a high degree of value added. Here Stralfors has pooled its knowledge and resources within, for example Smart Cards (Card Solutions), Input and Output Data Management (InfoConcept and Electronic Document Han-dling), Electronic processing of Credit cards (Stralfors Auriga) and Logistics.
The graphics block includes Business Area Graphics with gaming products and forms, and also Business Area Labels with marking and identification.
System- and product-oriented information transfer, SPI, includes Business Areas, Lasermax and IT-Supplies, and also the subsidiary, Stralfors TradeCom Solutions AB.
Cost-reduction programme
A decision was taken to set up a comprehensive programme to reduce costs to ensure the competitiveness of the Group and to reach the goals set for profitability and increased productivity. The programme is now under way and the aim is to have lowered the Group’s annual costs by at least MSEK 50 within nine months. It is estimated that the structural measures initiated at Siaco will lead to savings of a further MSEK 20, which will mean a total annual reduction in costs of at least MSEK 70. The cost-reduction programme has led to a non-recurring charge of MSEK 27. This amount has been posted as a cost affecting comparability during the third quarter.
Investments, financing and liquidity
Investments, excluding the acquisition of Siaco, amounted in the first nine months to MSEK 82. The acquisition of Siaco was a charge on the cash flow of MSEK 107.
Liquid funds increased during the third quarter by MSEK 1, and amounted at the close of the report period to MSEK 129. In addition, there are unused overdraft facilities totalling MSEK 401. The equity/assets ratio at the end of the close of the report period was 51%.
Outlook for the whole year
The current year has been marked to a large extent by the reorganization the Group is undergoing at present. It will not be possible to recover the loss of income made during the second and third quarters during the remainder of the year. Income for the whole year before tax is expected to amount to MSEK 90, which sum includes an item affecting comparability of net earnings of MSEK 28. Income before tax for 1999 amounted to MSEK 95 after a charge of costs affecting comparability of MSEK 27. Further measures to streamline the structure of the Group may influence the forecast result.
Financial information from Stralfors
Any questions you may have about the content of the Report may be addressed to MD Per Samuelson on +46 372 854 40 or to vice MD Kjell Åke Jönsson on +46 372 825 34.
The next trading report, Report on 2000 Operations, will be published on 13 February, 2001.
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 billion and operates in 11 countries with a total of 1 900 employers, 825 of whom are employed in Sweden. Stralfors has been quoted on the Stockholm Stock Exchange since 1984.
The Report has not been examined by the Company’s auditors.
Ljungby, 2 November, 2000
The Board of Directors