Structural measures and strong cash flow in fourth quarter

2014 was characterized by major uncertainty globally, which negatively affected
our customers. The Swedish export industry, which is important to Semcon, has
adopted a general wait-and-see attitude towards new investments. Some offices in
Germany also reported weak profitability, so work on customizing the offer for
the market is underway. A review of the business was carried out in Q4 to boost
profits. Efficiency measures and an adapted offer have meant redundancies in
Sweden and Germany, affecting a total of 45 people. Semcon also sold Zooma by
Semcon AB, with activities in online marketing and communication, affecting
around 20 people. Capital gains from the sale and structural costs negatively
impacted the operating profit by SEK 7 million net in Q4. It is pleasing however
that the year ended with a strong cash flow and that the Product Information
business area is continuing to report healthy sales growth and profits.
Fourth quarter
• The operating income was SEK 731 million (654) and organic growth was 6%
• The operating profit was SEK 27 million (22), giving an operating margin of
3.6% (3.3)
• The profit after tax was SEK 22 million (16)
• Earnings per share (EPS) after dilution was SEK 1.23 (0.87)

January-December
• The operating income was SEK 2,726 million (2,508) and organic growth was 5%
• The operating profit was SEK 102 million (125), giving an operating margin of
3.8% (5.0)
• The profit after tax was SEK 75 million (88)
• Earnings per share (EPS) after dilution was SEK 4.16 (4.86)
• The equity/assets ratio was 48% (48)
• Return on shareholders’ equity was 12% (15)
• The Board of Directors proposes an unchanged dividend of SEK 2.50 per share
(2.50)

Income and result
Fourth quarter
Operating income amounted to SEK 731 million (654). Adjusted for currency
fluctuations, acquisitions and divestments, organic growth was 6%. It is mainly
Product Information that is reporting excellent sales increases. The operating
profit was SEK 27 million (22), giving an operating margin of 3.6% (3.3). The
quarter was affected by SEK -7 million net for structural costs and capital
gains from the sale of Zooma by Semcon AB. Profits were hit last year through
structural costs of around SEK 10 million. Net financial items totalled SEK -1
million (-2), giving a profit before tax of SEK 26 million (20). Tax costs for
the quarter stood at SEK -4 million (-4). The profit after tax was SEK 22
million (16) and EPS after dilution was SEK 1.23 (0.87).

January-December
The operating income rose by SEK 218 million, amounting to SEK 2,726 million
(2,508), giving organic growth of 5%. Sales growth is mainly attributable to the
increased share of goods and services purchased in certain projects. The
operating profit amounted to SEK 102 million (125), giving an operating margin
of 3.8% (5.0). The decline is mainly attributable to lower utilization during
the second quarter.  There was also one fewer workday compared with 2013. Net
financial items totalled SEK -5 million (-7), giving a profit before tax of SEK
97 million (118). The tax cost for the year stood at SEK -22 million (-30). The
profit after tax was SEK 75 million (88) and EPS after dilution was SEK 4.16
(4.86).

Financial position
The operating cash flow from current activities was SEK 82 million (135). Cash
flow this year has, in addition to declining profits, also been affected by
increased tax and VAT payments of around SEK 30 million. Investments in
hardware, licences, office supplies and equipment, amounted to SEK 28 million
(24). The Group’s cash and bank balances amounted to SEK 152 million (153) with
additional non-utilized credit of SEK 273 million (262) as at 31 December.
Shareholders’ equity amounted to SEK 662 million (633) and the equity/assets
ratio was 48% (48). A dividend of SEK 45 million (36) was paid to shareholders
in Q2. The Group’s net debt amounted to SEK 14 million (net liquid assets SEK 7
million). Net liquid assets amounted to SEK 55 million (59) excluding pension
commitments. Over the year pension obligations rose by SEK 17 million, mainly
attributable to a lower discount rate and currency fluctuations. The interest
coverage ratio was 26 times (22).

Staff and organisation
The headcount on 31 December was 2,990 (3,001). The number of employees in
active service was 2,891 (2,851). In the respective business areas the headcount
is as follows: Engineering Services Nordic 1,038 (1,083), Engineering Services
Germany 1,044 (1,078), Engineering Services International 359 (331) and Product
Information 549 (509).

Outlook
Semcon estimates that customers’ development needs will remain strong, even
though the market situation is difficult to predict.
Björn Strömberg, CFO
+46(0)31-721 03 06
Semcon is an international technology company in the engineering services and
product information sectors. We have around 3,000 employees with extensive
experience from many different industries. We develop technology, products,
plant and information solutions along the entire development chain and also
provide many services and products in areas such as quality control, training
and methodology development. We contribute to our customers’ competitive
strength by providing innovative solutions, design and solid engineering
expertise. From 2014, business activities are run via four business areas:
Engineering Services Nordic, Engineering Services Germany, Engineering Services
International and Product Information. Work processes and solutions are adapted
to customer requirements, from taking part in the customer’s teams to in-house
development projects. The Group had annual sales of SEK 2.7 billion in 2014 with
activities at more than 45 sites in Sweden, Germany, the UK, Brazil, China,
Hungary, India, Spain and  Norway. Semcon’s biggest customers include: ABB, AB
Volvo, Audi, BMW, Daimler, Ericsson, Jaguar Land Rover, Scania, Volvo Cars and
VW. Read more at semcon.com