SOLNA, Sweden, Nov. 5, 2002 (PRIMEZONE) -- Scribona:
- Sales in the third quarter of 2002 amounted to MSEK 2,617 (2,753).
- Operating income for the quarter improved to MSEK -19 (-81) and income after tax was MSEK -20 (-67). Operating income for the first nine months amounted to MSEK 1 (-139) and income after tax to MSEK -20 (- 132).
- The cash flow from operating activities amounted to MSEK -60 for the third quarter and MSEK 669 for the past 12-month period. The capital turnover rate has improved significantly.
- During the quarter, Scribona defended its market shares in all main segments and thus maintained its leading position in the Nordic market.
- Earnings per share for the first nine months amounted to SEK -0.39 (-2.90).
CEO's comments
In spite of a traditionally weak third quarter, Scribona is definitely on the right path and is well poised for a coming market upswing. In a market with weak growth, Scribona Distribution and Scribona Brand Alliance succeeded in improving their operating income despite temporary and isolated slumps in Distribution's Danish operations and Toshiba's document management sales. We have defended our position as market leader and although we are clearly disappointed with the third quarter's negative results, our determined efforts to gradually boost profitability are continuing to bear fruit. We anticipate a good fourth quarter on par with the preceding year.
Cash flow and capital employed have shown excellent development over the past 12-month period, thanks to a combination of structural changes in our logistic system and organization and ongoing efforts to improve our capital management. At the end of the quarter we had reduced capital employed by a full MSEK 328, which is a decrease of 24% compared with the corresponding period of last year.
THE MARKET
Compared with the preceding year, demand in Scribona's main markets showed varying development during the third quarter. The total Nordic market for PC products grew 3% in units sold. Home PC volumes remained high in Sweden, while the Nordic market for laptop PCs rose 12% and Nordic sales of PC servers were up 7%.
The market for document management products has contracted by around 10%. Although there are no reliable statistics for IT infrastructure products, this market is also estimated to have declined by at least about 10%.
The combination of falling prices, primarily in the infrastructural segment, and a decrease in units sold has further contributed to the shrinking market. The opposite trend has been seen in the document management market, where the average price per product has risen somewhat.
In general, sales to businesses and organizations have continued to decline, while consumer sales via home PC offers and electronics retailers have shown more positive development.
DEVELOPMENT DURING JANUARY - SEPTEMBER 2002
Sales and income in the third quarter
The Group's sales during the third quarter reached MSEK 2,617 (2,753), a decrease of 5%. For comparable units and at unchanged exchange rates, sales were down 10%. Sales were also affected by a continued drop in prices for IT infrastructure products.
Third quarter sales in the Solutions business area decreased to MSEK 395 (629), attributable to the transfer of high volume products to Scribona Distribution, significantly lower average prices and a continued weak IT infrastructure market.
Sales in the Distribution business area amounted to MSEK 1,976 (1,763), an improvement of 12%. Adjusted for comparable units and at unchanged exchange rates, sales were on a level with the preceding year.
Sales in the Brand Alliance business area have increased now that Toshiba Digital Media's previously declining laptop sales are picking up. Total sales in Brand Alliance reached MSEK 521 (519).
The Group's operating income improved by MSEK 62 to MSEK -19 (-81). The year-earlier figure was charged with a write-down of MSEK 50. Solutions achieved weak earnings growth during the quarter due to low sales, and reported a loss MSEK -10 (-9). While the operating result for Distribution was somewhat better at MSEK -7 (-9), this nonetheless disappointing result was entirely attributable to weak development in the Danish operations. Brand Alliance achieved earnings growth of MSEK 5 (-8) thanks to strong results for Toshiba Digital Mediaand Carl Lamm, while a temporary drop in earnings for Toshiba Document Solutions had a negative impact on income.
Sales and income for the first nine months
Third quarter sales amounted to MSEK 9,181 (8,053), an increase of 14%. PC LAN was acquired on April 1, 2001 and was therefore not consolidated in the Group during the first quarter of last year.
For the first nine months of the year, the Solutions business area reported sales of MSEK 1,606 (1,710), Distribution of MSEK 6,641 (5,152) and Brand Alliance of MSEK 1,507 (1,711).
Operating income for the first three quarters reached MSEK 1 (-139). The year-earlier figure was charged with a write-down of MSEK 50 and accounts receivable losses of MSEK 40. Aside from this, Distribution's dramatic rise in income to MSEK 11 (-60) is explained by volume growth and lower costs. Brand Alliance posted an improved operating income of MSEK 15 (-6), while Solutions reported a weaker result of MSEK -1 (7).
The Group's earnings growth was achieved in a generally unchanged market compared with the previous year, and has been facilitated by maximum realization of the synergy gains offered by the acquisition of PC LAN.
Net financial items for the period amounted to MSEK -27 (-41). The year- earlier figure included an MSEK 17 write-down of receivables in the partly-owned web development company Proventum.
Income before tax was MSEK -26 (-180).
Cash flow and financial position
The Scribona Group's cash flow from operating activities during the first three quarters was MSEK 45 (-75). Third quarter cash flow amounted to MSEK -60 and net investments to MSEK 26 (-43). During the quarter, two small-scale operations in Denmark were acquired in the Distribution and Brand Alliance business areas. Liquid assets at the end of the period amounted to MSEK 247 (225). At the end of September, structural changes and determined efforts to reduce tied up capital meant that net financial items weakened only slightly to MSEK-66 (-398). Capital employed has decreased by MSEK 328 over the past 12- month period, corresponding to a reduction of 24%. The capital turnover rate during the same period improved considerably to 12.5 times/year (9.3 for the full year 2001).
The accounts receivable securitization program through the international capital market which is described in the annual report for 2001 is expected to be carried out by the beginning of 2003.
Employees
The number of employees on 30 September was 1,488 (1,539).
Key ratios
Earnings per share for the first nine months amounted to SEK -0.39 (-2.90). Earnings per share over the past 12-month period, excluding items affecting comparability, totaled SEK -0.20 (-1.82 for the full year 2001).
Equity per share at the end of the period was SEK 18.82 (18.74).
The equity ratio on 30 September was 30.5% (24.0%).
Return on capital employed excluding items affecting comparability over the past 12-month period was 4.5% (-3.4% for the full year 2001). Including items affecting comparability, the figure was 4.7% (-7.2% for the full year 2001).
Over the past 12-month period, return on shareholders' equity excluding items affecting comparability was -1.1% (-9.1% for the full year 2001). Including items affecting comparability, the figure was -0.9% (-12.7% for the full year 2001).
DEVELOPMENT BY BUSINESS AREA
Scribona Solutions
Investments in IT infrastructure fell short of expectations, although most market analysts agree that there is a significant underlying need for increased infrastructural capacity owing to security requirements and data storage needs. The market weakened further during the quarter. The telecom industry's more restrictive attitude towards investment and a continued drop in average prices have further impacted sales. However, despite declining sales Scribona is judged to have maintained its leading position as a distributor of IT infrastructure products. With its potential for development, this business area is an important part of Scribona's future.
Third quarter sales in the business area reached MSEK 395 (629), down 37%. Half of the decrease is attributable to the transfer of high volume products to the Scribona Distribution business area. Operating income amounted to MSEK -10 (-9).
Sales for the first nine months totaled MSEK 1,606 (1,710). PC LAN was acquired on April 1, 2001 and was therefore not consolidated in the Group during the first quarter of last year. Operating income amounted to MSEK -1 (7).
Scribona Distribution
Market development for PC products in the Nordic region improved during the quarter, with a 3% increase is units sold. The corporate market remains weak and has declined further. Considerably stronger growth is being noted for consumer sales, primarily via home PC sales in Sweden but also via electronics retailers. Vigorous home PC activity was the main factor behind growth of a full 13% in the Swedish market. In the other Nordic countries, development ranged from +8% to -15%. The Nordic market for laptop computers rose 12%.
Third quarter sales amounted to MSEK 1,976 (1,763). After adjustment for comparable units and at unchanged exchange rates, this is on par with the preceding year. Scribona Distribution has thus retained its high share of the market for PC products. Strong earnings in Sweden and Norway, but a sharp decrease in Denmark, generated an operating income of MSEK -7 (-9). The decrease in Denmark has been analyzed and the measures taken are expected to have an effect already in the fourth quarter.
Sales for the first nine months amounted to MSEK 6,641 (5,152). PC LAN was acquired on April 1, 2001 and was therefore not consolidated in the Group during the first quarter of last year. Operating income amounted to 11 (-60).
Scribona Brand Alliance
Third quarter sales in the Brand Alliance business area were on par with the previous year, at MSEK 521 (519). The market for document management products shrank by around 10% during the quarter, while the laptop market increased by 12%. The earlier negative trend in the Toshiba Digital Media division has now reversed and sales are rising.
Operating income amounted to MSEK till 5 (-8). Although Toshiba Digital Media and Carl Lamm posted a significantly improvement over the same period of 2001, income was affected by lower earnings in Toshiba Document Solutions
Sales during the first nine months totaled MSEK 1,507 (1,711). Operating income was MSEK 15 (-6).
Accounting principles
This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR 20, Interim reports. The same accounting and valuation principles have been applied as in the most recent annual report with the following additions: In 2002, new recommendations for consolidated accounting (RR 1:00), intangible assets (RR 15), provisions (RR 16), write-downs (RR 17), borrowing expenses (RR 21) and closely affiliated companies (RR 23) went into effect. None of these new recommendations has led to a significant change in the previously applied accounting principles.
Facts about Scribona
Scribona is the Nordic market's leading provider of IT products and solutions, offering customers cutting-edge product expertise, the industry's leading e-commerce system, optimized product availability and a broad range of complementary services. Scribona's operations are organized in three business areas:
-- Scribona Solutions - value adding distribution of IT infrastructure
-- Scribona Distribution - effective volume distribution of IT products
-- Scribona Brand Alliance - exclusive agent for leading brand suppliers
Address:
Scribona AB, Sundbybergsvagen 1, Box 1374, SE-171 27 SOLNA. The company's registered office is located in Solna, Sweden.
For additional information, please contact: Lennart Svantesson, President & CEO, telephone: +46 8 734 35 76 Lars Palm, Executive Vice President, telephone +46 8 734 37 10 Anders Bley, Executive Vice President, telephone +46 8 734 35 55
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