Interim report January - June 2009 HL Display AB (publ)

* Net sales for January - June amounted to MSEK 696 (787).
    Operating profit was MSEK 38 (75) and profit before tax was MSEK
    38 (72). Net profit amounted to MSEK 27 (52).
  * Net sales during the second quarter of 2009 decreased by 15 per
    cent to MSEK 343 (404). Operating profit amounted to MSEK 21 (44)
    and profit before tax to MSEK 20 (44). Net profit was reported as
    MSEK 15 (31) and profit per share after dilution was SEK 0.47
    (1.01) .
  * EBITA-margin for the first six months was 5.5 (9.5) per cent and
    for the second quarter 6.0 (10.8) per cent
  * Earnings per share after dilution amounted to SEK 0.88 (1.67) for
    the first six months of the year.

Statement by the CEO

HL Display has been increasingly affected by the global economic
downturn in the first half of the year.  In the first quarter, a
lower demand was noted in most markets. This trend was even more
apparent in the second quarter. Total sales fell by 12 percent to
MSEK 696 in the first half of the year. Adjusted for currency
effects, the decline was 17 percent. However, it is our belief that
we have strengthened our competitiveness and market share in a weak
market.

Results affected by reduced sales
The decline in sales volume has had a negative effect on the profit
and has led to underutilization in production. Cost reductions at our
production facilities, and a shift in the product mix towards higher
margin products, have been offsetting the negative volume effects
somewhat. Operating profit for the first half of 2009 amounted to
MSEK 38, compared to MSEK 75 in the same period last year. The EBITA
margin amounted to 5.5 percent for the first six months of 2009. The
decrease in operating profit is somewhat an effect of lower sales
volumes, although it has partly been compensated by a reduction in
operating expenses, production cost and currency effects.

Differing trends among regions
Looking at the different regions in which we operate, it can be
observed that the market activity level is generally lower than last
year. However, the trends vary from region to region. We can clearly
see that sales decreases in markets serviced by external distributors
are larger than in markets managed by our own sales companies.
In Asia, HL Display is currently helped by the currency. In the first
half of the year, sales increased by 12 percent including currency
effects. Sales in local currencies were down six percent.
Sales in Middle Europe (countries such as Switzerland, Germany and
Austria) for the first half of 2009 were overall better than for the
rest of Europe. This was largely due to the fact that food retailers
in the region decided to keep investments in their stores at a higher
level than in other European countries.
In Southern Europe, there was clear evidence of a loss of investment
appetite among our customers during the second quarter. This was
particularly the case in Spain. Overall, the region's sales were down
15 per cent in the first half of 2009 in local currencies.
The region which was hit hardest by the financial crisis and economic
downturn was Eastern Europe, with many of the region's countries
experiencing severe negative economic growth. This is particularly
true of the important Russian market, where we are experiencing a
very tough market climate. However, if we compare the first and
second quarters, it can be seen that the situation has not
deteriorated further in Eastern Europe. Sales decreased by 26 percent
in the region during the first six months compared to the same period
last year.
The Nordic markets also experienced negative growth in the first half
of the year. Sales were down by 19 percent for the first six months.
However, in certain countries, such as Norway, growth and investments
in the food retail sector have been at a very high level for some
years. Consequently, the decline in sales is to some extent an effect
of a natural downward revision of the investment level.

Brand manufacturers still investing
Looking at our priority customer groups, the food retail segment is
the group which has decided to reduce its investments most. This
trend is common to most of our markets. Also in the non-food retail
segment, the propensity to invest has declined considerably,
particularly in areas affected by the economic downturn, which
include home electronics and "Do-it-yourself". In the brand
manufacturer customer segment, it is evident that many companies have
been adversely affected by the present situation. Nevertheless brand
manufacturers continue to invest in their brands, leading to
increased sales to this customer group for HL Display.

Rationalisation work continues
In the first half of the year, we continued our rationalisation
programme with undiminished vigour. Measures include short-term
management of the market situation in which we find ourselves and
important forward-looking measures designed to make HL Display a
stronger and more efficient company when the market turns.
In the first half of the year, we implemented targeted cost reduction
measures aimed at adapting capacity to lower demand and issued
redundancy notices at the Group's production facilities and sales
companies. We will however not see the full effects of these measures
until the third and fourth quarter of 2009. The number of employees
has decreased from 970 people in December to 920 people at the end of
June. In addition, we have taken measures to improve working capital
by actions aimed at reducing capital tied up in inventories and
receivables as well as payables improvements.
In a long-term perspective, we are focusing on processes and raw
materials in order to strengthen our production and our offer. We are
for example actively promoting increased use of recycled materials.
One such example is the decision that the new shelf divider system
launched in autumn will be partly manufactured from recycled PET
plastic.
We are also continuing the important work of establishing regional
service centres which will provide logistics and stock control, and
also encompass supporting and auxiliary services for administration
and finance for the regions' countries. This investment is designed
to increase cost efficiency and quality in the long term while
reducing capital in tied up inventories. The new service center for
parts of Central and Eastern Europe will open in Hungary in October
of 2009.

Continuing focus on innovation and acquisitions
Despite a tough market climate, we have decided to continue investing
in product development. This is one of our main competitive tools and
differentiates us from our competitors. In 2009, we will be launching
a number of new innovative products aimed at the retail trade and
brand manufacturers.
HL Display previously communicated the intention to strengthen its
market position and offering by means of acquisitive growth. This
work has continued during the first half of the year and we regularly
evaluate potential acquisitions.

Future development
In summary, we have been affected by a weak market in the first half
of 2009. The market situation in the future is also very uncertain.
At the same time it is important to emphasize that our financial
position continues to be strong. The measures that we have
implemented have ensured that we, despite sales decreases, are still
maintaining a profitable operation.
Although we are expecting more turbulent times ahead, I am convinced
that the long-term measures we have initiated will create a healthier
and better structured company when the market returns to normal.

Nacka Strand in July 2009
Gérard Dubuy
CEO

The full report incl. tables can be downloaded from the enclosed
link.