Enea 2009 Full Year Report
STOCKHOLM, Sweden, 4 February 2010
For Enea, 2009 has been characterized by cost cutting and restructuring programs. Net sales have fallen by 15 percent, mainly due to reduced royalties from telecom customers and a downturn in the demand for consultancy services. That said, profits have improved over the year from a loss over the first quarter to an operating margin of 8.5 percent before non-recurring items for the fourth quarter.
Fourth Quarter
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Net sales SEK 195.1 (252.0) million.
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Revenues for the Software business unit SEK 91.0 (108.5) million.
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Revenues for the Consulting business unit SEK 113.6 (168.0) million.
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Operating profit SEK 13.1 (23.4) million.
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Operating profit before non-recurring items 8.5 (9.3) percent.
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Net profit after tax SEK 14.9 (31.8) million.
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Cash flow from operations SEK 35.9 (30.5) million.
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Earnings per share SEK 0.85 (1.76).
January – December
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Net sales SEK 777.7 (917.6) million.
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Revenues for the Software business unit SEK 339.7 (378.1) million.
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Revenues for the Consulting business unit SEK 488.0 (615.9) million.
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Operating profit SEK -4.1 (73.1) million.
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Operating profit before non-recurring items 4.9 (8.0) percent.
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Net profit after tax SEK 4.2 (88.3) million.
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Cash flow from operations SEK 70.3 (81.7) million.
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Earnings per share SEK 0.24 (4.90).
A word from the CEO
For Enea, 2009 has been a year of adjustment. Over the first quarter, Enea reported a loss. This was followed by a series of measures such as a new, focused strategy and an extensive restructuring program to bring down costs. The program is now at an end and the last of the restructuring costs have been included in the fourth quarter.
The fourth quarter has shown mixed results. Our net sales fell by 23 percent over the quarter, mainly due to lower sales than expected for consultancy. Operating profit has however shown stable development over the last few quarters and in the fourth quarter the operating margin before non-recurring items amounted to 8.5 percent.
For the full year, net sales declined by 15 percent. The decrease in net sales also affected profits, which were lower than last year. However, we did manage to reverse the negative trend at the start of the year, turning it into a profit on a full-year basis before non-recurring items.
We ended the year on a high note by winning our biggest deal ever. A global finance corporation selected Enea to supply software and consultancy services worth SEK 37 million.
Software
The performance of the Software business unit for the fourth quarter was as expected. Its profitability remained high, amounting to 17 percent for the fourth quarter. This is slightly below the margin target of 20 percent for the business unit, but we are well on our way to meeting this target even in the long term. New license sales remain stable, while the revenue flows from royalties fell due to fewer units sold by telecom customers. Moreover, our accounting principles for royalties were modified over the year, which means that the comparative figures for 2008 are slightly too high. All in all, this resulted in a reduction of 16 percent in net sales for the fourth quarter.
As far as products are concerned, our launch of multicore processor support has been the most important improvement of the year. Multicore is the major technology shift in real-time operating systems and is expected to be an important growth area in years to come. Enea is well positioned to play an active part in this development and take new market shares.
Consulting
Profits for the Consulting business unit were not as good as expected for the fourth quarter. Revenues fell by 32 percent and the operating margin was negative. Before non-recurring items, the operating margin was 1 percent compared with the long-term target of 10 percent. Development within Consulting was mixed. The Swedish consultancy operation has experienced the greatest downturn in demand over the year, mainly in the Öresund region. However, demand seems to be gradually on the increase again, and Enea has a good combination of expertise in the areas in demand.
On a final note
Now the end of 2009 is upon us, we see a more competitive Enea with substantially increased earning potential. For 2010, our ambition is to proceed one step further towards our margin targets for Software and Consulting.
To read the full report, visit www.enea.com/financialreports