Enea Interim report, April-June 2010
Enea continues to improve operating margins
Over the second quarter of 2010, Enea has continued to improve its results compared with the same period in the previous year. The operating margin for the Group amounted to 9.5 percent, and the operating profit amounted to SEK 18.3 million. The Software business unit has demonstrated both growth and significantly improved profitability compared with the second quarter last year. The Consulting business unit has continued to improve its profitability over the quarter and has increased the revenue compared with the previous quarter.
Cash flow from operations was very strong and strengthened Enea's good financial position even further.
The outlook for the year 2010 remains unchanged. The company is expected to demonstrate stable income development, and that it will see a considerably improved operating profit compared with 2009.
Second quarter
- Net sales, SEK 192.6 (202.9) million.
- Revenues for the Software business unit, SEK 91.2 (84.9) million.
- Revenues for the Consulting business unit, SEK 115.1 (129.3) million.
- Operating profit, SEK 18.3 (4.6) million.
- Net profit after tax, SEK 14.6 (5.0) million.
- Cash flow from operations, SEK 66.5 (15.1) million.
- Earnings per share, SEK 0.84 (0.28).
First six months:
- Net sales, SEK 378.9 (410.2) million. The comparative figures for the previous year are affected by a change in the accounting for royalties, which had a negative effect of SEK 7 million over the first quarter.
- Revenues for the Software business unit, SEK 177.9 (165.4) million.
- Revenues for the Consulting business unit, SEK 227.9 (274.6) million.
- Operating profit, SEK 30.1 (-32.1) million. The comparative figures for the previous year include a non-recurring writedown of SEK 24.5 million over the first quarter.
- Net profit after tax, SEK 23.3 (-20.2) million.
- Cash flow from operations, SEK 70.6 (36.6) million.
- Earnings per share, SEK 1.34 (-1.13).
Per Åkerberg, President and CEO comments:
"Enea has continued to considerably improve its profitability over the second quarter. Our two business units, Software and Consulting, are making further progress towards our long-term profitability targets, while at the same time our net sales figures are demonstrating an ever clearer positive trend. Over the previous year we adapted our operations in a number of ways, which has resulted in fewer consultants, fewer product developers and a lower cost base. Despite this, we are now seeing growth in Software and recovery throughout most of Consulting. The operating profit is significantly better than last year, amounting to SEK 18.3 million; equivalent to an operating margin of 9.5 percent As far as revenues are concerned, we have not reached last year's net sales levels and are reporting net sales which were 5 percent lower than in the second quarter last year.
Enea has had a good financial position over the last few quarters, and over the second quarter this has been further reinforced by a strong cash flow of SEK 66.5 million from operations; despite the fact that we paid a dividend to our shareholders of SEK 1.50 per share, or SEK 26 million in total.
Software
The Software business unit has demonstrated both growth and improved margins over the quarter. The operating margin has climbed by more than four percentage points since the previous quarter, amounting to 15.5 percent. This is very much in line with the long-term margin target for the business unit, at 20 percent. With 29 design wins in the second quarter, which is more than twice as many as in the first quarter, Enea has continued to strengthen its market position and laid the foundation for further growth.
As far as products are concerned, we have deepened our cooperation with Freescale Semiconductors. In our industry, the success of the operating system is dependent in part to how well the products are adapted to the hardware, and a partnership such as our partnership with Freescale gives us an early insight into future product road maps, giving us the opportunity to work together to adapt our products in order to optimize performance for customers. Our cooperation with Freescale also involves joint development of customers together with Freescale's global sales force. As part of this cooperation, we have also announced a number of product improvements within multicore for Freescale processors. 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
The Consulting business unit has also improved its operating margin compared with both the first quarter and last year. The operating margin amounted to 3.6 percent in the second quarter. This should be compared with the long-term target of 10 percent. All five regions have demonstrated positive development, and we can see gradual recovery in terms of both net sales and profitability. The recovery in Öresund is slower than the other regions.
On a final note
In the long term, Enea has good opportunities to continue its positive development and create long-term value for shareholders through both organic growth and acquisitions. For 2010, our ambition is to further underpin our market position and continue to improve our profitability."
The full interim report is available on Enea's website www.enea.com