Enea interim report, April – June 2011
Enea’s net sales fell by 6.2 percent over the second quarter. The operating margin for the Group was 4.1 (9.5) percent. The operating profit of SEK 7.4 (18.3) million was affected by restructuring costs of SEK 4.6 million in the second quarter.
The Software business unit reported that its sales were down 9.4 percent due to a quarter of very weak sales in the USA and France. Other geographical regions reported growth, however. The number of design wins in the Software business area amounted to 17 compared with 29 over the second quarter the previous year.
Net sales for the Consulting business unit fell by 1.5 percent, mainly because of the strengthened Swedish currency. Growth after adjustments for currency effects was 2.7 percent. Most of the regions in the Consulting business unit have shown growth in local currency, including the Öresund region.
Cash flow from operations amounted to SEK 44.3 (66.5) million during the second quarter.
The operating profit for the first six months of the year is on a par with the same period in the previous year.
The full year outlook for 2011 has been revised due to the second quarter result and an uncertain market situation, especially in North America. The company now expects net sales and profitability on par with the previous year.
Second quarter 2011 (second quarter previous year in brackets)
- Net sales, SEK 180.7 (192.6) million
- Growth, -6.2 (-5.1)%
- Growth, currency adjusted -2.8 (-6.8)%
- Operating profit, SEK 7.4 (18.3) million
- Operating margin, 4.1 (9.5)%
- Net profit before tax, SEK 8.7 (18.7) million
- Net profit after tax, SEK 5.2 (14.6) million
- Earnings per share, SEK 0.30 (0.84)
- Cash flow from operations, SEK 44.3 (66.5) million
First six months 2011 (same period previous year in brackets)
- Net sales, SEK 365.2 (378.9) million
- Growth, -3.6 (-7.6)%
- Growth, currency adjusted -0.6 (-10.5)%
- Operating profit, SEK 28.0 (30.1) million
- Operating margin, 7.7 (7.9)%
- Net profit before tax, SEK 30.0 (30.6) million
- Net profit after tax, SEK 20.3 (38.1) million
- Earnings per share, SEK 1.18 (2.20)
- Cash flow from operations, SEK 49.7 (70.6) million
Per Åkerberg, President and CEO comments:
“After a number of quarters of improvements in development, Enea’s result for the second quarter was a disappointment. Despite this, net profit before tax for the first six months of the year is in line with the same period in the previous year. Weak license sales in the USA is the main reason for the impaired result for the quarter which had an adverse effect on net sales. We have also implemented minor restructurings of the European operations to increase efficiency and reduce the future cost base. This resulted in a non-recurring cost of SEK 4.6 million which affected profit. The actions undertaken are expected to generate annual savings of about SEK 6 million.
In the long term, Enea has a positive market position, with rapid development in the field of digital communication which is leading to a strong increase in the number of units that communicate with one another. That said, Enea is still a company that can demonstrate uneven development in individual quarters.
In the Software business unit, we reported growth in Asia and Europe, with the exception of France. Business with our key customers went well, and production volumes were up compared with the same period in the previous year; a fact reflected in our royalty income, which grew over the second quarter.
A number of deals were postponed within our American operations, and this was our worst quarter in a very long time. On the other hand, we can see that our latest product launches have attracted a lot of interest, and we are confident that development in this region will improve in future.
As far as products are concerned, we were very active over the quarter. We launched among other things the industry’s first tool for the NetLogic Microsystems multicore processors for implementations using “bare metal” technology. This technology will allow customers to improve the performance of multicore applications, a field generating a lot of interest on the market.
Within business unit Consulting, we have focused and emphasized the Swedish consultancy operations under a separate name – Enea Experts. In this way, we want to make it clear to our customers that we have a good combination of the specialist areas in demand. This also means that our profile is becoming clearer and more attractive when we recruit, which is a crucial factor in achieving growth. Two out of three regions in Sweden demonstrated growth; and it is particularly pleasing to see that Öresund is one of these due to the fact that this region has been experiencing a difficult market position for a long time.
Our consultancy operations in both the USA and Romania continued to grow over the second quarter. In the USA, the number of consultants commissioned increased over the first six months of the year.
On a Final Note
We have revised the full year outlook for 2011 due to the second quarter result and an uncertain market situation, especially in North America. The company now expects net sales and profitability on par with the previous year.”
Press and analyst meeting
Press and financial analysts are invited to a press and analyst meeting where Per Åkerberg, President and CEO, will present and comment on the report.
Time: Thursday July 21 at 09:30 am CEST.
Link to slides: Financial Hearings
Phone: +46 (0)8 5051 3791 or +44 (0)20 7136 6285
Confirmation Code: 6565247
The full report is published at www.enea.com/investors