Enea interim report, January – March 2011
The operating profit increased significantly in the first quarter of 2011 compared with the same period previous year. The group’s operating margin was 11.2 (6.3) percent and the profit before tax totaled SEK 21.3 (11.9) million.
Net sales fell by 1.0 percent in SEK but rose by 1.6 percent after adjustments for currency effects. The Software business unit reported a 2.3 percent increase in net sales during the quarter with continued improved profitability. The Consulting business unit saw net sales decline with 2.7 percent while its profitability improved compared with the same period the previous year.
Cash flow from the operations amounted to SEK 5.4 (4.1) million during the quarter.
The full-year outlook for 2011 is unchanged. The company expects net sales to increase compared with the previous year and profitability to continue improving.
First quarter 2011 (first quarter previous year in brackets)
- Net sales, SEK 184.5 (186.3) million
- Growth -1.0 (-10.1)%
- Growth, currency adjusted 1.6 (-6.2)%
- Operating profit, SEK 20.6 (11.8) million
- Operating margin 11.2 (6.3)%
- Net profit after tax, SEK 15.1 (8.7) million
- Earnings per share, SEK 0.87 (0.50)
- Cash flow from operations, SEK 5.4 (4.1) million
Per Åkerberg, President and CEO comments:
“Enea had a good start to the year. Our operating profit has increased significantly and we have also reported growth in local currencies. Our main priority for the year is profitable growth.
Development in digital communication has led to a strong increase in the number of connected devices. With new Internet services, e.g. streaming video, more data is being sent in the networks.As a result, network traffic is increasing exponentially, which in turn will generate demand for the type of solutions that Enea has to offer. This development was highlighted at the Mobile World Congress in February. The range of smart phones and tablets is growing drastically and mobile operating systems such as Android are spreading to other communication devices than telephones. Multicore processors are no longer only available on the infrastructure side but have also reached the consumer product market. For Enea this has been noticeable in the number of new deals for multicore operating systems. Multicore is one area that will be instrumental in allowing us to reach our growth targets, so this development is very good news indeed.
The Software business unit experienced solid growth during the quarter, reporting a growth of 2.3 percent in SEK and 4.6 percent after adjustments for currency effects. Profitability continued to increase and the operating margin was 16.9 percent. Both new license sales and royalties saw stable growth during the quarter.
On the product side we have taken a strategically important step with the launch of our improved Linux offering. Many of our customers use a realtime system such as Enea OSE together with Linux and we need a share of this business in order to achieve success in the long-term. I am happy to report that our strategy was proved correct as we closed our first Linux deal related to the improved offering during the quarter.
Our collaboration with the semiconductor manufacturer Freescale has been intensified. During the quarter we took part in Freescale’s partner meetings and have conducted a number of joint marketing activities. This collaboration is on the right track despite continuing to progress more slowly than we initially planned.
In the first quarter, the Consulting business unit’s revenues fell by 2.7 percent in SEK but rose by 0.5 percent after currency adjustments. The operating margin also climbed to 5.1 percent.
In the Swedish operation, demand has been good but we have had difficulties maintaining the recruitment rate that we planned for. In the North American operations, on the other hand, both the workforce and revenues have increased after a number of new deals were concluded.
Demand for Enea’s consultancy services has gradually returned, even in the Öresund region where the state of the market has been difficult for a long period. Enea has a good combination of competence in the area under demand.
On a final note
Enea is in a strong financial position and our shareholders will now be benefiting as the Annual General Meeting resolved upon a redemption program at a value of SEK 5.00 per share.
Our assessment for 2011 is that net sales will increase compared with the previous year and that profitability will continue to improve.”
The full report is published at www.enea.com/investors