Interim report January - September 2009 HL Display AB (publ)
(Thomson Reuters ONE) - * Net sales for January - September amounted to MSEK 1,022 (1,154). Operating profit was MSEK 65 (110) and profit before tax was MSEK 60 (110). Net profit amounted to MSEK 40 (78). * Net sales during the third quarter of 2009 decreased by 11 percent to MSEK 325 (367). Operating profit amounted to MSEK 26 (36) and profit before tax to MSEK 22 (38). Net profit was reported as MSEK 13 (26) and profit per share after dilution was SEK 0.42 (0.84) . * EBITA-margin for the first nine months was 6.3 (9.6) percent and for the third quarter 8.1 (9.7) percent. * Earnings per share after dilution amounted to SEK 1.31 (2.52) for the first nine months of the year.Statement by the CEOHL Display has been significantly affected in 2009 by the globaleconomic downturn. However, we have seen signs in the third quarterof having passed the worst period. Sales fell by 11 percent in thefirst nine months as a whole, and in the third quarter by the samepercentage. Further to a successful reduction of operating expenses,the operating profit has improved quarter by quarter.Differing trends among regionsThe geographical regions are affected by the crisis to differentdegrees and with major fluctuations from one month to another. It isevident that being an international company is helping to balance theeffects on a global level. We have been affected the hardest inCentral/Eastern Europe with volumes down by around 20 percent, whileAsia continues to show growth. The crisis has hit us later inSouthern Europe than in the other regions. The Nordic countries stillshow substantial decline.Satisfying resultsUnder the circumstances, it is satisfying to present a sound grossmargin and rising profit level over the year. The measures we havetaken in production have proven to be well-balanced and to pay offaccording to plan. Sales companies have also been downsized andadapted to declining market conditions. Reviews with tailored actionsmarket by market started at the end of 2008. Rationalization andrenegotiated agreements within the logistics and administrative areashave also been achieved. As a result, operating expenses fell by MSEK38 in Q3 compared with the same period last year (corrected forcurrency effects), and the number of employees decreased by more than110.New logistics centreAs set out in the plans for 2009, we started our new logistics hub inGyör, Hungary on 1 October. This is a further step towards theregionalization of our widespread organization. When it is fullyimplemented the new hub will serve six countries in the centralEuropean area, expecting to result in lower costs, better control andmore professional handling of purchases and logistics.Continued focus on innovation and acquisitionsWe are now launching a new innovation - thus demonstrating that HLDisplay also takes the lead when implementing new technology in thestores. PowerTrackTM is a unique system for supplying power to theshelf. This solves a problem for our customers that wish to use newtechnology such as digital signage, but have so far lacked acost-efficient and flexible means of power supply. This newinfrastructure is open to all low-voltage applications, but we see agreat potential when combined with Ad'liteTM - a new lighting systemdeveloped by HL Display.A third important launch is the improved version of our successfulmerchandising system, Optimal+, which contains recycled PET as partof our "We Care" sustainability program.We continuously evaluate possible acquisition targets that couldcontribute in markets and segments where we have identified unusedpotential.A successful adjustmentThe year so far has been characterized by actions to adjust to lowervolumes. The strongest measures are now behind us, and will givefurther effects in the fourth quarter. Now we have a balance betweencapacity and demand in the financial situation we face today.Nacka Strand in October 2009Gérard DubuyCEOInterim reportNet sales and profit for the first nine months 2009The Group's net sales amounted to MSEK 1,022 (1,154) for the firstnine months, representing a fall of 11 percent compared with the sameperiod 2008. Movement in the value of the SEK vis-à-vis the tradingcurrencies as a whole has affected net sales positively by MSEK 52 incomparison with last year.The operating profit for the period was MSEK 65 (110) and the profitbefore tax amounted to MSEK 60 (110). Movement in value of the SEKcompared to last year has had a positive effect of MSEK 7 on theoperating profit (see table on page 4). Financial net for the periodamounted to MSEK -4.7 (-0.7) of which net interest represented MSEK-1.3 (-1.5) and exchange rate effects MSEK -3.4 (0.8). Apart fromSEK, HL Display's most important trading currencies are the euro, theBritish pound, the Russian ruble, the Norwegian krona and the SwissFranc.The gross margin has remained basically unchanged, at around 49percent. Operating expenses have decreased by MSEK 18 or 5 percent incomparison with last year. Adjusted for currency fluctuations,operating expenses have decreased by MSEK 38.Net sales and profit for the third quarter 2009Net sales for the Group amounted to MSEK 325 (367) for the thirdquarter, representing a decrease of 11 percent compared with the sameperiod 2008. The operating profit for the third quarter was MSEK 26(36) and the profit before tax amounted to MSEK 22 (38). Financialnet for the third quarter amounted to MSEK -4.4 (2.3) of which netinterest amounted to MSEK -0.8 (-0.1), and exchange rate effects toMSEK -3.6 (2.4).Market developmentsDemand for HL Display's products and solutions are largely affectedby the performance of retail trade. When retail trade is healthy,demand for HL Display's products and solutions tends to rise, andvice versa. In the first nine months of the year retail trade wasaffected by the global economic downturn. As a consequence investmentlevels within the sector have been heavily reduced.Sales by geographical segment9)Sales in the Nordic region, including the Baltics and the UK, fell by17 percent during the first nine months as compared to the sameperiod last year. The corresponding decrease in local currencies (LC)was 19 percent. The situation in Middle Europe differed to the restof Europe, and still showed an increase after six months- but has nowbeen hit by the crisis and declined overall by one percent (LC -7percent). Sales in Southern Europe resisted quite well in thebeginning of the year, but after nine months have declined by 7percent (LC -17 percent). Sales in Central/Eastern Europe fell by 24percent (LC -20 percent). Sales in Asia/Australia increased by 11percent (LC -7 percent).Seasonal effectsHL Display is normally affected by seasonal variations, with lowersales in December and January. This is due to customers, who areprimarily retailers, not planning for changes during the Christmasshopping period.InvestmentsDuring the first nine months, net investments in non-current assetsamounted to MSEK 20 (27). Scheduled depreciation amounted to MSEK 28(27). The outstanding minority share of the co-owned sales company inChina was acquired in the beginning of the year for MSEK 4 further towhich the Group no longer holds any minority shares.Cash flow and financial positionCash flow during the first nine months amounted toMSEK --8 (--1). A dividend amounting to MSEK 43 (43) was paid in thesecond quarter. Cash flow from operating activities increased to MSEK59 (56). as a result of improvements in receivables, payables andinventories.Cash flow during the third quarter amounted to MSEK 13 (16), of whichoperating activities amounted to MSEK 21 (16).Operating cash flow (for definition, see note 4) for the first ninemonths was MSEK 78 (65). The period's operating cash flow per sharefor the first nine months was SEK 2.53 (2.09) and for the thirdquarter SEK 0.82 (0.59) per share.Liquid assets amounted to MSEK 210 (177), as of 30 September 2009,and at the beginning of the year to MSEK 221. Interest-bearing netreceivables amounted to MSEK 118 (39) as per the balance sheet date.The equity ratio as per the balance sheet date amounted to 61.3(54.7) percent. At the beginning of the year the equity ratio was57.3 percent.EmployeesThe average number of employees during the period was 927 (987). Thenumber of employees as per the balance sheet date was 873 (989) andat the beginning of theyear 974.Risks and uncertainty factorsVariations in raw material prices and exchange rate differencesconstitute uncertainty factors, but not significant risks. For acloser description of the risks and uncertainty factors facing HLDisplay, please see the risk and sensitivity analysis on page 32 ofthe Annual Report for 2008.Parent CompanyThe Parent Company's profit after financial items for the first ninemonths of 2009 amounted to MSEK 51 (loss: -64).No significant changes have been noted in the income statement orbalance sheet. For the Parent Company's contingent liabilities, seenote 11.Nomination CommitteeMembers of the Nomination Committee to the Annual General meeting tobe held on 22 April 2010 are Johan Lannebo (Chairman), Fund Managerat Lannebo Mutual Funds, Adam Gerge, CEO Didner & Gerge Fonder, ArneKarlsson, CEO Ratos AB and Anders Remius, Chairman ofHL Display AB.Related party transactionsPlease see note 5 for related party transactions.Significant events further to the balance sheet dateFurther to the balance sheet date, an ongoing discussion with theAmerican partner in the company's two joint ventures - TrionIndustries - has developed into a dispute with legal implications. Apossible termination of the American co-operation could imply anon-recurring cost of MSEK 10 to 15. The Group's results have notbeen affected by this in the reported period.Prospects for the remainder of 2009As communicated in a press release on 2 April 2009 the Group's netestimated sales for 2009 will lower than 2008. The Company'slong-term growth and profitability targets remain unchanged.Nacka, October 21st, 2009Gérard DubuyMember of the board, Managing Director and CEOThe full report incl tables can be downloaded from the enclosed link.http://hugin.info/1092/R/1348837/324761.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 21.10.2009 - 08:40 Uhr
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