CEO’s comment on Year-end report 2019:
We ended 2019 with an intensive and successful final quarter in which operating profit rose 20 per cent year on year and we reported an operating margin of 10 per cent. Looking back on the year, we improved operating profit by 19 per cent and profit per share by 15 per cent, and are now nearing the target of an operating margin of 8 per cent.
The successful strategic shift in recent years towards new fields of technology, a focus on offerings within digitisation, increased industry diversification, positive developments in productivity and other measures to strengthen margins have resulted in steady improvements to our operating margin and a strong financial position.
The Product Information business area has continued to expand its leading offering in digital aftermarket solutions. Through the use of AI, we can now help our customers streamline their service businesses and thereby ensure maximum operating lifetime, but also optimize performance through predictive maintenance. Our aftermarket solutions are becoming more relevant than ever as technology becomes increasingly complex, and we can see this in rising demand. In 2019, interest in Semcon’s offering in product information resulted in organic growth of 9 per cent and a more than 50 per cent improvement in operating profit for the business area compared with 2018. More than 70 per cent of contracts are managed service contracts, which create long-term and stable partnerships.
Through the Engineering & Digital Services business area, Semcon has taken a clear market position with genuine engineering expertise in the development of products and production. Combined with our specialist knowledge in, for example, electrification, digitisation and autonomous applications, this creates an attractive offering that is in line with the challenges facing our customers across all industries. Engineering & Digital Services strengthened its operating margin in 2019, though weaker demand from the automotive industry had an adverse impact on the business area’s growth during the year. Our focus on the Life Science area, where we have specialist knowledge of both production development and medtech, produced excellent results in the form of organic growth of 23 per cent.
The investment needed to develop tomorrow’s technology remains substantial among our customers. In response to growing market demand and to improve the platform for growth, we invested in activities aimed at supporting sales, primarily in the Engineering & Digital Services business area. These investments are expected to initially have a slight negative impact on operating profit in the first quarter of 2020. However, they are expected to have a positive impact on the year as a whole. Overall, we noted a strong end to 2019 and are beginning a new year with the ambition of growth and of further improvements to our operating margin.