CEO’s comment on interim report January-September 2019:
Our constant focus on strengthening profitability is having the desired effect. The third quarter’s profits and operating margins are considerably higher than the corresponding quarter in 2018. The main reasons for the earnings improvement are strong growth in new fields of technology, continuing industry diversification with the resulting higher remuneration, the positive impact of efficiency enhancements and that the quarter contained one more working day than the year-earlier period. Rolling 12 months, operating profit now amounts to SEK 134 million, with an operating margin of 7.2 per cent.
The Product Information business area is one of the largest and leading suppliers worldwide for digital product information solutions. Our deliveries enable customers to obtain greater impact from their service and aftermarket business using own-developed software and information solutions that create increased customer satisfaction, customer loyalty, higher repurchase rates and also lower our customers’ costs.
Product Information reported organic growth of 12 per cent and doubled its year-on-year operating profit for the first three quarters of the year. One contributing factor to the fine earnings trend is the business area’s large share of long-term Managed Service contracts, where we create significant value for our customers. This enables us to deliver effective solutions with a stable business model over time.
The Engineering & Digital Services business area, with its cutting-edge expertise in AI, automated production, servitisation and connected products and systems, more than doubled its operating profit for the quarter. We can now clearly see the positive effects on profitability from the measures implemented in the first half of the year. The strong improvement in earnings was also achieved despite a skills transition recently, which has had an adverse impact on growth. However, the demand for new technologies is steadily increasing, and the latest example of this is the electrification consortium in Brazil.
Interest is growing for our offering to the railway industry and to parts of the public sector. We look forward to growing our business in these segments where we can provide new perspectives and efficient future-proof solutions. Our increasing differentiation between industries and our international breadth has enabled us to create a stable foundation for profitable growth.
There is no doubt that the investment needs of our customers remain high. Making the right investment priorities is more important than ever with the increasing speed of technology change. I am proud of Semcon’s unique offering and ability to help our customers with the transformation, which is crucial for many. We create sustainable solutions that are good for the planet, end users and our customers.
Despite somewhat more uncertain market conditions, we expect to see sustained earnings improvements at the end of the year due to the efficiency enhancements carried out together with strong demand for Semcon’s value-creating offering.