Strong growth and high profitability.
Comment from CEO Markus Granlund:
Demand increased further in the quarter and for the second consecutive quarter we reported double-digit sales growth for both Engineering & Digital Services and Product Information. Profit was stable for the seasonally weak quarter and profitability for the rolling twelve months remained at record levels. Our financial position is strong and even after the dividend payment to shareholders during the quarter our net cash is almost SEK 200 million. Digitalisation and sustainable product and production development as well as the customers' increased focus on aftermarket solutions were major contributing factors that enabled us to deliver another quarter with historically high figures.
Major need for sustainable innovation
Sales for the quarter amounted to SEK 371 million and total growth was 11 per cent, with a positive contribution from the acquisition of the IT company Squeed and an organic growth of 6 per cent. I am pleased to also see that our expertise, which encompasses both physical and digital fields, offers us an excellent position to help even more customers as we move forward. We can see increased demand for sustainable innovation and digitalisation services as our customers set new and challenging climate targets. In many projects we are accelerating the transition to sustainable alternatives, such as in our collaboration with Hystar, where we are contributing our expert knowledge in developing new technology for green hydrogen production.
Operating profit for the third quarter, which was negatively impacted by seasonal effects, amounted to SEK 33 million and the margin was 9.0 per cent. For the rolling twelve months, operating margin was 10.2 per cent, which was in line with the second quarter and our financial objective.
Positive development for each business area
Sales for Engineering & Digital Services amounted to SEK 231 million for the quarter, corresponding to total growth of 12 per cent, which was in part due to the acquisition of Squeed and in part organic growth, mainly in life science and the public sector/other. Profit for the quarter was SEK 18 million and operating margin 8.0 per cent, entailing a continued strong improvement compared with the same period of 2020 and a further improvement in margin on a rolling twelve-month basis. The acquisition of Squeed has further broadened our industrial mix and our offering.
The Product Information business area has again reported a historically high operating margin of 14.2 per cent for the third quarter and sales growth of 10 per cent. With more than 800 people in the business area, Product Information is a leading supplier of digital aftermarket solutions that is active on the global market. The rise in demand for digital learning has made a positive contribution to profit and together with Xtractor, which was acquired last year, we have developed our offering and strengthened our position further.
Strong performance creates new opportunities
In September, the important commercial and strategic decision was taken to separate Product Information and to explore the possibility for a public listing of the business area. The aim is to accelerate the long-term growth of each segment and to continue to create value for customers, employees and shareholders.
The decision was made on the basis of positive trends for future growth. As independent companies, they will have greater focus and flexibility and their actions will be both faster and better. As previously communicated, we will come back with more information about the process in conjunction with the year-end report for 2021.
We look forward to responding to the need for innovative and sustainable products, production solutions and digitalised aftermarket services and I expect continued healthy growth in the fourth quarter. We will retain our acquisition focus with the aim of strengthening our market presence, mainly in Northern Europe.
Göteborg, 19 October 2021
Markus Granlund, President and CEO
Telephone conference and audio cast
Today at 10:00 a.m. CET, Semcon's president and CEO, Markus Granlund, and CFO, Björn Strömberg, will present the report and host a Q&A session. For more information about the audio cast, please visit https://semcon.com/investor-relations/.
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