Interim report January-September 2019 – Pricer AB (publ)
Continued good profitability, tough comparison figures versus 2018
Third quarter 2019
· Net sales amounted to SEK 232.5 M (406.0), a decrease of 43 percent compared to the same period last year.
· Operating profit amounted to SEK 24.8 M (31.0), which corresponds to an operating margin of 10.7 percent (7.6).
· Order intake was SEK 222 M (286), a decrease of 22 percent compared to the same period last year.
· Order backlog amounted to SEK 132 M (338), of which the majority is expected to be invoiced in the next quarter.
· Profit for the period was SEK 27.0 M (27.4). IFRS 16 had a negative impact on profit of SEK -0.4 M.
· Earnings per share (basic) were SEK 0.25 (0.25).
· Cash flow from operating activities was SEK -1.8 M (-52.6).
· Net sales amounted to SEK 765.1 M (808.0), a decrease of 5 percent compared to the same period last year.
· Operating profit amounted to SEK 76.4 M (60.1), which corresponds to an operating margin of 10.0 percent (7.4).
· Order intake was SEK 661 M (994), a decrease of 33 percent compared to the same period last year.
· Profit for the period was SEK 78.6 M (61.5). IFRS 16 had a negative impact on profit of SEK -0.8 M.
· Earnings per share (basic) were SEK 0.71 (0.56).
· Cash flow from operating activities was SEK 26.0 M (24.5).
As of January 1, 2019, the company applies IFRS 16 to the Group’s leases. Data from previous years has not been restated. The equity/assets ratio decreased by 4 percentage points due to an increase in the balance sheet total.
Comments from CEO Helena Holmgren
It was expected that net sales in the third quarter of SEK 233 M would not reach last year’s record-high sales for a single quarter of SEK 406 M. This is due to the large U.S. customer project that contributed just over SEK 200 M to the net sales for the corresponding quarter of last year and which was not compensated by a similar project in 2019. Instead, the good news is that the underlying flow of small and mid-sized customer projects continues to show growth and that the geographic distribution indicates a widening of the addressable market.
Order intake for the third quarter amounted to SEK 222 M, which is a level that does not fully reflect the continued high activity we note in the market. Aside from the order totaling just over SEK 60 M from the Italian grocery store Tosano that was communicated in July, no other large customer projects were finalized during the third quarter. The unevenness created by the timing of large customer projects in terms of both order intake and sales for individual quarters has been mentioned many times before. Our overall picture remains that the market activity is high, and that the interest in store digitalization is growing rapidly in many geographical markets.
The third quarter was characterized by numerous in-depth customer projects, of which several are approaching final negotiation stage. As customers’ needs for solutions to streamline critical store processes are added to system evaluations, the complexity of integration increases, and each procurement process becomes more and more resource intensive. Competition in the market remains fierce. However, we remain convinced that the benefits of our unique system’s functionality, such as speed, reliability, scalability and battery life, respond better to the challenges facing retailers than any of our competitors’ systems.
The improved gross margin for the third quarter contributes to continued good profitability. Similar to the previous quarter, the product and contract mix combined with optimized component sourcing and good delivery planning had a positive impact on the gross margin. The weak Swedish krona also contributed positively.
The turbulence on the global market following the trade negotiations between the USA and China and the subsequent import duties has, as we have mentioned before, led to a deferment of business decisions. However, this same uncertainty has contributed positively to our cost development in the supply chain where, due to a globally declining demand in a number of different electronics segments, there has been a temporary overcapacity of components and transport, among other things. As the situation stabilizes, it is our assessment that costs will return to their previous levels.
To summarize, we are confident about the future. Digital store solutions are a natural part of the future of retail. Despite this, the global penetration rate of ESL (Electronic Shelf Label) systems continues to be low, and our primary competitor — the paper label — has no chance to keep up with the development.
President and CEO
Every care has been taken in the translation of this document. In the event of discrepancies, the Swedish original will supersede the English translation.
This information is information that Pricer AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency by the contact persons set out below, on October 25, 2019 at 13:00 CET.
For more information, please contact:
Helena Holmgren, President and CEO
Susanne Andersson, CFO
Phone: +46 8 505 582 00