Interim report January-June 2019 – Pricer AB (publ)
- Continued growth in net sales and higher operating profit
Second quarter 2019
· Net sales of SEK 270.7 M (222.0), an increase of 22 percent compared to the same period last year.
· Operating profit of SEK 34.1 M (20.1), which corresponds to an operating margin of 12.6 percent (9.0).
· Order intake was SEK 230 M (520), a decrease of 56 percent compared to the same period last year. Last year’s order intake included a large order totaling more than SEK 300 M from an American customer.
· Order backlog amounted to SEK 131 M (445), of which the majority is expected to be invoiced in the next quarter.
· Profit for the period was SEK 32.2 M (28.4). IFRS 16 had a negative impact on profit of SEK -0.2 M.
· Earnings per share were SEK 0.29 (0.26).
· Cash flow from operating activities was SEK -27.3 M (49.1).
First half of the year 2019
· Net sales of SEK 532.6 M (402.0), an increase of 32 percent compared to the same period last year.
· Operating profit of SEK 51.6 M (29.1), which corresponds to an operating margin of 9.7 percent (7.2).
· Order intake was SEK 438 M (708), a decrease of 38 percent compared to the same period last year.
· Profit for the period was SEK 51.6 M (34.2). IFRS 16 impacted operating profit negatively of SEK -0.4 M.
· Earnings per share were SEK 0.47 (0.31).
· Cash flow from operating activities was SEK 27.8 M (77.1).
As of January 1, 2019, the company applies IFRS 16 for the Group’s leases. Data from previous years has not been restated. The equity/assets ratio decreased by 3 percentage points due to an increase in the balance sheet total.
Comments from CEO Helena Holmgren
The year continued strong with growth in net sales of 22 percent during the second quarter compared to the same period last year. In turn, this resulted in an operating profit that increased to SEK 34.1 M (20.1). Both net sales and profit were positively affected by currency since SEK depreciated against USD and EUR.
Order intake of SEK 230 M (520) comes from a large number of orders from several customers with a broad geographic distribution. Last year’s order intake included a large order totaling more than SEK 300 M from an American customer. As we have previously communicated, the impact of large customer projects continues to generate volatility between quarters in terms of both order intake and sales. Demand for our system remains high, and we continue to note high market activity with an increasing number of customer dialogues and several new pilot installations. Order backlog at the end of the second quarter amounted to SEK 131 M (445).
The product and contract mix during the second quarter of the year is approximately the same as in the comparison period last year. Revenue growth, price reductions on several standard components and a higher degree of automation within production contribute to the gross margin in Q2 2019 of 33.2 percent (30.7). Delivery planning also made it possible to increase the utilization of sea freight instead of air freight during the year, which also had a positive impact on the gross margin.
Increased utilization of sea freight is one step toward our goal of reducing the company’s impact on the climate and part of our sustainability strategy. This method of transport is both cost- and climate-efficient, but it results in longer transport times, which leads to an increase in capital tie-up. To maintain good scalability and meet expected lead times to customers with broad geographic distribution, we increased our inventory in terms of both components and standardized finished goods. Cash flow from operating activities amounted to SEK -27.3 M (49.1) during the quarter. As mentioned previously, cash flow should be analyzed over time.
Competition on the market continues to be tough. Significant customer projects often attract a large number of suppliers, many of which have a primary focus of winning market shares at any cost. When retail chains evaluate the return of their long-term investment in an Electronic Shelf Label (ESL) system, the way they assess the systems’ functionality, stability, update speed and future development opportunities in the investment calculations can vary.
We are convinced that the benefits of our unique system’s functionality, for example speed, reliability, scalability and battery life, respond better to the challenges facing the retail industry than any of our competitors’ systems. One sign of this is the order from the Italian grocery chain Tosano for SEK 60 M that was communicated in July, where the customer’s need for advanced integration and real-time communication to optimize the flow of goods from the warehouse to the store shelf is provided by Pricer’s system of advanced digital solutions, such as dynamic product positioning and InstantFlash functionality.
In a market with several strong macrotrends, such as e-commerce, sustainability, digitalization and artificial intelligence, there are endless opportunities with regards to product development and innovation. The challenge lies in balancing risk and resource utilization with customer benefit and demand to ensure a long-term sustainable business model. It is with pride we conclude that Pricer’s focused innovation work, where we continuously develop the system’s capabilities both in terms of capacity and in the form of adding new solutions and application areas, enables true value creation for our customers and thus in the long run for our shareholders.
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 and the Securities Market Act. The information was submitted for publication, through the agency by the contact persons set out below, on July 18, 2019 at 13:00 CET.
For more information, please contact:
Helena Holmgren, President and CEO
Susanne Andersson, CFO
Phone: +46 8 505 582 00