Third quarter
- Net sales for the third quarter reached
SEK 472 m (345), corresponding to an increase of 37%. Currency translations had a negative effect ofSEK 7 m on net sales - Order intake was
SEK 669 m (336), corresponding to an increase of 99% - Operating profit reached
SEK 101 m (77), equal to a 21.5% (22.3) operating margin - Profit after taxes totalled
SEK 84 m (61) and earnings per share wasSEK 1.81 (1.33) - Cash flow from operating activities amounted to
SEK 148 m (116) - HMS acquired 60% of the shares in
Owasys Advanced Wireless Devices S.L .
First nine months
- Net sales for the first nine months reached
SEK 1,401 m (1,061), corresponding to a 32% increase. Currency translations had a negative effect ofSEK 69 m on net sales - Order intake was
SEK 1,839 m (1,039), corresponding to an increase of 77% - Operating profit was
SEK 336 m (213), equal to a 24.0% (20.0) operating margin - Profit after taxes totalled
SEK 276 m (163) and earnings per share wasSEK 5.75 (3.58) - Cash flow from operating activities amounted to
SEK 405 m (286)
Comment from the CEO
The trend continues - order intake at new record levels
We continue to see a strong demand in our markets driven by increasing investments in automation, digitalization, energy efficiency and remote monitoring of industrial machinery. Order intake reaches a new record level and amounts to
The component shortage has also impacted our delivery capacity negatively. Our customers have a good understanding of the current component shortage situation and our assessment is that we do not lose customer orders to any greater extent due to longer delivery times. Despite the challenging situation sourcing components, we achieved net sales of
We estimate that the delivery situation has had a negative impact on our sales of approximately
The effect of the strong order intake and delivery challenges leads to a large build-up of the order book and we now have an order book of approximately
Our geographic markets
In our most important geographical market,
The lack of components results in short-term gross margin pressure
The global component shortage is now also affecting costs, and during the quarter we have seen prices of components multiply for some components, which has a negative effect on our manufacturing costs and leads to temporarily lower gross margin of 61.4%. To compensate for these cost increases, we are now implementing price increase for new orders. We expect to see the full effect of the price adjustments in the middle of next year, which means that the gross margin can be expected to be around current, somewhat lower, levels until mid 2022.
Our operating expenditures are increasing according to plan, in line with higher activities and new investments for growth. The increase in operating expenditures in combination with the temporarily lower gross margin mean that profitability is somewhat lower than the two previous quarters in 2021, even though we reach an operating profit of
The new family members deliver
Our latest acquisitions, Procentec and Owasys deliver. Procentec continues on a winning streak and has during the year shown an organic doubled net sales. Owasys’ business is developing as planned, although there are some challenges related to component supply.
Since we see it as probable that the existing put/call options will be exercised to increase HMS ownership to one hundred percent in these two companies we will, in accordance with IFRS, not report any minority. Thus, a liability is also reported that corresponds to the expected payment for the remaining shares in the two companies. In total, the assessment of these options affects our net debt of
Sustainability and staff
With more and more people fully vaccinated, the world is starting to open up again. Our employees now work from our offices to an increasing extent and we can meet more and more customers in person. Trade shows are also re-starting, albeit on a small scale. We have learned a lot about how we can conduct business more efficiently during the pandemic and we benefit from that. Still, we should not underestimate the importance of real-life meetings when it comes to maintaining relationships and creating new business.
Our sustainability work continues towards our goals for 2025 both when it comes to the environment, our employees, customers and responsible business. As part of the sustainability work, we have also signed the
Positive outlook but delivery challenges during the fourth quarter
Demand is expected to continue at a high level and most of our customers have strong underlying business. This is expected to continue in the coming quarters. The Group’s sales is now highly affected by the availability of components, and we estimate that our delivery capacity will remain at current levels for the remainder of the year and then gradually improve during next year. The situation on the component market is still uncertain and temporary setbacks cannot be ruled out. We have good relations with our customers, who understand the situation that has affected the entire industry and we see the risk of lost business as low.
We continue to work with a focus on long-term growth based on a balanced view of our costs. In the long term, we continue to believe that the market for Industrial ICT (Information & Communication Technology) will be an interesting area, both in terms of organic growth and acquisitions.
Halmstad
Chief Executive Officer
Further information can be obtained from:
Joakim Nideborn, CFO, +46 (0) 35 710 6983
This information is such that
Attachment
HMS Networks Q3 Report 2021
© OMX, source