Quarterly Report • May 4, 2011
Quarterly Report
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– Currency impact affects the margin negatively
"We note a significant increase in the order intake and sales in the first quarter. The higher growth rate during the autumn of 2010 has continued throughout the first part of 2011. The expansion has also a good mix of recurring and new customers and a wide geographical spread. We have taken important deals in America, Asia and Europe. Furthermore, the volume delivered to customers has never been so high during a first quarter. Our margin was, on the other hand, lower in this past quarter, mainly due to negative currency effects, however, the underlying margin is still favorable. In all, we expect to be able to generate higher net sales and profit for the full year 2011 as compared to 2010.
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Order intake and net sales increased significantly as compared to the comparable quarter in the past year. A number of frame agreements for deliveries this and coming years have been signed which is partly already reflected in the order position.
During the quarter several installations have taken place at large customers with a dominant share to France, being the largest market for Pricer. The relation with Carrefour is significant with ongoing replacement of older systems for electronic shelf labels (ESL-systems) in hypermarkets and in parallel sales to other store formats.
A large supermarket retailer in France has decided to equip an additional 85 stores with Pricer at an expected value of SEK 25 M. Castorama continues its program to equip all stores in France with ESL-systems. Deliveries to the French retail group Schiever, an affiliate of the Auchan group, are continuing. This is particularly interesting as Auchan is a new customer to Pricer.
Also outside of France progress is being made. The agreement with Coop Nordic is beginning to generate results and discussions are ongoing with several Coop retailers mainly in Sweden and Norway. The development is also positive in other countries, notably in Italy.
Deliveries to South Africa continue and the interest for ESLsystems in the Middle East has increased even if volumes are still limited.
A North American retail chain with over 250 food stores continues its large installation of ESL-systems. Pricer has received additional orders for installations in 40 stores in 2011.
Soriana, a large supermarket chain in Mexico, is installing Pricer systems across the country. Soriana signed a new contract during the first quarter for the installation of150 additional stores, to be delivered during 2011 and 2012. The value of the contract is estimated at SEK 50 M.
Pricer and japanese Ishida have agreed to revise the license agreement signed in 2007. The agreement includes that Ishida has placed orders for ESL equipment, valued at SEK 40 M, to be delivered in 2011 – 2012.
The earthquake in Japan has only had a limited impact on operations. Regarding component supply, alternative sources have been established for the relevant components in question.
Order entry in the first quarter more than doubled and amounted to SEK 215.6 M (100.1). Excluding the negative currency effect the increase was 137 percent as compared to the past year. The Swedish krona has strengthened as compared to Pricer's main trading currencies, the euro and US dollar. The order backlog amounted to about SEK 188 M (103) atthe end of March.
Net sales were SEK 111.1 M (69.7) during the quarter - an increase of 59 percent as compared to the first quarter of 2010. Excluding the negative currency effect the increase was 75 percent.
Order Entry, SEK M
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| Q 1 2011 |
Q 1 2010 |
|
|---|---|---|
| % change in Orders | 115% | 48% |
| whereof currency effect | -22% | -15% |
| % change in Orders adjusted for currency effect | 137% | 63% |
| % change in Sales | 59% | 10% |
| whereof currency effect | -16% | -9% |
| % change in Sales adjusted for currency effect | 75% | 19% |
Growth would have been higher with currency rates prevailing last year, as both the euro and the dollar were stronger against the krona
Gross profit amounted to SEK 33.6 M (36.1) and the gross margin to 30 percent (52) for the quarter. The gross margin was not as high as it was in the first quarter of 2010, when it was especially high due to a generally favourable mix of products and services and positive effects from currency contracts. The gross profit during the first quarter has been effected with realised and unrealised currency effects from hedging contracts contributing with a net of SEK -6.2 M (2.9) during the quarter. Gross margin was 36 percent before this effect. Furthermore, the increased level of airfare, due to the intensified deliveries based on customer demands, has had a negative impact on the result.
Operating expenses amounted to SEK 26.0 M (24.1) during the quarter. Operating result was SEK 7.6 M (12.0) during the quarter leading to an operating margin of 6.8 percent (17.2).
Net financial items were SEK -3.2 M (-2.1) for the quarter and consisted mainly of negative currency revaluations of loan assets and cash positions. No tax is charged to profit in the quarter because of available tax loss carry-forwards.
Net profit was SEK 4.9 M (10.4) for the quarter. Translation differences in other comprehensive income consisted of negative currency revaluation of assets, notably goodwill and loans to a subsidiary, denominated in euro.
| Q 1 2011 |
Q 1 2010 |
|
|---|---|---|
| % Gross Margin | 30% | 52% |
| whereof value changes in currency futures | -6% | 4% |
| % Adjusted Gross Margin | 36% | 48% |
The result in the first quarter has been affected negatively by revaluation of currency hedging contracts. The effect was positive in the preceding year.
| SEK M | Jan - Mar 2011 |
Jan - Mar 2010 |
|---|---|---|
| Net sales | 111.1 | 69.7 |
| Cost of goods sold | -77.5 | -33.6 |
| Gross profit | 33.6 | 36.1 |
| Gross margin, % | 30.2 | 51.8 |
| Expenses | -26.0 | -24.1 |
| Operating profit | 7.6 | 12.0 |
| Operating margin, % | 6.8 | 17.2 |
Cash flow from operating activities has developed positively and amounted to SEK 29.9 M (10.8) for the quarter. Working capital amounted to SEK 166.6 M (110.9) at the end of the quarter, equivalent of a reduction of10 percent from the level of SEK 186.1 M at the beginning of the year. Cash and cash equivalents at March 31, 2011 amounted to SEK 97.5 M (109.1).
In addition to available cash, Pricer has bank facilities in place amounting to SEK 50 M, of which SEK 25 M in the form of bank overdraft.
Capital expenditures amounted to SEK 1.3 M (2.6) during the first quarter, and included mainly capitalised development costs of SEK 1.1 M (1.8).
The average number of employees in the quarter was 59 (54) and the number of employees at the end of the quarter was 61 (53). Complementing recruitments to strengthen the position of the company on the market has taken place during the quarter and a few additional recruitments are planned for during the year.
The Parent Company's net sales amounted to SEK 98.7 M (61.6) and net profit amounted to SEK 5.5 M (12.8) for the quarter. The company had cash and cash equivalents of SEK 87.2 M (102.3) at March 31, 2011.
Pricer's results and financial position are affected by a number of risk factors that should be taken into consideration when assessing the company and its future potential. These risks are primarily related to development of the ESL market. Given the customer structure and the large size of the contracts any delay in the installations may have a significant impact on any given quarter. For additional risks reference is made to the annual report.
There have been no significant transactions involving related parties that could have a material impact on Pricer's financial position and earnings other than the conversion of loans in June 2010.
This interim report has for the consolidated accounts been issued in accordance with the IAS 34 Interim reporting and relevant regulations in the Swedish Annual Accounts Act. This interim report for the Parent Company has been issued in accordance with the Swedish Annual Accounts Act, chapter 9. Accounting principles applied for the consolidated and the Parent Company accounts are coherent with the principles in the latest annual report. The new or amended IFRS standards and IFRIC interpretations, which became effective January 1, 2011, have had no material effect on the consolidated financial statements.
As Pricer announced in 2009, the company is party to an arbitration proceeding against ProMargin. An interlocutory has been awarded to Pricer's detriment and the size of potential damages will be determined in continuing arbitration. The defendant has presented a significant claim. In line with earlier Pricer has not made any provisions in the matter.
Expectations of higher net sales and result in 2011 than in 2010 remain.
The interim report for January – June 2011 will be published on August 24, 2011.
Sollentuna, May 4, 2011 Pricer AB (publ)
Fredrik Berglund CEO
This report has not been subject to audit review
(The interim report is a translation of the Swedish original only for convenience)
In its capacity as issuer, Pricer AB is releasing the information in this interim report for January - March 2011 in accordance with the Swedish Securities Exchange Act (2007:528). The information was distributed to the media for publication at 14.00 AM CEST on Wednesday May 4, 2011.
For further information, please contact: Fredrik Berglund, CEO or Harald Bauer, CFO, Pricer AB +46 8 505 582 00
| Q 1 | Q 1 | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Net Sales | 111.1 | 69.7 | 447.2 |
| Cost of goods sold | -77.5 | -33.6 | -283.9 |
| Gross profit | 33.6 | 36.1 | 163.3 |
| Selling and administrative expenses | -21.1 | -20.2 | -86.4 |
| Research and development costs | -4.9 | -3.9 | -16.1 |
| Operating profit | 7.6 | 12.0 | 60.8 |
| Net financial items | -3.2 | -2.1 | -6.3 |
| Profit before tax | 4.4 | 9.9 | 54.5 |
| Income tax | 0.5 | 0.5 | 1.7 |
| Profit for the period | 4.9 | 10.4 | 56.2 |
| Translation differences | -2.3 | -19.4 | -45.6 |
|---|---|---|---|
| Net comprehensive income for the period | 2.6 | - 9.0 | 10.6 |
| Profit for the periods attributable to: | |||
| Owners of the Parent Company | 4.9 | 10.4 | 56.2 |
| Non-controlling interest | 0.0 | 0.0 | 0.0 |
| Net comprehensive income for the period attributable to: | |||
| Owners of the Parent Company | 2.6 | -9,0 | 10.6 |
| Non-controlling interest | 0.0 | 0,0 | 0.0 |
| EARNINGS PER SHARE | Q 1 | Q 1 | Full year |
|---|---|---|---|
| 2011 | 2010 | 2010 | |
| Basic earnings per share, SEK | 0.00 | 0.01 | 0.05 |
| Diluted earnings per share, SEK | 0.00 | 0.01 | 0.05 |
| Number of shares, millions | 1 058 | 1 016 | 1 036 |
| Diluted number of shares, millions | 1 076 | 1 055 | 1 088 |
| NET SALES BY GEOGRAPHICAL MARKET | Q 1 | Q 1 | Full year |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Europe, Middle East and Africa | 82.6 | 45.8 | 350.8 |
| America | 23.8 | 19.9 | 57.0 |
| Asia & the Pacific | 4.7 | 4.0 | 39.4 |
| Total net sales | 111.1 | 69.7 | 447.2 |
| Amounts in SEK M | 2011-03-31 | 2010-03-31 | 2010-12-31 |
|---|---|---|---|
| Intangible fixed assets | 244.3 | 267.3 | 249.1 |
| Tangible fixed assets | 2.6 | 2.1 | 2.8 |
| Deferred tax assets | 41.4 | 41.5 | 41.4 |
| Total fixed assets | 288.3 | 310.9 | 293.3 |
| Inventories | 88.8 | 72.2 | 78.0 |
| Current receivables | 195.2 | 111.2 | 200.8 |
| Cash and cash equivalents | 97.5 | 109.1 | 69.9 |
| Total current assets | 381.5 | 292.5 | 348.7 |
| TOTAL ASSETS | 669.8 | 603.4 | 642.0 |
| Shareholders' equity | 550.6 | 504.3 | 546.5 |
| Non-controlling interest | 0.1 | 0.1 | 0.1 |
| Total equity | 550.7 | 504.4 | 546.6 |
| Long-term liabilities | 1.7 | 4.2 | 4.0 |
| Short-term liabilities | 117.4 | 94.8 | 91.4 |
| Total liabilities | 119.1 | 99.0 | 95.4 |
| TOTAL EQUITY AND LIABILITIES | 669.8 | 603.4 | 642.0 |
| Pledged assets | 35.6 | 164.2 | 35.6 |
| Contingent liabilities | 1.0 | 1.4 | 1.0 |
| Basic shareholders' equity per share, SEK | 0.52 | 0.50 | 0.53 |
| Diluted shareholders' equity per share, SEK | 0.51 | 0.50 | 0.50 |
| 3 months | 3 months | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Equity at beginning of period | 546.6 | 513.2 | 513.2 |
| Other comprehensive income | |||
| Profit for the period | 4.9 | 10.4 | 56.2 |
| Other comprehensive income | -2.3 | -19.4 | -45.6 |
| Net comprehensive income for the period | 2.6 | -9.0 | 10.6 |
| Transaction with owners of the Group | |||
| Conversion/Share issue | 1.4 | 0.0 | 22.4 |
| Share based payments, equity settled | 0.1 | 0.2 | 0.4 |
| Total transaction with owners of the Group | 1.5 | 0.2 | 22.8 |
| Equity at end of period | 550.7 | 504.4 | 546.6 |
| Attributable to: | |||
| - Owners of the Parent Company | 550.6 | 504.3 | 546.5 |
| - Non-controlling interest | 0.1 | 0.1 | 0.1 |
| Total | 550.7 | 504.4 | 546.6 |
| Q 1 | Q 1 | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Profit before tax | 4.4 | 9.9 | 54.5 |
| Adjustment for non-cash items | -2.3 | 0.6 | 27.4 |
| Paid income tax | - | - | - |
| Change in working capital | 27.8 | 0.3 | -96.8 |
| Cash flow from operating activities | 29.9 | 10.8 | -15.3 |
| Cash flow from investing activities | -1.3 | -2.6 | -12.0 |
| Cash flow from financing activities | - | - | - |
| Cash flow for the period | 30.0 | 8.2 | -27.3 |
| Cash and cash equivalents at beginning of period | 69.9 | 102.8 | 102.8 |
| Exchange-rate difference in cash and cash equivalents | -2.4 | -1.9 | -5.6 |
| Cash and cash equivalents at end of period | 97.5 | 109.1 | 69.9 |
| Unutilised bank overdraft facilities | 25.0 | 25.0 | 25.0 |
| Disposable funds at end of period | 122.5 | 134.1 | 94.9 |
| Q 1 | Q 4 | Q 3 | Q 2 | Q 1 | |
|---|---|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 | 2010 | 2010 |
| Order entry | 215.6 | 144.0 | 112.6 | 82.3 | 100.1 |
| Order entry - moving 4 quarters | 554.5 | 439.0 | 388.9 | 365.7 | 370.3 |
| Net sales | 111.1 | 161.3 | 106.7 | 109.5 | 69.7 |
| Net sales - moving 4 quarters | 488.6 | 447.2 | 400.0 | 365.7 | 333.9 |
| Operating profit | 7.6 | 26.0 | 7.1 | 15.7 | 12.0 |
| Operating profit - moving 4 quarters | 56.4 | 60.8 | 54.2 | 49.8 | 30.9 |
| Profit for the period | 4.9 | 25.6 | 2.3 | 17.9 | 10.4 |
| Cash flow from operating activities | 29.9 | 13.3 | -25.4 | -14.0 | 10.8 |
| Cash flow from op.activities - moving 4 quarters | 3.8 | -15.3 | -17.1 | 24.4 | 40.5 |
| Number of employees, end of period | 61 | 55 | 53 | 54 | 53 |
| Equity ratio | 82% | 85% | 83% | 82% | 84% |
| PARENT COMPANY STATEMENT OF INCOME AND STATEMENT OF COMPREHENSIVE INCOME IN SUMMARY | |
|---|---|
| INCOME STATEMENT | 3 months | 3 months | Full year |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Net sales | 98.7 | 61.6 | 356.4 |
| Cost of goods sold | -78.6 | -36.5 | -262.5 |
| Gross profit | 20.1 | 25.1 | 93.9 |
| Selling and administrative expenses | -8.3 | -6.4 | -31.2 |
| Research and development costs | -4.9 | -3.9 | -16.1 |
| Operating profit | 6.9 | 14.8 | 46.6 |
| Result fron participations in group companies | - | - | -13.3 |
| Net financials items | -1.4 | -2.0 | -5.4 |
| Profit before tax | 5.5 | 12.8 | 27.9 |
| Income tax | - | - | -0.4 |
| Result of the period | 5.5 | 12.8 | 27.5 |
| OTHER COMPREHENSIVE INCOME | 3 months | 3 months | Full year |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Result of the period | 5.5 | 12.8 | 27.5 |
| Translation differences | -0.6 | -4.9 | -12.5 |
| Net comprehensive income for the period | 4.9 | 7.9 | 15.0 |
| Amounts in SEK M | 2011-03-31 | 2010-03-31 | 2010-12-31 |
|---|---|---|---|
| Intangible fixed assets | 15.7 | 10.5 | 16.9 |
| Tangible fixed assets | 1.3 | 1.0 | 1.3 |
| Financial fixed assets | 313.8 | 317.7 | 315.8 |
| Total fixed assets | 330.8 | 329.2 | 334.0 |
| Inventories | 55.0 | 43.7 | 52.3 |
| Current receivables | 122.2 | 64.5 | 124.5 |
| Cash and cash equivalents | 87.2 | 102.3 | 49.1 |
| Total current assets | 264.4 | 210.5 | 225.9 |
| TOTAL ASSETS | 595.2 | 539.7 | 559.9 |
| Shareholders' equity | 501.2 | 464.8 | 494.8 |
| Total equity | 501.2 | 464.8 | 494.8 |
| Provisions | 10.7 | 16.2 | 11.2 |
| Long-term liabilities | 0.1 | 0.1 | 0.1 |
| Current liabilities | 83.2 | 58.6 | 53.8 |
| Total liabilities | 94.0 | 74.9 | 65.1 |
| TOTAL EQUITY AND LIABILITIES | 595.2 | 539.7 | 559.9 |
| Pledged assets | 34.8 | 51.9 | 34.8 |
| Contingent liabilities | 0.2 | 0.2 | 0.2 |
| 3 months | 3 months | Full year | |
|---|---|---|---|
| Amounts in SEK M | 2011 | 2010 | 2010 |
| Equity at beginning of period | 494,8 | 456.9 | 456.9 |
| Net comprehensive income for the period | 4.9 | 7.9 | 15.0 |
| Conversion/Share issue | 1.4 | 0.0 | 22.4 |
| Share based payments, equity settled | 0.1 | 0.2 | 0.4 |
| Equity at end of period | 501.2 | 465.0 | 494.8 |
Pricer provides the retail industry's leading electronic display and Electronic Shelf Label (ESL) platform, solutions, and services for intelligently communicating, managing, and optimizing price and product information on the retail floor. Pricer is the only company today offering a communication platform that supports both segment based ESL and pixel-based ESL. The platform is based on a two-way communication protocol to ensure a complete traceability and effective management of resources. The Pricer system significantly improves consumer benefit and store productivity by simplifying work in the store.
Pricer, founded in 1991 in Uppsala, Sweden, offers the most complete and scalable ESL solution. Pricer has installations in more than 40 countries with the largest ESL world market share. Customers include many of the world's top retailers and some of the foremost retail chains in Europe, Japan and the USA. Pricer, in co-operation with qualified partners, offers a totally integrated solution together with supplementary products, applications and services.
Pricer AB (publ.) is quoted on Nasdaq OMX Nordic Small Cap. For further information, please visit www.pricer.com
Pricer AB (publ.) Bergkällavägen 20-22 SE-192 79 Sollentuna Sweden
Website: www.pricer.com Telephone: +46 8 505 582 00 Corporate Identity number: 556427-7993
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