Micronic reports lower sales

Operating profit for 2006 was SEK 123 (172) million, including SEK 9 (162) million for the fourth quarter. Operating profit adjusted for capitalization and amortization of development costs totaled SEK 220 (285) million for the full year and SEK 31 (185) million for the fourth quarter. Profit after tax for 2006 was SEK 93 (117) million, equal to SEK 2.37 (3.00) per share. Profit after tax for the fourth quarter was SEK 10 (115) million, equal to SEK 0.24 (2.93) per share. The order backlog at December 31, 2006, was SEK 200 (871) million and consisted of systems scheduled to ship during 2007. Measures were taken in 2006 to reduce the Group's costs, including downsizing of personnel and a reduction in the number of contract staff and consultants. These measures will generate cost savings of more than SEK 100 million annually. "2006 turned out to be a very turbulent year, a situation that arises from time to time in the equipment industry. These rapid changes led to revisions in our future outlook. In spite of this, 2006 will go on record as the second best year in Micronic's history, when we achieved sales of SEK 1,204 million," says Sven Lofquist, President and CEO of Micronic Laser Systems AB. "Operating margin for the period was 10 percent. Adjusted for net amortization of capitalized development costs the same margin was 18 percent, which exceeds our long-term target. Gross margin for the full year was 54 percent, on a level with 2005. R&D expenditure as a percentage of sales rose somewhat to 18 percent, which is consistent with our plans. In 2007 we expect to reduce these costs to less than SEK 200 million as part of the cost-cutting program that we launched in the fourth quarter. All in all, the program will generate estimated savings of over SEK 100 million annually. To further increase our efficiency, we also introduced a new organization at the beginning of 2007," adds Sven Lofquist. "Our order intake of SEK 604 million and low order backlog of SEK 200 million at December 31 reflect a cyclical display market that seems to have hit bottom and also that we fell short of our targets in the semiconductor market," comments Sven Lofquist. "Our assessment is that 2007 will be a transitional year for Micronic, with lower sales than in 2006. We believe the market for display pattern generators will revive some time in the second half of the year, led by sustained growth in demand primarily for LCD TVs and computer display panels, which in turn will fuel ongoing capacity expansion in the industry. The impact on sales will be a function of the industry's planned capacity buildup in the first part of 2008. We also expect to see a need for performance and functionality enhancements, in addition to increased manufacturing capacity". "The semiconductor industry has entered a mild slump but is expected to rebound in the latter half of 2007. By realigning our strategy we aim to further expand our market share, and are also working decisively to position our Sigma series for volume production of the most advanced established technology nodes. We will continue targeting the market for replacement of older systems with our Omega products," says Sven Lofquist. "After the cost and strategy adjustments made in the second half of the year, we are well prepared for a slower 2007. We now have an organization that optimizes and focuses our resources and creates greater clarity. Although we are fully aware of the inherent volatility of our markets, we also see potential for growth and are optimistic about the future," concludes Sven Lofquist.