Electronics Production | October 25, 2007

Lower sales volumes for PartnerTech

Sweden based EMS Provider today announced its report for the third quarter 2007. Net sales were SEK 618.9 million (1 SEK = approximately 0,9 EUR) (769.0). The operating profit was SEK 14.4 million (48.5). Cash flow after investments amounted to SEK –80.2 million (22.6).
Net sales decreased by SEK 150.1 million, or 19.5%, to SEK 618.9 million (769.0). The falloff for comparable units was 27.6%. The organic decline during the quarter was primarily due to three large customers, mainly one customer's project order for which the customer has not placed comparable orders in 2007.

PartnerTech's business model, service offering and broad-based expertise permit its customers to outsource all or some of the responsibility for their production, from the component to product level. Those opportunities have led to close, profitable cooperative ventures with a number of large customers over the past few years, but have also resulted in major volume fluctuations from one period to another. The third quarter of 2007 is a typical illustration of that dynamic.

The profit decline from the third quarter of 2006 was primarily due to lower sales volumes. The translation effects of foreign subsidiaries were negligible. Return on operating capital decreased to 5.9% (22.2) during the quarter. The profit after tax of SEK 7.4 million (32.0) generated earnings per share after tax and dilution of SEK 0.57 (2.56).

Cash flow after investments was SEK –80.2 million (22.6). The outcome reflected working capital, which increased by SEK 88.2 million. That was primarily due to temporarily high payments to suppliers and adjustment to lower inventory levels, thereby reducing accounts payable. Working capital was also affected by a SEK 41.0 million decrease in other operating liabilities. That decrease stemmed from vacation pay and the conversion of an advance payment by a customer to a letter of credit. Inventories declined by SEK 30.0 million and favorably affected cash flow. Investments totaled SEK 4.1 million (19.1).

Net sales in January to September were SEK 1,984.2 million (2,256.9). The operating profit was SEK 69.1 million (138.3). The profit after tax was SEK 41.7 million (93.9). Earnings per share after tax totaled SEK 3.25 (7.53). Cash flow after investments amounted to SEK 23.6 million (–12.8). The equity/assets ratio was 39.8% (33.2).

Sales trends by business unit
Net sales for the Terminals/Machine Solutions business unit declined by SEK 458.9 million, or 51.1%, during the first nine months to SEK 440.0 million (898.9). The falloff was 52.6% for comparable units. The decrease from the same period of 2006 was primarily due to the fact that 2006 project orders of largely non-recurring nature have not been compensated for in 2007. Third quarter sales were SEK 152.1 million (316.2).

Sales at the Medical Equipment business unit rose by 3.3% to SEK 355.7 million (344.2) for the first nine months. The UK acquisition accounted for the improvement. Sales for comparable units were in line with the first nine months of 2006 at SEK 339.1 million (342.5).

January-September sales at the Industry/Telecom business unit were up by 17.2% to SEK 1,188.5 million (1,013.8). The acquisition of Hansatech Ltd boosted sales by SEK 193.7 million compared with the year before.


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