Electronics Production | April 23, 2009

Partnertech with increased operating profit

The Sweden-based EMS-provider PartnerTech was able to increase its operating profit in 1Q/2009 to SEK 9.5 million (1Q/2008: -9.1). Net sales were SEK 594.2 million (612.0) and profit after tax was SEK 0.5 million (-9.7). However, cash flow after investments amounted to SEK -36.6 million (14.7).
As of 2009, PartnerTech's existing customer base is broken down into six market areas: Defense and Maritime, Industry, Information Technology, MedTech & Instrumentation, CleanTech and Point of Sale Applications. The categorization is more revealing of the areas in which PartnerTech actually operates. Customers can more readily identify the ways that we are able to strengthen the competitiveness of a particular product. Meanwhile, PartnerTech is better positioned to focus on the important factors in a specific market area and find synergies. The breakdown also illustrates differences among the areas when it comes to customer needs, skills, economic cycles and business logic.

The Defense and Maritime market area primarily manufactures components that are subject to stringent security and quality requirements, as well as products for use by the oil and other industries. Characteristic of the area is that it is based on longterm relationships, given that contracts run for many years. Volatility is correspondingly less. Sales rose by 37% from the first quarter of 2008 to SEK 66.5 million (48.4).

The Industry market area largely manufactures components and products for operator terminals, power & range control units and similar areas. Because a number of customers in this area are looking for large-scale production, it is integral to spearheading the development of PartnerTech's global structure. The customer base is relatively large and diversified. The SEK 38.1 million sales decline was due to poorer demand by a number of customers whose products were affected by the business cycle.

PartnerTech often obtains major assignments in the Information Technology market area. For instance, we manage the entire chain from production of advanced, encapsulated electronics (box build assembly) for distribution and after-sales to many businesses with an international market. Because the size and applicability of the products manufactured by this area are often suited to largescale production, it also puts demands on the development of PartnerTech's global structure. Sales were stable compared with the first quarter of 2008.

Among the products of the MedTech & Instrumentation market area are blood analysis equipment, allergy testing instruments and printed circuit boards for various types of instruments. That PartnerTech's local customer centers facilitate close technical collaboration is particularly important in this area. The ISO 13485 Medical Device Quality Management Standard serves as our basis for regulatory requirements. In addition, we adapt our processes to the requirements to which the manufacture of medical devices is subject: the Quality System Regulation (QSR) for the United States, the Pharmaceutical Affairs Law (PAL) for Japan, and the Medical Device Directive (MDD) and In Vitro Diagnostic Device Directive (IVDD) for Europe. First quarter sales were SEK 98.8 million (111.2).

The expanding CleanTech market area is partially influenced by public policy decisions. The area, which includes both components and complete systems, often requires us to gather expertise from several of our disciplines. The sales increase from the first quarter of 2008 stemmed from new customers.

Human Resources
The number of full-time equivalent employees averaged 1,514 (1,730) in the first quarter. Divestment of units, the 2008 action program and previous notices of termination reduced the number of full-time equivalent employees by 246 over the past 12 months. The group had 1,467 (1,713) fulltime employees on March 31.

"Despite signs of lower demand early in the year, PartnerTech's sales remained largely unaffected in the first quarter. Excluding some translation differences and the like, sales showed a decrease of approximately 5%. That performance should be interpreted with market uncertainty and customer caution in mind. The fact that orders received are more volatile and subject to shorter notice also reflects market instability. Regarding our earnings performance I believe, given our ongoing efforts and the current state of the market, that we have succeeded. After a difficult year in 2007, we launched our changes and adaptations in time.

That foresight is now paying off. Our target for 2009 is to add new production options, primarily in Eastern Europe and secondarily in Asia, to bolster our streamlined industrial structure. The ability of our customer centers and dedicated teams to operate in close proximity with local markets will continue to strengthen our customer and manufacturing services. The changes we carried out in 2007-2008 position us well to rapidly confront and adapt to any new challenges that emerge in 2007 as the result of economic turbulence. We have a flexible organization that is able to respond quickly."
Rune Glavare President and CEO

More information to follow.


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