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Electronics Production | July 14, 2009

PartnerTech: Net sales down to SEK 519.5 million

Sweden-based EMS-provider PartnerTech has seen a substantially lower demand in its fiscal 2Q. Net sales were down to SEK 519.5 million (694.7), while operating profit stood at SEK -14.9 million (8.1).

Sales related to divested units amounted to SEK 31 million for the quarter. Thus, sales for comparable units declined by 21% from the second quarter of 2008. The decrease stemmed primarily from the economic downturn and lower underlying demand. Also because of the downturn, the orders of PartnerTech's customers are placed on shorter and shorter notice. That means a high degree of volatility, thereby creating even greater challenges for our operations to meet. Given substantial fluctuations in exchange rates, sales of foreign subsidiaries were SEK 14.0 million higher after translation than they would have been had second quarter 2008 rates been applied. The group's operating profit for the second quarter was SEK -14.9 million (8.1). Profit was detrimentally affected by the sales decline, mitigated by the cost savings carried out during the past 12 months. Return on operating capital was -6.7 % (3.5) in the second quarter. Second quarter profit after tax of SEK -13.8 million (3.7) represented earnings per share after tax of SEK -1.09 (0.29). Cash flow after investments was SEK 35.8 million (-16.2). Positive cash flow was due to the sales decline, which reduced working capital, and other capital-saving measures. "Our performance in the first half of the year demonstrated that our structural development and customer offering have enabled us to create the kind of flexibility that our customers expect in light of their increasingly shifting needs. Thus, we are continuing to proceed from our focus on customers to streamline and optimize operations by constantly improving our four Center of Excellence in their individual areas of expertise: electronics, mechanics, system integration and enclosure", states President and CEO Rune Glavare. Sales Trends for the Market Areas 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. Our customers have responded favorably to the new structure. The goal of restructuring is to improve transparency with respect to the prospects of the various market areas when it comes to customer needs, expertise, cyclical tendencies and business logic, thereby enabling us to more effectively meet the requirements of our customers. 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 enters into longterm contracts. Volatility is correspondingly less. Sales declined from the second quarter of 2008 by 21% to SEK 56.9 million (71.9). The Industry market area largely manufactures components and products for operator terminals, power & range control units and similar segments. Because customers in this area are often 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. Sales totaled SEK 118.0 million (199.3). The SEK 81.3 million 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 for many businesses with an international market. Given that the size and applicability of products often make them suitable for somewhat larger-scale production, this area also requires that PartnerTech's international structure grow. Sales rose from the second quarter of 2008 to SEK 126.8 million (108.0). The increase was chiefly attributable to higher demand by a few customers. 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. PartnerTech's local customer centers promote close cooperation with customers, a particularly valuable asset in this area. The ISO 13485 medical device standard is the foundation of our regulatory requirements. Based on our customers, we also adapt our processes to the market requirements placed on the manufacture of medical devices. Sales of SEK 98.7 million (109.0) were somewhat lower than the second quarter of 2008 but in line with the first quarter of 2009. 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 assemble expertise from several of our disciplines. The substantial sales decline from the second quarter of 2008 to SEK 67.9 million (89.5) was due primarily to poorer demand. PartnerTech's Point of Sale Applications market area can boast of sound expertise and experience when it comes to cash handling systems, card readers for payment systems and similar products. Our customers frequently rely on PartnerTech for each step in the value chain, all the way from product development and manufacturing to logistics and after-sales. Sales totaled SEK 51.1 million (117.0) for the period. The decrease was due primarily to lower demand by two of the area's big customers.
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