Interim report 2021, January - March
- Net sales for the first quarter reached SEK 455 m (361), corresponding to an increase of 26%. Currency translations had a negative effect of SEK 29 m on net sales
- Order intake was SEK 565 m (401), corresponding to an increase of 41%
- Operating profit reached SEK 114 m (67) equal to a 25.0% (18.5) operating margin
- Profit after taxes totalled SEK 94 m (48) and earnings per share was SEK 1.93 (1.01)
- Cash flow from operating activities amounted to SEK 132 m (55)
Last twelve months
- Net sales for the last twelve months reached SEK 1,560 m (1,500), corresponding to a 4% increase. Currency translations had a negative effect of SEK 51 m on net sales
- Order intake was SEK 1,611 m (1,484), corresponding to an increase of 9%
- Operating profit was SEK 335 m (250), equal to a 21.4% (16.7) operating margin
- Profit after taxes totalled SEK 266 m (212) and earnings per share was SEK 5.70 (4.56)
- Cash flow from operating activities amounted to SEK 447 m (257)
Comment from the CEO
Full speed ahead!
At the end of last year, we saw a more positive market climate and an increased demand for HMS products. The increased demand has continued in the first quarter of 2021, even stronger than expected. We released preliminary figures on order intake, sales and profitability as early as April 8, and can now confirm and elaborate on this positive situation.
The quarter’s order intake was very strong and amounted to SEK 565 m, an increase of 41% compared to the same period last year. This corresponds to an organic growth in order intake of 38%. It is particularly satisfying to see that order intake from all our brands is growing by at least 35%.
The significant increase in order intake is driven by a substantially stronger end market where business has returned after 18 months of lower investment climate and pandemic effects. In addition to the general market recovery, we see temporary effects as our customers rebuild inventories after a weak 2020. There is also an effect of increasing inventories to prepare for longer delivery times for electronic components, due to the semiconductor shortage situation. In total, these effects are estimated to have had a positive effect on orders of approximately SEK 60-70 m during the quarter, which we believe is non-recurring.
Sales in the first quarter also increased considerably and amounted to SEK 455 m, an increase of 26% (organic growth is 19%) compared to the corresponding period last year.
Despite continued currency headwinds and challenges in sourcing of components, increasing our purchasing costs, we can continue to show a positive development in our gross margin, which amounts to 64.0% (62.4%) for the quarter. The biggest effect behind the strong gross margin is the program that was implemented in 2020 with increased efficiency in operations and selective price increases.
The quarter’s operating profit amounts to a record level of SEK 114 m, a significant improvement of 70% compared to the first quarter last year. The positive result is driven by sales growth in combination with good gross margins and continued low operational expenses, partly due to reduced travelling for our staff and reduced external activities due to the pandemic.
Cash flow continues to be strong at SEK 132 m (55) in the quarter, which has contributed to reducing our debt. At the end of the quarter, we had a net debt in relation to EBITDA, of 0.21 (1.13).
Strong recovery in our main markets
The biggest contributing factor to the strong quarter has been a continued recovery in our main markets – largely driven by Continental Europe, but China and Japan have also continued to develop well, and on the order side, USA has also shown record levels. Machine builders and device manufacturers in all segments have shown a strong demand for our product offerings.
Within Anybus, the German automotive industry, which is an important target group for Anybus sales, has accounted for a large part of the growth through its investments in conversion to electric car production.
Also, in Asia growth has been driven by Anybus, largely through the robotics and wind power industry, which takes Asia to new record levels both in terms of sales and order intake.
Procentec, which was acquired in the previous quarter, has continued to develop very well, with organic growth of 75% and sales of SEK 52 m, driven by a number of new key customers in Logistics.
Roll-out of the HMS 2025 strategy
During the quarter, we continued the work of implementing the HMS 2025 strategy, presented during the latter part of 2020. Among other things, we strengthened our resources within the important functions M&A and sustainability, two of the main areas in our new strategy.
After setting the wheels in motion last year, we have now begun further expansion in China and investments in other interesting markets in Southeast Asia.
In the near future, we will also make further investments in building our team for long-term organic growth in Industrial ICT (Information & Communication Technology), towards our goals in 2025: Revenue of more than SEK ”π” (3.14) billion, to be CO2 net positive, and to reach our high ambitions for customer and employee satisfaction.
Positive outlook for 2021
The recovery has been somewhat faster than we previously expected, and although the first quarter has some positive non-recurring effects, we expect to see continued strong demand in 2021. Of course, there are still uncertainties about what happens with the pandemic, but we assess the risks as lower for each month that passes with more and more people vaccinated. Despite strong demand, we are able to deliver as usual, but we see that our strong order intake in combination with increasing lead times for sourcing semiconductor components means that we can expect certain delivery time increases for customers. The price situation for semiconductors is also expected to increase in the future. As previously communicated, we see increased interest in our offering within Remote Access, which we believe will continue to have a strong market even after the pandemic. We also estimate that our operational expenses will increase during the year with new investments and gradually better conditions for travelling and customer meetings.
We continue to work with a focus on long-term growth with a balanced cost level. In the long term, we continue to believe that the market for Industrial ICT (Information & Communication Technology) will be an interesting area, both in terms of organic growth and acquisitions.
Halmstad April 23, 2021
Further information can be obtained from:
Staffan Dahlström, CEO, +46 (0) 35 17 2901
Joakim Nideborn, CFO, +46 (0) 35 710 6983
This information is such that HMS Networks AB (publ) is obliged to make public pursuant to the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 08.00 CET on April 23, 2021.
HMS Networks AB (publ) is a market-leading provider of solutions in industrial information and communication technology (Industrial ICT). HMS develops and manufactures products under the Anybus®, Ixxat®, Ewon® and Intesis® brands. Development takes place at the headquarter in Halmstad and also in Ravensburg, Nivelles, Igualada, Wetzlar Buchen and Delft. Local sales and support are handled by branch offices in Germany, USA, Japan, China, Singapore, Italy, France, Spain, the Netherlands, India, UK, Sweden, South Korea and UAE, as well as through a worldwide network of distributors and partners. HMS employs over 700 people and reported sales of SEK 1,467 million in 2020. HMS is listed on the NASDAQ OMX in Stockholm, category Mid Cap, Information Technology
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