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2016-07-20

Enea AB: Interim Report April - June 2016

A strong quarter for software sales outside Enea's Key Accounts

Enea improved revenue, operating profit and operating margin in the
second quarter 2016. Enea reported a stable operating margin of over
20 percent and increased earnings per share.

· Revenue in the second quarter were SEK 124.1 (120.2) million, a 3
percent increase. In the first six months of the year, revenue
increased to SEK 244.9 (237.6) million.

· Operating profit for the second quarter was up to SEK 28.8 (26.5)
million, corresponding to an operating margin of 23.2 (22.1) percent.
Operating profit for the first six months of the year rose to SEK
55.8 (49.8) million, corresponding to an operating margin of 23.2
(22.1) percent.

· Earnings per share were up to SEK 1.48 (1.30) for the second
quarter, and SEK 2.86 (2.49) for the first six months of the year.

· Cash flow from operating activities was SEK 41.1 (54.7) million
for the quarter and SEK 79.9 (68.4) million for the first six months
of the year. Cash and cash equivalents and financial investments
amounted to SEK 196.6 (187.6) million at the end of the quarter.

· Enea paid SEK 4.20 (3.60) per share through an automatic
redemption program on

14 June, which corresponds to a transfer of SEK 66.8 (57.8) million to
shareholders.

April to June 2016

(second quarter previous year in brackets)

· Revenue, SEK 124.1 (120.2) million
· Revenue growth, 3 (16) %
· Revenue growth, currency adjusted, 4 (8) %
· Operating profit, SEK 28.8 (26.5) million
· Operating margin, 23.2 (22.1) %
· Net profit after tax, SEK 23.5 (20.8) million
· Earnings per share, SEK 1.48 (1.30)
· Change in earnings per share, 14 (19) %
· Cash flow (from operating activities), SEK 41.1 (54.7) million
· Cash and cash equivalents and financial investments, SEK 196.6
(187.6) million

Anders Lidbeck, President and CEO comments:

"New business
Going into 2016, our target was to keep our operating margin stable at
levels above 20 percent, and with the ambition to keep increasing our
earnings in absolute terms, and earnings per share, on 2015. Looking
back at the second quarter, we achieved an operating margin of 23.2
(22.1) percent, and a 14 percent increase in earnings per share to
SEK 1.48 (1.30). Operating profit for the quarter was SEK 28.8
million, a 9 percent increase compared with the same period last
year. This means that for the first half-year 2016, we increased
operating margin to 22.8 (21.0) percent and increased operating
profit by 12 percent to SEK 55.8 (49.8) million in the quarter
compared to the corresponding period of 2015. In the same period,
earnings per share increased by 15 percent.

Revenue increased by 3 percent on the corresponding quarter of the
previous year. Revenues from our services business progressed well,
representing 31 percent of revenues in the quarter. At the beginning
of the quarter, we secured a major new deal in the US within our
services business, which we will continue to deliver in the third
quarter. As I have written many times previously, expert knowledge,
not only confined to our products, but also the capacity to deliver
integrated projects effectively and with high quality is, and will
remain, a key component in a world where open source is becoming ever
more significant. Accordingly, our service business will become
strategically more central to Enea. But once again, it is our
software business outside Key Accounts that is in the highest growth
in year-on-year terms, and growing in North and South America, Europe
and Asia. We are in the midst of a clear realignment. Revenues from
Key Accounts are continuing to reduce as a share of total, while once
again, we achieved growth of over 20 percent in Worldwide Software
Sales compared to the corresponding period of the previous year. This
means that for the quarter, Worldwide Software Sales represent 24
percent of revenues compared to 14 percent just over two years ago.
This is a major change for Enea, and we are really satisfied to have
achieved this with increasing profit margins.

An award-winning team
The market for building the communication systems of the future is in
fundamental transformation, and it is critical that Enea is part of
this process. This is why we are continuing to make substantial
investments in our product portfolio and offering to the market. In
the first half-year, we invested over SEK 43 million in what we refer
to as product development, and expect to maintain this tempo in the
second half-year. We are continuing to invest in our proprietary
products, and solutions based on open source. In recent quarters, our
work has included producing an ARM variant of the new version of the
OPNFV platform known as Brahmaputra, which is the second-and thus
enhanced-release of this platform. We have managed this project in
close partnership with ARM, and in the past quarter, we were able to
demo the results of this process at the NFV World Congress in San
Jose. Our work on OPNFV and Brahmaputra has attracted attention in
several contexts, and our team received the Director's Award at the
OPNFV Summit in Berlin in the quarter for their efforts.

It is very satisfying that Enea's efforts and professionals have been
recognized in this way. Congress delegates were also able to see Enea
and Red Hat experts presenting the ongoing security process in the
OPNFV project. This is a direct result of our commitment to selected
open source projects, where we have played a leading role in security
on the OPNFV and Yocto projects. We are now continuing our work on
Colorado, the third-and further enhanced-release of the OPNFV
platform, scheduled for release in autumn 2016.

New, exciting projects
Apart from our work within open source and projects based on open
source, we also worked intensively on our own products in the
quarter. We completed the new version of our Element product, with a
retained focus of what we usually refer to as on-device management-a
segment where we see new opportunities, not least in NFV contexts. We
have also worked intensively on our portfolio of operating system
solutions, and completed new versions of Enea OSE and Enea Linux in
the quarter. Operating systems remain the backbone of our product
portfolio, and we are continuing to secure new customers with our
flagship OSE.

The fundamental technology and market trends are clear, and we are
focusing just as clearly on being part of these trends by developing
new technology segments and new business models, simultaneous with
continuing to develop our existing business. By enhancing, expanding
and integrating the various products and solutions we possess, and by
still actively screening acquisitions, we are building a
progressively stronger position in a really attractive market. So we
can combine substantial investments in our product portfolio with
continued earnings growth, our long-term strategy is to continuously
optimize our organization. We are continuously seeking new ways to
make our organization more effective and competitive with a retained
focus on excellence, quality and our customers. We are continuing our
endeavour to build a bigger and stronger company, which delivers
increasing value to customers, employees and shareholders. With
strong finances, good cash flows and a more secure market position,
we view the future with confidence.

We are reiterating our objective of achieving revenue growth for the
full year 2016, and we expect earnings per share to improve compared
to 2015."

Press and analyst meeting
Press and financial analysts are invited to a press and analyst
meeting where Anders Lidbeck, President and CEO, will present and
comment on the report.

Time: Wednesday July 20 at 08:30 am CEST.
Link: http://www.financialhearings.nu/?160720/enea
Phone number: SE: +46 856642669, UK: +44 2030089804
The full report is published at www.enea.com/investors

This information is information that Enea AB (publ) is obliged to make
public pursuant to the EU Market Abuse Regulation and the Swedish
Securities Markets Act. The information was submitted for
publication, through the agency of the contact person set below, on
July 20, 2016 at 7.20 CEST.

For more information visit www.enea.com/investors or contact:
Anders Lidbeck, President & CEO
E-mail: anders.lidbeck@enea.com

Julia Steffensen, Executive Assistant
Phone: +46 70 971 03 33
E-mail: julia.steffensen@enea.com

About Enea
Enea is a global supplier of network software platforms and world
class services, with a vision of helping customers develop amazing
functions in a connected society. We are committed to working
together with customers and leading hardware vendors as a key
contributor in the open source community, developing and hardening
optimal software solutions. Every day, more than three billion people
around the globe rely on our technologies in a wide range of
applications in multiple verticals - from Telecom and Automotive, to
Medical and Avionics. We have offices in Europe, North America and
Asia, and are listed on Nasdaq Stockholm. Discover more at
www.enea.com and start a conversation at info@enea.com.

Enea®, Enea OSE®, Netbricks®, Polyhedra®, Zealcore®, Enea® Element,
Enea® Optima, Enea® LINX, Enea® Accelerator, Enea® dSPEED Platform
and COSNOS® are registered trademarks of Enea AB and its
subsidiaries. Enea OSE®ck, Enea OSE® Epsilon, Enea® Optima Log
Analyzer, Enea® Black Box Recorder, Polyhedra® Lite, Enea® System
Manager, Enea® ElementCenter NMS, Enea® On-device Management and
Embedded for LeadersTM are unregistered trademarks of Enea AB or its
subsidiaries. Any other company, product or service names mentioned
above are the registered or unregistered trademarks of their
respective owner. © Enea AB 2016.

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http://news.cision.com/enea-ab/r/interim-report-april---june-2016,c2048738
http://mb.cision.com/Main/1006/2048738/542079.pdf
http://mb.cision.com/Public/1006/2048738/82752d95d3a959e3.pdf

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