HMS Q4 Report and Year-End Report 04

January December 2014

Net sales for the full year 2014 increased by 18 % reaching SEK 589 m (501), corresponding to a 13 % increase in local currencies. The revaluation of the Swedish currency had a positive impact of SEK 25 m on net sales

Operating profit reached SEK 98 m (87) corresponding to a 13 % increase and a 17 % (17) operating margin

Order intake for the year increased to SEK 611 m (516), corresponding to a 14 % increase in local currencies

Cash flow from operating activities amounted to SEK 94 m (90)

Profit after taxes totalled SEK 63 m (63) and the result per share amounted to SEK 5.59 (5.54)

The Board of Directors propose a dividend to the amount of SEK 2.50 (2.25)

Fourth quarter

Net sales for the fourth quarter reached SEK 156 m (126) corresponding to a 24 % increase

Operating result reached SEK 18 m (13) corresponding to a 34 % increase and a 12 % (11) operating margin

Order intake for the fourth quarter was SEK 162 m (132) corresponding to a 23 % increase

Comments from the CEO

We saw a positive last quarter 2014 with good order intake and net sales. In combination with a continued weakening of the Swedish currency, we can report a 18 % growth for the year and an annual net sales volume on the new record level SEK 589 m. The 2014 order intake was SEK 611 m, also a new record level, corresponding to a 18 % growth.

For HMS, the North American market is starting to grow again. At the same time, both Germany and Japan shows stability over the last few months. Many of our customers are talking about an underlying concern regarding geopolitical effects and business cycle development in the future but in the short term, we can see a good order intake and a continuing growth of new design wins for our products.

During the year, we have continued to work with improvements in efficiency and quality. This shows in the stable gross margin for the year and the quality of our products which continues to be at an impressive level. As an example, our field returns for the year was below 200 PPM (0.02%). This is world class performance.

As previous years, we report seasonally high expenses for the fourth quarter. This is primarily related to many large market activities during October and November. We have returned to significantly lower levels of capitalized development expenses after previous years' significant investments in new technology platforms. Despite considerably lower capitalization of development expenses and consequently higher OPEX, this year's growth and strong gross margin result in an improved operating profit compared to the previous year.

We have now launched most of the new products within the Anybus Embedded product group that has been developed during the recent years. For Anybus and IXXAT, we can see an inflow of 180 new design wins during 2014. This means that we today have 1 241 active design wins of which 929 is in the production phase. In our opinion, we have a solid base of existing design wins and with the new products released, we have strengthened our attractiveness on the market which will give us new customers going forward.

IXXAT, which was acquired in 2013, has through the integration into the HMS global sales channel acquired more customers especially in North America. With a positive development both regarding customers and increasing sales volumes on the existing customer base, we can report an 11 % growth for IXXAT during 2014.

For the Netbiter product line, we have received an increased number of design wins for industrial applications during the year. Sales of the Netbiter product increased but is still on levels below our expectations. The product line for wireless communication acquired from u-blox AG in October last year has now been successfully transferred to HMS and is now offered in our Anybus Gateways product line. Subsequent to this acquisition, we have received positive feedback from the market regarding our product offer for wireless communication, which we believe to be an important future area for communication.

Our focus remains to grow our three product brands Anybus, Netbiter and IXXAT. We continue to balance our long-term growth strategy with a restrictive approach to expenses and new resources. In the long term, we consider the market for industrial data communication and remote monitoring to be interesting growth areas and we continue to focus on our motto Connecting devices .

Halmstad, February 04, 2015

Staffan Dahlstr m

Chief Executive Officer

HMS Networks Q4 Report 2014 (English)

LINK:	http://www.hms-networks.com/press/2015/02/04/hms-q4-report-and-year-en...
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