HMS presents its half-year report 2021 and updated financial calendar

Second quarter

Net sales for the second quarter reached SEK 474 m (355), corresponding to an in crease of 33%. Currency translations had a negative effect of SEK 33 m on net sales

Order intake was SEK 606 m (302), corresponding to an increase of 100%

Operating profit reached SEK 121 m (69), equal to a 25.5% (19.4) operating margin

Profit after taxes totalled SEK 98 m (54) and earnings per share was SEK 2.02 (1.24)

Cash flow from operating activities amounted to SEK 126 m (115)

First six months

Net sales for the first six months reached SEK 929 m (716), corresponding to a 30% increase. Currency translations had a negative effect of SEK 62 m on net sales

Order intake was SEK 1,170 m (703), corresponding to an increase of 67%

Operating profit was SEK 235 m (136), equal to a 25.3% (18.9) operating margin

Profit after taxes totalled SEK 192 m (102) and earnings per share was SEK 3.94 (2.26)

Cash flow from operating activities amounted to SEK 257 m (170)

Subsequent events

Acquisition of 60% of all shares in the Spanish company Owasys Advanced Wireless Devices S.L.

The company also announces that the previously communicated date for the year-end report 2021 has been changed to January 26, 2022. The dates for upcoming financial reports and the annual general meeting are stated in the half-year report and on the company's website.

Comment from the CEO

Continued strong development but challenging component supply situation

The underlying demand continues to be strong for HMS products and we can conclude that we have yet another record quarter in terms of sales, order intake and operating profit.

Order intake during the quarter amounted to a record level of SEK 606 m, corresponding to a growth of 100%, of which 88% was organic compared to the previous year. For the first half of the year, the corresponding figures are 67% and 60% respectively.

The record-high order intake is driven by a strong recovery in all markets and increased interest in connecting machines. But it is also due to an increasingly challenging component shortage situation which means that our customers build safety stocks to prepare for longer delivery times. We estimate that we have advance purchase effects, due to customers' concerns about component shortages, of approximately SEK 100 m, with some of our larger customers plac ing orders longer in advance than normal. This means that we have a significantly larger order book than usual, more than twice as large compared to the end of Q2 2020.

The lack of components has partly affected our delivery capacity and we have had to postpone some deliveries. This has had a negative im pact on the quarter's sales of approximately SEK 30 m. All in all, the quarter's sales reach a new record level of SEK 474 m, correspond ing to a growth of 33% compared to the previous year, whereof 28% is organic growth.

Furthermore, we see continually strengthened gross margins amounting to 63.7% (62.0%) and we now see the full effect of the price adjustments that were implemented at the turn of the year. We see some negative effects from increased component prices, which might affect the gross margin by a few percentage points in the com ing quarters.

During the quarter, we started up several long-term investments within our development and marketing organizations to take advan tage of the trends we see in increased automation and a strengthened focus on sustainability among our customers. These investments in combination with a return to more normal business travel will grad ually increase our operating costs by approximately 10% until the fourth quarter.

We can also conclude a new record quarter for our operating profit, which amounts to SEK 121 m, corresponding to an operating mar gin of 26%, an increase of 76% compared with the second quarter last year. The positive result is driven by expansive sales in combina tion with good gross margins and low operating expenditures.

Cash flow continues to be strong at SEK 126 m (115) for the quarter, which has contributed to reducing our debt. At the end of the quar ter, we had a net debt of SEK 78 m.

All markets at record levels during the second quarter

In our large and important markets in Europe, such as Germany, France and Italy, the strong market recovery continues and our order intake has more than doubled from last year's quarters, which were weak. A strong machine-building market and robot industry, together with the automotive industry's conversion to electric car manufac turing and generally large investments in increased automation and digitization in the industry are driving the growth of HMS in Europe.

North America is also delivering positive results with a strong econ omy and consistently strong end-customer verticals. Among other things, we have won new business in the growing area of battery manufacturing.

In Asia, China and Japan continue their strong development. De mand from Japanese robot manufacturers is at record levels and de spite a good comparison quarter last year, order intake is up over 60% in Asia.

We also see an increased demand in our offering for remote control of machines where more and more machine manufacturers choose to integrate remote control as standard in their machines, which has resulted in sales growth of over 50% and order intake that has more than doubled.

Acquisition of Owasys Advanced Wireless Devices after the end of the quarter

On July 1, HMS acquired 60% of the Spanish company Owasys Ad vanced Wireless Devices S.L., with 20 employees and headquartered in Bilbao. Owasys offers wireless communication platforms that ena ble remote monitoring and control of various types of utility vehicles and industrial machines. The acquisition enables HMS to address the vertical for mobile machines and utility vehicles, an interesting addi tion to the Informatio

LINK:	http://www.hms-networks.com/news-and-insights/news-from-hms/2021/07/14...
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