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ÅF- Interim Report January-March 2008: Operating profit up 57%

Published april 23, 2008
For further information:         
Jonas Wiström, President/CEO     +46 (0)70-608 12 20
Viktor Svensson,                 
Director, Corporate Information +46 (0)70-657 20 26

First Quarter 2008

  * Net sales totalled SEK 1,064 million (Q1 2007: SEK 932 million)
  * Operating profit totalled SEK 117 million (SEK 74 million)
  * Profit after tax rose to SEK 80 million (SEK 49 million)
  * Earnings per share, before dilution, amounted to SEK 4.69 (SEK

A few words from the President, Jonas Wiström
ÅF continues to grow, and profitability is increasing. The operating
margin for the first quarter was 10.9 percent (Q1 2007: 8.0 percent).
This improvement in earnings was attributable above all to a growth
in volumes and increases in the prices we charge to our clients, but
also to the effects of ÅF's sale of a number of poorly performing
We grew our business 14 percent compared with the same period last
year, and the figure for organic growth was 5 percent. There were two
days fewer in the first quarter this year compared with the first
quarter in 2007, which corresponds to 3 percent less invoiceable time
for the reporting period.
Today, with almost 4,000 employees in 19 countries, ÅF is one of
Europe's 500 most rapidly expanding companies according to the
international magazine, Business Week.
All five divisions reported improved levels of profitability. Three
divisions achieved operating margins in excess of 12 percent, and the
trends in the Engineering and Systems Divisions were especially
Current uncertainty about the economy as a whole has not yet begun to
impact on demand for our services, and to date we have seen no signs
of a downturn.
The market remains strong in all our areas of operation, with the
increasing interest in ÅF's specialist expertise in infrastructure,
energy and the environment worthy of special mention.
Sales and profits
Net sales for the reporting period totalled SEK 1,064 million, an
increase of 14 percent on the figure for the corresponding period in
2007 (SEK 932 million).
Operating profit was SEK 117 million (SEK 74 million), and the
operating margin was 10.9 percent (8.0 percent).
The reduction in occupational pension premiums introduced by Alecta
had a positive effect on ÅF's operating profit of SEK 9.5 million
compared with the first quarter of 2007.
Profit after net financial items was SEK 109 million (SEK 72
million), and the profit margin was 10.2 percent (7.8 percent).
Net financial items for the first quarter totalled SEK -7.8 million
compared with SEK -1.9 million for the same period last year. This
change is due to a combination of negative exchange rate differences
and generally higher interest rates.
Capacity utilisation for the period was 74 percent (74 percent).
Profit after tax totalled SEK 80 million (SEK 49 million).
Earnings per share before dilution were SEK 4.69 (SEK 3.01).
Important events during Q1 2008 and after the closing of the
reporting period
ÅF signed a contract for technical consulting services in connection
with the construction of a gas-fired power plant in Cikarang,
Indonesia. The agreement involves consulting and project control
services during the design and production phases, as well as
monitoring the construction and commissioning of this 360 MW power
station. The contract value is EUR 3 million. The client is the
privately owned power generation company PT Cikarang Listrindo.
ÅF won an order from ABB for the plant design of facilities at the
kraft unit at Stora Enso's plant at Hyltebruk, Sweden. The assignment
extends to approximately 20,000 consulting hours and work will be led
from ÅF's office in Norrköping. This full-service undertaking
involves the replacement of existing control and monitoring equipment
with a modern process control system.
ÅF has been appointed chief consultant for technical consulting
services for the construction of a new 600 MW coal-fired power plant
in Vietnam. The contract value is EUR 2.3 million. ÅF will be
responsible for project control and project engineering of the power
plant, which is being built by the Vietnamese state utility EVN. The
project is financed by the Japanese Bank of International
Cooperation, and ÅF is conducting its consulting activities in
cooperation with the Japanese company JPower.
Acquisitions and disposals
In March ÅF acquired the consulting company Proplate IT, via the ÅF
Systems Division. Proplate IT, with 22 employees in three central
locations in Sweden (Karlskoga, Örebro and Karlstad), is a
well-established consulting company that offers qualified IT
consulting services to industrial clients in Sweden. Its major client
is Outokumpu.
Divisional performance                     

Engineering Division Sales Q1, SEK 288 million (Q1 2007: SEK 289 m)
                     Operating margin Q1: 13.4% (9.1%)  

The Engineering Division, which offers services within automation,
industrial IT and mechanical engineering, is a leader in its field in
the Nordic countries.
The level of activity remained high on the market during the first
quarter, which contributed to the continued rise in the division's
capacity utilisation rate.
Demand was strongest from the nuclear power, petrochemical, iron and
steel, and mining industries. Clients in these industries are
investing in increased automation to improve productivity.
Work with the division's competence centres has continued. These
competence centres are a way of bringing together the division's
unique skills within a specific area, enabling us to handle
large-scale projects in a cost-effective manner even in smaller
locations. The first quarter saw the establishment of new competence
centres for Nuclear Power and Industrial IT.
Engineering won a number of major contracts during the reporting
period, including projects for Iggesund Paperboard and ABB.
Another assignment was secured in collaboration with the
Infrastructure Division: this involves responsibility for electrical
project engineering work in connection with Outokumpu's modernisation
of the plate-rolling mill at Degerfors.

Infrastructure     Sales Q1, SEK 333 million (Q1 2007: SEK 298 m)
                   Operating margin Q1: 12.2% (11.5%)

The Infrastructure Division offers infrastructure consulting services
in the following business areas: Communications & Maintenance,
Installations, Infrastructure Planning, Electric Power and Sound &
The market for qualified consulting services in the field of
infrastructure developments remained strong in the first quarter.
One of the factors driving demand is the raft of major investment
programmes to improve and expand the Swedish road and rail networks.
ÅF is involved in important undertakings for the City Tunnel rail
project in Malmö and the Citybanan Rail Link in Stockholm. High oil
prices and new environmental criteria are contributing to a growing
interest in future solutions for public transport and other traffic
issues. Increasing environmental awareness is also driving demand in
our biggest business area, Installations, which serves the
construction industry and property-owners' market. The need for
energy consulting is growing both with regard to new construction and
in existing properties.
The division is involved in a number of major communication-based
projects for the Swedish Defence Materiel Administration, FMV.

 Inspection   Sales Q1, SEK 64 million (Q1 2007: SEK 56 m)
              Operating margin Q1: 7.7% (6.2%)    

The Inspection Division works with technical inspections, chiefly in
the form of periodic inspections, testing and certification. Major
clients include the engineering and nuclear power industries.
Demand was strong during the first quarter and the rate of growth
could be maintained at around 15 percent. Growth was the result of a
large number of new, small and medium-sized assignments of the kind
that characterise the division's business as a whole.
Demand was greatest from the nuclear power and petrochemical
industries. Assignments in the nuclear power industry have, for the
most part, involved safety improvements and efficiency enhancing
Intensive recruitment efforts are ongoing to consolidate the
division's position in the market, primarily in the fields of
advanced mechanised testing and design, and the supply of complete
systems for non-destructive testing.
Early in the first quarter Inspection won a contract to carry out
design reviews, manufacturing inspections, assembly inspections and
other inspections in connection with the Perstorp Group's
construction of a new plant in Stenungsund.

  Process         Sales Q1, SEK 280 million (Q1 2007: SEK 212 m)
                  Operating margin Q1: 8.1% (5.7%)    

The Process Division offers consulting services for every aspect of
an industrial process and possesses world-leading expertise in
certain specialist areas of the pulp and paper industry and in the
energy sector.
The market during the first quarter was characterised by the
continued buoyancy of the energy sector, where demand is driven by a
rise in electricity consumption and the ongoing expansion of capacity
in the Nordic countries, Eastern Europe, Russia and Asia.
Orders on the Process Division's books from the energy sector are
currently at historically high levels.
Examples of recent assignments include a project for TGK in Russia to
conduct feasibility studies ahead of the construction of a proposed
new power plant, an appointment as technical consultant for Kalmar
Energi's planned power plant construction, and project engineering
and project control services for the Jindal Group in connection with
the construction of a new hydropower plant in India.
There has been a slight increase in demand from the pulp and paper
industry. This sector is driven by new investments and the
construction of new plant, primarily in Asia and South America. In
Chile ÅF is conducting a project to renovate a pulp line for the
Chilean pulp company CMPC.

  Systems         Sales Q1, SEK 130 million (Q1 2007: SEK 106 m)
                  Operating margin Q1: 12.7% (6.9%)   

The Systems Division offers services in the fields of embedded
systems, mechanical engineering and IT systems.
The market for IT and product development services remained strong,
and was a contributory factor behind the improved capacity
utilisation rate for the division compared with the figure for the
corresponding period in 2007.
The first quarter saw the acquisition of the IT consulting company
Proplate IT with around 20 employees in West-Central Sweden. This
takeover of Proplate IT reinforces the System Division's claim to be
one of the leading IT consultants in the region with a total of
around 100 members of staff. Proplate IT brings with it into the ÅF
Group its well-established relations with clients such as Outokumpo
and the steel company Smidox.
New assignments include a new laser application designed to improve
traffic safety on the Öresund Bridge that links Sweden and Denmark.
The division has also won new contracts for test systems for 2G and
3G mobile systems with a leading supplier of telecommunications
Other new projects have come from Scania as part of the company's
Fleet Management System for logistics and vehicle administration.
Cash flow and financial position
Cash flow for the period was SEK -46 million (SEK +7 million). Before
borrowings and amortisation of loans, cash flow was SEK 20 million
(SEK 8 million).
The Group's liquid assets totalled SEK 269 million (SEK 265 million).
Equity per share was SEK 84.46, and the equity/assets ratio was 50.7
percent. At the beginning of the 2008, equity per share was SEK 78.83
and the equity/assets ratio was 47.9 percent. 
The Group's net loan debt (cash and cash equivalents minus
interest-bearing liabilities) at the end of March totalled SEK 61
million (SEK 95 million).
Number of employees
The number of full-time equivalents employed by the company was 3,747
The total number of employees at the end of the reporting period was
3,938 (3,723): 3,007 in Sweden and 931 outside Sweden.
Gross investment in machinery and equipment for the period January to
March 2008 totalled SEK 15 million (Q1 2007: SEK 8 million).
Accounting principles
This interim report has been prepared in accordance with IAS 34
("Interim Financial Reporting"). The report has been drawn up in
accordance with International Financial Reporting Standards (IFRS),
as well as statements on interpretation from the International
Financial Reporting Interpretations Committee (IFRIC) as they have
been approved by the European Commission for use in the EU, and the
relevant references to Chapter 9 of the Swedish Annual Accounts Act.
The report has been drawn up using the same accounting principles and
methods of calculation as those in the Annual Report for 2007 (see
Note 1, page 78). The parent company has implemented the Swedish
Financial Accounting Standards Council's Recommendation RR 32:06,
which means that the parent company shall apply all the IFRS and
related statements approved by the EU as far as this is possible
while continuing to apply the Swedish Annual Accounts Act in the
preparation of the legal entity's accounts. 
Risks and uncertainty factors
The significant risks and uncertainty factors to which the ÅF Group
is exposed include business risks linked to the general economic
situation, the propensity of various markets to invest, the ability
to recruit and retain qualified co-workers, and the effect of
political decisions. In addition, the Group is exposed to a number of
financial risks, including currency risk, interest-rate risk and
credit risks. No significant risks are considered to have arisen over
and above those described on pages 57-60 of ÅF's Annual Report for
ÅF shares
The ÅF share price at the close of the reporting period was SEK
145.75, which represents a fall of 12.2 percent during the period
January-March 2008.
The Stockholm Stock Exchange all-share index (OMXSPI index) fell by
9.5 percent during the same period.
Reporting dates for financial information 2008
Interim report January-June 2008                               25
Interim report January-September 2008                      23 October

Stockholm, Sweden - 23 April 2008
AB Ångpanneföreningen (publ)
Jonas Wiström, President and CEO
This interim report has not been subjected to scrutiny by the
company's auditors.
The full report in cluding tables can be downloaded from the
following link:

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