- Second quarter net sales reached SEK 601 million (474), corresponding to an increase of 27%. Currency conversions had a positive effect of SEK 30 million on net sales
- Order intake was SEK 815 million (606), corresponding to an increase of 35%
- Operating profit reached SEK 143 million (121), representing an operating margin of 23.7% (25.5)
- Profit after tax amounted to SEK 109 million (98) and earnings per share to SEK 2.33 (2.02)
- Cash flow from operating activities amounted to SEK 56 million (126)
- Acquisition of the remaining 30% of the shares of Procentec BV
first six months
- Net sales for the first six months reached SEK 1,118 million (929), corresponding to an increase of 20%. Currency conversions had a positive effect of SEK 51 million on net sales
- Order intake was SEK 1,671 million (1,170), corresponding to an increase of 43%
- Operating profit reached SEK 282 million (235), representing an operating margin of 25.2% (25.3). Adjusted operating profit reached SEK 255 million, representing an adjusted operating margin of 22.8%
- Profit after tax amounted to SEK 221 million (192) and earnings per share to SEK 4.74 (3.94). Adjusted profit after tax was SEK 195 million and adjusted earnings per share was SEK 4.17.
- Cash flow from operating activities was SEK 136 million (257)
- Acquisition of all the shares of the Australian company Global M2M Pty Ltd
Demand remains at a high and stable level
The second quarter of the year represents another quarter with solid demand in all our markets. Order intake continues to be strong at SEK 815 million, corresponding to organic growth of 16%. We are still experiencing somewhat increased order intake from our customers due to uncertainties in the global electronics component supply chain. We estimate the boost effect at 150 million Swedish crowns, which is lower than the previous quarter, but still represents a significant part of the order intake.
The significant depreciation of the Swedish krona against most other currencies is leading to a revaluation of our record order book, positively impacting reported order intake by SEK 50 million.
We report a new record revenue of SEK 601 million in the quarter, corresponding to organic growth of 17%. This was partly due to better than expected component availability during the latter part of the quarter. The overall supply chain situation is starting to become more predictable, but it is far from good. We still have challenges with delivery times and our order book is bigger than ever. This is an industry-wide challenge and most of our customers understand the longer lead times. We are seeing fewer allocations and reconfirmations from our semiconductor vendors, but several key components are still very hard to find, and we expect this to continue for the remainder of this year.
Navigating Cost Inflation
As in previous quarters, we continue to see significant raw material cost inflation. To protect our gross margin, we have been actively working with a combination of long-term price increases and a short-term surcharge on booked orders. We are now beginning to see the effects of this work. Our gross margins are moving in the right direction in the quarter at 62.2% (63.7%) although there is still some way to go to return to pre-supply chain issues levels in 2021.
Thanks to high delivery volumes and stable gross margins, we achieved a new record result in the second quarter with an EBIT of SEK 143 million (121) corresponding to an EBIT margin of 23.7%.
We continue to build component inventory to be able to deliver our backlog as key components become available. Inventory accumulation is SEK 50 million, negatively impacting our cash flow in the quarter. Cash flow amounted to SEK 56 million for the quarter.
Acquisition of the remaining 30% of the shares of Procentec
As reported in the first quarter report, HMS acquired the remaining 30% of Dutch Procentec at the start of the quarter, making HMS the 100% owner of Procentec. The purpose of the acquisition is to accelerate the work of integration with the rest of the HMS organization. We see major future synergies in markets in North America and Asia.
Acquisition of Australian distributor Global M2M
Australia is becoming a more interesting market for HMS. To accelerate market penetration, HMS has entered into an agreement with our main distributor in Australia, Global M2M, to acquire the company. The company has four employees and represents most HMS brands. Australia is now HMS’s 17th country with its own sales organization.
New product releases
During the quarter, we launched the next generation of our core remote access product line, Ewon Cosy+, with new world-class security features to meet future customer expectations for robust cybersecurity for applications. industrial.
We are also starting to see broader interest in our new AI-based software product for network outage analysis, Procentec’s SNAP Analysis. SNAP is a subscription service that identifies the reason for network outage based on advanced signal interpretation and analysis, enabling the customer to significantly reduce network downtime.
Outlook still positive despite a difficult macroeconomic situation
There are several challenges and risks ahead with the uncertain development of the global economy, for example the continuing covid concerns and the war in Ukraine. We also continue to have uncertainties in the supply of electronic components.
Despite the macro risks, HMS sees a good market and believes that the next few quarters will be strong in terms of sales and profitability, but with a dependency on the availability of major semiconductor components.
Longer term, HMS is of course dependent on the general development of the global economy, but we believe that our customers’ continued investment in increased automation and digitization, rising energy prices which are accelerating electrification and energy storage demand are all areas where we see more demand for industrial communication solutions, which will support HMS’s long-term growth.
Over the long term, we continue to believe that the industrial ICT (information and communication technology) market will be an interesting area, both in terms of organic growth and acquisitions.
Halmstad July 14, 2022
Staffan Dahlström Charlotte Brogren
Chief executive officer President of the council
Niklas Edling Fredrik Hansson
Crew member Crew member
Anna Kleine Anders Mörck
Crew member Crew member
Mikael Martensson Freddy Dahlberg
Staff representative Staff representative
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 required to make it public under the EU Market Abuse Regulation and Securities Markets Act. The information was submitted for publication, through the contact persons listed above, at 07:30 CET on July 14, 2022.
HMS Networks AB (audience) is a leading provider of solutions in the field of industrial information and communication technologies (Industrial ICT). HMS develops and manufactures products under the Anybus®, Ixxat®, Ewon® and Intesis® brands. Development takes place at the headquarters in Halmstad as well as in Ravensburg, Nivelles, Bilbao, Igualada, Wetzlar, Buchen and Delft. Local sales and support are handled by branches in Germany, USA, Japan, China, Singapore, Italy, France, Spain, Netherlands, India, UK , in Sweden, South Korea and the United Arab Emirates, as well as through a worldwide network of distributors and partners. HMS employs approximately 750 people and had sales of SEK 1,972 million in 2021. HMS is listed on NASDAQ OMX in Stockholm, Large Cap category, Information Technology.
HMS Networks Q2 Report 2022