ÅF AB Interim Report January-June 2016

For further information:

Jonas Wiström, President and CEO, +46 70 608 12 20
Stefan Johansson, CFO, +46 70 224 24 01

ÅF reports increased earnings and continued growth

Second quarter 2016

• Net sales amounted to SEK 2,942 million (2,589)
• Operating profit, excl items affecting comparability, totalled SEK 284 million (225)
• Operating margin, excl items affecting comparability, was 9.7 percent (8.7)
• Operating profit totalled SEK 281 million (260)
• Operating margin was 9.5 percent (10.0)
• Profit after tax totalled SEK 211 million (199)
• Earnings per share, before dilution: SEK 2.75 (2.55)

First half year 2016

• Net sales amounted to SEK 5,585 million (4,986)
• Operating profit, excl items affecting comparability, totalled SEK 504 million (432)
• Operating margin, excl items affecting comparability, was 9.0 percent (8.7)
• Operating profit totalled SEK 501 million (466)
• Operating margin was 9.0 percent (9.4)
• Profit after tax totalled SEK 372 million (351)
• Earnings per share, before dilution: SEK 4.85 (4.51)

A few words from the President, Jonas Wiström:

ÅF's operating profit totalled SEK 281 million, which is the highest quarterly profit ever. At the same time the Group is reporting persistently high growth and a strong cash flow. Three of four divisions report an operating margin of over 10 percent. The operating margin for the International Division remained unchanged, despite challenging market conditions.

ÅF is of the opinion that the market situation is largely unchanged compared with the previous quarter. There is persistent high variation between different sectors, with strong demand from the automotive, pulp, food and pharma industries, infrastructure planning and infrastructure projects within roads, railways and the construction sector. The weak level of demand within nuclear power, the oil industry and commodities sector is persisting. However, ÅF takes a positive view of the agreement on Swedish energy policy, which will generate a need for increased investment in the energy sector including nuclear power in Sweden.

In order to further boost profitability, ÅF has launched a second cost-cutting programme within the Industry and Technology divisions, as well as in the parent company, which resulted in restructuring costs of SEK 25 million during the quarter. The measures are expected to generate annual savings of about SEK 38 million.

The Infrastructure Division is reporting solid growth with healthy profitability. Growth is strong within roads and railways, but the construction sector is also experiencing healthy and increasing growth. Design and architecture will gain increasing significance in the move towards a sustainable society. The acquisition of sandellsandberg will strengthen ÅF's broad offering within infrastructure planning and architecture, which also means that ÅF will enter the project phase at an earlier stage.  The integration of ÅF Reinertsen in Norway is proceeding according to plan.

The Industry Division is continuing to increase its share of end-to-end solutions. With its experience of leading large and complex projects and broad expertise across a number of technical areas, the company is able to guarantee customers' requirements in terms of technical proficiency, delivery reliability, quality and cost. The automotive industry is continuing to perform well, particularly in China. In the second quarter ÅF established a permanent presence in Shanghai in order to meet increasing demand for qualified product development expertise from Chinese car manufacturers.

The International Division is exhibiting negative growth as a result of a shrinking market in Europe. Sales are also being affected by political turmoil in Brazil, along with delayed decisions regarding investments in nuclear power in Europe and Asia. However, the quarter saw a healthy inflow of orders, which will have a positive impact on the second half of the year.

The Technology Division is seeing a persistent increase in growth and improved profitability in a flourishing market for digitalisation and embedded systems. The improvements are primarily a result of increased capacity utilisation and better prices, along with the effects of the cost-cutting programme initiated in autumn 2015.

Overall, ÅF has never been stronger. ÅF's wide-ranging technical expertise combined with quality and delivery reliability are ever popular among the company's clients. The target for 2020 remains, in which ÅF will generate net sales of at least EUR 2 billion and achieve an operating margin of at least 10 percent over a business cycle.

Group Head Office:
ÅF AB (publ), SE-169 99 Stockholm, Sweden
Visitors' address:  Frösundaleden 2, 169 70 Solna, Sweden
Tel. +46 10 505 00 00   Fax +46 10 505 00 10
www.afconsult.com / info@afconsult.com
Corporate ID number 556120-6474

The information contained in this press release is such that ÅF AB (publ) is required to disclose pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 10.30, 13 July, 2016.

All assumptions about the future that are made in this report are based on the best information available to the company at the time the report was written. As is the case with all assessments of the future, such assumptions are subject to risks and uncertainties, which may mean that the actual outcome differs from the anticipated result.

This is a translation of the Swedish original. The Swedish text is the binding version and shall prevail in the event of any discrepancies.

The full report including tables (pdf) is available for download.