ÅF AB Interim Report January-March 2016

27 april 2016

For further information:

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

Improved earnings and increased growth despite calendar effects

First quarter 2016

• Net sales amounted to SEK 2,643 million (2,397)
• Operating profit totalled SEK 220 million (207)
• Operating margin was 8.3 percent (8.6)
• Profit after tax totalled SEK 161 million (152)
• Earnings per share, before dilution: SEK 2.10 (1.95)

A few words from the President, Jonas Wiström:

ÅF's operating profit of SEK 220 million is the highest ever for a first quarter. ÅF also presented a persistently stable growth and a strong cash flow.

The Infrastructure Division is continuing to exhibit solid growth with healthy profitability. Meanwhile in Norway, Reinertsen and ÅF are in the process of merging their infrastructure operations. This will create an effective platform for continued growth in the Norwegian market. The focus now is on integrating both operations to provide a stronger offering to customers in Norway.

The Technology Division is seeing a persistent improvement in profitability in a market that is showing a positive trend. Demand for digital services and IT is rising, and the savings programme that was implemented last year has produced the anticipated effect during the quarter.

The market situation for the Industry Division remains unchanged, with considerable variation in demand in the various sectors. Demand continues to be weak in the commodities and energy sectors, whereas in the pulp, pharmaceutical and automotive industries we are seeing growth in demand. China has become an interesting market within the automotive industry. ÅF received a significant product development order during the quarter. In order to be able to take full responsibility and lead the Chinese customers' development projects, ÅF is expanding its presence in Shanghai.

Enquiries regarding assignments and projects within product development are on the increase in general at ÅF. The traditional model is that customers demand specific skills or resources to staff their product development projects. A lot of customers are realising that there are efficiency gains and cost savings to be had in engaging ÅF to take responsibility and lead parts of the development work in the form of subprojects or end-to-end solutions. ÅF, with its solid experience of managing major projects, can draw on its broad technical expertise and considerable resources to ensure that customers' requirements for delivery and quality are satisfied.

The European power generation industry, which comprises a large part of the International Division's business, is characterised by low energy prices, with persistently low propensity to invest. The proportion of the division's projects outside Europe is gradually increasing as part of a long-term initiative. One country where ÅF has successfully established and secured a large number of projects is Indonesia. Indonesia is the fourth most populous country in the world, and there is a huge need for power generation. ÅF is continuing to focus on markets where demand for power production is on the rise, including Southeast Asia, Africa and Latin America. However, in Brazil, political unrest has caused delays in a major project, which has impacted negatively on the division's profit.

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 13.00, 27 April, 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.

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