Lower sales and good cost control
Kista, 14 July 2021
During the second quarter of 2021 we have continued experiencing long sales cycles at our customers, which has negatively affected sales in the quarter, in particular for our systems business. After having addressed the changed user behaviours and new demands that the pandemic has caused, many customers are now careful regarding investment decisions, as it remains unclear how ways of working and structure will change in the longer run. We have also experienced delivery delays connected to semiconductor shortages and long lead times at our suppliers, which has impacted systems sales negatively as well. In total, revenues for the quarter amounted to SEK 878 (987) million, corresponding to a decline of 11,0% and an organic decline of 13.5%. Systems revenues declined by 19 percent, while services revenues increased somewhat. It is positive that our customers continue to see a need for our consulting and support services even when they are more cautious regarding system investments.
In this quarter we saw declines in most of our markets, with negative growth in three of our four Business Units; Nordics & Baltics, West and Central. Our continued view is that the declines primarily are related to longer sales cycles rather than lost business, and that we continue to have a strong position on a growing market. We also work closely with our suppliers to forward minimize the impact of the semiconductor shortage. During the quarter we have continued to work to strengthen our services offering and improve the quality of our service delivery, which is enabling additional growth in coming quarters.
The gross margin increased during the quarter which is a reversal of the trend from previous quarters. We see that the previously initiated measures are having an effect, in combination with favorable pricing. The actions taken in Busines Unit West have been successful and have led to West again showing a profit in the quarter, although the full effect of the implemented measures are not yet fully visible in the results.
Adjusted EBITA for the quarter was SEK 46.0 (56.3) million. The lower profitability was due to the declining revenues, partly offset by lower sales, general and administration costs as well as improved gross margins compared to last year.
New contracts for SEK 72 (77) million relating to cloud services were contracted during the quarter, which is a small decline compared to last year. Our assessment is that the dcline is a result of normal fluctuations between quarters. We continue to see a good demand for cloud services, in particular within hybrid infrastructure solutions as well as security and network services.
During the quarter we closed, as previously communicated, the acquisition of Conoa, a Swedish fast-growing company with specialist competence within cloud services. During the quarter we have started the integration in a very good way, and it is pleasing to see that we already have initiated the development of common offerings. We have received a very positive response on the acquisition from both customers and employees, and we see a strong demand for Conoa’s competence and services.
In summary, the sales in the quarter were lower than we would have wished, but we still see underlying growth in our market and that we are well positioned relative to our competition. With the engagement and the competence we have among our employees I look forward with confidence.