Enea interim report, July - September 2011

Enea interim report, July - September 2011 

Good sales to key accounts, weak income development in other areas

Enea's net sales for the quarter were weak. Net sales amounted to SEK
155.5 (166.1) million with an operating margin of -34.3 (12.2) percent.
The operating margin, excluding write offs of goodwill and capitalized
development expenses, was 4.1 percent.

Net sales for the Software business unit were 11.7 percent down over the
third quarter. This reduction is due mainly to lower royalty income from
customers in the wireless devices segment, in addition to reduced sales
to customers other than key accounts. Sales of core products to key
customers have developed well.

The Consulting business unit increased its net sales by 1.4 percent,
adjusted for changes in currency exchange rates. Consultancy operations
in the USA and Romania are developing well, while development in Sweden
has been weak.

46 MSEK of goodwill and 14 MSEK of capitalized operating expenses have
been written off.

Cash flow from operations over the first nine months of the year
amounted to SEK 67.6 (96.7) million.

The board of directors has appointed Anders Lidbeck to CEO of Enea on a
permanent basis.

The full year outlook for 2011 has been revised. The company was
previously expecting net sales and profitability to remain on a par with
last year. Enea is now expecting net sales and operating profit,
excluding existing write offs, to be down on last year.

Third quarter 2011 (third quarter previous year in brackets)

  · Net sales, SEK 155,5 (166,1) million
  · Growth -6,4 (-3,7) %
  · Growth, currency adjusted -4,1 (-3,5)%
  · Operating profit, SEK -53,3 (20,2) million
  · Operating margin -34,3 (12,2)%
  · Net profit before tax, SEK -51,2 (20,4) million
  · Net profit after tax, SEK -48,6 (10,9) million
  · Earnings per share, SEK -2,82 (0,63)
  · Cash flow from operations, SEK 17,9 (26,1) million

First nine months 2011 (same period previous year in brackets)

  · Net sales, SEK 520,7 (545,0) million
  · Growth, currency adjusted -4,5 (-6,5)%
  · Growth, currency adjusted -1,7 (-8,4)%
  · Operating profit, SEK -25,3 (50,3) million
  · Operating margin, -4,9 (9,2)%
  · Net profit before tax, SEK -21,2 (51,0) million
  · Net profit after tax, SEK -28,3 (34,2) million
  · Earnings per share, SEK -1,64 (1,95)
  · Cash flow from operations, SEK 67,6 (96,7) million

Anders Lidbeck, President and CEO comments:

“Our aim is to create growth and growing profitability. We have failed
to achieve this in 2011. Our core business was stable over the third
quarter. Business with our key customers is good, and sales of operating
systems increased, apart from sales in the wireless device market. But
that said, sales to smaller customers and sales of smaller product lines
are not going well. As a result of this development we are now writing
off the part of our goodwill and capitalized development expenses that
are related to these areas.

Software Business Unit - Focus and Global Market Leadership

Enea has built up a strong market position over a decade. We have
leading edge technology which is embedded in market-leading products
world wide. The market for wireless communication is growing quickly.
Cisco estimates that data traffic will increase by 26 times between 2010
and 2015. With data traffic increasing at a tremendous pace, there is
demand of optimized software and higher concentration of the number of
base stations. Enea's core expertise is in this field and our solutions
deal with the challenges faced by today's networks. This is the market
we will be focusing on and in this market we will be building an even
stronger market position.

Our ambition is to become number one. We are the company that the major
telecoms companies and hardware manufacturers should consult when they
need operating system solutions and expert knowledge on development of
the networks of the future.

Successful business relations with major telecoms suppliers demand high
quality solutions and long-term partnerships. Also required is
far-reaching cooperation with the leading manufacturers of hardware, so
that we can achieve the optimized performance that our customers demand.

Consulting Business Unit - Attract and Deliver

Our Nordic consultancy business has also been slow over the quarter.
While the economic situation in the Swedish market has been good,
consultants have resigned and not been able to recruit new ones at the
same pace. As a result, we have lost volume. Our consultancy operations
in the USA and Romania have been able to recruit new staff which has
resulted in increased net sales and profit over the third quarter.

We launched Enea Experts in Sweden in the spring as a way of calling
attention to our profile on the Swedish consultancy market, and also to
allow us in the longer term to more effectively attract the experts we
are looking for. We will be building on that initiative and making sure
that we become one of Sweden's leading suppliers of consultancy services
in our fields. My prediction is that we will be seeing positive effects
from this initiative in 2012.

Productivity and Commitment

Cost control is good at Enea, also over the third quarter. Lower net
sales are the reason why the operating margin is not satisfactory.
Productivity at Enea must increase. The business model is still too
diverse to be effective. This is why we have launched a project which
aims to optimize the organization in accordance with the strategy.

Enea has a strong position on its markets, and it is well respected. We
will now be intensifying our communications with players in the
ecosystems of the respective business units. Our objective: to create
more value, and specific value, from these initiatives. Another
objective is to achieve clearer global success which will lead to more
commitment, thereby further improving productivity within the
organization.

Financial outlook

We have revised our targets for 2011, now predicting that net sales and
operating profit, excluding existing write offs, will be down on last
year.

In the long term, however, our ambitions are still unchanged. With
greater emphasis on wireless broadband, Enea will again demonstrate
growth and at the same time achieve its long-term targets of an
operating margin of 20 percent for Software and at least 10 percent for
Consulting.”

Press and analyst meeting

Press and financial analysts are invited to a press and analyst meeting
where Anders Lidbeck, President and CEO, will present and comment on the
report.

Time: Thursday October 27 at 09:00 am CEST.

Link: Financial
Hearings (http://www.financialhearings.com/hearing/financia1.nsf/(record
ednew)/DD0208B4B3DAE870C12577EC00526040?OpenDocument)

Phone number: +46 8 505 598 12

The full report is published at
www.enea.com/investors (http://www.enea.com/investors)

For more information

Anders Lidbeck, President & CEO
Phone: 46 8 50 71 40 00
Email: anders.lidbeck@enea.com (anders.lidbeck@enea.com)

Lars Kevsjö, CFO
Phone: 46 8 50 71 40 00
Email: lars.kevsjo@enea.com (lars.kevsjo@enea.com)

Catharina Paulcén, VP Corporate Communications
Phone: 46 8 50 71 40 00
Email: catharina.paulcen@enea.com (catharina.paulcen@enea.com)