Growth in both its Imaging IT Solutions and Secure Communications business areas propelled operating profit and net sales growth for Sectra in its 2015/2016 fiscal first quarter.
The company had net sales of 224.9 million Swedish kronor (23.9 million euros), up 5.9% from the 212.4 million Swedish kronor (22.6 million euros) reported in the same period a year ago. However, net sales increased 14.7% if a nonrecurring item of 16.3 million Swedish kronor (1.7 million euros) for a patent sale in the first quarter last year was excluded.
Sectra reported operating profit of 31.4 million Swedish kronor (3.3 million euros), down from 40.5 million Swedish kronor (4.3 million euros) last year. Operating profit would have risen 29.8% if the nonrecurring item was excluded from the previous quarter, however.
Sectra President and CEO Torbjörn Kronander said in a statement the quarterly improvement was partly attributable to the large number of long-term contracts the company has signed in recent years. These contracts are helping to counterbalance seasonal variations in net sales. He also said new and additional sales are contributing to increased order bookings in its Imaging IT Solutions business in several markets, including the U.S., where it is intensifying its growth initiatives.
Kronander also noted while order bookings remained favorable and well above the firm's net sales, they did decline in comparison with the first quarter of last year. As anticipated, order bookings in the U.K. -- where the firm's order bookings had increased the most in the last fiscal year -- were not as high. He also noted that long-term managed-services agreements, while somewhat reducing net sales variability between quarters, can increase variability in order bookings. Sectra recognizes the entire order amount when a five-year managed services contract is signed, for example, but distributes the sales results over the duration of the agreement as the systems are implemented.
