Axis Q1 results mixed, still growing in U.S.

Wednesday, April 1, 2009

STOCKHOLM—Network video surveillance specialist Axis Communications announced its first quarter results on Tuesday amid what the company’s president, Ray Mauritsson, called a “relatively weak market” in the short term.

Net sales for January-March 2009 amounted to SEK 532mln (approximately $62 million), an increase of 22 percent year on year. That growth in sales, however, was due primarily to currency effects fueled by the weak Swedish kronor.

Broken down by region, sales in the Americas, which accounted for 49 percent of total sales, reached SEK 259mln in 1Q ($30 million), up from SEK 174mln in the same period a year earlier, with that translating to growth of 8 percent in local currency terms and 49 percent in Swedish kronor.

EMEA sales, which accounted for 42 percent of total sales, amounted to SEK 223mln ($26 million), which represented slightly positive growth in Swedish kronor, but negative growth of 13 percent in local currency terms.

Sales in Asia reached SEK 49mln, which represented growth of 14 percent in Swedish kronor but negative growth of 13 percent in local currency terms.

Operating profit fell to SEK 46mln ($5.37 million), down from SEK 69mln in 1Q 2008. Net profit stood at SEK 33mln, down from SEK 39mln ($3.86 million) a year earlier.

Commenting on the current market situation in a teleconference presentation, Mauritsson said that the 1Q trend was similar to that at the end of 2008, with activity on the market for network video security installations “relatively low.” Despite the continued weak market, he said there were some “positive signs” from the U.S. market, however. “There’s a little more optimism there; that’s what we feel,” he said. Looking ahead, however, he said the market remains difficult to predict.

Mauritsson said the network video surveillance market was experiencing “slightly tougher price competition due to the fewer number of projects,” but said that Axis was well positioned in that it was ahead of the curve in terms of technology.

Despite the current market, Axis is continuing in expansion mode, according to Mauritsson, though in a “slightly more conservative” manner. Reflecting that, the company added 38 new employees in 1Q 2009, bringing the company’s total workforce to 750. While the majority of those new hires were signed in 4Q 2008, Axis will continue to add staff, though at a slower pace, this year.

The company is in an “intense” product launch phase, with a new line of simple-to-install dome cameras coming out as well as a new series of encoders, which Mauritsson said would be important for installers working on upgrades, as they would allow them to leverage existing analog systems.

Vertical markets that continue to fare well despite the economy include transport, public surveillance and schools. “These continue to be strong drivers in all regions,” said Mauritsson.