Interim report january - march 2001

INTERIM REPORT JANUARY - MARCH 2001 [REMOVED GRAPHICS] The positive trend in order bookings continues, with order bookings during the period the best-ever on a quarterly basis since the major Iran projects were booked in mid-1997 and early 1998. Combined, order bookings amounted to SEK 3,969 M, an increase of 6% compared with previous year. The market situation in Europe shows no sign of a levelling off and is continuing at a relatively favorable level. In North America, demand declined for equipment for the construction and civil engineering industry. The trend, particularly in South America, but also in parts of Asia/Pacific and in Southern Africa, is positive and is expected to remain so this year. Operating profit before and after restructuring costs amounted to SEK 85 M (111) and SEK 85 M (41), respectively. Operating profit for the entire year 2001, before restructuring costs, is expected to be in line with 1999. Malmö, April 26, 2001 Alf Göransson President and CEO METSO CORPORATION'S BID FOR SVEDALA On April 9, 2001, the Finnish group, Metso Corporation, announced the extension of the acceptance period for the conditional offer, originally presented on June 21, 2000, now until June 1, 2001. The offer, formulated as a cash offer to the shareholders and holders of convertible debentures in Svedala Industri AB, amounts to SEK 185 per share and SEK 245 plus accrued interest per convertible debenture. The review process of Metso's application for clearance of its offer is still ongoing with the Federal Trade Commission (FTC) in the US. During the process Metso has come to the understanding that in order to obtain clearance from the FTC, it is expected to divest its grinding mills business in addition to the businesses included in the remedy package agreed with the EU commission. The sales process for the remedy package, for which agreement was reached with the EU commission, is continuing, with Metso conducting discussions with a shortlist of preferred bidders. Metso retains the right to further extend the application period if it is deemed necessary. MARKET The mining industry in South America has recovered, with many of the region's major mining companies having announced sizeable investments in the immediate years ahead. Increased activity in the mining sector is anticipated in South Africa as well, while elsewhere in the world, more of a wait-and-see attitude with respect to investments prevails. Rationalizations and improved capacity utilization in the global mining industry are expected to generate increased demand for Svedala's products within this sector. Within the construction industry, demand is expected to remain at a high level during the year in Europe. In the US, the willingness to invest is presently at a lower level than previous years with respect to equipment for the industry. Within service and spare parts, Svedala's emphasis on the after-market is expected to result in expanded market shares and thus a more positive volume trend. ORDER BOOKINGS [REMOVED GRAPHICS] During the first quarter of 2001, order bookings increased by 6% to SEK 3,969 M (3,753), with currency fluctuations accounting for the greater part of the improvement. The increase pertains mainly to equipment and projects in Europe and South America, with North America reporting lower order bookings. Strong activity in the construction industry continues, mainly in Europe while the previously indicated slowdown in the US persists. In the mining industry, the trend is positive in South America and in Southern Africa, with continued hesitancy prevailing elsewhere in the world. During the first quarter, three important orders were landed in South America having a combined value of SEK 335 M. All of them pertained to equipment and systems for bulk handling. Two of these orders were received in Brazil within the mining sector, with the third received in Venezuela for the loading and unloading of coke, a by-product related to oil refining. INVOICED SALES [REMOVED GRAPHICS] Invoiced sales increased by 9% during the period to SEK 3,381 M (3,092). Sales of service and spare parts amounted to SEK 1,568 M (1,452). Excluding currency fluctuations, the overall increase was 3%. The increase occurred mainly in Europe and in South America, with sales in Africa having also taken a favorable turn. PROFIT Operating profit amounted to SEK 85 M (41) for the first quarter. Operating profit last year was burdened with restructuring costs of SEK 70 M. The lower gross margin during the first quarter is mainly attributable to comparatively larger project volume within the Mineral Processes business area, with lower margins than was the case in the preceding year. Operating profit from sales of service and spare parts amounted to SEK 163 M (147), which corresponds to an operating margin of just over 10%, whereas operating loss with respect to equipment amounted to SEK -45 M (loss: 10). The measures taken at year-end with regard to cost reductions in the US and within the Recycling division are proceeding according to plan. Profit after net financial items for the period was SEK 3 M (loss: 25). The net of financial items amounted to an expense of SEK 82 M (expense: 66). Net interest declined by SEK 18 M as a consequence of increased borrowing. Loss after tax amounted to SEK 8 M (loss: 43). [REMOVED GRAPHICS] [REMOVED GRAPHICS] INVESTMENTS AND DEPRECIATION During the first three months of the year, Group investments in plant and equipment amounted to SEK 87 M (122). During the same period, depreciation amounted to SEK 114 M (106). FINANCING AND CASH FLOW At the close of the first quarter of 2001, net borrowing amounted to SEK 5,134 M, which is the same level as at year-end. Tied-up capital in inventories increased by SEK 530 M since year-end. The increase is due to currency fluctuations and normal seasonal variations, and is also reinforced by order bookings having increased by slightly more than SEK 500 M since the fourth quarter of 2000. Current receivables declined by SEK 500 M since December 31, 2000 due to payments for projects delivered, and as a consequence of programs in progress for reducing capital tied up in accounts receivable. PERSONNEL The number of employees in the Group amounted to approx. 10,350 as of March 31, 2001. The workforce decreased by about 150 persons since year- end. ------------------------------------------------------------ This information was brought to you by BIT The following files are available for download: The full report The full report