Costs for volume increase reduces Allgon's Q2 income

Costs for volume increase reduces Allgon's Q2 income Allgon's net sales and orders received remain positive. Net sales for April- June 1999 are expected to be SEK 485-505 million (SEK 435 million April-June 1998) and orders received are expected to be SEK 480-500 million (SEK 441 million). Allgon's income after financial items for the second quarter of 1999 is expected to be in the range of SEK 17-20 million. (SEK 30 million) The gross margin for the second quarter of 1999 is expected to be lower than the first quarter despite a favorable exchange rate trend. This is due to: * temporarily higher costs in production, mainly in the form of a higher degree of manual labor in order to be able to cope with the increased sales volumes * some production interruptions in connection with volume increases * lower margins due to changes in the product mix in Business Area System. Expenses in relation to net sales for the second quarter of 1999 are expected to be approximately on a par with the first quarter, which means some cost increase in SEK. This is mainly due to increased development costs relating to new product variations with reference to customer-specific orders in Product Area Base Station Equipment. The first six months of 1999 involve a clear increase in net sales and orders received compared with the first half of 1998, whereas income before taxes is lower. Income for the first six months of 1999 is influenced by increased costs in the microwave radio product line of slightly more than SEK 15 million. For further information please contact: Jan Edhäll Telephone: +46 8 540 822 31 President & CEO, Allgon AB E-mail: jan.edhall@allgon.se Claes Silfverstolpe Telephone: +46 8 540 822 32 Chief Financial Officer, Allgon AB E-mail: claes.silfverstolpe@allgon.se ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/06/23/19990623BIT00020/bit0001.doc http://www.bit.se/bitonline/1999/06/23/19990623BIT00020/bit0002.pdf