Interim report jan-sep 1999

INTERIM REPORT JANUARY - SEPTEMBER 1999 * Orders received increased by 35 percent to SEK 1,761 million (1,302). * Net sales rose by 17 percent to SEK 1,508 million (1,294). * Operating income fell by 14 percent to SEK 92 million (107). Income after financial items fell by 11 percent to SEK 90 million (101). * During the quarter, Allgon was selected as supplier of antennas for several of Ericsson's latest mobile telephones. * A general agreement was signed with Tele2 for microwave radio products. The first order amounts to SEK 7 million. Market Sales of mobile telephones on the world market continued to develop strongly during the third quarter. Demand for antenna solutions for mobile telephones are characterized by a broadening with new types of external antennas and built-in antennas. Expansion of the infrastructure of the mobile telephone networks in North America remained strong. The North American market will continuously develop positively and Allgon's evaluation is that the penetration today is approximately 30 percent. The rising penetration and the increasingly higher proportion of subscribers in digital systems, in combination with the rising talktime per subscriber, have been the prime driving forces behind the increased investments. The expansion rate in Europe is at a sound and stable level. Brazil is still suffering from the after-effects of earlier economic unrest. Over the next year, investments in mobile telephone networks are expected to develop more strongly in the region, especially in Brazil, Argentina, Chile and Venezuela. In Argentina, PCS-licenses were recently released which will lead to increased investments. Telecommunication investments in China were low during the year. However, demand is now expected to increase slightly. In other parts of East Asia the market situation has been stable with continued investments by the major operators. In China, the trend is expected to improve, whereas it will remain weak in South-East Asia and remain stable in the rest of Asia. Third quarter 1999 Allgon's net sales in the third quarter of 1999 rose by 22 percent to SEK 545 million (447). Operating income fell by 1 percent to SEK 47 million (48). Income before financial items fell by 13 percent to SEK 40 million (46). Group net sales and orders received During the period January - September 1999, net sales increased by 17 percent to SEK 1,508 million (1,294). Orders received rose by 35 percent to SEK 1,761 million (1,302). Business Area System Net sales rose by 13 percent to SEK 791 million (703). Sales increased to customers in North America and Asia, whereas they fell to customers in Europe. Sales of repeater systems developed positively in Europe and Asia but more weakly in North America. Sales of base station equipment also developed favorably, especially in North America. Sales of base station antennas were on a par with the previous year. Stronger sales were noted in North America, whereas sales in Europe, where the price pressure was harder, developed more weakly. Deliveries of the first microwave radio products will take place during the fourth quarter of 1999. A two-year general agreement with the Scandinavian tele-operator, Tele2, has recently been signed. The first order amounts to SEK 7 million with delivery during the fourth quarter of 1999. Business Area Mobile Communications Net sales rose by 21 percent to SEK 717 million (591). Volume development for terminal antennas was much stronger than growth in invoicing also in the third quarter. This is due to price reductions and changed product mix. The proportion of fixed antennas has been stable since end-December last year and was 61 percent (49) for the first three quarters. During the third quarter, Allgon began deliveries of built-in antennas and the distribution between retractable, fixed and built-in antennas was 38/61/1 percent. During the quarter, Ericsson chose Allgon as supplier of antennas for several of its latest models of mobile telephones. The extended collaboration will gradually impact on sales. After having supplied antennas for a number of customer-specific projects, Allgon launched a general platform for built-in antennas during the quarter. In September, Allgon delivered its 200 millionth mobile telephone antenna, approximately 15 months after delivery of the 100 millionth antenna. In 1998, Allgon delivered 65 million terminal antennas. With regard to antennas for satellite telephones, sales and deliveries are going according to plan. Sales of vehicle antennas were slightly above the previous year's level. Income Allgon's operating income fell by 14 percent to SEK 92 million (107). Income after financial items fell by 11 percent to SEK 90 million (101). The reduction has among others been affected by: * temporarily higher direct costs in production in order to be able to handle the increased delivery volumes during the second and third quarters * increased costs within the microwave segment of SEK 21 million compared with January - September 1998. Allgon's net exposure to the USD amounts to approximately 42 percent of net sales. The exchange rate affected the period's result positively by SEK 45 million compared with the previous year. Income after financial items would have been SEK 6 million higher if Allgon had not had any hedging. Financial position At September 30, 1999, the equity ratio amounted to 56 percent (62 percent at December 31, 1998). Net liquid assets amounted to SEK 1 million at the period- end (SEK 199 million at December 31, 1998). Capital expenditure During the period, capital expenditure in buildings, land, machinery and equipment amounted to SEK 196 million (120) gross, of which the ongoing new construction for Allgon System accounted for SEK 98 million (41). Upcoming information dates January 18, 2000 Year-end Report 1999 March 15, 2000 Annual General Meeting April 13, 2000 Three-Month Interim Report July 13, 2000 Six-Month Interim Report October 17, 2000 Nine-Month Interim Report Åkersberga, October 19, 1999 Allgon AB (publ) Jan Edhäll President and CEO For further information, please contact: Jan Edhäll Telephone: +46 8 540 822 31 President and CEO, Allgon AB Claes Silfverstolpe Telephone: +46 8 540 822 32 Chief Financial Officer, Allgon AB ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/10/19/19991019BIT00310/bit0001.doc The full report http://www.bit.se/bitonline/1999/10/19/19991019BIT00310/bit0002.pdf The full report