AB Ångpanneföreningen (publ) Interim report January - March 2001

AB Ångpanneföreningen (publ) Interim report January-March 2001 · Substantial increase in profit to SEK 35 (9) million · Operating margin 8.1 (3.3) percent · Sales grow by 13 percent to SEK 478 (422) million · ÅF to remain a preferred supplier to Ericsson · Acquisition of 20 percent of Finnish forestry consulting company CTS Engineering · The strong demand in significant parts of the market for consulting services during the second half of 2000 continued into the first quarter of 2001. All six business areas improved their profit margins compared with the corresponding period in 2000. Three of the business areas - those working with Installations and the development of Systems and Products - achieved profit margins of between 10 percent and 14 percent. Ericsson continued to show confidence in the ÅF Group by signing a new co-operation agreement primarily covering the development of systems and products. This suggests that opportunities for the ÅF Group to acquire new shares of this market will remain good. At the same time, the prospects for development continue to remain positive in the installation field as well. The market in those business areas which are active mainly within Plant and Process Industries remained weak - primarily because of widespread reluctance to invest in the process industries and the energy sector. However, the situation has shown a clear improvement compared with that a year ago and is expected to continue to improve even further. The Group's Inspection & Testing business has benefited from a far better balance between supply and demand and a significant improvement in capacity utilisation. The result for the reporting period was SEK 2 million better than budgeted, or a loss of just SEK 1million compared with SEK -5 million for 1999. This points the way to a positive result for the year as a whole. The first-quarter acquisition of 20 percent of Finnish CTS Engineering has done much to consolidate the ÅF Group's position in international forestry consulting, with more than 800 consultants working with the forestry industry in half a dozen countries. The agreement with CTS provides the ÅF Group with an option to increase its ownership to 33 percent. CTS, which employs 250 people in Finland, is one of Europe's most competitive consulting firms in the field of paper machine technology. Group profit after net financial items and proportions of associated companies' profits amounted to SEK 35 (9) million, corresponding to an operating margin of 8.1 (3.3) percent and a profit margin of 7.2 (2.2) percent. These profits are charged with unrealised losses in the share portfolio of SEK 3.2 million, and have also been influenced by a bonus to ÅF Group staff calculated at SEK 4 (1) million. Return on equity was 16.8 (7.6) percent. Sales amounted to SEK 478 (422) million, with order stock rising to SEK 466 (430) million. The number of employees (calculated as full-time equivalents) including those in associated companies rose to 2,444 (2,209). Parent company sales totalled SEK 27 (27) million, and the result after net financial items was SEK -6.1 (3.3) million. The Group's net worth, after a 20 percent standard tax deduction on the estimated surplus value of property was SEK 126 (78) per share. Adjusted equity ratio was 47 (38) percent. Consulting businesses Overall profit from consulting operations after net financial items totalled SEK 42 (12) million, with sales increasing to SEK 511 (454) million. Capacity utilisation during the period was 71 (66) percent. Profit and sales by business area Amounts in millions of SEK January-March January- Full-year 2001 March 2000 2000 Profit Sales Profit Sales Profit Sales Elec. Eng. & 16 154 7 129 38 522 Instrumentation Energy, Environment & 3 106 -5 100 1 442 Process Technology HVAC & Sanitation Eng. 9 61 4 49 17 191 Software, Electronics & 15 132 13 116 50 462 Mechanical Eng. Inspection & Testing -1 27 -5 28 -8 115 Education & Management 1 31 -2 32 0 136 Profit improved substantially despite the fact that demand remains relatively weak for significant parts of the Group's operations. All business areas showed improvements with the greatest advances being made in Energy, Environment & Process Technology, Inspection & Testing and Education & Management. HVAC & Sanitation Engineering recorded the best profit margin for the period, in excess of 14 percent. Business within the field of Energy, Environment & Process Technology has been affected by the general tendency to adopt a "wait-and-see" attitude to investments in the forest and energy sectors. However, it is anticipated that these sectors will step up their investments during the coming year at the same time as the acquisition of a share of CTS will enable the ÅF Group to compete for more and bigger commissions. Profits for Software, Electronics & Mechanical Engineering have continued to improve, but there is uncertainty as to developments in the telecom sector. The recently signed framework agreement with Ericsson ensures that we will remain a preferred supplier over the coming year, which we believe will lead to continued favourable development. Real Estate and Finance Administration The Group's properties, which consist of 95 percent offices, are used primarily by the Group's consulting businesses. The vacancy ratio at the end of the period was 5 (5) percent. The Group currently owns 34,300 sq.m. of real estate. In an evaluation carried out by Fastighetsforum at the end of 2000 the market value of the Group's properties was assessed at SEK 469 (394) million. Book value was SEK 270 million. Gross investments in machinery and equipment amounted to SEK 13 (14) million excluding investments made via corporate acquisitions. The Group's liquid assets amounted to SEK 215 (99) million, with SEK 24 million of this total being invested in Swedish and foreign shares. Interest-bearing liabilities and allocations totalled SEK 368 (350) million, bringing the Group's net borrowings to SEK 153 (251) million. The negative cash flow for the period of SEK -86 (-14) million is attributable chiefly to the payment of tax on the large premium refund from Alecta (formerly SPP), which was entered in the Group's last set of annual accounts. Accounting and valuation principles The principles and calculation methods remain unchanged from those used in the most recent annual report. Outlook for 2001 as a whole It is anticipated that market conditions for those segments in which the ÅF Group is active will be somewhat more favourable throughout the remainder of 2001 than they were in 2000. Despite some concern about the downturn for the telecom industry and a certain amount of uncertainty about the general state of the economy and its effect on attitudes to investment we believe that the consolidated result for the ÅF Group, excluding premium refunds from SPP, will show a marked improvement on that for 2000. Stockholm, 8 May 2001 AB ÅNGPANNEFÖRENINGEN (publ) Gunnar Grönkvist Managing Director and CEO For further information: Gunnar Grönkvist, Managing Director and CEO, Tel. +46-(0)8 657 11 15 Kaj Sandart, Director, Corporate Information, Tel. +46-(0)8 657 11 85 AB Ångpanneföreningen ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/08/20010508BIT01120/bit0001.doc Full Report http://www.bit.se/bitonline/2001/05/08/20010508BIT01120/bit0002.pdf Full Report