Quarterly report january-march 1999 for Bong Ljungdahl AB

QUARTERLY REPORT JANUARY-MARCH 1999 for BONG LJUNGDAHL AB * STRUCTURAL MEASURES GENERATE CONTINUED STRONG EARNINGS GROWTH * PROFIT AFTER NET FINANCIAL ITEMS INCREASED BY SKr 17 MILLION TO SKr 26 MILLION (9) * EARNINGS PER SHARE AFTER TAX SKr 2.81 (1.13) * INTEGRATION OF FINNISH ACQUISITION PROCEEDING AS PLANNED THE MARKET Generally speaking, conditions have been relatively favourable on the Group's key markets at the start of 1999. The increase in volume that was seen in Sweden at the end of last year is believed to have continued during the first quarter of 1999. Demand has remained broadly unchanged in Finland and Denmark, while a tendency to slacken began to emerge in Norway. On the Nordic market as a whole, which accounts for almost 80 per cent of total sales, conditions are relatively stable, although some increase in activity could be noted among companies operating on an international level. From a European perspective, the market for envelopes is still expanding, mainly generated by steady growth in the product segment related to direct mail advertising. In line with this, there is trend towards higher value added products in larger formats. SALES AND RESULT The Group's net turnover increased to SKr 338 million (275), which is an increase of 5 per cent for comparable units. Currency fluctuations had only a marginal effect on turnover. The operating profit increased by some SKr 18 million to SKr 31 million (13). The effects of the structural and rationalisation measures within the Group's Scandinavian envelope units, that were initiated in 1997 and completed during the last financial year, are now making their full impact and have resulted in significantly improved margins as well as strengthening the Group's competitive position. Further rationalisation of the Swedish operations was decided upon in the previous financial year, focusing on more far-reaching concentration of the manufacturing structure. These measures are now being implemented, and a non recuring SKr 6 million cost has been taken against the result. Capital gains of an equivalent amount have been generated by the divestment of old machinery and plant. The integration of the Finnish business is going according to plan and by the end of the quarter all sheet-based production capacity had been transferred to the factory at Nybro. These changes in Finland and Sweden, which have involved an aggregate reduction in the work force of some 90 people, are expected to have their full effect during the second half of the year. The profit after net financial items increased by SKr 17 million to SKr 26 million (9 the same quarter previous year, excluding capital gains). The acquisition of the Finnish business has resulted in an increase of interest costs of approximately SKr 1 million at Group level. The structural changes carried out in 1998 within Envelopes Sweden are now having their full effect. Cost reductions and efficiency improvements, in combination with somewhat better selling prices, have generated a significant increase in profit. After extensive internal changes, delivery capacity and customer service have reached planned levels, which has also helped to strengthen our position on the market. The work of further rationalising and streamlining the production structure at the units in Kristianstad and Nybro is also proceeding as planned. Turnover amounted to SKr 136 million (132). Further positive changes to the product mix in the Group's Envelopes Denmark segment more than compensated for the slightly lower deliveries during the period. The result is far better than for the corresponding quarter last year. Turnover amounted to SKr 52 million (55). Improved productivity, in both production and printing, is the main factor behind the distinct improvement in Envelopes Norway's result. Increased foreign activity on the market has resulted in a slightly stiffer competition. Turnover amounted to SKr 47 million (53). The co-ordination of the Group's Envelopes Finland sector is on schedule and, at the end of the first quarter, sheet-based production was transferred to Nybro. Moreover, the printing operations have been relocated from Helsinki to Tampere, where they have been integrated with envelope production. The measures taken successively reduce the cost base, mostly due to a reduction of some 45 in the work force. Turnover amounted to SKr 50 million. Envelopes Belgium's result remained weak, despite healthy volume growth. Investments and rationalisation measures to improve productivity have not had the desired effect as a result of growing pressure on prices in the sectors that the unit has so far focused on. Turnover amounted to SKr 46 million (35). Envelopes Poland has made relatively good progress and, with the launch of a new product, is well positioned on the market. Sales and result have increased. As a consequence of the expansion of the Polish envelopes business, operations are being transferred to new, more suitable premises in the Warsaw area. Turnover amounted to SKr 8 million (7). At the beginning of 1999, the Group's Binders Divisions developed particularly well. Increased sales volumes resulted in considerably significantly higher capacity utilisation, which is the main cause of marked improvement in the result. Turnover amounted to SKr 21 million (16). LIQUID FUNDS AND FINANCING st Closing liquid funds amounted to SKr 49 million (36 at December 31 , 1998) and net loan liabilities decreased by SKr 33 million to SKr 285 million. The equity ratio was 39 per cent (38) and the debt-equity ratio was 0.65 (0.78). CAPITAL EXPENDITURE Capital expenditure during the period amounted to SKr 38 million and was directed towards the continued technical upgrading of the machinery at the envelope production units. As a result of the current structural changes, old equipment has been sold for Skr 14 million. EMPLOYEES The average number of employees in the Group amounted to 1,176, which, for comparable units, represents a reduction of 52 on the corresponding period for the previous year. OUTLOOK The structuring programme implemented in 1998 is now having its full effect, and further measures will successively generate positive effects throughout 1999. Based on the assumption that the reasonably stable conditions on the Group's key markets will continue, the annual result should be considerably better than last year's. th Kristianstad, May 6 , 1999 BONG LJUNGDAHL AB (publ) Lennart Pihl President This report has not been subject to specific examination by the company's auditors. Further information may be obtained from Lennart Pihl, President and CEO of Bong Ljungdahl AB. Telephone (switchboard) +46 (44) 20 70 00, (direct) +46 (44) 20 70 50, (mobile) 070 594 68 66 Forthcoming reports th Thursday, August 12 , 1999 Interim report January-June, 1999 th Thursday, October 28 , 1999 Interim report January-Sept,1999 BONG LJUNGDAHL AB P.O. Box 516, SE-291 25 Kristianstad Phone +46 44-20 70 00 Fax +46 44-20 70 91 www.bongljungdahl.se QUARTERLY ACCOUNTS BONG LJUNGDAHL GROUP SUMMARY PROFIT AND LOSS Jan-March 1999 Jan-March 1998 Jan-Dec 1998 ACCOUNT (SKr million) Net turnover 338.2 275.3 1095.3 Operating costs -307.7 -262.4 -1039.1 Operating profit 30.5 12.9 56.2 Capital gain on sale of - 7.0 7.0 subsidiary Net financial items -4.7 -3.9 -15.4 Profit after net 25.8 16.0 47.8 financial items Tax -5.6 -1.1 -7.5 Net profit after tax 20.2 14.9 40.3 st st SUMMARY BALANCE SHEET March 31 1999 December 31 , 1998 (SKr million) Fixed assets 633.1 628.3 Receivables 214.2 198.4 Stocks 185.5 200.7 Liquid funds 48.7 36.1 Total assets 1081.5 1063.5 Equity 422.3 405.2 Interest-bearing provisions 78.1 78.2 Interest-free provisions 85.1 77.6 Interest-bearing liabilities 261.9 282.5 Interest-free liabilities 234.1 220.0 Total liabilities and equity 1081.5 1063.5 FINANCIAL RATIOS Jan-March 1999 Jan-March 1998 Jan-Dec 1998 KRONOR PER SHARE Earnings after standard tax 2.59 0.92/1.64 4.16/4.87 1) 1) Ditto after full tax 2.81 1.13/2.12 4.32/5.70 1) 1) Equity 61.19 54.80 58.80 RATIOS Operating margin 9.0% 4.7% 5.1% Profit margin 7.6% 3.3%/5.8% 3.7%/4.4% 1) 1) Return on equity 17% 7%/12% 1) 7%/9% 1) Return on capital employed 16% 8% 9% Debt-equity ratio 0.65 0.53 0.78 Equity ratio 39% 42% 38% Capital employed, SKr 762.3 626.7 765.9 million Net interest-bearing debt, 284.6 205.1 317.3 SKr million Average number of shares 7,164,840 6,990,140 7,066,721 (after full conversion) 1) Including capital gain on sale of the Labels division (Nova Print) QUARTERLY COMPARISONS GROUP (SKr million) Q1/99 Q4/98 Q3/98 Q2/98 Q1/98 Q4/97 Q3/97 Q2/97 Q1/97 * * * * Net 338.2 336.4 228.4 255.3 275.3 272.8 225.9 268.3 275.8 turnover Operating - - - - - - - - - costs 307.7 312.2 217.6 247.0 262.4 265.3 220.6 268.8 267.4 Operating 30.5 24.2 10.8 8.3 12.9 7.5 5.3 -0.5 8.4 profit/lo ss Capital - gain on sale of - - - - 7.0 - - - subsidiar y company Net -4.7 -5.3 -3.6 -2.6 -3.9 -3.4 -3.2 -3.1 -3.3 financial items Result after net 25.8 18.9 7.2 5.7 16.0 4.1 2.1 -3.6 5.1 financial items *) Pro forma including Ljungdahls and excluding Labels division CASH FLOW ANALYSIS: GROUP (SKr million) Jan.-Mar. 1999 Jan.-Mar. 1998 Operating profit 30.5 12.9 Net financial items -4.7 -3.9 Tax paid -6.0 -0.1 Depreciation 16.8 14.2 36.6 23.1 Change in working capital 12.4 -9.0 Cash flow from current operations 49.0 14.1 Capital expenditure, etc -21.5 -10.0 Acquisitions/divestments, etc - 31.4 Cash flow after investments, etc 27.5 35.5 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/05/06/20000314BIT00670/bit0001.doc http://www.bit.se/bitonline/1999/05/06/20000314BIT00670/bit0002.pdf