Interim Report 1 January - 31 March 2000

Interim Report 1 January - 31 March 2000 * Net sales increased by 13 % compared to the corresponding period 1999 * Profit after financial items SEK 148.1 million (32.9 including extraordinary items of 32.3) -In the result is included an amount of SEK 153.2 million constituting the present value computation of the Group's share of SPP's surplus. * Weak freight market in the beginning of the year -Clear improvement from March for tonnage over 20,000 dwt. * Increased contract volumes for tanker shipping -Contracts of affreightment, North European volumes, up by 20 %. -Two vessels (45,000 dwt) chartered out on long-term time charter. * A newbuilt product tanker added to the fleet 3 -UNITED GLORY, 7,000 m , delivered in January. * Continued positive development within Marine & Logistics Services -Additional transportation contracts have been secured within Bulk Logistics. * Disposable liquidity SEK 238 million (253) Operations Broström is one of the leading logistics companies for the oil and chemical industry, focusing on industrial product and chemical tanker shipping and marine services. SHIPPING Strong demand and tight supply on the oil market combined with a considerable uncertainty about OPEC's future production policy resulted in a continued high crude oil price during the period. Expectations of increased production volumes with decreased oil prices as a consequence resulted in a reduction of existing oil stocks during the period. The crude oil stocks were on an exceptionally low level before OPEC decided to increase the production. After this the stocks have grown again and are now considered to be on such a level that they will not cause any problems for the refineries in their production to meet the expected increased demand for petrol during the summer. The high crude oil price also meant that the bunker price during the period was on a very high level which further negatively influenced profitability. In the beginning of this period the market conditions in Northern Europe have been on about the same level as they were at the end of 1999. Not until the end of the period a certain im-provement was noted. The effects of the ship accident off the French coast at the end of last year, when the 25-year-old tanker Erika sank in bad weather, have resulted in an increased focus on quality and safety. The attention is not only drawn to the control of the vessels but also to owners and operators of vessels. The market recovery which now is slowly in progress is partly a consequence of an increased demand for quality tonnage and quality operators. In combination with the fact that the continuously expanding oil companies have changed their opinion on logistics and require larger and more flexible transport solutions, this development becomes a competitive edge for Broström. It has contributed to us having managed to increase our contract volumes by about 20 % in this segment. For the ships operating on the global market the year started with relatively low volumes and a freight level in line with those at the end of 1999. From March there was an improvement in the market, especially for the ships operating in Asia. The reason can partly be found in a changed distribution pattern resulting in longer transport distances. For the ships trading methanol the volumes were low due to the fact that a number of methanol factories were closed during the period. The volumes are expected to grow for the rest of the year. At the end of February two of the vessels of 45,000 dwt were chartered on a long- term timecharter. For a period of ten years these ships are chartered out for methanol transports. In 1999 the market for vessels in the segment 55,000-80,000 dwt was characterised by very low volumes and low freight levels. This continued also in the beginning of 2000 but as from the end of February the freight levels were much improved and at present they are on a level which has to be considered very good. Within Bulk Shipping, which is a very limited part of Broström's shipping operations, the market is still weak. This segment is being phased out. The total result for the Shipping operational area for the period is not satisfactory but for the rest of the year a positive impact on the result is expected partly due to improved market conditions and partly due to the effects of our action program which is carried through. MARINE & LOGISTICS SERVICES The market conditions and the business development have continued to be good. Nordic Bulkers has signed contracts for additional volumes for intermodal transport of granulated plastics. The company's position as being one of Northern Europe's leading logistics companies for bulk products has further been strengthened. The total result for Marine & Logistics Services is satisfactory and prospects for the future are considered as good. SPP SPP (a Swedish pension insurance company) has now informed about the rules for using the allocated surplus funds. The Group's share of SPP's surplus amounts to SEK 161.3 million before tax. A direct deduction from the amounts to be paid out in cash, against deduction of existing pension debt of SEK 64.6 million and a deduction of the remaining amount of the present value of future expected pension payments results in a profit before tax for the Broström Group of SEK 153.2 million. This amount has been included in the result for the period. New Group profile During the period the companies within the operational area Shipping and where Broström is the majority shareholder have now changed identity in such a way that all have "Broström" in their name. All owned vessels will get new logos on the funnels and the prefix "BRO" will be added to the names. This work is carried out gradually in order not to disturb the operations, which means that it will take more than a year before it has been completed. The final part of the introduction of the new profile is the proposal to change the name of our parent company to Broström AB at the Annual General Meeting on 11 May. Net sales and result The net sales of the Group were for the first three months SEK 557.9 million (491.6) and of the Parent Company SEK 11.0 million (9.0). The result before allocations and taxes was for the Group SEK 148.1 million (32.9) and for the Parent Company SEK -1.3 million (-21.0). ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/11/20000511BIT00880/bit0001.doc The full report http://www.bit.se/bitonline/2000/05/11/20000511BIT00880/bit0002.pdf The full report