BT Industries AB (publ) Annual Accounts 1998

The global market grew by around 10% Orders received, SEK 8,924 m. (6,113) Income after net financial items +47%, SEK 544 m. (370) Earnings per share rise 54% to SEK 11.10 (7.20) Cooperation agreement with Toyota in Europe Financial summary Full-year Amounts in SEK m. 1998 1997 1) Orders received 8,924 6,113 Net sales 8,838 5,956 EBITDA 2) 956 656 Operating income 576 389 Income after net financial 544 370 items 1) The Raymond Corporation was consolidated in BT as of August 1, 1997. 2) EBITDA = Earnings Before Interest, Tax, Depreciation and Amortisation of intangible assets Market development Demand for warehouse trucks developed strongly both in Europe and North America. Total market growth is estimated at 10% - higher in Western Europe, slightly lower in North America. During the fourth quarter growth was slightly lower than earlier in the year. Of an estimated global market volume of slightly over 200,000 units in 1998, approximately 80% were sold in Western Europe and North America. In other markets, the previous high growth rate slowed slightly. In Japan and Russia, the markets for warehouse trucks declined. BT has a market position in Europe, North America and the rest of the world, with the exception of Japan, that corresponds fairly well to the total market's break-down. BT's growth during the year also largely reflects growth in the various market regions. BT has a global market share of over 20%. Despite the market's favorable development, price competition remains intense. Orders and sales The Group's orders received for the full-year amounted to SEK 8,924 m. (SEK 6,113 m.). For comparable units - BT before the acquisitions of Raymond and MHC - and at comparable exchange rates, orders received rose by slightly more than 10% compared with the previous year. Fourth-quarter orders received amounted to SEK 2,330 m., against SEK 2,104 m. in the corresponding period of 1997. In comparable terms, orders received rose by approximately 4% compared with the fourth quarter a year earlier. Net sales amounted to SEK 8,838 m. (SEK 5,956 m.), an increase of 48%. For comparable units and at comparable exchange rates, the increase was slightly over 11% compared with the previous year. The delivery rate during the fourth quarter was very high, and net sales amounted to SEK 2,635 m. against SEK 2,170 m. in the previous year. As per the normal seasonal pattern, the order backlog was reduced during the fourth quarter of the year. For the full year, however, the order backlog rose and at year-end was 13% higher than at the beginning of the year. The general agreement signed during the year with The Home Depot on deliveries in 1999 and 2000 totaling approximately SEK 550 m. is not included in the year's orders received or the order backlog. These orders will be reported during the contract period as deliveries on specified orders are made. Of product launches in 1998, the new reach-truck - Reflex AC - with AC power, attained particular attention from the market. Consequently BT´s market share in this important product segment increased during the year. Net sales by product area Net sales for the full-years 1998 and 1997 by product area were as follows: Full-year Change Amounts in 1998 1997 in % SEK m. Warehouse 4,701 3,150 + 49% trucks Counterbalan ced trucks 644 320 >100% Manual 420 383 + 10% trucks Total, 5,765 3,853 + 50% trucks Spare parts 1,292 895 + 44% Service 948 754 + 26% Short-term 403 297 + 36% rentals Other areas 430 157 >100% Total, 3,073 2,103 + 46% aftermarket Net sales 8,838 5,956 + 48% Truck sales as a share of total sales amount to 65% (65%). Aftermarket sales, including spare parts, service, short-term rentals, etc. amount to 35% (35%). Other areas in aftermarket sales include other material handling equipment such as storage racks, radio shuttles etc. Net sales by market area Half of BT's sales are in Western Europe and 44% in North America. The financial turmoil that affected many growth markets during the year has only had a marginal impact on BT. [REMOVED GRAPHICS] Income The Group's EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation of intangible assets) amounted to SEK 956 m. (SEK 656 m.). For comparable units, this corresponds to an increase of approximately 20% relative to the previous year. As of May, income includes the operations of the MHC group, which sells and services trucks through its own companies in Eastern Europe. The financial turmoil in certain markets in this region has led to declining demand, primarily in Russia. Net financial items amounted to SEK -32 m. (SEK -19 m.). Net financial items include a positive interest margin on long-term rentals/leasing of SEK 112 m. (SEK 68 m.). Income after net financial items amounted to SEK 544 m. (SEK 370 m.), an increase of 47%. Fourth-quarter income amounted to SEK 172 m., against SEK 143 m. for the corresponding period of 1997. Net income, after tax, for the year amounted to SEK 310 m. (SEK 168 m.). The total tax charge was SEK 234 m. (SEK 198 m.). The tax charge corresponds to approximately 36% of income after net financial items plus non tax-deductible amortisation. Earnings per share after full tax amounted to SEK 11.10, against SEK 7.20 in the previous year. Cooperation agreement with Toyota In December BT and Toyota in Europe signed a cooperation agreement whereby BT will manufacture a limited range of smaller warehouse trucks under Toyota's brand name. Through the agreement, BT reaches important customer segments that earlier weren't covered through its own distribution. Orders stemming from the agreement began to be registered in January 1999, with series deliveries beginning during the spring. Capital expenditures The Group's total direct net capital expenditures for fixed assets amounted to SEK 409 m., compared with SEK 264 m. in the previous year. Demand for services in the form of short-term truck rentals remained high throughout the year. Expenditures for BT's own truck fleet for short-term rentals and trucks for customer demonstrations accounted for nearly half the year's net capital expenditures. In early May BT completed its previously announced acquisition of MHC, which is engaged in the sale and service of trucks through its own companies in Eastern Europe. During the autumn the Canadian subsidiary Lift-Rite placed in operation its new production facility for manual trucks. The new plant increases capacity by approximately 40%. Financing and liquidity The Group's total assets increased to SEK 8,128 m., against SEK 7,061 m. at the beginning of the year and net borrowings amounted to SEK 2,119 m., compared with SEK 1,783 m. at the beginning of the year. The net gearing ratio thus amounted to 104% (99%). The equity ratio amounted to 25.0%, against 25.6% at the beginning of the year. Operating cash flow amounted to SEK -241 m. (SEK -38 m.). During the year capital tied up in operations rose as a result of, among other things, an increase in business volume. Investments in leasing operations in North America lowered cash flow by SEK 211 m. in 1998. Efforts to reduce capital tied-up was increased during the year. During the fourth quarter working capital was reduced by SEK 77 m. Efforts to further reduce tied-up capital are continuing in 1999. Financing of leasing operations within the business concept long- term rental has since many years in Europe been financed off- balance with external funders. The forms for leasing financing in the U.S. is changed in 1999. Using so called "asset-back" financing, the large part of new leasing agreements signed will be outside BTs balance sheet. Unlike before, BT will no longer have to utilize a significant portion of its cash flow for investments in leasing operations. In 1998 all leasing financing in North America remained on the balance sheet. The Group's total leasing receivables on the balance sheet amounted to SEK 1,532 m. (SEK 1,302 m.) at year-end. Personnel At year-end there were 6,975 (6,444) employees. During the year the number rose by 531. The MHC acquisition accounted for 230 of the increase. BT´s Business Areas In 1998 BT was organised into three business areas. Each business area has overall operative responsibility for a specific geographic market region. In addition to the three business areas, BT has central, Group-wide resources for, among other things, management, business control, accounting, finance, IT and information. Business Area BT EUROPE Covering Western Europe. Net sales, SEK m. 4,845 Operating margin, % 1)9.2% No. of employees 3,799 Business Area BT RAYMOND Covering North America. Net sales, SEK m. 3,914 Operating margin, % 1)8.2% No. of employees 2,861 Business Area BT INTERNATIONAL Covering markets outside North America and Western Europe. Net sales, SEK m. 569 Operating margin, % 1)5.1% No. of employees 274 1) For definitions, see page 8. Amortisation of goodwill is not charged to each Business Area. Proposed dividend The Board of Directors is recommending that the Annual General Meeting raise the dividend to the shareholders by 18 percent to SEK 91 m. (SEK 77 m.). The proposed dividend per share is SEK 3.25, compared with SEK 2.75 in 1997. The Board of Directors and the President have decided to recommend April 27, 1999 as the record day for the dividend. If the Annual General Meeting approves the proposal, the dividend is expected to be sent out by Värdepapperscentralen VPC AB (the Swedish Securities Register Center) on May 4, 1999. Annual General Meeting The Annual General Meeting of BT Industries AB will be held at 1:00 p.m. on April 22 at the company's offices at Svarvargatan 8 in Mjölby, Sweden. Notice of the Meeting will be announced in the Swedish daily press in accordance with the company's articles of association. Information on the time of the Meeting, the record day for the share register, etc. will also be available in the Annual Report for 1998. UPCOMING REPORTS FROM BT INDUSTRIES AB Annual accounts, 1998February 15 Annual Report for 1998mid-March Interim Report January-March 1999 April 22 Annual General Meeting, 1:00 p.m. at the Company's offices, Svarvargatan 8, MjölbyApril 22 Interim Report January -June 1999 July 20 Interim Report January -September 1999October 19 Information can be ordered from BT Industries AB, Information, telephone +46-142 - 86 000. BT´s web-site: www.bt-industries.com Mjölby, February 15, 1999 Carl-Erik Ridderstråle President and CEO For further information, please contact: Carl-Erik Ridderstråle, CEO Per Zaunders, CFO Phone: +46-142-86 000 INCOME STATEMENTS Full-year Amounts in SEK m. 1998 1997 Net sales 8,838 5,956 Cost of sales -6,270 -4,202 Gross income 2,568 1,754 Product development -174 -79 Marketing and sales -1.156 -831 Administration -623 -435 Amortisation of goodwill -95 -43 Other operating income 103 82 Other operating expenses -59 -64 Income in associated 12 5 companies Operating income 576 389 Income from financial investments Interest margin, long-term 112 68 rentals/leasing Interest income and other 42 16 financial income Interest expenses and other -186 -103 financial expenses Income after net financial 544 370 items Income tax -234 -156 Non-recurring tax - -42 Minority interests 0 -4 Net income 310 168 Average number of shares 28,000,23,333, 000 333 Earnings per share, full 11.10 7.20 tax, SEK Reported operating income has been charged with depreciation and -380 -267 amortisation according to plan totalling: BALANCE SHEETS Amounts in SEK m. Dec 31 Dec 31 1998 1997 ASSETS Fixed assets Goodwill 1,749 1,658 Other intangible assets 20 27 Tangible assets 1,334 1,153 Financial fixed assets 1,332 1,068 Total fixed assets 4,435 3,906 Current assets Inventories 1,015 879 Current receivables 2,478 1,991 Cash and banks 200 285 Total current assets 3,693 3,155 TOTAL ASSETS 8,128 7,061 EQUITY AND LIABILITIES Equity 2,027 1,774 Minority share 2 34 Provisions 563 497 Liabilities Long-term liabilities 3,072 588 Short-term liabilities 2,464 4,168 TOTAL EQUITY AND LIABILITIES 8,128 7,061 STATEMENTS OF CASH FLOWS Full-year Amounts in SEK m, 1998 1997 From operations Operating income 576 389 Non cash flow related items - Depreciations and 380 267 amortisations - Other -45 -11 Non cash flow related items 335 256 Interest margin, long-term 112 68 rentals/leasing Other financial items, net -125 -79 Paid taxes -259 -134 Cash flow from operations before 639 500 changes in working capital Changes in working capital -210 -148 Cash flow from operations 429 352 From investments Net investments in financial -261 -126 fixed assets *) Net investments in tangible -409 -264 fixed assets Cash flow from investments -670 -390 OPERATING CASH FLOW -241 -38 Acquisitions of companies -218 -2,759 From financial activities Rights issue - 793 Changes in interest-bearing 446 2,183 liabilities Dividend to shareholders -77 -70 Cash flow from financial 369 2,906 activities Change in cash and banks -90 109 Cash brought forward 285 168 Translation differences, 5 8 cash and banks Cash and banks carried forward 200 285 *) A continued increase in leasing operations in North America reduced cash flow with SEK 211 m. in 1998. During the 5-months period in 1997 in which Raymond was consolidated in BT the corresponding amount was SEK 116 m. NET BORROWINGS Dec. Dec. Amounts in SEK m, 31, 31 1998 1997 Interest-bearing assets 1,789 1,578 Interest-bearing liabilities 3,908 3,361 NET BORROWINGS 2,119 1,783 QUARTERLY DEVELOPMENT [REMOVED [REMOVED GRAPHICS] GRAPHICS] [REMOVED GRAPHICS] KEY RATIOS Full-year 1998 1997 EBITDA margin, % 1) 12.1% 12.2% Operating margin, % 2) 7.8% 7.7% Profit margin, % 3) 6.2% 6.2% Interest coverage, 4) 4.2 4.9 multiple Return on capital 5) 15.3% 16.7% employed, % Return on equity, % 6) 16.3% 12.8% Net gearing ratio, % 7) 104% 99% Equity ratio, % 8) 25.0% 25.6% PER SHARE DATA Full-year 1998 1997 Earnings per share, 9) 11.10 7.20 full tax, SEK Earnings per share, 10) 11.35 9.15 standard tax, SEK EBITDA per share, SEK 11) 38.15 31.05 Operating cash flow per 12) -8.60 -1.65 share, SEK Equity per share, SEK 13) 72.40 63.35 Number of shares (000) 28,000 28,000 at year-end Average number of 28,000 23,333 shares (000) Number of shareholders 4 936 4 129 at year-end DEFINITIONS Operating income plus depreciation, amortisation and the interest margin on long-term rentals/leasing in relation to net sales. 2)Operating income plus the interest margin on long-term rentals/leasing in relation to net sales. 3)Income after net financial items in relation to net sales. 4)Operating income plus interest income including the interest margin on long-term rentals/leasing divided by interest expenses. Operating income plus interest income including the interest margin on long-term rentals/leasing in relation to average capital employed at the opening and closing of each year. Net income for the period in relation to average equity at the opening and closing of each year. 7)Net borrowings in relation to equity and the minority share at the closing of the year. 8)Equity including the minority share in relation to total assets at the closing of each year. 9)Net income divided by the average number of shares outstanding during the period. Income after net financial items charged with standard tax of 35 per cent on income before tax and non-tax deductable amortisations divided by the average number of shares outstanding during the period. Operating income plus depreciation, amortisation and the interest margin on long-term rentals/leasing divided by the average number of shares outstanding during the period. Operating cash flow according to the statement of cash flows divided by the average number of shares outstanding. Equity divided by the number of shares at year-end. FIVE-YEAR SUMMARY Amounts in 1998 1997 1996 1995 1994 SEK m, Income statements Net sales 8,838 5,956 3,999 3,918 3,354 Gross income 2,568 1,754 1,256 1,289 1,102 Income before 956 656 455 483 365 depreciation (EBITDA) Operating income 576 389 293 321 227 Income after net 544 370 311 311 202 financial items Net income 310 168 202 213 142 Total depreciation charged against -380 -267 -162 -162 -138 operating income Balance sheets Fixed assets 4,435 3,906 767 731 734 Current assets 3,693 3,155 1,456 1,355 1,373 Total assets 8,128 7,061 2,223 2,086 2,107 Equity 2,027 1,774 850 696 512 Minority share 2 34 - - - Liabilities and 6,099 5,253 1,373 1,390 1,595 provisions Total liabilities and 8,128 7,061 2,223 2,086 2,107 equity Net borrowings Interest-bearing 1,789 1,578 170 53 185 assets Interest-bearing 3,908 3,361 429 470 724 liabilities Net borrowings 2,119 1,783 259 417 539 Cash flows Cash flow from 429 352 418 296 424 operations Cash flow from -670 -390 -194 -179 -118 investments 1) Operating cash flow -241 -38 224 117 306 Key ratios EBITDA margin, % 12.1% 12.2% 12.3% 13.2% 11.8% Operating margin, % 7.8% 7.7% 8.3% 9.1% 7.7% Profit margin, % 6.2% 6.2% 7.8% 7.9% 6.0% Return on capital 15.3% 16.7% 27.5% 30.1% 20.8% employed, % Return on equity, % 16.3% 12.8% 26.1% 35.3% 32.1% Capital turnover rate, 1.9 2.1 3.3 3.3 2.7 multiple Interest coverage, 4.2 4.9 10.8 6.4 4.3 multiple Net gearing ratio, % 104% 99% 30% 60% 105% Equity ratio, % 25.0% 25.6% 38.2% 33.4% 24.3% Personnel Number of employees at 6 975 6 444 3 688 3 566 3 303 year-end 1) Excluding acquisitions of companies For definitions, see page 8. d ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/02/15/19990215BIT00200/bit0002.pdf http://www.bit.se/bitonline/1999/02/15/19990215BIT00200/bit0001.doc