Interim Report January-September 1998

BT Industries AB (publ) Interim Report, January - September 1998 Continued stable growth in BT's market and customer segments Orders received, SEK 6,594 m. (4,009 Invoiced sales, SEK 6,203 m. (3,786) Income after net financial items +64%, SEK 372 m. (227) @ Financial Summary January - September Full-year Amounts in SEK m. 1998 1997 1) 1997 1) Orders received 6,594 4,009 6,113 Net sales 6,203 3,786 5,956 EBITDA 2) 658 396 656 Operating income 386 238 389 Income after net financial 372 227 370 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 BT and the world The worries that plagued the global financial system during the third quarter have impacted BT very marginally compared with many other industries and companies. The market and customer profile that BT has gives it good stability in connection with economic fluctuations. *More than 95% of all BT's transactions are in Western Europe and North America. The markets in Asia, South America and Australia are still considered to have great long-term growth potential, however. *The single largest customer segment, accounting for far more than 50%, is the daily good industry - including production, distribution and the retail level. In terms of material handling needs, the daily goods sector is relatively insensitive to economic changes. *A large percentage of BT's transactions are in such areas as rentals, long-term service agreements, sales of spare parts etc. These are services that maintain good stability over the business cycle. Market and sales In Western Europe, market demand has continued to develop strongly with growing volumes. The North 1 (8) BT Industries AB (publ) Interim Report, January - September 1998 American market has stabled at a high level. Also in Eastern Europe demand has developed strongly in most markets. Only in Russia has a decline become evident due to the financial crisis. Orders received for BT have remained good in Europe as well as in North America, with unchanged price level. Strong orders continue for the AC truck introduced in Europe during the spring, resulting in increased market shares. During the third quarter BT signed a delivery agreement with the U.S. home improvement chain The Home Depot. The agreement, which calls for the delivery of a total of 4,500 trucks during the years 1999 and 2000, has a value of over USD 70 m., in addition parts supply will follow. This order is not included in the reported order figures. Instead it will be gradually reported as order inflow when delivery requests are received. Orders received for the period January-September amounted to SEK 6,594 m. (SEK 4,009 m.). For comparable units - BT before the acquisitions of Raymond and MHC - and at comparable exchange rates, orders received increased by 13% compared with the corresponding period of 1997. Net sales amounted to SEK 6,203 m. (SEK 3,786 m.), an increase by 64%. For comparable units and at comparable exchange rates, the increase was 13% compared with the corresponding period of 1997. The delivery rate primarily from the Swedish production unit increased further during the third quarter. For the Group as a whole, orders received have exceeded deliveries in all three quarters despite an increased delivery capacity. Net sales by product area Net sales for the period January-September 1998 and 1997 for the various product areas were as follows: January- Chan September ge Amounts in 1998 1997 % SEK m. Warehouse 3,26 1,94 +68% trucks 7 0 Manual 304 275 +11% trucks Spare parts 948 589 +61% Service 695 524 +33% Short-term 288 197 +46% rentals Other areas 701 261+169 *) % Net sales 6,20 3,78 +64% 2 (8) BT Industries AB (publ) Interim Report, January - September 1998 3 6 *) Incl. counterbalanced trucks Net sales by market area Half of BT's sales are in Western Europe and about 45% in North America. The financial crisis in Asia has had a very marginal impact on BT. Asia's share of BT's total sales amounted to 1.1%, against 1.5% for the full-year 1997. [REMOVED GRAPHICS] Income EBITDA for the Group amounted to SEK 658 m. (SEK 396 m.). For comparable units, EBITDA rose by approximately 22% compared with the corresponding period of 1997. Operating income rose to SEK 386 m., against SEK 238 m. for the corresponding period of 1997. Income was charged with total depreciation of SEK 272 m. (SEK 158 m.), including goodwill amortisations of SEK 70 m. (SEK 21 m.) The Group's net financial items amounted to SEK -14 m. (SEK -11 m.). Net financial items include a positive interest margin on long-term rentals/leasing of SEK 82 m. (SEK 40 m.). Income after net financial items amounted to SEK 372 m. (SEK 227 m.), an increase by 64%. Profit margin after three quarters is on the same level as before the Raymond-acquisition. Capital expenditures The Group's total net capital expenditures for fixed assets amounted to SEK 311 m., compared with SEK 179 m. in the previous year. Demand for services in the form of short-term truck rentals is high in Europe. Expenditures for BTs truck fleet for short-term rentals and trucks for customer demonstrations account for around half of capital expenditures for the year. In early May BT completed its previously announced acquisition of MHC Ltd, which is engaged in the sale and service of trucks through its own companies in Eastern Europe. MHC is consolidated in the BT Group as of May 1998. During the third quarter the Canadian subsidiary Lift- Rite placed its new production facility for manual trucks in operation. The new plant increases capacity by approximately 40%. The transfer in production and start-up of the new facility have proceeded according to plan. 3 (8) BT Industries AB (publ) Interim Report, January - September 1998 Financing and liquidity Total assets for the Group increased to SEK 7,790 m., against SEK 7,061 m. at the beginning of the year, and net borrowings increased to SEK 2,257 m., compared with SEK 1,783 m. at the beginning of the year. The net gearing ratio thereby has risen to 118%. The equity ratio was 24.6%, against 25.6% at the beginning of the year. Cash flow before financial activities amounted to SEK - 595 m. (-2,746). Company acquisitions accounted for SEK 196 m. (2,759), increased capital tied up in operations for SEK 287 m. and continued investments in leasing operations in North America for SEK 184 m. Efforts to reduce tied-up working capital are under way. In addition, different ways of leasing financing in the U.S. have been reviewed. This has now led to an agreement in principle with independent financiers on so-called asset-back financing. When a final agreement is signed, further information on the impact to BT will be released. Personnel At the end of the period there were 6,829 (6,416) employees. During the year the number of employees increased by 385, of whom 210 were added through the acquisition of MHC. UPCOMING REPORTS FROM BT INDUSTRIES AB Annual Accounts for 1998 February 15 Annual Report for 1998early April Interim Report January-March 1999 April 22 Annual General Meeting, 1.00PM at the Company's offices, Svarvargatan 8, Mjölby April 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 4 (8) BT Industries AB (publ) Interim Report, January - September 1998 - 86 000. Mjölby, October 21, 1998 Carl-Erik Ridderstråle President and CEO For further information, please contact: Carl-Erik Ridderstråle, CEO Per Zaunders, CFO Phone: +46-142-86 000 This interim report has not been reviewed by the Company's auditors. INCOME STATEMENTS Consolidated January- Full- September year Amounts in SEK m. 1998 1997 1997 Net sales 6,203 3,786 5,956 Cost of sales -4,368 -2,646 -4,202 Gross income 1,835 1,140 1,754 Product development -115 -49 -79 Marketing and sales -829 -551 -831 Administration -428 -286 -435 Amortisation of goodwill -70 -21 -43 Other operating income 50 36 82 Other operating expenses -65 -32 -64 Income in associated 8 1 5 companies Operating income 386 238 389 Income from financial investments Interest margin, long-term 82 40 68 rentals/leasing Interest income and other 30 10 16 financial income Interest expenses and other -126 -61 -103 financial expenses Income after net financial 372 227 370 items Income tax *) -157 -85 -156 Non-recurring tax - - -42 Minority interests 0 -2 -4 Net income 215 140 168 Reported operating income has been charged with depreciation and -272 -158 -267 amortisation according to plan totalling: 5 (8) BT Industries AB (publ) Interim Report, January - September 1998 *)Nine months tax has been estimated at 35% standard tax of income before tax and amortisation QUARTERLY DEVELOPMENT [REMOVED GRAPHICS] of intangible assets. For the full-year 1997 full tax is reported. BALANCE SHEETS Consolidated Amounts in SEK m. Sept. Sept.Dec.31, 30, 1998 30,19971997 ASSETS Fixed assets Intangible assets 1,755 1,735 1,685 Tangible assets 1,299 983 1,153 Financial fixed assets 1,229 965 1,068 Total fixed assets 4,283 3,683 3,906 Current assets Inventories 1,024 882 879 Current receivables 2,371 1,820 1,991 Cash and banks 112 166 285 Total current assets 3,507 2,868 3,155 TOTAL ASSETS 7,790 6,551 7,061 EQUITY AND LIABILITIES Equity 1,913 1,717 1,774 Minority share 5 31 34 Provisions 532 279 497 Liabilities Long-term liabilities 3,254 591 588 Short-term liabilities 2,086 3,933 4,168 TOTAL EQUITY AND LIABILITIES 7,790 6,551 7,061 NET BORROWINGS Consolidated 6 (8) BT Industries AB (publ) Interim Report, January - September 1998 Amounts in SEK m. Sept. Sept.Dec.31, 30, 199830, 19971997 Interest-bearing assets 1,612 1,378 1,578 Interest-bearing liabilities 3,869 3,153 3,361 NET BORROWINGS 2,257 1,775 1,783 STATEMENTS OF CASH FLOW Consolidated January- Full- September year Amounts in SEK m. 1998 1997 1997 Net income 215 140 168 Cash flow adjustments - Depreciations according 272 158 267 to plan - Other -101 119 86 Total 171 277 353 Change in working capital -287 -203 -169 Cash flow before investments 99 214 352 Net investments excl. acquisitions/disposals of -498 -201 -390 companies *) OPERATING CASH FLOW -399 13 -38 Acquisitions -196 -2,759 -2,759 Cash flow before financial -595 -2,746 -2,797 activities Cash flow from financial activities Changes in interest-bearing 498 2,019 2,183 liabilities Dividend to the shareholders -77 -70 -70 Rights issue - 793 793 Total 421 2,742 2,906 Change in cash and banks - excl. translation -174 -4 109 differences - translation differences 1 2 8 Change in cash and banks -173 -2 117 *) A continued increase in leasing operations in North America reduced cash flow with approx. SEK 184 m. during the first nine months of 1998. During the 5- months period in 1997 in which Raymond was consolidated in BT thecorresponding amount was approximately SEK 116 m. KEY RATIOS Consolidated January- Full- September year 1998 1997 1997 EBITDA-margin, % 11.9% 11.5% 12.2% Operating margin, % 7.5% 7.3% 7.7% Profit margin, % 6.0% 6.0% 6.2% Interest coverage, 3.9 5.3 4.9 multiple Net gearing ratio, % 118% 102% 99% Equity ratio, % 24.6% 26.7% 25.6% 7 (8) BT Industries AB (publ) Interim Report, January - September 1998 DEFINITIONS EBITDA margin Operating income plus depreciation and the interest margin on long-term rentals/leasing divided by net sales. Operating margin Operating income plus the interest margin on long-term rentals/leasing in relation to net sales. Profit margin Income after net financial items in relation to net sales. Interest coverage Operating income plus interest income divided by interest expenses. Net gearing ratio Net borrowings in relation to shareholders' equity and the minority share at the end of each period. Equity ratio Shareholders' equity including the minority share in relation to total assets at the end of the period. SHARE DATA Consolidated January- Full- September year 1998 1997 1997 Earnings per share after 7.70 6.45 9.15 standard tax, SEK 1) EBITDA per share, SEK 2) 26.45 20.00 31.05 Cash flow per share, SEK -14.25 0.60 -1.65 3) Equity per share, SEK 4) 68.30 61.30 63.35 Number of shares at the end of the period, 28,000 28,000 28,000 thousands Average number of shares, 28,000 21,778 23,333 thousands 5) Number of shareholders at the end of the period 4 656 4 184 4 129 6) 1)Income before tax is charged with 35% standard tax on income before tax and amortisation of intangibleassets divided by the average number of shares during the period. 2)Operating income plus depreciation and the interest margin on long-term rentals/leasing divided by the average number of shares. 3)Cash flow from operations according to the cash flow analysis divided by the averagenumber of shares. 4)Shareholders' equity divided by the number of shares on the closing day. 5)Average number of shares during the year. For 1997 calculated as: 8 (8) BT Industries AB (publ) Interim Report, January - September 1998 (No. at beginning of year, 20,000,000 x 7 mos. + 28,000,000 x 5 mos./12) = 23,333,333 For January-September 1997 calculated as: (No. at beginning of year, 20,000,000 x 7 mos. + 28,000,000 x 2 mos./9) = 21,777,778 6)Number of shareholders October 31, 1997. [REMOVED GRAPHICS] [REMOVED GRAPHICS] [REMOVED GRAPHICS] [REMOVED GRAPHICS] FIVE-YEAR SUMMARY Amounts in SEK m. 1997 1996 1995 1994 1993 Income statements Net sales 5,956 3,999 3,918 3,354 2,982 Gross income 1,754 1,256 1,289 1,102 936 Income before 656 455 483 365 145 depreciation (EBITDA) Operating income 389 293 321 227 25 Income after net 370 311 311 202 -15 financial items Net income 168 202 213 142 -37 Total depreciation charged against -267 -162 -162 -138 -120 operating income Balance sheets Fixed assets 3,906 767 731 734 729 Current assets 3,155 1,456 1,355 1,373 1,265 Total assets 7,061 2,223 2,086 2,107 1,994 Equity 1,774 850 696 512 373 Minority share 34 - - - - Liabilities and 5,253 1,373 1,390 1,595 1,621 provisions Total liabilities and 7,061 2,223 2,086 2,107 1,994 equity Net borrowings Interest-bearing 1,578 170 53 185 70 assets Interest-bearing 3,361 429 470 724 896 liabilities Net borrowings 1,783 259 417 539 826 Key ratios EBITDA margin, % 12.2% 12.3% 13.2% 11.8% 6.1% Operating margin, % 7.7% 8.3% 9.1% 7.7% 2.1% Profit margin, % 6.2% 7.8% 7.9% 6.0% -0.5% Return on capital 16.4% 27.5% 30.1% 20.8% 5.3% employed, % 9 (8) BT Industries AB (publ) Interim Report, January - September 1998 Return on equity, % 12.8% 26.1% 35.3% 32.1%-10.1% Capital turnover rate, 2.1 3.3 3.3 2.7 2.4 multiple Interest coverage, 4.9 10.8 6.4 4.3 0.8 multiple Net gearing ratio, % 99% 30% 60% 105% 221% Equity ratio, % 25.6% 38.2% 33.4% 24.3% 18.7% Personnel Number of employees at 6 444 3 688 3 566 3 303 3 215 year-end 10 (8) ------------------------------------------------------------ http://www.bit.se/bitonline/1998/10/21/19981021BIT00250/BITQ3E.pdf