Cardo AB interim report, january - june 2001

CARDO AB Interim report, January - June 2001 Earnings for last year included non-recurring income relating to a pension refund of SEK 69 million. In the commentary below, Group earnings for last year are stated exclusive of this pension refund. · Inflow of orders: SEK 5,704 million (4,900), a rise of 8 percent for the current structure of the Group after adjustment for the effects of exchange rate movements · Invoiced sales: SEK 4,990 million (4,586), which exclusive of the effects of acquisitions and exchange rate movements is on a par with last year · Operating earnings: SEK 258 million (290) · Earnings after financial items: SEK 208 million (235) · Earnings per share: SEK 4.51 (4.95) The Group's inflow of orders amounted to SEK 5,704 million (4,900) during the first half-year, a rise of 8 percent for the current structure of the Group after adjustment for the effects of exchange rate movements. The trend for service and the aftermarket was good in all business areas. Invoiced sales amounted to SEK 4,990 million (4,586). Adjusted for the effects of exchange rate movements, this is a rise of 2 percent, which is mainly attributable to company acquisitions. Operating earnings amounted to SEK 258 million (290). The operating margin was 5.2 percent (6.3). In the second quarter, Cardo Door's earnings were affected by weak sales of residential garage doors in Germany. Reduced sales and lower margins in Germany had an adverse effect on Cardo Pump's earnings. A rise in deliveries resulted in improved earnings for Cardo Rail during the second quarter. Earnings after financial items were SEK 208 million (235). The profit margin amounted to 4.2 percent (5.1). Earnings per share after full tax amounted to SEK 4.51 (4.95). Exchange rate movements are estimated to have had only a marginal impact on Group earnings. Cardo Door Cardo Door is one of the world's largest manufacturers of industrial doors and Europe's leading supplier of dock loading equipment. Cardo Door is also the market leader in the service of these products and one of Europe's largest manufacturers of residential garage doors. Adjusted for the effects of exchange rate movements and company acquisitions, Cardo Door's inflow of orders was on a par with last year. Demand for industrial doors, which account for slightly more than 40 percent of Cardo Door's sales, was somewhat weaker during the period compared with last year. For dock loading equipment, demand was on a par with last year, as it also was for residential garage doors except for in Germany where demand was weak. The trend for service, which accounts for approximately a quarter of Cardo Door's turnover, remained good. Invoiced sales during the period amounted to SEK 2,377 million (2,155), which adjusted for the effects of exchange rate movements and company acquisitions is on a par with last year. Operating earnings amounted to SEK 137 million (144). Weak sales of residential garage doors in Germany had an adverse effect on earnings in the second quarter. During the second quarter, the Swedish operations of the Danish Miflex group, which was acquired in January 2001, were integrated into Cardo Door's Swedish sales company Crawford Door. Sales of a new generation of industrial doors were initiated in the second quarter. The new doors have been developed to meet the expected more stringent requirements of a future EU standard for function and safety. A number of major orders were received during the second quarter. These included one from the Dutch supermarket group Ahold N.V. for 97 industrial doors for installation in Prague. A breakthrough order relating to about 20 dock loading units was received in Lithuania, and the Finnish shipyard Nautor ordered 6 Megadoor doors. Danzas-ASG Eurocargo ordered 41 complete dock loading systems for installation at distribution centers in Jönköping and Norrköping in Sweden. In Germany, 46 industrial doors were sold to a wholesale company in Bavaria, 70 industrial doors for installation at Stuttgart Airport and 87 industrial doors for a mail order terminal in Nuremberg. Cardo Pump Cardo Pump is one of Europe's largest manufacturers of pumps, mixers and aerators and a global leader in the production of sophisticated measuring instruments for the pulp and paper industry. After adjustment for the effects of exchange rate movements, the inflow of orders was 4 percent higher than last year, despite falling demand in Germany and the UK. In Cardo Pump's biggest segment, water and wastewater, demand increased during the half-year period compared with the corresponding period last year, as did demand from the process industry. In the building services segment, demand was less than last year. During the second quarter, a number of significant orders were received in respect of pumps for the pulp and paper industry, including ones from Hallstavik in Sweden, Mayen in Germany and Aracruz in Brazil. In the water and wastewater segment, big orders were received for, among other things, mixers for Belgium and submersible pumps for China. Invoiced sales amounted to SEK 1,306 million (1,211). The increase is almost exclusively attributable to the effects of exchange rate movements. Operating earnings amounted to SEK 73 million (98). Reduced sales and lower margins in Germany during the second quarter had an adverse effect on earnings. Certain cost-saving measures were adopted during the period. These included a start on a restructuring of the plant in Mölndal, Sweden, with a view to improving efficiency and profitability. Further measures will be adopted, principally in markets with falling demand, and these will be charged to earnings for the second half of the year. The objective is to achieve an operating margin level of 10-11 percent for the business area within a two-year period. Cardo Rail Cardo Rail is one of the world's largest manufacturers of brake systems and brake components for rail vehicles. The inflow of orders, which remained good in the second quarter, amounted to SEK 1,738 million during the half-year period. This is a rise of 25 percent compared with last year adjusted for the effects of exchange rate movements. Orders received in the second quarter included one from AnsaldoBreda, Italy, relating to electronic control and monitoring systems for brakes for 83 diesel-driven trains for delivery to DSB, the Danish national railway company. This order, which marks a strategic breakthrough in the Danish market, is worth SEK 102 million. Deliveries will begin in February 2002. The inflow of orders as regards the aftermarket developed well. In France, the national railway company SNCF has decided to double its freight capacity by the year 2010 and, in addition, to implement an upgrade of a large number of older passenger cars. This resulted in a more than doubled inflow of orders in the aftermarket for Cardo Rail in France during the first half-year compared with last year. Cardo Rail's invoiced sales amounted to SEK 1,307 million (1,220), which is a rise of 1 percent adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK 86 million (88). An increase in the delivery of completed orders resulted in improved earnings during the second quarter compared with the corresponding period last year. The operating margin for the whole year is still expected to be in line with the objective of 8-10 percent. Liquidity and financing At June 30, the Group's liquid assets stood at SEK 210 million (179) compared with SEK 225 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 3.3 billion (2.4). Cash flow from operations was SEK 128 million (271) after tax, which is equivalent to SEK 4.27 (9.03) per share. Adjusted for the effects of exchange rate movements on the change in working capital, cash flow was SEK 8.00 (8.37) per share after tax. The Group's gross investments, excluding company acquisitions, stood at SEK 147 million (144). Net interest bearing debt at June 30 amounted to SEK 1,495 million (1,642) compared with SEK 1,265 million at the beginning of the year. Equity amounted to SEK 3,232 million (2,719), which is equivalent to SEK 107.73 (90.62) per share. The Group's equity ratio at June 30 was 42.2 percent (39.2). Personnel The number of employees in the Group at June 30 was 7,940 (7,679). Structural changes On January 1 2001 Cardo Door acquired all shares in the Danish dock loading equipment company Miflex Miljöexpert A/S. The Miflex group, which has a turnover of approximately SEK 80 million and employs 36 people, is included in Cardo Door's invoicing and earnings as of the date of acquisition. Accounting and valuation principles The interim report has been drawn up in accordance with the new recommendation RR 20 of the Swedish Financial Accounting Standards Council concerning interim reports and using the same accounting and valuation principles as in the annual report for the year 2000 with two exceptions. The accounting principles in respect of income taxes and revenues have been adapted to comply with the new recommendations RR 9 and RR 11 of the Swedish Financial Accounting Standards Council. This adaptation has been reported as a change of accounting principle and has resulted in SEK 42 million being credited to equity brought forward at the same time as the comparative figures for the year 2000 have been adjusted. The Group's tax rate, re-calculated in accordance with the new accounting principles, amounted to 34 percent for the year 2000. The same tax rate is expected for the current year. The parent company The parent company's earnings after financial items amounted to SEK 75 million (172), its gross investments to SEK 0 million (0) and its liquid assets to SEK 0 million (0) as against SEK 1 million at the beginning of the year. Market prospects The market prospects published in the report for the first quarter still apply. There continues to be great uncertainty regarding the economic trend in the near future, not least when it comes to the important German market. As regards Cardo, the Group is still considered to be capable of showing greater growth than that of the underlying market during the year through the growth efforts that have been made. Malmö, Sweden, August 14 2001 Cardo AB (publ) Kjell Svensson President and CEO This report has not been subjected to special examination by the Company's auditors. Cardo's interim report for January-September will be published on November 7 2001. Enclosed:1. Invoiced sales, operating earnings and operating margin by business area 2. Consolidated income statement and balance sheet in brief 3. Consolidated cash flow statement in brief 4. Group financial summary For further information, please contact: Kjell Svensson, President and CEO, phone +46 40 35 04 53, +46 40 35 04 00 Göran Axeheim, Executive Vice President and CFO, phone +46 40 35 04 42, +46 40 35 04 00 Christer Roskvist, Head of Public Relations, phone +46 40 35 04 25, +46 40 35 04 00 Cardo is an international engineering group with a turnover of approximately SEK 10 billion. Cardo holds a strong position in the markets for doors, pumps and rail-vehicle brake systems. Cardo has subsidiaries in about 30 countries with the focal point resting in western Europe, and roughly 8,000 employees. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/14/20010814BIT00550/bit0001.doc http://www.waymaker.net/bitonline/2001/08/14/20010814BIT00550/bit0001.pdf http://www.waymaker.net/bitonline/2001/08/14/20010814BIT00550/bit0001.xls Tables