Interim report, January - March 1999

Interim report, January - March 1999 Invoiced sales rose to SEK 2,117 million (1,910). Adjusted for the effects of exchange rate movements and company acquisitions, the rise was approximately 3 percent. Operating earnings rose to SEK 79 million (64). Earnings after financial items and minority share amounted to SEK 52 million (51), and earnings per share after full tax stood at SEK 1.27 (1.35). The Group's inflow of orders during the period amounted to SEK 2,272 million (2,173), which adjusted for the effects of exchange rate movements is a fall of approximately 3 percent for the current structure of the Group. Invoiced sales rose by 11 percent to SEK 2,117 million (1,910). Adjusted for the effects of exchange rate movements, this was a rise of approximately 9 percent. Company acquisitions accounted for about 6 percentage points of this rise. Operating earnings rose to SEK 79 million (64), providing an operating margin of 3.7 percent (3.4). Cardo Rail improved its operating earnings and Cardo Pump's were virtually unchanged. Cardo Door's operating earnings fell, mainly as a result of lower invoiced sales due to the harsh winter in central Europe. Earnings after financial items rose to SEK 54 million (41), providing a profit margin of 2.5 percent (2.1). Hafa is included as of January 1. Hafa's earnings has not resulted in any charge after acquisition costs. Earnings after financial items and minority share amounted to SEK 52 million (51). Earnings per share after full tax for the period amounted to SEK 1.27 (1.35). The return on capital employed was 18.9 percent (16.0) for the twelve-month period ended March 31. The return on equity during the same period was 19.9 percent (16.9). Invoiced sales and operating earnings by business area Invoiced sales Operating earnings January-March Whole January-March Whole year Year MSEK 1999 1998 1998 1999 1998 1998 Cardo Door 916 785 3,741 35 43 404 Cardo Pump 538 541 2,546 37 36 266 Cardo Rail 636 584 2,707 18 -8 -12 2) Other items 27 - - -11 -7 -131 1) 2,117 1,910 8,994 79 64 527 3) Financial items -25 -23 127 Earnings after financial items 54 41 654 Minority share in earnings after financial -2 10 22 items to be added/deducted Earnings after financial items and 52 51 676 minority share Made up of the parent company, other central units and Group adjustments. Invoicing during 1999 relates to Tebel. Including write-down by SEK 85 million of assets attributable to Tebel. Including capital gain of SEK 233 million relating to sale of shares in AAE. rdo Door Cardo Door is Europe's largest manufacturer of industrial doors and dock loading equipment and one of its largest manufacturers of residential garage doors. The major brand names for industrial doors and dock loading equipment are Crawford, Clever, Hafa, Faltec, Alsta and Allhabo. Residential garage doors are marketed under the brand names Normstahl, Crawford and Car-In. December 1998 saw the acquisition of the German Hafa group, which is Europe's largest supplier of dock loading equipment. Hafa is consolidated in Cardo Door's balance sheet as of December 31 1998 and is included in invoicing and earnings as of 1999. Hafa, with an annual turnover of about SEK 500 million and approximately 170 employees, has historically enjoyed good profitability. Through this acquisition, which is part of Cardo Door's strategy for continued growth in the dock loading segment, Cardo Door is now the market leader in Europe. Cardo Door's invoiced sales rose to SEK 916 million (785) during the period. Adjusted for the effects of exchange rate movements and company acquisitions, this represents a fall of approximately 3 percent. Demand for industrial doors remained low in Germany, while the weak upward tendency noted in France during the second half of 1998 continued. In southern and eastern Europe, demand for industrial doors remained good. Demand for service, dock loading systems and rapid-action rolling doors was good in the major European markets. Sales of industrial doors and residential garage doors were adversely affected by the harsh winter in central Europe. Operating earnings amounted to SEK 35 million (43). A number of major orders were received during the period. These included orders for 109 industrial doors for installation in a shopping center on Cyprus, and 36 Megadoor doors for a fishing facility in Denmark. An order for 118 industrial doors was received for the Lotus supermarket chain in Thailand, and a further 52 industrial doors were ordered for Singapore Airport where Cardo Door will have a total of more than 130 doors installed. 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. The products are mainly marketed under the brand names ABS, Pumpex and Lorentzen & Wettre. Invoiced sales amounted to SEK 538 million (541). After adjustment for the effects of exchange rate movements and company acquisitions, this represents a fall of approximately 2 percent. This fall is due to the currency turbulence in Brazil, which resulted in a sharp reduction in deliveries in the local market. Volumes delivered to Cardo Pump's biggest segment, water supply and wastewater, continued to develop well. Deliveries to the pulp and paper industry were virtually unchanged, while the heating, ventilation and sanitation segment contracted compared to the corresponding period last year. Cardo Pump's operating earnings amounted to SEK 37 million (36). In the water supply and wastewater area, the inflow of orders has continued to rise. Orders included one worth SEK 8 million for big submersible pumps for the extension of the new airport in Shanghai. As regards products for the pulp and paper industry, the inflow of orders was more or less unchanged compared to the first quarter last year, while the inflow of orders from the heating, ventilation and sanitation market declined. In order to further improve its coverage of the German pump market, Cardo Pump has opened its own sales office in Berlin. Cardo Pump was already represented by its own sales staff at 15 locations in Germany. In addition, there is an organization of own and independent authorized service and rental workshops at about 100 locations. Cardo Rail Cardo Rail is one of the world's largest manufacturers of brake systems for rail vehicles. Marketing is conducted under the SAB WABCO, BSI, Davies & Metcalfe and Gutehoffnungshütte Radsatz trademarks. Cardo has a 60-percent holding in Cardo Rail and Thyssen holds 40 percent. The inflow of orders amounted to SEK 631 million (704) during the first quarter, and the backlog at the end of the period was SEK 2,345 million. The lower inflow of orders is due to delays to certain major projects during the first quarter. At the beginning of May, an order was booked relating to complete brake systems for high-speed trains in South Korea. This order, which is worth slightly more than SEK 200 million, is one of the biggest ever for Cardo Rail and marks a significant breakthrough in the Asian market. Invoiced sales rose to SEK 636 million (584). Adjusted for the effects of exchange rate movements and Tebel, which has been transferred to Cardo AB, this represents an increase of approximately 16 percent. Operating earnings amounted to SEK 18 million (-8). The improvement in earnings is a result of the increase in invoicing in combination with a lower level of costs due to the fact that restructuring measures adopted are now successively taking effect. Within the framework of the restructuring program, and of the restructuring provision previously established for the measures involved, developments during the period included the close-down of a production plant in the UK at the end of March according to plan. Of the restructuring provision amounting to SEK 180 million established in 1997, SEK 141 million had been utilized at the end of March. Liquidity and financing At March 31, the Group's liquid assets stood at SEK 368 million (320) compared with SEK 517 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 2.9 billion (2.4). Net interest bearing debt at March 31 amounted to SEK 1,538 million (1,409) compared with SEK 1,975 million at the beginning of the year. Cash flow generated by operations amounted to SEK 98 million (138) before tax. The corresponding figure after tax was SEK 34 million (68). The Group's gross investments, excluding company acquisitions, stood at SEK 42 million (43). Equity amounted to SEK 2,364 million (2,093), which is equivalent to SEK 78.82 (69.77) per share. The Group's equity ratio at March 31 was 36.5 percent (36.2). Personnel The number of employees in the Group at March 31 was 7,364 (7,549). The parent company The parent company's earnings after financial items amounted to SEK 166 million (-1), its gross investments to SEK 0 million (1) and its liquid assets to SEK 6 million (32) as against SEK 152 million at the beginning of the year. Market prospects During the year, no dramatic changes are foreseen in the state of the construction market. The level of demand for products for the pulp and paper industry may stabilize, but an upturn is not expected in 1999. The trend for water supply and wastewater is presumed to remain positive, and in the rail market a slight upswing is expected together with a continued high level of activity. The acquisition of Hafa is expected to have a marginally positive effect on Group earnings after financial items for 1999. The restructuring measures will lead to a positive trend for Cardo Rail. Malmö, Sweden, May 3 1999 Cardo AB (publ) Kjell Svensson President and CEO This report has not been subjected to special examination by the Company's auditors. The half year interim report will be published on August 19 1999. Enclosed:1. Consolidated income statement and balance sheet in brief 2. Consolidated cash flow statement in brief 3. Invoiced sales and operating earnings by business area 4. Five-year review - Group 5. Consolidated income statement and balance sheet in brief translated into euros For further information, please contact: Kjell Svensson, President and CEO, phone +46 40 35 04 53, +46 40 35 04 00 Sven-Erik Persson, Executive Vice President, phone +46 40 35 04 50, +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 more than SEK 9 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 7,400 employees. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/05/03/19990503BIT00300/bit0001.doc http://www.bit.se/bitonline/1999/05/03/19990503BIT00300/bit0002.pdf http://www.bit.se/bitonline/1999/05/03/19990503BIT00300/bit0003.xls Tabeller