Interim Report, January - September 2004

• Inflow of orders: SEK 5,872 million (5,761)
• Net sales: SEK 5,491 million (5,528)
• Net earnings: SEK 74 million, excl. non-recurring items SEK 123 million (173)
• Earnings per share: SEK 2.48, excl. non-recurring items SEK 4.11 (5.78)
• Non-recurring items relate to costs of the reorganization in Cardo Pump announced in the half-yearly report.

The Group’s inflow of orders amounted to SEK 5,872 million (5,761), an increase of 3 percent after adjustment for the effects of exchange rate movements.

Net sales amounted to SEK 5,491 million (5,528), which adjusted for the effects of exchange rate movements is on a par with the previous year.

Operating earnings amounted to SEK 193 million (262) excluding non-recurring items of SEK 70 million. The lower earnings are mainly due to the product mix and costs for increased activities in both sales and product development. Thus far, product-price rises and enhanced efficiency in purchasing have compensated for higher raw-material prices. The non-recurring items relate to costs of the reorganization in Cardo Pump that was announced in the half-yearly report. The measures will create better conditions for increasing organic growth at the same time as they are expected to bring an annual net saving of approximately SEK 40 million, whereof the main part as of 2005.

Group earnings after financial items, excluding non-recurring items, amounted to SEK 176 million (248). The impact of exchange rate movements on earnings was only marginal.

Net earnings amounted to SEK 123 million (173) excluding non-recurring items, which is equivalent to SEK 4.11 (5.78) per share. Including non-recurring items, earnings per share were SEK 2.48.

Cash flow from operations was SEK 214 million (391) after tax, which is equivalent to SEK 7.13 (13.03) per share.

Cardo Door
The inflow of orders increased as far as industrial doors, dock loading systems and service were concerned. For garage doors, the inflow of orders was somewhat lower, mainly owing to reduced demand in Germany during the third quarter. For the business area as a whole, the increase was 5 percent after adjustment for the effects of exchange rate movements.

Net sales amounted to SEK 3,459 million (3,435), an increase of 1 percent after adjustment for the effects of exchange rate movements.

Operating earnings amounted to SEK 126 million (146). Earnings were affected by costs for increased activities in both sales and product development.

Cardo Pump
The inflow of orders rose in the water and wastewater segment, while it fell for building services and industry. For the business area as a whole, the inflow of orders increased by 1 percent after adjustment for the effects of exchange rate movements.

Net sales amounted to SEK 2,032 million (2,093), which adjusted for the effects of exchange rate movements is a decrease of 1 percent.

Operating earnings amounted to SEK 112 million (161) excluding non-recurring items of SEK 70 million relating to measures as set out below. Earnings were adversely affected by the lower net sales and by the product mix in the period.

In the half-yearly report, a reorganization within the Pump field was announced, aimed at increasing its competitiveness and rate of geographical expansion. The cost of the measures amounts to SEK 70 million and has been charged to earnings for the third quarter. The measures will create better conditions for increasing organic growth at the same time as they are expected to bring an annual net saving of approximately SEK 40 million, whereof the main part as of 2005.

The measures in Pump include implementation of a new, geographically based organization, which involves moving the sales resources nearer the customers, and an expansion of the organization in Asia. The marketing activities that have thus far been pursued under the ABS and Pumpex trademarks will be concentrated on a single sales channel, which involves merging the parallel sales organizations in Sweden, France, Germany and the USA. A sales company will be formed focusing on customers in the pulp and paper industry globally. All the measures have been initiated and most of them are expected to be implemented during the current year.

Liquidity and financing
At September 30, the Group’s liquid funds stood at SEK 154 million (170) compared with SEK 171 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 1 billion (approximately 1.9).

The Group’s gross investments, excluding company acquisitions, stood at SEK 194 million (205).

Net interest bearing debt at September 30 amounted to SEK 511 million (410) compared with SEK 179 million at the beginning of the year.

Equity amounted to SEK 2,670 million (2,726), which is equivalent to SEK 89.00 (90.86) per share.

The Group’s equity ratio at September 30 was 51.9 percent (53.7).

Personnel
The number of employees in the Group at September 30 was 5,774 (5,941).

Repurchase of shares
At this year’s Annual General Meeting of Cardo AB, a resolution was passed authorizing the Board of Directors to acquire up to so many own shares before the next Annual General Meeting that the Company’s holding at no time exceeds 10 percent of all shares in the Company. Acquisition is to be made on Stockholmsbörsen at the market value applying on the occasion of acquisition. The purpose of the repurchase is to give the Board the opportunity to adjust the capital structure of the Company during the period until the next Annual General Meeting. The Board has yet to resolve to utilize the authorization and thus no repurchase has been made.

Accounting principles
The interim report has been drawn up in accordance with recommendation RR 20 of the Swedish Financial Accounting Standards Council concerning interim reports. The accounting principles used are the same as in the annual report for 2003 except in relation to accounting for benefit-based pension schemes, for which the change is described below.

As of January 1 2004, Cardo applies the Swedish Financial Accounting Standards Council’s recommendation RR 29, Employee Benefits, which in all essentials agrees with IAS 19, Employee Benefits. Pensions and other remuneration after retirement have previously been accounted for in accordance with the local regulations in each country. The application of RR 29 involves a change of accounting principle and the effect of the change has been recorded directly against equity. The changeover to RR 29 has involved the Group’s provisions for pensions increasing by SEK 74 million,

which, after taking deferred tax into consideration, has reduced the Group’s equity by SEK 57 million net. In accordance with the transition rules of the recommendation, Cardo has not recalculated figures for previous financial years in respect of the new recommendation.

The parent company
The parent company's earnings after financial items amounted to SEK -12 million (-12), its gross investments to SEK 0 million (0) and its liquid funds to SEK 0 million (0) as against SEK 0 million at the beginning of the year.

Nominations committee
The Annual General Meeting has resolved to appoint a nominations committee consisting of the Chairman of the Board, who is to be the convener, and one representative of each of the Company’s three largest shareholders at September 30 each year. The duties of the nominations committee are to submit proposals to the Annual General Meeting in respect of the election of the Board of Directors, auditors whenever applicable and fees. The election committee that has been appointed ahead of the 2005 Annual General Meeting consists of:

Fredrik Lundberg (Chairman of Cardo), L E Lundbergföretagen AB, Stockholm
Kerstin Hessius, National Swedish Pension Fund, 3rd Fund Board, Stockholm
Marianne Nilsson, Robur funds, Stockholm

Market prospects
The assessment that the general economic upturn seems more assured continues to apply. This is reflected in an increased demand for construction-related products, which it is assessed could continue.


Malmö, Sweden, November 2 2004

Cardo AB (publ)

Kjell Svensson
President and CEO




This report has not been subjected to special examination by the Company’s auditors.

Cardo's report on operations for the whole of 2004 will be published on February 10 2005.


Enclosures:
1. Net sales, 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