Interim Report January - March 2001

Interim Report January - March 2001 * Consolidated earnings after net financial items amounted to SEK 43 million (42). * Profit improvements in business areas Edible Oils and Technical Products. * Growing volumes in business areas Edible oils (11%) and Technical Products (14%). * Ongoing far-reaching restructuring process aiming at accelerated profitable growth. MARKET AND BUSINESS CONDITIONS Raw material prices increased somewhat in the first months of 2001, while the Swedish Krona decreased in value against both USD and Euro.The weaker Swedish currency contributed to growing competitive strength in the Swedish units, which was particularly noticeable in business area Edible Oils where sales of standard products on the Scandinavian market increased substantially after some consecutive years of falling volumes. In the past six months, Karlshamns' operations were influenced, to various degrees, by the current situation in Europe caused by BSE as well as the Foot and Mouth Disease (FMD). The ban on animal fat in feed products in France and Germany, for example, boosted rapeseed meal prices in the autumn of 2000 and, thus, stimulated demand for vegetable feed fats. A shrinking demand for cattle feed due to the FMD subsequently depressed prices of rapeseed meal. On the aggregate level, consolidated earnings have so far been only marginally affected by the joint effects of BSE and FMD. The fatty acid market has been stable through the first quarter of 2001. In combination with improved capacity utilisation, this resulted in a volume increase of 14%. Glycerol prices have fallen drastically compared to the very high price level prevailing at the end of 2000, which has depressed contribution margins. The major forces behind the falling price trend are lower capacity utilisation in the chemical industry along with the current expansion of bio-diesel plants in Europe, in which crude glycerol is a by-product of the main production process. The increase in raw material prices is assumed to be only temporary, with the strong USD being one of the factors contributing to the rising price trend. The decision of the Malaysian Government to burn 500,000 tons of palm oil as fuel contributed to increasing palm oil prices, as did India's growing imports of palm oil in January - February. Soybean harvests are expected to reach record levels, while decreasing rapeseed production is anticipated in Canada, India and Australia. The European rapeseed supply is estimated to remain on the 2000 level. The price difference between rapeseed and soybean oil is still expanding, mainly due to the growing demand from new bio-diesel plants in Europe. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/02/20010502BIT00770/bit0002.doc Full Report http://www.bit.se/bitonline/2001/05/02/20010502BIT00770/bit0002.pdf Full Report