Interim report January - March 2002

Interim report January - March 2002 - The Group's earnings after net financial items amounted to SEK 45 million (43). - Hardening competition for less advanced oils and fats on the Nordic and Western European markets. - Sales of higher value-added products are increasing in business area Oils & Fats. - Profit improvements in business areas Feed Materials and Technical Products. - Build-up in stocks of strategic raw materials increases the amount of capital tied up. - Proposal to issue convertible debt instruments to all employees. MARKET Raw material prices remained stable through the first quarter of 2002, while the Swedish Krona increased in value against both US dollar and Euro. The stronger Swedish currency had only marginal effects on profits as of 31 March, however. Increasing competition for less advanced oils and fats throughout the vegetable oil industry has had negative effects on both volumes and margins on the Nordic and Western European markets. Volumes have developed favourably in Eastern Europe. Demand for vegetable feed raw materials has remained strong. Crushing margins for rapeseed remained on last autumn's high level through the first three months of 2002. The recession in the metalworking industry dampened demand for technical oils. Cocoa butter prices continued to rise, as a consequence of increasing prices of cocoa beans. From the fourth quarter 2001 onwards, demand for fatty acids on the European market has decreased due to the general recession. Oils & Fats Chocolate & Confectionery Fats The global market for the chocolate and confec-tionery industry totals some 5.6 million tonnes and is growing by some 3-4 per cent each year. Along with rising cocoa butter prices, the growing interest to replace cocoa butter by vegetable fats in the wake of the 5 per cent rule* contributed to higher contribution margins as well as increasing volumes in the CBA** segment. The effect of rising cocoa butter prices takes some 9 months to materialise, as CBE sales are always based on long-term contracts. The rising prices for shea nuts affected CBE margins negatively. however. Volumes in the first quarter of 2002 were higher than in the same period 2001, even though volumes of less advanced speciality fats (CBS) continued to decrease. Edible Oils The world market for vegetable oils amounts to some 85 million tonnes, with an annual growth rate of 3 - 4 per cent. Sales volumes in the Edible Oils sector decreased in the first quarter of 2002 compared with the same period last year, the main reason being stronger competition on the Nordic and Western European markets. Sales of higher value-added products continue to grow. Lipids for Care The market for cosmetic products, and in particular the one for skin care products, grows by 4-5 per cent each year. To an increasing extent, consumers give priority to vegetable raw materials over synthetic, animal and mineral oil based alternatives. Sales to the cosmetic industry continued to increase in the first quarter of 2002. Technical Products Tefac The European fatty acids market displayed weaker trends than in the same period last year. Tefac still managed to boost its volumes, thereby consolidating its position on the Northern European market. Glycerol margins were considerably lower in the first quarter of 2002 than in the same period last year. Binol The current recession in the metalworking industry has reduced the total market for technical oils. Binol nevertheless maintains the market shares gained in 2001. Product segments forestry and construction have remained stable. Feed Materials The feed industry's stronger focus on feed safety and the growing consumption of vegetable feed fats have positive effects on Karlshamns sales volumes. Volumes as well as margins in the first quarter were higher than in the same period last year. *In the spring of 2000 the European Union voted a directive allowing other vegetable fats to replace up to 5 per cent of cocoa butter in products marketed as "chocolate" within the EU. The new regulation will come into full force in the autumn of 2003. ** Karlshamns vegetable alternatives to cocoa butter, so-called CBA fats (Cocoa Butter Alternatives), which comprise CBE (Cocoa Butter Equivalents), CBS (Cocoa Butter Substitutes) and CBR (Cocoa Butter Replacers). ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/04/24/20020424BIT00500/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/04/24/20020424BIT00500/wkr0002.pdf The Full Report