Interim Report January - September 2000

Interim Report January - September 2000 * Profit before taxes fell by 6 per cent to SEK 51.9M (55.3). The result includes items of a one-off nature of SEK +14.9M (0). Acquisitions have not affected the result. * The fall in consolidated profit before taxes relates to Product Area Sheet Metal Working. Order intake continued to increase, but problems with adjustment of production to new products had a negative effect on both net sales and results. * Net sales rose by 28 per cent to SEK 855M (669). Excluding acquisitions, net sales amounted to SEK 757M (669). * Order intake amounted to SEK 941M (745), an increase of 26 per cent. Excluding acquisitions, order intake amounted to SEK 790M (745). * New forecast: Profit before taxes for the full-year is expected to be approximately on a par with the result for the previous year (102). The forecast includes items of a one-off nature. Summary In line with its current strategic plan, Vision 2000, KMT has laid several important foundation stones for future growth during the year. The new high-technology product ranges, which generate even higher benefits for the customers, have been very positively received in the market, most recently at the IMTS fair in Chicago during September. Products from several KMT companies attracted considerable attention at IMTS. The business trend scenario within KMT's sectors remains fragmented. In Sweden, investments are increasing, whereas they are evening out at a high level in the United Kingdom. In Germany, investments have not yet gained momentum. In the USA, growth in investments has died down in general, whereas investments are falling in the contracting and agricultural sectors. For UVA, in product area Precision Grinding, the market has levelled off following several years of high growth. We estimate that this is momentary and that the investment level for UVA's customers will increase again. The increasing environmental demands within the automotive sector have the effect that new fuel injection technology is developing at a rapid pace. As a result, the need for investment in new production technology among UVA's customers is also increasing. The restructuring work in Lidköping Machine Tools - LMT - is proceeding according to plan. Cost reducing measures are being implemented and marketing activities are at the same time focused on making several large roller bearing companies customers of LMT. During the third quarter, the company received a strategically important order from FAG, one of the leading manufacturers. The order indicates that LMT has a growth potential within this customer segment. The new product range within Sheet Metal Working has now been launched in all the prioritised markets, where they have been very positively received. This has contributed to increased order intake. Adjustment to production of the new modular products has not gone according to plan which meant that deliveries and results were negatively affected during the third quarter. Vigorous measures have been implemented to shorten delivery times and increase the rate of delivery. At the same time, action has also been taken to improve profitability and competitiveness. It is expected that the measures will have a significant impact from the end of the year. In addition to one-off costs for investment in rationalisation, the year's results will be charged with additional costs for catching up with delayed deliveries of the new products. The increasingly strong market response to product area Tube Forming's new product range continues to have positive effects on order intake. This will gradually lead to increasing deliveries and results. Operations Order intake Order intake for the third quarter rose by 49 per cent to SEK 362M (243). For the nine-month period, order intake amounted to SEK 941M (745). Of order intake, SEK 750M (564) referred own products. Excluding acquisitions, order intake amounted to SEK 790M (745). Order intake on a twelve-month rolling basis increased by 20 per cent to SEK 1,197M (1,001). Of rolling order intake, SEK 922M (776) related to own products. Excluding acquisitions, twelve-month rolling order intake amounted to SEK 1,052M (1,001). Backlog The backlog amounted to SEK 568M (456), of which own products accounted for SEK 524M (395). The backlog includes SEK 154M from acquisitions. SPP surplus funds and restructuring reserve The Group's discounted share of SPP's surplus funds amounts to SEK 24.9M, excluding LMT. Payments to the Group companies are expected to be made over more than three years with a start in September 2000. A restructuring reserve of SEK 10M for product area Sheet Metal Working is charged to profit. These two items are reported as items affecting comparability of +14.9M net. Net sales and results Net sales for the third quarter rose by 32 per cent to SEK 241M (183). For the first nine months of the year, net sales amounted to SEK 855M (669). Of net sales, SEK 634M (504) referred to own products. Excluding acquisitions, net sales amounted to SEK 757M (669). Net sales calculated on a twelve-month rolling basis increased by 19 per cent to SEK 1,186M (997). Of rolling net sales, SEK 893M (768) referred to own products. Excluding acquisitions, net sales amounted to SEK 1,088M (997) on a rolling basis. Consolidated result before taxes for the third quarter amounted to SEK - 8.2 (4.7). For the nine-month period, profit fell by 6 per cent to SEK 51.9M (55.3), including items of a one-off nature which amounted to SEK +14.9M. Profit before taxes calculated on a rolling 12-month basis was largely unchanged, SEK 98M (99), including items of a one-off nature. The profit margin for the nine-month period amounted to 6.1 per cent (8.3), including acquisitions and items of a one-off nature, of which one- off items accounted for 1.7 per cent. Excluding acquisitions and one-off items, the profit margin amounted to 5.0 per cent (8.3). Seasonal variations KMT's products are investment goods. Normally, order intake as well as invoicing and profit is higher during the second and fourth quarters compared with the first and third quarters. Capital expenditure During the period, the Group's capital expenditure in real estate, machinery and equipment amounted to SEK 98.9M (13.4), in goodwill to SEK 30.0M (0) and in patents to SEK 10.7M (0). Excluding asset items relating to the acquisition of LMT, capital expenditure in real estate, machinery and equipment amounted to SEK 16.4M (13.4) during the period. Financial position Cleared of one-off effects of acquisitions and with LMT included from May, cash flow from operations was SEK 56.2M (53.8). Changes in working capital amount to SEK -51.1M (1.6), mainly as a result of building up inventories to cope with deliveries during the autumn and a receivable from SPP for surplus funds. Following net capital expenditure, including patents, of SEK 27.1M (13.4), the cash flow amounts to SEK -22.0M (42.0). At the period-end, liquid assets including unutilised bank overdraft facilities and credit promises amounted to SEK 117.2M (140.2). The change is partly due to the acquisition of LMT. The equity ratio amounted to 34 per cent (49) at the period-end. The change relates wholly to the effects of the acquisition of LMT which was carried out without any addition of equity. Number of shares and shareholders The number of shares in KMT amounts to 5,000,000. The number of shareholders was unchanged at the period-end, approximately 4,700. Full-year forecast Profit before taxes for the full year, including items of a one-off nature with an estimated effect of SEK +15M net, is expected to be approximately on a par with the result for the previous year (SEK 102M). The previous forecast was: "Profit before taxes including items of a one-off nature with an estimated net effect of SEK +15M, for the full year is estimated to be higher than in the previous year". ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/11/08/20001108BIT00820/bit0001.pdf The full report http://www.bit.se/bitonline/2000/11/08/20001108BIT00820/bit0002.doc The full report