Semi-Annual Report January - June 2001

Semi-Annual Report January - June 2001 · Net sales increased by 10 percent to MSEK 655.7 (598.1) · Operating profit MSEK 13.0 (93.7) including inventory writedown MSEK 33.5 · Personnel reduction by 149 employees SALES AND PROFIT First six months of 2001 The sharp downturn in the telecom sector has had a negative effect on LGP's growth and profitability. In spite hereof, consolidated net sales reached MSEK 655.7, which represents an increase of MSEK 57.6, or 9.6 percent, compared to the corresponding period one year ago. Telecom products developed in-house account for most of the sales increase, while sales of mechanical products manufactured under contract have declined. Telecom accounts for 78.5 percent of total sales; compared to the preceding year telecom sales increased by 21.3 percent. Operating income for the period amounted to MSEK 13.0 (93.7), including amortization of goodwill, which is a decline by 86.1 percent. The operating result has been charged with costs for writedown of inventory in an amount of MSEK 33.5 and salaries to terminated personnel in an amount of MSEK 3.4. The operating margin was 2.0 percent (14.6). Amortization of goodwill was charged to income in an amount of MSEK 9.9 (10.0). Earnings per share were SEK 0.07 (2.22). During the first quarter there was no remarkable downturn. The sales in the United States and Western Europe,was satisfactory. One sign hereof was that LGP received its first frame order from a leading systems supplier with a total value of MSEK 200. The order refers to delivery of TMA's for third generation mobile infrastructure. The second quarter showed a sharp downturn in Europe, however. The reason for this sharp downturn is that several European network operators are delaying their GSM investments and upgrading awaiting the start up of 3G network investments as well as availability of GPRS handsets. Also in the U.S. LGP has seen delays in orders and expansion plans on the part of a number of major operators. In addition hereto several major systems suppliers have focused on reducing their own component inventories, which has meant delays of orders to LGP. The markets in Asia are still distinguished by good demand, however. As a consequence of the sharp downturn in the telecom industry, LGP implemented an action program during spring aimed at reducing the Group's costs. The Group has reviewed its costs, and costs have been cut in most areas. In production 136 employees have been terminated and 13 office workers have received notice since the turne of the year. These personnel reductions will generate their full effect on income during the second half of the year. LGP's new production facility in Tullinge was inaugurated in May. All volume manufacturing has been moved from Solna to Tullinge. Only prototype production will be handled in Solna in the future. The new facility in Tullinge is adapted for cost-efficient volume production of tower-mounted amplifiers and CDU units. On June 19 LGP decided to abandon its previous full-year forecast for 2001 with a sales of MSEK 1 850 due to the recession within the telecom industry, leading to that goals of growth and profitability will not be reached. Second quarter 2001 The second quarter saw a sharp downturn in demand in Europe. Several of LGP's customers have reacted to this by focusing on a reduction of their inventory of components. As a consequence of this LGP's inventory increased. The change in demand has led to a depreciation of LGP inventory. Sales for the second quarter amounted to MSEK 279.7 (313.4), which is a decline by 10.8 percent. The operating result was MSEK -29.1 (54.5). The operating result was affected by the mentioned writedown of inventory and provisions for salaries for terminated personnel. Earnings per share were SEK -0.89 (1.30). CAPITAL EXPENDITURES The Group's net capital expenditures during the period January - June amounted to MSEK 125 (4.8) in building and land and MSEK 51.3 (31.6) in machinery and equipment. Depreciation and amortization amounted to MSEK 52.7, with MSEK 9.9 thereof amortization of goodwill. PERSONNEL The number of employees as of June 30 was 845 (710). Decisions were made during the period to cut a total of about 150 positions. Most of these employees had left the Group as of June 30. FINANCING The equity ratio as of June 30, 2001 stood at 56.6 percent. As of December 31, 2000 the ratio was 62.8 percent. The Group's liquid funds amounted to MSEK 18.6 and unutilized committed credit facilities amounted to MSEK 60.0. Operating cash flow for the period was MSEK 82.3. Net after capital expenditures cash flow for the period was MSEK -36.2 (2.0). As of December 31, 2000 the Group's liquid funds were MSEK 54.8 and unutilized committed credit facilities amounted to 34.7. Shareholders equity per share was MSEK 32.3 (30.9). OTHER INFORMATION The regularly scheduled Annual General Meeting on April 24th resolved the issuance of a subordinated loan in a nominal amount of SEK 50,000 in the form of a debenture with detachable warrants. The warrants will be issued during a three year period. All employees have then been offered to acquire warrants. The warrants have a tenor from June 5, 2001 - May 24, 2004. Under the warrant program a total of up to 500,000 shares may be issued, resulting in dilution of about 1.8 percent of the number of capital and votes. The same accounting principles and calculation methods have been applied for the semi-annual report as for the most recent annual report. Stockholm, August 14, 2001 Board of Directors ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/14/20010814BIT00970/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/08/14/20010814BIT00970/bit0002.pdf The full report