Interim Report for January - March 2001

Interim Report for January - March 2001 * Sales during the first quarter of 2001 rose 26% to SEK 301 M (240). * Profit after net financial items increased 15% to SEK 24 M (21). * Earnings per share after full tax amounted to SEK 2.60 (2.51). * Sales to customers in the telecom equipment industry increased 30%. * Strong growth in Asia. Cooperation with Huawei is resulting in expansion in China. * Deliveries of complete packaging solutions are increasing. * Acquisition of MK Specialemballage completed. * Uncertainty regarding demand in the telecom equipment industry. First quarter of 2001 Sales during the first three months increased to SEK 301 M (240), up 26% compared with the year-earlier period. The acquisition of MK Specialemballage is included in sales for the quarter in the amount of SEK 2 M. Sales are deemed to have been affected positively by about SEK 17 M due to changes in currency exchange rates. Order bookings amounted to SEK 311 M (255), an increase of 22%. The strongest growth was in Asia, where sales more than doubled compared with the corresponding period in the preceding year. Operations in central Europe and France also report strong growth. The market in North America, which grew strongly for a number of years, now reports zero growth due to the weakening in business conditions. After the close of the period, significant volumes to an important customers were lost. Profit after net financial items during the first quarter amounted to SEK 24 M (21). Telecom equipment industry Sales to the telecom equipment industry increased 30% to SEK 134 M (103), accounting for 44% of consolidated sales. In March, an agreement was signed with the Chinese telecom equipment manufacturer Huawei, a leader in the Chinese fixed-telephony area. The agreement means anticipated additional sales of about SEK 25 M annually. In addition to deliveries to China, the agreement also pertains to Huawei's operations in Brazil. Nefab's deliveries to the telecom equipment industry pertain mainly to packaging for equipment for fixed as well as mobile networks. Less than 10% is for packaging for telephones. The last quarter was characterized by growing uncertainty in the telecom equipment industry. Earlier, concern had been largely limited to the market for telephones, but has now spread to the market for mobile systems. Within the area of mobile networks, Nefab's products are utilized mainly for GSM systems, where the market has not been hit as hard as within other systems. Overall, the assessment is that Nefab increased its market shares during a quarter characterized by lower market growth. Automotive industry and other market segments The automotive industry segment showed positive development. Invoicing rose 50% to SEK 29 M (20) corresponding to 10% of Group sales. Despite weakening business conditions, invoicing for other market segments increased by 18% to SEK 138 M (117). Complete packaging solutions Nefab's product range has been revised increasingly, from deliveries of a packaging to offering the customer a total solution. The product then becomes a combination of analysis, consultation and delivery of both in- house produced as well as purchased products. During the first quarter, the proportion of purchased products increased by about SEK 15 M, corresponding to about one quarter of growth. In line with the endeavor to provide complete packaging solutions, the operations of MK Specialemballage were acquired at the end of 2000. These operations became a part of the Nefab Group effective March 1 this year. The company manufactures and sells packaging materials to Swedish industry. The products consist of customized cushioning and securing packaging assemblies produced from plastic foam. Earnings Profit after net financial items for the quarter amounted to SEK 24 M (21). The earnings for the quarter after net financial items are estimated to have been affected positively in the amount of SEK 1.5 M due to changes in currency exchange rates. The successively increasing proportion of purchased products has begun to have an adverse effect on the gross margin. However, the effect during the first quarter is limited. The Group's sales costs are increasing, due mainly to increasing costs of technical sales support. These costs are in line with a conscious focus on raising expertise within the Group with respect to the sale of complete packaging solutions. Net financial items for the quarter were affected in part by heavy investment volume and the build up of inventories, and partly by the unfavorable trend in the Brazilian currency. Earnings per share for the quarter amounted to SEK 2.60 (2.51). Return on capital employed was 21.6% (23.8). Capacity and investments Group investments for the quarter amounted to SEK 59 M (8). During the first quarter, an investment program for increasing capacity was implemented. As a result, capacity was strengthened in Asia as well as in Europe and North America. During the first quarter, investments in new manufacturing premises in the UK and Canada were completed. The investment in a production facility that was decided on in Estonia remains, and is scheduled to begin operation in the autumn of 2001. Due to the prevailing demand situation, the investment in Estonia has altered character. Initially planned as capacity reinforcement, the facility is now intended as a rationalization investment. Due to the strong growth in Asia and the cooperation with Huawei in China, the decision was reached to build a new production unit in Shenzhen in southern China. The unit is projected to begin operation during the summer of 2001. Investments for the quarter include the acquisition of MK Specialemballage's operations. Financial position The equity/assets ratio on March 31 was 43.5% (44.3). Shareholders' equity per share amounted to SEK 51.63 (37.01). The Group's liquid assets on the same date amounted to SEK 103 M (8), including unutilized credit facilities. Group equity, which at the beginning of the year amounted to SEK 330 M, was increased by the period's net earnings of SEK 18 M, and including the translation difference of SEK 9 M, amounted at period-end to SEK 357 M. Outlook for 2001 In connection with the year-end report, a forecast of continued strong growth during 2001 was made. As a result of the weak trend in the telecom equipment industry, the full year is highly unpredictable. Our assessment continues to be that invoicing will increase compared with the preceding year. Profit and loss accounts 0101-0103 0001-0003 0004-0103 0001-0012 (SEK M) 3 months 3 months 12 months 12 months Net sales 301 240 1.182 1.121 Cost of sold goods -219 -172 -858 -811 Gross profit 82 68 324 310 Selling expenses -31 -24 -112 -105 Administration expenses -22 -21 -82 -81 Other operating income - - 7 7 Operating profit 29 23 137 131 Net financial items -5 -2 -11 -8 Profit after net financial 24 21 126 123 items Taxes -6 -4 -33 -31 Net profit for the year 18 17 93 92 Depreciation included above 11 9 40 38 Balance sheets (SEK M) 010331 000331 010331 001231 Intangible assets 34 16 34 12 Tangible assets 311 219 311 276 Financial assets 17 8 17 17 Inventories etc. 147 104 147 134 Current receivables 293 219 293 276 Cash and bank balances 20 12 20 23 Equity capital 357 256 357 330 Provisions 31 26 31 31 Long-term liabilities 208 124 208 159 Current liabilities 226 172 226 218 Total capital 822 578 822 738 Of which interest-bearing 226 144 226 175 liabilities Cash flow statements (SEK M) 0101-0103 0001-0003 0004-0103 0001-0012 Operating profit 29 23 137 131 Depreciation, financial net 0 4 -5 -1 and taxes Cash flow from the year's 29 27 132 130 operations Change in working capital -23 -17 -63 -57 Net investments in fixed -59 -8 -134 -83 assets Cash flow after investments -53 2 -65 -10 Dividend - - -10 -10 Financing 50 -1 83 32 Changes in liquid funds -3 1 8 12 Key ratios 0101- 0001- 0004- 0001- 0103 0003 0103 0012 Operating margin, % 9.6 9.6 11.6 11.7 Profit margin, % 8.1 8.8 10.7 11.0 Return on equity capital, % 20.9 28.0 30.2 32.2 Return on total capital, % 15.1 16.6 18.0 20.6 Return on capital employed, % 21.6 23.8 25.6 29.9 Equity/assets ratio, % 43.5 44.3 43.5 44.8 Employees, yearly average 1,140 943 1,145 1,096 Net investments, SEK M 59 8 134 83 Key ratios per share Profit per share, full tax, SEK 2.60 2.51 13.38 13.29 Equity capital per share, SEK 51.63 37.01 51.63 47.82 Number of shares at the end of the 6,907 6,907 6,907 6,907 period, in thousands Share price on closing day, SEK 122.00 70.00 122.00 147.50 For definitions, see Annual Report for 2000. Financial reports Annual General Meeting May 19, 2001 Interim Report, January-June 2001 August 15, 2001 Interim Report, January-September 2001 October 31, 2001 Preliminary Report on 2001 operations February 12, 2002 For additional information, contact Lars-Åke Rydh, President and CEO tel. +46-70-592 45 70, e-mail lars-ake.rydh@nefab.se, or Anna Stålenbring, CFO, tel +46-70-814 23 44, e-mail anna.stalenbring@nefab.se Stockholm, May 4 2001 Lars-Åke Rydh President and CEO This report is unaudited. In preparing the interim report, the same accounting principles were applied as in the most recent Annual Report. Information about Nefab Nefab delivers complete packaging solutions to international industrial groups, primarily within the telecom equipment and automotive industries. Nefab companies are located in Europe, North and South America and Asia. Invoiced sales in 2000 amounted to SEK 1.1 billion. The Nefab share is listed on the OM Stockholm Exchange. Nefab AB (publ) Östra Storgatan 20 . P O Box 2184 . SE-550 02 Jönköping . Sweden Telephone +46(0)36-345050 . Telefax +46(0)36-150444 . Organization No. 556226-8143 Homepage: www.nefab.com . E-mail: info@nefab.se The registered office of the board of directors is in Ovanåker, Sweden Quarterly data Q1/9 Q2/9 Q3/9 Q4/9 Q1/0 Q2/0 Q3/0 Q4/00 Q1/0 9 9 9 9 0 0 0 1 Net sales 191 207 205 234 240 275 285 321 301 Cost of goods sold -143 -152 -147 -170 -172 -198 -207 -234 -219 Gross profit 48 55 58 64 68 77 78 87 82 Selling expenses -26 -27 -22 -28 -24 -26 -24 -31 -31 Administration -18 -18 -18 -22 -21 -19 -19 -22 -22 expenses Other operating income - - - - - 7 - - - Operating profit 4 10 18 14 23 39 35 34 29 Net financial items -3 -2 -3 -2 -2 -2 -2 -2 -5 Profit after net financial items 1 8 15 12 21 37 33 32 24 Taxes -3 -6 -6 -3 -4 -10 -9 -8 -6 Net profit for the -2 2 9 9 17 27 24 24 18 year Fixed assets 241 240 236 246 243 254 265 305 362 Current assets 266 286 283 304 335 377 414 433 460 Equity capital 223 216 222 239 256 274 305 330 357 Provisions 26 26 26 27 26 26 26 31 31 Long-term 140 148 126 126 124 147 142 159 208 liabilities Current liabilities 118 136 145 158 172 184 206 218 226 Total capital 507 526 519 550 578 631 679 738 822 Operating margin, % 2.2 5.1 8.8 5.8 9.6 11.6 12.4 10.7 9.6 * Profit margin, % 0.3 3.9 7.5 5.2 8.8 10.8 11.7 9.9 8.1 * Return on equity capital, % -4.1 4.6 16.4 16.1 28.0 33.1 33.3 29.7 20.9 * Return on total 3.6 8.4 19.5 capital, % 13.9 10.6 16.6 21.4 21.9 15.1 * Return on capital employed, % 4.9 11.5 19.6 15.2 23.8 30.8 31.9 28.6 21.6 * Equity/assets 44.5 41.6 43.4 44.1 44.3 43.5 45.0 44.8 43.5 ratio, % Profit per share, full tax, SEK - 0.36 1.30 1.34 2.51 3.17 3.49 3.41 2.60 0.34 * Equity capital per share, SEK 32.2 31.2 32.2 34.6 37.0 39.6 44.1 47.82 51.6 9 6 2 5 1 0 6 3 Share price on closing day, SEK 60 64 57 78 70 94 120 147.5 122 0 * Calculated with SPP recovery excluded. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/04/20010504BIT00620/bit0002.doc http://www.bit.se/bitonline/2001/05/04/20010504BIT00620/bit0002.pdf