Interim Report for January - September 1999

Interim Report for January - September 1999 *Invoiced sales rose 12% to SEK 604 M (540). *Profit after net financial items amounted to SEK 24 M (22). *Compared with the preceding year, a significant improvement in profit after net financial items is projected for full-year 1999. *Break-even in China. *Growth in North America continues. Sales up 30%. *Continued success in telecom equipment industry. Sales increased 29%. Third quarter of 1999 Sales invoiced by the Nefab Group during the third quarter of 1999 amounted to SEK 205 M (187), an increase of 9% compared with the corresponding period of 1998. Order bookings amounted to SEK 206 M (163). Third-quarter profit after net financial items amounted to SEK 15 M (9). Invoiced sales during the first nine months of 1999 amounted to SEK 604 M (540), up 12% compared with the year-earlier period. Excluding the acquisition of NEFAB LogPak, the increase was 8%. Order bookings amounted to SEK 614 M (522). NEFAB ExPak business area Sales invoiced by NEFAB ExPak, the Group's largest business area, rose 16% during the first nine months of 1999 to SEK 463 M (400). The business area accounts for about 77% of Group sales. The strongest growth was noted in North America, where invoiced sales increased 38%. Deliveries to Nortel Networks accounted for a substantial part of the increase. Strong growth was reported in the Nordic market, supported by increased deliveries to Ericsson and Nokia. Higher sales were also noted in the Asian, German and French markets. NEFAB RePak business area The NEFAB RePak business area reported sales of SEK 121 M (120). NEFAB LogPak accounted for SEK 34 M (11). The remainder of the business area reported a decline of SEK 22 M, due largely to final deliveries to a major project in the Swedish market. The business area accounts for approximately 20% of Group sales. The business area's sales are project-related. At the end of last year and the beginning of 1999, activities were characterized by fewer contracts and, as a result, the number of new systems implemented during the period was lower than anticipated. Telecom equipment industry Nefab's focus on the telecom equipment industry segment continues to yield results. Sales increased 29% to SEK 249 M (193), accounting for 41% of Group invoicing. Ericsson is the largest customer in the telecom segment. Sales to other telecom companies are increasing sharply. Nefab delivers products to the telecom industry in most geographic markets, and the business establishments in China and Brazil focus primarily on this sector of industry. Expansion in Asia and South America Business activities in China and Singapore/Malaysia show favorable development, and sales during the first nine months of 1999 amounted to SEK 13 M (3). The telecom industry accounts for about 80% of sales invoiced in the region. The monthly sales volume has now reached the break-even level. Operations in 1999 have been characterized by economic concern in Brazil, which has resulted in weak demand for Nefab products. Depreciation of the Brazilian currency in the beginning of 1999 has resulted in higher debt for the Brazilian company, with rising financial expenses as a result. Sales during the first nine months of 1999 amounted to SEK 4 M (0.5). Invoicing in the region is increasing gradually, but not as rapidly as expected. Earnings Profit after net financial items in the first nine months amounted to SEK 24 M (22). Third-quarter earnings amounted to SEK 15 M (9), the Group's strongest quarterly result over the past two-year period. The NEFAB ExPak business area shows strong profitability. Activities in North America also yielded favorable third-quarter earnings. Operations in Brazil resulted in charges against earnings amounting to approximately SEK 13 M (8), of which exchange losses on loans in foreign currencies accounted for slightly more than SEK 3 M. The NEFAB RePak business area shows a loss, reflecting a sharp decline compared with the first nine months of 1998. Some improvement was noted during the third quarter, however, compared with the two previous quarters. Earnings per share for the nine-month period amounted to SEK 1.33 (1.25). The Group's tax charges remain considerable, since operations in newly established markets are still reporting losses, and the tax value of these losses has not yet been capitalized. The return on capital employed was 12.1% (10.5). Events after reporting date At the end of October, Nefab units in Sweden received notification from SPP (Swedish Staff Pension Society) of future compensation amounting to SEK 7 M for paid pension premiums. The funds have not been activated in the consolidated balance sheet. Investments Group investments amounted to SEK 26 M (72), most of which pertained to machinery and equipment. Financial position The equity/assets ratio on September 30 was 43.4% (45.7). Shareholders' equity amounted to SEK 32.22 (33.96) per share. The Group's liquid assets on September 30 amounted to SEK 75 M (58). Outlook for full-year 1999 Effects of the millennium shift on demand during the fourth quarter are difficult to assess. Compared with the preceding year, a significant improvement in profit after net financial items is projected for full-year 1999. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/11/03/19991103BIT00270/bit0001.doc http://www.bit.se/bitonline/1999/11/03/19991103BIT00270/bit0002.pdf