Interim Report January - March 1999

Interim Report January - March 1999 * Invoiced sales rose 12% to SEK 191 M (170). * Profit after net financial items amounted to SEK 1 M (7). * Sales company established in Singapore/Malaysia. * Continued successes within telecom equipment industry. * Growth in North America continues. Market and sales Sales invoiced by the Nefab Group during the first three months of 1999 amounted to SEK 191 M (170), up 12% compared with the corresponding period in the preceding year. Excluding company acquisitions, the increase was 6%. Order bookings amounted to SEK 194 M (170). NEFAB ExPak business area Sales in the largest business area, NEFAB ExPak, rose 12% in the first quarter to SEK 143 M (128). The business area accounts for about 75% of total sales. The highest growth was noted in North America, where invoiced sales increased 33%. Among other factors, the favorable growth is attributable to the cooperation agreement signed with the telecom equipment company Nortel Networks during 1998. However, demand from other customers in North America was weaker than expected. Growth in the German market was good, where deliveries related to production and storage of the new euro coins were extensive. The Finnish market is also growing sharply, as a result of broadened cooperation with Nokia. Deliveries to customers in Spanish markets declined compared with the year-earlier period. The reason was a general weakening in demand, combined with lower project-related volumes. NEFAB RePak business area Invoiced sales of NEFAB RePak rose 10% to SEK 41 M (37), of which the newly acquired NEFAB LogPak accounted for SEK 10 M (0). The remainder of the business area reported a decline of SEK 6 M. The business area accounts for slightly more than 20% of Group invoiced sales. The business area is cyclically sensitive. In a weak business climate, customers are less willing to make investment decisions. Moreover, the need for replacement and complementary deliveries of packaging is lower since production declines. The effects of the weakening in the business climate, combined with completion of deliveries to a major project in the Swedish market in 1998, resulted in reduced volumes in the business area. Telecom equipment and automotive industry market segments The telecom equipment segment continues to develop well. Sales increased 20% to SEK 72 M (60). This segment accounts for about 38% of Group invoicing. Ericsson is the largest customer in the segment. Deliveries to Alcatel, Nokia and Nortel, among other customers in the segment, are increasing successively. Nefab delivers to the telecom equipment industry in several geographic markets and the operations being established in China and Brazil are seeking their customer base mainly within this segment. Sales to the automotive segment totaled SEK 17 M (22), corresponding to 9% of Group sales. Nefab delivers to a number of leading companies within the automotive industry. Expansion in China and Brazil The plant in China is now in its second year of operations. Invoiced sales in the first quarter amounted to slightly more than SEK 3 M. Invoicing is expected to increase, with break-even being reached at the end of 1999. Marketing efforts are aimed primarily at companies in the telecom equipment industry, major international as well as domestic companies. The largest customer is Nokia. The development potential in the Chinese market is considered to be large. Sales in Brazil developed satisfactorily until year-end 1998, but experienced a temporary, but sharp, decline due to the economic uncertainty in the country. The Brazilian currency was floated free in mid- January and fell sharply for a month, with major effects on the country's economy. The uncertainty in the country caused a delay in the Nefab project by about six months. The depreciation of the currency has resulted in a higher debt for the company, with rising financial expenses as a result. Recently, the currency has stabilized somewhat and market activity has increased. The market potential is considered to be large. Nefab has been appointed as main supplier of transport packaging to the telecom equipment industry company NEC and deliveries have started already. However, break-even is not expected until the year 2000. Establishment in Singapore/Malaysia A decision was made to establish a sales company in Singapore, for serving the markets in Singapore and Malaysia. The market was previously served by dealers since 1994. In conjunction with the establishment of the plant in China, marketing efforts have been intensified and Nefab is currently delivering packaging to customers in the area at a value of about SEK 5 M annually. One of the largest customers is Ericsson in Kuala Lumpur. The establishment will be carried out in cooperation with a local partner, whereby Nefab will hold a 60% interest in the company. Earnings Profit after net financial items in the first quarter amounted to SEK 1 M (7). The operations in Brazil resulted in charges against earnings of about SEK 5 M, of which slightly more than SEK 2 M is attribu- table to exchange losses on loans in foreign currencies. Compared with a year earlier, the trend in NEFAB RePak affected earnings adversely. The operations in North America show favorable sales growth, but satisfactory earnings have not yet been achieved. Investments in prior years, in new as well as established markets, have resulted in higher cost levels. The rise in costs halted during the first quarter. Earnings per share during the period were negative, compared with SEK 0.39 a year earlier. Return on capital employed was 4.9% (11.2). Investments Group investments amounted to SEK 10 M (18), and pertain mainly of machinery and equipment. Financial position The equity/assets ratio at March 31, 1999 was 44.5% (52.3). Shareholders' equity per share amounted to SEK 32.29 (34.07). The Group's liquid funds, including overdraft facilities, amounted to SEK 64 M (78). Outlook for full-year 1999 Invoiced sales are expected to increase, mainly in the telecom equipment industry. The charges from the expansion projects, especially in Brazil, remain notable, but are expected to decline during the year. Investments will be significantly lower than in the preceding year. Profit after net financial items for full-year 1999 is forecast to be higher than in 1998. Profit and loss 9901-9903 9801-9803 9804-9903 9801-9812 accounts (SEK M) 3 months 3 months 12 months 12 months Net sales 191 170 768 747 Cost of goods sold -143 -123 -567 -545 Gross profit 48 47 201 202 Selling expenses -26 -22 -104 -101 Administrative -17 -17 -76 -76 expenses Operating profit 5 8 21 25 Net financial items -4 -1 -5 -3 Profit after net 1 7 16 22 financial items Taxes -3 -4 -15 -16 Net profit for the -2 3 1 6 year Depreciation included 9 7 34 32 above Balance sheets (SEK M) 990331 980331 981231 Fixed assets 241 207 247 Current assets 266 243 275 Equity capital 223 235 233 Provisions 26 18 26 Long-term liabilities 140 72 131 Current liabilities 118 125 132 Total capital 507 450 522 Of which interest- 148 88 142 bearing liabilities Source of funds (SEK 9901-9903 9801-9803 9801-9812 M) Operating profit 5 8 25 Depreciation, 2 1 16 financial net and taxes Cash flow from the 7 9 41 year's operation Change in working -15 -17 -34 capital Net investments in -10 -18 -84 fixed assets Cash flow after -18 -26 -77 investments Dividend - - -10 Financing 8 16 84 Changes in liquid -10 -10 -3 funds Key ratios 9901-9903 9801-9803 9804-9903 9801-9812 Operating margin, % 2.2 4.8 2.7 3.3 Profit margin, % 0.3 4.2 2.0 3.0 Return on equity capital, % Neg 4.6 0.4 2.5 Return on total capital, % 3.6 8.0 5.1 6.1 Return on capital employed, 4.9 11.2 7.0 8.5 % Equity-assets ratio, % 44.5 52.3 44.5 45.1 Employees, yearly average 848 780 822 805 Net investments, SEK M 10 18 76 84 Key ratios per share Profit per share, full tax, Neg 0.39 0.13 0.86 SEK Equity capital per share, 32.29 34.07 32.29 33.68 SEK Number of shares at the end of the period, in thousands 6,907 6,907 6,907 6,907 Share price on closing day, 59.50 131 59.50 85 SEK For definitions, see Annual Report for 1998. Future financial reports Six-months interim report 1999 August 25, 1999 Nine-months interim report 1999 November 3, 1999 For further information, contact Lars-Åke Rydh, tel. +46 70 592 45 70. Jönköping, May 6th 1999 Lars-Åke Rydh President This interim report has not been examined by the company's auditors. Information about Nefab The packaging company Nefab, established in 1949, is market leader in the area of transport packaging manufactured from sheet material and steel. Nefab operates within two business areas - NEFAB ExPak (collapsible export packaging system) and NEFAB RePak (reusable transport packaging and storage system). Customers are leading international industrial groups primarily within the telecom equipment and automotive industry. Nefab has production units in nine countries - Sweden, Germany, England, France, Spain, the U.S., Canada, China and Brazil. The products are sold through subsidiaries in seventeen countries which, in addition to the manufacturing countries, are Norway, Denmark, Finland, Netherlands/Belgium, Italy and Singapore/Malaysia. Nefab products are marketed in Switzerland, Austria, Poland, Portugal, Ireland, Japan, South Korea and Australia through co-operation agreements with local companies. Nefab has its own purchasing organization in Russia where plywood, the most important raw material, is procured. The Nefab share is listed on the OTC-list of the Stockholm Stock 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.se . E-mail: info@nefab.se The registered office of the board of directors is in Ovanåker, Sweden ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/29/20010529BIT00120/bit0002.doc http://www.bit.se/bitonline/2001/05/29/20010529BIT00120/bit0002.pdf