Interim report for nine months ended September 30, 2002

Interim report for nine months ended September 30, 2002 * Invoicing in the third quarter declined by 6 percent compared with the year-earlier period and operating margin was 14.0 percent (16.4). * Improved operating cash flow compared with preceding year. * Unchanged demand expected during remainder of the year. Market The industrial economy remained soft in Europe and the US during the period. Sales and earnings in Q3 2002 [REMOVED GRAPHICS] In general, the demand for Seco's products in Europe remained lower than in the corresponding period last year, with the exception of the Scandinavian countries. Sales compared with earlier in the year were stable for most of the other European markets, with a favorable trend in Italy, Spain and Germany, in relation to the market situation. Development in Central and Eastern Europe was similar. Sales in the US continued to be weak during the period due to a continued subdued market. The sales trend in Asia for most markets was stable, with certain positive signs in China and Korea. The Group's invoicing for the quarter totaled SEK 943 M (1,005), which is a decline of 6 percent. Structural and currency effects amounted to plus 3 and minus 6 percentage points. Sales at fixed exchange rates for comparable units declined by 3 percentage points compared with the corresponding period in the preceding year. Consolidated profit after financial items for the quarter amounted to SEK 124 M (156). Operating margin was 14.0 percent (16.4). Earnings were affected adversely primarily by reduced volumes and currency effects. Invoicing by market area 2002 2001 2002 2001 2002/2001 2002/2001 July-Sep July-Sep Jan-Sep Jan-Sep July-Sep Jan-Sep SEK M SEK M SEK M SEK M %1) %1) Sweden 53 47 184 172 1 -2 EU, excl 449 464 1 448 1 517 -4 -7 Sweden Other Europe 83 83 269 271 -5 -8 Total for 585 594 1 901 1 960 -4 -7 Europe NAFTA 216 256 710 796 -6 -9 South America 27 33 92 102 20 11 Africa, Middle 20 20 57 61 23 13 East Asia, 95 102 282 295 0 -2 Australia Group total 943 1 005 3 042 3 214 -3 -6 1) Change from preceding year is shown in fixed currencies for comparable units. Sales and earnings for the year A generally weakening demand in the US and Europe during the year resulted in reduced sales overall. To date, the decline has been more pronounced in the US than in Europe. Within Asia/Pacific, sales at fixed exchange rates were on level with the preceding year. The Group's invoicing totaled SEK 3,042 M, which is 5 percent lower than the preceding year, in which the net of structural and currency effects increased sales by 1 percentage point. Accordingly, the decline for comparable units at fixed exchange rates was 6 percent. Profit after financial items year-to-date amounted to SEK 455 M (608). The operating margin was 16.1 percent (19.4). Lower sales volume was the main reason for a lower earnings level than in the preceding year. Negative currency effects impacted earnings in the amount of SEK 7 M. Earnings per share in the most recent 12-month period amounted to SEK 14.00 (19.00). Return on capital employed was 24.3 percent (34.4). Return on equity amounted to 20.8 percent (28.1). [REMOVED GRAPHICS] Consolidated income statement (SEK M) 2002 2001 2002 2001 July-Sep July-Sep Jan-Sep Jan-Sep Invoiced sales 943 1 005 3 042 3 214 Cost of goods sold -484 -517 -1 470 -1 578 Gross profit 459 488 1 572 1 636 Administration and selling costs -331 -329 -1 047 -1 037 Other revenues and costs 4 6 -35 26 Operating profit 132 165 490 625 Financial items -8 -9 -35 -17 Profit after financial items 124 156 455 608 Taxes -36 -50 -142 -194 Net profit 88 106 313 414 The Group's depreciation according to plan amounted to SEK 227 M (214). Sales invoiced by the Parent Company amounted to SEK 1,627 M (1,741), with operating profit of SEK 344 M (452). Liquid funds declined by SEK 18 M from the beginning of the year and amounted to SEK 55 M at the close of the reporting period. The Parent Company's interest-bearing loans, including the convertible debenture loan, amounted to SEK 292 M. Key figures 2002 2001 2002 2001 July-Sep July-Sep Jan-Sep Jan-Sep Operating margin, % 14.0 16.4 16.1 19.4 Profit margin, % 13.2 15.5 15.0 18.9 Earnings per share before 3.10 3.70 10.80 14.40 dilution, SEK Earnings per share after 3.00 3.70 10.80 14.30 dilution, SEK Return on capital employed 24.3 34.4 24.3 34.4 before tax, % 1) Return on equity capital after 20.8 28.1 20.8 28.1 tax, % 1) Equity capital per share before 65.90 69.15 65.90 69.15 dilution, SEK 1) 1) All key figures are calculated on a rolling 12-month basis. The number of shares before dilution at the close of the third quarter in both 2002 and 2001 was 28,832,898, which was also the average number of shares in both periods. After adjustments for full conversion of the convertible debentures, corresponding to 274,160 shares, the number of shares at the close of the third quarter in 2002 and 2001 amounted to 29,107,058. The average number of shares after dilution was 29,107,058. No convertible debentures were converted to shares during the year. Balance sheet (SEK M) Sep 30, 2002 Dec 31, 2001 Intangible fixed assets 203 111 Other fixed assets 1 510 1 535 Inventories 878 935 Current receivables 946 973 Liquid funds 368 365 Total assets 3 905 3 919 Shareholders' equity 1 900 2 072 Interest-bearing provisions and liabilities 812 588 Non-interest-bearing provisions and 1 193 1 259 liabilities Total equity and liabilities 3 905 3 919 Change in shareholders' equity (SEK M) Sep 30, 2002 Sep 30, 2001 Shareholders' equity, December 31, 2001 and 2 072 2 006 2000 Effect of change in accounting principles - 35 Adjusted shareholders' equity, January 1, 2 072 2 041 2002 and 2001 Currency exchange differences -81 116 Profit for the year 313 414 Dividend -404 -577 Shareholders' equity, September 30, 2002 and 1 900 1 994 2001 Cash flow statement (SEK M) Sep 30, 2002 Sep 30, 2001 Profit after financial items 455 608 Reversal of depreciation 227 214 Other 23 -12 Taxes paid -156 -145 Change in working capital 9 -215 Investment activities -305 -172 Financing activities, incl dividends -227 -572 Cash flow 26 -294 Rolling 12-month review Invoicing Change Operating Operating SEK M % profit margin SEK M % Q4, 2001 1 071 4 162 15.1 Q1, 2002 1 031 -7 170 16.5 Q2, 2002 1 068 -3 188 17.5 Q3, 2002 943 -6 132 14.0 Rolling 12 months 4 113 652 15.9 Any items affecting comparability are excluded from the operating profit and operating margin. Accounting principles The interim report complies with recommendations of the Swedish Financial Accounting Standards Council. At year-end 2001, the Swedish Financial Accounting Standards Council issued several new recommendations, including RR 15 regarding intangible assets. This recommendation means that Seco, after fulfillment of certain criteria, will capitalize a small percentage of expenses for IT and new product development. Effects on the operating result for this year are positive in an amount of SEK 38 M. Liquidity, equity ratio and cash flow The Group's liquid funds in the form of short-term investments and bank balances increased during the quarter by SEK 128 M and amounted to SEK 368 M at the end of September. The cash flow from current operations improved substantially compared with the year-earlier period. The Group's interest-bearing loans, including the convertible debenture loan, amounted to SEK 711 M (568). The Group's equity ratio was 49 percent (51). Personnel The number of employees in the Group at the close of the period was 3,900 (3,904 at year-end 2001). The change in personnel during the period was insignificant and in total amounted to a decline of four persons. Capital expenditures Group investments in fixed assets during the quarter amounted to SEK 176 M (188), of which intangible assets totaled SEK 38 M. Most investments were related to machinery and equipment for the production units in Sweden, the US and the Czech Republic. Investments in 2002 are estimated at approximately SEK 300 M. Short-term market outlook Unchanged demand is expected for the remainder of the year. Market outlook published on August 7, 2002 We anticipate stabilized demand in most principal markets compared with the first six months of the year. This report has not been reviewed by the Company's auditors. The next report, covering full-year 2002, will be published on February 11, 2003. Fagersta, November 6, 2002 SECO TOOLS AB; (publ) Lars Renström President and CEO For additional information, contact Lars Renström, President and CEO (Tel: +46 223-401 10), Tomas Eliasson, CFO (Tel: +46 223-401 20) or Stefan Sjödahl, Investor Relations (Tel: +46 223-401 32). E-mail may be sent to: investor.relations@secotools.com Previously published financial information is available under "Investor Relations" at the Seco Tools' website (www.secotools.com) ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/11/06/20021105BIT01000/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/11/06/20021105BIT01000/wkr0002.pdf The full report