Interim report for three months ended March 31, 2002

Interim report for three months ended March 31, 2002 * Operating profit during the quarter amounted to SEK 170 M (240). * Sales during the quarter, SEK 1,031 M, remained high, but lower than sales in Q1 2001. * Stabilized demand expected in the US. * Production in China will be started to support continued rapid expansion. Market Industrial trends in Europe declined gradually and remained generally weak in the NAFTA region and Japan. Sales in Q1 2002 [REMOVED GRAPHICS] Sales during the quarter were high, but lower compared with a very strong first quarter in 2001. The sales trend in Europe showed continued decline in all major markets, in parallel with weaker demand for industrial goods. Sales showed greater stability, however, in Eastern Europe, where the current market outlook is more positive. Demand in the NAFTA region was generally weak in most customer segments during the period. Accordingly, sales were lower compared with the preceding year, but absolute sales have now stabilized at a low level. Sales were stable in most markets in Asia, with the exception of Japan. Sales in South America were weaker due to the economic crisis in Argentina. Consolidated invoiced sales during the quarter amounted to SEK 1,031 M, a decline of 7 percent compared with the year-earlier period. The weak Swedish krona (SEK) generated favorable currency effects corresponding to 3 percentage points, which offset some of the decline in sales. Sales by comparable Group units at fixed exchange rates were down 10 percent. However, the Group's order bookings increased from SEK 1,050 M during the fourth quarter 2001 to SEK 1,056 M in the first quarter this year, up 1 percent. At fixed exchange rates, order bookings declined 2 percent. Invoicing by market area (SEK M) 2002 2001 Change 02/01 Jan- Jan- % %1) March March Sweden 60 65 -8 -8 EU, excl Sweden 493 539 -9 -10 Other Europe 96 93 +3 -5 Total for Europe 649 697 -7 -9 NAFTA 245 266 -8 -14 South America 32 34 -6 -9 Africa, Middle East 16 19 -16 0 Asia, Australia 89 92 -3 -4 Group total 1 031 1 108 -7 -10 1) Change from preceding year is shown in fixed currencies for comparable units. Earnings Consolidated profit after financial items amounted to SEK 160 M (240), down 33 percent compared with the first quarter of 2001. The operating margin was 16.5 percent (21.7). Favorable currency effects on earnings amounted to SEK 8 M. Earnings per share before dilution amounted to SEK 3.80 (5.70). Earnings were affected negatively by lower sales volumes in most markets, which resulted in a decline in capacity utilization at the Group's production plants. As a result of the cost-savings program and continued adjustments to weaker market demand, administration and sales costs were lower compared with Q1 2001. The profit margin in the first quarter of 2002 was 15.6 percent (21.7). Earnings per share in the most recent 12-month period amounted to SEK 15.65 (19.60). Return on capital employed was 25.4 percent (31.6). Return on equity amounted to 20.4 percent (26.1). Sales were mainly at the level posted in the two most recent quarters, but operating profit and margin were higher. [REMOVED GRAPHICS] [REMOVED GRAPHICS] Consolidated income statement (SEK M) 2002 2001 Jan- Jan- March March Invoiced sales 1 031 1 108 Cost of goods sold -491 -523 Gross profit 540 585 Administration and selling costs -349 -357 Other revenues and costs -21 12 Operating profit 170 240 Financial items -10 0 Profit after financial items 160 240 Taxes -51 -74 Net profit 109 166 The Group's depreciation according to plan amounted to SEK 72 M (71). Sales invoiced by the Parent Company amounted to SEK 564 M (617), with operating profit of SEK 155 M (178). Liquid funds, which have declined by SEK 40 M since the beginning of the year, amounted to SEK 33 M at the close of Q1 2002. The Parent Company's interest-bearing loans, including the convertible debenture loan, amounted to SEK 154 M. Key figures 2002 2001 Jan- Jan- March March Operating margin, % 16.5 21.7 Profit margin, % 15.6 21.7 Earnings per share before 3.80 5.70 dilution, SEK Earnings per share after dilution, 3.80 5.70 SEK Return on capital employed before 25.4 31.6 tax, % 1) Return on equity capital after 20.4 26.1 tax, % 1) Equity capital per share before 74.40 78.70 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 first 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 first quarter of both 2002 and 2001 amounted to 29,107,058, and the average number of shares after dilution was 29,107,058. No convertible debentures were converted to shares during the period. Balance sheet (SEK M) March Dec 31, 31, 2002 2001 Intangible fixed assets 112 111 Other fixed assets 1 629 1 535 Inventories 915 935 Current receivables 986 973 Liquid funds 329 365 Total assets 3 971 3 919 Shareholders' equity 2 145 2 072 Interest-bearing provisions and liabilities 623 588 Non-interest-bearing provisions and liabilities 1 203 1 259 Total equity and liabilities 3 971 3 919 Change in shareholders' equity (SEK M) March March 31, 31, 2002 2001 Shareholders' equity, December 31, 2001 and 2000 2 072 2 006 Effect of change in accounting principles - 36 Adjusted shareholders' equity, January 1, 2002 2 072 2 042 and 2001 Currency exchange differences -36 60 Profit for the year 109 166 Dividend - - Shareholders' equity at end of period 2 145 2 268 Cash flow statement (SEK M) March March 31, 31, 2002 2001 Profit after financial items 160 240 Reversal of depreciation 72 71 Other 22 -28 Taxes paid -35 -34 Change in working capital -54 -239 Investment activities -198 -56 Financing activities, incl dividends 7 17 Cash flow -26 -29 Rolling 12-month review Invoicing Change Operating Operating SEK M % profit margin SEK M % Q2, 2001 1 101 16 220 20.0 Q3, 2001 1 005 12 165 16.4 Q4, 2001 1 071 4 162 15.1 Q1, 2002 1 031 -7 170 16.5 Rolling 12 4 208 6 717 17.0 months 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 result will be of minor significance. Liquidity and equity ratio The Group's liquid funds in the form of short-term investments and bank balances declined by SEK 36 M since year-end 2001 to SEK 329 M at the close of Q1 2002. The main reason for the decline was payments made for acquired companies. Interest-bearing loans in the Group, including the convertible debenture loan, amounted to SEK 519 M. The Group's equity ratio was 54 percent (55). Personnel The number of employees in the Group at the close of Q1 2002 was 3,802 (3,904 at year-end 2001), including 1,280 (1,353) persons employed in Sweden. The decline in the workforce during the quarter amounted to 102 persons, and the cutbacks mainly affected Seco's subsidiaries in the Czech Republic and India, as well as continued alignments to lower demand at the production plants in Sweden. Capital expenditures Group investments in tangible and intangible fixed assets during the quarter amounted to SEK 48 M (65). The investments were related primarily to plants for the production of indexable inserts in Sweden and the US. Investments in 2002 are estimated at approximately SEK 300 M, including capital expenditures to secure production capacity in preparation for a recovery in economic conditions. Market investments China has been one of Seco's fastest growing markets during recent years, and additional investments are needed to support continued rapid expansion. Plans are now being made to establish a plant in China for the production of special tools; the plant will be situated in Shanghai. The investment will enable Seco to strengthen its market position by offering customers improved delivery terms and conditions. On March 1, 2002 Seco finalized its acquisition of Jabro Tools, a Dutch company with operations in the solid carbide end mills product area. Jabro has annual sales of about SEK 140 M and 125 employees. Jabro's sales and earnings for March 2002 will be included in Seco's second- quarter results. Short-term market outlook Stabilized demand is expected in the US. A continued slowdown is projected in Europe. Market outlook published on February 14, 2002 We anticipate weakening demand in most markets in Europe and a continued decline in the US. Accordingly, continued cost savings and rationalization measures are necessary. This report has not been reviewed by the Company's auditors. The next report, covering the first six months of 2002, will be published on August 7, 2002. Fagersta, May 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, Group Controller (Tel: +46 223-401 32). E-mail may be sent to: investor.relations@secotools.se Previously published financial information is available under "Investor Relations" at the Seco Tools' website (www.secotools.se) ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/05/06/20020506BIT00810/wkr0001.doc http://www.waymaker.net/bitonline/2002/05/06/20020506BIT00810/wkr0002.pdf