Interim report January – June 2009

SECO TOOLS AB

Interim report for the six months ended 30 June 2009 * Revenue for the quarter fell by 40 per cent at fixed exchange rates and 30 per cent in Swedish kronor (SEK), and amounted to SEK 1,180 M (1,697). * The cost adaptations have been increased and are proceeding more quickly than planned. * Due to significantly lower volumes, operating profit for the quarter declined to SEK 40 M (378). Operating margin for the quarter was 3.4 per cent (22.3). * Revenue for the six-month period fell by 34 per cent at fixed exchange rates and amounted to SEK 2,531 M (3,329). * Profit after tax for the six-month period was SEK 68 M (531). * Earnings per share for the six-month period were SEK 0.47 (3.65). Comments from the CEO “The weak demand situation in virtually all of Seco Tools’ markets persisted throughout the second quarter. Revenue for the quarter was weak compared to the previous year, but the dramatic drop in demand appears to have passed and sales levelled off at a low level during the quarter. On the whole, however, Seco Tools’ development relative to the market average remains positive. A major product launch in the important area of square shoulder milling was carried out during the quarter with the new Square 6 family, which offers highly attractive cutting economy for our customers. The cost adaptations have been increased and the implementation is proceeding more quickly than the plan we presented after the first quarter. All in all, the ongoing actvities are expected to reduce Seco Tools’ annual cost level by nearly SEK 600 M, whereof SEK 500 M will impact this years’ result. The cost-cutting programmes include a reduction in our global workforce by around 900 positions including temporary employees. Operating margin for the second quarter was 3.4 per cent (22.3) including additional one-time costs of SEK 24 M for the cost adaptations. The decrease compared to the previous year is mainly attributable to the drop in both sales and production volumes. The period’s lower earnings have been somewhat offset by the effects of the cost-cutting programmes and positive foreign exchange effects. The present weak demand situation is being further aggravated by inventory reduction among our end-customers and distributors, a trend that is expected to continue until after the vacation period. On the whole, we are currently seeing no signs of a near-term improvement in the demand scenario” says Kai Wärn, President and CEO of Seco Tools.