Interim Report

INTERIM REPORT January - June, 2002 · Substantially lower transport volumes to the Middle East due to continued escalation of conflict in the region · Continued positive trend for liner service to southern and West Africa and for project consignments · Result for the 2nd quarter MSEK -4 (2nd quarter, 2001: MSEK 7) · Equity/assets ratio 44% (30) Operations Swedish Orient Line's core business is liner shipping between the Nordic countries and the Mediterranean. Since autumn, 2000, this service has been operated via a joint venture, SolNiver Lines, with SOL holding 60% of the shares. This service is based on four RoRo vessels, which are chartered from SOL and which SOL, in turn, charters on a long-term basis. The RoRo vessels are supplemented by chartered tonnage when the need arises. In addition to being the general agent for SolNiver Lines in Scandinavia, the Baltic States and the UK, SOL is also the agent for Pol-Levant Shipping Lines, which also operates liner traffic between the Nordic countries and the Mediterranean. SolNiver Lines has a traffic collaboration agreement with Pol-Levant Shipping Lines. SOL also operates a container service between the Nordic countries and southern Africa and carries out liner agency operations for traffic to and from West Africa as well as international project consignments. Consolidated Result The continued escalation of the conflict between Israel and Palestine resulted in substantially lower transport volumes to two of SOL's very important markets. This decrease is mainly due to lower volumes of shipments from Finland. This, together with the weaker USD/SEK exchange rate, resulted in shipping sales falling to MSEK 118 (141) during the 2nd quarter. As a result of lower freight revenues generated by the service to and from the Mediterranean, the service operated at a loss during the second quarter. The freight volumes for the liner service to and from southern and West Africa and project consignments were at higher or unchanged levels and the profits posted by both these business areas continued to be good. The consolidated result for the 2nd quarter was MSEK -4 (7) and MSEK -6 (6) for the first six months of 2002. The freight volume reported by the UK subsidiary Transocean Shipping Agency (UK) was lower due to fewer shipments of citrus fruits and potatoes to the UK from the Mediterranean. Consequently, an agreement has been reached to sell the company, which has operated at a loss in recent years. The sale is expected to generate a small profit for the Group. Financial position On 30 June, consolidated liquid funds, including investments and MSEK 25 in unutilised credit facilities, amounted to MSEK 49 compared with MSEK 59 at the end of last year. The Group had no loans or unutilised credit facilities. Investments during the period January-March amounted to MSEK 2 (1). On 30 June, the equity/assets ratio in the Group was 44% compared with 46% on 31 December, 2001. Parent Company The Parent Company's sales during the period amounted to MSEK 60 (68). The operating result before depreciation was MSEK -9 (0) and the result before allocations and tax was MSEK -9 (0). Total assets were MSEK 87 (94). Liquid funds, including investments and unutilised credit facilities, totalled MSEK 14 (31 December, 2001: MSEK 16). Measures to improve earnings As a consequence of the effects of the conflict in Israel we have intensified our sales efforts in alternative Mediterranean markets. One result of this is that Istanbul is now included as a regular port of call in our liner service. Furthermore, a program has started which is designed to bring the tonnage and costs in line with the prevailing situation on the Mediterranean service. However, the savings to be achieved by these measures are not expected to have full effect until next year. Prospects for 2002 The situation in the Middle East, which has resulted in lower exports from the Nordic countries to Israel and Palestine, is negatively affecting SOL's transport volumes at present. However, the operation of the service has not been affected and remains unchanged. On the other hand, the drawn-out conflict is creating an increasingly large future demand for transportation and necessities. When and how large this demand will be is, of course, impossible to predict. The transport volumes to the other parts of the Mediterranean and to southern and West Africa as well as in the project consignment segment are expected to continue to be good and are thus also continue to post good results. However, as a result of the continuing conflict in the Middle East and the lack of any signs of normalisation in the region in the near future, and despite measures taken to compensate for the loss of revenues and to adjust costs, it will in all likelihood not be possible to compensate for the loss during the first half of the year. Accordingly, a consolidated loss at about the same level as the loss for the first six months is anticipated for the full year. Next Financial Report The Interim Report for the period January-September, 2002, will be published on Tuesday, 5 November, 2002. Gothenburg 8 August, 2002. Svenska Orient Linien AB (publ) Board of Directors ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/08/20020808BIT00580/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/08/08/20020808BIT00580/wkr0002.pdf The full report