Interim Report January - September, 1999

Interim Report January - September, 1999 * Continued weak reefer market * Good third quarter for liner services * Effects from action program Consolidated result The reefer market continues to be very weak, which has resulted in large losses for the SOL Group. The loss for the first nine months of the year was MSEK -43 (-6). The loss for the third quarter - MSEK -27 - represented, however, a MSEK 10 million improvement over the previous year. Both liner services and reefer shipping have contributed to this improvement in addition to which the on- going action program has begun to produce results in the form of reduced costs. SOL Lines SOL Lines transported several cargoes of materiel for the KFOR forces in Kosovo during the third quarter. It was able to combine these shipments in an effective way with its normal southbound shipments of forest products to the Mediterranean area and with its northbound cargo flow. Two RoRo vessels were chartered on a single-voyage basis during the period to be able to meet the total demand for transportation. Despite the general downward pressure on freight rates and high bunker prices, SOL Lines posted its best third-quarter result - MSEK +2 (-2) - for several years. The increased demand for transportation to and from the Balkans and Turkey/Greece is expected to continue. The result posted by agency operations continued to be weak due to low freight rates and over-capacity in the traffic to and from South Africa. Transport capacity to and from South Africa is being reduced and the freight rates for next year are rising. SOL Reefers The reefer market continues to be extremely weak even though there was some improvement on the spot market during the third quarter. The higher spot rates are due to increased demand and the fact that more ships are laid up than in 1998. This resulted in somewhat better revenues during the third quarter and a MSEK 5 lower loss - MSEK -27 - than in the third quarter of 1998. Investments Investments during the period January-September amounted to MSEK 2 (6). Financial position During the third quarter, the Company improved its liquidity despite what is normally a low season during the holiday months. Consolidated liquid funds, including short-term investments, amounted to MSEK 36 compared with MSEK 33 on 30 June, 1999. Interest-bearing liabilities totalled MUSD 78 (equivalent to MSEK 598), a decrease of MUSD 1 since the end of 1998. The Group's equity ratio was 19 per cent compared with 23 per cent on 31 December, 1998. Parent Company Sales in the Parent Company amounted to MSEK 16 (31). The operating profit before depreciation was MSEK -2 (0) and the profit before appropria-tions and tax was MSEK -9 (-6). Balance sheet turnover amounted to MSEK 433 (402). Liquid funds, including short-term investments, totalled MSEK 21 (31-12-1998: MSEK 34). Action program The action program described earlier, which consists of measures aimed at reducing costs, is continuing as planned. The effects of these cost reductions as well as other measures included in the action program can be seen in the form of an improved result and higher liquidity. The measures instituted have so far this year resulted in a more than 10% reduction in the total costs of the shore-based organisation compared with 1998. Prospects for 1999 Cargo volumes for the liner services are expected to continue to be good and the earlier forecast of a profit of MSEK 5-10 for the liner services remains unchanged. SOL Reefer's loss is expected to be MSEK 55-65, which is in line with the earlier reported forecast. Consequently, the full-year result for the SOL Group is expected to show a loss of MSEK 55-65. Next financial report The Preliminary Report for 1999 will be published on Thursday, 24 February, 2000. Göteborg, 25 October, 1999 SVENSKA ORIENT LINIEN AB (publ) The board of Directors This report has not been examined by the company's auditors. For further information, please contact Peter Hermansson, Vice President Finance, Swedish Orient Line, phone +46 31 64 54 00 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/10/25/19991025BIT00870/bit0001.doc The full report http://www.bit.se/bitonline/1999/10/25/19991025BIT00870/bit0002.pdf The full report