Interim Report 1 january - 31 march 1999

OPCON AB (publ) INTERIM REPORT 1 January - 31 March 1999 Sales turnover in the first quarter amounted to SEK 57.4 million (57.2) The company reported a loss after financial items in the first quarter of SEK 3.6 million (-2.1) Unfavourable product mix had negative impact on results Considerable increase in received orders during March and April 1999 Negotiations continue regarding licensing and acquisition Positive full-year results are forecast despite weak start Opcon in brief Opcon companies develop, manufacture and market ignition and engine management systems, electromagnetic devices, screw compressors and transformers Customers are mainly in the automotive, small engine and engineering industries. Operations are organised in four business areas: Ignition systems - SEM AB Electromagnetic devices - SEM Drive AB Transformers - Transformator-Teknik AB Screw compressors - Opcon Autorotor AB Opcon is based in Åmål, Sweden. The company was listed on the Opcon-list of the Stockholm Stock Exchange on 30 December 1998. The Group Sales turnover during the first quarter amounted to SEK 57.4 million (57.2). Orders received by the Group improved considerably during March and April. The company made a loss of SEK 3.6 million (-2.1) during the period. The increase compared with the previous year was due to an unfavourable product mix for electromagnetic devices and reduced deliveries of compressors to aftersales markets. The investment climate in Asia and South America (Brazil) remains weak, which negatively affects some of the Group's products. Ignition systems - SEM AB Sales turnover 5 % higher than first quarter of 1998. Orders received at same level as first quarter of 1998 Orders received in March and April considerably higher than in 1998 Profit up by SEK 1.3 million. Continued increase in capacity for Saab ignition systems. Assessment of acquisition alternatives continues SEM AB (SEK 000) 3 months 3 months Most recent Full year Full year 1999 1998 12 months 1998 1997 Sales turnover 37 596 35 893 154 700 152 977 119 928 Operating profit 2 843 1 354 11 068 9 579 3 954 Operating 7,6 3,8 7,2 6.3 3.3 margin, % Average no. of 176 168 employees Electromagnetic devices - SEM Drive AB Sales turnover 5 % higher than first quarter of 1998. Orders received in January and February 1999 fell in the vehicle (including Volvo and Opel) and engineering segments. Orders received increased considerably in March and April Changes in product mix yielded lower margins and a larger loss Higher capacity brought significant productivity and profit improvements during March 1999. SEM Drive AB 3 3 Most recent Full Full (SEK 000) months months year year 1999 1998 12 months 1998 1997 Sales turnover 11 131 10 800 46 928 46 597 36 242 Operating profit -2 019 -858 -4 643 -3 482 -2 554 Operating -18,1 -7,9 -9,9 -7,5 -7,0 margin, % Average no. of 67 53 employees Transformator-Teknik AB Sales turnover amounted to SEK 7.7 million (8.3). Orders received 8% up on first quarter of 1998. Operating margin at same level as first quarter of 1998 Transformator- 3 3 Most recent Full Full Teknik AB (SEK months months 12 months year year 000) 1999 1998 1998 1997 Sales turnover 7 741 8 267 29 130 29 656 30 628 Operating profit 551 584 1 262 1 295 797 Operating 7,1 7,1 4.3 4.4 2.6 margin. % Average no. of 50 52 employees Compressors - Opcon Autorotor AB Sales turnover amounted to SEK 1.6 million (3.2). No deliveries to USA aftersales market during first quarter Negotiations held with Whipple Ind. regarding compensation for breaking contract, which led to a shortfall in turnover of SEK 3.5 million. Increase in development assignments for fuel cell segment. Licensing negotiations continue. Opcon Autorotor 3 3 Most Full Full (SEK 000) months months recent year year 1999 1998 12 1998 1997 months Sales turnover 1 594 3 200 13 565 15 171 7 526 Operating profit -2 281 -1 923 -9 980 -9 622 -11 242 Operating -143,1 -60,1 -73.6 -63.4 -149.4 margin. % Average no. of 15 14 employees The Group Investments Investments in machinery and equipment during the first quarter amounted to SEK 6.3 million (8.9). Financial position At the end of the first quarter, the Group's liquid funds amounted to SEK 22.9 million (0.9) and interest-bearing debt amounted to SEK 54.4 million (68.4). On 31 December 1998, liquid funds amounted to SEK 33.3 million (1.5) and interest-bearing debt amounted to SEK 53.9 million (63.1). Negative cash flow was recorded during the first quarter, primarily due to the costs of raising capital and the stock exchange listing. Other factors included increased need of working capital due to volume increases (SEM) and temporary stock building (SEM Drive, Autorotor). Employees At the end of the first quarter the Group had 333 employees (317). On 31 December 1998 there were 343 employees (304). Comments on 1999 Results in the first quarter were worse than expected. The effects of continued weak demand in Asia, Brazil and the USA (the aftersales market for compressors) had a negative impact on sales. SEM AB will launch two new products on the small engines market during the second quarter. A volume increase of around 10% is expected regarding deliveries to Saab. SEM Drive AB recorded an increase in received orders during March and April, especially from industrial customers, and this strengthened margins. Hard work aimed at improving productivity bore fruit during March. The company has a positive order book and good capacity for the second and third quarters of the year. Received orders for Transformator-Teknik AB were positive during the first quarter and the company is expected to exceed its invoicing and profit plans. The order books at Opcon Autorotor AB have already been filled regarding development assignments in the fuel cell segment. However, planned delivery volumes for compressors to the aftersales market will not be met during the year. In summary, improvements in profits for the full year are expected to be at least as good as for 1998, which will yield a profit after financial items. Parent company Opcon AB The operations of the parent company cover internal services and the management of the Group's assets The shared functions of the Group are finance, administration, human resources, IT and property management. These functions will be retained from 1999 within the parent company, Opcon AB. Staff from SEM AB, totalling 14 people, now work for the parent company. In the first quarter, the parent company made a loss after financial items of SEK 1.4 million (-0.3). For the full year, 1998, the parent company made a loss after financial items of SEK 1.7 million. In the comparison of annual results, costs worth SEK 0.9 million during 1999 have been reported by the parent company, rather than the subsidiaries. These costs cover Group management and administration. Financial information The interim report for the first six months of the year will be published on 31 August 1999. The interim report for the period January-September 1999 will be published on 29 October 1999. The press release of unaudited annual earnings for 1999 will be published at the end of February 2000. This interim report has not been the subject of verification by the company's auditors. Consolidated income 3 3 Most Full Full statement (SEK 000) months months recent year year 1999 1998 12 1998 1997 months Net sales 57 440 57 160 240 240 193 462 182 375 Other operating - - 160 160 255 revenue Operating profit/loss -2 748 -1 013 -5 559 -3 824 -12 152 Financial items -805 -1 113 -3 976 -4 284 -2 470 Profit/loss after -3 553 -2 126 -9 535 -8 108 -14 financial items 622 Tax - - - - 3 665 Minority shares -94 -39 -45 10 8 profit/loss for the -3 647 -2 165 -9 580 -8 098 -10 period 949 Consolidated balance 990331 980331 981231 971231 sheet (SEK 000) Fixed assets 80 593 79 998 80 207 77 744 Current assets 93 660 82 095 87 937 73 040 Liquid funds 22 894 873 33 311 1 461 Total assets 197 162 201 152 147 966 455 245 Shareholders' equity 84 777 45 750 88 424 47 915 Minority shares 703 658 609 619 Interest-bearing 54 410 68 409 53 931 63 098 provisions and liabilities Long-term non- 656 656 656 656 interest-bearing liabilities Short-term on- 56 601 47 493 57 835 39 957 interest-bearing liabilities Total liabilities and 197 162 201 152 shareholders' equity 147 966 455 245 Key figures 3 3 Most Full Full months months recent year year 1999 1998 12 1998 1997 months Operating margin % -4.8 -1.8 -2.3 -1.6 -6.3 Return on net - - -4.8 -3.5 -11.8 operating assets % Return on equity, % - - -14.7 -11.9 -20.6 Loss per share, SEK - - -1.53 -1.30 -2.58 Shareholders' equity - - 13.58 14.17 11.30 per share, SEK Equity ratio % 43.4 28.5 43.4 44.2 31.9 Number of shares 6 242 4 242 6 242 6 242 4 242 (000) Cash flow analysis 3 3 Most Full Full (SEK 000) months months recent year year 1999 1998 12 1998 1997 months Cash flow from -4 691 2 941 11 832 19 464 12 331 ongoing operations Cash flow from -6 299 -8 879 -24 -27 -31 investment operations 718 298 857 Cash flow from 573 5 350 34 907 39 684 16 745 financing operations Total cash flow -10 -588 22 021 31 850 -2 781 417 Åmål, Sweden 27 April 1999 Opcon AB (publ) The Board of Directors For further information regarding this report, please contact CEO Sven-Gunnar Oskarsson Tel +46 532-61130. fax +46 532-12019. Finance director Göran Falkenström Tel +46 532-61122. fax +46 532-12019 Opcon AB Box 30. 662 21 Åmål, Sweden Tel +46 532-61100. fax +46 532-12019 E-mail opconinfo@opcon.se www.opconab.com ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/28/19990428BIT00300/bit0001.doc http://www.bit.se/bitonline/1999/04/28/19990428BIT00300/bit0002.pdf