Third-quarterly report 1 January - 30 September 2000

Third-quarterly report 1 January - 30 September 2000 Progress over Q3 was good - in terms of sales, profits, cash flow and the order book Sales for January-September totalled SEK 182.8 million (173.6 m). The profit after financial items was SEK 2.4 million (- 5.8 m). (of which funds returned by SPP amounted to SEK 5.7 million). Cash flow continued to improve. During Q3 liquid assets rose from SEK 13.7 million to SEK 21.2 million. The order book increased by 20% during the year and reached SEK 147 million. Orders received for air systems for fuel cell projects climbed significantly. Rapid growth in the fuel cell sector will generate growth in sales and profits for the future. A positive trend is expected in sales, profits and cash flow in Q4 and in 2001. THE GROUP Summary Sales for the January-September period totalled SEK 182.8 million, compared with SEK 173.6 million in the same period last year. The company made a profit of SEK 2.4 million (-5.8 m), which represents an improvement of SEK 2.5 million, excluding the effect of returned SPP funds, compared with last year. The results for the period include revenue recognition of funds returned from SPP, worth SEK 5.7 million. Q3 saw a significant boost to profits and cash flow. Compared with the losses of SEK 2.9 million in Q2 and SEK 1.8 million in Q1, the profit of SEK 1.3 million in Q3 represents a strong turnaround. Liquidity also rose over the quarter. At the end of September liquid assets totalled SEK 21.2 million, compared with SEK 13.7 million at the end of June. Important agreements were signed during the quarter. Opcon AB's subsidiary, SEM AB, signed a 4-year agreement with Husqvarna, a member of the Electrolux Group. This agreement has strategic importance because it will help the Group reach its established growth targets. The agreement means that SEM AB will supply most of Husqvarna's requirements for small ignition systems for its chainsaws. A further agreement has been signed within the fuel cell sector. The agreement between Opcon Autorotor AB and Plug Power Inc of the US includes an order for developing an air supply system for a stationary fuel cell application. Opcon's CEO presents a more detailed view of the future of fuel cells in a supplement to this report. Financial position The Group's liquid assets totalled SEK 21.2 million (17.5 m) and interest- bearing liabilities stood at SEK 59.0 million (60.3 m). Cash flow in Q3 continued to progress well. Current activities have contributed SEK 16.4 million (-6.1 m) during the year. Total cash flow, after investments and financing, was SEK 7.0 million, compared with a negative cash flow of SEK 15.8 million last year. Cash flow is expected to remain positive in Q4 2000. The Group's equity/assets ratio stands at 44.2%. Investments Investment in machinery and tools over the period amounted to SEK 9.5 million (16.3 m). Employees At the end of September 2000 the headcount was 345, compared with 346 at the end of September 1999. SEM AB Sales in January-September totalled SEK 107.0 million (111.5 m). The operating loss for the period was SEK 0.1 million (+7.6 m) excluding the effect of returned SPP funds. Lower sales and a reduced operating profit were due to less deliveries of ignition cassettes for the Saab V6 engine over the first six months. This reduction was expected at the start of the year but it remained throughout the period. Compared with last year, fewer deliveries to the after-sales market for Saab have also affected the sales and profit figures. The operating profit was further affected by one-off costs, and the company has increased its investment in development. An agreement was signed during the period with Husqvarna regarding the supply of most of the ignition systems Husqvarna requires for its chainsaws. The agreement is for four years and is worth around SEK 100 million. The agreement shows that a Swedish supplier can be competitive in this sector and it increases the company's opportunities for doing more business with other customers in this sector. The agreement also underpins the company's position as one of the world-leading manufacturers of ignition systems for small engines used in chainsaws and hand-held equipment. SEM Drive AB SEM Drive AB increased its sales figure by 17% during the first nine months of 2000 while orders received climbed by 36% compared with the same period in 1999. The increase was achieved on the back of industrial customers making new orders. Changes in the product range have produced better operating margins. The company made a profit of SEK 1.2 million (-2.5 m), excluding the effect of returned SPP funds, which represents a marked improvement for the current year. Sales stood at SEK 42.0 million (36.0 m). Transformator-Teknik AB Sales and orders received were at the same level as last year but the profit was down due to pressure on margins. During September orders received climbed by 22% and are forecast to be 4% above last year for the full year. Sales in January-September stood at SEK 22.5 million (21.8 m). The company's operating profit of SEK 1.2 million (1.4 m), excluding the effect of returned SPP funds, was hit by one-off costs and greater pressure on the prices of key products. The company is increasing the level of its activities in Estonia. Opcon Autorotor AB Sales and orders received continued to rise during the period. Sales totalled SEK 11.8 million (6.0 m). The company has started work on the development projects that are being carried out with world-leading companies and will result in new engine concepts for combustion and fuel cell engines. Fuel cell development projects are on the increase throughout the world. During the period Opcon Autorotor AB signed an agreement lasting several years with a compressor distributor in the US. The agreement means that the company has safeguarded additional volumes for the next five years, and that the company's involvement in the US market is generating continued growth. Compared with last year the operating profit continued to improve and the loss after nine months was SEK 0.7 million (-6.1 m), excluding the effect of returned SPP funds. The result includes a one-off item worth SEK 1.5 million, which was received for signing a development agreement reported in Q1 2000. Parent company The parent company made a loss after financial items during the period of SEK 1.8 million (-3.5 m). COMMENTS REGARDING 2000 AND 2001 A continued positive trend is expected in the results in Q4 2000 and in 2001. Growth will be organic, based on the unique technologies within the Group and on delivery agreements that have been signed. Growth is also expected from planned acquisitions. The increasing importance of the US market, especially for SEM AB and Opcon Autorotor AB, will mean that a manufacturing and sales organisation will be required in the US. It is planned that this organisation will be established in partnership with a US company. SEM AB's four-year agreement with Husqvarna will mean a significant boost to volumes from 2001 onwards. During the current year investment will begin in new production equipment. The order means that an extra 25 employees will be recruited. New digital ignition systems have been launched and attracted great interest from European motorbike manufacturers. The company has also secured orders for prototypes from leading manufacturers in the US and Europe. Saab is planning to build more V6 engines, which will mean increased demand for ignition cassettes. SEM AB continues to focus on ion-sense technology by integrating it into the development of new engine management systems for the more environment- friendly combustion engines of the future. SEM Drive AB reported a strong improvement in sales and orders received during the year. Orders received are currently 36% above last year's levels and an annual increase of 17% is forecast. With volumes continuing to rise during the remainder of the year, the company will be able to report a significant improvement in profits compared with last year. This positive trend is expected to continue during 2001. Transformator-Teknik AB is progressing according to plan and will not achieve the same result levels as last year, although profitability will remain good compared with the norms for this segment. Continued production in Estonia will enable the company to win market shares and retain customers without compromising margins. An acquisition is probable during the year to complement operations. Increasing pressure on prices is being noted in the Swedish market for the company's products. Opcon Autorotor AB has a unique position in a new growth market - fuel cells for mobile applications. During the period, the company received its first order for an air supply system for stationary fuel cells. The company's order portfolio is the largest it has ever been and more and more customers are choosing Opcon Autorotor AB's air supply systems for fuel cell and combustion engines. Orders will result in increased deliveries of air-supply systems for fuel cell and combustion engines during 2001. Due to the rapid pace of development in fuel cell engines, the company can quickly generate returns on its investments, and these returns should remain high over the long term. Four important agreements have been signed during the year. These agreements will mean high usage of existing resources and therefore improved profits for Opcon Autorotor AB during the year compared with last year. Future information * Press release of the financial statement for 2000: 22 February 2001. * Annual Report for 2000: April 2001 * AGM: 26 April 2001 in Stockholm. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/11/03/20001103BIT00390/bit0001.doc The full report http://www.bit.se/bitonline/2000/11/03/20001103BIT00390/bit0002.pdf The full report