Strong first quarter for Viking Sewing Machines

Strong first quarter for Viking Sewing Machines · Viking Sewing Machines operating result after depreciation of goodwill grew strongly from MSEK 34 to MSEK 66. · Turnover increased by 33 percent. · Growth in sales on the company's primary market in North America continued to be very strong. · Cashflow from continuing operations was positive, MSEK 77 (MSEK -47). Swedish sewing machine manufacturer Viking Sewing Machines announced a turnover of MSEK 700 (MSEK 527) during the first quarter of 2002 (January-March). This was an increase of 33 percent compared with the same period last year. Demand continued to be very strong in the company's chief market, North America. In Swedish kronor terms, the increase amounted to 57 percent, of which the currency effect comprised a minor part, 9 percent. The expansion of the retail outlet network that took place in 2001 was a contributory factor, as were increased sales via independent retailers. Another important reason was the launch of new products, principally the new Pfaff embroidering machine, demand for which outstripped capacity to supply. "The 24 percent upswing in the Nordic countries is also very pleasing to note," said Svante Runnquist, MD of Viking Sewing Machines AB. Sewing machine sales in the rest of West Europe remained at the same level as the year before, partly because the new Pfaff embroidery machine was not available for delivery during the first quarter. Shipping got underway at the beginning of April. The operating result before depreciation for goodwill rose to MSEK 77 (MSEK 45) and the operating result after depreciation for goodwill jumped 93 percent to MSEK 66 (MSEK 34). Restructuring costs of MSEK 10 have been charged against the first quarter results for the personnel cutbacks in Germany already agreed as part of the integration of the former Pfaff operations. "This rise in earnings is due to continued improved margins from higher sales of more advanced machines and the positive effects of the higher dollar exchange rate compared with last year," said Svante Runnquist. After sale purchases that offer good margins, also increased as a result of new software products being released. Pre-tax earnings rose to MSEK 48 (MSEK 28). "This increase in our operating result led to a positive cashflow MSEK 77 (MSEK -47) from our continuing operations. Working capital also went down as a consequence of accounts payable having been reduced," added Svante Runnquist. During the quarter, the assembly of Pfaff machines in the Czech Republic was switched to a separate wholly owned company, which meant that the number of employees rose by almost 200. "This takeover is part of moves to integrate the Pfaff business, which continues to be intensively pursued and also partly accounts for the improved results," said Svante Runnquist. Key figures (All in MSEK) 3 mth 3 mth 12 mth 12 mth Jan-Mar Jan-Mar Jan-Dec April 2001- 2002 2001 2001 Mar 2002 Net turnover 700 527 2 543 2 716 Operating results before goodwill depr. 77 45 200 232 Operating results after goodwill depr. 66 34 157 189 Results before tax 48 28 109 129 Cashflow from continuing 77 -47 84 208 Operations PRESS SERVICE Svante Runnquist, MD Tel: 036-14 66 82 Gunnar Vidén, Finance Director Tel: 036-14 72 47 Hans-Peter Hindrikson, Head of International PR Tel: 036-14 73 70, Mob: 070-699 37 00 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/11/18/20021118BIT00470/wkr0001.doc http://www.waymaker.net/bitonline/2002/11/18/20021118BIT00470/wkr0002.pdf