FAGERSTA, Sweden, Aug. 7, 2002 (PRIMEZONE) -- SecoTools AB:
-- Operating margin for the second quarter (17.5%) was the highest
during the past four quarters.
-- Operating cash flow was substantially better compared with the
year-earlier period.
-- Seco establishes a subsidiary in Finland.
Market
A gradual stabilization of the economy occurred in the U.S. Continued decline in industrial production in Europe.
Sales in Q2 2002
Demand in Europe during the quarter was weaker compared with the year- earlier period, but was on the same level as during the first quarter of the current year. Sales in most West European markets were sluggish due to a generally lower rate of production in manufacturing industry. However, among the larger markets, Italy and Spain demonstrated a continued favorable trend. Investment-related products experienced a continued steeper decline in demand compared with industrial consumption goods. Acquisition effects increased sales in Europe by approximately 5 percent.
In the U.S., the sales trend in local currency was stable and was largely comparable with the preceding quarter. A declining dollar rate had a negative impact on sales in SEK. Sales in Brazil were strengthened somewhat compared with the year-earlier period, despite ongoing regional crises. Sales in most markets in Asia were on the same level as 2001, with the particular exception of Japan, where demand is weak but the trend is relatively even.
The Group's invoicing for the quarter totaled SEK 1,068 M (1,101), which is 3 percent lower than in the year-earlier period. Structural and exchange-rate effects amounted to plus 4 and minus 1 percentage points. The reduction for comparable units in fixed currency was 6 percent.
Sales performance for the year
Market development for the full year is relatively similar to that described for the latest quarter. Weaker demand in Europe and Japan compared with the preceding year existed, at the same time as the sales level within the NAFTA region gradually stabilized at a lower level. The Group's invoicing totaled SEK 2,099 M (2,209), which is 5 percent lower than the preceding year. Structural and exchange-rate effects increased sales by 3 percent, of which currency effects accounted for 1 percentage point. Sales decreased by 8 percent for comparable units in fixed currency.
Invoicing by market area
2002 2001 2002 2001 2002/ 2002/
2001 2001
April- April- Jan- Jan- April- Jan-
June June June June June June
SEK M SEK M SEK M SEK M %(1) (%1)
Sweden 71 60 131 125 0 -4
EU, excl Sweden 506 514 999 1 053 -6 -8
Other Europe 90 95 186 188 -13 -9
Total for Europe 667 669 1 316 1 366 -7 -8
NAFTA 249 274 494 540 -7 -10
South America 33 35 65 69 20 6
Africa, Middle East 21 22 37 41 15 9
Asia, Australia 98 101 187 193 -2 -4
Group total 1 068 1 101 2 099 2 209 -6 -8
(1) Change from preceding year is shown in fixed currencies for
comparable units.
Earnings
Consolidated operating profit for the second quarter amounted to SEK 188 M (220), down 15 percent compared with the second quarter of 2001. The operating margin was the highest during the past 12 months and totaled 17.5 percent (20.0). Earnings were affected negatively primarily by lower sales volumes, which resulted in a lower capacity utilization at the Group's manufacturing units.
The operating margin for the first six months of 2002 was 17.0 percent (20.8). Favorable currency effects on operating profit amounted to SEK 10 M. Earnings per share before dilution in the most recent 12-month period amounted to SEK 14.70 (19.10). Return on capital employed was 26.2 percent (35.5). Return on equity amounted to 23.1 percent (30.6).
Consolidated income statement (SEK M)
2002 2001 2002 2001
April- April- Jan- Jan-
June June June June
Invoiced sales 1 068 1 101 2 099 2 209
Cost of goods sold -494 -538 -985 -1 061
Gross profit 574 563 1 114 1 148
Administration and selling costs -367 -351 -716 -708
Other revenues and costs -19 8 -40 20
Operating profit 188 220 358 460
Financial items -17 -8 -27 -8
Profit after financial items 171 212 331 452
Taxes -55 -70 -106 -144
Net profit 116 142 225 308
The Group's depreciation according to plan amounted to SEK 152 M (144).
Sales invoiced by the Parent Company amounted to SEK 1,127 M (1,221), with operating profit of SEK 302 M (341). Liquid funds were unchanged compared with the close of the preceding quarter and amounted to SEK 33 M at the close of the reporting period. The Parent Company's interest- bearing loans, including the convertible debenture loan, amounted to SEK 343 M (154).
Key figures
2002 2001 2002 2001
April- April- Jan- Jan-
June June June June
Operating margin, % 17.5 20.0 17.0 20.8
Profit margin, % 15.9 19.3 15.8 20.5
Earnings per share before dilution,
SEK 4.00 4.95 7.80 10.70
Earnings per share after dilution,
SEK 4.00 4.90 7.75 10.60
Return on capital employed before
tax, %(1) 26.2 35.5 26.2 35.5
Return on equity capital after tax,
%(1) 23.1 30.6 23.1 30.6
Equity capital per share before
dilution, 62.60 64.80 62.60 64.80
SEK (1)
(1) All key figures are calculated on a rolling 12-month basis.
The number of shares before dilution at the close of the second quarter in both 2002 and 2001 was 28,832,898, which was also the average number of shares in both periods. After adjustments for full conversion of the convertible debentures, corresponding to 274,160 shares, the number of shares at the close of the second quarter of both 2002 and 2001 amounted to 29,107,058, and the average number of shares after dilution was 29,107,058.
No convertible debentures were converted to shares during the year.
Balance sheet (SEK M)
June 30, 2002 Dec 31, 2001
Intangible fixed assets 204 111
Other fixed assets 1 533 1 535
Inventories 913 935
Current receivables 973 973
Liquid funds 240 365
Total assets 3 863 3 919
Shareholders' equity 1 805 2 072
Interest-bearing provisions and
liabilities 843 588
Non-interest-bearing provisions and
liabilities 1 215 1 259
Total equity and liabilities 3 863 3 919
Change in shareholders' equity (SEK M)
June 30, 2002 June 30, 2001
Shareholders' equity,
December 31, 2001 and 2000 2 072 2 006
Effect of change in accounting
principles - 36
Adjusted shareholders' equity,
January 1, 2002 and 2001 2 072 2 042
Currency exchange differences -88 94
Profit for the year 225 308
Dividend -404 -577
Shareholders' equity, June 30,
2002 and 2001 1 805 1 867
Cash
June 30, 2002 June 30, 2001
Profit after financial items 331 452
Reversal of depreciation 152 144
Other 25 -28
Taxes paid -101 -98
Change in working capital -50 -270
Investment activities -265 -112
Financing activities, incl dividends -198 -469
Cash flow -106 -381
Rolling 12-month review
Invoicing Change Operating Operating margin
SEK M % profit %
SEK M
Q3, 2001 1 005 12 165 16.4
Q4, 2001 1 071 4 162 15.1
Q1, 2002 1 031 -7 170 16.5
Q2, 2002 1 068 -3 188 17.5
Rolling 12
months 4 175 1 685 16.4
Any items affecting comparability are excluded from the operating profit and operating margin.
Accounting principles
The interim report complies with recommendations of the Swedish Financial Accounting Standards Council. At year-end 2001, the Swedish Financial Accounting Standards Council issued several new recommendations, including RR 15 regarding intangible assets. This recommendation means that Seco, after fulfillment of certain criteria, will capitalize a small percentage of expenses for IT and new product development. Effects on the operating result for the first six months of the year were positive in an amount of SEK 28 M.
Liquidity, equity ratio and cash flow
The Group's liquid funds in the form of short-term investments and bank balances declined by SEK 125 M since year-end 2001 to SEK 240 M at the end of the period. The main reasons for the decline were the dividend paid to shareholders and payments made for acquired companies. Interest- bearing loans in the Group, including the convertible debenture loan, amounted to SEK 733 M (543). The cash flow from current operations improved substantially compared with the year-earlier period.
The Group's equity ratio was 47 percent (49).
Personnel
The number of employees in the Group at the close of the period was 3,904 (3,904 at year-end 2001), of which the acquisition of Jabro Tools added 123. Excluding acquisitions, the number of employees declined by 21 during the quarter. Most of the personnel cutbacks were made at the manufacturing units in the Czech Republic and the U.S.
Capital expenditures
Group investments in fixed assets during the year amounted to SEK 130 M (122), of which intangible assets totaled SEK 28 M. The investments in machinery and equipment were related primarily to the production units in Sweden, the US and the Czech Republic. Investments in 2002 are estimated at approximately SEK 300 M.
Market investments
In collaboration with its current distributor in Finland, Seco intends to establish a subsidiary in the area from the end of 2002. This is part of the Group's strategy to work directly with end-customers in all major industrial markets. Seco will thereby strengthen its market position through such steps as the ability to offer Finnish customers extended service and a more complete product program.
On March 1, 2002, Seco completed its acquisition of Jabro Tools. Sales and earnings for the period March-June, 2002, are included in earnings for the second quarter. Jabro's production capacity will be increased during the year to enable continued growth.
Short-term market outlook
We anticipate stabilized demand in most principal markets compared with the first six months of the year.
Market outlook published on May 6, 2002
Stabilized demand is expected in the U.S. A continued slowdown is projected in Europe.
This report has not been reviewed by the Company's auditors. The next report, covering the third quarter of 2002, will be published on November 6, 2002.
Lars Renstroem President and CEO
Previously published financial information is available under "Investor Relations" at the Seco Tools' website (www.secotools.se)
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