The Sapa Group - Weakening Demand Had a Negative Impact On Results; Interim Report January-September 2001.Business Editors STOCKHOLM Stockholm (stŏk`hôlm'), city (1995 pop. 692,954), capital of Sweden and of Stockholm co., E Sweden, situated where Lake Mälaren flows into the Baltic Sea. , Sweden--(BUSINESS WIRE)--Oct. 24, 2001 The Sapa Group:
-- Kare Wetterberg, who will leave his present position as head of Profiles
Nordic & Baltic, to take responsibility for Business Segments Development and
Group Technology. He is also appointed Executive Vice President, based at the
Sapa Group headquarters in Stockholm.
-- Robin Greenslade, Group Vice President, responsible for Profiles Overseas,
based in the US. He was previously head of Profiles UK & Overseas.
-- Francois Coeffic, Group Vice President, responsible for Profiles Europe,
which now also includes the UK, as well as the Nordic and Baltic regions. Mr
Coeffic, previously in charge of Profiles Continental Europe, is based in
Luxembourg.
-- Derek Phillips, Group Vice President, responsible for business and
management development, based at the Sapa Group headquarters in Stockholm.
Sapa in brief Jan-Sept Jan-Sept Jan-Sept
2001 2000 1999
Net sales, MSEK 12,433 11,014 8,874
Operating profit, MSEK1 517 635 514
Profit before tax, MSEK1 337 512 447
Operating margin, %1 4.2 5.8 5.8
Cash flow after 171 -420 -86
investments2
Debt ratio, % 0.46 1.32 0.68
1 Excluding non-recurring items (see note, p 8)
2 Excluding divestments and acquisitions
"The market for both profiles and heat transfer strip continued to weaken even further during the third quarter, and the sustained falls in volume have negatively impacted our profitability," comments Staffan Bohman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Sapa. "We now see the most rapid decline in volumes for a very long time, and it is therefore difficult to make any predictions about future demand, and thereby also volumes and prices. We do not believe in a recovery for our market in the next couple of months. The weak market conditions will remain in next year." "However, forceful force·ful adj. Characterized by or full of force; effective: was persuaded by the forceful speaker to register to vote; enacted forceful measures to reduce drug abuse. measures to respond to the new business climate have already been taken, and further measures to reduce the company's cost levels are prepared if the market continues to weaken." This report is also available on Sapa's website on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the : www.sapagroup.com. A slide presentation of this release can be downloaded as a PDF-file. Select Investor Relations Investor relations The process by which the corporation communicates with its investors. , Presentations. THE SAPA GROUP January-September 2001 Group net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight rose by 13 per cent during the period to MSEK MSEK Meyer, Suozzi, English & Klein (New York law firm) MSEK Million Swedish Kroner 12,433 (11,014), of which net acquisitions and divestments accounted for 7 percentage points, and close to 7 percentage points from currencies. The volumes of aluminium products fell with 9 per cent for comparable units, with a falling trend between the individual quarters. The general market was characterised by a continued weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. during the whole period, with falling volumes. This has been especially
noticeable in Northern Europe Europe (y r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .The unusually rapid decline in volumes has also resulted in quickly falling metal prices and a general price pressure in the market. The Overall US market has so far this year declined by 25 per cent. Sapa has done better than its competitors, but has not been able to avoid a noticeable decline in volumes. On 2 July July: see month. , the sale of the remaining foil operations, at Skultuna Skultuna is an industrial town (pop. 3,299) in Västerås Municipality, Västmanland County, Sweden, approximately 10 kilometres north of the city Västerås. Skultuna has early 17th century brassworks Skultuna mässingsbruk and high number of runestones. , to the Italian company Comital was concluded. It generated a capital gain of MSEK 92. These operations are included in the results for the first six months. On 27 September September: see month. , Sapa also completed the sale of the Autoplastics division to the Dutch investment buy-out buy·out also buy-out n. 1. The purchase of the entire holdings or interests of an owner or investor. 2. The purchase of a company or business: specialist Gilde Gilde is a brand name used by the Norwegian meat processing company Nortura on its red meats. The mother company is responsible for the slaughterhouses whiel marketing and distribution is managed by the subsidiary Gilde Norge BA. Investment Management B.V. and the Autoplastics management. It generated a capital loss of MSEK 135. These operations are included in the results for the entire period. Group operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the period, excluding non-recurring items, was MSEK 517 (635), corresponding to an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 4.2 per cent (5.8). Profit before tax, excluding non-recurring items, amounted to MSEK 337 (512). Earnings per share decreased to SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 5.15 (8.86). The return on shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. added up to 9.1 (17.1) per cent, while the return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). was 10.2 (16.2) per cent. Shareholders' equity per share rose by 24 per cent to SEK 110 (88). Group tax costs tax costs n. a motion to contest a claim for court costs submitted by a prevailing party in a lawsuit. It is called a "Motion to Tax Costs" and asks the judge to deny or reduce claimed costs. amounted to approximately 24 per cent, including non-recurring items. Group tax costs, excluding non-recurring items and divested companies, amounted to approximately 37 per cent. Third quarter of 2001 The group net sales during the third quarter was MSEK 3,525 (3,522). The weak development of the market from the first half-year was accentuated during this period. Sold volumes decreased by 5 per cent, excluding foil operations but including the addition from the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of operations, which are included from 1 September last year. Volumes of aluminium declined with 13 per cent for comparable units. The group operating profit for the period, excluding non-recurring items, decreased to MSEK 76 (179). Profit before tax, excluding non- non- word element [L.]not . non- pref. Not: noninvasive. recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. items, amounted to MSEK 35 (120). Earnings per share totalled -0.32 kronor (1.91). The negative earnings per share during the third quarter are mainly explained by higher tax costs, primarily in the divested Autoplastics operations. Group1 Q3 2001 Q3 2000 Q3 1999 Net sales, MSEK 3,525 3,522 2,981 Operating profit, MSEK 76 179 172 Profit before tax, MSEK 35 120 146 Operating margin, % 2.1 5.1 5.8 Deliveries, tonnes 63,800 79,300 68,800 1 Excluding non-recurring items FINANCING, LIQUIDITY AND SHAREHOLDERS' EQUITY The Group's debt/equity ratio Debt/Equity Ratio A measure of a company's financial leverage calculated by dividing long-term debt by shareholders equity. It indicates what proportion of equity and debt the company is using to finance its assets. has improved from 119 per cent at the end of last year to 46 per cent, following the divestment divestment to strip one's investment from an entity. of the foil operations and Autoplastics. This is in line with Sapa's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. restriction to have a debt/equity ratio below 100 per cent. The interest coverage ratio was 2.9. The financial net of the period amounted to an expense of MSEK 180 (expense: 123), of which an expense of MSEK 40 in the third quarter (expense: 58). After investments, and before acquisitions and divestments, Sapa had a positive cash flow of MSEK 171 during the first nine months (negative: MSEK 420). During the period, the capital employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. decreased with MSEK 1,624, mainly due to the divestment of the foil operations and Autoplastics. Increased turnover and exchange rate variations when translating into Swedish kronor have had an opposite effect. Shareholders' equity increased by MSEK 547 to MSEK 4,014, after dividend payments of MSEK 183. Translation differences have had a positive impact on shareholders' equity of approximately MSEK 239. INVESTMENTS Group investments during the first nine months totalled MSEK 453 (499), to be compared with depreciations of MSEK 438. The completion of a new profile press in Albi Albi (älbē`), town (1990 pop. 48,707), capital of Tarn dept., S France, in Languedoc, on the Tarn River. A commercial center, its has glassworks and food-processing, textile-manufacturing, and tourist industries. , in Southern France Southern France (or the South of France), colloquially known as Le Midi, is a loosely defined geographical area consisting of the regions of France that border the Atlantic Ocean south of the Gironde, Spain, the Mediterranean Sea, Italy, and Switzerland south of the , a comprehensive investment programme within Heat Transfer at Finspang, Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. , and a programme to raise the productivity in the UK belong to the major investments of the period. PERSONNEL The average number of employees in the Sapa Group during the first nine months was 9,504 (8,898), but amounted to 6,830 (9,829) by the end of the period. A decision was taken to make personnel reductions, in order to adjust Sapa's costs and organisation to a weaker market. The total rationalisation Noun 1. rationalisation - (psychiatry) a defense mechanism by which your true motivation is concealed by explaining your actions and feelings in a way that is not threatening rationalization means that approximately 750 positions within the new Sapa Group will disappear between mid- mid- pref. Middle: midbrain. 2000 and the end of this year. Both temporary and permanent employees will be affected. More than half of the programme has already been implemented. As a consequence of the weak market situation, it was decided to take extensive measures to strengthen the company's competitive power and raise its level of profitability. In August, Sapa announced planned redundancies in Torsby and Skultuna, both in Sweden. In total, 132 employees are affected, of which 49 in Torsby and 83 in Skultuna. Negotiations have commenced with union representatives regarding the closure of the sites at these locations. An overview of the operations in other countries is also initialised. As an immediate consequence, some 30 positions at the plant in Offenburg, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , will be affected. Further measures to reduce the cost levels on all our markets can not be ruled out. THE SAPA SHARE During the first nine months of 2001, the price of the Sapa share decreased by less than 1 per cent. The Stockholm Exchange All-Share index fell with more than 31 per cent during the same period. Until 18 October October: see month. , the share rose by 5 per cent, while the All-Share index fell with 26 per cent during the same period. TREND BY PRODUCT AREA Aluminium Products The introduction of a new Group organisation has led to a replacement of the former business areas by control spans, with companies reporting directly to the Group management. Commercial considerations regarding the market for heat transfer strip - which is characterised by a small number of producers and competing customers in a specific segment - will make a separate report of this business inappropriate. As a consequence of this change, all the aluminium operations are reported under the heading Aluminium Products Net sales for Aluminium Products during the first nine months rose with 13 per cent to MSEK 9,605 (8,482). Of this increase, net acquired and divested companies accounted for 8 percentage points, and the remaining 5 percentage points from currency effects. The operating profit fell to MSEK 516 (618), corresponding to an operating margin of 5.4 per cent (7.3). The development of volumes on most markets was negative during the entire period, and this trend accelerated during the third quarter. Especially Northern Europe experienced a significant decline in demand. During the first six months, the demand in Southern Europe Southern Europe or sometimes Mediterranean Europe is a region of the European continent. There is no clear definition of the term which can vary depending on whether geographic, cultural, linguistic or historical factors are taken into account. was stable, but also here, the market for aluminium products has weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak en·er n. during the
last quarter.The UK operations now see the effects of the completed programme of measures, plus a stabilised Adj. 1. stabilised - made stable or firm stabilized stable - resistant to change of position or condition; "a stable ladder"; "a stable peace"; "a stable relationship"; "stable prices" demand, especially for building systems. The profiles operations in Poland continued to develop well. The ongoing investment programme at Heat Transfer in Finspang, Sweden, has improved the efficiency at the plant, leading to a high yield from the production of heat transfer strip. The effect was however neutralised Adj. 1. neutralised - made neutral in some respect; deprived of distinctive characteristics neutralized neutral - possessing no distinctive quality or characteristics by a considerable decline in volumes that was particularly noticeable during the third quarter. Operations in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. show continued positive operating results.
Aluminium products Q3 Q3 Q3 Jan- Jan- Jan-
2001 2000 1999 Sept Sept Sept
2001 2000 2000
Net sales, MSEK 2,663 2,749 2,236 9,605 8,482 6,850
Operating profit,
MSEK 81 183 181 516 618 524
Operating margin, % 3.0 6.7 8.1 5.4 7.3 7.6
Deliveries, tonnes 63,800 79,300 68,800 243,000 249,800 214,000
Plastic Products Net sales increased during the first nine months with 11 per cent to MSEK 2,675 (2,414). The operating profit decreased to MSEK 57 (66). The operating margin fell to 2.1 per cent (2.7). Plastics Products include the now divested division Autoplastics. After the sale of Autoplastics, a small painting facility in Kungalv, Sweden, with about 40 employees after restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , will remain with Sapa. This unit will in the future be included in Other companies.
Plastic products Q3 Q3 Q3 Jan- Jan- Jan-
2001 2000 1999 Sept Sept Sept
2001 2000 1999
Net sales, MSEK 817 732 714 2,675 2,414 1,902
Operating profit,
MSEK 16 13 2 57 66 15
Operating margin, % 2.0 1.8 0.2 2.1 2.7 0.8
OTHER Divestment of the foil operations On 2 July, the sale of the Swedish foil operations at Skultuna to the Italian company Comital was completed. During the second quarter of 2001, on 15 June, the foil operations in Belgium and Luxembourg were sold to the French company Pechiney. The total price for Sapa Eurofoil operations was approx. MEUR MEUR Million Euros 150. Divestment of Autoplastics On 27 September, the sale of Autoplastics was completed, for a price of MSEK 1,220. Autoplastics will reassume Re`as`sume´ v. t. 1. To assume again or anew; to resume. its previous name Plastal. New owners are Gilde Investment Management B.V., the Dutch investment buy-out specialist, and Autoplastics management. Autoplastics showed an operating profit for the first nine months of MSEK 57. New board members At Sapa AB's Extra Annual General Meeting in Stockholm, on 22 August, Ole Enger, President and CEO of Elkem asa, and Anders Carlberg, Board member of the same company, were elected as new Board members of Sapa AB. The Sapa Board will hereby consist of 8 members and no deputies. New organisation In line with the ongoing restructuring of the whole Sapa Group, the company has decided to renew its Executive Management Team with four new members. Sapa has also announced a new organisation, as a result of the recent divestments of the Foil and Autoplastics operations. The new organisation was effective as of 1 October 2001. The four new members of the Executive Management Team are: -- Kare Wetterberg, who will leave his present position as head of Profiles Nordic & Baltic, to take responsibility for Business Segments Development and Group Technology. He is also appointed Executive Vice President, based at the Sapa Group headquarters in Stockholm. -- Robin Greenslade, Group Vice President, responsible for Profiles Overseas, based in the US. He was previously head of Profiles UK & Overseas. -- Francois Coeffic, Group Vice President, responsible for Profiles Europe, which now also includes the UK, as well as the Nordic and Baltic regions. Mr Coeffic, previously in charge of Profiles Continental Europe, is based in Luxembourg. -- Derek Phillips, Group Vice President, responsible for business and management development, based at the Sapa Group headquarters in Stockholm. Together with the CEO Staffan Bohman and the CFO See Chief Financial Officer. Bo Askvik, they form the Executive Management Team of the Sapa Group. This interim report also includes: Summary of Group income statement; Summary of Group balance sheet; Group key financial figures; Financial information by business areas; Group cash flow; Changes in Group equity; Accounting principles; Non-recurring items Report Dates 2001 Full year report 6 February 2002 This report has not been examined by the Company's auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together . THE SAPA GROUP Consolidated July- July- Jan- Jan- Jan- income statements Sept Sept Sept Sept Dec MSEK 2001 2000 2001 2000 2000 Net sales 3,524.4 3,522.0 12,432.5 11,014.3 15,395.4 Cost of goods sold -2,988.0 -2,883.5 -10,407.3 -9,041.2 -12,622.8 Gross profit 537.4 638.5 2,025.2 1,973.2 2,772.6 Selling and administrative expenses -460.6 -466.2 -1,521.3 -1,374.7 -1,924.5 Other operating revenues/expenses -110.6 8.9 317.0 366.1 375.9 Operating profit -33.8 181.1 820.9 964.6 1,224.0 Financial items -40.4 -58.4 -180.0 -122.7 -187.8 Profit after financial items -74.2 122.7 640.8 841.9 1,036.2 Tax 34.5 -51.5 -148.9 -216.6 -267.1 Minority interest in net profit -0.7 0.3 -0.1 0.9 1.1 Net result -40.4 71.5 491.8 626.2 770.2 Consolidated balance 30 Sept 30 sept 31 Dec sheets 2001 2001 2001 MSEK Intangible assets 1,213.7 1,335.2 1,336.3 Tangible assets 2,825.6 4,000.8 4,210.5 Financial assets 142.5 85.3 185.6 Inventories 1,797.6 2,488.5 2,441.9 Current receivables 2,571.3 3,674.2 3,654.1 Liquid funds 1,183.9 413.8 572.0 Total assets 9,734.6 11,997.8 12,400.5 Shareholders' equity 4,014.4 3,233.0 3,467.1 Interest-bearing liabilities and provisions 3,034.0 4,669.0 4,708.8 Interest-free liabilities and provisions 2,686.2 4,095.7 4,224.6 Total shareholders' equity and liabilities 9,734.6 11,997.8 12,400.5 Key figures and other Jan-Sept Jan-Sept Jan-Dec information 1 2001 2000 2000 Return on shareholders' equity, %2 9.1 17.1 15.2 Numbers of shares, '000 36,628 36,617 36,617 Earnings per share, SEK2 5.15 8.86 12.75 Earnings per share, incl non-recurring items, SEK 13.43 17.10 21.03 Earnings per share after full conversion, SEK 5.10 8.74 12.56 Earnings per share, incl non-recurring items, after full conversion SEK, kr2 13.22 16.82 20.69 Shareholders' equity per share, SEK 109.60 88.29 94.68 Return on capital employed, %2 10.2 16.2 14.1 Operating margin, %2 4.2 5.8 5.8 Capital turnover rate (multiple) 2.2 2.6 2.4 Equity/assets ratio, % 41 27 28 Debt/equity ratio, %2 46 132 119 Net debt, MSEK 1,850 4,255 4,137 New and replacement investments, MSEK 453 499 829 Average number of employees 9,504 8,898 9,118 1 Key ratios calculated based on rolling twelve-month values 2 Excluding non-recurring items Financial Jul- Jul- Jan- Jan- Jan- information by Sept Sept Sept Sept Dec business area 2001 2000 2001 2000 2000 MSEK Aluminium Products Net sales 2,662.8 2,748.6 9,605.5 8,481.8 11,849.4 Operating profit 80.6 182.7 515.6 618.2 872.1 Plastic Products Net sales 816.6 732.3 2,674.9 2,414.4 3,375.8 Operating profit 16.1 13.0 57.0 65.8 75.4 Other companies and Group items Net sales 100.7 95.0 330.7 290.5 433.6 Inter-company deliveries -54.7 -54.0 -178.5 -172.3 -263.5 Operating profit -21.1 -16.8 -55.6 -49.0 -54.6 Group Net sales 3,525.4 3,522.0 12,432.5 11,014.3 15,395.4 Operating profit1 75.6 178.9 517.1 635.0 892.9 1 Excluding non-recurring items Cash flow Jan-Sept Jan-Sept Jan-Dec MSEK 2001 2000 2000 Operating profit 820.9 964.5 1,224.0 Depreciations 493.4 413.7 567.3 Other items not affecting liquidity -328.9 -369.8 -347.0 Interest received/paid -216.7 -108.2 -123.5 Income tax paid -273.3 -157.7 -234.9 Change in working capital 115.0 -737.6 -614.2 Cash flow from ongoing operations 610.4 4.9 471.8 New and replacement investments -452.0 -498.8 -829.0 Company acquisitions/divestments 1,726.4 -1,480.4 -1,481.2 Sales of fixed assets and changes in financial fixed assets 13.0 74.4 93.1 Cash flow after investments 1,897.8 -1,899.9 -1,745.3 Financing -1,128.9 1,966.5 1,963.0 Dividend -183.1 -173.9 -173.9 Cash flow 585.9 -107.3 43.7 Changes in equity Jan-Sept Jan-Sept MSEK 2001 2000 Opening balance 3,467.1 2,754.3 Translation differences 238.6 26.4 Dividend -183.1 -173.9 Net result 491.8 626.2 Outgoing balance 4,014.4 3,233.0 Accounting principles This interim report was made in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Swedish Financial Accounting Standards Council's recommendation RR20, interim reporting. From 2001, the company puts the Council's new recommendations into practice, with the exception of the recommendations of which the coming into force has been deferred until 2002. The application of the new recommendations has not had a material influence on the company's result and position. Non-recurring items (before tax) 2001: capital gain of MSEK 678 from sale of the Eurofoil business (Q2 and Q3), write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of goodwill in Autoplastics, MSEK 174 (Q2), capital loss of MSEK 135 from sale of Autoplastics (Q3), provisions of MSEK 65 for close-down of operations, and other restructuring measures. Included in other operating revenues/expenses 2000: capital gain of approx. MSEK 230 from sale of Securistyle (Q1), surplus SPP (1) (Scalable Parallel Processor) A multiprocessing computer that can be upgraded by adding more CPUs. (2) (Standard Parallel Port) The Centronics parallel port that was used on the first PCs. funds of approx. MSEK 100 (Q2). Included in other operating revenues/expenses. |
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