Unitor Reports Fourth Quarter and Full Year 1999 Results.

OSLO, Norway--(BUSINESS WIRE)--March 2, 1999--The Unitor Group today reported a pretax profit before restructuring costs for the year ended December 31, 1998 of NOK 146 million (US$19.2 million), compared to NOK 128 million (US$16.8 million) for 1997. After the provision of NOK 62 million (US$8.1 million), pretax profit was NOK 84 million (US$11.0 million). Net profit, including the restructuring costs, was NOK 45 million (US$5.9 million), or NOK 2.30 per share (US$0.30 per ADR), compared with NOK 90 million (US$11.8 million), or NOK 3.58 per share (US$0.47 per ADR), for all of 1997.

For the fourth quarter of 1998, Unitor reported a pretax loss, including the restructuring costs, of NOK 67 million (US$8.8 million), compared with a profit of NOK 24 million (US$3.2 million) in the fourth quarter of 1997. After the restructuring costs, the Company reported a net loss of NOK 57 (US$7.5 million), or (NOK 2.92 per share) (US$0.38 per ADR), compared with a net profit of NOK 20 million (US$2.6 million), or NOK 1.03 per share (US$0.14 per ADR), for the same period in 1997. Unitor Group sales in the fourth quarter amounted to NOK 618 million (US$81.2 million), compared to NOK 635 million (US$83.4 million) for the same period in 1997. The reduction in sales is due to lower sales of products and services to operative ships. Ordinary operating costs in the fourth quarter were NOK 266 million (US$34.9 million) compared with NOK 247 million (US$32.5 million) for the fourth quarter of 1997. Comparing the fourth quarter against previous quarters in 1998, the figures are NOK 266 million (US$34.9 million) compared with an average of NOK 250 million (US$32.8 million) for the first three quarters of the year. With the exception of one-time costs in the fourth quarter of 1998, costs have been stable for the past seven quarters. Ordinary operating profit in the fourth quarter was NOK 13 million (US$1.7 million) compared to NOK 51.0 (US$6.7 million) for the same period in 1997.

Total Group sales in 1998 amounted to NOK 2.7 billion (US$349.1 million), compared with NOK 2.5 billion (US$328.1 million) in 1997. Ordinary operating costs in 1998 amounted to NOK 1,017 million (US$133.6 million) as compared to NOK 944 million (US$124.0 million) in 1997. Of this increase of NOK 73 million (US$9.6 million), NOK 28 million (US$3.7 million) is due to currency effects and approximately NOK 35 million (US$4.6 million) is due to inflation. The ordinary operating profit for the Unitor Group in 1998 was NOK 229 million (US$30.1 million), compared to NOK 236 million (US$31.0 million) in 1997.

Net interest costs in 1998 were NOK 48 million (US$6.3 million) compared to NOK 47 million (US$6.2 million) in 1997. Hedging the cash flow in US dollars, including other currency items, resulted in a loss of NOK 35 million (US$4.6 million) compared to a loss of NOK 58 million (US$7.6 million) in 1997. In accordance with the company's hedging policy, US$105 million, which equates to 95-100% of expected positive cash flow in the year 1999, is hedged at an average rate of 7.54. Further, US$25 million of the expected cash flow in the year 2000 is hedged at a forward rate of 7.97.

Based on the ordinary operating result, return on capital employed was 14.4% compared to 15.4% in 1997.

Capital

The Unitor Group had a positive cash flow from operations of NOK 222 million (US$29.2 million) compared with NOK 16 million (US$2.1 million) in 1997. This positive trend in cash flow from operations in the period 1997-1998 may be explained by the fact that the company has not had the same increase in inventory and other working capital items as in 1997. In addition, the provision for restructuring is included.

Investments in 1998 totaled NOK 219 million (US$28.8 million), compared to NOK 142 million (US$18.7 million) in 1997. Of this figure, buildings represented NOK 115 million (US$15.1 million), machinery and IT equipment NOK 67 million (US$8.8 million), and gas cylinders NOK 37 million (US$4.9 million).

Net interest bearing debt was NOK 492 million (US$64.6 million) as of year end, NOK 531 million (US$69.8 million) at the end of the third quarter and NOK 437 million (US$57.4 million) at the beginning of the year. The increase from year end 1997 is due to the above mentioned investments, increases in the US dollar exchange rate, and payment of dividends which were already carried out during the first half of the year, thereby facilitating the reduction in debt in the second half.

Equity as of year end 1998, was NOK 881 million (US$115.8 million), or 41.4% of total capital. At year end 1997, the equity percentage was 43.9%.

General Market and Business Conditions

Developments in Unitor's mainstream activity - the sale of products and services to the international commercial fleet - have further confirmed what has previously been predicted, i.e. a generally flat market at best in 1999. It is expected that the weak bulk freight sector will continue, whereas a positive trend is expected in the cruise sector. The weakness is most prevalent in the Greek market and in Southeast Asia. Unitor sees the likelihood of a rapid market improvement as small.

Unitor has initiated a restructuring process with the aim of matching costs to the income picture we see in the immediate future, while also creating the most efficient operation possible. In this regard, the number of employees at the head office and in the network has been reduced by 137 persons, equivalent to 9.3%, and a number of functions have been consolidated in fewer locations. It has also been decided to pull out of the ship chandler operation in Piraeus, and dispose of other non-core activities. It is expected that activities that have been carried out and those that are planned during the first quarter will reduce operational costs and depreciation by NOK 103 million (US$13.5 million) per year, of which NOK 74 million (9.7 million) will be effected in 1999. Costs and extraordinary depreciation associated with these changes are calculated at NOK 62 million (US$8.1 million), which has been charged in the accounts in 1998.

Even though market conditions are difficult, up to this point, it has not been necessary to write-off bad debts on any greater scale than normal. This area is however under scrutiny.

Activities outside of Unitor's mainstream amount to approximately 27% of total sales and comprise the following. Sales of standardized systems to newbuildings (predominantly fire extinguishing systems) show a positive trend, and both the orderbook and influx of orders continues at a satisfactory level. Development in the Group's two production companies, Kjemi-service and Svenska Skum remains positive, and the business area Marine Contracting (insulation systems for LNG and LPG ships) has recently secured contracts for two LNG ships in Poland and will continue to be satisfactorily engaged until mid-2000.

NOK = Norwegian kroner

Currency exchange rate: U.S. $1.00 = NOK 7.6110 -0-

UNITOR GROUP

                         Twelve months ended Twelve months ended
                         December 31, 1998   December 31, 1997 %Change

                           USSm     NOKm        USSm     NOKm    USSm


Operating revenues            349.1  2,657.0    328.1  2,497.0      6%

Cost of goods                 172.1  1,309.0    159.7  1,215.0      8%
                           ------------------------------------

Gross profit                  177.1  1,348.0    168.4  1,282.0      5%

Depreciation                   13.4    102.0     13.4    102.0      0%

Other operating expenses      133.6  1,017.0    124.0    944.0      8%
                           --------------------------------------------

Ordinary operating profit      30.1    229.0     31.0    236.0     -3%

Restructuring expenses/(income) 8.1     62.0      0.4      3.0   1967%

Operating  result              21.9    167.0     30.6    233.0    -28%

Net interest and other
financial expenses (income)    10.8     83.0     13.8    105.0    -21%
                           --------------------------------------------


Income before taxes            11.0     84.0     16.8    128.0    -34%

Income taxes                    5.1     39.0      5.0     38.0      3%
                           --------------------------------------------

Net profit                      5.9     45.0     11.8     90.0    -50%


                           ============================================


Earnings per share                      2.30              3.58

Earnings per ADR               0.30              0.47

Weighted average number of
shares outstanding (millions)  19.5     19.5     19.5     19.5


Currency translation rate: $1.00 = NOK 7.6110


UNITOR GROUP

                          Three months ended Three months ended
                          December 31, 1998  December 31, 1997% Change

                           USSm     NOKm         USSm     NOKm    USSm


Operating revenues             81.2    618.0      83.4    635.0   -3%

Cost of goods                  40.9    311.0      40.5    308.0    1%
                           -------------------------------------

Gross profit                   40.3    307.0      43.0    327.0   -6%

Depreciation                    3.7     28.0       3.8     29.0   -3%

Other operating expenses       35.0    266.0      32.5    247.0    8%
                           -------------------------------------------

Ordinary operating profit       1.7     13.0       6.7     51.0  -75%

Restructuring expenses/(income) 8.1     62.0       0.0      0.0    0%

Operating result               -6.4    -49.0       6.7     51.0 -196%

Net interest and other
financial expenses (income)     2.4     18.0       3.5     27.0  -33%
                           -------------------------------------------

Income before taxes            -8.8    -67.0       3.2     24.0 -379%

Income taxes                   -1.3    -10.0       0.5      4.0 -350%
                           -------------------------------------------

Net profit                     -7.5    -57.0       2.6     20.0 -385%


                           ===========================================


Earnings per share                     -2.92              1.03

Earnings per ADR              -0.38                0.14

Weighted average number of
shares outstanding (millions)  19.5     19.5       19.5   19.5


Currency translation rate: $1.00 = NOK 7.6110