RNS No 3570w
PERSTORP AB
20 October 1999
PERSTORP GROUP
Interim report, January 1 to September 30, 1999
Perstorp completes streamlining process:
- Group to focus on specialized chemical markets
- Future flotation of Perstorp Flooring
- New owner to be sought for surface material operations
Dear Shareholder,
Perstorp AB's Board of Directors decided at a Board meeting today to complete
the already initiated streamlining of the Group over a two-year period. As part
of this process, Perbio Science was recently listed on the Stockholm Stock
Exchange. In a dynamic world characterized by increased competition and rapid
structural changes, it is essential that all operations be provided with the
best possible opportunities to develop and achieve strong positions within
their respective sectors. Accordingly, the selected strategy, a streamlining of
the Group, is adjudged to be the most favorable approach for both the Group's
employees and its owners.
The next move will involve a concentration of operations to the chemical and
flooring sectors, in which the Group foresees good potential for continued
rapid expansion. A new owner is to be sought for Perstorp Surface Materials to
ensure further development of these operations and their value potential.
Subsequently, flooring operations will be listed on the stock market and
Perstorp AB will focus exclusively on specialized segments of the chemical
market. It is estimated that it will take approximately two years to further
strengthen the Group's chemical and flooring operations.
The Board and Executive Management have concluded that the changes described
above will enhance growth potential and the prospects for further development
within all three areas. The combined value appreciation that the changes will
generate is expected to exceed the level that would be possible within the
framework of the current Group structure.
Continued growth within chemical and flooring sectors
Although both Perstorp Chemicals and Perstorp Flooring have strong market
positions and considerable growth potential within their segments, the
synergies between these segments are very limited. Accordingly, it has been
concluded that they would develop best as separate entities. However, their
operations have yet to attain the size required to earn a favorable valuation
in the capital markets. Perstorp Flooring's current program of changes is to be
completed and allowed to attain its full impact.
Accelerated growth for Perstorp Chemicals
Perstorp Chemicals possesses a high level of chemistry expertise and occupies
strong positions in several segments of the global chemical sector. The company
is to intensify its efforts to develop these positions and enhance its growth,
both organically and through company acquisitions. Several possible
acquisitions have been identified and are currently being studied.
The ultimate aim is that Perstorp AB's core business will consist solely of
chemical operations. The Group is to be a leader in its selected market areas,
while being viewed as an attractive investment in the capital markets.
Perstorp Flooring to be prepared for stock-exchange listing
Perstorp Flooring has established a position in the international market as an
innovative flooring company with a strong brand recognition. The company will
further develop its positions and be prepared for stock-exchange listing within
a period of two years. It has been concluded that Flooring will require this
amount of time to implement its already initiated program of operational
changes and for its operations to attain an appropriate size.
The actual timing of a stock-exchange listing will be determined mainly by the
company's development, while conditions prevailing in the capital markets will
also be taken into account.
New owner sought for Perstorp Surface Materials
Perstorp Surface Materials has built up strong positions in market segments for
advanced surface materials in several countries in Europe, Asia and South
America, and its growth prospects are favorable. In order to implement its
established strategy, the company needs to expand and participate actively in
the structural transformation of the sector. This work is expected to require
considerable resources and Perstorp has decided to assign priority to the
growth opportunities existing in the chemical and flooring sectors.
Consequently, the Group will seek a new owner for Perstorp Surface Materials,
one who has the ability to continue to develop the value inherent in these
operations. Such a sale should be possible within a period of 12 months,
assuming that favorable terms are achieved.
Perbio Science enables shareholders to benefit directly from growth in
biotechnology market.
Perbio Science was recently spun off to shareholders and its shares were listed
on the Stockholm Stock Exchange on October 18. The stock-exchange listing
enables Perstorp shareholders to benefit directly from the progress of these
operations and the valuation assigned to the expansive market for biotechnology
and medical technology.
Perstorp, October 20, 1999
Ake Fredriksson
President and Chief Executive Officer
PERSTORP GROUP
Interim report, January 1 to September 30, 1999
- Perstorp is to be streamlined with the focus on chemicals.
- Pretax earnings, including those of Perbio Science, declined to SEK 360 m
(552)*, due mainly to weaker conditions in the chemical sector.
- All costs for the incorporation of the divisions and for the spin-off of
Perbio Science to shareholders were expensed during the period in an amount of
SEK 135 m, including taxes of SEK 60 m.
- Strong performance by Perstorp Flooring, mainly as a result of continued
successes in the US.
- Perbio Science shares listed on Stockholm Stock Exchange after the close
of the report period.
*) Pro forma figures are shown for 1998, due to the switch to calendar-year
reporting.
General economic conditions
European industrial growth is increasing, as a result of higher exports and
domestic consumption. France continues to have the strongest economy in
Europe, although the German economy has gained momentum during recent months.
Activity in the construction industry has increased, particularly in the
renovation segment. The trend for the chemicals sector remains weak, but is
expected to recover during the latter part of 1999, largely because of
generally brighter prospects for the world economy. Prices in the global
market have stabilized, with increases noted for basic chemicals in recent
months.
The American economy continues to grow, and the forecasts for the immediate
future are favorable. Activity in the American construction industry remains
high, although the growth rate has diminished in the past few months.
Earnings and financial position after nine months of the year
As already indicated, the Board of Directors has decided to concentrate Group
operations around the chemical sector, whereby the streamlining of the Group
will be completed over a two-year period. Perstorp Flooring is to be prepared
for a stock-exchange listing and a new owner is being sought for Perstorp
Surface Materials.
Perbio Science, which was spun off to shareholders during October and whose
shares are now listed on the Stockholm Stock Exchange, is included in the
accounts for the entire period.
Net sales
Net sales during the first nine months of the year amounted to SEK 7,885 m
(corresponding period of 1998: 8,396). Adjusted for the divestment of Perstorp
Plastic Systems during the preceding year, net sales rose by 5%. The volume
increase was 8%, while prices and currency changes had a combined negative
impact of 3%.
The Perstorp Life Science, Perstorp Flooring and Perstorp Surface Materials
divisions increased their net sales during the period by 55%, 11% and 8%,
respectively, compared with the year-earlier period. Perstorp Chemicals' sales
declined somewhat.
The increase in consolidated net sales was mainly attributable to North
America. Europe accounted for 53% of total sales and North America for 36%.
Operating earnings for the nine-month period amounted to SEK 435 m (624).
Items affecting comparability resulted in charges of SEK 100 m (revenues: 28)
against earnings, of which costs for the incorporation of the divisions
accounted for SEK 60 m, restructuring costs within Perstorp Flooring for SEK
25 m and the spin-off and stock-exchange listing of Perbio Science for SEK 15
m. In addition, royalty expenses amounting to SEK 10 m were brought forward,
due to the demerger of Perbio Science.
The decrease in earnings from continuing operations was entirely attributable
to Perstorp Chemicals, whose earnings were lower than in the year-earlier
period. Perstorp Flooring, Perstorp Surface Materials and Perstorp Life
Science all reported increased earnings.
Costs for the incorporation and exchange listing of Perbio Science AB amounted
to approximately SEK 100 m, including taxes of about SEK 80 m. The tax costs
do not affect consolidated earnings, since they are charged against the
Perstorp Group's shareholders' equity at the spin-off date. In all essential
respects, the incorporation of the three other divisions is expected to be
completed by the end of the year. All of the related costs, which total
approximately SEK 120 m, including taxes of about SEK 60 m, have been charged
against earnings.
The Group is pursuing a productivity program, known as P500, in order to
generate continuing improvements in profitability and competitiveness. The aim
is to achieve annual productivity improvements corresponding to SEK 500 m as
of the year 2000. To date, savings corresponding to approximately SEK 450 m
have been achieved on an annualized basis. The efforts to use capital more
efficiently have improved the Group's cash flow.
Earnings for the period were charged with approximately SEK 19 m for costs
related to year-2000 compliance of the Group's IT systems.
Consolidated earnings, excluding Perbio Science and adjusted for items
affecting comparability, are presented in a table below.
Net financial items, which amounted to an expense of SEK 75 m (expense: 72),
were charged with other financial expenses amounting to SEK 13 m (0), of
which currency effects pertaining to Brazil accounted for SEK 5 m. If these
costs are excluded, net interest expense amounted to SEK 62 m (72). The main
reason for the improvement was a reduction in average net borrowing, as well
as lower interest rates, due to a change in currency composition.
Tax costs totaled SEK 193 m (195), or 54% (35) of pretax earnings. The
increase was mainly attributable to tax resulting from the incorporation
project (SEK 60 m) and to a shift in the earnings pattern towards countries
with a high tax rate, particularly the US. Excluding the incorporation
project, the tax rate was 37%.
Earnings per share after full conversion amounted to SEK 2.44 (5.03). The
corresponding figure for continuing operations is SEK 3.48 (4.02).
The Group's total assets rose by SEK 230 m during the first nine months of the
fiscal year to SEK 8,866 m. The reasons for the increase were a rise of SEK
197 m in long-term operating assets, and a rise of SEK 279 m in current
operating liabilities, because of increased sales at the end of the period,
while inventories declined by SEK 190 m.
Investments in plant amounted to SEK 782 m (669), of which SEK 530 m (326) was
for strategic investments, that is, measures that result in a significant
increase in capacity or productivity. The largest single strategic investments
were the Dutch formalin plant under construction in Dordrecht, the acquisition
of Endogen Inc (Perbio Science) and the purchase of a foils operation in
Brazil.
Net borrowing amounted to SEK 2,098 m, an increase of SEK 475 m during the
period. The increase was mainly attributable to dividends, the redemption of
PRI pension liabilities and investments. Long-term liabilities decreased by
SEK 152 m.
Provisions decreased by SEK 467 m, due mainly to the fact that a part of the
Group's pension provisions were redeemed through a nonrecurring amortization
to an independent pension insurance company, SPP.
Shareholders' equity decreased by SEK 374 m, the net result of negative
exchange-rate effects of SEK 264 m, dividend payments of SEK 286 m and a
positive effect of SEK 176 m from net profit for the period. Brazil accounted
for about half of the exchange-rate effects.
The equity ratio declined to 48% on September 30, 1999 compared with 53% at
the end of the preceding fiscal year. The equity ratio on September 30, 1998
was 54%.
Free cash flow improved to SEK 667 m (291). The improvement was mainly
attributable to a decrease of SEK 232 m in working capital, compared with an
increase of SEK 185 m during the year-earlier period.
The operating margin of 5.5% (7.4) reflected a decline compared with the year-
earlier period, mainly due to weaker margins reported by Perstorp Chemicals.
However, the margin increased compared with the end of 1998. The operating
margin for continuing operations was 6.3% (7.1) and has increased continuously
during the period.
The return on equity was 5% (11). Adjusted for the effects of Perbio Science
and items affecting comparability, the return on equity was 8% (9, excluding
Perstorp Plastic Systems).
The weaker profit margin resulted in a decline in profitability during the
period, compared with the year-earlier period. However, a recovery occurred
during the third quarter.
Free cash flow in relation to net sales increased sharply from 3.5% to 8.5%,
mainly due to a decrease in working capital.
Operating earnings excluding items affecting comparability
SEK m Q3 Q1 - 3 Most Full
1999 1998 1999 1998 recent year
12 mos 1998
Perstorp Chemicals 85 143 261 418 337 494
Perstorp Flooring 77 36 218 146 202 130
Perstorp Surface Materials 17 20 67 58 68 59
Other items, incl. -32 -52 -115 -123 -132 -140
eliminations
Operating earnings excl. items
affecting comparability 147 147 431 499 475 543
Perstorp Life Science
/Sold business units* 33 26 104 97 121 114
Costs for incorporation
projects -30 0 -60 0 -60 0
Other items affecting
comparability -7 23 -40 28 -75 -7
Group 143 196 435 624 461 650
*The amounts shown for 1998 pertain to Perstorp Plastic Systems.
Performance during the third quarter
Net sales during the third quarter were virtually unchanged compared with the
third quarter of 1998. Net sales by comparable units rose by 3%.
Third-quarter operating earnings amounted to SEK 143 m, a decline compared
with the corresponding quarter of 1998 (196). If items affecting comparability
are excluded, operating earnings were unchanged.
Net financial items during the third quarter amounted to an expense of SEK 38 m
(expense: 18). Most of the deterioration was due to third-quarter earnings
being charged with SEK 13 m (0) for other financial expenses, mainly deriving
from currency effects pertaining to Brazil.
Tax costs amounted to SEK 94 m, compared with SEK 63 m in the third quarter of
1998. Earnings during the period were charged with SEK 56 m for tax resulting
from the incorporation project. Tax on continuing operations corresponds to
37% (35) of pretax earnings.
PERSTORP CHEMICALS
SEK m Q3 Q1 - 3 Most Full
unless otherwise stated 1999 1998 1999 1998 recent year
12 mos 1998
Net sales 950 998 3,096 3,160 4,060 4,124
Operating earnings 85 143 261 419 336 494
Operating margin, % 8.9 14.3 8.4 13.3 8.3 12.0
Depreciation 65 44 193 144 246 197
Investments 97 89 347 253 482 388
- Weaker demand and lower price levels for several products resulted in reduced
net sales compared with the corresponding nine months of 1998, after an
adjustment to take into account the effects of an internal transfer of a unit
to the division (see below). However, the volume sales recovery that has been
noticeable since the beginning of the year continued during the third quarter.
The division also increased its market shares in several segments, with a
particularly strong trend noted for special polyols.
- Operating earnings declined significantly compared with the year-earlier
period, due to the weaker conditions in the chemicals market. Although the
trend for raw-material prices is pointing upwards, the price increases
implemented for several of the division's products led to steadily improving
margins during the third quarter.
- In all significant respects, the internal service operations conducted at the
unit in Perstorp, Sweden, have been transferred to Perstorp Chemicals, as part
of the incorporation of the division. These operations were previously
reported under the "Other items, including eliminations" heading, but the
comparative figures have not been adjusted to reflect this change. The
transferred operations increased the division's net sales and operating
earnings by SEK 138 m and SEK 50 m, respectively, during the first nine months
of the year.
- Investments in increased capacity and the manufacture of new products
continued at the division's units, particularly in Sweden, France, the UK and
Brazil. Construction of a formaldehyde plant for DuPont de Nemours (Nederland)
B.V. continued during the quarter in Dordrecht, the Netherlands, and this
plant is expected to be put into operation around the beginning of next year.
Investments in this plant are expected to total slightly more than SEK 200 m,
two-thirds of which were expensed during the period.
PERSTORP FLOORING
SEK m Q 3 Q 1 - 3 Most Full
unless otherwise stated 1999 1998 1999 1998 recent year
12 mos 1998
Net sales 887 822 2,718 2,455 3,530 3,267
Operating earnings 77 36 193 146 164 117
Operating margin, % 8.7 4.4 7.1 5.9 4.6 3.6
Depreciation 33 27 92 82 118 108
Investments 33 79 73 154 92 173
- Perstorp Flooring's net sales rose by 11% compared with the year-earlier
period, due largely to the successful launch of Pergor 99 during spring 1999.
- The cost-rationalization program and the focusing of the new sales
organization that was introduced during the preceding year in Europe and the
US are now generating effects. Operating earnings rose sharply compared with
the year-earlier period, despite being charged with SEK 25 m for the
restructuring of operations. However, the full impact of the measures
implemented will not be attained until next year.
- Both net sales and operating earnings were lower during the third quarter
than in the preceding quarter. This was because the second quarter was a
strong period, due to the said product launch and seasonal variations.
- The launch of the new product assortment, Pergor 99, has been followed up by
a more modest product launch in the American market during September, which is
expected to have a certain positive impact during the fourth quarter.
Additional products will be test launched during the final quarter of the
year.
- The incorporation of the division was completed after the close of the report
period. As of October 1, Perstorp Flooring constitutes a separate subgroup
within Perstorp AB.
PERSTORP SURFACE MATERIALS
SEK m Q 3 Q 1 - 3 Most Full
unless otherwise stated 1999 1998 1999 1998 recent year
12 mos 1998
Net sales 504 469 1,561 1,450 2,032 1,921
Operating earnings 17 20 67 57 51 41
Operating margin, % 3.3 4.3 4.3 3.9 2.5 2.1
Depreciation 18 17 58 53 79 74
Investments 23 30 175(1) 78 212 115
(1) Includes acquisitions in the fields of finished foils and decorative papers
in Brazil.
- The division's net sales rose by 8% compared with the year-earlier period.
The sales increase during the period included SEK 113 m resulting from the
transfer to the division of the Group's technical laminate operations in
Brazil. Previously, technical laminate operations were reported under "Other
items, including eliminations." The comparative figures have not been adjusted
to reflect this change.
- Sales during the third quarter were lower than in the preceding quarter. The
demand trend was weak during the summer months, but improved sharply in
several European markets during the latter part of the quarter, although a
weaker trend was noted in Germany and the UK.
- The division's operating earnings increased compared with the year-earlier
period, mainly as a result of the restructuring and rationalization measures
implemented in European laminate operations, and the transfer of technical
laminate operations. In addition to normal seasonal variations, the third-
quarter decline in operating earnings, compared with the second quarter, was
due to the said transfer of technical laminate operations being implemented
retroactively during the second quarter and to the weaker trend in Germany and
the UK.
PERSTORP LIFE SCIENCE / PERBIO SCIENCE
SEK m Q 3 Q 1 - 3 Most Full
unless otherwise stated 1999 1998 1999 1998 recent year
12 mos 1998
Net sales 290 180 817 526 997 706
Operating earnings 26 25 89 69 106 86
Operating margin, % 9.0 13.9 10.9 13.1 10.6 12.2
Depreciation 14 8 34 20 42 28
Investments 140 45 171 64 186 79
- In accordance with a decision at Perstorp AB's Annual General Meeting in
April, the shares in the wholly owned subsidiary Perbio Science were spun off
to Perstorp AB shareholders after the close of the report period and then
listed on the OM Stockholm Stock Exchange.
- During the nine-month report period, these operations were part of the Group,
initially as a division and subsequently, following their incorporation, as a
separate subgroup with Perbio Science as the parent company. In this report,
the operations are reported as a Perstorp AB division, while separate pro
forma accounts are presented for the Perbio Science subgroup. For a complete
account of Perbio Science's performance, reference is made to the company's
first interim report, which was released on October 18. Goodwill amortization
and dividend costs are the items that mainly differ between the reports of
these operations as a division and as a new subgroup.
- The market for the division's products remained strong during the first nine
months of 1999. Net sales, which were affected by company acquisitions, rose
55% compared with the year-earlier period.
- As a result of the continuingly favorable sales trend during the nine-month
period, operating earnings continued to increase, despite being charged with
substantial amounts for the spin-off of operations. Direct costs during the
period for the spin-off and stock-exchange listing of Perbio Science amounted
to SEK 15 m. In addition, royalty expenses amounting to SEK 10 m were brought
forward, due to the demerger of Perbio Science. Adjusted for these costs,
operating earnings rose by 65% compared with the year-earlier period, while
third-quarter earnings were slightly lower than the Q2 level. Company
acquisitions made a sharp contribution to the increase in earnings during the
nine-month period.
Personnel
The number of Group employees at the end of the period was 6,258, including
901 within Perbio Science, compared with 6,102 and 688, respectively, at the
beginning of the fiscal year.
Year 2000
In cooperation with IBM, Perstorp is conducting a comprehensive project to
adapt the Group's administrative and embedded systems in preparation for the
shift into the Year 2000. In all essential respects, the project is adhering
to the established time schedule and all feasible adaptation measures will be
implemented before the new millennium. Activities currently under way include
work to plan in detail the measures and resources required directly before,
during and immediately following January 1, 2000.
The Group's costs for Y2K measures are estimated at approximately SEK 90 m,
with external input accounting for about SEK 85 m. Charges against earnings
for the first nine months amounted to about SEK 19 m and the total costs
during 1999 are now estimated to be approximately SEK 30 m. The charge against
1998 earnings was SEK 60 m.
The Perstorp share
The price of Perstorp shares (Perstorp B) at the end of the period was SEK 89,
including the right to an allotment of Perbio Science shares. The share price
rose by 20% during the period, while the general index for the Stockholm Stock
Exchange rose by 18%.
In accordance with the terms for the spin-off of shares in Perbio Science,
Perstorp AB shareholders received one share of the new company for each
multiple of two Perstorp shares held, regardless of share series. The Perbio
Science shares were initially listed on October 18 and the last price paid on
that date was SEK 34.50.
Perstorp AB's year-end report will be published on February 3, 2000.
Outlook
The cyclical improvement in most of the Group's product area is expected to
continue and a certain improvement in margins is anticipated during the
remainder of the fiscal year.
Perstorp Chemicals expects volume growth to remain favorable during the fourth
quarter.
Perstorp Flooring's comprehensive program of change has started to yield
results and the favorable trend is expected to continue.
As of October 15, Perbio Science is no longer a part of the Group.
In general, the Group operates with short order backlogs. Accordingly, there
is some uncertainty regarding the extent to which customers will decide to
bring forward or defer desired deliveries ahead of the new millennium.
Perstorp, October 20, 1999
Ake Fredriksson
President and Chief Executive Officer
This report is unaudited.
Earnings
Income statement Q3 Q1 - Q3 Most Full
(SEK m) 1999 1998 1999 1998 recent year
12 1998
months
Net sales 2,544 2,580 7,885 8,396 10,231 10,742
Cost of goods sold -1,825 -1,816 -5,634 -5,886 -7,307 -7,559
Gross earnings 719 764 2,251 2,510 2,924 3,183
Sales, administration
and R&D costs -541 -595 -1,718 -1,927 -2,352 -2,561
Items affecting
comparability -37 23 -100 28 -135 -7
Other operating
revenues and
expenses -4 -4 -15 1 -2 14
Result from
participations in
associated companies 6 8 17 12 26 21
Operating earnings 143 196 435 624 461 650
Net financial items -38 -18 -75 -72 -100 -97
Earnings before taxes 105 178 360 552 361 553
Taxes -94 -63 -193 -195 -227 -229
Minority share 7 1 9 8 12 11
Earnings after taxes 18 116 176 365 146 335
Earnings per share 0.25 1.62 2.46 5.10 2.04 4.68
Earnings per share
after full conversion 0.26 1.60 2.44 5.03 2.06 4.65
Earnings per share
after full conversion,
excluding Perbio,
items affecting
comparability and
tax on incorporation
process 1.16 1.19 3.48 4.02 3.25 3.79
Consolidated Balance Sheet
SEK m Sep. 30, Dec. 31, Sep. 30,
1999 1998 1998
Long-term operating assets 4,284 4,087 3,743
Long-term financial assets 334 314 296
Inventories 1,719 1,909 1,744
Current operating receivables 2,405 2,126 2,423
Current financial assets 124 200 230
Total assets 8,866 8,636 8,436
Shareholders' equity 4,154 4,528 4,494
Minority interests 58 56 41
Provisions 378 845 806
Long-term financial liabilities 255 407 403
Current operating liabilities 1,818 1,539 1,605
Current financial liabilities 2,203 1,261 1,087
Total liabilities and
shareholders' equity 8,866 8,636 8,436
Operating earnings by division
SEK m Q3 Q1 - 3 Most Full
1999 1998 1999 1998 recent year
12 mos 1998
Perstorp Chemicals 85 143 261 419 336 494
Perstorp Flooring 77 36 193 146 164 117
Perstorp Surface Materials 17 20 67 57 51 41
Perstorp Life Science 26 25 89 69 106 86
Other items, including
eliminations 3) -62 -29 -175 -95 -196 -116
Operating earnings excl. 143 195 435 596 461 622
units sold
Business units sold 2) 0 1 0 28 0 28
Group 143 196 435 624 461 650
Net sales by division
SEK m Q3 Q1 - Q3 Most Full
1999 1998 1999 1998 recent year
12 mos 1998
Specialty Chemicals 528 572 1,742 1,792 2,297 2,347
Chemitec 316 351 1,050 1,167 1,400 1,517
Construction Chemicals 85 85 216 219 283 286
Other items including 21 -10 88 -18 80 -26
eliminations
Perstorp Chemicals 950 998 3,096 3,160 4,060 4,124
Perstorp Flooring 887 822 2,718 2,455 3,530 3,267
Perstorp Surface Materials 504 469 1,561 1,450 2,032 1,921
Perstorp Life Science 290 180 817 526 997 706
Other items, including
eliminations 1) -87 -7 -307 -69 -388 -150
Comparable net sales 2,544 2,462 7,885 7,522 10,231 9,868
Business units sold 2) 0 118 0 874 0 874
Group 2,544 2,580 7,885 8,396 10,231 10,742
1) As of 1999, this item mainly comprises the elimination of intra-Group sales.
2) Pertains in its entirety to the former Perstorp Plastic Systems division.
3) As of 1999, this item mainly comprises Group-wide costs, central R&D costs
and items affecting comparability that cannot be related to a specific
division. Comparisons are affected by the internal transfer of technical
laminate operations in Brazil and by the service unit in Perstorp.
Key ratios
Q 3 Q 1 - 3 Most Full
1999 1998 1999 1998 recent year
12 mos 1998
Turnover rate
total capital,
times/year 1.14 1.15 1.20 1.28 1.18 1.21
working cap.,
times/year 4.3 3.8 4.4 4.3 4.2 4.2
Operating margin, % 5.6 7.6 5.5 7.4 4.5 6.1
Return
on total capital 6 9 7 10 6 8
on shareholders'
cap., % 2 11 5 11 3 8
on capital
employed, % 9 12 9 13 8 10
Debt/equity multiple 0.5 0.3 0.5 0.3 0.5 0.4
Equity ratio, % 48 54 48 54 48 53
Interest-coverage
ratio, times/year 3.6 7.4 4.5 6.2 3.8 5.1
Shareholders' equity
per share, SEK 58 63 58 63 58 63
Free cash flow/net
sales, % 14.3 6.7 8.5 3.5 7.2 3.4
The number of shares during 1998 and 1999 was 71,584,341, corresponding to
73,610,991 shares after full conversion.
Cash flow analysis / Group
SEK m Q 3 Q 1 - 3 Most Full
1999 1998 1999 1998 recent year
12 mos 1998
Operating earnings 143 196 435 624 461 650
Depreciation 136 111 391 395 517 521
Change in working capital 189 54 232 -185 270 -147
Current investments in
fixed assets -59 -124 -252 -343 -365 -465
Operating cash flow 409 237 806 491 883 568
Tax-related to
operating earnings -46 -63 -139 -200 -147 -208
Free cash flow 363 174 667 291 736 360
Adjusted for taxes,
financial items and
other items -202 -20 -303 -25 -273 5
Cash flow from operations 161 154 364 266 463 365
Strategic investments in
plant and
company acquistions. -239 -142 -530 -326 -675 -471
Divestments 0 474 0 474 0 474
Cash flow before dividend -78 486 -166 414 -212 368
Dividend to shareholders 0 0 -286 -197 -286 -197
Net cash flow -78 486 -452 217 -498 171
Free cash flow per share 5.07 2.43 9.32 4.07 10.28 5.03
Net debt at beginning of
period -2,003 -2,463 -1,623 -2,178 -1,426 -2,178
Net debt at end of period -2,098 -1,426 -2,098 -1,426 -2,098 -1,623
Quarterly data (1998 and 1997 pro forma)
SEK m 1997 1998 1999
III IV I II III IV I II III
Net sales 2,777 2,746 2,885 2,931 2,580 2,346 2,549 2,792 2,544
Cost of goods
sold 2,004 1,964 2,006 2,064 1,816 1,673 1,830 1,979 1,825
Gross earnings 773 782 879 867 764 673 719 813 719
Sales.
administration
and R&D costs -636 -628 -666 -666 -595 -634 -572 -605 -541
Items
affecting
comparability -57 66 -3 8 23 -35 -15 -48 -37
Other oper.
revenues
and expenses 4 29 5 0 -4 13 -3 -8 -4
Result from
parti-
cipations in
associated 0 2 1 3 8 9 4 7 6
companies
Operating
earnings 84 251 216 212 196 26 133 159 143
Net financial
items -46 -47 -16 -38 -18 -25 -14 -23 -38
Earnings
before tax 38 204 200 174 178 1 119 136 105
Taxes -14 -70 -70 -62 -63 -34 -42 -57 -94
Minority share 8 -1 5 2 1 3 0 2 7
Earnings after
tax 32 133 135 114 116 -30 77 81 18
Quarterly data, divisions
Net sales 1997 1998 1999
SEK m III IV I II III IV I II III
Perstorp 1,022 998 1,062 1,100 998 964 1,017 1,129 950
Chemicals
Perstorp 789 787 803 830 822 812 852 979 887
Flooring
Perstorp 490 436 469 512 469 471 445 612 504
Surface
Materials
Perstorp Life 139 140 174 172 180 180 248 279 290
Science
Subtotal 2,440 2,361 2,508 2,614 2,469 2,427 2,562 2,999 2,631
Other items, 337 385 377 317 111 -81 -13 -207 -87
including
eliminations
Group 2,777 2,746 2,885 2,931 2,580 2,346 2,549 2,792 2,544
Operating earnings
Operating 1997 1998 1999
earnings SEK m III IV I II III IV I II III
Perstorp 77 137 141 135 143 75 70 106 85
Chemicals
Perstorp 78 49 66 44 36 -29 26 90 77
Flooring
Perstorp
Surface -22 6 8 29 20 -16 12 38 17
Materials
Perstorp Life 12 9 23 21 25 17 34 29 26
Science
Subtotal 145 201 238 229 224 47 142 263 205
Other items,
including -61 50 -22 -17 -28 -21 -9 -104 -62
eliminations
Group 84 251 216 212 196 26 133 159 143
Consolidated financial statements assuming the spin-off of Perbio Science
Income Statement Perstorp Distribution of
Group Q 1 -3, 1999 before PerBio Science 1)
(SEK m) distribu
tion
PerBio Adjust- Perstorp
Science ments proforma
proforma 2) after
distr.
Net sales 7,885 817 7,068
Cost of goods sold -5,634 -452 -5,182
Gross earnings 2,251 365 0 1,886
Sales, administration and -1,718 -260 -9 -1,467
R&D costs
Items affecting comparability -100 0 -100
Other operating revenues and -15 -7 -8
expenses
Result from participations in 17 0 17
associated companies
Operating earnings 435 98 -9 328
Net financial items -75 -18 -57
Earnings before taxes 360 80 -9 271
Taxes -193 -37 -156
Minority share 9 0 9
Earnings after tax 176 43 -9 124
Distribution of
PerBio Science 1)
Balance Sheet Perstorp PerBio Adjust- Perstorp
SEK m before Science ment proforma
distribu- proforma 2) after
tion distr.
Long-term operating assets 4,284 616 192 3,860
Long-term financial assets 334 0 334
Inventories 1,719 413 -16 1,290
Current operating 2,405 207 2,198
receivables
Current financial assets 124 3 121
Assets 8,866 1,239 176 7,803
Shareholders' equity 4,154 621 96 3,629
Minority interests 58 0 58
Provisions 378 1 377
Long-term financial liabilities 255 0 255
Current operating liabilities 1,818 128 1,690
Current financial 2,203 489 80 1,794
liabilities
Liabilities and 8,866 1,239 176 7,803
shareholders' equity
Key ratios
Capital employed, SEK m 6,590 1,108 5,658
Interest-bearing net debt, 2,098 486 1,692
SEK m
Debt/equity ratio, 0.5 0.8 0.5
times/year
Equity ratio, % 48 50 47
1) The two columns show the net effect on the Perstorp Group of the spin-off
of Perbio Science.
2) Pro forma operating earnings include SEK 6 m for the amortization goodwill
that arose in connection with the formation of the Perbio Science subgroup.
The item does not include costs for the incorporation and spin-off of the
subgroup, which amounted to SEK 15 m.
END
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