RNS Number:8468S
Perstorp AB
20 October 2000
Perstorp Group
Definitive interim report on operations during
the nine months ended September 30, 2000
- Pretax earnings amounted to SEK 470 m (360). Operating
earnings, adjusted for items affecting comparability and demerged
units, rose to SEK 485 m (369).
- Sharp improvement in Perstorp Chemicals' operating earnings
due to favorable business conditions.
- Decline in Pergo's operating earnings due to lower prices
and delays in product launches and structure costs.
- Provided economic conditions remain favorable, full-year
operating earnings excluding demerged units are expected to
amount to SEK 625-650 m (460).
- Pergo is to be spun off to shareholders and listed on the
stock exchange.
- Industri Kapital is not completing its offer from April 2000
to acquire Perstorp AB.
General conditions
To date, the 2000 fiscal year has been characterized by generally
favorable economic conditions, although uncertainty regarding the
future economic trend has increased.
International conditions in the chemical sector has during the
period been strong, with favourable demand for chemical products.
However, margins in certain sectors are being depressed by
increasing prices for oil-based chemical raw materials. In the
short term, major price adjustments could lead to inventory
adjustments at the various processing levels.
Although demand for construction products has remained favorable,
it has been affected by lower activity in the American
construction sector.
Pergo to be spun off to shareholders and listed on the stock
exchange
Following the end of the report period, the Board of Directors
decided that, in line with the strategy set in October 1999,
Pergo is to be prepared for a stock-exchange listing during 2001.
The Board's intention is to propose that the next Annual General
Meeting approve a motion that Pergo be spun off to Perstorp AB
shareholders. The subsidiary Perstorp Laminatproduktion AB will
be merged with Pergo. It is proposed that the spin-off take
the form of a cost-free distribution of all shares in Pergo, in
accordance with the Swedish legal precedent known as Lex Asea,
which means that the spin-off may be undertaken without immediate
tax implications in Sweden for Perstorp's shareholders. It is
proposed that the spin-off will take the form of a single series
of shares.
The decision to proceed with plans for a stock-exchange listing
is an expression of the positive view of flooring operations
shared by the Board and a majority of Perstorp's shareholders. A
stock-exchange listing of Pergo will create the potential for
more rapid expansion and thus greater value for Perstorp's
shareholders. This will enable the company to work in a more
focused manner and encourage greater responsibility and
commitment among employees.
A working group, which includes representatives of the major
shareholders and trade unions, has been formed in preparation for
the spin-off and stock-exchange listing.
It is estimated that Pergo will have annual sales of
approximately SEK 3,700 m, with 1,000 employees. The current
Perstorp Chemicals, which after the market listing of flooring
operations, will represent the bulk of the Perstorp Group, has
annual sales of approximately SEK 5,300 m, with 2,500 employees.
Offer from Industri Kapital
The Industri Kapital venture capital company announced at the end
of September that it would not complete its public offer via
Perstorp Intressenter AB to acquire all of the shares and
convertible debentures in Perstorp AB.
Following the close of the period, three of Perstorp's major
institutional owners requested that the the Swedish Securities
Council issue a statement on various aspects of public offers in
view of withdrawal of this bid. The statement issued by the
Securities Council on October 18, clarifies certain matters of
principle terms and conditions for withdrawing offers during the
acceptance period.
The OM Stockholm Exchange, to which the Securities Council had
transferred assessment of Perstorp AB's provision of information
in the case, announced in its statement on October 18 that
Perstorp AB has followed the Stock Exchange's listing agreement.
The Board of Directors of Perstorp AB has provided more detailed
comments on the withdrawn offer in conjunction with the Group's
nine-month interim report.
Operations
In fulfillment of its streamlining strategy, the Group now
operates primarily through the two subgroups Perstorp Chemicals
AB and Pergo AB (formerly, Perstorp Flooring AB).
Perstorp Surface Materials, which was divested during the period,
is included in the accounts through March 24. Perstorp
Laminatproduktion AB, which was formerly part of Perstorp Surface
Materials, is reported under Other operations.
With the aim of expanding in the chemical and flooring markets,
Perstorp completed three strategic acquisitions during the first
half-year, which have significantly strengthened the Group's
market positions. The acquired operations are the Degussa-Huls
group's polyol operations, Plasta Erkner's phenolic resin
operations and a partnership (25.1%) in the laminate flooring
manufacturer Witex. These companies are included in the
consolidated accounts as of the takeover date.
Earnings and financial position after the first nine months of
the year
Net sales amounted to SEK 6,822 m (7,885). Adjusted for demerged
business units - that is, the divestment of Perstorp Surface
Materials during the first quarter and the spin-off of Perbio
Science in the preceding year - net sales rose 12%, of which
increased volume accounted for 10%.
Perstorp Chemicals' sales rose by 24%, mainly due to a favorable
volume trend.
Pergo's net sales declined by 2% during the period, due mainly to
lower prices in Europe and delayed product launches.
Operating earnings amounted to SEK 516 m, up SEK 81 m compared
with the year-earlier period. The operating margin rose from 5.5%
to 7.6%. Positive items affecting comparability include the
capital gain of SEK 75 m from the sale of Perstorp Surface
Materials, entered under "Other, including eliminations," and the
SEK 61 m repayment of pension funds from SPP, distributed by
operations as follows: Perstorp Chemicals: SEK 45 m; Pergo: SEK 5
m; Perstorp Laminatproduktion: SEK 5 m; Other items: SEK 6 m.
During the third quarter, the total cost of items affecting
comparability amounted to SEK 106m, of which Pergo accounted for
SEK 85m and Perstorp Laminatproduktion for SEK 21 m. These items
primarily concerned changes in the product range and production
techniques. Of this amount, SEK 41 m was due to write-downs of
fixed assets within Pergo, which have no effect on cash flow.
Operating earnings after adjustments for items affecting
comparability and demerged units amounted to SEK 485m (369).
Based on this, the operating margin rose to 7.6% (6.4).
Perstorp Chemicals' operating earnings are higher than in the
year-earlier period, due mainly to increased volumes and a larger
proportion of specialty products. The division's operating margin
rose to 11.0% (8.4).
Pergo's operating earnings were significantly lower than in the
year-earlier period, due to the adverse impact of falling prices
and delayed product launches, as well as costs of SEK 85m for
adapting manufacturing operations and distribution to changes in
the product range and production techniques.
Earnings from participations in associated companies, which
pertained mainly to Perstorp Clariant AB, a manufacturer of water-
borne dispersions, amounted to SEK 12 m (17).
Perstorp Surface Materials, which was part of the Group until
March 24, reported net sales of SEK 474m and operating earnings
of SEK 1m for that period.
Net financial items amounted to an expense of SEK 46m (expense:
75). The improvement compared with the year-earlier period was
due in part to lower indebtedness following the sale of Perstorp
Surface Materials and in part to the fact that the third quarter
of 1999 was charged with SEK 13m for other financial expenses,
mainly currency effects in Brazil.
The interest-coverage multiple was 5.6 (4.5).
Tax costs totaled SEK 178m (193). The tax rate was 38% (54). The
tax rate for the year-earlier period was 37%, if tax related to
the incorporation project conducted during that period is
excluded.
Earnings per share after full conversion amounted to SEK 3.95
(2.44).
Total assets decreased by SEK 341 m compared with December 31,
1999 to SEK 7,828m (8,169) at the end of the period. The sale of
Perstorp Surface Materials reduced total assets by approximately
SEK 1,600 m, although this is being offset by investments in new
operations.
Investments amounted to SEK 1,023m, of which SEK 882m derived
from strategic investments, that is, measures that result in a
significant increase in the value of a particular subgroup. The
strategic investments during the period primarily involved the
three acquisitions in Germany. Of the total investments, SEK 12m
pertained to Perstorp Surface Materials.
Net debt declined during the period to SEK 1,200m (2,098) on
September 30. The decrease was mainly attributable to the sale of
Perstorp Surface Materials, but was limited by the said
acquisitions within Perstorp Chemicals and Pergo.
Shareholders' equity rose by SEK 191m compared with December 31,
1999 to SEK 3,967m (3,776) at the end of the period. Exchange-
rate effects in an amount of SEK 177m and net profit for the
period of SEK 300 m had a positive effect on shareholders'
equity, which was simultaneously reduced by dividend payments of
SEK 286m. The reversal of exchange-rate effects related to
Perstorp Surface Materials as of the beginning of 1999 accounted
for SEK 53 m of the exchange-rate effects. The other exchange-
rate effects were mainly attributable to the Group's North
American operations.
The equity ratio rose from 47% at the beginning of the fiscal
year to 51%.
The return on total capital has increased from 7% to 10% compared
with the year-earlier period.
The capital turnover rate improved in terms of working capital,
but remained unchanged in terms of total capital.
Free cash flow amounted to SEK 168m (667). The decrease compared
with the year-earlier period was attributable to an increase in
working capital in Pergo, and the consequences of volume
increases within Perstorp Chemicals and the acquisitions in
Germany.
The Group's commercial paper program has been expanded and now
amounts to EUR 300m.
Performance during the third quarter
Net sales before demerged business units rose during the third
quarter compared with the year-earlier period, and amounted to
SEK 2,193m (1,824). The increase was attributable entirely to
Perstorp Chemicals.
Perstorp Chemicals' sales rose, due mainly to a favorable volume
trend and to the implemented company acquisitions. Pergo's sales
were virtually unchanged and were affected by lower prices and
delayed product launches.
Operating earnings before demerged business units and excluding
items affecting comparability were virtually unchanged at SEK 130m (131).
Perstorp Chemicals' operating earnings excluding items affecting
comparability amounted to SEK 121 m. This was an increase
compared with the SEK 85m reported in the third quarter of 1999,
a decline compared with earnings of SEK 138m in the preceding
quarter of 2000 and in line with the SEK 120m reported for the
first quarter. Pergo's operating earnings, excluding items
affecting comparability, amounted to SEK 23m, which was lower
than the SEK 58 m reported in the third quarter of 1999 and when
compared with the SEK 38m and SEK 39m reported in the second
and first quarter of 2000, respectively. Excluding items
affecting comparability, Perstorp Laminatproduktion reported an
operating loss of SEK 8m (19).
The corporate acquisitions implemented during the second quarter
contributed both to net sales and operating earnings during the
period.
Net financial items amounted to an expense of SEK 19m (expense:
38) during the period. The improvement was attributable to lower
indebtedness following the sale of Perstorp Surface Materials and
to the fact that the year-earlier period was charged with SEK 13m
for other financial expenses, mainly currency effects in Brazil.
PERSTORP CHEMICALS
SEK m Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Net sales 1,342 950 3,843 3,096 4,904 4,157
Operating earnings 164 85 424 261 548 385
Operating margin. % 12.2 8.9 11.0 8.4 11.2 9.3
Depreciation 70 65 202 193 258 249
Investments 46 97 754 347 808 401
- Demand for several of Perstorp Chemicals' products was
favorable during the period, due to the satisfactory market
conditions. At the same time, raw-material prices continued to
rise. To date, it has been possible to offset the effects of
these increases on earnings by raising sales volumes, combined to
a certain extent with price increases for Perstorp products - the
effect of which is subject to a certain time lag, however - as
well as through the implemented company acquisitions. Uncertainty
about the general market trend has increased and, in the short
term, demand could be affected by inventory adjustments at the
various processing levels. Trend can be affected by means of
inventory adjustments at the various processing levels.
- Net sales rose by 24%, due to a favourable volume trend for
most products. Continued strong growth was noted for several
specialty products, particularly special polyols, formalin plants
and catalysts and composites. Accordingly, this marked a
reinforcement of the previously noted trend of an increased
proportion of sales of specialty products, which is considered to
have a beneficial impact on the earnings trend. New TMP capacity,
which will be put into operation during 2001, could affect the
market prospects for TMP.
- Operating earnings rose sharply compared with the year
earlier period, due mainly to the increase in net sales. The
business area noted an increase in operating earnings, even after
an adjustment for the SEK 45m refund from SPP. The operating
margin rose to 11.0% (8.4).
- Effective June 1, Perstorp acquired the Degussa-Huls group's
polyol operations, with production activities in Bruchhausen,
Germany. The acquisition strengthens Perstorp Chemicals' world-
leading positions in the markets for Penta and di-Penta.
- Effective May 1, Perstorp acquired the operations of Plasta
Erkner GmbH, based in Erkner, close to Berlin. The company, which
is one of Europe's leading manufacturers of phenolic resins,
strengthens Perstorp Chemicals' position as one of Europe's
largest producers of phenol-based resins.
- Perstorp Chemicals, via the Perstorp Chemitec subsidiary,
has concluded an agreement with Penn Specialty Chemicals of the
US regarding the acquisition of two phenolic resin product lines.
The product lines currently generate annual sales of
approximately SEK 40m.
- During the period, Perstorp signed agreements regarding the
construction of six formalin plants, in Venezuela, China,
Germany, Chile, South Africa and Thailand. The combined order
value was approximately SEK 170m. These orders strengthen
Perstorp's position as the world's leading supplier of plants for
the production of formalin. The order backlog now consists of 11
plants, scheduled for delivery during 2000-2001.
- A newly constructed formaldehyde plant for DuPont de Nemours
(Nederland) B.V., in Dordrecht, the Netherlands, was put into
operation in January 2000.
PERGO (PERSTORP FLOORING)
SEK m Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Net sales 881 887 2,652 2,719 3,560 3,627
Operating earnings -57 58 20 130 74 184
Operating margin. % Neg 6.5 0.8 4.8 2.1 5.1
Depreciation 23 20 70 54 96 80
Investments 15 32 229 53 263 87
- The market for laminate flooring continues to grow in Europe
and the US. However, the market is characterized by intensified
competition and price pressure, at the same time as direct
laminate flooring and new joint systems are increasing their
shares of the total market. The pace of this trend is faster than
expected.
- During the period, Pergo introduced several new products,
mainly direct laminate flooring and flooring with glue-free joint
systems and other new functions. Due to delays in launching these
products, their impact on sales and earnings is not expected to
be felt until the fourth quarter in the US and somewhat later in
Europe. The delays were due primarily to the fact that the
increasing share of direct laminate products and flooring with
glue-free joint systems requires a comprehensive adjustment of
production and distribution, at the same time as installation of
production lines for new products has been delayed.
- Net sales declined by 2% compared with the year-earlier
period, due to lower prices, mainly in Europe, and delayed
product launches. A certain decline in prices was noted in the
American market during the period. The previously delayed
launches of new products are now being implemented in accordance
with a revised time schedule. The Home Depot, Pergo's largest
customer in the US, initiated the launch of Pergo flooring with
glue-free joint systems in September. By the end of the year,
these products will have been introduced in most of Home Depot's
1,100 sales outlets, which will be followed by a nationwide
marketing campaign. In the fragmented European market, prices
have continued to decline. At the same time, Pergo's new product
launches are taking place later than expected, and they are not
expected to generate effects until after the end of the fiscal
year.
- Operating earnings declined to SEK 20m (130). Nonrecurring
expenses related to the adaptation of Pergo's production and
distribution operations to changes in product range and
production techniques, as well as employment terminations, have
been charged against operating earnings in a total amount of SEK
85m. Of this total, write-downs of fixed assets account for SEK
41m, an amount that has no effect on cash flow. A refund of
pension contributions from SPP had a positive impact of SEK 5m
on earnings. Adjusted for these items affecting comparability,
operating earnings declined to SEK 100m (155), due mainly to
lower prices and the reduction in net sales. The decrease in the
operating margin from 4.8% to 0.8% compared with the preceding
year, due mainly to lower prices in Europe, was partly offset by
cost reductions during the period.
- During the period, Perstorp acquired 25.1% of the shares in
the German laminate flooring manufacturer Witex, a globally
active flooring company. Pergo could increase its shareholding to
49% in 2002, under certain conditions. Within the framework of a
long-term delivery agreement, both companies have commenced close
cooperation, which is expected to result in stronger market
positions and bring Pergo more efficient production and
distribution operations in Europe, the US and Asia.
- The cooperation with Witex broadens Pergo's product range by
adding direct laminate flooring. During the period, Pergo
replaced a part of the production operations at its own plant in
Trelleborg, Sweden, with production at the Witex plant in
Augustdorf, Germany. This is resulting in lower manufacturing
costs for the products concerned and is enhancing Pergo's
competitiveness. In connection with this transfer, 90 employees
had to leave the operations at the plant in Trelleborg, Sweden.
- Pergo also concluded an agreement with Unilin of Belgium,
whereby Pergo will start to utilize Unilin's Uniclic joint
system for several laminate flooring products. The companies are
also cooperating on the further development of glue-free joint
systems for flooring. The growth potential for flooring systems
with glue-free joint systems is regarded as favorable. As a
result of the addition of the Uniclic system to Pergo's own new
Cliq-lock system, the company expects to strengthen its position
in the various market segments. Several types of glue-free joint
systems for both laminate flooring and other types of flooring
have been introduced in the market in a short period of time. A
number of disputes regarding patents are under way in this
innovative market segment. At the present time, it is not
considered that these disputes will have a significant effect on
Pergo's sale.
- Due to expectations that the transition to direct laminate
flooring featuring another type of base will continue, further
corrective measures within Pergo will be required in the coming
fiscal year. These measures are expected to have only a limited
adverse affect on Group cash flow.
PERSTORP SURFACE MATERIALS
As part of the Group's continued streamlining, the Perstorp
Surface Materials AB subgroup was sold to Decorative Surfaces
Holding AB in March. Decorative Surfaces Holding is an investment
company formed by DLJ Merchant Banking Partners and CVC European
Equity Partners.
The sales price of approximately SEK 1,500 m including the
transfer of loans, generated a capital gain estimated at SEK 75
m. The subgroup's operations are included in the accounts through
March 24 and its net sales and operating earnings for that period
amounted to SEK 474 m and SEK 1 m, respectively.
Other operations
In addition to the Perstorp Chemicals AB and Pergo AB subgroups,
Perstorp's business operations consist primarily of Perstorp
Laminatproduktion AB. These operations, which were part of
Perstorp Surface Materials during the preceding year, are
conducted at the complex in Perstorp, Sweden, with slightly more
than 300 employees.
Perstorp Laminatproduktion AB is primarily a supplier of flooring
laminate to Pergo AB. Due to the changes in the product range
currently under way, the company has reduced the number of
employees in Perstorp, Sweden, by 125 and has initiated a
broadening of its product range. Perstorp Laminatproduktion AB
reported net sales of SEK 477 m (560) and operating earnings of
SEK 14 m (63) during the period, after being charged with SEK 21
m for costs related to the aforementioned changes, at the same
time as a SEK 5 m refund of SPP pensions contributions had a
favorable impact on earnings. After adjustments for items
affecting comparability, operating earnings amounted to SEK 30 m
(63).
Due to the continued rapid switch to direct laminate flooring,
further corrective measures at Perstorp Laminatproduktion will be
required in the coming fiscal year, but these measures are
expected to have only a limited adverse affect on Group cash
flow.
Group-wide costs, the business development company Pernovo and
the capital gain from the divestment of Perstorp Surface
Materials are also reported under Other items including
eliminations.
Personnel
The number of Group employees at the end of the period was 3,614
(6,258). The decline in relation to the year-earlier period was
due mainly to the divestment of Perstorp Surface Materials and
the spin-off of Perbio Science.
The Perstorp share
Trading in Perstorp shares was suspended at the end of the period
in connection with the withdrawal of Perstorp Intressenter AB's
offer. On the day before share trading was suspended, the prices
per Perstorp A and B share were SEK 116.50 and SEK 118,
respectively, and when trading was resumed the closing price per
Series B shares was SEK 84, while no closing price was quoted for
Series A shares. The corresponding prices at the end of the
preceding year were SEK 81.50 and SEK 79, respectively.
Pension funds from SPP
As previously announced, Perstorp AB has been notified by SPP
that it will receive an allocation of SEK 61 m in excess pension
contributions. Earlier, the Group had redeemed its PRI pensions
in return for a lump-sum amortization that exceeded the amount of
the allocation. The amount was booked as revenue during the third
quarter, as an item affecting comparability.
The allocated pension refunds are distributed as follows by unit:
SEK 45 m for Perstorp Chemicals, SEK 5 m for Pergo, SEK 5m for
Perstorp Laminatproduktion and SEK 6 m for other units.
Full-year estimate for the 2000 fiscal year
Assuming the current favorable business trend continues, full-
year earnings for the Group in its current structure - that is,
excluding demerged business units - are expected to amount to SEK
625 - 650m (460 )
Earnings include nonrecurring revenue from proceeds of the sale
of Perstorp Surface Materials (SEK 75m) and the repayment of
pension funds from SPP (SEK 61m), which will basically be offset
by restructuring costs expensed during the fiscal year.
Perstorp Chemicals will continue to perform favourably, whereas
full-year earnings for Pergo and Perstorp Laminatproduktion will
be adversely affected by lower prices and the said delays in
product launches.
With respect to 2001, Perstorp believes that Perstorp Chemicals
will continue to develop well and be positively affected by the
acquisitions carried out during the current year, assuming that
the general business trend remains favourable. Performance
improvements are expected from Pergo and Perstorp
Laminatproduktion, as ongoing product launches and restructuring
begin to generate effects. However, uncertainty regarding the
future earnings trend for the two latter operations has
increased.
The preliminary date for publication of the year-end report for
2000 is mid-February 2001.
Perstorp, October 20, 2000
Board of Directors
This interim report is unaudited.
Earnings
Consolidated income Q 3 Q 1-3 Most Full
statement recent year
SEK m 2000 1999 2000 1999 12 1999
months
Net sales 2,193 2,544 6,822 7,885 9,289 10,352
Cost of goods sold -1,719 -1,825 -5,122 -5,634 -6,845 -7,357
Gross earnings 474 719 1,700 2,251 2,444 2,995
Sales, administration -364 -541 -1,256 -1,718 -1,819 -2,281
and R&D costs
Items affecting -45 -37 30 -100 44 -86
comparability
Other operating 14 -4 30 -15 50 5
revenues and expenses
Result from 6 6 12 17 13 18
participation in
associated companies
Operating earnings 85 143 516 435 732 651
Net financial items -19 -38 -46 -75 -71 -100
Earnings before taxes 66 105 470 360 661 551
Taxes -24 -94 -178 -193 -266 -281
Minority share in net 1 7 8 9 10 11
profit
Earnings after taxes 43 18 300 176 405 281
Earnings per share, SEK 0.60 0.25 4.19 2.46 5.66 3.93
Earnings per share 0.55 0.26 3.95 2.44 5.35 3.87
after full conversion,
SEK
Consolidated Balance Sheet
SEK m Sep 30, 2000 Dec 31, 1999 Sep 30, 1999
Long-term operating assets 3,870 3,947 4,284
Long-term financial assets 487 316 334
Inventories 1,038 1,387 1,719
Current operating 2,403 2,312 2,405
receivables
Current financial assets 30 207 124
Total assets 7,828 8,169 8,866
Shareholders' equity 3,967 3,776 4,154
Minority interests 46 56 58
Provisions 543 526 378
Long-term financial 308 271 255
liabilities
Current operating 1,667 1,802 1,818
liabilities
Current financial 1,297 1,738 2,203
liabilities
Total liabilities and 7,828 8,169 8,866
shareholders' equity
Net sales by division
SEK m Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Perstorp Specialty 834 528 2,343 1,742 2,956 2,355
Chemicals
Perstorp Chemitec 427 316 1,261 1,050 1,624 1,413
Perstorp Construction 69 85 195 216 258 279
Chemicals
Perstorp Support 143 100 429 368 569 508
Other items including -131 -79 -385 -280 -503 -398
eliminations
Perstorp Chemicals 1,342 950 3,843 3,096 4,904 4,157
Pergo 881 887 2,652 2,719 3,560 3,627
Other items including -30 -13 -83 -92 -115 -124
eliminations
of which Perstorp 109 168 477 560 678 761
Laminatproduktion
Net sales excluding 2,193 1,824 6,412 5,723 8,349 7,660
demerged business units
Demerged business units
and
eliminations 0 720 410 2,162 940 2,692
Group 2,193 2,544 6,822 7,885 9,289 10,352
Operating earnings by division
SEK m
Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Perstorp Chemicals 164 85 424 261 548 385
Pergo -57 58 20 130 74 184
Other items including -22 -42 71 -107 69 -109
eliminations
of which Perstorp -24 19 14 63 37 86
Laminatproduktion
Operating earnings excluding
demerged business units 85 101 515 284 691 460
Demerged business units 0 42 1 151 41 191
Group 85 143 516 435 732 651
Operating earnings by division adjusted for items affecting
comparability
SEK m Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Perstorp Chemicals 121 85 379 261 489 371
Pergo 23 58 100 155 154 209
Other items including -14 -12 6 -47 4 -49
eliminations
of which Perstorp -8 19 30 63 53 86
Laminatproduktion
Operating earnings excluding
demerged business units 130 131 485 369 647 531
Key Ratios
Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Turnover rate
- total capital, 1.2 1.1 1.2 1.2 1.2 1.2
times/year
- working capital, 5.4 4.3 5.3 4.4 5.1 4.7
times/year
Profit margin, % 3.9 5.6 7.6 5.5 7.9 6.3
Return on
- total capital, % 4 6 10 7 10 8
- shareholders' equity, 4 2 10 5 10 7
%
- capital employed, % 7 9 14 9 14 11
Debt/equity ratio 0.3 0.5 0.3 0.5 0.3 0.4
Equity ratio, % 51 48 51 48 51 47
Interest-coverage 2.4 3.6 5.6 4.5 5.9 5.1
ratio, times
Shareholders' equity 55 58 54 58 54 53
per share, SEK
Free cash flow/net Neg 14.3 2.5 8.5 5 9
sales, %
Number of shares
71,589,720 71,584,341 71,589,720 71,584,341 71,589,720 71,584,341
Number of shares after
full conversion
74,114,341 74,114,341 74,114,341 74,114,341 74,114,341 74,114,341
Cash flow analysis, summary
SEK m Q 3 Q 1-3 Most Full
recent year
2000 1999 2000 1999 12 1999
months
Operating earnings 85 143 516 435 732 651
Depreciation and write- 157 136 398 391 518 511
downs
Change in working -289 189 -440 232 -339 333
capital
Current investments in -56 -59 -141 -252 -213 -324
fixed assets
Operating cash flow -103 409 333 806 698 1,171
Tax related to -27 -46 -165 -139 -234 -208
operating earnings
Free cash flow -130 363 168 667 464 963
Adjustments of tax, 17 -202 311 -303 244 -370
financial items and
other items
Cash flow from -113 161 479 364 708 593
operations
Strategic investments -19 -239 -882 -530 -934 -582
in plants and company
acquisitions
Effect of spin- 0 0 562 0 1,078 516
off/divestments
Cash flow before -132 -78 159 -166 852 527
dividend
Dividend to 0 0 -286 -286 -814 -814
shareholders
Net cash flow -132 -78 -127 -452 38 -287
Free cash flow per -1.82 5.07 2.35 9.32 6.48 13.45
share, SEK
Net debt at beginning -1,003 -2,003 -1,597 -1,623 -2,098 -1,623
of period
Net cash flow -132 -78 -127 -452 38 -287
Net debt in 0 0 601 0 923 322
acquired/demerged
operations
Currency effects -65 -17 -77 -23 -63 -9
Net debt at end of -1,200 -2,098 -1,200 -2,098 -1,200 -1,597
period
Quarterly data (1998 pro forma)
SEK m 1998 1999 2000
III IV I II III IV I II III
Net sales 2,580 2,3462,549 2,792 2,544 2,467 2,414 2,215 2,193
Cost of goods sold - - - - - - - - -
1,816 1,6731,830 1,979 1,825 1,723 1,776 1,627 1,719
Gross earnings 764 673 719 813 719 744 638 588 474
Sales, -595 -634 -572 -605 -541 -563 -476 -416 -364
administration and
R&D costs
Items affecting 23 -35 -15 -48 -37 14 75 0 -45
comparability
Other operating -4 13 -3 -8 -4 20 3 13 14
revenues and
expenses
Result from 8 9 4 7 6 1 3 3 6
participations in
associated
companies
Operating earnings 196 26 133 159 143 216 243 188 85
Net financial items -18 -25 -14 -23 -38 -25 -13 -14 -19
Earnings before 178 1 119 136 105 191 230 174 66
taxes
Taxes -63 -34 -42 -57 -94 -88 -93 -61 -24
Minority share in 1 3 0 2 7 2 3 4 1
net profit
Earnings after 116 -30 77 81 18 105 140 117 43
taxes
Quarterly Data by division
Net sales 1998 1999 2000
SEK m III IV I II III IV I II III
Perstorp Chemicals 1,046 1,022 1,086 1,060 950 1,061 1,172 1,329 1,342
Pergo 822 812 852 980 887 908 865 906 881
Other items -47 -127 -77 -2 -13 -32 -33 -20 -30
including
eliminations
of which Perstorp
Laminatproduktion 167 168 182 210 168 201 187 181 109
Total "Ongoing 1,821 1,707 1,861 2,0381,824 1,937 2,004 2,215 2,193
business"
Demerged business 759 639 688 754 720 530 410 0 0
units and
eliminations
Group 2,580 2,346 2,549 2,7922,544 2,467 2,414 2,215 2,193
Quarterly Data by division
Operating earnings 1998 1999 2000
SEK m III IV I II III IV I II III
Perstorp Chemicals 158 90 87 89 85 124 120 140 164
Pergo 21 -45 6 66 58 54 38 39 -57
Other items -30 -18 -11 -54 -42 -2 84 9 -22
including
eliminations
of which Perstorp
Laminatproduktion 15 16 20 24 19 23 22 16 -24
Total "Ongoing 149 27 82 101 101 176 242 188 85
business"
Demerged business 47 -1 51 58 42 40 1 0 0
units
Group 196 26 133 159 143 216 243 188 85
In addition to the interim report, the press release from the
Board of Directors, issued on October 18, 2000, will also be
distributed to shareholders.
Perstorp AB comments on Swedish Securities Council's opinion
regarding withdrawal of Industri Kapital/Perstorp Intressenters'
bid
Perstorp AB welcomes the clarification made by the Swedish
Securities Council and the OM Stockholm Exchange in its statement
issued on October 18 regarding the conditions for public offers
and provision of information in conjunction with such offers
based on the bid for Perstorp AB by Industri Kapital/Perstorp
Intressenter and the withdrawal of that bid.
The Board of Directors of Perstorp AB notes that the Securities
Council found it appropriate to transfer assessment of Perstorp
AB's provision of information to the OM Stockholm Exchange. The
Board is gratified to find that the OM Stockholm Exchange has
concluded that the company's provision of information was in
keeping with the rules of the Stock Exchange.
Perstorp AB's Board also finds that the Securities Council's
statement regarding Industri Kapital/Perstorp Intressenters'
withdrawal of the bid for Perstorp has clarified certain matters
of principle for the terms and conditions of withdrawal during an
acceptance period.
The Board again expresses its regret at the withdrawal of the
bid, which placed Perstorp in a situation that was unfavourable
for the company and its shareholders. The Board has adopted a
long-term perspective in its work to develop value for the
shareholders. Unlike Industri Kapital/Perstorp Intressenter, the
Board and a majority of Perstorp's owners take a positive view of
the potential of the flooring operations and see favorable
conditions for the long-term positive development of these
operations. The Board, accordingly, will continue to evaluate all
strategic and industrial alternatives for the Perstorp Group,
which does not rule out discussions with Industri
Kapital/Perstorp Intressenter.
Perstorp, October 18, 2000
The Board of Directors of Perstorp AB
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