Bong Ljungdahl AB Interim Report, January - March 2001

5/9/2001 9:23 AM EST

INTERIM REPORT, JANUARY - MARCH 2001

* NET SALES INCREASED BY 7% TO SKr 673 MILLION (629)

* REDUCED PRODUCTION RESULTING FROM RESTRUCTURING OF ACQUIRED
UNITS AND A WEAKENING ON SOME MARKETS HAVE ADVERSE EFFECT ON PROFIT

* OPERATING PROFIT (EXCL. ITEMS DISTURBING COMPARABILITY)
DECREASED TO SKr 32 (63)

* PROFIT AFTER NET FINANCIAL ITEMS (EXCL. ITEMS DISTURBING
COMPARABILITY) DECREASED TO SKr 15 MILLION (46)

Bong is a rapidly growing, international envelope company. The Group has
annual sales of some SKr 2.5 billion, approximately 1900 employees and
an output of some 16 billion envelopes per year at its units in Sweden,
Denmark, Norway, Finland, Germany, Great Britain, Ireland, Belgium,
Poland and Estonia.
In recent years, Bong has played an active role in the current process
of restructuring in the European envelope industry, where it sees
worthwhile opportunities for further expansion. Bong is a public company
and its share is listed on Stockholmsbörsen's Attract 40 list.

MARKET AND SALES
Demand on several of the Group's important markets weakened in the first
quarter. In Sweden, which accounts for some 17% of the Group's turnover,
activity on the market has been exceptionally low. The slowdown, which
is considered the result of cyclical activity and which was particularly
evident during the second half of the quarter, has resulted in clearly
flagging sales. The trend now seems to be flattening out, the second
quarter having displayed an early tendency towards a healthy strong
order intake. There has been relatively strong demand on the markets in
Norway and Finland and the Group's Norwegian unit has greatly
consolidated its position, partly through the acquisition of Norsk
Konvolutt at the end of last year. Market developments in Denmark have
been weak. Despite a tendency towards a general slowdown, orders and
sales on the German market have been stable compared with the same
period last year. Demand on the British envelope market was relatively
good at the start of the year, but weakened as the quarter came to a
close. Order and sales on the British market, for comparable units,
declined during the first quarter, this being wholly attributable to
Rexam Envelopes, acquired in September 2000, and largely the result of a
conscious strategy to steer sales towards the product and customer
segments for which the production resources are best suited. Sales on
the British market account for some 23% of the Group's turnover.

TURNOVER AND RESULT
The Group has been adversely affected by weakening markets in Britain,
Denmark and, in particular, Sweden. The quarter's consolidated turnover
increased by 7% to SKr 673 million (629). Of this, about 5% are
attributable to acquired units, 5% to price increases and 3% to currency
fluctuations. Volumes have therefore dropped by 6%.

The Group's operating profit for the first quarter (excluding items
disturbing comparability of 4.5 MSEK) declined by SKr 31 million to SKr
32 million (63), with a profit margin of 4.8 per cent (10,0). The
extensive programme of change, which has been implemented during the
first three months and which was designed to co-ordinate and integrate
the newly acquired units, has meant considerable disruptions in
production. This and the subsequent reduction in production have had a
serious effect on the profit, estimated to about 15 MSEK. A large amount
of production volume has been purchased externally in order to meet
customer commitments during the transition period, and this has also had
a negative effect on margins. The most extensive parts of the programme
are now complete. Productivity and efficiency are gradually improving
and are expected to reach planned levels in the second quarter.

The overheating which characterised the market for fine paper last year
and which led to a series of substantial price increases has now cooled
off, creating a more balanced situation with paper prices stabilising.
It has not yet been possible for the Group to compensate the whole cost
effect by increasing its own prices, which is why the gross margins have
deteriorated.

In accordance with the previous announcement, negotiations on the
acquisition of the Dutch envelope group Stronghold were terminated in
March 2001 and the Board withdrew its previous decision on the new share
issue associated with this acquisition. The cost of this discontinued
project was some SKr 5 million, and is stated as an item disturbing
comparability for the period.

Profit after net financial items (excluding items disturbing
comparability) amounted to SKr 15 million (46) and earnings per share
after tax and full dilution (excluding items disturbing comparability)
were SKr 1.21 (3.58).

ACQUISITION
In January 2001, Bong completed an agreement, through its Polish
subsidiary, on the acquisition of the envelope operations of Bording
Polska. Bording Polska distributes and prints envelopes to the Polish
market and has a turnover of some SKr 5 million. The acquisition is now
being co-ordinated into the Group's existing operations in Poland and
strengthens the position on the rapidly growing Polish envelope market.

CASH FLOW, LIQUID FUNDS AND FINANCING
The consolidated cash flow from operating activities was 35 MSEK (58).
Closing liquid funds amounted to SKr 72 million (70 at December 31,
2000). The net debt was SKr 1,038 million (1,017 at December 31, 2000)
which, after adjustment for currency effects, means a decrease of SKr 11
million from the turn of the year.

At the end of the period, equity amounted to SKr 695 million (675 at
December 31, 2000). The closing equity ratio was 29 per cent (29 at
December 31, 2000) and the debt-equity ratio was 1.49 (1.51 at December
31, 2000).

CAPITAL EXPENDITURE
Net capital expenditure for the period, excluding that associated with
company acquisitions, amounted to SKr 24 million (25) and represents, as
planned, an adjustment to a much lower level, relatively speaking, than
has been the case in the past few years.

EMPLOYEES
The average number of employees for the period was 1,902 (1,873), of
which acquired units accounted for an increase of 125.

PROSPECTS
Given the weak sales trend and production disruptions associated with
the restructuring work carried out at the start of the year has an
adverse effect on the result. Bong's strong position on the growing
European market, together with expected synergy gains in the acquired
units, mean, however, that the conditions for long-term sales and profit
growth are good.

Kristianstad, May 9th 2001

Lennart Pihl
Managing Director and Group CEO

This interim report has been prepared in accordance with the Swedish
Financial Accounting Standards Council's recommendation RR20: Interim
reports.
The same accounting principles have been used as for the latest annual
report.

This interim report has not been subject to specific examination by the
company's auditors.

Further information may be obtained from Bong Ljungdahl AB's MD and CEO,
Lennart Pihl on +46 44 20 70 50 (direct), or +46 70 594 68 66, (mobile)

Next financial reports:
Sixth-monthly report January - June 2001 August 17th 2001
Interim report January - September 2001 November 2nd 2001
Year-end release February, 2002



CONSOLIDATED PROFIT AND Jan-Mar April 2000-Jan-Dec
LOSS ACCOUNT SUMMARY 2001 2000 Mar 2001 2000
(MSEK) 3 3 12 months 12
months months months
Net turnover 673,2 628,8 2 391,2 2 346,8
Cost of sold products -531,1 -465,2 -1 859,3 -1 793,5
Gross profit 142,1 163,6 531,9 553,3

Selling costs -52,4 -54,0 -190,7 -192,3
Administrative costs -46,6 -39,5 -166,6 -159,5
Other operating income 1,1 2,9 6,9 8,7
Other operating costs -6,0 -4,0 -9,2 -7,2
Items disturbing -4,5 - 39,4 43,9
comparability
Operating profit before 33,7 69,0 211,7 246,9
depr. of goodwill
Depreciation of goodwill -6,1 -6,1 -22,5 -22,5
Operating profit 27,6 62,9 189,2 224,4

Net financial items -16,7 -17,2 -64,2 -64,6
Profit before tax 10,9 45,7 125,0 159,8

Tax -3,6 -14,5 -39,5 -50,3
Profit after tax 7,3 31,2 85,5 109,5


SUMMARY CONSOLIDATE 31 Mar 31 Mar 31 Dec
BALANCE SHEET (MSEK) 2001 2000 2000
Assets
Goodwill 449,4 403,4 442,7
Other fixed assets 1 1 1
099,4 005,8 067,6
Inventories 396,1 328,1 395,4
Receivables 415,9 382,4 365,4
Liquid funds 72,1 72,5 70,3
Total assets 2 2 2
432,9 192,2 341,4

Equity and liabilities
Equity 695,0 591,0 674,5
Interest-bearing 76,4 75,8 74,9
provisions
Interest-free provisions 179,3 208,7 176,7
Interest-bearing 1 986,8 1
liabilities 053,8 031,5
Interest-free liabilities 428,4 329,9 383,8
Total liabilities and 2 2 2
equity 432,9 192,2 341,4



KEY RATIOS Jan-March April Jan-
2000- Dec
2001 2000 March 2000
2001
Earnings per share after
standard tax and full
conversion
excluding items disturbing 1,21 3,58 6,35 8,75
comparability, SEK
D:o incl. items disturbing 0,84 3,58 9,82 12,56
comparability, SEK

Earnings per share after tax
but before full conversion
excl. items disturbing 1,22 3,62 6,42 8,82
comparability, SEK
D:o incl. items disturbing 0,85 3,62 9,90 12,68
comparability, SEK

Equity after full conversion, 80,41 68,79 - 78,07
SEK
D:o before full conversion 80,31 68,52 - 77,95

Operating margin before 1 5,7 11,0 7,2 8,7
depreciation of goodwill, % )
Operating margin, % 1 4,8 10,0 6,3 7,7
)
Profit margin, % 1 2,3 7,3 3,6 4,9
)

Return on equity, % 1 - - 8,6 12,2
)
Return on capital employed, % 1 - - 8,8 10,7
)

Equity ratio, % 29 27 - 29
Net debt-equity ratio, x 1,49 1,64 - 1,51
Interest covering ratio, x 1 1,9 3,7 2,3 2,7
)

Capital employed, MSEK 1 1 - 1
825,2 653,6 780,9
Net interest-bearing debt, 1 970,6 - 1
MSEK 037,9 016,5

Number of shares at end of 8 653 8 624 8 653 591 8 652
period 591 791 991
Average number of shares 8 726 8 726 8 726 691 8 726
after full conversion 691 691 691
Average number of shares 8 653 8 624 8 638 506 8 631
before full conversion 158 791 493

CHANGES OF EQUITY IN Jan-March Jan-
Dec
THE GROUP (MSEK) 2001 2000 2000
Opening balance for the 674,5 433,7 433,7
period
New share issue - 137,4 137,4
Conversion 0,1 - 2,6
Dividend to shareholders - - -22,4
Translation differences 13,1 -11,3 13,8
Profit for the period 7,3 31,2 109,4
Closing balance fo the 695,0 591,0 674,5
period

CONSOLIDATED CASH FLOW Jan-March Jan-
Dec
ANALYSIS (MSEK) 2001 2000 2000
Operating activities
Operating profit 27,6 62,9 224,4
Depreciation 35,2 33,2 127,7
Financial items -16,7 -13,7 -61,1
Tax paid -8,6 -14,0 -12,6
Other items not affecting -13,6 2,6 -82,3
liquidity
Cash flow from operating
activities
before change in working 23,9 71,0 196,1
capital

Change in working capital 11,5 -12,7 -42,2
Cash flow from operating 35,4 58,3 153,9
activities

Capital expenditure
Acquisitions/divestments -24,1 -25,2 28,4
of fixed assets
Company acquisitions -2,2 -301,3 -419,4
Cash flow from capital -26,3 -326,5 -391,0
expenditure

Financing activities
Change in interest-bearing -9,9 316,8 298,1
loans
Dividend to shareholders - - -22,4
Cash flow from financing -9,9 316,8 275,7
activities

Cash flow for the period -0,8 48,6 38,6

QUARTERLY COMPARISONS, GROUP (MSEK)
1/200 4/200 3/200 2/200 1/200 4/199 3/199 2/199 1/199
1 0 0 0 0 9 9 9 9
Net turnover 673,2 644,0 526,4 547,6 628,8 316,6 265,5 302,6 338,2
Operating costs - - - - - - - - -
635,0 594,2 485,1 504,7 559,8 290,2 249,0 278,2 305,8
Operating
profit before
depreciation of 38,2 49,8 41,3 42,9 69,0 26,4 16,5 24,4 32,4
goodwill

Depreciation of -6,1 -5,4 -6,1 -4,9 -6,1 -1,8 -2,0 -1,8 -1,9
goodwill
Operating
profit before
items 32,1 44,4 35,2 38,0 62,9 24,6 14,5 22,6 30,5
disturbing
comp.

Items -4,5 - 32,8 11,1 - - - - -
disturbing
comp.
Operating 27,6 44,4 68,0 49,1 62,9 24,6 14,5 22,6 30,5
profit

Net financial -16,7 -15,1 -17,2 -15,1 -17,2 -4,6 -3,7 -4,2 -4,7
items
Profit after 10,9 29,3 50,8 34,0 45,7 20,0 10,8 18,4 25,8
net fin.items

Profit after
net financial
items,
excl.items
disturbing 15,4 29,3 18,0 22,9 45,7 20,0 10,8 18,4 25,8
comparability