Quarterly report january-march 1999 for Bong Ljungdahl AB

5/6/1999 7:00 AM EST

QUARTERLY REPORT JANUARY-MARCH 1999
for BONG LJUNGDAHL AB

* STRUCTURAL MEASURES GENERATE CONTINUED STRONG EARNINGS GROWTH

* PROFIT AFTER NET FINANCIAL ITEMS INCREASED BY SKr 17 MILLION TO SKr 26
MILLION (9)

* EARNINGS PER SHARE AFTER TAX SKr 2.81 (1.13)

* INTEGRATION OF FINNISH ACQUISITION PROCEEDING AS PLANNED

THE MARKET
Generally speaking, conditions have been relatively favourable on the
Group's key markets at the start of 1999. The increase in volume that was
seen in Sweden at the end of last year is believed to have continued
during the first quarter of 1999. Demand has remained broadly unchanged in
Finland and Denmark, while a tendency to slacken began to emerge in
Norway. On the Nordic market as a whole, which accounts for almost 80 per
cent of total sales, conditions are relatively stable, although some
increase in activity could be noted among companies operating on an
international level.

From a European perspective, the market for envelopes is still expanding,
mainly generated by steady growth in the product segment related to direct
mail advertising. In line with this, there is trend towards higher value
added products in larger formats.

SALES AND RESULT
The Group's net turnover increased to SKr 338 million (275), which is an
increase of 5 per cent for comparable units. Currency fluctuations had
only a marginal effect on turnover.

The operating profit increased by some SKr 18 million to SKr 31 million
(13). The effects of the structural and rationalisation measures within
the Group's Scandinavian envelope units, that were initiated in 1997 and
completed during the last financial year, are now making their full impact
and have resulted in significantly improved margins as well as
strengthening the Group's competitive position.

Further rationalisation of the Swedish operations was decided upon in the
previous financial year, focusing on more far-reaching concentration of
the manufacturing structure. These measures are now being implemented, and
a non recuring SKr 6 million cost has been taken against the result.
Capital gains of an equivalent amount have been generated by the
divestment of old machinery and plant. The integration of the Finnish
business is going according to plan and by the end of the quarter all
sheet-based production capacity had been transferred to the factory at
Nybro. These changes in Finland and Sweden, which have involved an
aggregate reduction in the work force of some 90 people, are expected to
have their full effect during the second half of the year.

The profit after net financial items increased by SKr 17 million to SKr 26
million (9 the same quarter previous year, excluding capital gains). The
acquisition of the Finnish business has resulted in an increase of
interest costs of approximately SKr 1 million at Group level.

The structural changes carried out in 1998 within Envelopes Sweden are now
having their full effect. Cost reductions and efficiency improvements, in
combination with somewhat better selling prices, have generated a
significant increase in profit. After extensive internal changes, delivery
capacity and customer service have reached planned levels, which has also
helped to strengthen our position on the market. The work of further
rationalising and streamlining the production structure at the units in
Kristianstad and Nybro is also proceeding as planned. Turnover amounted to
SKr 136 million (132).

Further positive changes to the product mix in the Group's Envelopes
Denmark segment more than compensated for the slightly lower deliveries
during the period. The result is far better than for the corresponding
quarter last year. Turnover amounted to SKr 52 million (55).

Improved productivity, in both production and printing, is the main factor
behind the distinct improvement in Envelopes Norway's result. Increased
foreign activity on the market has resulted in a slightly stiffer
competition. Turnover amounted to SKr 47 million (53).

The co-ordination of the Group's Envelopes Finland sector is on schedule
and, at the end of the first quarter, sheet-based production was
transferred to Nybro. Moreover, the printing operations have been
relocated from Helsinki to Tampere, where they have been integrated with
envelope production. The measures taken successively reduce the cost base,
mostly due to a reduction of some 45 in the work force. Turnover amounted
to SKr 50 million.

Envelopes Belgium's result remained weak, despite healthy volume growth.
Investments and rationalisation measures to improve productivity have not
had the desired effect as a result of growing pressure on prices in the
sectors that the unit has so far focused on. Turnover amounted to SKr 46
million (35).

Envelopes Poland has made relatively good progress and, with the launch of
a new product, is well positioned on the market. Sales and result have
increased. As a consequence of the expansion of the Polish envelopes
business, operations are being transferred to new, more suitable premises
in the Warsaw area. Turnover amounted to SKr 8 million (7).

At the beginning of 1999, the Group's Binders Divisions developed
particularly well. Increased sales volumes resulted in considerably
significantly higher capacity utilisation, which is the main cause of
marked improvement in the result. Turnover amounted to SKr 21 million
(16).

LIQUID FUNDS AND FINANCING
st
Closing liquid funds amounted to SKr 49 million (36 at December 31 ,
1998) and net loan liabilities decreased by SKr 33 million to SKr 285
million.

The equity ratio was 39 per cent (38) and the debt-equity ratio was 0.65
(0.78).

CAPITAL EXPENDITURE
Capital expenditure during the period amounted to SKr 38 million and was
directed towards the continued technical upgrading of the machinery at the
envelope production units. As a result of the current structural changes,
old equipment has been sold for Skr 14 million.

EMPLOYEES
The average number of employees in the Group amounted to 1,176, which, for
comparable units, represents a reduction of 52 on the corresponding period
for the previous year.

OUTLOOK
The structuring programme implemented in 1998 is now having its full
effect, and further measures will successively generate positive effects
throughout 1999.

Based on the assumption that the reasonably stable conditions on the
Group's key markets will continue, the annual result should be
considerably better than last year's.

th
Kristianstad, May 6 , 1999

BONG LJUNGDAHL AB (publ)

Lennart Pihl
President

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

Further information may be obtained from Lennart Pihl, President and CEO
of Bong Ljungdahl AB. Telephone (switchboard) +46 (44) 20 70 00, (direct)
+46 (44) 20 70 50, (mobile) 070 594 68 66

Forthcoming reports
th
Thursday, August 12 , 1999 Interim report January-June, 1999
th
Thursday, October 28 , 1999 Interim report January-Sept,1999

BONG LJUNGDAHL AB
P.O. Box 516, SE-291 25 Kristianstad
Phone +46 44-20 70 00 Fax +46 44-20 70 91
www.bongljungdahl.se

QUARTERLY ACCOUNTS BONG LJUNGDAHL GROUP

SUMMARY PROFIT AND LOSS Jan-March 1999 Jan-March 1998 Jan-Dec 1998
ACCOUNT
(SKr million)
Net turnover 338.2 275.3 1095.3
Operating costs -307.7 -262.4 -1039.1
Operating profit 30.5 12.9 56.2

Capital gain on sale of - 7.0 7.0
subsidiary
Net financial items -4.7 -3.9 -15.4
Profit after net 25.8 16.0 47.8
financial items

Tax -5.6 -1.1 -7.5
Net profit after tax 20.2 14.9 40.3


st st
SUMMARY BALANCE SHEET March 31 1999 December 31 , 1998
(SKr million)
Fixed assets 633.1 628.3
Receivables 214.2 198.4
Stocks 185.5 200.7
Liquid funds 48.7 36.1
Total assets 1081.5 1063.5

Equity 422.3 405.2
Interest-bearing provisions 78.1 78.2
Interest-free provisions 85.1 77.6
Interest-bearing liabilities 261.9 282.5
Interest-free liabilities 234.1 220.0
Total liabilities and equity 1081.5 1063.5

FINANCIAL RATIOS Jan-March 1999 Jan-March 1998 Jan-Dec
1998
KRONOR PER SHARE
Earnings after standard tax 2.59 0.92/1.64 4.16/4.87
1) 1)
Ditto after full tax 2.81 1.13/2.12 4.32/5.70
1) 1)
Equity 61.19 54.80 58.80

RATIOS
Operating margin 9.0% 4.7% 5.1%
Profit margin 7.6% 3.3%/5.8% 3.7%/4.4%
1) 1)

Return on equity 17% 7%/12% 1) 7%/9% 1)

Return on capital employed 16% 8% 9%

Debt-equity ratio 0.65 0.53 0.78
Equity ratio 39% 42% 38%

Capital employed, SKr 762.3 626.7 765.9
million
Net interest-bearing debt, 284.6 205.1 317.3
SKr million

Average number of shares 7,164,840 6,990,140 7,066,721
(after full conversion)

1)
Including capital gain on sale of the Labels division (Nova Print)

QUARTERLY COMPARISONS GROUP (SKr million)

Q1/99 Q4/98 Q3/98 Q2/98 Q1/98 Q4/97 Q3/97 Q2/97 Q1/97
* * * *
Net 338.2 336.4 228.4 255.3 275.3 272.8 225.9 268.3 275.8
turnover
Operating - - - - - - - - -
costs 307.7 312.2 217.6 247.0 262.4 265.3 220.6 268.8 267.4
Operating 30.5 24.2 10.8 8.3 12.9 7.5 5.3 -0.5 8.4
profit/lo
ss
Capital -
gain on
sale of - - - - 7.0 - - -
subsidiar
y company
Net -4.7 -5.3 -3.6 -2.6 -3.9 -3.4 -3.2 -3.1 -3.3
financial
items
Result
after net 25.8 18.9 7.2 5.7 16.0 4.1 2.1 -3.6 5.1
financial
items
*) Pro forma including Ljungdahls and excluding Labels division

CASH FLOW ANALYSIS: GROUP (SKr million)

Jan.-Mar. 1999 Jan.-Mar. 1998
Operating profit 30.5 12.9
Net financial items -4.7 -3.9
Tax paid -6.0 -0.1
Depreciation 16.8 14.2
36.6 23.1

Change in working capital 12.4 -9.0
Cash flow from current operations 49.0 14.1

Capital expenditure, etc -21.5 -10.0
Acquisitions/divestments, etc - 31.4
Cash flow after investments, etc 27.5 35.5