Interim report january - september 1998

11/11/1998 6:58 AM EST

Interim report, January - September 1998

Earnings after financial items and minority interest amounted to SEK 276
million (349). The third quarter accounted for SEK 130 million (127).

Earnings per share after full tax stood at SEK 6.47 (8.28). Shareholders'
equity per share amounted to SEK 70.51 (65.16).

The forecast of whole-year earnings after financial items and minority
interest on a par with last year (SEK 511 million) remains unchanged.

The Group's inflow of orders amounted to SEK 6,716 million (6,274), which for
the current structure of the Group, after adjustment for the effects of
exchange rate movements, is on a par with the corresponding period last year.

Invoiced sales rose to SEK 6,205 million (5,636). Adjusted for the effects of
exchange rate movements, this was a rise of approximately 9 percent. Of this
figure, company acquisitions accounted for 8 percentage points.

Operating earnings amounted to SEK 320 million (389), which is equivalent to
an operating margin of 5.2 percent (6.9).

Earnings after financial items were SEK 250 million (343), equivalent to a
profit margin of 4.0 percent (6.1). Group earnings after financial items and
minority interest amounted to SEK 276 million (349). The third quarter
accounted for SEK 130 million (127). The decline during the nine-month period
is mainly attributable to Cardo Rail's earnings trend during the first half of
the year. For the third quarter, Cardo Rail reported better earnings than for
the corresponding period last year.

Earnings per share after full tax for the period amounted to SEK 6.47 (8.28).

The return on capital employed amounted to 13.8 percent (22.3) for the twelve-
month period ended September 30. The return on shareholders' equity during the
same period was 14.3 percent (24.1). The change in return on capital employed
is attributable both to the lower operating earnings and to company
acquisitions carried through.


Invoiced sales and operating earnings by business area
Invoiced sales Operating earnings
January-September Whole January- Whole Year
year September
MSEK 1998 1997 1997 1998 1997 1997
1) 2)
Cardo Door 2,581 2,085 3,004 219 200 353
Cardo Pump 1,786 1,753 2,491 166 179 290
3)
Cardo Rail 1,838 1,798 2,488 -32 27 -41
4)
Other items - - - -33 -17 -35
6,205 5,636 7,983 320 389 567
Financial items -70 -46 -63
Earnings after financial items 250 343 504
Minority interest in earnings after 26 6 7
financial items
Earnings after financial items and 276 349 511
minority interest

1) Of which Normstahl SEK 423 million.
2)
Excluding the effects of the Normstahl acquisition, operating earnings
amounted to SEK 206 million (200).
3)
Operating earnings have been charged with provisions of a one-off nature
amounting to SEK 70 million in respect of warranty matters relating to certain
deliveries completed during previous years.
4)
Made up of operating earnings for the parent company, other central units
and Group adjustments.

Cardo Door

Cardo Door is one of the world's largest manufacturers of industrial doors and
one of Europe's largest manufacturers of residential garage doors. The product
range also embraces special-purpose doors used, for example, in aircraft
hangars, rapid-action rolling doors, door-operating equipment with attendant
automation as well as complete dock loading systems. Cardo Door's trademarks
for industrial doors are Crawford, Clever, Faltec, Alsta and Allhabo.
Residential garage doors are marketed under the Normstahl, Crawford and Car-In
trademarks.

Invoiced sales rose to SEK 2,581 million (2,085). Company acquisitions
accounted for most of the increase. Exchange rate movements had only a
marginal effect on invoicing compared to last year.

Operating earnings rose to SEK 219 million (200). Excluding the effects of the
Normstahl acquisition, earnings amounted to SEK 206 million (200). The German
company Normstahl, which is one of Europe's largest manufacturers of
residential garage doors, was acquired at the turn of the year. This company
normally experiences strong seasonal variations and generates its entire
earnings during the second half of the year. Normstahl's operating earnings
for the nine-month period were on a par with those for the corresponding
period last year.

Demand for industrial doors remained poor in the German market, while the
market in France showed signs of an upturn during the third quarter, albeit
from a low level. In Norway and Denmark, the markets developed well during the
period, but demand is expected to slacken in the near future. In Finland, the
positive trend is expected to continue. Demand remains strong in Spain and in
eastern Europe, particularly Poland.

Sales of rapid-action doors and of dock loading systems were good during the
period, and sales of residential garage doors rose sharply as a consequence of
the acquisition of Normstahl.

In France, a merger of Cardo Door's sales companies - market leaders Clever
and Crawford - is under way in order to create a more efficient organization
with a complete range of products. Earlier in the year, all sales of
residential garage doors in Germany were concentrated to Normstahl. In
Austria, Normstahl's and Crawford's operations for both industrial and
residential garage doors were merged on October 1.

A number of major orders were received during the third quarter. In France,
the food group LIDL bought 164 industrial doors, the supermarket chain
Informarche 84 industrial doors, 76 dock loading units and 14 rapid-action
doors, and the transport company TAT Express 76 dock loading units for its
terminal in Paris. The Italian vehicle testing authority bought a further 190
electrically operated industrial doors.

Cardo Pump
Cardo Pump is one of Europe's largest manufacturers of centrifugal pumps,
mixers and aerators used in municipal water management, the process industry
and the construction sector and is also a global leader in the manufacture of
sophisticated measuring instruments used in pulp and paper production. The
products are marketed primarily under the trademarks ABS, Pumpex and Lorentzen
& Wettre.

Invoiced sales amounted to SEK 1,786 million (1,753). The rise is a result of
exchange rate movements and company acquisitions/sales. Invoicing and the
inflow of orders for Cardo Pump's biggest segment, water supply and
wastewater, continued to rise during the third quarter. Owing to some
improvement in the second quarter, deliveries in the heating, ventilation and
sanitation sector rose somewhat during the period. Sales continued to be
adversely affected by the poor demand for products for the pulp and paper
industry.

Operating earnings amounted to SEK 166 million (179).

In the water management field, Cardo Pump had continued success in Spain and
Italy in particular. Service activities developed very positively in Austria

and Britain, with an increase in the number of service and maintenance
contracts for municipal pump stations.

The new series of dry-pit wastewater pumps introduced during the first quarter
has continued to meet with success in the market, and orders include a number
from Norway for a total of around 20 complete pump stations.

Cardo Rail
Cardo Rail is one of the world's largest manufacturers of hi-tech and safety-
related systems for rail vehicles. The principal product is brake systems.
Marketing is conducted under the trademark SAB WABCO, but also under the BSI,
Davies & Metcalfe, Gutehoffnungshütte Radsatz and Tebel trademarks.

Since January 1997, Cardo Rail consists of Cardo BSI Rail AB, in which Cardo
has a 60-percent holding and Thyssen Guss holds 40 percent, and the wholly-
owned train door manufacturer Tebel.

The inflow of orders amounted to SEK 2,063 million (2,190) during the period,
which adjusted for the effects of exchange rate movements and company
acquisitions, is a fall of about 6 percent. However, the inflow of orders for
own-manufactured products was 3 percent higher than for the corresponding
period last year. During the third quarter, agreements signed included a two-
year contract with FS, the Italian state railway company, regarding the supply
of spare parts for brake equipment. In Germany, a number of important orders
were received for wheels from companies such as Deutsche Bahn and Adtranz.

Invoiced sales amounted to SEK 1,838 million (1,798). Exchange rate movements
and company acquisitions had only a marginal effect on invoicing compared to
last year.

Operating earnings were SEK -32 million (27). The fall in earnings during the
period is due to a too high level of costs and to disruption of production in
the units affected by the restructuring process currently in progress. As a
result of this, Cardo Rail's earnings were charged with provisions amounting
to SEK 35 million during the second quarter. These provisions remained
unchanged at September 30. During the third quarter, earnings improved and
amounted to SEK 10 million (-8).

A restructuring program was begun during the second half of 1997. The measures
are intended to refine product and production structure and involve a
reduction in the number of production sites and a cut in personnel by 10-15
percent. The measures decided upon during 1997 included the close-down of one
production unit in Germany and one in France. At the beginning of the third
quarter, negotiations were initiated with staff organizations regarding the
close-down of a production unit in Britain. These negotiations have now been
completed, and a phasing out of operations has begun. This is expected to be
complete by the end of March 1999. Agreement has also been reached regarding
further staff cuts in countries such as Germany. At the same time, measures
are under way to make material supply and administration more efficient and to
control marketing and sales efforts more selectively. The aim is for the
planned measures to take effect over a period of not quite one year and lead
to considerable improvements in earnings in the future.

All measures are covered by the restructuring provision amounting to SEK 180
million established in connection with the formation of Cardo BSI Rail AB. Of
this provision, SEK 76 million had been utilized at September 30 1998.

Liquidity and financing
At September 30, the Group's liquid assets stood at SEK 334 million (262)
compared with SEK 272 million at the beginning of the year. In addition, there
are unutilized credit facilities of approximately SEK 2.4 billion (1.8). Net
interest bearing debt at September 30 amounted to SEK 1,576 million (1,030)
compared with SEK 1,498 million at the beginning of the year. Cash flow
generated by operations amounted to SEK 438 million (349) before tax. The
corresponding figure after tax was SEK 237 million (146). The Group's
investments, excluding company acquisitions, stood at SEK 143 million (120).

Shareholders' equity amounted to SEK 2,115 million (1,955), which is
equivalent to SEK 70.51 (65.16) per share.

The Group's equity ratio at September 30 was 34.7 percent (38.6).

Personnel
The number of employees in the Group at September 30 was 7,497 (7,252).

Call options for leading officers
44 leading officers at Cardo have subscribed for call options in Cardo on
market terms and with L E Lundbergföretagen AB as the issuer of the options.
In total, L E Lundbergföretagen AB has granted 405,000 call options to these
persons. On September 18, between 2,000 and 30,000 options per person were
allotted.

Each option carries the right to acquire one share in Cardo AB at the exercise
price of SEK 172 during the period August 1 - September 30 2003. Handelsbanken
Markets has estimated a market value for the options. The price, which is
based on the average share price of SEK 148 over the period September 7 - 16
1998, was established at SEK 20 per option.

Forecast 1998
The previous forecast of whole-year earnings after financial items and
minority interest on a par with last year (SEK 511 million) remains unchanged.

Malmö, Sweden, November 11 1998

Cardo AB (publ)

Kjell Svensson
President and CEO

Enclos 1. Consolidated income statement and
ed: balance sheet in brief
2. Invoiced sales and operating
earnings by business area
3. Group review
4. Parent company income statement and
balance sheet in brief

This report has not been subjected to special examination by the Company's
auditors.

Cardo's report on operations for the whole of 1998 will be published on
Thursday, February 18 1999.

For further information, please contact:
Kjell Svensson, President and CEO, phone +46 40 35 04 53, +46 40 35 04 00
Sven-Erik Persson, Executive Vice President, phone +46 40 35 04 50, +46 40 35
04 00
Christer Roskvist, Head of Public Relations, phone +46 40 35 04 25, +46 40 35
04 00

Cardo is an international engineering group with a turnover of approximately
SEK 8 billion in 1997. Cardo holds a strong position in the markets for
industrial doors, residential garage doors, centrifugal pumps and rail-vehicle
brake systems. Cardo has subsidiaries in about 30 countries with the focal
point resting in western Europe, and roughly 7,500 employees. The head office
is in Malmö, Sweden.