CARDO AB: Interim report, January – September 2000

The Group's inflow of orders amounted to SEK 7,312 million (7,213).
This represents an increase of 2 percent for the current structure of
the Group after adjustment for the effects of exchange rate
movements.

Invoiced sales amounted to SEK 6,851 million (6,748), a rise of 4
percent after adjustment for the effects of exchange rate movements.
Company acquisitions/disposals account for 3 percentage points of
this figure.

Operating earnings amounted to SEK 529 million (441), providing an
operating margin of 7.7 percent (6.5). Cardo Pump's earnings were
lower than last year, while Cardo Door's and Cardo Rail's improved.
Operating earnings have been boosted by SEK 69 million this year in
respect of a pension refund and were boosted by SEK 38 million in
1999 in respect of a reversed warranty provision. Excluding these
non-recurring items, operating earnings rose by 14 percent.

Earnings after financial items were SEK 443 million (372), providing
a profit margin of 6.5 percent (5.5). Earnings after financial items
and minority share rose to SEK 438 million (367). Earnings per share
after full tax during the period amounted to SEK 10.47 (8.72).

Exchange rate movements are estimated to have had a marginally
adverse impact on Group earnings.

Return on capital employed was 20.1 percent (20.4) for the
twelve-month period ended September 30. Return on equity during the
same period amounted to 21.9 percent (21.9).

Cash flow from operations amounted to SEK 13.27 (16.80) per share
after tax. Adjusted for the effects of exchange rate movements on the
change in working capital, cash flow after tax was SEK 14.60 (14.74)
per share.

Cardo Pump
Cardo Pump is one of Europe's largest manufacturers of centrifugal
pumps, mixers and aerators for use in water and wastewater treatment
plants, process industries and the construction sector. Cardo Pump is
also a global leader in the production of sophisticated measuring
instruments for the pulp and paper industry. Its products are
marketed under the brand names ABS, Pumpex and Lorentzen & Wettre.

At the beginning of the year, the US company CH&E was acquired. This
company has a turnover of approximately SEK 60 million and makes
diesel-driven dewatering pumps that complement Cardo Pump's
electrically operated pumps.

Invoiced sales amounted to SEK 1,783 million (1,739). Adjusted for
the effects of exchange rate movements and company acquisitions, this
is on a par with last year. Operating earnings, which amounted to SEK
133 million (150), were adversely affected by lower margins for
products for the pulp and paper industry. The Njurunda operation in
Sweden is now being moved to Cardo Pump's plant at Vadstena, Sweden,
with a view to reducing costs.

There has been a rise in deliveries to Cardo Pump's biggest segment,
water supply and wastewater, while deliveries to the pulp and paper
industry have decreased compared to the corresponding period last
year. Exclusive of the effects of company acquisitions, deliveries to
the construction industry decreased.

In order to adapt to the change under way in the pulp and paper
industry, where manufacturers are consolidating in ever greater
groups with production in many countries, Cardo Pump has formed a
special marketing and service company that targets this customer
group exclusively. The company's headquarters is in Sweden, and its
marketing and service staff are present in most countries with a
developed pulp and paper industry.

A number of considerable orders were received during the third
quarter, including one for 66 submersible, acid-resistant mixers for
the treatment process in a new wastewater treatment plant in South
Korea. Several big distribution pumps for drinking water in the
Shanghai area of China were ordered for a newly planned waterworks.

During the third quarter, the expansion of the service operation was
continued through the acquisition of small service companies in
Germany, Finland and Sweden.

On September 1, Thomas Widstrand took over as new head of the Cardo
Pump business area.