CARDO AB: Interim Report, January – June 2003

The Rail business area was disposed of on September 25 2002 and is included in the consolidated financial statements for the previous year. The income statement and cash flow broken down by current operations and the operation disposed of are shown in enclosure 4.

The Group's inflow of orders amounted to SEK 3,897 million (5,591). Adjusted for the effects of exchange rate movements and the disposal of Rail, this is a decrease of 5 percent, which is mainly attributable to Cardo Door. Company acquisitions made a positive contribution of 1 percentage point.

Invoiced sales amounted to SEK 3,703 million (5,385). Adjusted for the effects of exchange rate movements and the disposal of Rail, this represents a decrease of 5 percent. Company acquisitions made a positive contribution of 1 percentage point.

Net earnings amounted to SEK 104 million (123), which is equivalent to SEK 3.45 (4.11) per share.

Current operations

After the disposal of the Rail business area, the Group's operations consist of the Cardo Door and Cardo Pump business areas.

Operating earnings in the current operations amounted to SEK 155 million (157) during the period. Compared with the previous year, Pump's earnings rose during the second quarter, while Door's were lower in consequence of the weak state of the construction market in

Europe.

Earnings after financial items amounted to SEK 148 million (137). The impact of exchange rate movements on earnings was only marginal.

Net earnings amounted to SEK 104 million (99), which is equivalent to SEK 3.45 (3.32) per share.

Cash flow from operations was SEK 292 million (275) after tax, which is equivalent to SEK 9.73 (9.17) per share. Adjusted for the effects of exchange rate movements on the change in working capital, cash flow after tax was SEK 8.83 (6.67) per share.

Cardo Door

Cardo Door's inflow of orders was, after adjustment for the effects of exchange rate movements, 7 percent lower than the previous year. Company acquisitions made a positive contribution of 1 percentage point. For industrial doors and dock loading systems, demand was considerably weaker than during the corresponding period 2002. The trend for service, which accounts for approximately a quarter of Cardo Door's turnover, remained good. For residential garage doors, demand was somewhat lower than the previous year.

Invoiced sales amounted to SEK 2,323 million (2,532), which adjusted for the effects of exchange rate movements is a decrease of 6 percent. Company acquisitions made a positive contribution of 1 percentage point. Operating earnings amounted to SEK 85 million

(105).

The measures that were initiated during the fourth quarter of 2002 are expected to give an annual improvement in earnings of approximately SEK 30 million and to take effect gradually during 2003, achieving full effect as of 2004. Intense efforts are being made to further reduce costs and to enhance efficiency in all parts of the organization with a view to improving profitability in both the short and long term.

Cardo Pump

The inflow of orders was, after adjustment for the effects of exchange rate movements, 1 percent lower than the previous year.

Demand in the water and wastewater segment during the period was lower than the previous year, particularly as regards big wastewater pumps. In the building services segment, demand was on a par with the previous year, while it increased from the process industry.

Invoiced sales amounted to SEK 1,380 million (1,511), which adjusted for the effects of exchange rate movements is 4 percent lower than the previous year. Operating earnings amounted to SEK 100 million (83).

Liquidity and financing

At June 30, the Group's liquid funds stood at SEK 158 million (201) compared with SEK 922 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 2.0 billion (2.8).

The Group's gross investments, excluding company acquisitions, stood at SEK 154 million (151). The level of investment was higher than the previous year in consequence of the construction of a new production line for residential garage doors in Torslanda, Sweden.

Net interest bearing debt at June 30 amounted to SEK 491 million (1,495), compared with net liquid funds of SEK 593 million at the beginning of the year.

Equity amounted to SEK 2,745 million (3,330), which is equivalent to SEK 91.51 (110.99) per share.

The Group's equity ratio at June 30 was 52.8 percent (41.9).

Personnel

The number of employees in the Group at June 30 was 6,026 (8,076).

Company acquisitions

As of January 2003, Cardo Door includes the acquired company SEA B2L, which has a turnover of approximately SEK 70 million.

Accounting principles

The report has been drawn up in accordance with recommendation RR 20 of the Swedish Financial Accounting Standards Council concerning interim reports. The accounting principles used are the same as in the annual report for 2002 except for the new recommendations of the Swedish Financial Accounting Standards Council effective as of January 1 2003. The application of the new recommendations has not given rise to any adjustment of previously reported periods.

The parent company

The parent company's earnings after financial items amounted to SEK -7 million (313), its gross investments to SEK 0 million (0) and its liquid funds to SEK 1 million (1) as against SEK 176 million at the beginning of the year.

Market prospects

The assessment in the previous report still applies: "There is still uncertainty about the market trend and no sign at present indicating imminent improvement. For Cardo's part, the uncertainty means continued focus on cost adjustment and improvements in efficiency."

Enclosures (Invoiced sales, earnings and operating margin by business area, Consolidated income statement and balance sheet in brief, Consolidated cash flow statement in brief, Income statement and cash flow broken down by current operations and operation disposed of and Group financial summary can be downloaded from http://reports.huginonline.com/913384/121337.pdf

Cardo's interim report for January-September will be published on October 29 2003.