Annual Report 2001 – Further expansion in service

18.03.2002

The ABS service concept has helped strengthen the company’s position in the aftermarket. The past year saw further training of service staff, the setting up of local service centres and the development of rental activities for dewatering pumps. The aftermarket area has expanded strongly with a rate of increase that is twice as high as that for other areas.

During the year 2001, ABS continued the expansion of aftermarket activities. Service workshops were established and acquired during the year in countries that included the USA, the Republic of Ireland, the UK, France and Spain.

In Holland, a project was started where the service operation was made more efficient by the introduction of remote IT support for service engineers. The new IT support gives the service engineers access to all the necessary information on site with the customer. This project is being run very successfully, and the customers appreciate the enhanced level of service.

Sales and earnings

Invoiced sales amounted to EUR 306 million (300), which adjusted for the effects of exchange rate movements is a rise of 3 percent. Operating earnings amounted to EUR 19 million (26), exclusive of restructuring costs. Including these costs, earnings were EUR 14 million. Earnings were adversely affected by weak sales and low margins in Germany and the UK and by unsatisfactory margins for process pumps for the pulp and paper industry. The inflow of orders rose by 4 percent after adjustment for the effects of exchange rate movements. This was despite weak demand in Germany and the UK.

Developments in 2001

Significant orders during the year included one from the Chinese paper mill Nine Dragons, which is situated in Guangdong province in southern China. This order, which relates to 137 pumps and 42 mixers, is a breakthrough for ABS in the Chinese market. In the USA, an order was received for almost 100 process pumps for a new paper machine for the Willamette paper mill in Tennessee.

In Spain, ABS received a large number of orders in the water and wastewater segment; and in France a three-year group agreement was signed with a multinational company in the field of water and wastewater facility construction relating to the delivery of products and maintenance. For a big wastewater treatment plant just outside Seoul in South Korea, a major order for mixers was received; and in Dubai an order was won for 24 big wastewater pumps.

From a private company in water and wastewater management in Manila in the Philippines, an order was received for 23 big and 3 smaller submersible wastewater pumps. This order is a breakthrough for ABS in the Philippine market.

At the end of the year, ABS acquired Swedmeter AB, one of Scandinavia’s leading companies in the field of control engineering for water treatment processes etc. Swedmeter manufactures and markets standardised products for level and flow control, analysis, process control and remote monitoring for both municipal and industrial processes. The acquisition makes ABS a more complete system supplier, particularly in the water and wastewater segment.

In early 2002, ABS acquired the Finnish company Nopon Oy, one of the world’s leading manufacturers of products for oxygenation in connection with biological wastewater treatment. Nopon manufactures and markets fine-bubble aeration systems complete with associated compressors and mechanical aerators. Through this acquisition, ABS is becoming a more complete supplier of customised oxygenation systems for wastewater treatment.

The organisation

The process of making the sales force more efficient continued during the year.

This included courses in sales management and training to enhance knowledge of applications. The harmonisation of production that was initiated in 2000 continued and included co-ordination of purchasing and logistics. A joint warehousing and logistics centre for the European market was set up in Germany.

A program to reduce costs was established in the fall; and measures were introduced in operations in markets with a falling demand in particular. The program mainly comprises staff reductions and the closure of certain regional offices.

ABS is the major part of Cardo Pump which in turn is one of three business areas within Cardo AB, an industrial group listed on the Stockholm stock exchange. Cardo AB had a group turnover in 2001 of more than EUR 1,167 million.

Exchange rates from SEK to EUR: 9.23444 (2001) and 8.4539 (2000)

For further information, please contact Annika Lemming, Marketing Communications Department, phone no +46 31 83 63 00 or e-mail: annika.lemming@abspumps.com.

Source: Sulzer Ltd.

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