CARDO AB: Interim report, January – June 2001

Cardo Pump

Cardo Pump is one of Europe's largest manufacturers of pumps, mixers

and aerators and a global leader in the production of sophisticated

measuring instruments for the pulp and paper industry.

After adjustment for the effects of exchange rate movements, the

inflow of orders was 4 percent higher than last year, despite falling

demand in Germany and the UK.

In Cardo Pump's biggest segment, water and wastewater, demand

increased during the half-year period compared with the corresponding

period last year, as did demand from the process industry. In the

building services segment, demand was less than last year.

During the second quarter, a number of significant orders were

received in respect of pumps for the pulp and paper industry,

including ones from Hallstavik in Sweden, Mayen in Germany and

Aracruz in Brazil. In the water and wastewater segment, big orders

were received for, among other things, mixers for Belgium and

submersible pumps for China.

Invoiced sales amounted to SEK 1,306 million (1,211). The increase is

almost exclusively attributable to the effects of exchange rate

movements. Operating earnings amounted to SEK 73 million (98).

Reduced sales and lower margins in Germany during the second quarter

had an adverse effect on earnings.

Certain cost-saving measures were adopted during the period. These

included a start on a restructuring of the plant in Mölndal, Sweden,

with a view to improving efficiency and profitability. Further

measures will be adopted, principally in markets with falling demand,

and these will be charged to earnings for the second half of the

year. The objective is to achieve an operating margin level of 10-11

percent for the business area within a two-year period.