CARDO AB: Interim report, January – March 2002

The Group's inflow of orders amounted to SEK 2,664 million (2,900), which is 13 percent lower than the previous year for the current structure of the Group after adjustment for the effects of exchange rate movements. The decrease is almost exclusively attributable to Cardo Rail, which had an unusually strong inflow of orders in the first quarter of the previous year.

Invoiced sales amounted to SEK 2,623 million (2,375). Adjusted for the effects of exchange rate movements, this is a rise of 7 percent. Company acquisitions account for 4 percentage points of this figure.

Operating earnings amounted to SEK 104 million (100), providing an operating margin of 4.0 percent (4.2). Door's and Pump's earnings were on a par with the previous year, while Rail's earnings rose slightly.

Earnings after financial items were SEK 79 million (76), providing a profit margin of 3.0 percent (3.2). Earnings per share after full tax were SEK 1.70 (1.63).

The impact of exchange rate movements on Group earnings is estimated to have been marginally beneficial.

Preliminary agreement on sale of the Rail business area

In mid-April, Cardo entered into a preliminary agreement with Vestar Capital Partners whereby Vestar will acquire the Cardo Rail business area from Cardo. The intention of the parties is to enter into a definitive sale and purchase agreement as soon as contract negotiations and due diligence have been completed.

Vestar is a leading private equity firm. Founded in 1988, Vestar has offices in Paris, Milan, New York and Denver, and currently manages approximately USD 4 billion of capital. The firm has substantial investment experience across a wide range of industries and a long history of investment in the railway supply sector.

Additional information is expected to be available at the end of May/beginning of June 2002.

Company acquisitions

As of January 2002, Cardo Pump includes the acquired companies Swedmeter AB and Nopon Oy with annual turnovers of approximately SEK 30 million and approximately SEK 120 million respectively. As of the same date, Cardo Door includes the acquired company Amber Doors Holding Limited with its subsidiary Amber Doors Limited. Amber Doors has an annual turnover of approximately SEK 240 million.

Cardo Door

Cardo Door is one of the world's largest manufacturers of industrial doors and Europe's leading supplier of dock loading equipment. Cardo Door is also the market leader in servicing these products and one of Europe's largest manufacturers of residential garage doors.

Cardo Door's inflow of orders for the current structure was 2 percent lower than the previous year after adjustment for the effects of exchange rate movements.

For industrial doors and dock loading products, demand was weaker than during the corresponding period the previous year. Demand for residential garage doors was on a par with the previous year with demand in Germany remaining weak. The trend for service, which accounts for approximately a quarter of Cardo Door's sales, remained good.

Major orders during the first quarter included ones in the UK for 130 residential garage doors for the British Royal Navy for a facility in Culdrose in southern England, 86 security doors for the mobile phone retailer Phones 4U for nationwide installations, and 41 complete dock loading units and 6 industrial doors for the Burton-on-Trent facility of the catalog house Argos Ltd. In China, an order was received for 28 industrial doors from Eastocean Oils & Grains Industries Ltd in Zhangjiagang, 150 km northwest of Shanghai. From Bin Dasmal Door Est. in Dubai, an order was received for 90 fire doors; and Standoor Hellas in Greece bought 42 electrically driven industrial doors for installation at the Athens facility of the French supermarket chain Carrefours Hypermarkets.

Invoiced sales rose to SEK 1,243 million (1,131). Adjusted for the effects of exchange rate movements, this is a rise of 7 percent. Company acquisitions account for 5 percentage points of this figure. Operating earnings amounted to SEK 53 million (53).

Cardo Door's expansion in the Chinese market is continuing. March saw the opening of the new plant for the process production of industrial doors at the subsidiary in Kunshan in the Shanghai area.

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.

The inflow of orders rose by 1 percent for the current structure after adjustment for the effects of exchange rate movements.

Demand increased in the water and wastewater segment during the period compared with the previous year. In the building services segment, demand stabilized after the downward trend during most of 2001. Demand from the process industry decreased compared with the previous year.

Expansion in Asia continued, and the period saw Cardo Pump secure a number of major orders for pumps for wastewater projects in China and for mixers for Japan.

In the USA, an order worth SEK 2.7 million was received for submersible pumps for Portland Airport; and in Venezuela a major government customer placed an order for 43 big dewatering pumps worth SEK 4.7 million. Process pumps, worth SEK 5.4 million, were sold to Chile for a major project in the paper industry as well as pumps and mixers for a new water and wastewater treatment plant. In Spain, a number of major orders were received for wastewater treatment projects; and in Sweden an order was won for rental of a number of big pumps in connection with a tunnel construction project in Gothenburg. This tunnel project, with an estimated project cost totaling SEK 2.2 billion, will be under way over a five-year period.

The newly acquired companies Swedmeter and Nopon secured a number of interesting orders during the period, including one for Swedmeter products for the remote monitoring of 21 pumping stations in Italy, where a big order for Nopon's fine-bubble aeration systems was also received from a major customer. Nopon also secured a major order in Switzerland for similar products and orders from Poland and Germany for compressors for use in aeration systems.

Invoiced sales amounted to SEK 722 million (611), which adjusted for the effects of exchange rate movements is a rise of 15 percent. Company acquisitions account for 7 percentage points of this figure. Operating earnings amounted to SEK 30 million (31). Earnings were adversely affected by unsatisfactory margins for a number of major project deliveries to the pulp and paper industry.

The action program that was started in the fall of 2001 for the purpose of reducing costs is continuing according to plan. The measures will begin to give improvements in earnings during the second half of this year.

Cardo Rail

Cardo Rail is one of the world's largest manufacturers of brake systems and brake components for rail vehicles.

The inflow of orders during the period amounted to SEK 622 million, which adjusted for the effects of exchange rate movements is 38 percent lower than the previous year. The decrease is mainly accounted for by the comparison with an unusually strong inflow of orders during the first quarter of the previous year.

Orders received in the quarter included one from Bombardier worth SEK 30 million relating to couplers for the ICN high-speed train for delivery to Switzerland. Bombardier also ordered bogie-mounted brake equipment for 100 commuter trains for delivery to Deutsche Bahn. This order is worth SEK 35 million, and there is an option on a further 140 trains. An order worth SEK 20 million was received from Alstom for bogie-mounted brake equipment for commuter trains for delivery to a railway operator in Spain.

Cardo Rail's invoiced sales amounted to SEK 658 million (633), which is a rise of 1 percent adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK 40 million (35).

With a view to increasing Cardo Rail's activities and strengthening its position in Asia and eastern Europe, new organizations with responsibility for these growth markets were established in the first quarter. Seoul in South Korea is Cardo Rail's base in Asia; and Tremosnice in the Czech Republic is its base in eastern Europe.

Liquidity and financing

At March 31, the Group's liquid assets stood at SEK 219 million (274) compared with SEK 264 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 3.2 billion (3.1).

Cash flow from operations was SEK 229 million (49) after tax, which is equivalent to SEK 7.63 (1.63) per share. Adjusted for the effects of exchange rate movements on the change in working capital, cash flow was SEK 5.03 (4.16) per share after tax. The Group's gross investments, excluding company acquisitions, stood at SEK 65 million (68).

Net interest bearing debt at March 31 amounted to SEK 1,484 million (1,289) compared with SEK 1,242 million at the beginning of the year. The increase is mainly attributable to company acquisitions.

Equity amounted to SEK 3,497 million (3,327), which is equivalent to SEK 116.56 (110.90) per share.

The Group's equity ratio at March 31 was 43.2 percent (43.9).

Personnel

The number of employees in the Group at March 31 was 8,173 (7,971).

The parent company

The parent company's earnings after financial items amounted to SEK 89 million (-12), its gross investments to SEK 0 million (0) and its liquid assets to SEK 0 million (76) as against SEK 0 million at the beginning of the year.

Market prospects

Market prospects continue to be difficult to assess, not least when it comes to Germany. As regards Cardo, the Group is still considered to be capable of showing greater growth than that of the underlying market for the whole year.

Malmö, Sweden, May 6 2002

Cardo AB (publ)

Kjell Svensson President and CEO

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

Cardo's interim report for January-June will be published on August 14 2002.

For further information, please contact:

Kjell Svensson, President and CEO, phone +46 40 35 04 53, +46 40 35 04 00

Göran Axeheim, Executive Vice President and CFO, phone +46 40 35 04 42, +46 40 35 04 00

Christer Roskvist, Head of Public Relations, phone +46 40 35 04 25, +46 40 35 04 00

About Cardo

Cardo is an international engineering group with a turnover of approximately SEK 11 billion. Cardo holds a strong position in the markets for doors, pumps and rail-vehicle brake systems. Cardo has subsidiaries in about 30 countries with the focal point resting in western Europe, and roughly 8,000 employees.