Continued Positive Trend for CARDO AB

Net sales amounted to SEK 2,136 million (1,953), up 8% after adjustment for the effects of exchange rate movements. Organic growth was 4%.

The group's operating earnings improved to SEK 145 million (78).

Door & Logistics Solutions

Adjusted for the effects of exchange rate movements, the inflow of orders and net sales rose by 12%, whereof the acquisition of Combursa accounted for 7 and 8% respectively. Operating earnings improved to SEK 68 million (45).

Wastewater Technology Solutions

Adjusted for the effects of exchange rate movements, the inflow of orders and net sales rose by 6 and 5% respectively. Operating earnings improved to SEK 70 million (63).

Pulp & Paper Solutions

Adjusted for the effects of exchange rate movements, the inflow of orders and net sales rose by 7 and 1% respectively. Operating earnings improved to SEK 21 million (20).

Residential Garage Doors

Adjusted for the effects of exchange rate movements, the inflow of orders and net sales rose by 7%. Operating earnings improved to SEK 3 million (-8).

The period January-June

The group's inflow of orders amounted to SEK 4,426 million (3,951), up 9% after adjustment for the effects of exchange rate movements. Organic growth was 7%. The inflow of orders in Europe has improved, while several markets in Asia and in North and Latin America have continued to show good growth.

Net sales amounted to SEK 3,948 million (3,575), up 8% after adjustment for the effects of exchange rate movements. Organic growth was 6%.

Operating earnings amounted to SEK 188 million (68). Improvements in earnings have occurred for all divisions. The effects of the restructuring program are appearing according to plan. The impact of exchange rate movements on operating earnings was only marginal.

Net earnings amounted to SEK 124 million (28), which is equivalent to SEK 4.13 (0.93) per share.

Cash flow from operating activities was SEK 116 million (56) after tax, which is equivalent to SEK 3.87 (1.87) per share.

Door & Logistics Solutions

For Cardo's division Door & Logistics Solutions with its corporate brand Crawford, the inflow of orders amounted to SEK 2,140 million (1,878), up 11% on the corresponding period the previous year adjusted for the effects of exchange rate movements. Organic growth was 7%.

Net sales amounted to SEK 1,953 million (1,757), up 9% adjusted for the effects of exchange rate movements. Organic growth was 5%. Operating earnings were SEK 137 million (87). The improvement in earnings is an effect of increased sales and lower fixed costs. Earnings were adversely affected to an extent of SEK 10-15 million by the recent increases in the prices of raw materials. Selective price rises will therefore be introduced during the third and fourth quarters.

Wastewater Technology Solutions

For the division Wastewater Technology Solutions with its corporate brand ABS, the inflow of orders amounted to SEK 1,317 million (1,185), up 7% on the previous year adjusted for the effects of exchange rate movements.

Net sales amounted to SEK 1,143 million (1,039), up 6% on the corresponding period the previous year adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK 96 million (77).

Pulp & Paper Solutions

The division Pulp & Paper Solutions includes the Lorentzen & Wettre and Scanpump operations. The inflow of orders amounted to SEK 374 million (348), up 4% on the previous year adjusted for the effects of exchange rate movements.

Net sales amounted to SEK 315 million (286), up 8% adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK 20 million (10).

Residential Garage Doors

Residential Garage Doors' operation is run under the Crawford, Normstahl and Henderson brands. The inflow of orders amounted to SEK 606 million (550), up 8% on the corresponding period the previous year adjusted for the effects of exchange rate movements.

Net sales amounted to SEK 548 million (502), up 7% adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK -32 million (-49). The improved earnings are attributable to increased sales and lower fixed costs. In general, there are still difficulties in passing on increases in the prices of materials to customers, but selective price rises will be introduced during the remaining quarters of the year.

Company acquisitions

Late March saw finalization of the acquisition of Combursa, Spain's leading supplier of docking systems and industrial doors with annual sales of approximately SEK 275 million and with about 150 employees. The results of the Door & Logistics Solutions division include Combursa from April 1 2006.

Early July saw the acquisition of the operations of the Australian company Style Industries, with annual sales of approximately SEK 45 million and almost 30 employees. The company pursues sales and service of pumps and peripheral equipment for water treatment and wastewater applications. Style Industries is based in Brisbane in southeastern Australia.

The acquisition will be accounted for within the division Wastewater Technology Solutions and will be included in the group's results from the date of acquisition.

Liquidity and financing

At June 30, the group's cash and cash equivalents amounted to SEK 155 million (162) as against SEK 168 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 1.6 billion (approximately 2.1).

The group's gross investments, exclusive of company acquisitions, stood at SEK 68 million (129).

Net interest bearing debt at June 30 amounted to SEK 1,035 million (581) as against SEK 554 million at the beginning of the year. The increase is explained by the acquisition of Combursa and by the payment of dividend.

Equity amounted to SEK 2,760 million (2,829), which is equivalent to SEK 92.00 (94.30) per share.

At June 30, the group's equity ratio was 46.8% (52.5).

Cardo's CFO leaving the group

Cardo's CFO Göran Axeheim has decided to leave the group, but will remain in his post until the beginning of October. A successor is being recruited.

Personnel

The average number of employees in the group was 5,710 (5.746).

Repurchase of shares

At this year's Annual General Meeting of Cardo AB a resolution was passed authorizing the Board of Directors to acquire up to so many own shares before the next Annual General Meeting that the Company's holding at no time exceeds 10% of all shares in the Company. Acquisition is to be made on the Stockholm Stock Exchange at the market value applying on the occasion of acquisition. The purpose of the repurchase is to give the Board the opportunity to adjust the capital structure of the Company during the period until the next Annual General Meeting. The Board has yet to resolve to utilize the authorization and thus no repurchase has been made.

Accounting principles

This interim report has been drawn up in accordance with IAS 34, Interim Financial Reporting, which accords with the requirements of recommendation RR 31 of the Swedish Financial Accounting Standards Council concerning interim reports for groups. The same accounting principles have been applied in the interim report as in the latest annual report.

Parent company

The parent company's earnings after financial items amounted to SEK 437 million (-5), gross investments to SEK 0 million (0) and cash and cash equivalents to SEK 0 million (0) as against SEK 10 million at the beginning of the year.

Market prospects

The following market prospects still apply:

We assess that the market trend for industrial products will be generally relatively favorable during 2006, even if there are differences between different geographical regions. There is still uncertainty in the garage door division owing to the large excess capacity within the industry.