STOCKHOLM, Sweden, May 25, 2002 (PRIMEZONE) -- Annual General Meeting of Nefab AB (publ)
The Annual General Meeting of Nefab AB shareholders was held on May 25, 2002.
Dividend
The Annual General Meeting approved the Board of Directors' proposal that a dividend of SEK 2.80 per share be paid to shareholders. This amount is unchanged compared with the preceding year. May 29, 2002 was set as the record date and the dividend is expected to be distributed via VPC on June 3, 2002.
Board of Directors
Ing-Marie Nordgren, Jochum Pihl, Bjorn Svedberg, Hans Nilsson, Reinhold Geijer, Hans Narfstrom and Lars-Ake Rydh were all re-elected as members of the Board for the next fiscal year.
Financial reports Interim report for January-June August 13, 2002 Interim report for January-September October 30, 2002 Year-end report for 2002 February 13, 2003
For further information, contact President and CEO Lars-Ake Rydh, tel. +46-70-592 45 70, e-mail lars-ake.rydh@nefab.se, or CFO Anna Stalenbring, tel +46-70-814 23 44, e-mail anna.stalenbring@nefab.se
Alfta, May 25, 2002
Lars-Ake Rydh President and CEO
Appendix: President's address at the Annual General Meeting
Information about Nefab
Nefab delivers complete packaging solutions to international industrial groups, primarily within the telecom equipment and automotive industries. Nefab has its own companies in Europe, North and South America and Asia. Annual sales are about SEK 1.1 B. The Nefab share is listed on the OM Stockholm Exchange.
Nefab AB (publ)
Ostra Storgatan 20 . P O Box 2184 . SE-550 02 Jonkoping . Sweden Telephone +46(0)36-345050 . Telefax +46(0)36-150444 . Organization No. 556226-8143 Homepage: www.nefab.com . E-mail: info@nefab.se The registered office of the board of directors is in Ovanaker, Sweden
President's address at Nefab's Annual General Meeting for 2002
Mr. Chairman, distinguished shareholders and Meeting participants !
Today is the sixth occasion on which Nefab is holding an annual general meeting since we were exchange-listed in 1996. This year too we are following our tradition of holding the Meeting in Halsingland. This time we are gathered in the barn in Runemo - I feel certain that this is the only annual general meeting in the world to take place in a barn! Be that as it may, it is no coincidence that Nefab's event has an air of simplicity and economy. Perhaps this aspect of what we might call the Nefab culture is one of the reasons why we are doing as well as we are, even in the current adverse business climate. Despite the gesture to economy, I hope you do not feel that we have economized on the refreshments at the Meeting.
A good year despite the turbulence
For 2001, Nefab is able to report earnings of SEK 67 M, the second best earnings figure in the more than 50 years of the company's existence. However, the year was characterized by considerable turbulence. During late autumn of 2000, I visited key customers in the telecom equipment sector in Europe, North and South America and Asia. The overall impression I gained from the trip was that the market would grow very rapidly. In fact, growth was expected to be so rapid that my greatest concern was how we would manage to build enough capacity to meet our commitments. In order to meet demand, we decided on substantial investments in capacity, both in Europe and in North America and Asia.
We had barely had time to move into the new production units in Canada and the UK before the market turned and demand from our most important customers declined sharply.
Capacity adjustment
As a result of this dramatic change in the market, we decided to close the production units in both the US and the UK. By the end of the year, both plants had been completely shut down. Naturally it was difficult to take a decision to close a plant that had opened only six months earlier - I am referring to the plant in the UK. But in times when conditions change rapidly, it is obviously better to accept the reality than live on dreams that are not going to be realized. This process also cost a large amount of money. We estimate that the negative impact of the restructuring on full-year earnings was in the order of SEK 40 M.
Despite the changed market scenario, we made a number of major investments.
In January we moved into newly constructed, larger premises in Canada.
We constructed our second plant in China in order to meet increasing demand in that market. The unit was sited in Shenzhen in southern China, where a number of potentially interesting telecom equipment and electronics companies are located, including European and American as well as wholly owned Chinese companies. The plant was placed in operation during autumn 2001. Asia has become an increasingly important market for us, representing approximately 15 percent of total invoiced sales during the year.
We also completed our investment in a new facility in Estonia. Initially this plant was intended purely as an investment in capacity, but now we are viewing it more as a rationalization investment. The low costs, combined with an excellent location from the logistics standpoint, serve to strengthen our competitiveness. The unit was placed in operation at the beginning of this year, but operations are only now building up to a more extensive scale.
The investment in Estonia has had some effect on employment levels here in Alfta. In the long term, however, the Tallinn plant will strengthen the competitiveness of the concept we deliver from Alfta, which will also mean increased security for the employees in Sweden.
During a period of 12 months, we thus adapted our operations to a market that had changed radically since the beginning of 2001. Although this was a stressful process for the organization, I am pleased today that the decision to adapt was made so promptly, so that the negative impact on the Group's earnings and cash flow could be kept to a minimum. Cash flow from ongoing operations amounted to SEK 94 M for the full year.
Telecom equipment industry undergoing change
For some years, our main customers have been in the telecom equipment industry. During the past two years, we have noted a trend for these companies to outsource production to so-called "contract manufacturers." This process accelerated during 2001, resulting in a noticeable change in Nefab's customer structure. We have gradually adapted to the new situation and established cooperation with the leading companies in the sector. One example is Flextronics, with which we cooperate in a number of locations in Europe, Asia and South America.
Global supplier of complete packaging solutions
2001 was a groundbreaking year in terms of deliveries of complete solutions. Historically, Nefab has functioned as a supplier of a niche product. We have adapted to keep pace with changes in customer expectations. Today we are a customer-focused company with the capability to supply complete packaging solutions in a global market. There are few other players, if any, who can compare with us as a global player and supplier of complete solutions.
China is the market where we have progressed furthest in terms of supplying complete solutions. Within a short time, we have built up a highly competent organization - a factor that has made us welcome in the Chinese market. Now we are further strengthening our position by constructing a testing facility that will be one of the best in China.
Nefab is nevertheless a relatively small company, and it is therefore a challenge to be both global and a full-service company. Accordingly, we will need partners with the right credentials in order to be able to maintain and strengthen our market position long-term. Over the years, we have built up relations with a number of companies that complement Nefab and thus help us to fulfill our vision.
As an example, I can cite the cooperation initiated during the year with SCA Packaging. Nefab and SCA complement each other well in terms of both product ranges and market coverage. The cooperation has developed very satisfactorily and today we can identify 100 or more customer projects that can be considered to have good business potential.
As we have broadened our offering to the market, our interest in acquisitions has also increased. While we do not anticipate making any major acquisitions, there are a number of smaller companies that could complement Nefab in various ways. Accordingly, the purpose of prospective acquisitions is to broaden our customer offering and/or to fill a gap geographically.
Globality
During the past year, our aim of achieving globality has brought both advantages and disadvantages. There is no question that our presence in China has been important for our position as a partner to multinational companies. At the same time, however, our operations in North America and Brazil have proved a substantial burden. As far as North America is concerned, I believe we have passed through the worst period, but we need to increase volumes in order to be on a really sound footing. Brazil continues to represent a considerable burden for us.
We have recently intensified our cultivation of the markets in Eastern Europe, and today we have sales organizations in Poland and Hungary and are in the process of establishing a presence in the Czech Republic.
Environmental work continues
We state in our environmental policy that the most important function of packaging is to protect the goods being shipped, thereby preventing unnecessary wastage of resources through damage. Effective packaging solutions are essential in an environmentally compatible society. I am therefore pleased to report that Nefab has become the first packaging company in Sweden to market packaging bearing KD certification from the Swedish Board of Agriculture. Once again we have shown that we are among the leaders in regard to environmental issues.
Know-how - a key competitive weapon
In parallel with Nefab's transformation from a supplier of packaging to a supplier of total solutions, it is important to also develop the collective know-how within the organization. To this end we have established a global network for the transfer of know-how and information, based on three competence centers located in Asia, Europe and North America. The competence matrix is coordinated by the organization here in Alfta. It is my ambition that, in terms of know- how, our organization should remain a step ahead of the competition.
Future outlook
About half of our invoiced sales are to the telecom equipment sector, and we are positioned as the global market leader in this segment. During the early part of 2002, however, deliveries to the telecom equipment industry have remained at a low level, and this applies essentially to all geographic markets. Even China, which has hitherto been the growth engine, has not been immune to the crisis.
So when can we expect an improvement in the market situation? A number of factors need to fall into place. The financial situation of the operators must stabilize. New applications must be developed for which we as consumers are prepared to pay, and technical development in the telephony area must continue. Since our customers, the telecom equipment manufacturers,
are extremely cautious about predicting when the market will improve, there is no reason why anyone should expect us, as a subcontractor, to be any better informed.
So what should we do in the meantime? We will make sure we retain our market position, so that we can benefit from the volume growth that must come sooner or later; we will intensify our marketing efforts in other segments - particularly the automotive industry; and we will gradually broaden our product and service offering to the market.
We will focus more intently on cash flow. We are working with current assets and holding back on investments, since we have adequate capacity to handle a future increase in volumes. During Q1 we had a positive cash flow amounting to SEK 48 M and a cash reserve of slightly more than SEK 220 M, which gives a feeling of security in the prevailing market situation.
Over many years, Nefab has progressively built itself up into a multinational packaging company. Our position today is unique within the sector. Our ambition remains the same - to serve as a global partner supplying complete packaging solutions.
I would like to conclude my presentation of the Nefab Group's operations for 2001 on that positive note.
Thank you for your attention.
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