STOCKHOLM, Sweden, May 14, 2004 (PRIMEZONE) -- The Annual General Meeting of Nefab AB shareholders was held on May 14, 2004.
Dividend
The Annual General Meeting approved the Board of Directors' proposal that a dividend of SEK 3.00, an increase with SEK 0.20 compared with last year (2.80), per share be paid to shareholders. May 19, 2004 was set as the record date and the dividend is expected to be distributed via VPC on May 25, 2004.
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 fical year and Cecilia Daun Wennborg was elected as a new member of the Board for the next fiscal year. The fee for the next fiscal year was stipulated to SEK 1,190,000 to be divided between the members.
Financial reports
Interim report for January-June 2004 August 11, 2004 Interim report for January-September 2004 October 27, 2004 Year-end report for 2004 February 15, 2005
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 14, 2004
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. Invoiced sales in 2003 amounted to slightly above SEK 1 B. The Nefab share is listed on Stockholmsborsen.
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
CEO's address at Nefab's 2004 Annual General Meeting
Mr. Chairman, shareholders, meeting participants!
This is the eighth time Nefab is holding an Annual General Meeting since the company's listing in 1996. A lot has happened during these years. The world around us looks different and Nefab has adjusted its way of acting in the market.
However, one thing remains the same and that is the beautiful springtime in the Swedish province of Halsingland. It is a tradition to hold the meeting here in Runemo, despite the fact that we are now a global company and the Alfta unit is only one part of the Group. However, the Runemo unit remains somewhat of a core in the Group. It is, for example, here that our expertise in sheet material-based packaging is to be found and this is still an important part of our concept.
We achieved our targets
Let me move on to the past year. The ambition for 2003 was to be able to generate a reasonable profit and a favorable cash flow even during a period when demand from the telecom equipment industry was weak. With the answer sheet in our hand, we can affirm that we succeeded with this goal. Despite a continued relatively weak market, we improved profits and strengthened our financial base.
Improved profits and favorable cash flow
Invoicing remained largely unchanged compared with 2002. Since the Swedish krona strengthened against most other currencies and prices were relatively stable, this meant in practice a growth in volumes in the region of 8 percent. Profit after financial items improved from SEK 52 M in 2002 to SEK 65 M. This profit was achieved through a somewhat improved gross margin combined with lower fixed costs. Cash flow after investments amounted to SEK 73 M. Investments remained at a low level, at the same time as the working capital remained stable.
Telecom equipment and automotive industries in focus
Nefab's dependency on the telecom equipment industry has continued to decline. In 2003, 37 percent of our invoicing related to deliveries to this segment. However, in our evaluation, we have increased our market share during 2003. During early 2004, demand increased once again. We enjoy a very strong position and view ourselves as market leaders. Through the global cooperation we have with companies such as Ericsson and Alcatel, we are affected positively by the recovery in the segment.
The automotive industry, where our market share is marginal, represented 12 percent of invoicing in 2003. During the first quarter of 2004, this share was almost the same, implying growth of 37 percent. The potential within this segment is extensive. Competition is fierce, but we believe there are sub-segments where money can be earned. An increasing part of our sales to the automotive industry comprise products produced by our sub-suppliers. These often include products made from steel and plastic.
The remaining share of invoiced sales, about 50 percent, is distributed among a large number of industries, of which the mechanical and electronic engineering industries are the most significant.
Increasing proportion trading operations and service
In recent years, we have developed from being a product-oriented company to a supplier of complete solutions. During 2004, this process has accelerated. At the same time, this means that the proportion of in-house production has decreased. A significant part of our growth has been generated by trading operations and service. During 2003, in-house production accounted for 72 percent, while trade and service accounted for 28 percent. It is my view that we will arrive at a situation in the coming years where trading operations will be larger than our in-house production.
Growth through acquisitions
Since we are investing purposefully on broadening our offering to customers, two paths to growth are open to us, to grow organically or through acquisitions. We have chosen to combine the two alternatives. Nefab has established organizations at several industrialized centers around the world on which we can build further. As a complement to this organic growth, we are also planning for acquisitions, concentrating on Europe, which we view as our home market. Of greatest interest are trading companies with a broad product portfolio and favorable relations with customers in our prioritized segments. During 2003, two smaller acquisitions were made in Portugal and Finland. Our strong balance sheet and favorable cash balance mean we are ready to conduct further acquisitions as soon as suitable objects appear.
Increasing proportion of production in low-cost countries
In pace with our customers moving parts of their production to low-cost countries, Nefab is doing likewise. This is a necessity to be able to offer strong service and to maintain competitiveness. Nefab's production in areas such as Eastern Europe is expected to grow in the coming years. At today's Board meeting, it was therefore decided to establish a new production unit in Slovakia.
Slovakia is one of the new members of the EU, with a logistically strategic position in Europe. If everything proceeds as envisaged, we will be able to start production at the new plant about halfway through 2005. The investment in machinery amounts to approximately SEK 20 M. In addition, some machinery will be moved from other plants in Europe. We expect the unit to have a capacity of approximately SEK 135 M, in terms of sales prices to customers.
The new unit will primarily produce labor-intensive products. Longer series and products of a more standard nature will continue to be produced at our plants in Western Europe. Following this investment, approximately 50 percent of our European production of export packaging will take place in so-called low-cost countries.
Nefab's vision remains firm
Nefab shall be the global partner for complete packaging solutions. During 2004, we will continue to focus on the three key terms globality, partnership and complete solutions.
We view Europe as our home market and will ensure that we are able to provide our customers favorable service regardless of where in Europe their operations are located. Outside Europe, China is given the highest priority. Our existing operations there form a sold foundation and we have the ambition of further strengthening our position. In order to be a strong partner in Europe and China, a presence is also required in Brazil and North America. It is challenging for a company of Nefab's size to have a global ambition. However, it is my firm conviction that globality is our foremost competitive advantage today.
With regard to partnership, we will continue to monitor our position in the telecom equipment industry. With the outsourcing that has been implemented, we have also gained a strong position among "contract manufacturers." Our ambition is to develop this position further. The automotive industry is growing increasingly important for us. As previously mentioned, we feel there is considerable potential for growth in this segment.
Nefab's offering to the market comprises complete packaging solutions. We have progressed a long way, although a good deal of development remains. We are currently building up a supplier base which will be able to develop in pace with the company.
Nefab currently has some 1,200 skilled workers, distributed among almost 30 countries. The expertise of our personnel is growing increasingly important. For this reason, we are investing in internal training, primarily through our "web academy," which was developed in-house, an Internet-based, cost-effective training portal.
In holding together a company of Nefab's nature, the corporate culture is the most important tool. We are proud of the culture that has been established for many years. In our efforts to maintain and strengthen this, we have documented Nefab's Code of Conduct. This can be seen on page 22 of the Annual Report.
New financial objectives
During the past year, we have re-evaluated our financial targets. We now base these on a share- holder perspective. The target during an economic cycle is to generate a return of at least 15 percent on shareholders' equity. With regard to growth, our target is to grow more rapidly than the market organically and also through certain acquisitions. In order to achieve this, a stable cash flow is required and a strong balance sheet with an equity/assets ratio exceeding 40 percent.
Ownership structure and share-price trend
Consequently, our financial targets have become more clearly related to the ownership perspective. Who, then, are our owners? There are approximately 2,000, with the Nordgren/Pihl family being the largest. Skandia and Lannebo Fonder are also major owners.
The share price has developed favorably recently and now amounts to approximately SEK 150, which gives Nefab a total market capitalization of approximately SEK 1 billion.
Beginning of 2004
So, how has the new year begun? The first quarter was the best first quarter in Nefab's history. Invoicing amounted to slightly more than SEK 300 M, an increase of 29 percent compared with 2003. One might conclude that the telecom industry generated this increase. However, this would be only half of the truth. In fact, half of our growth was related to segments outside the telecom sector. The reason behind this favorable growth is the improved market situation, although, in my evaluation, we are also witnessing the effects of our marketing efforts in the form of increased market shares.
In principle all geographic areas developed well. The Nordic countries, the rest of Europe and China all increased their invoicing and profits. It was also pleasing that Brazil, which has been a problem for us for a long time, contributed positively to the Group's profits during the first quarter. However, in North America, the situation remains strained. Cost savings are being implemented while our efforts to capture market shares are being intensified. Nefab's pre-tax profit for the first quarter amounted to SEK 20 M, which includes capital gains of SEK 3 M from the sale of a property in Canada. The balance sheet is strong with an equity/assets ratio of slightly more than 50 percent. The liquidity situation is also favorable with a liquidity reserve of SEK 355 M. Our net debt has been transformed into a net receivable of SEK 19 M.
Are there no clouds in Nefab's sky? Naturally there are some. We earn our living in a competitive market where many of our fellow companies are eager to take their share of the cake. Customers are growing increasingly demanding. Like everyone else, we must earn customers' confidence every day. We cannot live on past merits. Nefab is also dependent on developments in other areas of society. To give one example that represents both an opportunity and a threat, I can mention the rapid development of the Chinese economy. This creates market opportunities for Nefab while also creating turbulence in the global raw- materials market, resulting in high steel prices.
Future expectations
However, there is every reason to view 2004 with confidence. Nonetheless, as in previous years, we are adopting a somewhat cautious approach. We are prioritizing strong cash flow but will, at the same time continue to develop the company in accordance with our vision of being the global partner delivering complete packaging solutions.
Distinguished shareholders, this concludes my presentation of the operations of the Nefab Group in 2003.
Thank you for your attention.
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