Third quarter
* Operating profit amounted to SEK 76 M (82).
* Profit before tax amounted to SEK 68 M (75) and earnings per share to SEK 2.10 (2.55).
* Cash flow amounted to SEK 273 M (147).
Nine months
* Net turnover amounted to SEK 8,749 M (8,524).
* Net profit amounted to SEK 120 M (160) and earnings per share to SEK 5.20
(6.55).
* If Micro is excluded, earnings per share amounted to SEK 7.40 (7.25).
In a comment on the quarterly results, Bilia’s Managing Director Jan Pettersson says:
“Customer satisfaction has continued to develop positively, and in the most recent poll Bilia’s Swedish operation was rated higher than other Volvo dealers. This result should be viewed in the light of the fact that we do business in the metropolitan areas, where it is much more difficult to achieve high customer satisfaction. Direct imports of Volvo cars to Norway increased significantly during the quarter as a result of the strengthening of the Norwegian krone. Volumes and margins declined. It was not until the end of the quarter that Volvo reduced its car prices to restore its competitiveness.”
(For table view attached file)
Notable events after the end of the second quarter
Acquisitions and disposals
· Bilia acquired all shares in Sweden’s largest Hyundai dealership, Haglund & Hellberg Bil i Haninge AB. Turnover and profits from the acquired company will be included in Bilia’s consolidated accounts from the first of October 2005.
· Bilia announced its intention to start selling used cars via Internet auctions at the beginning of 2006. The business will be conducted in the newly started company Netbil i Skandinavien AB.
· Bilia sold the car facilities in Vanlöse and Herlev, Copenhagen, with a combined capital gain of SEK 21 M before tax.
· Bilia signed an agreement to sell a car facility in Bredden, Stockholm, with a capital gain of approximately SEK 6 M before tax. At the same time, it was announced that Bilia had decided to write down a property that is for sale by SEK 5 M. The earnings effects will be included in Bilia’s consolidated accounts for the fourth quarter of 2005.
· On 24 October, Bilia signed an agreement to acquire the business operation in one of Sweden’s biggest used car dealers, Michaelsson & Nelin AB, in Uppsala. The operation sells about 1,300 cars annually with a turnover of SEK 145 M and an operating margin of about 5 per cent. The acquisition is conditional on approval by the Swedish Competition Authority.
Miscellaneous
· The Board of Directors of Bilia AB has decided to propose that the next Annual General Meeting on 19 April 2006 resolve to spin off Bilia’s properties to the shareholders and apply for a listing of Bilia’s property portfolio under the name Catena. Preparations are currently being made aimed at enabling the AGM to pass a resolution in this matter. Hagström & Qviberg Fondkommission and Leimdörfer have been engaged as advisors in conjunction with the proposed spin-off.
· Volvo Personbilar Sverige AB announced that the dealer network will be expanded in Göteborg and Stockholm. The decision was motivated by Volvo Personvagnar AB’s growth strategy with the goal of increasing global annual sales from today’s 460,000 new Volvo cars to 600,000. The volume increase will come primarily from increased market share in the metropolitan areas via a strengthened sales organisation. The Volvo dealer Bra Bil AB will establish itself in Göteborg with estimated sales start at the end 2005. The Volvo dealer Upplands Motor AB will establish itself in Sollentuna north of Stockholm, with estimated sales start at the beginning of 2007.
Events reported during the first six months
· Bilia started selling Ford’s model range in Fornebu, Oslo.
· Bilia started selling Kia’s model range in a separate facility in Kista, Stockholm.
· All 37.7 million Series C shares were redeemed in January, and the share capital was reduced by SEK 377 M.
· Bilia acquired all shares in A/S Scaniadam and Selandia Motor Company A/S, which are authorised Ford dealerships in Copenhagen.
· The operation in Micro was transferred during the second quarter, the date of possession being 1 June 2005. Micro reduced the Bilia’s Group’s operating profit in 2005 by a total of SEK 70 M.
Group review
The following comments and comparative figures pertain to remaining operations, i.e. excluding the sold operation in Micro. The comments on shareholders’ equity pertain to the entire Group, however.
Third quarter 2005
Overall demand for new cars and service in Bilia’s market areas was at a good and stable level. Demand for used cars continued to be weak, although some improvement was noted in Sweden.
Net turnover during the quarter amounted to SEK 2,855 M (2,491). Adjusted for exchange rate changes and comparable operations, net turnover increased by about SEK 48 M or 2 per cent. The increase is mainly attributable to Bilia’s Danish operation (excluding Scaniadam), which delivered considerably more new and used cars during the quarter.
Operating profit amounted to SEK 77 M (88). Items affecting comparability increased the profit by SEK 17 M (18). The decline in earnings is attributable to Norway, which was affected by a considerable increase in direct imports of cars from Sweden during the quarter.
The result of customer financing amounted to SEK 29 M (29). A change in an accounting principle, IAS 18 Revenue, has affected customer financing by SEK 6 M (5).
Items affecting comparability (see table on page 5) amounted to SEK 17 M (18) during the quarter and consist of SEK 21 M (20) in gain from sale of property and SEK -4 M (-2) in costs for disputes and other costs.
Net financial items amounted to an expense of SEK 8 M (expense: 6). The decline is mainly attributable to the acquisition of Scaniadam and increased working capital in Bilia’s Norwegian operation. A profit share of SEK 4 M (-) from the indirect shareholding in Volvofinans is included, in net finance items.
Taxes are based on each markets tax expense respectively.
Net profit amounted to SEK 50 M (64) and earnings per share to SEK 2.15 (2.75). Exchange rate changes only affected the profit marginally. The Bilia Group’s net profit (including Micro) amounted to SEK 49 M (59), and earnings per share to SEK 2.10 (2.55).
Total assets decreased during the quarter by SEK 247 M to SEK 5,215 M. The decrease is mainly attributable to diminished stocks of new and used cars.
The Group’s shareholders’ equity increased during the quarter by SEK 47 M, amounting to SEK 1,217 M at the end of the quarter.
The equity/assets ratio amounted to 23 per cent (23).
Investments and disposals amounted to SEK 121 M (86). Replacement investments represented SEK 12 M (7), expansion investments SEK 9 M (6), environmental investments SEK 1 M (4) and investments in new construction and additions to properties SEK 19 M (12). Net investments in lease vehicles and finance leases amounted to SEK 80 M (57).
The number of employees declined marginally during the quarter, amounting to 3,261.
Cash flow from operating activities amounted to SEK 268 M (158). Stocks of new and used cars declined by SEK 180 M, which strengthened the cash flow during the quarter. Net debt decreased by SEK 247 M during the quarter, amounting to SEK 575 M.
(For complete interim report view attached file)
