SUMMARY
25 August 2008, Announcement 19
Satisfactory quarter with more difficult market conditions
With Group revenue of 3,789 mDKK (+5% compared with 2nd quarter 2007),
operating income (EBIT) of 377 mDKK (+14%) and Group net income before tax of
309 mDKK, earnings development has been satisfactory compared with the same
period in 2007. Overall, organic growth of 4% was realised in 2nd quarter 2008.
“Business as usual” in the 1st quarter has been succeeded by the prospect of
more uncertain market conditions in the 2nd half which are expected to affect
NKT Cables negatively in relation to our latest forecasts.
For NKT Cables, 2nd quarter growth in revenue has not lived up to expectations,
and the low voltage markets in Eastern Europe in particular are showing signs
of slowdown and increasing competition. To this must be added unchanged
expectations with regard to a normalisation of the low voltage market in
Denmark during 2nd half 2008. The expectations of a reduced level of activity
in the low voltage segment have led to an adjustment being made to the work
force in the Czech Republic. The high voltage market appears still very strong,
but the effect of this is not sufficient to compensate for the fall in the low
voltage segment, among other things because this segment cannot be provided
with additional capacity before the new factory in Cologne is ready for
production in 2009.
For Nilfisk-Advance the results for the 2nd quarter are satisfactory. The
assessment for the 2nd half is that market growth is falling and pressure on
earnings is rising. This has led to our decision to now implement a number of
structural and other adjustments to the company's business systems with a view
to maintaining an attractive level of earnings.
For NKT Flexibles, developments continue to be very positive and a very fine
performance was achieved in the 2nd quarter.
For the NKT Group, expected net income for 2008 before tax and restructuring
costs remains unchanged at around 950 mDKK, which corresponds to the revised
forecast after the 1st quarter.
As stated, the decision has been taken to address the more negative market
situation at Nilfisk-Advance by introducing a number of structural and other
adjustments. These measures will entail implementation costs totalling around
75 mDKK, of which 50 mDKK will affect 2008 and the remaining 25 mDKK will
affect 2009. These measures will have a positive impact on earnings of around
75 mDKK, the full effect being expected in 2010. Provision has not previously
been made for this initiative, which will mean that expected overall Group net
income before tax is reduced to around 900 mDKK.
Should market conditions in 2nd half 2008 deteriorate markedly in relation to
present possible estimates, it is expected that earnings could be reduced by
around 50 mDKK.
