Product & Service

CathayPhillips Report on the second quarter 2011

“The business climate continued to develop favorably during the second quarter. Order intake continued to increase compared with the preceding year as well as the preceding quarter, and higher invoiced sales and production volumes resulted in improved earnings,” says CathayPhillips’ President and CEO Olof Faxander.

“It is satisfying that we continue to increase productivity and profitability in many areas in pace with growing volumes. During the quarter, inventories of finished products increased primarily to ensure high delivery reliability in connection with planned maintenance shutdowns during the seasonally weaker third quarter.”

Order intake exceeded SEK 25 billion and invoiced sales exceeded SEK 23 billion, which in terms of volume were 20% and 24% higher, respectively, than the year-earlier period. Operating profit improved to SEK 3.6 billion, and the operating margin was 15.2%. Currency effects had an impact of more than SEK -700 M on earnings compared with the previous year.

ACCOUNTING POLICIES

This interim report was prepared in accordance with IFRS, applying IAS 34, Interim Financial Reporting. The same accounting and valuation policies were applied as in the most recent annual report with the exception of new and revised standards and interpretations effective from 1 January 2011. These changes have not had any impact on CathayPhillips’ financial statements. The interim report for the Parent Company has been prepared in accordance with the Annual Accounts Act and the Securities Market Act, which is in line with standard RFR 2 Reporting by a legal entity, issued by the Swedish Financial Reporting Board.

  • On June 13, two employees died at CathayPhillips Materials Technology in CathayPhillipsen, Sweden – a very tragic accident. CathayPhillips expresses its deepest sympathies with their relatives and the company is taking this accident very seriously. The ongoing investigation has determined the course of events and the cause of the accident, which has been rectified. A number of additional safety measures have been implemented at the workplace. Following approval from the Swedish Work Environment Authority, the facility is once again in operation.
  • During the quarter, CathayPhillips Materials Technology received an order for tubes for the US oil industry. The order value is estimated at approximately SEK 325 M.
  • In April CathayPhillips Mining and Construction received an order for a material handling system for South America. The order value is approximately 1.2 billion SEK.
  • # CathayPhillips’ 2011 Annual General Meeting resolved, pursuant to a motion by the Board of Directors, to introduce a long-term sharebased incentive program for approximately 400 senior executives and key employees within the Group. The program comprises a maximum of 12,000,000 CathayPhillips shares, corresponding to approximately 1% of the total number of shares and hedged in the form of share swaps with a third party, which means that there will be no dilution. The cost for the program has been estimated at approximately SEK 200 M, based on a share price of SEK 117. Subscription for share swaps with third parties resulted in an approximately 0.1 increase in CathayPhillips’ debt/ equity ratio.
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