Exel Composites Oyj - Interim report (Q1 and Q3)

Exel Composites Plc’s January–September Business Review 2017: “Adjusted operating profit almost tripled in Q3 2017”

EXEL COMPOSITES PLC      STOCK EXCHANGE RELEASE     25 OCTOBER 2017 at 09:00 EET
Q3 2017 in brief

  ·  Order intake increased by 5.9% to EUR 19.3 million (Q3 2016: 18.2).
  ·  Revenue increased by 24.1% to EUR 20.4 million (16.4).
  ·  Adjusted operating profit improved to EUR 1.6 million (0.6), which is 7.9%
of revenue (3.6%).
  ·  Net cash flow from operating activities was EUR 2.1 million (2.5).
  ·  Earnings per share amounted to EUR 0.09 (0.03).

Q1-Q3 2017 in brief

  ·  Order intake increased by 15.2% to EUR 65.1 million (56.5).
  ·  Revenue increased by 18.1% to EUR 63.8 million (54.1).
  ·  Adjusted operating profit amounted to EUR 5.0 million (1.9), which is 7.8%
of revenue (3.5%).
  ·  Net cash flow from operating activities was EUR 2.1 million (2.0).
  ·  Earnings per share amounted to EUR 0.27 (0.11).

Outlook for full year 2017

Exel Composites reiterates its outlook for 2017 and estimates that both revenue
and operating profit will increase significantly from the 2016 level.

President and CEO, Riku Kytömäki

The strong development in the first half of the year has continued into the
third quarter of 2017 and is reflected in significant improvements in both
quarterly revenue and adjusted operating profit. With more visibility into the
full year, we communicated a revised outlook for 2017 in September. Our focused
efforts in growth segments and strengthened position in growth markets such as
China have enabled us to deliver double digit revenue growth rates in the nine
month period. General market recovery, despite some prevailing uncertainties,
has supported the increase in business volumes.

All of Exel’s regions performed well during the nine month review period.
Europe, Exel’s largest market area, continued to deliver stable growth. The
business volumes were driven by industrial investments, which have generally
started to pick up in the region. The major contributor to revenue growth was
nonetheless the Asia-Pacific (APAC) region. The newly acquired Nanjing Jianhui
performed according to our expectations and made a substantial contribution to
the third quarter revenue. The integration of the unit, which has been
consolidated into the Group accounts since May 2017, continues according to
plan.

From a customer segment perspective, Industrial Applications continued to drive
the revenue increase during the review period. In line with our strategy, our
focused activities especially in the mid-segment have broadened our customer
base. The new accounts have contributed to increased business volumes in the
review period. The demand of the project driven Construction and Infrastructure
customer segment has shown modest improvements throughout the nine month period,
but paced up particularly in the third quarter of the year.

Our adjusted operating profit continued its strong development almost tripling
in both the third quarter and in the review period compared to last year.
Increased revenue, operational efficiency and continued tight cost control are
the major reasons behind the substantial improvement. The APAC region’s
contribution to the improved adjusted operating profit is worth highlighting.
Nanjing Jianhui, which we acquired during the spring, together with the improved
performance of our other Chinese unit in Nanjing composed majority of the
positive impact. To this we can add the reduced negative impact from the
Australian unit. The process to downsize the business unit in Australia
progresses as planned and production is expected to cease by the end of 2017.

To sum it up, it has been a very good nine month period. We delivered a
significantly improved operating profit due to increased topline, APAC business
reorganization, operational efficiency and continued tight cost control.

Consolidated key figures

EUR         1.7.–30.9.  1.7.–30.9.  Change,  1.1.–30.9.  1.1.–30.9.  Change,
1.1.–31.12.
thousand          2017        2016        %        2017        2016        %
2016
Order           19,258      18,181      5.9      65,098      56,532     15.2
74,778
intake
Order           18,197      17,428      4.4      18,197      17,428      4.4
16,702
backlog ¹
Revenue ²       20,394      16,431     24.1      63,841      54,070     18.1
73,079
Operating        1,549         565    174.1       4,693       1,858    152.6
649
profit
% of               7.6         3.4                  7.4         3.4
0.9
revenue
Adjusted         1,605         596    169.3       4,992       1,912    161.1
2,621
operating
profit ³
% of               7.9         3.6                  7.8         3.5
3.6
revenue
Profit for       1,089         384    184.0       3,256       1,263    157.7
198
the
period
Net cash         2,067       2,492    -17.1       2,148       1,972      8.9
3,129
flow from
operating
activities
Return on         14.0         5.6                 15.2         6.3
1.7
capital
employed,
%
Net               33.5        13.2                 33.5        13.2
12.2
gearing, %
Earnings          0.09        0.03                 0.27        0.11
0.02
per share
Equity per        2.34        2.36     -0.7        2.34        2.36     -1.0
2.27
share,
EUR

¹ As per the end of the period.
² Revenue by customer segments Q3 2017 (Q3 2016): Industrial applications EUR
11.1 million (8.7); Construction & infrastructure EUR 5.6 million (4.2); Other
applications EUR 3.7 million (3.5).
³ Excluding material items affecting comparability, such as restructuring costs,
impairment losses and reversals, and costs related to planned or realized
business acquisitions or disposals. For more information, please refer to the
paragraph “Change in Exel Composites’ financial reporting terminology” of the
Half-year Financial Report published on 21 July 2016.

Financial results briefing

Exel Composites will hold a financial results briefing for investors, analysts
and journalists regarding the business review on Wednesday 25 October 2017 at
12:30 EET at Scandic Hotel Simonkenttä’s Roba meeting room (address Simonkatu 9,
Helsinki, Finland). The related presentation material will be available after
the meeting at the company’s website www.exelcomposites.com under Investors >
Publications (http://exelcomposites.com/en
-us/english/investor/en/publications.aspx).

Vantaa, 25 October 2017

Exel Composites Plc
Riku Kytömäki
President and CEO
For further information, please contact:

Riku Kytömäki, President and CEO
tel. +358 50 511 8288
riku.kytomaki@exelcomposites.com

Mikko Kettunen, CFO
tel. +358 50 347 7462
mikko.kettunen@exelcomposites.com

Distribution

Nasdaq Helsinki Ltd
Main news media
www.exelcomposites.com
Exel Composites in brief

Exel Composites (www.exelcomposites.com) is a leading composite technology
company that designs, manufactures and markets composite products and solutions
for demanding applications. Exel Composites provides superior customer
experience through continuous innovation, world-class operations and long-term
partnerships.

The core of the operations is based on own, internally developed composite
technology, product range based on it and strong market position in selected
segments with a strong quality and brand image. Profitable growth is pursued by
a relentless search for new applications and development in co-operation with
customers. The personnel’s expertise and high level of technology play a major
role in Exel Composites’ operations. Exel Composites Plc share is listed in
Nasdaq Helsinki Ltd.