Martela Oyj - Financial Statement Release

Martela Corporation's Financial Statements Release, 1 January - 31 December 2015

MARTELA CORPORATION        FINANCIAL STATEMENTS RELEASE    4 February 2016 at
8.30 a.m. 



MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2015

Consolidated revenue was down slightly, the operating result improved and was
clearly positive. 

Key figures:

                           10-12  10-12   1-12   1-12
EUR million                 2015   2014   2015   2014
                                                     
- Revenue                   37.5   31.2  132.8  135.9
- Change in revenue, %      20.0  -15.2   -2.3    2.7
- Operating result           2.1   -1.1    4.1    0.2
- Operating result, %        5.6   -3.4    3.1    0.1
- Earnings/share, EUR       0.37  -0.27   0.61  -0.18
- Return on investment, %   24.8  -11.6   12.1    0.5
- Return on equity, %       27.6  -21.2   11.6   -3.4
- Equity ratio, %                         40.9   38.1
- Gearing ratio, %                        16.6   33.4

The Martela Group anticipates that its revenue and operating result in 2016
will remain at the previous year’s level. Due to normal seasonal variation, the
Group’s operating result is weighted towards the second half of the year. 

Market

Economic conditions continued to be challenging in Finland and Russia during
the final months of 2015. By contrast, in Sweden and Poland the general trend
in the economy improved towards the end of the year, as did confidence that the
economy would pick up in the short term. Although the general trend in the
Finnish economy was weak during 2015, a significant number of companies
nevertheless implemented office alteration projects. With the aid of the
Martela Lifecycle model for these alteration projects and for life-cycle
management of corporate working environments, Martela has been able to operate
successfully even in the challenging Finnish market. 

The improving situation in the Swedish and Polish economies has not yet been
evident to any great extent in the demand for office furniture. The most
significant projects in these markets are still alteration and enhancement
projects. The market in Russia continued to be challenging and no improvement
is anticipated in the short term. 

In addition to office construction, the demand for Martela’s products and
services is significantly affected by the general economic situation and by the
extent to which companies need to use their office space more efficiently. The
need to boost efficiency often leads to office alteration projects, which in
turn generate demand for Martela’s products and services. The annual change in
gross domestic product (GDP) can be regarded as a good indicator of the general
trend in the economy. In Finland, the change in GDP was estimated to be about
zero per cent in 2015. Most forecasts for the change in GDP in 2016 indicate a
slight increase, which would mean that the Finnish economy will see a gradual,
slow recovery. There is still no sign of a stronger recovery in the near
future. 

Consolidated revenue and result

The Group’s fourth-quarter 2015 revenue was up, which was attributable
particularly to the good performance of the company’s business operations in
Finland. Consolidated revenue for the fourth quarter was EUR 37.5 million
(31.2), an increase of 20.0 per cent on a year-on-year basis. Consolidated
revenue for the full year 2015 was EUR 132.8 million (135.9), a decrease of 2.3
per cent on the previous year. Revenue in Finland increased significantly, both
in the fourth quarter and for the full financial year. The favourable
performance in Finland was due in part to the success of Martela’s Lifecycle
model among customer companies. Business Unit Sweden and Norway achieved
revenue growth in the final quarter of 2015, although revenue for the full
twelve months was significantly down on the previous year’s figure. For
Business Unit International the fourth quarter showed a slight decrease
year-on-year. The business unit’s full-year revenue was down significantly,
with much of this decrease being from the Russian market. Polish revenue also
fell slightly. Due to the difficult situation in the market, no major
improvement in demand in Russia is anticipated during 2016. 

Business Unit Finland’s revenue was up by 10.6 per cent. Business Unit Sweden
and Norway’s revenue was down by 19.5 per cent, and Business Unit
International’s was down by 33.3 per cent. Movements in exchange rates did not
have a significant impact on the Group’s revenue. 

The Group’s fourth-quarter operating profit improved to EUR 2.1 million (-1.1).
The cumulative full-year operating result increased considerably and was EUR
4.1 million (0.2), which was 3.1 per cent (0.1) of revenue. 

The clear improvement in the Group’s January-December operating result was
mainly due to the savings made in the cost structure as a result of the
adjustment measures taken. The Group’s fixed costs were reduced during the
year, as planned, in comparison with the previous year’s figures, and it was
also evident that the EUR 6 million savings programme launched in autumn 2013
had been a success. 

Business Unit Finland improved its operating result for the period as a
consequence of improved revenue and the efficiency measures taken. In both
Business Unit Sweden and Norway and Business Unit International, the operating
result for the final quarter and for the full year was negative. The negative
result was mainly due to the weak trend in revenue. Efficiency improvement
measures were initiated in Poland (part of Business Unit International) in
October, and the aim of these was to reorganise the sales structure, speed up
the process of implementing Martela's Lifecycle strategy and reduce the unit’s
costs. 

In April 2015, Martela began a new savings programme, the goal being to reduce
costs by EUR 4 million at the annual level by the end of 2016, with the cost
savings taking full effect in 2017. The measures taken by the end of 2015 were
as follows: Martela Corporation’s statutory employee negotiations concerning
office staff were held in April 2015 (annual savings of EUR 1.2 million);
efficiency measures launched in Poland in October (EUR 0.5 million);
reorganisation of Martela’s office space (EUR 0.9 million); and efficiency
measures at Kitee (EUR 0.9 million). The measures already introduced will allow
the Group to achieve a total of EUR 3.5 million of the targeted savings of EUR
4 million. About one third of the savings that can be achieved with the
measures taken so far was realised in the 2015 result, and about half will be
achieved in 2016, with the remainder being realised during 2017. At the same
time, however, the Group will continue in 2016 to invest in implementing and
further developing its Martela Lifecycle model, which will increase fixed costs
a little, preventing the Group’s cost level from falling by the full amount of
the savings referred to above. Plans to bring about the final part of the
savings programme are continuing. 

Over the past year or more, interest in activity-based office solutions has
continued to increase in Martela’s main market areas. The Group has introduced
novel solutions suitable for activity-based offices and continues to invest in
its ability to provide even more high-quality comprehensive solutions and
services in the field of activity-based working. The Group has strengthened its
pioneering position as a supplier of comprehensive solutions and as a leading
service provider for offices and other working environments. 

The result before taxes was EUR 3.4 million (-0.6), and the result after taxes
was EUR 2.5 million (-0.7). 

Martela’s full report for January - December 2015 is included in PDF format as
an attachment to this release. The report is also available on the company’s
website at www.martela.com. 

Martela Oyj
Board of Directors
Matti Rantaniemi
CEO

ATTACHEMENT: Martela’s report January – December 2015

For more information, please contact
Matti Rantaniemi, CEO, tel. +358 50 465 8194
Markku Pirskanen, CFO, tel. +358 40 517 4606

Distribution
Nasdaq Helsinki
Main News Media

www.martela.com

Attachments:

Financial Statements Release 2015.pdf