2012-08-09 07:15:00 CEST
2012-08-09 07:15:09 CEST
REGULATED INFORMATION
PKC Group Oyj - Interim report (Q1 and Q3)
PKC GROUP’S INTERIM REPORT 1-6/2012
PKC Group Plc INTERIM REPORT 9 August 2012 8.15 a.m.
PKC GROUP'S INTERIM REPORT 1-6/2012
-- Net sales grew 136.1% on the comparison period (1-6/2011), totalling EUR
486.8 million (EUR 206.2 million).
-- Operating profit before PPA depreciation and amortization and non-recurring
items was EUR 35.3 million (EUR 20.1 million). During the report period PPA
depreciation and amortization totalled EUR 7.1 million (EUR 1.2 million).
-- Operating profit was EUR 26.9 million (EUR 16.7 million) and 5.5% (8.1%) of
net sales.
-- Net profit for the report period amounted to EUR 16.6 million (EUR 13.9
million).
-- Diluted earnings per share were EUR 0.78 (EUR 0.69).
-- Gross capital expenditure was EUR 10.1 million (EUR 19.5 million).
-- Net cash from operating activities was EUR 35.3 million (EUR 8.8 million).
-- Cash flows after investments were EUR 28.3 million (EUR 9.1 million
negative).
-- Gearing was 57.9% (14.8%).
-- Equity ratio was 31.2% (54.3%).
-- Net liabilities were EUR 93.4 million (EUR 18.7 million).
KEY FIGURES 1-6/12 1-6/11 1-12/11
Net sales, EUR 1,000 486,771 206,193 550,208
Operating profit, EUR 1,000 26,912 16,745 34,505
% of net sales 5.5 8.1 6.3
Net profit for the report period, EUR 1,000 16,626 13,854 23,445
Earnings per share (EPS), EUR 0.78 0.69 1.16
ROI,% 23.0 27.7 18.9
Net liabilities, EUR 1,000 93,426 18,727 110,739
Gearing, % 57.9 14.8 72.6
Average number of personnel 21,478 6,745 10,793
MATTI HYYTIÄINEN, PRESIDENT AND CEO:
“PKC's performance remained stable during the second quarter of 2012. The
second quarter's net sales reached EUR 244.8 million, EBITDA EUR 21.9 million
and operating profit EUR 14.2 million. Cash flow after investments were EUR 5.2
million positive. Cash flow during the second quarter was impacted by
investments that were larger than in the first quarter and growth of net
working capital in North America. In our other units the net working capital
decreased from the levels of the first quarter.
First six month's cash flow after investments were significantly better than
during the same period of time last year. This has further strengthened PKC's
financial position.
Production volumes of heavy and medium duty trucks in North America and Europe
remained roughly at the first quarter's level. In Brazil the production volumes
were on the same modest level as during the first quarter mainly due to the
transition to new emission standards (Euro 5) as well as the economic downturn
in Brazil.
I am especially pleased with the way PKC's North American Wiring Systems
business has developed. The management and personnel continued their determined
work developing operations and customer relationships. The acquisition of AEES
which was executed last year has proven to be a good acquisition and the
integration phase has been finalized during the second quarter ahead of
schedule.
The management of Wiring Systems business in Europe and Asia was renewed by
reorganizing operative management under common leadership and by centralizing
sales management. During the second quarter we opened a customer service and
design office in Munich, Germany. Our strengthened presence and improved
customer service has been appreciated by our customers.
Brazilian operating profit remained negative during the second quarter.
Measures to improve the situation have been started. During the report period
we reinforced the management of the Wiring Systems business in Brazil.
Simultaneously we centralized our operations. In co-operation with our
customers we decided to reschedule our production transfers and the projects
are due to continue until summer of 2013, which is longer than previously
estimated.
PKC's Wiring Systems business developed positively and first six months'
operating profit was EUR 29.4 million. The positive growth in North America and
Europe compensated for the operating loss of the Brazilian Wiring Systems
business. The ODM deliveries of PKC's Electronics business remained on a very
low level and the Electronics business recorded an operating profit of EUR 0.3
million negative.
PKC's commercial vehicle customers' demand estimates for the second half of the
year vary market to market. In North America the market outlook is more
uncertain whereas in Europe the market is estimated to remain stable. In Brazil
it is estimated that the market recovers slightly due to the actions taken by
Brazilian government to support purchases of new vehicles.”
OPERATING ENVIRONMENT
Wiring Systems business
- Vehicles, Europe
The economic uncertainty due to the continuing financial crisis in Europe
continued to affect market confidence and freight companies' investment plans.
Second quarter 2012 production of heavy duty trucks in Europe was 75,000 units
which was roughly the same as during the first quarter and down 11% from 85,000
units the same period of time year earlier. The estimate for full year
production has however been lifted from the first quarter's 300,000 units
stated during the first quarter to 306,000 units, showing still a 10% drop from
2011 production.
Second quarter 2012 production of medium duty trucks was 18,000 units which was
12% less than the same period of time year earlier (21,000 units) and about 5%
less than the production during the first quarter of 2012 (19,000 units). Full
year estimates have been lifted from the first quarter's 68,000 to 74,000 which
would mean a 9% decline from 2011 production.
- Vehicles, North America
The demand for freight remained at a good level and freight companies were
profitable, but the market witnessed a change to a more cautious approach to
new truck investments.
NAFTA second quarter 2012 production of heavy duty (class 8) was 75,000 units,
down 4% from the first quarter's 78,000 units. Compared to last year's
comparison period the production is up over 20% from 60,000. Full year
estimates of heavy duty truck production in North America have been adjusted
downwards to less than 290,000 units from the previously estimated 300,000
units. It is estimated that the production grows by 12% from 2011.
Medium duty truck production has remained on the same level with the first
quarter at 48,000 units, which represented 6% growth compared to same period
year earlier (45,000 units). Full year production estimates have been increased
from 175,000 units to 180,000 units, up by 8% from 2011 production.
Light vehicle production in the second quarter remained on the same level with
the first quarter at 1,800,000 units, up 15% from the same period year earlier.
It is estimated that full year production will grow by over 7% from last year's
6,500,000 to 7,000,000 units mainly due to replacement of aging trucks.
- Vehicles, Brazil
In Brazil, the second quarter heavy truck production was 27,000 units, which is
the same as during the first quarter of 2012 but down 19% from the same period
of time last year.
Latest estimates believe the governmental incentives announced by the Brazilian
government will improve production volumes and thus the full year production
estimates have been lifted from 101,000 to 115,000 units, showing a 19% drop
from year 2011 levels.
The medium duty truck production has remained on a stable level, a bit over
13,000 units, growing 7% from the first quarter but declining 14% from 15,000
units the same period of time last year. Full year estimates have been adjusted
upwards by 5% from 52,000 units to 55,000 units, showing a 20% decline from
2011 production levels.
- Agricultural Equipment
North American tractor sales were up 6% and combines down by 23 % from
comparison period year earlier. The draught conditions across much of the U.S.
added some uncertainty for agricultural equipment demand. South American sales
of both tractors and combines were down 7% and 12% from comparison period year
earlier. In Europe, tractor sales were stable, and combine sales up 15% from
same period last year. Full year agricultural equipment unit volume worldwide
is expected to be flat to down 5% in comparison to previous year.
- Construction Equipment
Global demand for construction equipment (units) dropped over 10% during the
second quarter compared to the same period last year. Differences between
markets were great: Europe grew about 5%, North America about 30%, South
America about 10% and Asia (excl. China) about 25%. On the other hand, the
Chinese markets declined almost 40%. Full year construction equipment unit
volume worldwide is expected to be flat to down by 5% in comparison to previous
year.
Electronics business
The economic uncertainty and worldwide drop in industrial investments affected
the demand for electronic appliances. Investments in renewable energy and
telecommunication testing equipment remained on the same modest level as during
the first quarter of 2012. However, the volumes of developing and constructing
smart grids were at a good level. Also the demand for energy efficient
technologies and products grew during the second quarter.
NET SALES AND FINANCIAL PERFORMANCE
April-June 2012
Net sales from April-June amounted to EUR 244.8 million (EUR 109.3 million), up
124.0% on the same period a year earlier. During the report period EUR 1.0
million (EUR 2.2 million) in non-recurring items were recognised. Operating
profit before non-recurring items, PPA depreciation and amortization totalled
EUR 19.2 million, accounting for 7.8% of net sales. Consolidated operating
profit totalled EUR 14.2 million (EUR 7.1 million), accounting for 5.8% of net
sales (6.5%). Operating profit continued to be burdened by the losses of the
Brazilian unit. Depreciation amounted to EUR 7.7 million (EUR 3.2 million).
Depreciation caused by acquisitions amounted to EUR 4.0 million. Financial
items were EUR 0.2 million negative (EUR 0.6 million). Financial items include
foreign exchange differences totalling EUR 1.3 million positive net. Profit
before taxes was EUR 14.0 million (EUR 7.7 million). Income tax of the report
period amounted to EUR 4.3 million accounting for 30.4% of profit before taxes.
Net profit for the report period totalled EUR 9.7 million (EUR 6.3 million).
Diluted earnings per share were EUR 0.46 (EUR 0.31).
Net sales generated by the Wiring Systems business in the report period
amounted to EUR 226.8 million (EUR 90.2 million), or 151.6% more than in the
comparison period. The segment's share of the consolidated net sales was 92.7%
(82.5%). Net sales increased along with the acquisition of AEES companies.
During the report period EUR 1.0 million (EUR 0.1 million) in non-recurring
items were recognised. Wiring Systems business generated an operating profit
before non-recurring items, PPA depreciation and amortization of EUR 19.3
million (EUR 10.4 million), equivalent to 8.5% of the segment's net sales
(11.5%). Wiring Systems business generated an operating profit of EUR 14.4
million (EUR 9.6 million), equivalent to 6.3% of the segment's net sales
(10.6%). The comparable profitability was still weakened due to the losses of
the Brazilian unit resulting from low production volumes and costs related to
the reorganisation of operations.
Net sales generated by the Electronics business decreased by 6.1% to EUR 18.0
million (EUR 19.1 million). The segment's share of the consolidated net sales
was 7.3% (17.5%). During the report period no non-recurring expenses were
recognised. During the comparison period EUR 0.2 million in non-recurring items
were recognised. Electronics business generated an operating profit of EUR 0.7
million (EUR 0.4 million), equivalent to 3.7% of the segment's net sales
(2.1%).
January-June 2012
Net sales from January-June amounted to EUR 486.8 million (EUR 206.2 million),
up 136.1% on the same period a year earlier. During the report period EUR 1.3
million (EUR 2.2 million) in non-recurring items were recognised. Operating
profit before non-recurring items, PPA depreciation and amortization totalled
EUR 35.3 million, accounting for 7.3% of net sales. Consolidated operating
profit totalled EUR 26.9 million (EUR 16.7 million), accounting for 5.5% of net
sales (8.1%). Operating profit was burdened by the losses of the Brazilian
unit. Depreciation amounted to EUR 15.0 million (EUR 6.1 million). Depreciation
caused by acquisitions amounted to EUR 7.1 million. Financial items were EUR
2.4 million negative (EUR 0.3 million). Financial items include foreign
exchange differences totalling EUR 0.6 million positive net. Profit before
taxes was EUR 24.5 million (EUR 17.1 million). Income tax of the report period
amounted to EUR 7.8 million accounting for 32.0% of profit before taxes. Net
profit for the report period totalled EUR 16.6 million (EUR 13.9 million).
Diluted earnings per share were EUR 0.78 (EUR 0.69).
Net sales generated by the Wiring Systems business in the report period
amounted to EUR 453.4 million (EUR 168.3 million), or 169.4% more than in the
comparison period. The segment's share of the consolidated net sales was 93.2%
(81.6%). Net sales increased along with the acquisition of AEES companies.
During the report period EUR 1.1 million (EUR 0.1 million) in non-recurring
items were recognised. Wiring Systems business generated an operating profit
before non-recurring items, PPA depreciation and amortization of EUR 37.7
million (EUR 21.0 million), equivalent to 8.3% of the segment's net sales
(12.5%). Wiring Systems business generated an operating profit of EUR 29.4
million (EUR 19.7 million), equivalent to 6.5% of the segment's net sales
(11.7%). The comparable profitability weakened due to the losses of the
Brazilian unit resulting from low production volumes and costs related to the
reorganisation of operations.
Net sales generated by the Electronics business decreased by 12.0% to EUR 33.3
million (EUR 37.9 million). The segment's share of the consolidated net sales
was 6.8% (18.4%). During the report period EUR 0.1 million (EUR 0.2 million) in
non-recurring items were recognised. Electronics business generated an
operating profit before non-recurring items of EUR 0.2 million negative,
equivalent to 0.6% negative of the segment's net sales. Electronics business
generated an operating profit of EUR 0.3 million negative (EUR 0.8 million),
equivalent to 1.0% negative of the segment's net sales (2.2%). The decline of
net sales and operating profit is due to decreased demand of design and
manufacturing services (ODM) of production and service devices for
telecommunication industry. Decrease in demand was especially due to change of
individual customer's product strategy. Electronics segment's result was
further burdened by costs related to production transfers from Finland to more
competitive production facilities.
FINANCIAL POSITION AND CASH FLOW
Consolidated total assets at 30 June 2012 amounted to EUR 516.6 million (EUR
233.7 million). Increase in total assets compared to comparison period is
mainly due to the business acquisitions. Interest-bearing liabilities totalled
EUR 155.1 million at the close of the report period (EUR 33.8 million). The
Group's equity ratio was 31.2% (54.3%). Net liabilities totalled EUR 93.4
million (EUR 18.7 million) and the gearing was 57.9% (14.8%).
Inventories amounted to EUR 97.6 million (EUR 71.1 million). Current
receivables totalled EUR 139.8 million (EUR 68.1 million). Net cash from
operating activities was EUR 35.3 million (EUR 8.8 million) and cash flows
after investments during the report period were EUR 28.3 million (EUR 9.1
million negative). Cash and cash equivalents amounted to EUR 61.6 million (EUR
15.1 million).
CAPITAL EXPENDITURE
During the report period, the Group's gross capital expenditure totalled EUR
10.1 million (EUR 19.5 million), representing 2.1% of net sales (9.5%). The
capital expenditure consisted mainly of production machinery and equipment.
RESEARCH & DEVELOPMENT
Research and development costs totalled EUR 4.1 million (EUR 3.2 million),
representing 0.8% (1.6%) of the consolidated net sales. At the end of the
report period, 163 (130) people worked in product development, excluding
production development and process development personnel.
PERSONNEL
During the report period, the Group had an average payroll of 21,478 employees
(6,745). At the end of the report period, the Group's personnel numbered 20,602
employees (7,685), of whom 20,240 (7,293) worked abroad and 362 (392) in
Finland. In addition the Group had at the end of the report period 368 rented
employees.
QUALITY AND THE ENVIRONMENT
All of the Group's factories are certified in accordance with requirements of
the ISO/TS16949 quality standard for the automotive industry excluding factory
in Traverse City (USA), which is certified in accordance with requirements of
ISO9001 standard. In addition all of the Group's factories, except factories in
Campo Alegre (Brazil) and Sao Bento do Sul (Brazil), are certified in
accordance with the ISO14001 environmental standard and all factories operate
in accordance with the ISO9001 quality standard. Production units in Curitiba
(Brazil), Itajuba (Brazil), Raahe (Finland) and Suzhou (China) have also
certification in accordance with the OHSAS18001 occupational health and safety
management system standard.
The certification in accordance with ISO14001 environmental standard in Campo
Alegre (Brazil) is planned to be completed during 2012.
MANAGEMENT
The Annual General Meeting held on 4 April 2012, re-elected Outi Lampela, Matti
Ruotsala and Jyrki Tähtinen as Board members and elected Andres Allikmäe,
Shemaya Levy, Robert Remenar and Harri Suutari as new Board members. In the
Board's organisation meeting, Matti Ruotsala was elected as Chairman of the
Board with Harri Suutari as Vice-Chairman.
Outi Lampela was elected as the chairman of the Audit Committee and Andres
Allikmäe, Shemaya Levy and Jyrki Tähtinen as members. The Board decided to
expand the duties of the Nomination Committee and form it into Nomination and
Remuneration Committee. The Board elected Matti Ruotsala as chairman of the
Nomination and Remuneration Committee and Robert Remenar and Harri Suutari as
members.
Authorised public accounting firm KPMG Oy Ab, which has announced Virpi
Halonen, APA, to be the Auditor with principal responsibility, was selected as
auditor.
Matti Hyytiäinen has started as President & CEO as of 4 April 2012.
The Group's Executive Board consists of the following persons Matti Hyytiäinen,
Chairman (President & CEO), Jyrki Keronen (Senior Vice President, Business
Development), Pekka Korkala (President, Wiring Systems, South America) Harri
Ojala (President, Wiring Systems, Europe & APAC), Sanna Raatikainen (General
Counsel), Jarmo Rajala (President, Electronics), Frank Sovis (President, Wiring
Systems, North America) and Juha Torniainen (CFO). Juha Torniainen has replaced
Marja Sarajärvi on 1 July 2012.
DIVIDEND FOR 2011
The Annual General Meeting held on 4 April 2012 resolved to pay a dividend of
EUR 0.60 per share: i.e. a total of about EUR 12.8 million. The dividend was
paid out on 18 April 2012.
SHARE TURNOVER AND SHAREHOLDERS
PKC Group Plc's share turnover on NASDAQ OMX Helsinki Ltd from 1 January to 30
June 2012 was 6,080,112 shares (5,402,828 shares), representing 28.8% of the
average number of shares (27.4%). Shares were traded to a total value of EUR
91.0 million (EUR 84.2 million). The lowest share value during the report
period was EUR 10.65 (EUR 13.90) and the highest EUR 18.30 (EUR 18.36). The
closing price on the last trading day of the report period was EUR 12.13 (EUR
15.78) and the average price during the report period was EUR 14.97 (EUR
15.59). The company's market capitalisation at 30 June 2012 was EUR 260.6
million (EUR 314.1 million).
The shares held by Board members, their closely associated persons and
corporations in which they have a controlling interest accounted for 1.5%
(0.7%) of the total number of shares at the end of the report period. PKC Group
Plc had a total of 8,976 shareholders (8,123) at the end of the report period.
The shares held by foreigners and through nominee registrations at the close of
the report period totalled 26.0% of the share capital (22.9%).
SHARES AND SHARE CAPITAL
PKC Group Plc's shares and share capital has changed during the report period
as follows:
-- A total of 110 PKC Group Plc's shares have been subscribed for with 2006B
options. The new shares and the corresponding increase in the share
capital, EUR 37.4, have been entered into the Trade Register on 12 January
2012. The new shares were traded on the main list of the NASDAQ OMX
Helsinki Ltd together with the old shares as of 13 January 2012. After the
increase the Company's registered share capital was EUR 6,103,098.92,
divided into 21,155,966 shares.
-- A total of 201,439 PKC Group Plc's shares have been subscribed for with
2006 options (101,040 with 2006B options and 100,399 with 2006C options).
The new shares and the corresponding increase in the share capital, EUR
68,489.26, have been entered into the Trade Register on 29 March 2012. The
new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd
together with the old shares as of 30 March 2012. After the increase the
Company's registered share capital was EUR 6,171,588.18, divided into
21,357,405 shares.
-- A total of 57,157 PKC Group Plc's shares have been subscribed for with 2006
options (28,780 with 2006B options and 28,377 with 2006C options), and the
corresponding increase in the share capital is EUR 19,433.38. A total of
67,750 PKC Group Plc's shares have been subscribed for with 2009A options.
New shares and increase in share capital corresponding to subscriptions
have been entered into the Trade Register on 10 May 2012. The new shares
were traded on the main list of the NASDAQ OMX Helsinki Ltd together with
the old shares as of 11 May 2012. After the increase the Company's
registered share capital was EUR 6,191,021.56, divided into 21,482,312
shares.
THE BOARD'S AUTHORISATIONS
The Board of Directors was granted authorisation by the Annual General Meeting
on 30 March 2011 to decide on share issue and granting of special rights
defined in Chapter 10, Section 1 of the Companies Act and all the terms and
conditions thereof. A maximum total of 6,000,000 shares may be issued or
subscribed for on the basis of authorisation. The authorisation includes the
right to decide on directed share issue. The authorisation is in force for five
years from the date of the General Meeting's decision. At Board of Directors'
discretion the authorisation may be used e.g. in financing possible corporate
acquisitions, inter-company co-operation or similar arrangement, or
strengthening company's financial or capital structure etc. PKC Group Plc's
Board of Directors has, on the basis of the authorisation granted by the
shareholders' meeting on 30 March 2011, resolved on a directed share issue
without payment of 1,250,000 new shares to company's wholly owned subsidiary
PKC Group USA Inc for the payment of the purchase price for the shares in the
AEES-companies. After this share issue, a maximum total of 4,750,000 shares may
be issued or subscribed for on the basis of authorisation.
The Board of Directors does not possess a valid authorisation to acquire
company's own shares, and the company does not have any own shares (treasury
shares) in its possession.
AMENDMENT OF ARTICLES OF ASSOCIATION
The Annual General Meeting resolved on 4 April 2012, in accordance with the
Board of Directors proposal, to amend the 1§ of the Articles of Association so
that PKC Group Plc shall be defined to be the company's name in English and
that Helsinki be changed to be the company's domicile; 9§ so that the
invitation to the General Meeting be published on the Company's Internet pages
no more than three (3) months and no less than three (3) weeks prior to the
meeting; 10§ so that the meeting shall be held at Company's domicile.
STOCK OPTION SCHEMES
2006 options
The stock option scheme initiated in 2006, comprises a total of 697,500 options
divided into A, B and C warrants. At the close of report period, the
outstanding options and options held by key personnel totals 80,610 2006C
warrants.
The share subscription price for the 2006 stock options is the volume-weighted
average price of the PKC Group Plc share on NASDAQ OMX Helsinki, with dividend
adjustments, as defined in the stock option terms (at present, EUR 8.94 for the
2006C warrants). Through the exercise of the 2006 stock options, the share
capital of PKC Group Plc may be increased by a maximum total of 697,500 new
shares and EUR 237,150. After the registration of subscription made on 10 May
2012, the Company's share capital can increase by a maximum of 82,260 shares
i.e. EUR 27,968.40 as a result of the exercise of the remaining outstanding
option rights. The share subscription period is for 2006C warrants 1 April 2011
- 30 April 2013. The 2006 stock options are subject to a share ownership plan.
Key personnel are obliged to subscribe for or purchase the company's shares
with 20% of the gross income earned from stock options and to own these shares
for two years. The company's President and CEO is obliged to own these shares
for the duration of his managerial contract.
The share subscription period for 2006A warrants has ended 30 April 2011.
During the share subscription period a total 200,300 shares were subscribed and
2,200 warrants remained unused. The share subscription period for 2006B
warrants has ended 30 April 2012 and no warrants remained unused.
2009 options
The Annual General Meeting held on 27 March 2009 decided to issue stock options
to key personnel in the company and its subsidiaries. The maximum total number
of stock options issued is 600,000 and they are divided into A, B and C
warrants. At the close of the report period, the outstanding options and
options held by key personnel totals 127,750 2009A, 200,000 2009B and 200,000
2009C warrants.
The subscription price for shares through the exercise of the 2009 stock
options is the volume-weighted average price of the PKC Group Plc share on
NASDAQ OMX Helsinki for April 2009, 2010 and 2011 + 20% with dividend
adjustments, (at present, EUR 2.30 for the 2009A warrants, EUR 12.11 for the
2009B warrants and EUR 17.98 for the 2009C warrants). The subscription price
for shares will be recorded in the invested non-restricted equity fund. The
stock options entitle their owners to subscribe for a maximum total of 600,000
new shares in the company or existing shares held by the company. After the
registration of subscription made on 10 May 2012, the Company's share capital
can increase by a maximum of 532,250 shares as a result of the exercise of the
remaining outstanding option rights. The share subscription period for 2009A
warrants is 1 April 2012 — 30 April 2014, for 2009B warrants 1 April 2013 — 30
April 2015 and for 2009C warrants 1 April 2014 — 30 April 2016. The 2009 stock
options are subject to a share ownership plan. Key personnel are obliged to
subscribe for or purchase the company's shares with 20% of the gross income
earned from stock options and to own these shares for two years. The company's
President and CEO is obliged to own these shares for the duration of his
managerial contract.
2012 options
The Annual General Meeting held on 4 April 2012 decided to issue stock options
to key personnel in the company and its subsidiaries. The maximum total number
of stock options issued is 1,020,000. The stock options are marked with the
symbol 2012A(i) and 2012A(ii); 2012B(i) and 2012B(ii); as well as 2012C(i) and
2012C(ii). A total of 170,000 stock options are included in each stock option
class. At the close of the report period, a total of 170,000 2012A(i) warrants
have been allocated to key personnel, in addition to which 170,000 2012A(ii)
warrants have been initially allocated to key personnel.
The subscription price for shares through the exercise of the 2012 stock
options is the volume-weighted average price of the PKC Group Plc share on
NASDAQ OMX Helsinki Ltd during first quarter in 2012, 2013 and 2014. The share
subscription price is EUR 15.31 with the 2012A options. The subscription price
for shares will be recorded in the invested non-restricted equity fund. The
stock options entitle their owners to subscribe for a maximum total of
1,020,000 new shares in the company or existing shares held by the company. The
share subscription period for stock options 2012A, will be 1 April 2015—30
April 2017, for stock options 2012B, 1 April 2016—30 April 2018, and for stock
options 2012C, 1 April 2017—30 April 2019. The share subscription period for
stock options 2012A(ii), 2012B(ii) and 2012C(ii) shall, however, not commence,
unless certain operational or financial targets of the Group established for
the exercise of stock options and determined by the Board of Directors have
been attained. The Board of Directors shall annually decide on targets
separately for each stock option class in connection with the distribution of
stock options. Those stock options, for which the targets determined by the
Board of Directors have not been attained, shall expire in the manner decided
by the Board of Directors. The 2012 stock options are subject to a share
ownership plan. Key personnel are obliged to subscribe for or purchase the
company's shares with 20% of the gross income earned from stock options and to
own these shares for two years. The company's President and CEO is obliged to
own these shares for the duration of his managerial contract.
CORPORATE RESPONSIBILITY
Corporate responsibility is a key element in PKC's operations. PKC operates
with ethical business practice, takes responsibility for the operating
environment and strives to minimize any harm caused to the environment, and
respects and promotes human rights and fair workplace practices, equal
opportunities, and zero-tolerance policy on bribery and corruption. PKC Group's
Board of Directors has ratified the Code of Conduct covering the whole group.
The Code of Conduct sets principles for ethical business practice and is based
on the highest ethical standards. Compliance with legislation, regulations and
international norms is a fundamental requirement, from which it is not possible
to deviate in any circumstances. PKC is in the process of developing its
corporate responsibility reporting in the direction of GRI's guidelines (Global
Reporting Initiative).
With regard to the labour union issue in Acuna, Mexico, PKC Group is complying
fully with the Mexican laws and norms and respects the rights of its employees,
including their freedom of association and the right to collective bargaining.
Furthermore, a labour union vote shall be arranged in the Mexican subsidiary in
question. The Mexico Federal Labour Court oversees the vote process and will
schedule the vote. The working environment in the Acuna plant is stable, the
employee turnover is very low and the employee satisfaction is high.
SHORT-TERM RISKS AND UNCERTAINTIES
The public deficit and high indebtedness of many European countries and the
United States may weaken economic growth and availability of financing for
investment goods and increase uncertainty in the markets.
A potential weakening of the euro against the Polish zloty and the Russian
rouble as well as the potential weakening of the USD against the Mexican peso
may increase PKC's processing costs.
A significant increase in copper price may weaken PKC Group's profit in short
term. The customer prices are updated on average with 5 month delay on the
basis of copper price changes.
OUTLOOK FOR THE FUTURE
PKC expects that its net sales and comparable operating profit will increase in
2012 from the previous year's level. Net sales in 2011 amounted to EUR 550.2
million and operating profit without non-recurring items was EUR 42.6 million.
Major part of net sales and profit is generated by the Wiring Systems business.
FINANCIAL REPORTS IN 2012
In 2012, the Interim Reports will be published as follows:
Interim Report 1-9/2012 Thursday, November 1, 2012 at about 8.15 a.m.
The text section of this release focuses on the interim report. Comparisons
have been made to the figures of the corresponding period in 2011, unless
otherwise mentioned. The figures presented in the tables are independently
rounded figures.
TABLES
This interim report has been prepared in accordance with IAS 34 (Interim
Financial Reporting) standard. The interim report has been prepared in
accordance with the same principles as the annual financial statements for
2011. The year 2012 IFRS standard changes have not had any effect. Interim
financial statements are unaudited.
CONSOLIDATED STATEMENT OF 4-6/12 4-6/11 1-6/12 1-6/11 1-12/11
COMPREHENSIVE INCOME 3 mon. 3 mon. 6 mon. 6 mon. 12 mon.
(EUR 1,000)
NET SALES 244,804 109,307 486,771 206,193 550,208
Other operating income 331 1,755 661 2,413 4,042
Increase (+) / decrease (-) in -1,772 -558 -2,505 1,107 -1,679
stocks of finished goods and work
in progress
Production for own use 39 74 60 74 208
Materials and services 149,583 67,459 297,273 127,679 332,646
Employee benefit expenses 50,888 21,649 101,283 40,374 109,800
Depreciation 7,688 3,243 15,048 6,056 17,531
Other operating expenses 21,065 11,153 44,471 18,933 58,296
OPERATING PROFIT 14,177 7,074 26,912 16,745 34,505
Interest expenses -1,492 -591 -3,139 -1,129 -4,253
Other financial income 1,337 1,213 723 1,460 599
Other financial expenses -32 0 -32 0 -1,437
PROFIT BEFORE TAXES 13,991 7,696 24,464 17,076 29,414
Income tax -4,260 -1,434 -7,839 -3,222 -5,969
PROFIT FOR THE REPORT PERIOD 9,731 6,262 16,626 13,854 23,445
Other comprehensive income:
Interest derivatives -193 0 -401 0 -464
Foreign currency translation 1,186 -590 4,800 -3,329 -1,112
differences - foreign operations
Total comprehensive income for the 10,724 5,672 21,025 10,525 21,869
period
Attributable to equity holders of
the parent company:
Basic earnings per share (EPS), 0.46 0.32 0.79 0.70 1.18
EUR
Diluted earnings per share (EPS), 0.46 0.31 0.78 0.69 1.16
EUR
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6/12 6/11 12/11
(EUR 1,000)
ASSETS
NON-CURRENT ASSETS
Goodwill 30,527 15,384 29,813
Other intangible assets 49,070 10,650 50,099
Property, plant and equipment 101,729 48,478 113,556
Deferred tax assets 12,957 4,895 7,697
Other receivables 23,302 31 20,207
Total non-current assets 217,584 79,438 221,371
CURRENT ASSETS
Inventories 97,586 71,083 110,526
Receivables
Trade receivables 112,721 55,766 103,965
Other receivables 22,440 12,007 20,490
Current tax assets 4,606 328 165
Total receivables 139,766 68,100 124,621
Cash and cash equivalents 61,636 15,056 52,280
Total current assets 298,988 154,240 287,426
TOTAL ASSETS 516,573 233,677 508,798
EQUITY AND LIABILITIES
EQUITY
Share capital 6,191 6,103 6,103
Share premium account 10,605 8,246 8,259
Invested non-restricted equity fund 34,013 21,852 35,639
Translation reserve 10,700 733 6,257
Fair value reserve -865 0 -464
Share-based payments 2,676 1,993 2,340
Retained earnings 81,407 74,179 70,902
Profit for the report period 16,626 13,854 23,445
Total equity 161,353 126,960 152,482
LIABILITIES
Non-current liabilities
Interest-bearing liabilities 140,942 25,228 146,789
Non-interest-bearing liabilities 26,809 0 24,321
Provisions 885 1,037 1,541
Deferred tax liabilities 32,007 6,762 32,957
Total non-current liabilities 200,643 33,026 205,608
Current liabilities
Interest-bearing liabilities 14,120 8,556 16,230
Trade payables 91,342 37,306 90,779
Other non-interest-bearing liabilities 44,659 27,451 43,176
Current tax liabilities 4,456 379 524
Total current liabilities 154,577 73,692 150,708
Total liabilities 355,220 106,718 356,316
TOTAL EQUITY AND LIABILITIES 516,573 233,677 508,798
CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000) 1-6/12 1-6/11 1-12/11 12
6 mon. 6 mon. mon.
Cash flows from operating activities
Cash receipts from customers 478,124 220,549 564,533
Cash receipts from other operating activities 351 2,224 5,357
Cash paid to suppliers and employees -433,713 -212,053 -520,867
Cash flows from operations before financial 44,762 10,719 49,022
income and expenses and taxes
Interest paid and other financial expenses -3,004 -1,164 -3,695
Translation difference 1,448 994 2,489
Interest received 91 713 1,995
Income taxes paid -8,027 -2,469 -9,822
Net cash from operating activities (A) 35,271 8,794 39,990
Cash flows from investing activities
Acquisition of property, plant and equipment and -9,454 -5,674 -11,845
intangible assets
Proceeds from sale of property, plant and 2,077 293 1,393
equipment and intangible assets
Acquisitions of subsidiaries 0 -12,552 -79,565
Loans granted 0 0 -514
Proceeds from repayments of loans 411 16 16
Dividends received 0 0 301
Net cash used in investment activities (B) -6,965 -17,917 -90,213
Cash flows after investments 28,305 -9,123 -50,223
Cash flows from financing activities
Drawing of long-term borrowings 0 0 153,703
Drawing of short-term borrowings 5,041 0 12,175
Share issue 2,590 3,500 4,000
Repayment of short-term/long-term borrowings -14,549 -5,355 -93,596
Dividends paid -12,814 -10,891 -10,890
Net cash used in financing activities (C) -19,733 -12,746 65,391
Net increase (+) or decrease (-) in cash and 8,572 -21,868 15,168
equivalents (A+B+C)
Cash and cash equivalents in the beginning of 52,280 37,104 37,104
the period
Effect of exchange rate fluctuations 784 -179 8
Cash and cash equivalents in the end of the 61,636 15,056 52,280
period
KEY FINANCIAL INDICATORS 1-6/12 1-6/11 1-12/11 12
6 mon. 6 mon. mon.
Net sales, EUR 1,000 486,771 206,193 550,208
Operating profit, EUR 1,000 26,912 16,745 34,505
% of net sales 5.5 8.1 6.3
Profit before taxes, EUR 1,000 24,464 17,076 29,414
% of net sales 5.0 8.3 5.3
Net profit for the period, EUR 1,000 16,626 13,854 23,445
% of net sales 3.4 6.7 4.3
Return on equity (ROE), % 21.2 22.1 17.0
Return on investments (ROI), % 23.0 27.7 18.9
Net liabilities, EUR 1,000 93,426 18,727 110,739
Gearing, % 57.9 14.8 72.6
Equity ratio, % 31.2 54.3 30.0
Current ratio 1.9 2.1 1.9
Gross capital expenditure, EUR 1,000 10,132 19,493 101,532
% of net sales 2.1 9.5 18.5
R&D expenditures, EUR 1,000 4,079 3,196 6,922
% of net sales 0.8 1.6 1.3
Personnel average 21,478 6,745 10,793
PER-SHARE KEY INDICATORS 1-6/12 1-6/11 1-12/11 12
6 mon. 6 mon. mon.
Earnings per share (EPS), EUR 0.79 0.70 1.18
Earnings per share (EPS),diluted, EUR 0.78 0.69 1.16
Equity per share, EUR 7.51 6.38 7.66
Share price at close of period, EUR 12.13 15.78 11.48
Lowest share price, EUR 10.65 13.90 8.60
Highest share price, EUR 18.30 18.36 18.36
Average share price, EUR 14.97 15.59 13.44
Turnover in shares, 1,000 shares 6,080 5,403 11,804
Turnover in shares per (share issue adjusted) 28.8 27.4 59.6
share capital, %
Average number of shares, 1,000 shares 21,082 19,725 19,816
Average number of shares, diluted, 1,000 shares 21,310 20,104 20,127
Shares at end of period, 1,000 shares 21,482 19,904 19,906
Unlisted shares at the end of period, 1,000 0 0 1,250
shares
Market capitalisation, EUR 1,000 260,580 314,092 228,519
1. SEGMENT INFORMATION
1.4.-30.6.2012 (EUR 1,000) Wiring Electro Unallocated amounts and Group
Systems nics eliminations Total
Sales to external 226,827 17,977 0 244,804
customers
Sales to other segments 122 31 -153 0
Net sales 226,948 18,008 -153 244,804
Operating profit before 15,382 664 -851 15,195
non-recurring items
% of net sales 6.8 3.7 6.2
Non-recurring employee 1,018 0 0 1,018
benefit expenses
Total non-recurring other 1,018 0 0 1,018
operating items
Operating profit 14,364 664 -851 14,177
% of net sales 6.3 3.7 5.8
Segment's assets 501,675 46,942 -45,064 503,553
Unallocated assets *) 13,020 13,020
Total assets 501,675 46,942 -32,044 516,573
*) Segment's assets do not include deferred taxes
1.4.-30.6.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group
Systems nics and eliminations Total
Sales to external customers 90,159 19,148 0 109,307
Sales to other segments 266 43 -309 0
Net sales 90,425 19,192 -309 109,307
Operating profit before 9,653 543 -934 9,262
non-recurring items
% of net sales 10.7 2.8 8.5
Donations to the 0 150 0 150
universities
Advisor fees 410 0 1,944 2,354
Cancellation of the -317 0 0 -317
write-down of inventories
Total non-recurring other 93 150 1,944 2,187
operating items
Operating profit 9,560 393 -2,878 7,075
% of net sales 10.6 2.1 6.5
Segment's assets 193,376 50,026 4,858 248,260
Unallocated assets *) -14,583 -14,583
Total assets 193,376 50,026 -9,725 233,677
*) Segment's assets do not include deferred taxes
1.1.-30.6.2012 (EUR 1,000) Wiring Electro Unallocated amounts and Group
Systems nics eliminations Total
Sales to external 453,447 33,325 0 486,771
customers
Sales to other segments 278 54 -332 0
Net sales 453,724 33,379 -332 486,771
Operating profit before 30,553 -203 -2,158 28,191
non-recurring items
% of net sales 6.7 -0.6 5.8
Non-recurring employee 1,143 136 0 1,279
benefit expenses
Total non-recurring other 1,143 136 0 1,279
operating items
Operating profit 29,410 -339 -2,158 26,912
% of net sales 6.5 -1.0 5.5
Segment's assets 501,675 46,942 -45,064 503,553
Unallocated assets *) 13,020 13,020
Total assets 501,675 46,942 -32,044 516,573
*) Segment's assets do not include deferred taxes
1.1.-30.6.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group
Systems nics and eliminations Total
Sales to external customers 168,333 37,860 0 206,193
Sales to other segments 419 59 -478 0
Net sales 168,752 37,920 -478 206,193
Operating profit before 19,756 986 -1,810 18,932
non-recurring items
% of net sales 11.7 2.6 9.2
Donations to the 0 150 0 150
universities
Advisor fees 410 0 1,944 2,354
Cancellation of the -317 0 0 -317
write-down of inventories
Total non-recurring other 93 150 1,944 2,187
operating items
Operating profit 19,663 836 -3,754 16,745
% of net sales 11.7 2.2 8.1
Segment's assets 193,376 50,026 4,858 248,260
Unallocated assets *) -14,583 -14,583
Total assets 193,376 50,026 -9,725 233,677
*) Segment's assets do not include deferred taxes
1.1.-31.12.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group
Systems nics and eliminations Total
Sales to external customers 477,212 72,995 0 550,208
Sales to other segments 755 132 -887 0
Net sales 477,967 73,127 -887 550,208
Operating profit before 42,467 2,825 -3,326 41,967
non-recurring items
% of net sales 8.9 3.9 7.6
Donations to the 0 150 0 150
universities
Advisor fees 7,100 0 0 7,100
Cancellation of the -317 0 0 -317
write-down of inventories
Non-recurring employee 218 310 0 528
benefit expenses
Total non-recurring other 7,001 460 0 7,461
operating items
Operating profit 35,466 2,365 -3,326 34,505
% of net sales 7.4 3.2 6.3
Segment's assets 483,593 48,910 -31,402 501,101
Unallocated assets *) 7,697 7,697
Total assets 483,593 48,910 -23,706 508,798
*) Segment's assets do not include deferred taxes
NET SALES BY GEOGRAPHICAL 4-6/12 4-6/11 1-6/12 1-6/11 1-12/11 12
LOCATIONS (EUR 1,000) 3 mon. 3 mon. 6 mon. 6 mon. mon.
Finland 16,038 16,521 29,029 32,107 62,521
Other Europe 59,019 62,790 117,066 117,615 236,006
North America 146,552 6,913 294,594 13,283 157,458
South America 17,877 17,329 36,236 33,111 73,514
Other countries 5,318 5,755 9,846 10,078 20,708
Total 244,804 109,307 486,771 206,193 550,208
2. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR MILLION)
A = Share Capital
B = Share premium account
C = Invested non-restricted equity fund
D = Fair value reserve
E = Translation difference
F = Retained earnings
G = Total equity
A B C D E F G
Equity at 1.1.2011 6.0 4.9 21.8 0.0 7.6 83.5 123.7
Dividends 0.0 0.0 0.0 0.0 0.0 -10.7 -10.7
Share-based payments 0.0 0.0 0.0 0.0 0.0 0.3 0.3
Subscription of shares 0.1 3.4 0.0 0.0 0.0 0.0 3.5
Comprehensive income for the period 0.0 0.0 0.0 0.0 -3.3 13.8 10.5
Other changes 0.0 0.0 0.0 0.0 -0.5 0.0 -0.5
Equity at 30.6.2011 6.1 8.3 21.8 0.0 3.8 86.9 126.9
Equity at 1.1.2012 6.1 8.3 35.6 -0.5 6.3 96.7 152.5
Dividends 0.0 0.0 0.0 0.0 0.0 -12.8 -12.8
Share-based payments 0.0 0.0 0.0 0.0 0.0 0.3 0.3
Share issue, exercise of options 0.1 2.3 0.0 0.0 0.0 0.0 2.4
Comprehensive income for the period 0.0 0.0 0.4 -0.4 4.4 16.6 21.0
Other changes 0.0 0.0 -2.0 0.0 0.0 0.0 -2.0
Equity 30.6.2012 6.2 10.6 34.0 -0.9 10.7 100.8 161.4
3. PROPERTY, PLANT AND EQUIPMENT (EUR 1,000) 6/12 6/11
Acquisition cost 1.1. 148,456 76,511
+ Additions 6,966 5,091
+ Acquisitions 0 15,738
- Disposals -1,152 -689
Acquisition cost 30.6. 154,271 96,651
Accumulated depreciation 1.1. 41,366 40,505
- Accumulated depreciation on disposals 0 3,409
+ Depreciation 10,878 4,034
+/- Exchange difference 298 223
Depreciation 30.6. 52,542 48,171
Carrying amount 30.6. 101,729 48,478
4. OTHER INTANGIBLE ASSETS (EUR 1,000) 6/12 6/11
Acquisition cost 1.1. 104,828 39,246
+ Additions 3,165 551
+ Acquisitions 0 2,918
Acquisition cost 30.6. 107,993 42,715
Accumulated depreciation 1.1. 24,525 14,882
+ Depreciation 3,680 1,705
+/- Exchange difference 192 95
Depreciation 30.6. 28,397 16,681
Carrying amount 30.6. 79,596 26,034
5. CONTINGENT LIABILITIES AT END OF PERIOD (EUR 1,000) 6/12 6/11 12/11
Leasing liabilities 14,519 2,712 1,898
Liabilities for derivative instruments
Nominal values
Interest rate swaps 40,991 0 45,974
Currency derivatives
Forward contracts 16,063 347 5,944
Copper derivatives
Forward contracts 8,257 2,524 2,450
Total 65,311 2,872 54,367
Fair values
Interest rate swaps -885 0 -480
Currency derivatives
Forward contracts 7 0 -64
Copper derivatives
Forward contracts -160 11 188
Total -1,037 12 -356
Currency and copper derivatives are used only in hedging currency and copper
risks. PKC Group does not apply hedge accounting to currency and copper
derivative instruments in accordance with IAS 39. Fair values of currency and
copper derivatives are recognised through profit and loss. PKC Group applies
hedge accounting to interest rate swaps.
6. QUARTERLY KEY 1-3/11 4-6/11 7-9/11 10-12/1 1-3/12 4-6/12
INDICATORS, 3 mon. 3 mon. 3 mon. 1 3 3 mon. 3 mon.
CONSOLIDATED mon.
Net sales, EUR million 96.9 109.3 102.0 242.0 242.0 244.8
Operating profit, EUR 9.7 7.1 9.0 8.8 12.7 14.2
million
% of net sales 10.0 6.5 8.8 3.6 5.3 5.8
Profit before taxes, EUR 9.4 7.7 4.6 7.7 10.5 14.0
million
% of net sales 9.7 7.0 4.5 3.2 4.3 5.7
Equity ratio, % 52.4 54.3 36.1 30.0 30.9 31.2
Earnings per share (EPS), 0.38 0.31 0.19 0.29 0.33 0.46
diluted (EUR)
Equity per share, EUR 6.09 6.38 6.44 7.66 7.65 7.51
QUARTERLY KEY INDICATORS,
WIRING SYSTEMS
Net sales, EUR million 78.2 90.2 84.3 224.5 226.6 226.8
Operating profit, EUR 10.1 9.6 7.1 8.7 15.0 14.4
million
% of net sales 12.9 10.6 8.4 3.9 6.6 6.3
QUARTERLY KEY INDICATORS,
ELECTRONICS
Net sales, EUR million 18.7 19.1 17.7 17.5 15.3 18.0
Operating profit, EUR 0.4 0.4 1.7 -0.2 -1.0 0.7
million
% of net sales 2.4 2.1 9.8 -1.2 -6.5 3.7
CALCULATION OF INDICATORS
Return on equity (ROE), %
= 100 x Profit for the report period / Total equity (average)
Return on investments (ROI), %
= 100 x (Profit before taxes + financial expenses) / (Total equity +
interest-bearing liabilities (average))
Gearing, %
= 100 x (Interest-bearing liabilities - cash and cash equivalents) / Total
equity
Equity ratio, %
= 100 x Total equity / (Total of the statement of financial position - advance
payments received)
Current ratio
= Total current assets / Total current liabilities
Earnings per share (EPS), EUR
= Profit for the report period attributable to equity holders of the parent
company / Average share issue-adjusted number of shares
Shareholders' equity per share, EUR
= Equity attributable to equity holders of the parent company / Share
issue-adjusted number of shares at the date of the statement of financial
position
Market capitalisation
= Number of shares at the end of the report period x the last trading price of
the report period
All the future estimates and forecasts presented in this stock exchange release
are based on the best current knowledge of the company's management and
information published by market research companies and customers. The estimates
and forecasts contain certain elements of risk and uncertainty which, if they
materialise, may lead to results that differ from present estimates. The main
factors of uncertainty are related, among other things, to the general economic
situation, the trend in the operating environment and the sector as well as the
success of the Group's strategy.
PKC GROUP PLC
Board of Directors
Matti Hyytiäinen
President and CEO
For additional information, contact:
Matti Hyytiäinen, President & CEO, PKC Group Plc, +358 400 710 968
PRESS CONFERENCE
A press conference on the interim report will be arranged for analysts and
investors today, 9 August 2012, at 10.00 a.m., at the address Event Arena Bank,
Unioninkatu 20, Helsinki.
DISTRIBUTION
NASDAQ OMX
Main media
www.pkcgroup.com
The PKC Group offers design and contract manufacturing services for wiring
systems and electronics. The Group has production facilities in Brazil, China,
Estonia, Finland, Germany, Ireland, Mexico, Poland, Russia, Ukraine and the
USA. The Group's net sales in 2011 totalled EUR 550.2 million. PKC Group Plc is
listed on NASDAQ OMX Helsinki Ltd.
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