Exel Composites Oyj - Interim report (Q1 and Q3)

Exel Composites Plc’s Business Review January – September 2016: Customer demand remained weak, however, operating profit improved in Q3 2016

EXEL COMPOSITES PLC   STOCK EXCHANGE RELEASE   25 OCTOBER 2016 at 16.00 EET



Exel Composites Plc’s Business Review January – September 2016: Customer demand
remained weak, however, operating profit improved in Q3 2016 


Q3 2016 in brief

--  Order intake for the third quarter amounted to EUR 18.2 (18.7) million,
-2.9% in comparison to previous year. 
--  Revenue amounted to EUR 16.4 (18.0) million, -8.7% in comparison to
previous year. 
--  Operating profit amounted to EUR 0.6 (0.5) million, which is 3.4% (2.6) of
revenue. 
--  Net cash flow from operating activities was positive at EUR +2.5 (+0.5)
million. 
--  Earnings per share were EUR 0.03 (0.01).

January – September 2016 in brief

--  Order intake for the period amounted to EUR 56.5 (62.9) million, -10.1% in
comparison to previous year. 
--  Revenue amounted to EUR 54.1 (60.9) million, -11.1% in comparison to
previous year. 
--  Operating profit amounted to EUR 1.9 (3.8) million, which is 3.4% (6.3) of
revenue. 
--  Net cash flow from operating activities was positive at EUR +2.0 (+2.9)
million. 
--  Earnings per share were EUR 0.11 (0.20).


Outlook for full year 2016

The Company continues to implement its new strategy with focus on operational
efficiency and optimizing the global manufacturing footprint. The Company
estimates that adjusted operating profit will decrease in 2016 compared to
2015. 


President and CEO, Riku Kytömäki

The market environment has remained challenging throughout 2016 and the
situation did not change in the third quarter of the year. While the seasonal
summer holiday period typically affects volumes, order intake for the third
quarter and year to date did not reach the previous year’s level due to a
generally lower demand in  our key markets. This is the case especially in
telecommunications, which is one of the main segments for Exel. It is generally
known that the competitive landscape in telecommunications is going through a
fundamental change and this has affected also the business of a number of our
key customers. 

Overall, we are seeing a declining share of orders from high volume customers,
which has had a negative impact on our sales mix. We are taking actions to
counteract this development for example by optimizing our production in shorter
production runs and with quicker ramp-up’s. We also continue to actively expand
our customer base and have a focused approach specifically on customer
industries where we see growth opportunities for composites even in the current
market environment. 

Our continuous efforts throughout this year to adjust our cost structure have
improved our profitability even despite lower volumes. Quarterly operating
profit for the third quarter was for the first time this year better than
previous year, although still behind when considering the January-September
period. We will continue implementing the cost reduction measures and improving
our operational efficiency. 

In the short term, we anticipate the market outlook to remain challenging due
to lower demand in some markets and low metal and oil prices affecting some of
our customers. In the long term, however, global megatrends continue to drive
growth and create new business opportunities for our business. Our strategy
combined with our expertise in composites keep us well positioned for
profitable growth when the market environment improves. 


Consolidated key figures

EUR thousand      1.7.-30.  1.7.-30.  Change  1.1.-30.  1.1.-30  Change  1.1.-31
                        9.        9.       ,        9.      .9.       ,     .12.
                      2016      2015       %      2016     2015       %     2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Order intake        18,181    18,723    -2.9    56,532   62,908   -10.1   83,374
Order backlog 1)    17,428    14,259    22.2    17,428   14,259    22.2   15,348
Revenue 2)          16,431    18,006    -8.7    54,070   60,853   -11.1   80,196
Operating profit       565       466    21.2     1,858    3,805   -51.2    4,414
% of revenue           3.4       2.6               3.4      6.3              5,5
Adjusted               596       517    15.3     1,912    4,097   -53.3    4,770
 operating                                                                      
 profit 3)                                                                      
% of revenue           3.6       2.9               3.5      6.7              5.9
Profit for the         384        78   392.3     1,263    2,435   -48.1    2,844
 period                                                                         
Net cash flow        2,492       549   353.9     1,972    2,908   -32.2    3,385
Return on              5.6       4.8               6.3     13.8             12.0
 capital                                                                        
 employed, %                                                                    
Net gearing, %        13.2      -1.2              13.2     -1,2              2.0
                                                                                
Earnings per          0.03      0.01              0.11     0.20             0.24
 share, EUR                                                                     
Equity per            2.36      2.51    -6.0      2.36     2,51    -6.0     2.58
 share, EUR                                                                     
1) As per 30 September 2016.                                                    
2) Revenue by customer industries Q3 2016 (Q3 2015): Industrial applications EUR
 8.7 (9.8) million; Construction & infrastructure EUR 4.2 (4.7) million;
 Other applications EUR 3.5 (3.6) million.                                      
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 26 October 2016 at
10.30 a.m. EET at the company’s factory site in Mäntyharju, Finland (address
Uutelantie 24 B, 52700 Mäntyharju). 


Vantaa, 25 October 2016

Exel Composites Plc
Riku Kytömäki, President & 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.