Vacon - Financial Statement Release

Vacon Plc Financial Statement Bulletin 1 January - 31 December 2010

Vacon Plc, Stock Exchange Release, 2 February 2011 at 10.00 am



Vacon Plc Financial Statement Bulletin 1 January - 31 December 2010



In this stock exchange release Vacon is publishing information that has a
significant impact on securities included in the financial statements. The full
financial statements are in the appendix to this release and can be downloaded
from the company's website in English at www.vacon.com and in Finnish at
www.vacon.fi 



October-December summary:



-         Order intake totalled MEUR 82.4, an increase of 29.7 % from the
corresponding period in 
the previous year (MEUR 63.5).

-         Revenues totalled MEUR 103.2, growth of 60.7 % (MEUR 64.2).

-         Operating profit was MEUR 9.1, or 8.8 % of revenues, growth of 111.5
% (MEUR 4.3 or 6.7 %). 

-         Cash flow from operations was MEUR 1.6 (MEUR 12.1), a decline of 86.4
%. 

-         Earnings per share were EUR 0.46 (EUR 0.19), growth of 146.3 %.



January-December summary:

-         Orders received totalled MEUR 358.2, an increase from 2009 of 39.9 %
(MEUR 256.1). 

-         Revenues were MEUR 338.0, growth of 24.3 % (MEUR 272.0).

-         Operating profit was MEUR 28.6, an increase of 26.8 % (MEUR 22.5).
Operating profit margin was 8.5 % (8.3 %). 

-         Cash flow from operations totalled MEUR 15.9, a decline of 57.1 %
(MEUR 37.1). 

-         Earnings per share were EUR 1.22 (EUR 1.01), growth of 20.1 %.

-         The Board of Directors proposes to the Annual General Meeting of
Shareholders that a dividend of EUR 1.00 per share be paid from the profit in
2010. 



January-December result



MEUR                      10-12/2010  10-12/200  1-12/2010  1-12/2009  Change, %
                                      9                                         
Revenues                       103.2       64.2      338.0      272.0       24.3
EBITDA                          11.9        6.9       39.7       32.1       23.4
Depreciation - tangibles        -1.3       -1.2       -5.0       -4.3       16.0
Amortization -                  -1.5       -1.4       -6.1       -5.3       15.0
intangibles                                                                     
Operating profit                 9.1        4.3       28.6       22.5       26.8
Operating profit %               8.8        6.7        8.5        8.3           
Profit before tax                9.5        4.3       27.5       22.0       25.3
Profit for the period            7.1        2.9       19.1       16.1       18.7


General review

The global AC drive market picked up significantly in 2010 and Vacon succeeded
in raising its market share in all geographical areas. Vacon's revenues
increased 24.3%, while the market is thought to have grown about 8 % (Frost &
Sullivan). Vacon's market share is estimated at some 5 % and the company is one
of the seven largest AC drive suppliers in the world. 



During the final quarter of 2010 revenues rose to EUR 103.2 million, thanks to
the excellent order intake in the third quarter. A shortage of components
disrupted deliveries to a certain extent, however. Orders received reflected
the seasonal variation in the orders from a few major customers. 



In the spring Vacon purchased a small company that specializes in solar energy
technology, which speeded up the launching of the company's solar energy
products. Vacon received its first solar energy orders in the third quarter.
Revenues for renewable energy products (wind and solar) accounted for 18% of
full-year revenues (12.5% in 2009). 



Growth in the operating profit margin was slowed down both in the
October-December period and for the whole year by the focus in sales on
low-power products with a lower profit margin and by the provision recognized
in the fourth quarter of 2010 on account of the legal case relating to the
customs procedures employed by the subsidiary in China. The Chinese prosecuting
authority is demanding compensation of EUR 3.2 million from Vacon. The total
costs relating to this customs issue in the result for 2010 are EUR 3.8
million. Excluding these one-time items, Vacon's operating profit would have
been EUR 32.4 million (9.6%) in 2010. A further factor weakening any
improvement in the operating profit was the costs for electronic components,
which rose in consequence of spot market purchases. The company invested in
growth during 2010 by recruiting new personnel especially for product
development and production. This has increased the company's fixed costs. 



The cash flow from operations was a positive EUR 15.9 million, but EUR 21.2
million less than in the previous year. The reason for this decline was the
increase in working capital caused by the sharp growth in business operations,
which in turn was due to revenues focusing on the last month in the quarter. 



During 2010 Vacon invested heavily in developing AC drive technology for wind
power plants. Another new area for Vacon was the inverter product range
developed for solar power plants. In the second half of 2010 Vacon launched the
Vacon 8000 Solar product family, which has a power range of up to one megawatt.
During 2011 Vacon plans to expand the product range still further. 



In November 2010 Vacon unveiled its new Vacon 100 Motor Mountable AC drive that
can be mounted on a motor or machine, which represents the new principle of
distributed drives in Vacon's product range. AC drives designed in accordance
with this principle can be placed as close as possible to the electric motor,
usually on the electric motor or machine it is controlling. 



Market guidance

Vacon estimates that its 2011 revenues will increase 10% - 20% and its
operating profit percentage is expected to rise from 2010. Earnings per share
are expected to improve from 2010. Vacon's goal is to achieve revenues of EUR
500 million in 2014. Its long-term profitability target is an operating profit
of 14% and a return on equity of more than 30%. 



Financial reports in 2011



Vacon is publishing three interim reports in 2011 as follows:



-         January-March : 27 April 2011

-         January-June: 3 August 2011

-         January-September: 25 October 2011



The 2010 annual report will be published in electronic format in week 8/2011
(21-25 February) and postage of the printed report will begin in week 10 (7-11
March). The Annual General Meeting of Vacon Plc will be held in Vaasa at 3.00
pm on Tuesday, 22 March 2011 at the premises of Åbo Akademi, at Academill,
Rantakatu 2, Vaasa. 



Formal statement

This release contains certain forward-looking statements that reflect the
current views of the company's management. Due to the nature of these
statements, they contain risks and uncertainties and are subject to changes in
the general economic situation and in the company's business sector. 



Vacon in brief

Vacon's operations are driven by a passion to develop, manufacture and sell the
best AC drives in the world — and nothing else. AC drives are used to control
electric motors and in renewable energy generation. Vacon has R&D and
production units in Finland, the USA, China and Italy, and sales offices in 27
countries. In 2010 Vacon had revenues of EUR 338.0 million and globally
employed 1,300 people. The shares of Vacon Plc (VAC1V) are quoted on the main
list of the Helsinki stock exchange. 



Driven by Drives, www.vacon.com



Vaasa, 2 February 2011



VACON PLC



Board of Directors



For more information please contact:

-         Mr Vesa Laisi, President and CEO, phone +358 (0)40 8371 510

-         Ms Eriikka Söderström, CFO and Vice President, Finance & Control,phone +358 (0)40 8371 445 



Conference for analysts, investors and media

Vacon will hold a briefing for analysts, investors and the media at 11.30 am on
2 February 2011 at Scandic Simonkenttä, Simonkatu 9, 00100 Helsinki. 



Dial-in conference for investors and investment analysts

A dial-in conference in English for investors and investment analysts will be
held at 3.00 pm on 2 February 2011. President and CEO Vesa Laisi and Eriikka
Söderström, CFO and Vice President, Finance and Control, will participate in
the conference. To participate, please call the service number +44 (0)20 7806
1968 and ask to be connected to Vacon's dial-in conference. The conference ID
code is 8224599. To hear a recording of the conference, available for three
working days, call +44 (0)20 7111 1244, ID code 8224599. Link to the meeting:
http://www.thomson-webcast.net/uk/dispatching/?event_id=f4c28f730978fe7b72ae5705
f4d5e36d&portal_id=4e8565689f5a5e82ba2d36d9d3fccdef

Attachments:

Vacon Financial Statement 2010_ENG_FINAL.pdf

Vacon results 2010 presentation FINAL.pdf