2009-10-27 08:30:00 CET
2009-10-27 08:32:03 CET
REGULATED INFORMATION
Vacon - Interim report (Q1 and Q3)
Vacon Plc Interim Report 1 January - 30 September 2009
Vacon Plc, Stock Exchange Release, 27 October 2009 at 9.30 am
July-September summary:
- Order intake totalled MEUR 57.1, a decline of -26.6 % from
the corresponding period
in the previous year (MEUR 77.8).
- Revenues totalled MEUR 62.1, a decline of -16.3 % (MEUR
74.2).
- Operating profit was MEUR 3.4, down -62.6 % (MEUR 9.1).
- Cash flow from operations was MEUR 10.8 (MEUR 6.4).
- Earnings per share were EUR 0.19 (EUR 0.37), a decline from
the previous year of -48.6 %.
January-September summary:
- Order intake totalled MEUR 192.5, a decline of -19.6 % from
the corresponding period
in the previous year (MEUR 239.3).
- Revenues totalled MEUR 207.8, a decline of -4.7 % (MEUR
218.1).
- Operating profit was MEUR 18.2, down -32.8 % (MEUR 27.1).
- Cash flow from operations was MEUR 25.0 (MEUR 16.8).
- Earnings per share were EUR 0.83 (EUR 1.19), a decline from
the previous year of -30.3 %.
The global recession weakened demand for AC drives in most market
segments during the first nine months of 2009. AC drive investments
to improve energy efficiency and in renewable energy generation
remained brisk especially in Asia, but they were not able to
compensate for the decline in orders in other market segments and
areas. Vacon does not expect the AC drive market to decline any
further in the final quarter of 2009.
A major order that Vacon was expecting in July 2009 from one of
Vacon's largest customers was not received in the third quarter and
this, coupled with normal seasonal fluctuation, reduced the order
intake to EUR 57.1 (77.8) million. The comparable order intake,
excluding the impact of the delayed order and normal seasonal
fluctuation, was at almost the same level in the third quarter as in
the first half of the year.
Vacon's deliveries to the mentioned above have started up again and
they are expected to slightly improve Vacon's order intake and
revenues in the final quarter of 2009 compared to the third quarter.
Revenues totalled EUR 62.1 million, a decline of 18 % from the second
quarter and some 16 % from the corresponding quarter in the previous
year. The fall in revenues was due to the reduction in orders
received and the delayed major order.
The operating profit margin in the third quarter was 5.5 % (12.3 %),
compared with 10.1 % in the first quarter of this year and 10.3 % in
the second quarter. The main factors in the weakening of
profitability were fixed costs, which remained at almost the same
level as in the first half of the year, and the decline in revenues.
Vacon has initiated measures to achieve annual cost savings of EUR 5
million. The company aims at savings especially in the procurement of
external services and in personnel costs.
On 14 September 2009 Vacon began negotiations affecting office staff
at its operations in Finland, examining the means available to adjust
its operations to weaker market conditions. As the result of these
negotiations Vacon decided to lay off 160 office staff for fixed
periods. Each office worker affected by the negotiations will be laid
off for 7 working days in 2009 and for a maximum of 30 working days
in 2010. It was also agreed that the need for layoffs will be
reviewed quarterly. The targeted savings are roughly equal to the
need to reduce costs by some 30 man-years during 2009 - 2010.
The balance sheet remained strong. The company has paid particular
attention to the management of working capital. The cash flow from
operations was EUR 10.8 million (EUR 6.4 million in July-September
2008). Intensified control of trade receivables and stocks helped
achieve this improvement.
January - September result and equity structure
MEUR 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/
2009 2008 2009 2008 % 2008
Revenues 62.1 74.2 207.8 218.1 -4.7 293.2
EBITDA 5.8 11.0 25.3 32.4 -21.9 41.9
Depreciation
- tangibles -1.1 -0.9 -3.2 -2.6 23.1 -3.5
EBITA 4.7 10.1 22.1 29.8 -25.8 38.4
Amortization
- intangibles -1.3 -1.0 -3.9 -2.7 44.4 -3.8
Operating
profit 3.4 9.1 18.2 27.1 -32.8 34.6
Profit before
tax 3.7 8.3 17.7 26.2 -32.4 32.6
Profit for
period 3.1 5.9 13.2 18.8 -29.8 23.9
The Group's order intake in the January-September period was 19.6 %
less than in the previous year, and revenues declined 4.7 %.
According to Vacon's own estimate, the company has succeeded in
raising its market share, despite the reduction in revenues. The
operating profit in the first nine months of the year was 32.8 %
lower than in the previous year. The operating profit as a percentage
of revenues fell from 12.4 % last year to 8.8 %. The EBITA margin was
10.6 %, compared to 13.7 % one year ago. The decline in revenues and
the investments in growth, such as establishing new sales companies
and the increasing number of personnel, have weakened profitability.
The earnings per share were EUR 0.83, a decline of EUR 0.36 from the
previous year.
The balance sheet total was EUR 143.0 (150.8) million. The equity
ratio was 55.3 % (48.0 %). The Group's cash flow from operations for
the January-September period was EUR 25.0 (16.8) million.
The Group's equity structure and liquidity remained strong.
Interest-bearing net debt at the end of the period totalled EUR 8.6
(11.3) million, and gearing was 11.0 % (15.8 %).
The Group's order book stood at EUR 32.7 (56.0) million. The order
book declined EUR 15.3 million from the beginning of the year.
Market position
Vacon Group revenues by market area were as follows:
MEUR 7-9/ % 7-9/ % 1-9/ % 1-9/ % 1-12/ %
2009 2008 2009 2008 2008
Europe,
Middle
East,
Africa 42.1 67.8 52.3 70.5 148.1 71.3 156.6 71.8 210.5 71.8
North
And
South
America 11.4 18.4 14.9 20.1 35.2 16.9 41.9 19.2 55.9 19.1
Asia and
Pacific 8.6 13.8 7.0 9.4 24.5 11.8 19.6 9.0 26.8 9.1
Total 62.1 100.0 74.2 100.0 207.8 100.0 218.1 100.0 293.2 100.0
Vacon has strengthened its global position during 2009. Based on
market surveys, the company estimates that it has about four per cent
of the global market.
Developments in Vacon's revenues by market region during the nine
month period were as follows: Europe, Middle East and Africa in total
-5.4 %, North and South America -16.0 %, and Asia and Pacific +25.0 %
from the corresponding period in the previous year.
Breakdown of Vacon Group revenues by distribution channel
7-9/ % 7-9/ % 1-9/ % 1-9/ % 1-12/ %
MEUR 2009 2008 2009 2008 2008
Direct
sales 32.7 52.7 36.9 49.7 120.0 57.7 104.1 47.7 146.4 49.9
Distribu-
tors 5.2 8.4 9.4 12.6 19.4 9.3 27.6 12.7 34.4 11.7
OEM 13.8 22.2 15.6 21.1 37.8 18.2 50.3 23.0 60.0 20.5
Brand
label 10.4 16.7 12.3 16.6 30.6 14.7 36.1 16.6 52.4 17.9
Total 62.1 100.0 74.2 100.0 207.8 100.0 218.1 100.0 293.2 100.0
Sales through several of Vacon's distribution channels fell during
the nine month period; OEM 25 %, distributors 30 % and brand label
customers 15 %. Revenues from direct sales (including sales to system
integrators) increased 15 % from the previous year. Sales to system
integrators in particular have supported this trend.
Vacon Group structure
No significant changes took place in the Group structure during the
third quarter.
Research and development
R&D expenditure during the first nine months of the year totalled
EUR 13.0 (12.6) million, and EUR 3.9 (1.3) million of this was
capitalized as development costs. R&D costs accounted for 6.3 % of
the Group's revenues (5.8 %).
Work on developing new products continued in accordance with the
company's plans. The company's goal in 2009 is to increase the
product offering in the new AC drive family. R&D focuses on improving
cost-efficiency, functionality, use of space, visual properties, user
friendliness and energy efficiency.
Investments
Gross investments by the Group during the first nine months totalled
EUR 11.5 (7.0) million. Expenditure focused on R&D, information
systems, raising production testing capacity, and expanding
production capacity for new products.
Organization and personnel
The number of Vacon Group personnel has increased by 29 since the
beginning of the year. At the end of September the Group employed
1,226 (1,163) people, of whom 640 (633) were in Finland and 586 (530)
in other countries. The table below shows the average number of Vacon
employees during the review period:
1-9/2009 1-9/2008 1-12/2008
Office personnel 759 672 687
Factory personnel 474 439 444
Total 1,233 1,111 1,131
On 14 September Vacon Plc began negotiations affecting office staff
at its operations in Finland, examining the means available to adjust
its operations to weaker market conditions. The negotiations were
concluded on 29 September and as a result Vacon decided to lay off
160 office workers for fixed periods.
Shares and shareholders
Vacon had a market capitalization at the end of September of EUR
387.8 million. The closing share price on 30 September 2009 was EUR
25.50. The lowest share price during the January-September period was
EUR 15.30 and the highest EUR 28.90. A total of 3,660,011 Vacon
shares were traded during the January-September period, in monetary
terms EUR 75.5 million.
Vacon's main shareholders on 30 September 2009:
Number of Holding, %
shares
Ahlström Capital Group 2,804,719 18.3
Tapiola Mutual Pension
Insurance Company 584,500 3.8
Ilmarinen Mutual Pension
Insurance Company 563,230 3.7
Vaasa Engineering Oy 424,433 2.8
Koskinen Jari 362,088 2.4
Holma Mauri 347,171 2.3
Ehrnrooth Martti 333,000 2.2
Tapiola Group companies 325,300 2.1
Niemelä Harri 271,939 1.8
Karppinen Veijo 209,349 1.4
Nominee registered and
in foreign ownership 4,490,357 29.4
Vacon Plc's own shares 86,011 0.6
Others 4,492,903 29.4
Total 15,295,000 100.0
Shares outstanding 15,208,989
On 30 September 2009 members of Vacon's Board of Directors, the
President and CEO, and the Deputy to the CEO held directly a total of
579,494 shares, or 3.8 % of Vacon's share stock.
Own shares
On 30 September 2009 Vacon Plc held a total of 86,011 of its own
shares.
Risks and uncertainties in the near future
The most significant risks for Vacon in the near future relate to the
weakening of general demand and intensifying competition on price.
Vacon's order book has always been short term in nature, so there are
no major risks connected with the timing of deliveries or their
cancellation. Vacon has thousands of customers worldwide. The ten
largest customers account for just under half of Vacon's revenues.
Vacon does not finance customer projects and is also continuously
assessing the creditworthiness of its customers and their ability to
pay their debts.
Vacon is able to adjust its production capacity to market demand. The
company estimates that its cash funds and available credit facilities
are sufficient to ensure its liquidity.
Vacon's balance sheet includes goodwill of EUR 8.1 million, most of
which is related to the company acquisition at the beginning of 2008.
The company tests goodwill for impairment annually.
The availability of raw materials and components and changes in their
prices can affect the profitability and scale of the company's
business. Purchase agreements for raw materials and components are
mainly annual agreements, which contain price and exchange rate
clauses for changes in the global market prices of raw and other
materials. Changes in the global economic situation may harm the
business opportunities for some component suppliers.
Some of the most significant financial risks affecting the result are
foreign exchange risks. Exchange rate fluctuations may have an impact
on business, although the international expansion of business
operations reduces the relative importance of individual currencies.
The biggest exchange rate risks against the euro relate to the US
dollar and the Chinese renmimbi.
Prospects for 2009
Vacon does not expect the AC drive market to weaken further during
the final quarter of 2009. According to Vacon's estimates, the AC
drive market in 2009 will show a significant decline from 2008. AC
drive investments to improve the energy efficiency of electric motor
drives and in renewable energy generation are increasing, but
investments to improve industrial processes and in new building are
falling. Vacon has about a 4 % market share. The global sales
network, the renewal of the product selection, and the relatively low
market share, coupled with a flexible organization support the
development of Vacon's business even in difficult market conditions.
Vacon will continue to adapt its investments in growth to the
prevailing market situation so as to secure its profitability.
Vacon estimates that its 2009 revenues will decline more than five
per cent from the 2008 figure. Profitability and earnings per share
are expected to be lower than in 2008. Return on equity (ROE) to fall
below 30 %.
2009 financial reporting
Vacon will publish its financial statements for 2009 at 9.30 am on 3
February 2010.
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 more than 25 countries. In 2008
Vacon had revenues of EUR 293.2 million and globally employed 1,200
people. The shares of Vacon Plc (VAC1V) are quoted on the main list
of the Helsinki stock exchange.
Vacon's long-term goals are to achieve revenues of EUR 500 million
and an operating profit percentage (EBIT %) of more than 14 % by the
end of 2012. An annual target of more than 30 % has been set for
return on equity (ROE).
Driven by Drives, www.vacon.com
Vaasa, 27 October 2009
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 443
Conference for media and analysts
Vacon will hold a briefing for analysts and the media at 11.30 am on
27 October 2009 in the Vaakuna meeting room at the Sokos Hotel
Vaakuna, entrance at Asema-aukio 2, 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 27 October 2009. President and CEO Vesa
Laisi, Executive Vice President Heikki Hiltunen and Eriikka
Söderström, CFO and Vice President, Finance and Control, will
participate in the conference. Lines can be booked ten minutes before
the conference by calling the service number +44 207 162 0025. The
conference ID code is "Vacon Oyj". To hear a recording of the
conference, available for three working days, call +44 207 031 4064,
ID code 824277.
Conference link:
http://wcc.webeventservices.com/view/wl/r.htm?e=172560&s=1&k=14896C8603DB67F53B0D50994D84EC9E&cb=blank
Distribution
NASDAQ OMX Helsinki Exchange
Financial Supervision Authority
Main media
Accounting principles
This interim report has been prepared in accordance with IFRS
(International Financial Reporting Standards) standard IAS 34 on
Interim Financial Reporting.
Vacon has prepared this interim report applying the same accounting
principles as those decribed in detail in its 2008 consolidated
financial statements
The interim report is unaudited.
Consolidated income statement, IFRS, MEUR
7-9/2009 7-9/2008 1-9/2009 1-9/2008 1-12/2008
Revenues 62.1 74.2 207.8 218.1 293.2
Other operating income 0.1 0.0 0.2 0.1 0.2
Change in inventories
of
finished goods and work
in progress 0.0 1.7 0.0 4.0 0.2
Materials and services -32.2 -39.6 -106.1 -115.9 -150.8
Employee benefit costs -12.9 -13.6 -40.6 -39.0 -52.7
Other operating costs -11.2 -11.7 -36.0 -34.8 -48.2
Depreciation -1.1 -0.9 -3.2 -2.6 -3.5
EBITA 4.7 10.1 22.1 29.8 38.4
Amortization -1.3 -1.0 -3.9 -2.7 -3.8
Operating profit 3.4 9.1 18.2 27.1 34.6
Financial income
and expenses 0.3 -0.9 -0.5 -1.0 -2.0
Profit before taxes 3.7 8.2 17.7 26.2 32.6
Income taxes -0.6 -2.3 -4.6 -7.4 -8.7
Profit for period 3.1 5.9 13.2 18.8 23.9
Attributable to:
Equity holders
of the parent 2.9 5.7 12.6 18.2 23.1
Minority interest 0.2 0.2 0.6 0.6 0.8
Earnings per share,
euro 0.19 0.37 0.83 1.19 1.51
Earnings per share
diluted, euro 0.19 0.37 0.83 1.19 1.51
Consolidated statement of comprehensive income, IFRS, MEUR
7-9/2009 7-9/2008 1-9/2009 1-9/2008 1-12/2008
Net profit for period 3.1 5.9 13.2 18.8 23.9
Other comprehensive
income
Cash flow hedging 0.0 0.0 0.0 0.0 0.0
Exchange differences
on translating
foreign operations -0.2 0.9 -0.3 0.4 0.4
Total comprehensive
income 2.9 6.8 12.8 19.2 24.3
Attributable to:
Shareholders of
parent company 2.7 6.6 12.2 18.6 23.5
Minority interest 0.2 0.2 0.6 0.6 0.8
Consolidated balance sheet , IFRS, MEUR
30.9.2009 30.9.2008 31.12.2008
ASSETS
Goodwill 8.1 8.0 8.3
Development costs 8.0 3.9 4.8
Intangible assets 13.0 12.6 14.9
Tangible assets 18.7 18.3 16.3
Loans receivable
and other receivables 0.2 0.2 0.2
Deferred tax assets 3.8 2.1 2.6
Other financial assets 3.7 2.4 3.3
Total non-current assets 55.4 47.5 50.3
Inventories 20.5 24.5 21.3
Trade and other receivables 54.4 60.5 61.7
Cash and cash equivalents 12.8 18.2 15.7
Total current assets 87.7 103.3 98.8
Total assets 143.0 150.8 149.1
EQUITY AND LIABILITIES
Share capital 3.1 3.1 3.1
Share premium reserve 5.0 5.0 5.0
Own shares -2.6 -1.2 -2.6
Retained earnings 71.3 63.5 68.7
Minority interest 1.4 1.2 1.3
Total equity 78.1 71.6 75.5
Deferred tax liabilities 4.3 3.1 3.5
Employee benefits 1.5 1.4 1.4
Interest-bearing liabilities 13.2 17.4 15.8
Total non-current liabilities 19.0 22.0 20.7
Trade and other payables 35.7 40.0 37.6
Income tax liabilities 0.4 3.1 1.5
Provisions 1.6 2.0 1.6
Interest-bearing liabilities 8.1 12.1 12.2
Total current liabilities 45.8 57.1 52.9
Total equity and liabilities 143.0 150.8 149.1
Q3/2008 Calculation of changes in shareholders' equity, IFRS, MEUR
Attributable to equity holders of the parent Minority Total
interest equity
Share Share Own Retain- Total
capital pre- shares ed
mium earn-
re- ings
serve
Shareholders'
equity
31.12.2007 3.1 5.0 -1.2 56.0 62.9 1.1 64.0
Dividend paid -11.4 -11.4 -0.5 -11.9
Total
comprehen-
sive income
for period 18.6 18.6 0.6 19.2
Other
changes 0.3 0.3 0.0 0.3
Shareholders'
equity
30.9.2008 3.1 5.0 -1.2 63.5 70.4 1.2 71.6
Q3/2009 Calculation of changes in shareholders' equity, IFRS, MEUR
Attributable to equity holders of the parent Minority Total
interest equity
Share Share Own Retain- Total
capital pre- shares ed
mium earn-
re- ings
serve
Shareholders'
equity
31.12.2008 3.1 5.0 -2.6 68.7 74.1 1.4 75.5
Dividend paid -10.1 -10.1 -0.5 -10.6
Total
comprehen-
sive income
for period 12.2 12.2 0.6 12.8
Other
changes 0.4 0.4 0.4
Shareholders'
equity
30.9.2009 3.1 5.0 -2.6 71.3 76.7 1.4 78.1
Consolidated cash flow statement, IFRS, MEUR
30.9.2009 30.9.2008 31.12.2008
Profit for the period 13.2 18.8 23.9
Depreciation 7.0 5.3 7.3
Financial income and expenses 0.5 1.0 2.0
Taxes 4.6 7.4 8.7
Other adjustments 0.3 0.5 0.5
Change in working capital 6.1 -9.3 -10.1
Cash flow from financial
items and tax -6.7 -6.8 -10.4
Cash flow from
operating activities 25.0 16.8 21.9
Purchase of subsidiary 0.0 -20.4 -20.4
Investments in tangible and
intangible assets -11.1 5.6 -9.2
Proceeds from disposal of
tangible and intangible assets 0.0 0.0 -0.1
Other investments -0.2 -0.4 -1.7
Proceeds from disposal
of other investments 0.0 0.0 0.6
Cash flow from
investing activities -11.3 -26.4 -30.8
Repayment of long-term loans -2.4 -2.3 -3.9
Proceeds from
short-term borrowings 0.0 7.8 7.9
Repayment of short-term loans -4.1 0.0 0.0
Purchase of own shares 0.0 0.0 -1.5
Financial leasing payments 0.0 0.0 0.0
Dividends paid -10.4 -11.9 -11.9
Cash flow from financial activities -17.0 -6.4 -9.4
Change in liquid funds -3.3 -16.1 -18.3
Liquid funds at start of period 15.7 34.4 34.4
Translation differences
for liquid funds 0.3 -0.1 -0.4
Liquid funds at end of period 12.8 18.2 15.7
Segment information
Vacon has one business segment, AC drives. The figures for the
business segment are identical with the figures for the whole Group.
Vacon's operations are organized in the following functions: Products
and Markets, Production, Research & Development, Finance and
Administration, Human Resources, IT and Process Development, and
Business Development. To ensure that the organisation is
customer-oriented, operations are controlled by sales channel:
Distributors, Systems Integrators, Direct Sales, OEM Customers and
Brand Label Customers.
Key indicators
30.9.2009 30.9.2008 31.12.2008
Orders received, MEUR 192.5 239.3 306.5
Change in
orders received, % -19.6 37.1 29.2
Revenues, MEUR 207.8 218.1 293.2
Change in revenues, % -4.7 27.7 26.3
Operating profit, MEUR 18.2 27.1 34.6
Change in
operating profit, % -32.8 24.9 18.5
Operating profit,
% of revenues 8.8 12.4 11.8
Earnings per share, EUR 0.83 1.19 1.51
Equity per share, EUR 5.04 4.62 4.88
Equity ratio, % 55.3 48.0 51.1
Gross capital expenditure,
(2008 exclud. TB Woods'
acquisition), MEUR 11.5 7.0 11.2
Gross capital expenditure,
% of revenues 5.5 3.2 3.8
Interest-bearing net
liabilities, MEUR 8.6 11.3 12.3
Gearing, % 11.0 15.8 16.3
Net working capital, MEUR 37.2 40.0 42.5
Order book, MEUR 32.7 56.0 48.0
Adjusted average number
of shares during the
period 15,202,564 15,244,714 15,238,236
Number of shares at end
of period 15,208,989 15,251,688 15,193,188
Number of personnel at
end of the period 1,226 1,163 1,197
Commitments and contingencies, MEUR
30.9.2009 30.9.2008 31.12.2008
Commitments and contingencies 5.3 2.9 2.2
Financing commitments 0.3 0.8 0.6
Calculation of financial ratios
Profit for the financial period attributable
to equity holders of the parent company
Earnings per ------------------------------------------------------
share =
Adjusted average number of shares
Shareholders' equity - minority holding
Equity per -------------------------------------------------
share =
Adjusted number of shares at year end
Equity ratio = Shareholders' equity x 100
-------------------------------------------------
Balance sheet total - advances received
(Interest-bearing liabilities - cash,
Gearing = bank balances and financial assets) x 100
-------------------------------------------------
Shareholders' equity
Net working Inventories + non-interest-bearing current receivables
capital =
- non-interest-bearing current liabilities
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