PKC Group Oyj - Interim report (Q1 and Q3)

PKC GROUP Q2/2014: SECOND QUARTER REVENUE AND EBITDA SIMILAR TO FIRST QUARTER

PKC Group Plc       INTERIM REPORT          7 August 2014  8.15 a.m.



PKC GROUP Q2/2014:

SECOND QUARTER REVENUE AND EBITDA SIMILAR TO FIRST QUARTER



APRIL - JUNE 2014 HIGHLIGHTS

  -- Revenue decreased 12.3% on the comparison period (4-6/2013), totalling EUR
     206.2 million (EUR 235.1 million).
  -- EBITDA before non-recurring items was EUR 12.4 million (EUR 20.6 million)
     and 6.0% (8.8%) of revenue.
  -- EBITA** was EUR 7.6 million (EUR 16.1 million) and 3.7% (6.8%) of revenue.
     During the report period PPA depreciation and amortisation totalled EUR 2.0
     million (EUR 2.8 million).
  -- Operating profit before non-recurring items was EUR 5.6 million (EUR 13.3
     million) and 2.7% (5.6%) of revenue.
  -- Diluted earnings per share were EUR 0.11 (EUR 0.28).
  -- Cash flow after investments was EUR 7.4 million (EUR 1.1 million).



JANUARY - JUNE 2014 HIGHLIGHTS

  -- Revenue decreased 10.9% on the comparison period (1-6/2013), totalling EUR
     410.0 million (EUR 460.3 million).
  -- EBITDA before non-recurring items was EUR 24.5 million (EUR 39.4 million)
     and 6.0% (8.6%) of revenue.
  -- EBITA** was EUR 15.3 million (EUR 30.3 million) and 3.7% (6.6%) of revenue.
     During the report period PPA depreciation and amortisation totalled EUR 4.1
     million (EUR 5.7 million).
  -- Operating profit before non-recurring items was EUR 11.2 million (EUR 24.6
     million) and 2.7% (5.3%) of revenue.
  -- Diluted earnings per share were EUR 0.15 (EUR 0.42).
  -- Cash flow after investments was EUR -11.0 million (EUR 1.3 million).



PKC GROUP'S OUTLOOK FOR 2014

  -- PKC Group estimates that 2014 revenue and comparable EBITDA will be lower
     than in 2013. In 2013, PKC's revenue was EUR 884.0 million and comparable
     EBITDA before non-recurring items was EUR 70.3 million.
  -- Revenue estimate is based on current business structure. Revenue will be
     affected by light vehicle build-outs in North America and by changes in
     exchange rates. As a result of the above, comparable EBITDA is expected to
     be lower than in 2013. Comparable EBITDA in 2014 will also be affected by
     reorganisation and program transfers in Europe and expenditures related to
     the implementation of PKC's growth strategy.





KEY FIGURES           4-6/14   4-6/13  Change   1-6/14   1-6/13  Change  1-12/13
                                            %                         %         
EUR 1,000 (unless otherwise noted)                                              
Revenue              206,222  235,099   -12.3  410,036  460,261   -10.9  883,986
EBITDA*               12,437   20,597   -39.6   24,531   39,365   -37.7   70,341
% of revenue             6.0      8.8              6.0      8.6              8.0
EBITA**                7,628   16,068   -52.5   15,276   30,302   -49.6   52,461
% of revenue             3.7      6.8              3.7      6.6              5.9
Operating profit*      5,607   13,261   -57.7   11,220   24,576   -54.3   40,873
% of revenue             2.7      5.6              2.7      5.3              4.6
Non-recurring items   -1,465   -1,265    15.8   -4,200   -6,654   -36.9  -10,409
Operating profit       4,142   11,996   -65.5    7,021   17,923   -60.8   30,463
% of revenue             2.0      5.1              1.7      3.9              3.4
Profit before taxes    3,871    9,368   -58.7    5,225   14,078   -62.9   21,562
Net profit for the     2,593    6,042   -57.1    3,501    9,151   -61.7   13,947
 report period                                                                  
Earnings per share      0.11     0.28   -61.3     0.15     0.42   -65.5     0.62
 (EPS), EUR                                                                     
Cash flow after        7,390    1,109   566.3  -10,965    1,313           24,941
 investments                                                                    
ROI,%                                             10.2     18.0             14.7
Gearing, %                                        14.0     45.2             -1.1
Average number of     19,246   19,553    -1.6   19,026   19,544    -2.7   19,206
 personnel                                                                      
* before non-recurring items                                                    
** operating profit before PPA depreciation and amortisation and non-recurring  
 items                                                                          





MATTI HYYTIÄINEN, PRESIDENT & CEO:



The revenue during the second quarter remained below the comparison period,
amounting to EUR 206.2 million. In Europe, truck production volumes were at the
same level as in the first quarter but still below the comparison period. In
North America, truck production kept growing compared to both the previous
quarter and the comparison period. In Brazil, the production volumes in the
second quarter topped the production in the first quarter but were
significantly below the comparison period. The crisis in the Ukraine has had a
negative impact on our customers' business activities in Russia, due to which
the planned production ramp-ups at PKC's Russian factory for new customer
programmes were not realised. 



PKC's operating profit before non-recurring items amounted to EUR 5.6 million.
The operating profit was burdened by the low production utilisation rate and
the losses in Brazil in particular. PKC has made progress with the price
agreements that are the prerequisite for the future profitable business, even
though price agreements covering all of the business operations have not yet
been completed in full. PKC's other geographical areas are proceeding according
to plan. 



The cash flow in the second quarter was at a good level, amounting to EUR 13.0
million before capital expenditure. The company has a strong balance sheet with
low gearing. This enables us to implement our strategy in full e.g. through
corporate acquisitions. 



The market downturn continues in Europe and Brazil, and truck production
(heavy-duty and medium-duty) for the full year is predicted to stay well below
last year's figures. The full-year production volumes in North America, on the
other hand, are predicted to top last year's figures. In the second half of the
year, which includes the holiday seasons and Christmas shut-downs, production
volumes are predicted to stay at the level of the first half in Europe and grow
approximately 10% in North America. In Brazil political and economic
uncertainty has increased. PKC's customers in Brazil have indicated production
volumes in second half to remain at the most on current level. 



Establishing PKC in the Chinese truck market is at the core of the PKC 2018
strategy. We have further enhanced the organisation of PKC China and currently
have a 70-strong competence unit in Suzhou. We are working on several projects
in China. 



I wish to thank all PKC personnel once more for all their good work.



MARKET OUTLOOK



Wiring Systems Business



In 2014 the production of heavy-duty trucks in Europe is expected to decline by
10% and production of medium-duty trucks by 13% compared to the level of 2013. 



Production of heavy-duty trucks in North America is expected to increase by
18%, production of medium-duty trucks by 4% and production of light vehicles by
3% compared to 2013. 



Production of heavy-duty trucks in Brazil is expected to decline by 14%, and
production of medium-duty trucks by 18% compared to 2013. The governmental
incentive program to support the purchase of new trucks continues to be valid
until further notice, although the terms have been weakened somewhat. 



Electronics Business



The market demand for Electronics segment's products is expected to remain at
the present level. 



PKC GROUP'S OUTLOOK FOR 2014



PKC Group estimates that 2014 revenue and comparable EBITDA will be lower than
in 2013. In 2013, PKC's revenue was EUR 884.0 million and comparable EBITDA
before non-recurring items was EUR 70.3 million. 



Revenue estimate is based on current business structure. Revenue will be
affected by light vehicle build-outs in North America and by changes in
exchange rates. As a result of the above, comparable EBITDA is expected to be
lower than in 2013. Comparable EBITDA in 2014 will also be affected by
reorganisation and program transfers in Europe and expenditures related to the
implementation of PKC's growth strategy. 



DISCLOSING PROCEDURES OF FINANCIAL REVIEWS



PKC Group Plc follows the disclosure procedure enabled by Standard 5.2b
published by the Finnish Financial Supervision Authority, and discloses
relevant information related to its Interim Report with this release. PKC's
interim report for January - June 2014 is attached to this release and is also
available on company's website at www.pkcgroup.com. 



PKC GROUP PLC

Board of Directors



Matti Hyytiäinen

President & CEO



For additional information, contact:

Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968 (7
August from 8.15 am to 1.30 pm) 

Juha Torniainen, CFO, PKC Group Plc, tel. +358 (0)40 570 8871



PRESS CONFERENCE



A press conference on the interim report will be arranged for analysts and
investors today, 7 August 2014, at 10.00 a.m., at the address Event Arena Bank,
Unioninkatu 20, Helsinki. 



ATTACHMENT

PKC interim report Q2 2014



DISTRIBUTION



NASDAQ OMX

Main media

www.pkcgroup.com



PKC Group is a global partner, designing, manufacturing and integrating
electrical distribution systems, electronics and related architecture
components for the commercial vehicle industry and other selected segments. The
Group has production facilities in Brazil, China, Estonia, Finland, Germany,
Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in
2013 totalled EUR 884.0 million. PKC Group Plc is listed on NASDAQ OMX Helsinki
Ltd.

Attachments:

PKC interim report Q2 2014.pdf