Martela Oyj - Interim report (Q1 and Q3)

MARTELA CORPORATION INTERIM REPORT, 1 January – 30 June 2013

MARTELA CORPORATION     INTERIM REPORT     6 August 2013, 8.30 a.m.


MARTELA CORPORATION INTERIM REPORT, 1 January - 30 June 2013

Consolidated revenue and operating result down on January-June of the previous
year 

Key figures:



                             4-6    4-6    1-6    1-6   1-12
EUR mill.                   2013   2012   2013   2012   2012
- Revenue                   29.3   35.1   61.1   67.1  142.7
- Change in revenue, %     -16.6   15.0   -8.9   15.9    9.2
- Operating result          -2.6   -0.9   -4.0   -1.8   -0.9
- Operating result, %       -8.9   -2.6   -6.6   -2.7   -0.6
- Earnings/share, EUR      -0.74  -0.29  -1.11  -0.56  -0.51
- Return on investment, %  -27.9  -10.4  -21.6   -9.9   -2.7
- Return on equity, %      -47.1  -16.8  -38.2  -16.1   -7.2
- Equity ratio, %                         36.3   43.1   41.2
- Gearing, %                              51.2   33.2   33.1

The management guidance for the current year has been revised as follows:
The Martela Group expects its revenue for 2013 to be down year on year and its
operating result to be at or slightly below the 2012 level. 

The preceding guidance was as follows:
The Martela Group anticipates that its revenue in 2013 will be at about the
2012 level, and that its operating result will show a year-on-year improvement. 

Market

In Finland, the demand for office furniture in the first half of 2013 was lower
than in 2012. At present, demand focuses largely on various office alteration
and enhancement projects instead of new offices. Among the other market areas
Poland still showed some positive signs, and in Sweden the market was somewhat
positive in the first half of the year, but there also were some signs of
uncertainty. Over the last 12 months, demand from major corporations in Finland
and Sweden in particular has increasingly focused on comprehensive solutions,
which include both products and services. 

Statistics on office construction are available for the first quarter of 2013,
and according to these, 68 per cent fewer office buildings were completed in
Finland in terms of square metres in the first quarter of 2013 than the
previous year. At the same time, however, only very few building permits (-94%)
were granted, and there were 82 per cent fewer new office building starts. In
other words, the construction of office buildings was at a very low level in
the first quarter. On the other hand it is not possible to make significant
conclusions based on one quarter's statistics because there might be big
variances in quarterly statistics. 

Consolidated revenue and result

Consolidated revenue for the second quarter was EUR 29.3 million (35.1), a
decrease of 16.6 per cent on the previous year. Net revenue for January-June
was EUR 61.1 million (67.1), a decline of 8.9% per cent. Most of the decline
took place in Finland, where revenue was affected by lower demand and by the
fact that customer projects were timed more towards the second half of the
year. In Poland, however, revenue remained at the 2012 level, while in Sweden
revenue was significantly higher than in 2012. In the other markets, the
transfer of the Danish business at the end of 2012 from the Martela subsidiary
to a dealer slightly reduced (2.1%) consolidated revenue for the period. In
Russia, significant year-on-year revenue growth continued, but revenue still
remains low in terms of euros. 

The operating result for the second quarter was EUR -2.6 million (‑0.9). The
operating for January-June was EUR -4.0 million (-1.8). The consolidated
operating result was substantially lower than the previous year due to lower
revenue and a reduced sales margin on products. The lower sales margin is the
result of a different product breakdown compared to the comparison period. In
the second quarter, profitability in Finland was also weakened by the new ERP
system implemented at the beginning of May. The issues have since been resolved
and the system is now fully operational and should improve productivity in the
future. 

The Group's fixed costs decreased on the previous year due to adjustment
measures taken already in 2012, including the discontinuation of the subsidiary
in Denmark. In addition, the cost reduction effect of the personnel reductions
and lay-offs agreed in the codetermination negotiations concluded in January
2013 began to have a gradual effect in the second quarter. 
The Group's result has not developed in a satisfactory manner and it is
apparent that economic conditions will remain uncertain in the near future. At
the same time Group's operational environment has changed. Importance of
customized, service and trading products has clearly increased. As a
consequence, Martela will adjust its operations to correspond to the changing
conditions. The Group has begun planning for measures to reduce its costs. The
goal is to reduce costs by an annual level of EUR 6 million by the end of 2014.
In addition to reducing fixed costs, the Group is also preparing measures to
improve its delivery and supply chains in order to reduce its variable costs.
Opportunities to lower costs will be sought in various cost groups and it is
likely that there will be an effect on personnel. The principal measures under
consideration are transfers of production between business locations and
merging of support functions, and reorganising and improving the productivity
of poorly performing businesses. At the same time, the Group will invest
resources in improving its ability to offer even better comprehensive
solutions, including services, especially to meet the growing customer need for
Activity Based Office solutions. 

Profit before taxes for January-June was EUR -4.6 million (-2.3), and profit
after taxes was EUR -4.5 million (-2.3). 

Martela's full interim report for January-June 2013 is included in PDF format
as an attachment to this release. The interim report is also available on the
company's website at www.martela.com. 


Martela Corporation
Board of Directors
Heikki Martela
Managing Director


ATTACHMENT: Martela's interim report January-June 2013


Additional information
Heikki Martela, Managing Director, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606

Distribution
NASDAQ OMX Helsinki
Main News media
www.martela.com

Attachments:

2013 0806 Interim Report Q2.pdf