2009-08-05 08:30:00 CEST
2009-08-05 08:32:07 CEST
REGULATED INFORMATION
Vacon - Interim report (Q1 and Q3)
Vacon Plc Interim Report 1 January - 30 June 2009: Vacon lowers 2009 financial forecast despite good first half result
Vacon Plc, Stock Exchange Release, 5 August 2009 at 9.30 am
April-June summary:
- Order intake totalled MEUR 66.4, a decline of -20.3 % from
the corresponding period
in the previous year (MEUR 83.3).
- Revenues totalled MEUR 75.7, a decline of -2.9 % (MEUR
78.0).
- Operating profit was MEUR 7.8, down -25.0 % (MEUR 10.4).
- Cash flow from operations was MEUR 7.9, growth of 36.2 %
(MEUR 5.8).
- Earnings per share were EUR 0.35 (EUR 0.48), a decline from
the previous year of -27.1 %.
January-June summary:
- Order intake totalled MEUR 135.4, a decline of -16.2 % from
the corresponding period
in the previous year (MEUR 161.5).
- Revenues totalled MEUR 145.7, an increase of 1.3 % (MEUR
143.9).
- Operating profit was MEUR 14.9, down -17.2 % (MEUR 18.0).
- Cash flow from operations was MEUR 14.2, growth of 36.5 %
(MEUR 10.4).
- Earnings per share were EUR 0.64 (EUR 0.82), a decline from
the previous year of -22.0 %.
The global recession weakened demand for AC drives in most market
segments during the first six months of 2009. AC drive investments to
improve energy efficiency and in renewable energy generation remained
brisk, but they were not able to compensate for the decline in orders
in other market segments.
In current market conditions, Vacon's performance in the first six
months is good. The value of the orders received in the second
quarter totalled EUR 66.4 (83.3) million. They were 4 % less than in
the first quarter of this year and almost the same as in the final
quarter of 2008. Revenues totalled EUR 75.7 (78.0) million, an
increase of 8 % from the first quarter of the year and about 1 % from
the final quarter of 2008.
The operating profit margin in the second quarter was 10.3 %
(13.3 %), compared to 10.1 % in the first quarter of this year and
10.0 % in the final quarter of last year. The balance sheet remained
strong. The company has paid particular attention to the management
of working capital, to ensure the Group has cost-effective financing
in the near future. The cash flow from operations was EUR 7.9 (5.8)
million in April-June 2009. Intensified control of trade receivables
and stocks helped achieve this improvement.
Vacon does not expect the AC drives market to improve during the
second haft of the year 2009. The company is also lowering its
estimates for its financial performance in 2009, because one major
order expected by Vacon in July 2009 has for the time being not
materialized. Vacon estimates that its 2009 revenues will decline
more than five per cent from the 2008 figure, where previously it had
estimated that revenues would be at the same level as in 2008.
Profitability and earnings per share are now expected to be lower
than in 2008, where previously it was forecast that they would be
slightly below their 2008 figures.
January - June result and equity structure
MEUR 4-6/ 4-6/ 1-6/ 1-6/ Change, 1-12/
2009 2008 2009 2008 % 2008
Revenues 75.7 78.0 145.7 143.9 1.3 293.2
EBITDA 10.1 12.2 19.5 21.5 -9.3 41.9
Depreciation - tangibles -1.0 -0.8 -2.1 -1.7 23.5 -3.5
EBITA 9.1 11.3 17.4 19.8 -12.1 38.4
Amortization - intangibles -1.3 -0.9 -2.5 -1.8 38.9 -3.8
Operating profit 7.8 10.4 14.9 18.0 -17.2 34.6
Profit before tax 7.5 10.6 14.0 17.9 -21.8 32.6
Profit for period 5.5 7.6 10.1 12.8 -21.1 23.9
The operating profit in the first half of the year was 17.2 % lower
than one year before. The operating profit as a percentage of net
sales fell from 12.5 % last year to 10.2 %. The EBITA margin was 11.9
%, compared to 13.8 % one year ago. Investments in growth, such as
establishing new sales companies and the increasing number of
personnel, have weakened profitability. The earnings per share were
EUR 0.64, a decline of EUR 0.18 from the previous year.
The balance sheet total was EUR 148.5 (141.7) million. The equity
ratio was 51.4 % (46.6 %). The Group's cash flow from operations for
the January- June period was EUR 14.2 (10.4) million.
The Group's equity structure and liquidity remained strong.
Interest-bearing net debt at the end of the period totalled EUR 15.8
(14.2) million, and gearing was 21.0 % (22.0 %).
The Group's order book stood at EUR 37.7 (52.4) million. The order
book declined EUR 10.3 million from the beginning of the year.
Market position
Vacon Group revenues by market area were as follows:
MEUR 4-6/ % 4-6/ % 1-6/ % 1-6/ % 1-12/ %
2009 2008 2009 2008 2008
Europe,
Middle
East,
Africa 55.6 73.4 57.2 73.3 106.0 72.8 104.3 72.5 210.5 71.8
North
and
South
America 11.6 15.3 14.0 18.0 23.8 16.3 27.0 18.8 55.9 19.1
Asia and
Pacific 8.4 11.1 6.8 8.7 15.9 10.9 12.6 8.7 26.8 9.1
Total 75.7 100.0 78.0 100.0 145.7 100.0 143.9 100.0 293.2 100.0
During the second quarter of 2009 Vacon strengthened its global
position. 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 first
half of the year were as follows: Europe, Middle East and Africa in
total 1.6 %, North and South America -11.9 % and Asia and Pacific
26.2 % from the corresponding period in the previous year.
Breakdown of Vacon Group revenues by distribution channel
MEUR 4-6/ % 4-6/ % 1-6/ % 1-6/ % 1-12/ %
2009 2008 2009 2008 2008
Direct sales 45.4 60.0 38.1 48.8 87.3 59.9 67.1 46.6 146.4 49.9
Distribu-tors 8.0 10.6 9.5 12.2 14.2 9.7 18.2 12.7 34.4 11.7
OEM 12.0 15.9 17.7 22.7 24.1 16.5 34.7 24.1 60.0 20.5
Brand label 10.3 13.6 12.6 16.2 20.1 13.8 23.8 16.5 52.4 17.9
Total 75.7 100.0 78.0 100.0 145.7 100.0 143.9 100.0 293.2 100.0
Sales through several of Vacon's distribution channels fell; OEM -31
%, distributors -22 % and brand label customers -16 %. Revenues from
direct sales (including sales to system integrators) increased 30 %
from the previous year. Sales to system integrators in particular
have supported this trend.
Vacon Group structure
The subsidiaries in South Korea, Denmark, Canada and Brazil started
operations during the first half of the year.
Research and development
R&D expenditure during the first half of the year totalled EUR 9.0
(8.3) million, and EUR 2.2 (0.7) million of this was capitalized as
development costs. R&D costs accounted for 6.2 % 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 six months totalled
EUR 7.4 (4.1) 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 85 since the
beginning of the year, mainly because of seasonal labour for the
summer. At the end of June, the Group employed 1,282 (1,137) people,
of whom 711 (635) were in Finland and 571 (502) in other countries.
The table below shows the average number of Vacon employees during
the review period:
1-6/2009 1-6/2008 1-12/2008
Office personnel 752 652 687
Factory personnel 461 435 444
Total 1,213 1,087 1,131
Shares and shareholders
Vacon had a market capitalization at the end of June of EUR 360
million. The closing share price on 30 June 2009 was EUR 23.7. The
lowest share price during the January-June period was EUR 15.30 and
the highest EUR 25.08. A total of 2,687,605 Vacon shares were traded
during the January-June period, in monetary terms EUR 50.6 million.
Vacon's main shareholders on 30 June 2009:
Number of shares Holding, %
Ahlström Capital Group 2,731,208 17.9
Tapiola Mutual Pension Insurance Company 584,500 3.8
Ilmarinen Mutual Pension Insurance
Company 538,830 3.5
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 309,840 2.0
Karppinen Veijo 209,349 1.4
Nominee registered and in foreign
ownership 4,396,047 28.7
Vacon Plc's own shares 86,011 0.6
Others 4,647,223 30.4
Total 15,295,000 100.0
Shares outstanding 15,208,989
On 30 June 2009 members of Vacon's Board of Directors, the President
and CEO, and the Deputy to the CEO held directly a total of 578,529
shares, or 3.8 % of Vacon's share stock.
Own shares
On 30 June 2009 Vacon Plc held a total of 86,011 of its own shares.
Annual General Meeting of Shareholders
Vacon Plc's Annual General Meeting of Shareholders was held in Vaasa
on 1 April 2009. The AGM approved the 2008 financial statements and
discharged the Board members and Managing Director from liability for
the 2008 fiscal year.
The AGM adopted the Board's proposal of paying a dividend of EUR 0.65
per share, or EUR 9,875,572.20 in total. The dividend was paid
according to the AGM's decision on 15 April 2009.
The AGM confirmed that the number of Board members is seven (7).
Pekka Ahlqvist, Jari Eklund, Mauri Holma, Jan Inborr, Veijo Karppinen
and Riitta Viitala were re-elected as Board members and Mika
Vehviläinen was elected as a new member to the Board.
The AGM decided that KPMG Oy Ab would continue as the company's
auditor, with Pekka Pajamo as principal auditor.
The AGM decided to amend Article 8 of the Articles of Association so
that the invitation to a general meeting of shareholders shall be
sent no later than three (3) weeks before the general meeting.
The AGM adopted the Board's proposal to authorize the Board to decide
on purchasing the Company's own shares. The Board's proposal is
reported in the stock exchange release of 19 February 2009. The
decisions of the Annual General Meeting of Shareholders were
supported by all the shareholders at the AGM, unless otherwise stated
in the minutes of the meeting.
Jan Inborr was re-elected Chairman and Veijo Karppinen was re-elected
Vice Chairman of the Board of Directors at the Board's organization
meeting. Jan Inborr was re-elected Chairman of the Board's
Remuneration and Nomination Committee and Pekka Ahlqvist and Veijo
Karppinen were re-elected members of the committee.
Risks and uncertainties in the near future
The most significant risks for Vacon in the near future are 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. The company does not finance customer projects and is
also continuously assessing the creditworthiness of its customers and
their ability to pay their debts.
Vacon has the ability 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 8.2 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 renminbi.
Prospects for 2009
The prevailing competitive conditions are expected to remain
challenging and Vacon does not expect the AC drive market to improve
during 2009. Vacon expects the AC drive market to decline
significantly in 2009 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 is lowering its estimates for its financial performance in
2009, because one major order expected by Vacon in July 2009 has for
the time being not materialized. Vacon estimates that its 2009
revenues will decline more than five per cent from the 2008 figure,
where previously it had estimated that revenues would be at the same
level as in 2008. Profitably and earnings per share are now expected
to be lower than in 2008, where previously Vacon forecast that they
would be slightly below their 2008 figures.
Vacon's long-term goals remain 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).
Financial reports in 2009
Vacon is publishing its third interim report in 2009 as follows:
- January-September Tuesday, 27 October 2009 at 9.30 am
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.
Driven by Drives, www.vacon.com
Vaasa, 5 August 2009
VACON PLC
Board of Directors
For more information please contact:
Mr Vesa Laisi, President and CEO, phone: +358 (0)40 8371 510
Mr Mika Leppänen, CFO and Vice President, Finance & Control, phone:
+358 (0)40 8371 235
Conference for media and analysts
Vacon will hold a briefing for analysts and the media at 11.30 am on
5 August 2009 in the Vaakuna meeting room at the Sokos Hotel Vaakuna,
Kaivokatu 3, 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 5 August 2009. President and CEO Vesa
Laisi and Mika Leppänen, 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=133673&s=1&k=75E6A8D4F90EF343493B768BF42FE504&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
4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008
Revenues 75.7 78.0 145.7 143.9 293.2
Other operating income 0.1 0.0 0.2 0.1 0.2
Change in inventories
of
finished goods and work
in progress 1.3 0.2 0.0 2.3 0.2
Materials and services -39.9 -41.1 -73.9 -76.3 -150.8
Employee benefit costs -13.5 -12.7 -27.7 -25.4 -52.7
Other operating costs -13.6 -12.3 -24.8 -23.1 -48.2
Depreciation -1.0 -0.8 -2.1 -1.7 -3.5
EBITA 9.1 11.3 17.4 19.8 38.4
Amortization -1.3 -0.9 -2.5 -1.8 -3.8
Operating profit 7.8 10.4 14.9 18.0 34.6
Financial income and
expenses -0.3 0.2 -0.8 -0.1 -2.0
Profit before taxes 7.5 10.6 14.0 17.9 32.6
Income taxes -1.9 -3.0 -4.0 -5.1 -8.7
Profit for period 5.5 7.6 10.1 12.8 23.9
Attributable to:
Equity holders of the
parent 5.3 7.3 9.7 12.4 23.1
Minority interest 0.2 0.3 0.4 0.4 0.8
Earnings per share,
Euro 0.35 0.48 0.64 0.82 1.51
Earnings per share
diluted, euro 0.35 0.48 0.64 0.82 1.51
Consolidated statement of comprehensive income, IFRS, MEUR
4-6/2009 4-6/2008 1-6/2009 1-6/2008 1-12/2008
Net profit for period 5.5 7.6 10.1 12.8 23.9
Other comprehensive
income
Cash flow hedging 0.0 0.0 -0.1 0.0 0.0
Exchange differences
on translating foreign
operations -0.7 0.1 -0.1 -0.4 0.4
Total comprehensive
income 4.8 7.7 9.9 12.4 24.3
Attributable to:
Shareholders of parent
company 4.6 7.4 9.5 12.0 23.5
Minority interest 0.2 0.3 0.4 0.4 0.8
Consolidated balance sheet , IFRS, MEUR
30.6.2009 30.6.2008 31.12.2008
ASSETS
Goodwill 8.2 7.6 8.3
Development costs 6.5 3.4 4.8
Intangible assets 13.8 12.8 14.9
Tangible assets 18.4 17.4 16.3
Loans receivable and other receivables 0.2 0.2 0.2
Deferred tax assets 3.1 2.1 2.6
Other financial assets 3.6 2.3 3.3
Total non-current assets 53.8 45.8 50.3
Inventories 21.4 22.2 21.3
Trade and other receivables 63.1 59.4 61.7
Cash and cash equivalents 10.2 14.3 15.7
Total current assets 94.7 95.9 98.8
Total assets 148.5 141.7 149.1
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 68.7 56.8 68.7
Minority interest 1.2 1.0 1.3
Total equity 75.3 64.7 75.5
Deferred tax liabilities 3.8 3.1 3.5
Employee benefits 1.5 1.4 1.4
Interest-bearing liabilities 14.3 17.4 15.8
Total non-current liabilities 19.6 21.9 20.7
Trade and other payables 38.5 39.9 37.6
Income tax liabilities 1.7 2.6 1.5
Provisions 1.6 1.3 1.6
Interest-bearing liabilities 11.8 11.2 12.2
Total current liabilities 53.6 55.0 52.9
Total equity and liabilities 148.5 141.7 149.1
Q2/2008 Calculation of changes in shareholders' equity, IFRS, MEUR
Attributable to equity holders of the parent Total
Minority equity
interest
Share Share Own Retain-ed Total
capital pre-mium shares earn-ings
re-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 -0.4 -11.8
Total
comprehen-sive
income for
period 12.0 12.0 0.4 12.4
Other changes 0.2 0.2 0.0 0.2
Shareholders'
equity
30.6.2008 3.1 5.0 -1.2 56.8 63.7 1.0 64.7
Q2/2009 Calculation of changes in shareholders' equity, IFRS, MEUR
Attributable to equity holders of the parent Total
Minority equity
interest
Share Share pre-mium Own Retain-ed Total
capital re-serve shares earn-ings
Shareholders' equity 31.12.2008 3.1 5.0 -2.6 68.7 74.1 1.4 75.5
Dividend paid -9.9 -9.9 -0.6 -10.4
Total comprehen-sive income for
period 9.5 9.5 0.4 9.9
Other changes 0.3 0.3 0.3
Shareholders' equity 30.6.2009 3.1 5.0 -2.6 68.7 74.1 1.2 75.3
Consolidated cash flow statement, IFRS, MEUR
30.6.2009 30.6.2008 31.12.2008
Profit for the period 10.1 12.8 23.9
Depreciation 4.6 3.4 7.3
Financial income and expenses 0.8 0.1 2.0
Taxes 4.0 5.1 8.7
Other adjustments 0.2 0.4 0.5
Change in working capital -0.4 -6.6 -10.1
Cash flow from financial items and tax -5.0 -4.8 -10.4
Cash flow from operating activities 14.2 10.4 21.9
Purchase of subsidiary 0.0 -23.6 -20.4
Investments in tangible and
intangible assets -7.4 0.0 -9.2
Proceeds from disposal of
tangible and intangible assets 0.0 0.0 -0.1
Other investments -0.2 -0.2 -1.7
Proceeds from disposal of other
investments 0.0 0.0 0.6
Cash flow from investing activities -7.6 -23.8 -30.8
Repayment of long-term loans -1.5 -1.2 -3.9
Proceeds from short-term borrowings 0.0 7.2 7.9
Repayment of short-term loans -0.4 -0.3 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 -12.4 -6.1 -9.4
Change in liquid funds -5.8 -19.5 -18.3
Liquid funds at start of period 15.7 34.4 34.4
Translation differences for liquid
funds 0.3 -0.6 -0.4
Liquid funds at end of period 10.2 14.3 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. To
ensure that the organisation is customer-oriented, operations are
controlled by customer segments: Component Customers, Solutions
Customers, OEM and Brand Label Customers, and Service and
After-Market Services.
Key indicators
30.6.2009 30.6.2008 31.12.2008
Orders received, MEUR 135.4 161.5 306.5
Increase in orders received, % -16.2 39.1 29.2
Revenues, MEUR 145.7 143.9 293.2
Increase in revenues, % 1.3 28.4 26.3
Operating profit, MEUR 14.9 18.0 34.6
Increase in operating profit, % -17.2 28.6 18.5
Operating profit, % of revenues 10.2 12.5 11.8
Earnings per share, EUR 0.64 0.82 1.51
Equity per share, EUR 4.87 4.17 4.88
Equity ratio, % 51.4 46.6 51.1
Gross capital expenditure, (2008
exclud. TB Woods' acquisition) 7.7 4.1 11.2
Gross capital expenditure, % of
revenues 5.3 2.8 3.8
Interest-bearing net liabilities,
MEUR 15.8 14.2 12.3
Gearing, % 21.0 22.0 16.3
Net working capital, MEUR 41.4 36.5 41.3
Order book, MEUR 37.7 52.4 48.0
Adjusted average number of shares
during the period 15,199,299 15,241,188 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 1,282 1,137 1,197
Commitments and contingencies, MEUR
30.6.2009 30.6.2008 31.12.2008
Commitments and contingencies 2.3 2.7 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, bank balances and
financial assets) x 100
Gearing =
-------------------------------------------------
Shareholders' equity
Inventories + non-interest-bearing current receivables
Net working - non-interest-bearing current liabilities
capital =
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