Lemminkäinen - Interim report (Q1 and Q3)

Lemminkäinen Interim Report 1 January - 31 March 2017

LEMMINKÄINEN CORPORATION      STOCK EXCHANGE RELEASE 27 APRIL 2017 AT 8:00 A.M.

LEMMINKÄINEN INTERIM REPORT 1 JANUARY - 31 MARCH 2017

January‒March 2017 (1‒3/2016)

  · Order inflow was EUR 424.3 million (400.5).
  · Order book at the end of the period amounted to EUR 1,566.8 million
    (1,449.0).
  · Net sales totalled EUR 240.3 million (216.8).
  · Operating profit amounted to EUR -32.9 million (-31.4), or -13.7% (-14.5)
    of net sales. The operating profit includes a EUR 3.4 million compensation
    related to the Helsinki Court of Appeal’s decision regarding breach of the
    Finnish environmental protection law.
  · Profit for the period was EUR -30.4 million (-27.9).
  · Earnings per share were EUR -1.34 (-1.31).
  · Cash flow from operating activities totalled EUR -48.9 million (-18.4).
  · Equity ratio at the end of the review period was 37.3% (36.0) and
    gearing 47.7% (61.8).
  · Interest-bearing net debt at the end of the review period was
    EUR 137.6 million (186.6).

Profit guidance for 2017

The profit guidance for 2017 remains intact. Lemminkäinen estimates that its net
sales in 2017 will grow from 2016 (EUR 1,682.7 million). Operating profit (IFRS)
in 2017 is expected to improve from EUR 45.1 million which reflects the
operational performance in 2016.


+-----------------------------------+--+--------+--------+------+---------+
|Key figures, IFRS                  |  |1-3/2017|1-3/2016|Change|1-12/2016|
+-----------------------------------+--+--------+--------+------+---------+
|Net sales                          |M€|   240.3|   216.8|  23.5|  1,682.7|
+-----------------------------------+--+--------+--------+------+---------+
|  Paving                           |M€|    42.9|    31.9|  11.0|    648.5|
+-----------------------------------+--+--------+--------+------+---------+
|  Infra projects                   |M€|    79.6|    65.0|  14.6|    426.2|
+-----------------------------------+--+--------+--------+------+---------+
|  Building construction,           |M€|   113.8|   113.1|   0.7|    581.2|
|  Finland                          |  |        |        |      |         |
+-----------------------------------+--+--------+--------+------+---------+
|  Russian operations               |M€|     9.8|     5.8|   4.0|     54.5|
+-----------------------------------+--+--------+--------+------+---------+
|  Other operations and             |M€|    -5.9|     0.9|  -6.8|    -27.7|
|  Group eliminations               |  |        |        |      |         |
+-----------------------------------+--+--------+--------+------+---------+
|Operating profit                   |M€|   -32.9|   -31.4|  -1.5|     67.6|
+-----------------------------------+--+--------+--------+------+---------+
|  Paving                           |M€|   -24.7|   -25.4|   0.7|     20.8|
+-----------------------------------+--+--------+--------+------+---------+
|  Infra projects                   |M€|    -3.6|    -3.4|  -0.2|     12.5|
+-----------------------------------+--+--------+--------+------+---------+
|  Building construction, Finland   |M€|     0.6|    -0.8|   1.4|     17.2|
+-----------------------------------+--+--------+--------+------+---------+
|  Russian operations               |M€|    -1.0|    -0.6|  -0.4|     -3.8|
+-----------------------------------+--+--------+--------+------+---------+
|  Other operations                 |M€|    -4.1|    -1.2|  -2.9|     20.9|
+-----------------------------------+--+--------+--------+------+---------+
|Operating margin                   | %|   -13.7|   -14.5|      |      4.0|
+-----------------------------------+--+--------+--------+------+---------+
|  Paving                           | %|   -57.6|   -79.4|      |      3.2|
+-----------------------------------+--+--------+--------+------+---------+
|  Infra projects                   | %|    -4.5|    -5.3|      |      2.9|
+-----------------------------------+--+--------+--------+------+---------+
|  Building construction, Finland   | %|     0.5|    -0.7|      |      3.0|
+-----------------------------------+--+--------+--------+------+---------+
|  Russian operations               | %|   -10.5|   -10.1|      |     -7.0|
+-----------------------------------+--+--------+--------+------+---------+
|Pre-tax profit                     |M€|   -37.1|   -35.3|  -1.8|     49.2|
+-----------------------------------+--+--------+--------+------+---------+
|Profit for the period              |M€|   -30.4|   -27.9|  -2.5|     38.0|
+-----------------------------------+--+--------+--------+------+---------+
|Earnings per share                 | €|   -1.34|   -1.31| -0.03|     1.27|
|for the period, basic              |  |        |        |      |         |
+-----------------------------------+--+--------+--------+------+---------+
|Earnings per share                 | €|   -1.34|   -1.31| -0.03|     1.26|
|for the period, diluted            |  |        |        |      |         |
+-----------------------------------+--+--------+--------+------+---------+
|Cash flow from operating activities|M€|   -48.9|   -18.4| -30.5|    131.7|
+-----------------------------------+--+--------+--------+------+---------+

+-------------+--+-------+-------------+-----------+-----------+-----------+
|Key figures, |  |     31|31 March 2016|Change 3/17|31 Dec 2016|Change 3/17|
|IFRS         |  |  March|             |    vs 3/16|           |   vs 12/16|
|             |  |   2017|             |           |           |           |
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Order book   |M€|1,566.8|      1,449.0|      117.8|    1,265.2|      301.6|
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Operating    |M€|  392.9|        450.4|      -57.5|      388.2|        4.7|
|capital      |  |       |             |           |           |           |
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Balance sheet|M€|  931.0|        949.6|      -18.6|      968.0|      -37.0|
|total        |  |       |             |           |           |           |
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Interest     |M€|  137.6|        186.6|      -49.0|       81.1|       56.5|
|-bearing net |  |       |             |           |           |           |
|debt         |  |       |             |           |           |           |
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Equity       | %|   37.3|         36.0|           |       39.5|           |
|ratio 1)     |  |       |             |           |           |           |
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Gearing 2)   | %|   47.7|         61.8|           |       24.3|           |
+-------------+--+-------+-------------+-----------+-----------+-----------+
|Return on    | %|   11.6|          3.6|           |       11.3|           |
|capital      |  |       |             |           |           |           |
|employed,    |  |       |             |           |           |           |
|rolling 12   |  |       |             |           |           |           |
|months       |  |       |             |           |           |           |
+-------------+--+-------+-------------+-----------+-----------+-----------+

1) Equity ratio, if hybrid bonds were treated as debt: 3/2017: 32.8%, 3/2016:
27.7% and 12/2016: 35.4%.

2) Gearing, if hybrid bonds were treated as debt: 3/2017: 68.0%, 3/2016: 110.1%
and 12/2016: 38.8%.

President and CEO Casimir Lindholm:

“During the first quarter, our operating profit decreased slightly year-on-year,
but operationally our performance improved,” says Casimir Lindholm, President
and CEO. “In Paving, operating result improved in Finland and Norway. In
Building construction, Finland, operating profit was supported by higher year-on
-year volumes in non-residential construction in the Helsinki metropolitan area.
In Infra projects, operating profit was on par with the comparison period. In
Russian operations, a lower year-on-year number of sold development units
weakened the result. Our Group operating profit was, however, burdened with a
EUR 3.4 million compensation related to the Helsinki Court of Appeal’s decision
regarding breach of the Finnish environmental protection law.”

“Our financial position strengthened year-on-year. Our operating capital
decreased from EUR 450 million to EUR 393 million and our interest-bearing net
debt declined from EUR 187 million to EUR 138 million. Although our financial
position has improved, we will continue to manage our balance sheet and cash
flow also going forward.”

“Our order book developed favourably during the first quarter. In Paving, our
order book before the season start is on a higher level compared to last year.
In addition, Building construction, Finland and Russian operations have strong
order books. In Infra projects, order book growth is still needed.”

“The market outlook for our businesses remains positive. Housing sales is solid
in Finland and the government and municipalities have confirmed future plans
regarding large transportation infrastructure projects. In Sweden and Norway,
States continue to invest in infrastructure construction. We have faced
challenges in our operations in Sweden, but during the past months we have
changed the management in both Paving and Infra projects, and will continue
measures to improve local operations. Our focus this year remains on improving
our operational efficiency in all operations.”

Market outlook

In Finland, the total volume of construction is expected to grow slightly in
2017. Residential construction overall is estimated to remain at a good level,
although investor demand is expected to decline somewhat from the high levels
witnessed in 2016. Demand for apartments will still be focused on small units in
urban growth centres. Non-residential construction is estimated to remain
stable, due to individual major projects and public sector works. Renovation is
expected to grow moderately due to increasing urbanisation and public sector
works.

Infrastructure construction is expected to grow approximately 2% in 2017. The
Government's decisions regarding transport projects in the General Government
Fiscal Plan as well as major cities’ investments in transportation
infrastructure improve the outlook for both paving and infra projects. The
state's planned investments in basic road maintenance are expected to keep
demand stable for paving in 2017. Demand for infra projects is maintained by
complex projects in urban growth centres and industrial investments but the
competition is intense.

In Norway and Sweden, infrastructure construction is boosted by multi-year,
state-funded traffic infrastructure development programmes. In both countries,
infrastructure construction is expected to grow in 2017. Large-scale road and
railway projects are ongoing or planned near urban growth centres in Sweden and
Norway, which will increase demand for infra projects and paving. In addition,
especially Norway is investing in the development and renewal of energy
production.

In Denmark, demand for paving is expected to decline as public investments in
road infrastructure are decreasing.

In Russia, economic growth is estimated to remain at a low level. The
fluctuations in the price of oil are reflected in the currency exchange rate. In
negotiated contracting in building construction, price competition is high but
the reliability of the builder has become a competitive advantage. Construction
and repair projects on major roads are expected to maintain demand for paving.

In the Baltic countries, the volume of infrastructure construction is expected
to start growing moderately.

Briefing

A Finnish-language briefing for analysts and the media will be held at 12:00
noon (EET) on Thursday 27 April 2017 at Lemminkäinen’s head office. The street
address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's President and
CEO Casimir Lindholm will present the Financial statements bulletin. The
presentation material can be found in Finnish and English at the company’s
website, www.lemminkainen.com/investors.

Financial reporting in 2017

In 2017, financial reports are published as follows:

9 February 2017     Financial statements bulletin 2016
Week 9              Annual report 2016
27 April 2017       Interim report 1 Jan – 31 March 2017
27 July 2017        Half year financial report 1 Jan – 30 June 2017
26 October 2017     Interim report 1 Jan – 30 Sep 2017

LEMMINKÄINEN CORPORATION
Corporate Communications

Additional information:
Casimir Lindholm, President and CEO, tel. +358 2071 53304
Ilkka Salonen, CFO, tel. +358 2071 53304

DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media
www.lemminkainen.com

Lemminkäinen is an expert in complex infrastructure construction and building
construction in Northern Europe and one of the largest paving companies in its
market. Together with our customers and 4,700 professionals we employ, we build
a sustainable society. In 2016, our net sales were EUR 1.7 billion. Lemminkäinen
Corporation’s share is quoted on Nasdaq Helsinki Ltd. www.lemminkainen.com

Attachments:

04264239.pdf