2012-05-10 11:00:01 CEST
2012-05-10 11:00:08 CEST
REGULATED INFORMATION
Honkarakenne Oyj - Interim report (Q1 and Q3)
HONKARAKENNE OYJ’S INTERIM REPORT, 1 JANUARY – 31 MARCH 2012
HONKARAKENNE OYJ INTERIM REPORT 10 May 2012 at 12:00 noon
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2012
SUMMARY
During the first quarter of the year the demand did not begin to recover. The
markets remained depressed. Honkarakenne made a loss in the first quarter due
to seasonal fluctuation, as expected.
January - March 2012
Honkarakenne Group's consolidated net sales for the first quarter of the year
amounted to MEUR 7.0 (MEUR 9.2 in 2011), a decrease of 24 % on the previous
year's corresponding period.
-- Operating loss was MEUR -2.3 (MEUR -1.1). Operating loss before
non-recurring items was MEUR -2.3 (MEUR -1.4).
-- Profit/loss before taxes was MEUR -2.1 (MEUR -0.9).
-- Earnings per share amounted to EUR -0.31 (EUR -0.12).
The company's goal for 2012 is to maintain its net sales and result before
taxes at 2011 levels.
KEY FIGURES 1-3/ 1-3/ 1-12/ Change
2012 2011 2011 %
Net sales, MEUR 7.0 9.2 55.0 -24
Operating profit/loss, MEUR -2.3 -1.1 1.9
Operating profit before non-recurring items, MEUR -2.3 -1.4 1.6
Profit/loss before taxes, MEUR -2.1 -0.9 1.1
Average number of personnel 260 265 265
Earnings/share (EPS), EUR -0.31 -0.12 0.17
Equity ratio, % 49.7 41.7 52.6
Return on equity, % -8.7 -3.3 4.6
Shareholders' equity/share, EUR 3.4 3.5 3.7
Gearing, % 42.7 81.9 34.5
Mikko Jaskari, acting President and CEO of Honkarakenne Oyj, in connection with
the interim report:
“The Group's net sales were not at a satisfactory level. Net sales contracted
by 24 % compared to the corresponding period of the previous year. At the turn
of the year, the order book was down 25 % on 2011, so bearing this in mind, net
sales were at the expected level. Looking at individual market areas, net sales
in the East fell notably short of last year in terms of euros. We do, however,
believe that net sales in the East will recover over the remainder of the year.
Due to seasonal fluctuation, the Group's first-quarter result before taxes was,
as expected, in the red.
In 2012, the company's main focus will be on expediting sales. Honkarakenne
will continue to concentrate on its premium and luxury strategy in all market
areas. This will be evident in the company's increased emphasis on design
during 2012. We've taken an even more customer-oriented approach to our product
range by creating design lines that make it easier to shop for homes. We've
also revamped our website in line with our strategic image. The first
country-specific website to be launched was Finland's honka.fi.
In Finland, we focused heavily on marketing. We concentrated on holiday homes
during the early year, shifting to detached houses towards the end of the
review period. In Finland, we're seeking growth from the detached house market
and are also concentrating in larger-scale timber construction projects.
The Honka Fusion™ product concept, which uses non-settling logs, was enhanced
by boosting production efficiency. The architectural potential of non-settling
logs was rolled out to designers. Honkarakenne is the market's only supplier of
non-settling logs.
Starting from the end of 2011, our international sales network received
training designed to enhance sales expertise. This training will be completed
by the end of the second quarter.”
NET SALES
Honkarakenne Group's consolidated net sales for the first quarter decreased by
24 % to MEUR 7.0 (9.2). The net sales in Finland decreased by 9 % to MEUR 3.2
(3.5). In export, net sales decreased by 33 % to MEUR 3.7 (5.5).
Geographical distribution of net sales:
DEVELOPMENT OF SALES
Distribution of 1-3/2012 1-3/2011
net sales, %
Finland 46 % 38 %
West 21 % 13 %
East 14 % 32 %
Far East 18 % 11 %
Other markets 0 % 4 %
Process waste sales for recycling 2 % 3 %
Total 100 % 100 %
Net sales, MEUR 1-3/2012 1-3/2011 Change 1-12/2011
%
Finland 3.2 3.5 -9 % 22.9
West 1.5 1.2 23 % 7.8
East 1.0 2.9 -67 % 13.9
Far East 1.2 1.0 25 % 6.9
Other markets 0.0 0.4 -100 % 2.0
Process waste sales for recycling 0.1 0.2 -48 % 1.5
Total 7.0 9.2 -24 % 55.0
West, includes the following countries: Netherlands, Belgium, Spain, Ireland,
Great Britain, Iceland, Italy, Austria, Greece, Cyprus, Latvia, Lithuania,
Luxembourg, Norway, Portugal, Poland, France, Sweden, Germany, Slovakia,
Slovenia, Switzerland, Denmark, Czech Republic, Hungary and Estonia.
East, includes the following countries: Azerbaijan, Kazakhstan, Ukraine, Russia
and other CIS countries.
Far East, includes South Korea and Japan.
Other markets, includes the following countries: Bulgaria, China, Croatia,
Mongolia, North and South America, Romania, Serbia, Turkey as well as new
target countries and markets.
In addition, the sales of factory process waste for recycling will be reported
separately from the actual Honkarakenne core business operations.
PROFIT AND PROFITABILITY TRENDS
The operating result for the January-March period was EUR -2.3 million (EUR
-1.1 million) and the result before taxes was EUR -2.1 million (EUR -0.9
million).
The change in the operating result was due to lower net sales than in 2011, as
well as investments in marketing, training the Group's sales network, and
developing operations in Japan. The result for the comparison period was
improved by a non-recurring item of EUR 0.3 million from the divestment of our
holding in Karjalan Lisenssisaha Invest Oy.
FINANCING AND INVESTMENTS
In the course of the period under review, the financial position of the Group
remained satisfactory. The equity ratio stood at 49.7 % (41.7 %) and
interest-bearing net liabilities at MEUR 7.0 (MEUR 13.8). MEUR 3.3 (4.3) of the
interest-bearing net liabilities carries a 30% equity ratio covenant term.
Group liquid assets totalled MEUR 2.0 (MEUR 1.3). The Group also has a MEUR 8.0
(MEUR 10.0) bank overdraft facility, MEUR 1.6 (MEUR 5.4) of which was had been
drawn on at the end of the report period. Gearing stood at 43 % (82 %). The
Group's capital expenditure totalled MEUR 0.3 (MEUR 0.2).
MARKET DEVELOPMENT
Based on a report commissioned by RTS Oy, Finnish log house production is
expected to reduce by 8 % this year. The figure includes production for Finland
and for export.
PRODUCTS, MARKETING
In Finland, we invested in marketing during the first quarter. The leisure-time
campaign in the early months of the year was followed by a detached house
campaign. After the overhaul of the Honka Group's website, the first
country-specific site to be launched was Finland's honka.fi. The Group's new
trade fair concept was first introduced in Finland. Our detached house range
launched a new collection of modern city homes. In Finland, growth will be
sought from the detached house market, as well as from investments in
larger-scale timber construction projects. The construction of Finland's
largest log-built day-care centre, supplied by Honkarakenne, was launched in
Kuopio. We also overhauled our network of representatives in Finland.
In the West, we focused on the acquisition of large-scale projects. The Honka
Fusion™ concept was rolled out to designers. Honkarakenne's European
organisation was restructured.
In the East, the next collection in the well-received Jewels range was
constructed. This collection will be launched during the second quarter. In
this market area, we concentrated on evolving area construction projects and
expanding our sales network to Russia's neighbouring countries.
In the Far East, we were putting the finishing touches to a new collection and
developing operations in Japan. In Japan, the second log-built hospital
supplied by Honkarakenne was completed.
In our Other Countries, we engaged in negotiations for major projects.
Expansion in Eastern European markets continued with Romania, where we launched
sales representation.
In all market areas, we took an even more customer-oriented approach to our
product range with brand-new house designs. We also revamped our website. This
overhaul will be implemented throughout the Group's sales network during the
second quarter in accordance with a separately agreed timetable. We believe
these actions will increase the number of customer contacts.
RESEARCH AND DEVELOPMENT
R&D focused on boosting the efficiency of log production and improving the fire
safety of logs. The company applied for a patent for Honka Säästö, a solution
that enables holiday homes to be left completely cold during the winter.
In the January-March period, the Group's R&D expenditure totalled EUR 0.1
million (EUR 0.1 million), representing 1.4% of net sales (1.6%). The Group did
not capitalise any development expenditure during the report period.
STAFF
At the end of the March, the Group employed 260 people (265) on average. This
is 5 less than at the same time in the previous year.
The negotiations under the act on co-operation that began with Honkarakenne's
Finnish personnel at the end of 2011 were concluded on 12 January 2012. As a
result of the negotiations, Honkarakenne laid off 49 employees for an
indefinite period. It was also decided that the remainder of the company's
personnel could be temporarily laid off for a maximum of 90 days until the end
of September 2012.
The company's President and CEO, Esa Rautalinko, resigned on 27 January 2012.
On 2 February 2012, the Board of Directors appointed the company's CFO, Mikko
Jaskari, as acting CEO and on 7 May the Board of Directors appointed Mikko
Kilpeläinen as new President and CEO. His beginning date will be confirmed
later and CFO Mikko Jaskari continues as acting CEO until Kilpeläinen will
begin.
HONKARAKENNE OYJ'S 2012 ANNUAL GENERAL MEETING, BOARD OF DIRECTORS, AND AUDITORS
The Annual General Meeting (AGM) of Honkarakenne Oyj was held at the company's
headquarters in Tuusula on 30 March 2012. The AGM confirmed the financial
statements of the parent company and Group, and discharged from liability the
board members and CEO for 2011. The AGM decided that no dividends be paid for
the 2011 financial year. The AGM decided that a repayment of capital totalling
EUR 0.08 per share be paid from the Fund for invested unrestricted equity.
Anders Adlercreutz, Lasse Kurkilahti, Mauri Saarelainen, Marko Saarelainen,
Mauri Niemi, Teijo Pankko, and Pirjo Ruuska were re-elected to the Board of
Directors. The Board's organisation meeting elected Lasse Kurkilahti the
Chairman of the Board. Mauri Saarelainen will serve as the Deputy Chairman.
Board of Directors decided not to set up any committees.
KPMG Oy Ab, Corporation of Authorized Public Accountants, was reappointed as
auditor of the company with Mr Reino Tikkanen, APA, as chief auditor.
HONKARAKENNE OYJ'S OWN SHARES AND AUTHORISATIONS OF THE BOARD OF DIRECTORS
Honkarakenne has not acquired its own shares during the report period. At the
end of the report period, the Group held 364,385 of its Honkarakenne B shares
with a total purchase price of EUR 1,381,750.23. These shares represent 7.05%
of the company's capital stock and 3.35% of all votes. The purchase cost has
been deducted from shareholders' equity in the consolidated financial
statements.
On 30 March 2012, the AGM decided that the Board of Directors will be
authorised to acquire a maximum of 400,000 of the company's own B shares with
assets included in the company's unrestricted equity. In addition, the AGM
authorised the Board to decide on a rights issue or bonus issue and on granting
special rights to shares referred to in Section 1 of Chapter 10 of the Limited
Liability Companies Act in one or more instalments. By virtue of the
authorisation, the Board may issue a maximum total of 400,000 new shares and/or
relinquish old B shares held by the company, including those shares that can be
issued by virtue of special rights. Both authorisations will be valid until 25
March 2013.
REDUCING THE RESERVE FUND
The AGM of 30 March 2012 decided to reduce the reserve fund recognised on the
balance sheet on 31 December 2011 by a sum of EUR 5,316,389.64 by transferring
all of the reserve fund's assets to the invested unrestricted equity fund. The
transfer of the reserve fund's assets to the invested unrestricted equity fund
will enhance the flexibility of the company's capital structure and increase
distributable equity.
OWNERSHIP CHANGES IN ASSOCIATED COMPANIES
Honkarakenne redeemed the shares of Honka Management Oy previously owned by Esa
Rautalinko based on the shareholders' agreement. Even before this redeeming
Honkarakenne Oyj has had control of Honka Management Oy based on the
shareholders' agreement and the company has also previously been included in
the consolidated financial statements.
CORPORATE GOVERNANCE
Honkarakenne Oyj follows the Limited Liability Companies Act and the Finnish
Corporate Governance Code, 1 October 2010, for listed companies issued by the
Finnish Securities Market Association. The company's website, www.honka.com,
provides more information on the corporate governance systems.
FUTURE OUTLOOK
The company forecasts that demand will remain low during the second quarter,
but believes an upswing in sales will occur during the third and fourth
quarters. Although there are some positive signs signalling a recovery in
demand, customers remain uncertain about future developments in the general
economic situation. General macroeconomic uncertainty factors, such as the
European Union's stabilisation measures, are reflected in customers'
unwillingness to make decisions on construction projects. In sales, this is
still evident in more lengthy sales times and a dearth of long-term pre-orders.
At the end of March, the Group's order book stood at MEUR 16.4, which is a 17 %
decrease from the MEUR 19.8 of the same time period in the previous year. The
order book refers to orders whose delivery date falls within the next 24
months. Some orders may include a financing or building permit condition.
FORTHCOMING RISKS AND UNCERTAINTIES
The Group's order book stands at a lower level than in 2011. There is a risk
that the Group will not be able to boost sales in the desired manner. In the
East in particular, both net sales and the order book are at a lower level than
last year. There is a risk that net sales in this market area will not develop
as forecast.
The Group has one significant concentration of credit risks in sales
receivables, concerning the open sales receivables of one importer. No
provision for doubtful debt has been made for this. The new sales made with
this importer have been paid according to the agreed terms. Deliveries to the
importer have continued, and the risks with the open sales receivables have not
increased.
REPORTING
This report contains statements that relate to the future, and these statements
are based on hypotheses that the company's management hold currently as well as
on the decisions and plans that are currently in place. Although the management
believes that the hypotheses relating to the future are well-founded, there is
no guarantee that the said hypotheses will prove to be correct.
This interim report has been prepared in line with the IFRS principles of
bookkeeping and assessment, but it does not meet all of the requirements of
standard IAS 34 (Interim Financial Reporting). The interim report should be
read together with the accounts for 2011. The figures have not been examined by
the auditor.
OUTLOOK FOR 2012
Honkarakenne holds the views on outlook for 2012 that it has published
previously. The company's goal for 2012 is to maintain its net sales and result
before taxes at 2011 levels.
HONKARAKENNE OYJ
Board of Directors
Further information:
Acting President and CEO Mikko Jaskari, tel. +358 400 535 337,
mikko.jaskari@honka.com.
This and previous releases are available for viewing on the company's website
at www.honka.com. The following interim reports will be published on 9 August
2012 and 8 November 2012.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited) 1-3 1-3 1-12 /2011
/2012 /2011
(MEUR)
Net sales 7.0 9.2 55.0
Other operating income 0.4 0.6 1.1
Change in inventories 0.8 0.6 -2.0
Production for own use 0.0 0.0 0.0
Materials and services -5.3 -6.2 -28.9
Employee benefit expenses -2.6 -2.8 -11.1
Depreciations -0.8 -0.8 -3.3
Other operating expenses -2.0 -1.7 -8.9
Operating profit/loss -2.3 -1.1 1.9
Financial income and expenses 0.2 0.1 -0.7
Share of associated companies' profit 0.0 0.0 -0.1
Profit/loss before taxes -2.1 -0.9 1.1
Taxes 0.6 0.4 -0.3
Profit/loss for the period -1.5 -0.6 0.8
Other comprehensive income:
Translation differences -0.2 -0.1 0.1
Total comprehensive -1.7 -0.7 0.9
income for the period
Attributable to:
Equity holders of the parent -1.7 -0.7 0.9
Non-controlling interest -0.0 0.0 0.0
-1.7 -0.7 0.9
Earnings/share (EPS), EUR
Basic -0.31 -0.12 0.17
Diluted -0.31 -0.12 0.17
CONSOLIDATED BALANCE SHEET 31.03.2012 31.03.2011 31.12.2011
(unaudited)
(MEUR)
Assets
Non-current assets
Property, plant and equipment 18.1 20.9 19.0
Goodwill 0.1 0.1 0.1
Other intangible assets 0.7 0.9 0.7
Investments in associated companies 0.3 0.4 0.3
Other investments 0.1 0.4 0.2
Receivables 0.3 0.1 0.3
Deferred tax assets 1.6 2.0 1.1
21.3 24.8 21.7
Current assets
Inventories 7.6 10.1 7.1
Trade and other receivables 7.4 11.4 7.7
Cash and bank receivables 2.0 1.3 2.6
17.1 22.8 17.3
Total assets 38.4 47.6 39.0
Shareholders' equity and liabilities 31.3.2012 31.3.2011 31.12.2011
Equity attributable to equity holders
of the parent
Capital stock 9.9 9.9 9.9
Share premium 0.5 0.5 0.5
Reserve fund 5.3 5.3 5.3
Unrestricted equity reserve 1.9 1.9 1.9
Translation differences 0.3 0.2 0.5
Retained earnings -1.7 -1.2 -0.2
16.2 16.6 17.9
Non-controlling interests 0.2 0.2 0.2
Total equity 16.4 16.8 18.1
Non-current liabilities
Deferred tax liabilities 0.1 0.3 0.2
Provisions 0.3 0.4 0.3
Interest bearing debt 6.8 11.9 1.1
Non-interest bearing debt 0.0 0.0 0.0
7.2 12.6 5.6
Current liabilities
Trade and other payables 12.6 15.0 11.5
Tax liabilities 0.0 0.0 0.1
Interest bearing debt 2.2 3.2 3.7
14.8 18.2 15.3
Total liabilities 22.0 30.7 20.9
Total equity and liabilities 38.4 47.6 39.0
STATEMENT OF CHANGES IN EQUITY
(unaudited)
1,000 EUR Equity attributable to equity holders of
the parent
a) b) c) d) e) f) g) Total h) Total
equity
Total equity 9898 520 5316 1896 319 -1382 771 17338 200 17538
1.1.2011
Total -123 -568 -691 -3 -694
comprehensive
income for the
period
Total equity 9898 520 5316 1896 196 -1382 202 16647 197 16844
31.3.2011
a) b) c) d) e) f) g) Total h) Total
equity
Total equity 9898 520 5316 1896 196 -1382 1151 17859 242 18101
1.1.2012
Proceeds from -35 -35
transfer of
own shares
Total -168 -1489 -1657 -4 -1661
comprehensive
income for the
period
Total equity 9898 520 5316 1896 295 -1382 -341 16202 203 16405
31.3.2012
a) Share capital
b) Premium fund
c) Reserve fund
d) Unrestricted equity reserve
e) Translation difference
f) Own shares
g) Retained earnings
h) Non-controlling interests
CONSOLIDATED CASH FLOW STATEMENT 1.1.- 1.1.- 1.1.-
(Unaudited) 31.3.2012 31.3.2011 31.12.2011
(MEUR)
Cash flow from operations -0.4 -0.8 6.0
Cash flow from investments, net -0.3 -0.2 0.9
Total cash flow from financing 0.1 0.4 -6.3
Share issue -0.5
Increase in credit capital 2.8 5.4 0.8
Decrease in credit capital -2.6 -4.9 -6.7
Other financial items -0.1 -0.1 0.1
Change in liquid assets -0.6 -0.6 0.7
Liquid assets at the beginning of period 2.6 1.9 1.9
Liquid assets at the end of period 2.0 1.3 2.6
NOTES TO THE REPORT
Calculation methods
This interim report has been prepared in line with the IFRS principles of
bookkeeping and assessment, but it does not meet all of the requirements of
standard IAS 34 (Interim Financial Reporting). The interim report should be
read together with the accounts for 2011. The new revised standards or
interpretations effective as of 1 January 2012 have no bearing on the figures
presented for the report period. The figures have not been examined by the
auditor.
Honka Management Oy, established year 2010 and owned by the top management of
the company, has been included in the consolidated financial statements due to
the terms and conditions of the shareholder agreement concluded between it and
Honkarakenne Oyj.
Honkarakenne has one operating segment, the manufacture, sales and marketing of
log houses, under the Honka brand. Geographically, the sales of the Group
divide as follows: Finland, West, East, Far East, Other markets and Process
waste sales for recycling. The internal reporting of the management is in line
with IFRS reporting. For this reason, separate reconciliations are not
presented.
TANGIBLE ASSETS
(Unaudited) Tangible
(MEUR) assets
Acquisition cost 1.1.2012 66.7
Translation difference (+/-) -0.2
Increase 0.2
Decrease -2.0
Transfers between balance sheet items -0.5
Acquisition cost 31.3.2012 64.2
Accumulated depreciation 1.1.2012 -47.7
Translation difference (+/-) 0.2
Disposals and reclassifications 2.0
Depreciation for the period -0.7
Accumulated depreciation 31.3.2012 -46.1
Book value 1.1.2012 19.0
Book value 31.3.2012 18.1
Own shares
Honkarakenne Oyj has not acquired its own shares during the report period. At
the end of the report period, the Group held 364,385 of its Honkarakenne B
shares with a total purchase price of EUR 1,381,750.23. These shares represent
7.05% of the company's capital stock and 3.35% of all votes.
CONTINGENT LIABILITIES
(Unaudited) 31.3.2012 31.3.2011
MEUR
For own loans
- Mortgages 23.7 25.7
- Pledged shares
- Other quarantees 2.0 2.9
For others
- Guarantees 0.2 0.2
Leasing liabilities 0.3 0.4
Nominal values of forward exchange contracts 2.4 2.1
Derivative contracts 0.3 0.2
Events in the circle of acquaintances
The Group's circle of acquaintances consists of subsidiaries, associated
companies and the company's management. The management included in the circle
of acquaintances comprises the Board of Directors, CEO and the company's
managing committee.
In the period under review, there were general transactions conducted with
acquaintances totalling 143 thousand euros. The pricing of goods and services
in transactions with acquaintances conforms to market-based pricing.
KEY INDICATORS
(Unaudited) 1-3 1-3 1-12
2012 2011 2011
Earnings/share (EPS) eur -0.31 -0.12 0.17
Return on equity % -8.7 -3.3 4.6
Equity ratio % 49.7 41.7 52.6
Shareholders equity/share eur 3.4 3.5 3.7
Net debt MEUR 7.0 13.8 6.1
Gearing % 42.7 81.9 34.5
Gross investments MEUR 0.3 0.2 1.0
% of net sales 4.5 2.1 1.8
Order book MEUR 16.4 19.8 13.6
Average number of personnel Staff 121 122 123
Workers 139 143 142
Total 260 265 265
Adjusted number of shares At year-end 4,805 4,805 4,805
Average during 4,805 4,805 4,805
period
CALCULATION OF KEY INDICATORS
Profit for the period attributable to equity
holders of parent
Earnings/share (EPS) -------------------------------------------------
----
Average number of outstanding shares
Profit before taxes - taxes
Return on equity % ------------------------------------------------- x 100
----
Total equity, average
Total equity
Equity ratio, % ------------------------------------------------- x 100
----
Balance sheet total - advances received
Net debt Interest-bearing debt - cash and cash equivalents
Interest-bearing debt - cash and cash equivalents
Gearing, % ------------------------------------------------- x 100
----
Total equity
Shareholders' equity
Shareholders -------------------------------------------------
equity/share ----
Number of shares outstanding at end of period
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