2013-08-08 07:00:00 CEST
2013-08-08 07:00:05 CEST
REGULATED INFORMATION
Lemminkäinen - Interim report (Q1 and Q3)
Lemminkäinen interim report 1 January - 30 June 2013
LEMMINKÄINEN CORPORATION INTERIM REPORT 8 AUGUST 2013 AT 8:00 A.M.
LEMMINKÄINEN INTERIM REPORT 1 JAN - 30 JUNE 2013:
Profitability challenges especially in international operations; Lemminkäinen
to cut costs by EUR 30 million
January - June 2013 (1 - 6/2012)
- Net sales for the first half of the year fell by 6% and totalled EUR 827.6
million (882.4).
- On 30 June 2013, the order book was EUR 2,085.1 million (1,931.2). Most of
the increase in the order book originated from International Operations.
Projects attributable to 2013 account for 52 (53) per cent of the order book.
- Operating profit weakened and totalled EUR -50.7 million (-13.9) with an
operating margin of -6.1% (-1.6). The losses derived from the delayed start of
the paving season, low number of housing completion and various one-offs.
- Pre-tax profit was EUR -62.4 million (-22.3).
- Earnings per share were EUR -2.63 (-0.90).
- Cash flow from operations totalled EUR -78.2 million (9.2). Factors
influencing cash flows included especially the weak result of the review period
and changes in working capital.
- The equity ratio stood at 29.2% (31.2) and gearing at 108.6% (91.7).
- Interest-bearing liabilities increased by 30%, totalling EUR 494.5 million
(381.6) at the end of the review period. Interest-bearing net debt totalled EUR
405.2 million (348.9).
April - June 2013 (4 - 6/2012)
- Second-quarter net sales fell by 8% and totalled EUR 521.2 million (567.0).
- Operating profit noticeably weakened and totalled EUR -12.4 million (7.7)
with an operating margin of -2.4% (1.4).
- Pre-tax profit was EUR -19.3 million (2.0).
- Earnings per share were EUR -0.91 (0.12).
- Cash flow from operations totalled EUR -53.8 million (-26.4).
Profit guidance for 2013
On the basis of the order book and the short-term outlook for demand, net sales
in 2013 are expected to be on a par with 2012. Operating profit for 2013 is
expected to fall short of 2012. In 2012, Lemminkäinen's net sales totalled EUR
2,268 million and its operating profit amounted to EUR 50 million. Since the
beginning of the year, Lemminkäinen has revised its profit guidance for 2013 on
19 April 2013 and on 18 July 2013.
Key figures
IFRS, EUR million 1-6/ 1-6/ Change 4-6/ 4-6/ Change 1-12/
2013 2012 2013 2012 2012
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Net sales 827.6 882.4 -6% 521.2 567.0 -8% 2,267.6
Operating profit -50.7 -13.9 over -12.4 7.7 50.4
100
Operating margin, % -6.1 -1.6 -2.4 1.4 2.2
Pre-tax profit -62.4 -22.3 over -19.3 2.0 29.1
100
Profit from continuing -48.9 -19.0 over -16.7 1.0 20.4
operations 100
Profit from discontinued 2.5 2.4 5.7
operations
Gain on sale from 18.0
discontinued operations
(after taxes)
Profit for the period -48.9 -16.5 over -16.7 3.5 44.1
100
Basic earnings per share,
EUR
From continuing operations -2.63 -1.02 over -0.91 0.00 0.83
100
From discontinued 0.12 0.12 1.21
operations
From the profit for the -2.63 -0.90 over -0.91 0.12 2.04
period 100
Cash flow from operations -78.2 9.2 -53.8 -26.4 57.8
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Business functions divested in 2012 are categorised as discontinued operations.
On 28 September 2012, Lemminkäinen sold the entire share capital of
Lemminkäinen Rakennustuotteet Oy, which comprised the company's concrete
business. The transaction price was EUR 55 million, from which Lemminkäinen
recognised pre-tax gain on sale of EUR 17.3 million, primarily in the third
quarter of 2012.
IFRS, EUR million 30 June 30 June Change 31 December
2013 2012 2012
--------------------------------------------------------------------------------
Order book, EUR million 2,085.1 1,931.2 8% 1,443.9
Balance sheet total, EUR million 1,461.8 1,389.7 5% 1,303.5
Interest-bearing net debt, EUR 405.2 348.9 16% 277.3
million
Equity ratio, % 29.2 31.2 37.2
Gearing, % 108.6 91.7 62.8
Return on investment (rolling 12 5.7 8.4 10.8
months), %
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President & CEO's view"Lemminkäinen's result for the first half of the year was poor across the
Group, but the main profitability challenges lie in our international
operations," says Timo Kohtamäki, President and CEO. "The single most
significant reason behind the negative result was the delayed start of the
season in paving and mineral aggregates by 4 to 12 weeks in all our operating
countries. Our cost structure in the paving business, and above all labour
cost, were too heavy for the H1 business volume. In residential development and
construction, the number of housing units completed was exceptionally low.
Furthermore, we had one-offs worth over EUR 10 million related to the
efficiency improvement measures in Norway as well as the telecommunications
network business.""Though the EUR 50 million efficiency programme launched in 2011 focusing on
the Finnish operations has proceeded as planned, it is evident that the
measures are not sufficient. We must continue to streamline our cost structure
to decrease the impact of seasonality, and to improve our competitiveness."
The goal is to cut the cost structure by EUR 30 million. The decisions will be
implemented in 2013, and the full impact of the measures is expected to
materialize from the second-half of 2014 onwards. The EUR 30 million plan
includes the EUR 10 million savings potential published in May 2013. "We will continue to increase the use of subcontracting and outsourcing. We
will also conclude the measures to significantly reduce the number of regional
units in Finland and Norway. Unavoidably this will also require adjusting the
number of employees to the business volume."
Lemminkäinen estimates that the personnel impact of the measures is about 500
men-year. The adjustment measures will affect the entire Lemminkäinen Group in
all its operating countries. "Scandinavia and Russia have the biggest growth and profitability improvement
potential for us. To ensure the successful implementation of the efficiency
measures and to speed up profitable growth, we have strengthened the management
of our international operations," Kohtamäki says.
Market outlook
The general market situation in construction has weakened; in Finland, the
total volume of construction is expected to decrease this year. Infrastructure
construction is declining for the third year in a row, and this trend is not
expected to change significantly in the next few years without support from the
state. Sales of new apartments will focus more intensely on the Helsinki
metropolitan area and urban growth centres. Low interest rates are maintaining
demand for housing, but demand development is slowed down by stricter loan
terms and higher interest rate margins applied by banks. In St Petersburg,
Russia, demand for comfort-class apartments is still strong, and demand for
infrastructure construction is boosted by several road projects across Russia.
In Sweden and Norway, the growing infrastructure market is attracting new
players from all across Europe, and particularly in paving and rock
engineering, competition for projects is intense.
Briefing
A Finnish-language briefing for analysts and the media will be held at 1:00
p.m. on Thursday, 8 August at Lemminkäinen's head office. The street address is
Salmisaarenaukio 2, Helsinki, Finland. The President & CEO Timo Kohtamäki will
present the Interim Report. Presentation materials are available in Finnish and
English on the company's website, www.lemminkainen.com.
Financial Reports for 2013
The Interim Reports and Financial Statements Bulletin for 2013 will be
published as follows:
7 November 2013 Interim Report, 1 Jan - 30 Sept 2013
7 February 2014 Financial Statements Bulletin 2013
LEMMINKÄINEN CORPORATION
Corporate Communications
ADDITIONAL INFORMATION:
Timo Kohtamäki, President & CEO, tel. +358 (0)2071 53263
Robert Öhman, CFO, tel. +358 (0)2071 53515
Katri Sundström, Vice President, Investor Relations, tel. +358 (0)2071 54813
APPENDICES:
Interim Report, 1 Jan - 30 June 2013
Interim Report, tabulated section
DISTRIBUTION:
NASDAQ OMX Helsinki
Key media
www.lemminkainen.com
Lemminkäinen Group operates in all areas of the construction sector. The
Group's business segments are building construction, infrastructure
construction, technical building services and international operations. Net
sales in 2012 were about EUR 2.3 billion, of which international operations
accounted for roughly 40 per cent. The Group employs an average of 8,200
people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic
Exchange Helsinki Ltd. www.lemminkainen.com
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