2011-11-10 14:00:00 CET
2011-11-10 14:00:07 CET
REGULATED INFORMATION
Honkarakenne Oyj - Interim report (Q1 and Q3)
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2011
Helsinki, Finland, 2011-11-10 14:00 CET (GLOBE NEWSWIRE) --
HONKARAKENNE OYJ INTERIM REPORT 10 NOVEMBER 2011 3:00 PM
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2011
SUMMARY
July-September 2011
-- Honkarakenne Group's consolidated net sales for the
third
quarter of the year amounted to MEUR 13.9 (MEUR 15.0 in 2010),
representing a reduction over the same period the previous year of 7%.
-- Operating profit was MEUR 1.0 (MEUR 0.2).
Operating profit before non-recurring items was MEUR 1.0 (MEUR 0.6).
-- Profit before taxes was MEUR 0.5 (MEUR 0.1).
-- Earnings per share amounted to EUR 0.09 (EUR 0.02).
January-September 2011
-- Honkarakenne Group's consolidated net sales for January-September amounted
to MEUR 41.4 (MEUR 43.1), representing a reduction over the same period the
previous year of 4%.
-- Operating profit was MEUR 2.0 (MEUR 0.9).
Operating profit before non-recurring items was MEUR 1.7 (MEUR 2.0).
-- Profit before taxes was MEUR 1.5 (MEUR 0.2).
-- Earnings per share amounted to EUR 0.27 (EUR 0.03).
-- Equity ratio 52% (39%).
-- Gearing 38% (82%).
The Group´s net sales in 2011 will be lower than the previous year. The Group
is still targeting a better result before taxes than last year. The performance
management is the same as that previously released in October 2011.
At the end of the third quarter, the Group's order book was 5% lower than the
corresponding period the previous year. KEY FIGURES 7-9/ 7-9/ 1-9/ 1-9/ Change 1-12/
2011 2010 2011 2010 % 2010
Net sales, MEUR 13.9 15.0 41.4 43.1 -4 58.1
Operating profit/loss, MEUR 1.0 0.2 2.0 0.9 1.3
Operating profit before non-recurring 1.0 0.6 1.7 2.0 2.5
items, MEUR
Profit/loss before taxes, MEUR 0.5 0.1 1.5 0.2 0.4
Average number of personnel 266 301 266 299 291
Earnings/share (EPS), EUR 0.09 0.02 0.27 0.03 0.23
Equity ratio, % 52 39 42.5
Return on equity, % 7.3 1.1 7.3
Shareholders' equity/share, EUR 3.8 3.4 3.6
Gearing, % 38 82 73.1
Esa Rautalinko, President and CEO of Honkarakenne Oyj, in connection with the
interim report:
“Honkarakenne's result before taxes in the third quarter of the year was at a
satisfactory level. The uncertainty in the global economy that strengthened in
the early summer was reflected in the development of net sales, and net sales
will not reach the growth targeted for 2011.
The Group's main area of focus this year, promoting sales, has developed
satisfactorily in other market areas except West and Domestic. In the Domestic
market area, vacation house sales have been dropping, and the sales of
single-family houses have not yet compensated for the decrease in vacation
sales enough. In market area West, the challenges in developing sales focus on
Germany, especially.
The Group's balance sheet structure has developed steadily in a stronger
direction since the improvement programme was initiated in the Group at the
start of 2010. Currently, the Group's equity ratio, 52% (39%), is the highest
recorded in the 21st century, whereas the interest-bearing net liabilities of
MEUR 7.0 (13.5) represent the lowest recorded in the 21st century. The
company's gearing is at a good level, 38% (82%). The balance sheet structure
has developed as forecast. The current good financial position makes it also
possible to develop the company financially during hard times.”
NET SALES
Honkarakenne Group's consolidated net sales for the third quarter of 2011
decreased by 7% to MEUR 13.9 (15.0). The net sales in Finland decreased by 13%
to MEUR 6.2 (7.1). In export, net sales decreased by 1% to MEUR 7.4 (7.5).
Honkarakenne Group's consolidated net sales for January-September 2011 were
MEUR 41.4, compared to MEUR 43.1 in the same period the previous year.
Geographical distribution of net sales:
DEVELOPMENT OF SALES
Distribution of 1-9/ 1-9/
net sales, % 2011 2010
Domestic 44% 48%
West 15% 19%
East 24% 19%
Far East 11% 9%
Other markets 3% 2%
Process waste sales for recycling 3% 3%
Total 100% 100%
Net sales, MEUR 7-9/ 7-9/ Change % 1-9/ 1-9/ Change %
2011 2010 2011 2010
Domestic 6.2 7.1 - 13% 18.2 20.5 - 11%
West 2.1 2.9 - 7% 6.1 8.3 - 26%
East 3.2 3.2 + 1% 9.9 8.3 + 19%
Far East 1.9 1.0 + 95% 4.5 3.8 + 16%
Other markets 0.1 0.5 - 71% 1.4 1.0 + 33%
Process waste sales for recycling 0.4 0.5 - 22% 1.3 1.2 + 10%
Total 13.9 15.0 - 7% 41.4 43.1 - 4%
The sales areas are:
Domestic, includes Finland.
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.
DEVELOPMENT OF PROFIT AND PROFITABILITY
Operating profit in January-September was MEUR 2.0 (MEUR 0.9), and profit
before taxes was MEUR 1.5 (MEUR 0.2). Operating profit without non-recurring
items in January-September was MEUR 1.7 (MEUR 2.0).
The calculations below present the change in operating profit from 2010 to 2011.
Operating profit 1-9/2010 without non-recurring items 2.0
Improvement programme and increase in sales - 0.2
Other items - 0.0
Operating profit 1-9/2011 without non-recurring items 1.7
Non-recurring items 1-9/2011 0.3
Operating profit 2011 2.0
Non-recurring items includes a positive item generated by the sale of the
shareholding in Karjalan Lisenssisaha Invest Oy of MEUR 0.34 and non-recurring
implementation expenditure for the improvement programme amounting to MEUR
0.06.
The goal of the improvement programme initiated by the Group at the beginning
of 2010 is to increase the result by MEUR 8 within two years. Of this, MEUR 5.1
was achieved in 2010, and for 2011 the targeted improvement is MEUR 2.9. During
the second quarter of the year, the effect of the improvement programme on 2011
amounted to -MEUR 0.2. The negative result of the improvement programme is a
result of the fact that the development of sales was not satisfactory, which is
why the required volumes have not been secured for the improvement programme.
FINANCING AND INVESTMENTS
In the course of the period under review, the financial position of the Group
strengthened. The equity ratio stood at 52% (39%) and interest-bearing net
liabilities at MEUR 7.0 (MEUR 13.5). MEUR 0.8 (2.7) of the interest-bearing net
liabilities carries a 30% equity ratio covenant term. Group liquid assets
totalled MEUR 2.4 (MEUR 1.4). The Group also has a MEUR 10.0 bank overdraft
facility, MEUR 8.7 (MEUR 6.9) of which had not been drawn on at the end of the
report period. Gearing stood at 38% (82%). The Group's capital expenditure
totalled MEUR 0.6 (MEUR 0.4).
MARKET DEVELOPMENT
Based on a report commissioned by RTS Oy, Finnish log house production is
expected to decrease by 2% this year. The corresponding forecast at the time of
the previous interim report was a 3% fall. The figure includes production for
Finland and for export.
PRODUCTS, MARKETING AND MARKET AREAS
In Finland, urban construction projects were invested in in the third quarter
of the year. In August, Honkarakenne presented the regional development venture
to be implemented in Suurpelto in Espoo. Urban homes that will be of high
quality and ecologically sustainable will be built in Suurpelto using the
collaborative construction method.
In terms of vacation construction, the targets exhibited at the fair were well
received. Honkarakenne's high-quality unique target, Lokki, launched at the
Holiday Housing Fair in Mäntyharju, was elected the Log House of the Year by a
jury summoned by Hirsitaloteollisuus. The jury consisted of designer Ristomatti
Ratia and professor Jouni Koiso-Kanttila.
In market area West, the development of sales was poor in Germany especially.
New partners are actively being sought for Germany to make sales grow again. In
other areas in West, the development of sales was satisfactory. Of
Honkarakenne's range, the sales of Honka Fusion was especially promoted.
In market area East, first major sales of the Honka Jewels range, introduced
during the previous quarter, were immediately secured, so the launch of the
range may be considered successful. More partners are actively being sought in
the East area for Kazakhstan and Ukraine in particular.
In Far East, a sales campaign was realised in the third quarter of the year.
The results of the campaign were good, and there is strong growth in Far East
net sales.
In the Other markets group, certain large projects in geographical areas prone
to earthquakes were invested in.
RESEARCH AND DEVELOPMENT
In January-September, the Group's R&D expenditure was MEUR 0.4 (MEUR 0.4), 1.0%
of net sales (0.9%). The Group did not activate development costs during the
period under review.
In the third quarter of the year, a new high-rise log type, ideal for a massive
and imposing design look, was introduced. Apart from this, R&D expenditure has
focused on the further development of energy solutions.
STAFF
At the end of September, the Group employed 266 people (299) on average. This
is 33 fewer than at the same time the previous year.
At the end of the second quarter, Honkarakenne entered into productional
co-operation negotiations, the aim of which is to maintain competitiveness
through periods of fluctuation in sales and production. As a result of these
negotiations, Honkarakenne may lay off its staff for a fixed period not
exceeding 90 days up to the end of March 2012.
OWNERSHIP CHANGES IN ASSOCIATED COMPANIES
On 17 February 2011, Honkarakenne Oyj signed an agreement to sell its 37.5%
sharehold in Karjalan Lisenssisaha Invest Oy to FM Timber Team Oy. Karjalan
Lisenssisaha Invest Oy and its subsidiaries operate in the field of sawmill
industry in Russia. Honkarakenne relinquished its sharehold in Karjalan
Lisenssisaha Invest Oy as part of its aim to focus on its core operations.
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/investors, provides more information on the corporate governance
systems.
FUTURE OUTLOOK
General macroeconomic uncertainties affect customers' willingness to make
decisions on large construction projects. Uncertainty in sales began to show
itself in early summer. Sales numbers still show signs of a prolonged sales
process and lack of long-term orders.
At the end of September, the Group's order book stood at MEUR 16.5, which is a
5% decrease from the MEUR 17.3 at the same period 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 has been unable to grow at a satisfactory pace in the West market
area. Customer investment decisions have clearly been delayed as a result of
general economic uncertainty. 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 been amortised as per the agreement.
The assessment of amounts in the balance sheet is based on current assessment
by the management. If these assessments are changed, this may result in changes
to the Group's result.
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 2010. The new revised standards or
interpretations effective as of 1 January 2011 have no bearing on the figures
presented for the report period. The figures have not been examined by the
auditor.
OUTLOOK FOR 2011
The Group´s net sales in 2011 will be lower than the previous year. The Group
is still targeting a better result before taxes than last year. The performance
management is the same as that previously released in October 2011.
HONKARAKENNE OYJ
Board of Directors
Further information:
Esa Rautalinko, President and CEO, tel. +358 400 740 997,
esa.rautalinko@honka.com or
Mikko Jaskari, CFO, 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/investors.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(unaudited) 7-9/2011 7-9/2010 1-9/2011 1-9/2010 1-12/2010
(MEUR)
Net sales 13.9 15.0 41.4 43.1 58.1
Other operating income 0.0 0.2 0.8 0.8 1.0
Change in inventories -0.4 0.6 -0.3 1.1 0.3
Production for own use 0.0 0.0 0.0 0.0 0.0
Materials and services -7.5 -9.6 -23.2 -25.0 -32.6
Employee benefit expenses -2.4 -2.4 -8.3 -9.1 -12.2
Depreciations -0.8 -0.9 -2.4 -2.8 -3.7
Other operating expenses -1.9 -2.7 -6.1 -7.3 -9.6
Operating profit/loss 1.0 0.2 2.0 0.9 1.3
Financial income and expenses -0.5 -0.0 -0.5 -0.6 -0.7
Share of associated -0.0 -0.1 -0.0 -0.0 -0.2
companies' profit
Profit/loss before taxes 0.5 0.1 1.5 0.2 0.4
Taxes -0.1 -0.0 -0.2 -0.0 0.7
Profit/loss for the period 0.4 0.1 1.3 0.2 1.1
Other comprehensive income:
Translation differences 0.0 0.0 0.1 0.2 0.3
Total comprehensive income 0.4 0.1 1.4 0.4 1.4
for the period
Protif for the period
attributable to:
Equity holders of the parent 0.4 0.1 1.3 0.2 1.1
Non-controlling interest 0.0 0.0 0.0 0.0 -0.0
0.4 0.1 1.3 0.2 1.1
Comprehensive income
attributable to:
Equity holders of the parent 0.4 0.1 1.4 0.4 1.4
Non-controlling interest 0.0 0.0 0.0 0.0 -0.0
0.4 0.1 1.4 0.4 1.4
Earnings/share (EPS), EUR
Basic 0.09 0.02 0.27 0.03 0.23
Diluted 0.09 0.02 0.27 0.03 0.23
CONSOLIDATED BALANCE SHEET (unaudited) 30.9.2011 30.9.2010 31.12.2010
(MEUR)
Assets
Non-current assets
Property, plant and equipment 20.0 22.1 21.6
Goodwill 0.1 0.1 0.1
Other intangible assets 0.8 1.1 1.0
Investments in associated companies 0.3 1.9 1.8
Other investments 0.2 0.4 0.4
Receivables 0.2 0.1 0.1
Deferred tax assets 1.4 1.5 1.6
22.9 27.2 26.5
Current assets
Inventories 8.9 10.7 9.9
Trade and other receivables 7.5 8.5 8.0
Cash and bank receivables 2.4 1.4 1.9
18.9 20.6 19.9
Total assets 41.8 47.9 46.4
Shareholders' equity and liabilities 30.9.2011 30.9.2010 31.12.2010
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 0.4 0.2 0.3
Retained earnings 0.3 -1.5 -0.6
18.3 16.3 17.3
Non-controlling interests 0.2 0.2 0.2
Total equity 18.6 16.5 17.5
Non-current liabilities
Deferred tax liabilities 0.3 0.9 0.3
Provisions 0.4 0.4 0.4
Interest bearing debt 4.4 11.1 11.1
Non-interest bearing debt 0.0 0.0 0.0
5.0 12.4 11.8
Current liabilities
Trade and other payables 13.1 15.1 13.5
Tax liabilities 0.0 0.0 0.0
Interest bearing debt 5.1 3.9 3.6
18.2 19.0 17.1
Total liabilities 23.2 31.4 28.9
Total equity and liabilities 41.8 47.9 46.4
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 7,498 520 5,316 29 -1,138 82 12,307 9 12,316
1.1.2010
Share issue 2,400 1,080 3,480 3,480
Management 816 -816 203 203
Incentive
Plan
Repurchase of -182 -182 -182
own shares
Proceeds from 758 -414 344 344
sale of own
shares
Total 220 160 380 0 380
comprehensiv
e income for
the period
Total equity 9,898 520 5,316 1,896 249 -1,378 -172 16,330 211 16,540
30.9.2010
a) b) c) d) e) f) g) Total h) Total
equity
Total equity 9,898 520 5,316 1,896 319 -1,378 771 17,342 200 17,542
1.1.2011
Dividends -446 -446 -446
Repurchase of -91 -91 -91
own shares
Proceeds from 87 4 91 91
sale of own
shares
Total 112 1,306 1,418 46 1,464
comprehensiv
e income for
the period
Total equity 9,898 520 5,316 1,896 431 -1,382 1,635 18,314 246 18,560
30.9.2011
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 1.1.- 30.9.2011 1.1.- 30.9.2010 1.1.- 31.12.2010
FLOW STATEMENT
(Unaudited)
(MEUR)
Cash flow from operations 5.9 1.6 2.8
Cash flow from investments, 0.4 -0.5 -0.8
net
Total cash flow from -5.8 -1.4 -1.8
financing
Share issue 3.5 3.5
Increase in credit capital 1.3 3.1 3.1
Decrease in credit capital -6.4 -8.0 -8.5
Other financial items -0.2 0.1 0.1
Dividends paid -0.4
Change in liquid assets 0.5 -0.2 0.2
Liquid assets at the 1.9 1.7 1.7
beginning of period
Liquid assets at the end of 2.4 1.4 1.9
period
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 2010. The new revised standards or
interpretations effective as of 1 January 2011 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: Domestic, 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 1.1.2011 67.0
Translation difference (+/-) 0.1
Increase 0.5
Decrease -0.1
Transfers between balance sheet items 0.0
Acquisition cost 30.9.2011 67.5
Accumulated depreciation 1.1.2011 -45.4
Translation difference (+/-) -0.1
Disposals and reclassifications 0.1
Depreciation for the period -2.1
Accumulated depreciation 30.9.2011 -47.5
Book value 1.1.2011 21.6
Book value 30.9.2011 20.0
Own shares
During the second quarter, by virtue of authorisation granted by the AGM, the
Board of Directors of the company decided to organise a rights issue of 17,250
shares. In the rights issue, in an exception to the shareholders' subscription
privilege, Honkarakenne relinquished 17,250 Honkarakenne B shares for the
subscription of Honka Management at a price of EUR 5.26 per share. As a result
of the issue, management group members now own 5.5% of Honkarakenne's shares
and 2.63% of the company's voting rights. Because Honka Management Oy has been
consolidated into the figures for the Honkarakenne Group, the purchase cost for
these shares has been entered in the consolidated accounts to reduce the
Group's shareholders' equity.
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) 30.9.2011 30.9.2010 31.12.2010
MEUR
For own loans
- Mortgages 25.7 26.3 25.7
- Other quarantees 0.2 1.6 2.3
For others
- Guarantees 0.2 0.7 0.7
Leasing liabilities 1.0 0.6 0.8
Nominal values of forward exchange contracts 4.1 3.5 2.8
Derivative contracts 0.4 0.4 0.3
KEY INDICATORS
(Unaudited) 1-9/ 1-9/ 1-12/
2011 2010 2010
Earnings/share (EPS) eur 0.27 0.03 0.23
Return on equity % 7.3 1.1 7.3
Equity ratio % 52.4 38.9 42.5
Shareholders equity/share eur 3.8 3.4 3.6
Net debt MEUR 7.0 13.5 12.8
Gearing % 37.8 81.8 73.1
Gross investments MEUR 0.6 0.4 0.5
% of net sales 1.5 1.0 0.8
Order book MEUR 16.5 17.3 18.0
Average number of personnel Staff 123 139 135
Workers 143 160 156
Total 266 299 291
Adjusted number of shares At year-end 4,805 4,766 4,805
Average during period 4,805 4,766 4,737
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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