2021-05-07 07:00:00 CEST

2021-05-07 07:00:07 CEST


REGULATED INFORMATION

English
Componenta - Interim report (Q1 and Q3)

Componenta Corporation Business Review January­­–March 2021


Componenta Corporation, Stock Exchange Release, 7 May 2021 at 08.00 a.m. EEST

Net sales increased and EBITDA improved in the reporting period

The information presented in this business review concerns the development of
Componenta Group in January–March 2021 and in the corresponding period in 2020,
unless otherwise stated. All financial figures in this review are for continued
operations, unless otherwise stated. Continued operations during the reporting
period included foundries in Pori and Karkkila, Finland, and metal product
plants in Jyväskylä, Härmä, Kurikka, Leppävesi and Sastamala, Finland.

This is not an interim report as specified in the IAS 34 standard. The company
complies with half-year reporting in accordance with the Finnish Securities
Markets Act and discloses business reviews for the first three and nine-month
periods of the year, in which key information regarding the company’s financial
situation and development will be presented.

The financial information presented in this business review is unaudited.

January–March 2021

  · Net sales increased, amounting to EUR 20,4 million (EUR 19,6 million).
  · EBITDA grew, reaching 1,5 Me (EUR 0,8 million).
  · Operating result was EUR 0,0 million (EUR -0,7 million).
  · Cash flow from operating activities amounted to EUR 0,9 million (EUR 2,2
million).

Componenta’s guidance for 2021

Componenta expects the net sales of continued operations in 2021 to be EUR 70–80
million. EBITDA is expected to improve from the previous year. In 2020, net
sales from continued operations were EUR 70.0 million and EBITDA EUR 3.7
million.

The potential increase in prices for raw materials, the general economic and
competitive situation, and the development of customers’ sales volumes may
affect the business outlook. Due to the COVID-19 pandemic, future sales and
profitability developments are associated with uncertainties and poor
visibility.

President and CEO Sami Sivuranta:

“The first quarter of the year went as we expected. Our net sales increased and
profitability improved thanks to the measures we implemented as planned.

Due to the COVID-19 pandemic, there continue to be uncertainties in the market.
However, restrictions have had a positive effect and vaccination coverage is
improving. There are therefore clear signs that the economy is starting to
recover, which increases demand. The pandemic had no significant effect on
Componenta’s business in the first quarter. Thanks to our personnel’s strong
performance, our own production did not suffer from any disruptions, and we were
able to keep our deliveries to customers and our service level at a good level.

On 31 March 2021, Componenta paid the debts amounting to EUR 5.9 million to its
creditors to end the parent company’s restructuring programme prematurely.
Consequently, Componenta Corporation’s restructuring programme ended on 27 April
2021 when the supervisor's final account was completed.

We believe that the end of the restructuring programme will clearly improve
Componenta's position and credibility from the perspective of our customers,
suppliers and other stakeholders, and that it will have a significant positive
impact on the Group's entire business.

Our liquidity remained at a good level throughout the whole reporting period and
continued to do so after the end of the period despite the payment of the
restructuring debts.

We will actively carry on with our measures to strengthen our market position
and to improve profitability as part of our growth strategy. Our objective is to
be the primary supplier with extensive offering for our customers.”

Financial performance during the reporting period

Sales volumes slightly increased in the first quarter of 2021. Componenta
Group’s net sales increased by 4% in the reporting period and amounted to EUR
20.4 million (EUR 19.6 million). EBITDA was EUR 1.5 million (EUR 0.8 million)
and operating result EUR 0.0 million (EUR -0.7 million). Profitability improved
due to our planned development measures. The one-time payment of EUR 0.1
million, from the bankruptcy estate of the former subsidiary Componenta BV for
receivables that had been previously written down, also contributed to our
profitability.

Result after financial items was EUR 0.3 million (EUR -1.0 million) and was
improved by a EUR 0.7 million net profit, which was realized when the recognized
restructuring debt of the parent company of EUR 6.6 million were paid with EUR
5.9 million.

At the end of the reporting period cash and cash equivalents of the Group
totalled EUR 10.5 million (EUR 5.6 million). The Group’s liquidity remained at a
good level despite the early payment of restructuring debts. At the end of the
reporting period, the Group had undrawn committed credit facilities of EUR 4.0
million (EUR 3.3 million). The payment exemptions related to the COVID-19
pandemic granted by the tax authorities, which must be paid according to
separate payment schedules by 15 June 2022, stood at EUR 2.9 million on 31 March
2021. An interest of 2.5% is paid for these debts.

Cash flow from operating activities during the reporting period was EUR 0.9
million (EUR 2.2 million). At the end of the reporting period, working capital
(incl. inventory and accounts receivables deducted by accounts payables) was EUR
5.8 million (31 December 2020: EUR 5.2 million). The change in cash flow was
mainly due to seasonal fluctuation in working capital, which is typical for this
line of business, as well as the payments made during the first quarter of 2021
in accordance with the payment schedule related to the relief granted by the tax
authority in 2020 due to the COVID-19 pandemic.

The Group’s equity ratio at the end of the reporting period was 40.4% (26.8%).
The improved equity ratio is mainly due to the rights issue executed in 2020 and
the premature payment of EUR 5.9 million of restructuring debts of the parent
company Componenta Corporation on 31 March 2021.

Non-current interest-bearing debts and non-current non-interest-bearing
restructuring debts totalled EUR 13.2 million (EUR 20.4 million) and current
interest-bearing debts and current non-interest-bearing restructuring debts
totalled EUR 3.9 million (EUR 4.4 million). The before mentioned restructuring
debts are referred to debts of the subsidiary Componenta Castings Oy. The
restructuring programme of Componenta Castings Oy shall continue in accordance
with its terms and conditions until 2023.

Key figures

+--------------------------------------------+-------+--------+------+---------+
|                                            |1–3/202|1–3/2020|Change|1–12/2020|
|                                            |      1|        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Net sales, continued operations, TEUR       | 20,384|  19,594|  4.0%|   70,040|
+--------------------------------------------+-------+--------+------+---------+
|EBITDA, continued operations, TEUR          |  1,510|     837| 80.5%|    3,750|
+--------------------------------------------+-------+--------+------+---------+
|Operating result, continued operations, TEUR|     41|    -692|      |   -2,034|
+--------------------------------------------+-------+--------+------+---------+
|Operating result, continued operations, %   |    0.2|    -3.5|      |     -2.9|
+--------------------------------------------+-------+--------+------+---------+
|Result after financial items, continued     |    275|  -1,043|      |   -3,224|
|operations, TEUR                            |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Net result, continued operations, TEUR      |    292|  -1,029|      |   -2,910|
+--------------------------------------------+-------+--------+------+---------+
|Net result, including discontinued          |    292|  -1,029|      |     -949|
|operations, TEUR                            |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Basic earnings per share*, EUR              |   0.03|   -0.22|      |    -0.20|
+--------------------------------------------+-------+--------+------+---------+
|Diluted earnings per share*, EUR            |   0.03|   -0.22|      |    -0.20|
+--------------------------------------------+-------+--------+------+---------+
|Cash flow from operating activities,        |    883|   2,208|-60.0%|    6,355|
|continued operations, TEUR                  |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Interest-bearing net debt**, TEUR           |  3,166|   7,585|-58.3%|   -2,584|
+--------------------------------------------+-------+--------+------+---------+
|Net gearing, %                              |   13.1|    51.0|      |    -10.8|
+--------------------------------------------+-------+--------+------+---------+
|Return on equity, %                         |    4.9|   -26.6|      |     -5.8|
+--------------------------------------------+-------+--------+------+---------+
|Return on investment, %                     |    0.4|    -9.6|      |      0.7|
+--------------------------------------------+-------+--------+------+---------+
|Equity ratio, %                             |   40.4|    26.8|      |     37.3|
+--------------------------------------------+-------+--------+------+---------+
|Gross investments incl. lease liabilities,  |    381|   1,000|-61.9%|    5,134|
|continued operations, TEUR                  |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Group’s restructuring debt                  |  4,116|  12,268|-66.5%|   10,694|
+--------------------------------------------+-------+--------+------+---------+
|Number of personnel at the end of the       |    586|     601| -2.5%|      574|
|period, incl. leased workers, continued     |       |        |      |         |
|operations                                  |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Average number of personnel during the      |    581|     602| -3.5%|      589|
|period, incl. leased workers, continued     |       |        |      |         |
|operations                                  |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+
|Order book at the end of the review period, | 11,862|   9,132| 29.9%|    9,536|
|continued operations, TEUR                  |       |        |      |         |
+--------------------------------------------+-------+--------+------+---------+

*) The comparable figures for 2020 have been adjusted due to reverse share split
and rights issue.

**) Only interest-bearing restructuring debt included.

Restructuring programmes

Componenta carried out a rights issue in November–December 2020, by which the
Company raised gross funds of approximately EUR 9.5 million. The company
intended to enter into negotiations with the company’s creditors on the early
payment of the restructuring debts. Furthermore, the purpose of the rights issue
was to strengthen the financial position of the company.

On 25 February 2021, the Board of Directors of the company decided to pay the
restructuring debts amounting to EUR 5.9 million to its creditors and to end the
restructuring programme prematurely. The premature termination of the
restructuring programme was funded with cash received from the abovementioned
rights issue.

On 31 March 2021 Componenta Corporation carried out the aforementioned EUR 5.9
million payments to its creditors, the amount of which has become more precise
during the course of March 2021.The company has also reached agreements with
creditors of the conversion into new maximum amount debts of approximately EUR
0,1 million conditional and maximum amount restructuring debts based on
guarantee liabilities which were included in the previous mentioned amount.

Following the conversion the company has fulfilled its liability towards these
creditors arising from the restructuring programme. As a consequence of the
payments and conversion, the company views that the payment obligations of its
restructuring programme have been fully fulfilled.

The restructuring programme of Componenta Corporation ended on 27 April 2021
when the restructuring programme supervisor approved the payments of
restructuring debt carried out by the company on 31 March 2021 and provided the
creditors with a final report on the restructuring programme.

The premature ending of Componenta Corporation’s restructuring programme will
not affect the restructuring programme of Componenta Castings Oy (formerly
Componenta Finland Oy), which shall continue in accordance with its terms and
conditions until 2023.

The Group’s, and at the same time Componenta Castings Oy’s, restructuring debts
were on 31 March 2021 EUR 4.1 million (EUR 12.3 million), as Componenta
Corporation paid prematurely its restructuring debts on 31 March 2021.

After the reporting period Componenta Castings Oy paid EUR 0.5 million of
external restructuring debt and EUR 0.4 million of internal restructuring debt
on 3 May 2021. After these payments, the Group’s and Componenta Castings Oy’s
external restructuring debts are EUR 3.6 million.

Repayment schedule for external restructuring debt as of 7 May 2021

TEUR                      2021   2022    2023  Total
Componenta Castings Oy     518  1,069   2,021  3,608
Total                      518  1,069  *2,021  3,608

*) The larger final instalment in Componenta Castings Oy’s repayment programme
is due to the fact that income from the sale of properties not included in core
business operations has been taken into account. This income will be used to pay
debt at the end of the programme.

Repayment schedule for intra-Group restructuring debt as of 7 May 2021

TEUR                      2021  2022   2023  Total
Componenta Castings Oy     363   726  1,452  2,540
Total                      363   726  1,452  2,540


Impact of the COVID-19 pandemic

The health and safety of personnel has been important to Componenta during the
COVID-19 pandemic. Componenta’s proactive measures to ensure the health of its
personnel have minimised the effects of the pandemic and the group has succeeded
in serving customers, completing deliveries, and keeping all operations running
without any major issues.

If the weak economic situation persists due to the pandemic, this may have a
significant impact on the financial situation of Componenta’s customers, which
will increase Componenta’s credit loss risks. The negative consequences of the
COVID-19 pandemic, if prolonged, could also pose a risk of impairment of the
company’s goodwill, inventories, trade receivables or fixed assets.

In connection with the COVID-19 pandemic, Componenta closely follows regulatory
guidelines on market developments and the operating conditions and business
situation of its customers and adjusts its own operations accordingly. Possible
illnesses and quarantines of personnel, as well as other restrictions in Finland
and other countries, can cause challenges to both Componenta’s own business and
that of its partners. Of particular importance in managing the negative effects
of a pandemic situation is the effectiveness and pace of vaccinations.
Componenta is actively pursuing the necessary measures to maintain health and
wellbeing and prevent the spread of the pandemic. Uncertainty in the market
caused by the COVID-19 pandemic will continue in 2021.

Risks and business uncertainties

The most significant risks in Componenta’s business under normal circumstances
are risks related to the business environment (competitive and price risk,
commodity risks and environmental risks), business risks (customer, supplier,
productivity, production, and process risks, labour market disruptions,
contractual and product liability risks, personnel, and security risks) and
financial risks (risks related to access to finance and liquidity, currency,
interest rate and credit risks).

The availability of certain raw materials, such as recycled steel, pig iron,
structural steel and aluminium, as well as energy at competitive prices, is
essential for the group’s business. The cost risk related to raw materials is
mainly managed through price agreements, whereupon product prices are adjusted
in line with changes in the general index of raw material prices. Rising raw
material prices may tie up more money in working capital than estimated.

Componenta’s potential risks related to the availability of working capital as
well as liquidity may weaken future new business volumes and reduce future
orders for new products from customers replacing expiring products. Volumes may
also be weakened by possible customer product transfers due to price competition
reasons. Componenta’s current credit facilities will need to be renewed at the
end of November 2021. The group also finances its business through non-binding
factoring arrangements for trade receivables. Termination of factoring
arrangements or non-renewal of credit facilities could significantly impair
Componenta’s liquidity. However, the group’s liquidity was at a good level at
the end of the reporting period, which makes it easier to manage the situation.

Resolutions of the Annual General Meeting

Componenta Corporation’s Annual General Meeting was held on 9 April 2021, in
Vantaa.

The AGM adopted the company’s financial statements and consolidated financial
statements and discharged the members of the Board of Directors and the
President and CEOs from liability for the financial period of 1 Jan – 31 Dec,
2020.In accordance with the proposal by the Board of Directors, the AGM decided
that no dividends will be distributed on the basis of the balance sheet
established for the financial year that ended on 31 December 2020.The General
Meeting resolved that the number of members of the Board of Directors be four
(4) and elected Harri Suutari, Anne Leskelä, Petteri Walldén and Tomas Hedenborg
to the Board of Directors. It was decided that the Board’s remuneration will not
be changed. At its organizing meeting held after the AGM, the Board of Directors
elected Harri Suutari as Chairman of the Board and Anne Leskelä as Vice Chairman
of the Board. The General Meeting chose the audit firm PricewaterhouseCoopers Oy
as the company’s auditor. Samuli Perälä, Authorised Public Accountant, will act
as the responsible auditor.

The AGM authorised the Board of Directors to decide on share issues in
accordance with the proposal by the Board of Directors. The issuance of shares
may be carried out by offering new shares or by transferring treasury shares
held by the company. The number of shares to be issued or transferred under the
authorisation may not exceed 940,000 shares, which corresponds to approximately
9.9% of all shares in the company. The new shares may be issued and the treasury
shares held by the company may be transferred for consideration or without
consideration.

The Board of Directors will decide on all other terms and conditions of the
share issues. On the basis of the authorisation the Board of Directors may
decide on a share issue in deviation of the pre-emptive subscription right of
the shareholders (directed issue) subject to conditions mentioned in the Finnish
Limited Liability Companies Act. The Board of Directors may use authorisation
for instance as compensation in acquisitions, to develop capital structure, to
broaden the ownership base, to acquire assets related the company’s business or
to finance or carry out other business transactions or other purposes decided by
the Board of Directors. The authorisation is valid until the end of the next
Annual General Meeting, but no longer than 30 June 2022. The authorisation shall
not revoke earlier valid and non-utilized authorisations to decide on share
issues.

The stock exchange release with the resolutions of the Annual General Meeting in
detail can be found on the company’s website.

Events after the reporting period

The Board of Directors of Componenta Corporation decided on 25 February 2021 to
end the Componenta Corporation’s restructuring programme prematurely and
Componenta Corporation carried out EUR 5.9 million payments to its creditors on
31 March 2021.

The restructuring programme of Componenta Corporation has ended upon the
approval of the payment of restructuring debt carried out by the company on 31
March 2021 by the supervisor and the provision of the supervisor’s final account
on the restructuring programme to the creditors on 27 April 2021.

Alternative performance measures

Componenta publishes certain publicly available performance measures that can be
derived from the IFRS financial statements. The calculation of these key
financial figures is presented in Componenta’s Annual Review published on 12
March 2021.

Webcast

President and CEO Sami Sivuranta will present the Business Review for investors,
analysts and media in a webcast on 7 May 2021 at 10 a.m. EEST. The webcast will
be in Finnish. You can follow the Finnish webcast via the company pages
www.componenta.com or via this link: https://live.esf.fi/componenta0521

COMPONENTA CORPORATION

For further information, please contact:

Sami Sivuranta, President and CEO, tel. +358 10 403 2200
Marko Karppinen, CFO, tel. +358 10 403 2101

Componenta is an international technology company with operations located in
Finland. With its wide technology portfolio, Componenta produces e.g., cast,
machined and unmachined components for its clients who are local and global
manufacturers of vehicles, machines and equipment. The company’s share is listed
on Nasdaq Helsinki. www.componenta.com



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