Martela Oyj - Company Announcement

MARTELA CORPORATION INTERIM REPORT, 1 January – 30 September 2014

MARTELA CORPORATION      INTERIM REPORT     28 October 2014, 8.30 a.m.

MARTELA CORPORATION INTERIM REPORT, 1 January-30 September 2014

Group's January-September revenue up and operating result positive

Key figures:



                            7-9   7-9    1-9    1-9   1-12
EUR million                2014  2013   2014   2013   2013
- Revenue                  36.5  34.3  104.7   95.4  132.3
- Change in revenue, %      6.5  -1.4    9.7   -6.3   -7.3
- Operating result          2.2   1.5    1.2   -2.5   -2.9
- Operating result, %       6.0   4.4    1.2   -2.6   -2.2
- Earnings per share, EUR  0.44  0.34   0.10  -0.77  -0.97
- Return on investment, %  23.5  14.4    4.3   -8.6   -7.9
- Return on equity, %      32.9  22.2    2.5  -17.1  -16.3
- Equity ratio, %                       40.1   38.4   37.6
- Gearing, %                            39.6   60.5   51.2



The Martela Group anticipates that its revenue and operating result for 2014
will show an improvement on the previous year's figures. 

Market

The demand for office furniture in Finland and Sweden continued to be weak.
Demand in Finland and Sweden is still largely focused on office alteration and
enhancement projects of different kinds rather than new offices. Despite the
weakness in the market, the activity based office concept, which is well-suited
for alteration and enhancement projects, has attracted considerable interest
among customers in Sweden, Norway, Finland and Russia. When implementing the
activity based office model at its premises, the customer can achieve
substantial savings in premises costs while also improving its employees' job
satisfaction and productivity. A weakening has been discernible in the Polish
market during the third quarter. Property market activity has slowed down
recently also in Russia. The prevailing weak market conditions cause
uncertainty about the Group's fourth-quarter performance. 

Statistics on office construction in Finland are available for the first half
of 2014. These statistics are presented below on the basis of a 12-month
rolling average: 

Finnish office construction statistics (m2):



12-month rolling average, change  30 June 2014 vs 30 June 2013*
Building completions                           -38%            
Building permits granted                       -8%             
Building starts                                74%             



* Change in the 12-month rolling average between the dates is compared.

Martela has used the above office construction statistics as a key indicator
when assessing overall market developments. Despite the weak general market
conditions, the increase in the number of commenced buildings can be regarded
as a mildly positive sign. However, in terms of square metres, the values
remain at quite a low level, although the change in percentage terms is large.
However, it should be remembered that there are also many other factors that
affect the demand for Martela products, such as overall economic growth and the
need for companies to use their premises more efficiently. The need to boost
efficiency increases the number of office alteration projects, which in turn
generates demand especially for Martela's activity based office model. However,
these projects also result in companies allocating fewer square metres of space
for each employee, which means that they purchase fewer pieces of traditional
office furniture, such as desks and cabinets. On the other hand, the demand for
products and solutions for all kinds of meeting spaces and lobbies is on the
increase. 

Consolidated revenue and result

Consolidated revenue for the third quarter was EUR 36.5 million (34.3), an
increase of 6.5 per cent on the previous year. Consolidated revenue for
January-September was EUR 104.7 million (95.4), an increase of 9.7 per cent on
the previous year. In Finland, revenue in the third quarter and during the
first nine months was down year on year. There were no significant large
customer projects in the review period in Finland, and revenue was largely from
small and medium-sized deliveries. Revenue in Poland increased in the third
quarter, but in January-September it was at the level of the previous year. By
contrast, there were major customer deliveries in Sweden and Norway during the
review period and, as a result, the revenue of the Business Unit in these
countries grew substantially from the previous year. The most significant
deliveries in Sweden and Norway were made in the first quarter, but revenue
grew substantially on the previous year also in the third quarter. In Russia,
revenue continued to grow on the previous year, but the weakening economic
situation of the Russian market may cause a future weakening in the Group's
demand from Russia. Major customer deliveries in Sweden and Norway and the
significant increase in Business Unit International's revenue were the main
reasons for the substantial increase in consolidated revenue during the review
period. 

The consolidated operating result for the third quarter was EUR 2.2 million
(1.5). The operating result for January-September improved substantially and
was EUR 1.2 million (‑2.5). The Group's fixed costs decreased slightly from the
previous year, as anticipated, due to the adjustment measures taken in 2013.
The January-September sales margin on the Group's products was unchanged from
the previous year. The combined effect of these factors and the increase in
revenue was a year-on-year improvement in Martela's consolidated operating
result. 

The EUR 6 million savings programme launched in the Group in the autumn of 2013
has proceeded according to plan, and the measures taken so far or in progress
are expected to achieve the targeted annual savings of EUR 6 million. It is
estimated that due to the timing of the measures the programme's impact on
costs in 2014 will be equivalent to about one third of the total savings
target. The full impact of the savings will be felt in 2015. 

As part of the savings programme, measures aiming to increase the efficiency of
production were implemented in the Group during the review period. Production
transfers between the Group's units located in Nummela and Riihimäki in
Finland, in Warsaw, Poland, and in Bodafors, Sweden have proceeded according to
plan, and most of these will be completed by the end of the year. These
measures will create a distinct role for each of Martela's production units and
ensure a more flexible and efficient service for customers. 

Demand for activity based office solutions strengthened further. Martela will
thus continue to focus on providing ever higher quality comprehensive solutions
and associated services in the field of activity based working. With its
activity based office solutions Martela can reduce its customers' property
costs while increasing the job satisfaction and productivity of these
customers' employees. The Group's aim is to strengthen its pioneering position
as a supplier of comprehensive solutions and as the leading service provider
for offices and other working environments. 

The Group's profit before taxes for January-September was EUR 0.7 million
(-3.3), and the profit after taxes was EUR 0.4 million (-3.1). 

Martela's full interim report for January-September 2014 is included in PDF
format as an attachment to this release. The interim report is also available
on the company's website at www.martela.com. 

Martela Oyj
Board of Directors
Heikki Martela
CEO


ATTACHEMENT: Martela's interim report January - September 2014

For more information, please contact
Heikki Martela, CEO, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606


Distribution
NASDAQ OMX Nordic
Main News Media
www.martela.com

Attachments:

2014 2810 Release Q3.pdf