Martela Oyj - Interim report (Q1 and Q3)

Martela Corporation Interim Report, 1 January – 31 March 2016

MARTELA CORPORATION            INTERIM REPORT            29 APRIL 2016 AT 8.30
A.M. 





MARTELA CORPORATION INTERIM REPORT, 1 January – 31 March 2016

During the first quarter, the revenue and the operating result improved
slightly on last year. 

Key figures:

                              1–3    1–3   1–12
EUR million                  2016   2015   2015
                                               
- Revenue                    27.8   26.7  132.8
- Change in revenue, %        4.3  -21.8   -2.3
- Operating result           -0.1   -1.3    4.1
- Operating result, %        -0.5   -4.9    3.1
- Earnings/share, EUR       -0.07  -0.36   0.61
- Return on investment, %    -1.7  -15.1   12.1
- Return on equity %         -5.5  -30.1   11.6
- Equity-to-assets ratio %   42.8   37.7   40.9
- Gearing ratio, %            3.9   31.3   16.6

The Martela Group anticipates that its revenue and operating result for 2016
will remain at the previous year’s level. Due to normal seasonal variations,
the Group’s operating result accumulates mainly during the second half of the
year. 

Market

The market situation prevailing at the end of 2015 continued into the first
quarter of 2016. Finland’s general economic environment remains challenging,
although some recovery was discernible late in 2015 with a slight upturn in
GDP. The Russian economy continues to be weak. In contrast, the national
economies of Sweden and Poland continued to develop favourably. 

The weak Finnish economy on the one hand and the need for companies to rapidly
adjust their operations to the new business realities on the other have
generated an often-substantial need to develop working environments. The
Martela Lifecycle model can respond to companies’ needs to effectively develop
their working environments even when they are faced with significant changes in
their business. As a result, the Finnish market has still performed moderately
well from Martela’s perspective, despite being challenging. 

While the Swedish and Polish markets have fared considerably better in recent
times than that of Finland, change and efficiency projects are usually given
precedence there, too. Quicker development of working environments to meet new
business needs and objectives has gained a key role also in Sweden and Poland. 

The demand for Martela’s products and services has been fundamentally affected
by the general economic situation and by the extent to which companies need to
use their office space more efficiently and make their working environments
more functional. The annual change in gross domestic product (GDP) can be
regarded as a good indicator of the general economic trend. In Finland, the
change in GDP was slightly positive in 2015. Most GDP forecasts for 2016
indicate a similar trend, which would mean that the Finnish economy will see a
continued, slow recovery. It is true, however, that prognoses concerning this
recovery have become more uncertain in the past quarter. 

Consolidated revenue and result

Consolidated revenue for January-March was EUR 27.8 million (26.7). However,
the revenue in Finland – which was generated mainly by small and medium-sized
deliveries – showed a slight decline on 2015. In contrast, revenue increased
significantly in Sweden. Two major customer deliveries were made in Sweden in
the review period and, as a result, good growth was attained in this market
area. Thanks to the success in Sweden, the overall revenue of the Business Unit
Finland & Sweden increased 8.3 per cent on last year. During the review period,
Poland’s revenue under the Business Unit International declined substantially,
however. And while the other countries in this Business Unit were able to
increase their revenue somewhat, it was not enough to prevent the overall
revenue of Business Unit International from decreasing by 17.8%. Nevertheless,
the positive performance of Business Unit Finland & Sweden meant that the
consolidated revenue grew slightly. 

The Group’s operating result for the first quarter was EUR -0.1 million (-1.3).
The operating result was boosted by the slight increase in revenue and the
significant reduction in the Group’s fixed costs as a result of the savings
programmes implemented. At the same time, the sales margin of the Group’s
products was slightly lower than a year earlier, due to the composition of the
revenue in the review period. Measures implemented during the two preceding
review periods were successful particularly in improving the result of the
Group’s production units. 

Measures to improve supply chain efficiency continued to be implemented in the
first quarter. In March Martela initiated co-determination negotiations at its
Bodafors facility in Sweden concerning improvements to the efficiency of
operations at the Martela Ab logistics centre in Bodafors. The negotiations
were completed after the end of the review period in April and a decision was
made to reduce the staff at the logistics centre in Bodafors by 16 persons. The
purpose of the measures is to create a more flexible supply chain in response
to the changed and more varied customer demand and to implement the Martela
Lifecycle strategy more effectively. In addition to improving the supply chain,
the planned measures target a EUR 0.5 million reduction in annual costs. The
savings are part of the EUR 4.0 million savings programme Martela announced in
April 2015. With the measures to be implemented in Sweden, the entire programme
has now been completed. About one third of the savings were achieved in 2015
and about half will be achieved in 2016, with the remainder being realised
during 2017. 

User-oriented activity-based offices are an increasingly popular solution for
corporate offices. Martela has introduced many new solutions for activity-based
office environments and continues to focus on developing modern solutions and
services. The Group has also invested heavily on the competence in
specification, design and maintenance of working environments. This helps it to
offer even more carefully specified working environments that are a good fit
for customer needs. With proper specification and design customer companies can
create cost-efficient working environments that increase job satisfaction. 

The result before taxes was EUR -0.3 million (-1.4), and the result after taxes
was EUR -0.3 million (-1.5). 

Martela’s full interim report for January - March 2016 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
Matti Rantaniemi
CEO

ATTACHEMENT: Martela’s interim report January – March 2016

For more information, please contact
Matti Rantaniemi, CEO, tel. +358 50 465 8194
Markku Pirskanen, CFO, tel. +358 40 517 4606

Distribution
Nasdaq Helsinki
Main News Media

www.martela.com

Attachments:

2016 0429 Interin report Q1.pdf