2011-04-28 07:00:00 CEST
2011-04-28 07:00:05 CEST
REGULATED INFORMATION
Uponor - Interim report (Q1 and Q3)
Q1/2011 interim report: Uponor's year gets off to a steady start
Uponor Corporation Interim report January-March 2011 28
April 2011 8.00 EET
Uponor's year gets off to a steady start
-- Market prospects improved, with demand reviving in several markets
-- Net sales in January-March totalled €173.2 (157.4) million; a change of
10.0%
-- Operating profit for January-March totalled €3.2 (1.5) million; a change of
€1.7 million
-- Earnings per share were €0.02 (-0.03)
-- Return on investment was 4.7% (-1.1%), and gearing 62.3% (60.4%)
-- Cash flow from business operations improved to €-21.9 (-28.0) million
-- Full-year guidance remains unchanged
(Figures for continuing operations, unless otherwise stated.)
President and CEO Jyri Luomakoski comments on the reporting period:
-- First-quarter demand in most markets improved year on year, and the
recovery accelerated after the winter. We expect demand to remain steady as
the summer approaches.
-- Rising raw material, component and energy prices are creating continuous
price pressure. Disregarding restocking to meet summer demand, our stock
values in euro have grown in step with higher raw material prices. It is
therefore vital that we are able to pass on price rises, to compensate for
the forthcoming higher production costs once our current stocks are
depleted.
-- In April, we concluded an acquisition in Germany. This represents an
important step in building our project business throughout Central Europe.
It will supplement our offering, providing us with fresh know-how in this
strategically important business sector.
Webcast and presentation material:
Following the release of this report, the related presentation material will be
available at www.uponor.com > Investors > News & downloads.
A live webcast in English on the Q1 results will be on Thursday, 28 April at
10:00 am. Questions for the webcast can be sent to ir@uponor.com. The recorded
webcast can be viewed at www.uponor.com >Investors > News & downloads shortly
after the publication of the financial results.
Uponor Corporation will publish its interim report for January-June 2011 on 10
August 2011. During the silent period from 1 July to 10 August, Uponor offers
no comment on market prospects or factors affecting business and performance,
nor does the company discuss events or trends related to the reporting period
or the current fiscal period.
Markets
The year has begun positively. In the first quarter, demand for building
solutions remained stable in the key markets of Central Europe and the Nordic
countries, mainly varying from good to satisfactory depending on the country.
With respect to Uponor's product ranges, a pickup in demand was seen in parts
of Western Europe, while the situation in Southern Europe remains challenging.
In North America, the US and Canadian building solutions markets were mainly
characterised by the continuation of weaker development than last year. This
was largely due to the peak in demand experienced in the US a year ago. On the
whole, demand for infrastructure solutions remained level with the previous
year, reflecting the second consecutive severe winter.
There were clear regional differences in the development of demand for
residential, public and commercial building, as well as for plumbing and indoor
climate solutions. On the whole, however, a relatively stable situation
prevailed.
Net sales
Uponor's net sales in the first quarter were affected by many factors, making
comparison with the previous year more difficult. Such factors include the
harsh winter in both years that, however, influenced different geographical
areas in different ways; the rising raw material and energy prices; as well as
anticipated price increases, all of which are expected to have affected
purchasing behaviour. Furthermore, financial and political instability, both in
Europe and the US, have hindered private homeowners' and companies' investments
and the financing of large projects.
Uponor's net sales in the first quarter of 2011 were €173.2 (157.4) million, up
by 10.0 per cent on a year earlier. Currency fluctuations had an impact of €2.8
million on the growth of net sales. Part of the growth in net sales was
attributable to the increase in raw material prices, insofar as the rise could
be passed onto sales prices.
Net sales improved in all segments, with the infrastructure solutions segment
experiencing the strongest growth. Its net sales grew, in particular, due to
growth in purchases by wholesalers in preparation for demand rising in the
spring as well as the sales price increases carried through. In Europe, net
sales of building solutions improved in Central Europe, mainly due to low sales
during the comparison period. Net sales in Southern and Western Europe also
increased slightly, despite Portugal's weak performance. In the Nordic
countries, net sales in building solutions remained more or less level with the
first quarter of 2010. Growth has slowed down since the final quarter of 2010,
due to the harsh winter and relatively large deliveries to wholesalers in the
final quarter of 2010. In Eastern Europe, where the markets are stabilising,
net sales showed a slight increase. Despite the difficult market situation, the
positive development in the U.S. increased the net sales of building solutions
in North America, measured both in local and reporting currency.
By country, net sales grew most in Germany, up approximately 20 per cent from
the previous year's modest level. In addition, net sales increased considerably
in Sweden, the Netherlands, France and the U.S. Of the ten largest countries,
net sales declined only in Italy and Norway.
Net sales by segment (January-March):
M€ 1-3/ 1-3/ Change
2011 2010
--------------------------------------------------------------
Building Solutions - Europe 122.3 112.0 9.2%
--------------------------------------------------------------
Building Solutions - North America 26.7 24.5 8.8%
(Building Solutions - North America (M$) 37.2 33.6 10.8%)
Infrastructure Solutions 26.0 21.9 18.9%
Eliminations -1.8 -1.0
--------------------------------------------------------------
Total 173.2 157.4 10.0%
--------------------------------------------------------------
Results and profitability
Uponor's operating profit totalled €3.2 (1.5) million, showing a year-on-year
increase of €1.7 million from the difficult first quarter of 2010. Operating
profit margin improved to 1.8 per cent, from 1.0 per cent reported a year ago.
Operating profit was burdened by the strong rise in raw material and component
prices, which the company could not pass on in full to its sales prices. This
affected the infrastructure solutions business in particular. In Europe,
building solutions' profitability was also eroded by considerable efforts put
into marketing and customer relationships, compared to the previous year, as a
result of the timing of the major exhibitions and product launches in the early
part of the current year.
Operating profit by segment (January-March):
M€ 1-3/ 1-3/ Change
2011 2010
-------------------------------------------------------------
Building Solutions - Europe 6.6 9.0 -27.4%
-------------------------------------------------------------
Building Solutions - North America 0.7 -1.8 139.5%
(Building Solutions - North America (M$) 1.0 -2.5 140.3%)
Infrastructure Solutions -4.0 -4.0 0.5%
Other -1.1 -1.9 42.4%
Eliminations 1.0 0.2
-------------------------------------------------------------
Total 3.2 1.5 113.5%
-------------------------------------------------------------
Profit before taxes for January-March totalled €2.1 (-2.6) million. The
influence of taxes on profits was negative, at €-0.6 million, while taxes for
the corresponding period in 2010 were €0.8 million. Profit for the reporting
period amounted to €1.5 (-1.8) million. Earnings per share were €0.02 (-0.03),
both basic and diluted. Equity per share was €2.87 (€3.07), both basic and
diluted.
Investment and financing
No significant investment projects were initiated during the reporting period;
capital investments were mainly targeted at maintenance and improvement.
Gross investments in the first quarter came to €2.9 (1.8) million, clearly less
than depreciation, which amounted to €6.9 (7.5) million. Cash flow from
business operations improved to €-21.9 (-28.0) million, in response to regular
seasonal fluctuations.
As market uncertainty continues, safeguarding liquidity remains one of the main
goals of corporate financing. Follow-up of overdue accounts receivable and
actions to avoid possible credit risk realisations are being actively
continued.
Since the end of last year, no major changes have occurred in the Group's
financial position. At the end of the reporting period, €48 million remained of
the €80 million of the company's pension contribution borrowed back from a
Finnish pension insurance company. Available bilateral credit limits amounted
to €190 million, none of which was in use at the end of the reporting period.
At the period end, €79.7 (53.9) million was in use of the €150 million from the
domestic commercial paper programme.
Despite the dividend of €40.2 million paid on 25 March, the company's gearing
is at a healthy level. Interest-bearing liabilities amounted to €130.8 (135.4)
million. The period-end cash balance totalled €8.5 (6.3) million. Gearing
increased to 62.3 per cent (60.4 per cent), but remains in line with the set
targets.
Key events
In the first quarter, Uponor focused strongly on modernising its marketing
activities and product systems. Significant new products were introduced at the
international ISH trade fair in Frankfurt, Germany, which is the world's
foremost customer event in the building solutions industry. A key novel product
was the new RTM press fitting. During the spring, this will be launched in
several European countries.
In addition, the new Quick & Easy expansion tool was introduced to the European
public at the ISH trade fair. This battery-powered tool, developed in
collaboration with a leading tool manufacturer, markedly facilitates the
fitting of plumbing systems, and it is compatible with the manufacturer's other
tools. In North America, where the tool was launched end of last year, it has
clearly raised interest in Uponor's offering.
New heating and control systems were also introduced at the ISH trade fair.
Uponor's communications concept was based on the new customer segmentation
model: for the first time, products and solutions were presented to defined
target groups in their actual environments.
The traditional Uponor Conference was organised in Austria, for the 33rd time.
This has become a key event for planners in Central Europe, with approximately
200 participants this year.
In March, Uponor signed a contract to acquire a 50.3% majority holding in the
German company Zent-Frenger Gesellschaft für Gebäudetechnik mbH, in order to
strengthen its position in the project business. Zent-Frenger develops,
manufactures and markets heating, cooling and geothermal technology solutions,
mainly for commercial and public building.
In March, Uponor's new distribution and training centre was inaugurated in
Spain, close to Madrid. The building also houses the main office for Uponor's
management in Western and Southern Europe.
In the US, good results were achieved through the company's success in key
markets to convert contractors and builders. In California, Uponor was able to
increase sales of pipe systems, following last year's state approval of the use
of PEX pipes in water distribution systems within buildings.
Uponor has taken measures to expand its business in Asia and concluded
co-operation contracts in Indonesia, for example, to increase its sales of
indoor climate systems. Preparations to establish a Rep Office in India
proceeded well.
Events after the period under review
The acquisition of the 50.3% majority holding in the German company
Zent-Frenger Gesellschaft für Gebäudetechnik mbH announced in March was
finalised on 11 April 2011.
Short-term outlook
The year has had a cautiously positive start, with the residential building
markets expected to grow steadily during the spring. Positive signs can be
discerned in Germany, in particular, and in some of its neighbouring countries.
Demand for building solutions is expected to remain at the current level in the
Nordic countries, whereas demand for infrastructure solutions should improve on
the previous year's modest level. Positive signs of a revival in demand are
also apparent in most markets in Southern, Western and Eastern Europe. Despite
the poor market statistics, Uponor has a more positive outlook in North America
than last year.
However, Uponor's financial performance may be affected by a range of
strategic, operational, financial and hazard risks. A more detailed risk
analysis is provided in the company's Annual Report. In addition, the future
development of the building and housing market depends on global economic and
political developments, which are very difficult to predict.
Under these circumstances, Uponor maintains its full-year guidance:
Organic growth in Uponor's net sales is expected to accelerate from the 2010
level, and operating profit is expected to improve on last year's reported
result. The Group's fixed-asset investments are not expected to exceed
depreciation, and efficient net working capital management measures will help
to retain a good cash flow level.
Uponor Corporation
Board of Directors
For further information, please contact:
Jyri Luomakoski, President and CEO, tel. + 358 20 129 2824
Riitta Palomäki, CFO, tel. + 358 20 129 2822
Tarmo Anttila
Vice President, Communications
Tel. +358 20 129 2852
DISTRIBUTION:
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Media
www.uponor.com
Uponor is a leading international provider of plumbing and indoor climate
solutions for residential and commercial building markets across Europe and
North America. In Northern Europe, Uponor is also a prominent supplier of
infrastructure pipe systems. Uponor offers its customers solutions that are
technically advanced, ecologically sustainable, and safe and reliable to own
and operate. The Group employs approx. 3,200 persons, in 30 countries. In 2010,
Uponor's net sales totalled 750 million euros. Uponor Corporation is listed on
NASDAQ OMX Helsinki in Finland. http://www.uponor.com
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