2010-10-27 08:30:00 CEST
2010-10-27 08:30:44 CEST
REGULATED INFORMATION
Vacon - Interim report (Q1 and Q3)
Vacon Plc Interim Report 1 January - 30 September 2010
July-September summary: - Order intake totalled MEUR 110.9, growth of 94.3 % from the corresponding period in the previous year (MEUR 57.1). - Revenues totalled MEUR 89.3, an increase of 43.8 % (MEUR 62.1). - Operating profit was MEUR 8.3, growth of 145.1 % (MEUR 3.4). - Cash flow from operations was MEUR 6.6 (MEUR 10.8). - Earnings per share were EUR 0.31 (EUR 0.19), an increase of 63.2 % from the previous year. January-September summary: - Order intake totalled MEUR 275.7, growth of 43.2 % from the corresponding period in the previous year (MEUR 192.5). - Revenues totalled MEUR 234.8, an increase of 13.0 % (MEUR 207.8). - Operating profit was MEUR 19.5, growth of 6.9 % (MEUR 18.2). - Cash flow from operations was MEUR 14.3 (MEUR 25.0). - Earnings per share were EUR 0.76 (EUR 0.83), a decline of 8.4 % from the previous year. January - September result MEUR 7-9/ 7-9/ 1-9/ 1-9/ Change 1-12/ 2010 2009 2010 2009 % 2009 Revenues 89.3 62.1 234.8 207.8 43.8 272.0 EBITDA 11.2 5.8 27.8 25.3 10.0 32.1 Depreciation -1.3 -1.1 -3.7 -3.2 18.2 -4.3 Amortization -1.6 -1.3 -4.6 -3.9 17.7 -5.3 Operating profit 8.3 3.4 19.5 18.2 6.9 22.5 Operating profit-% 9.3 5.5 8.3 8.8 8.3 Profit before tax 7.3 3.7 18.1 17.7 1.9 22.0 Profit for period 4.9 3.1 12.0 13.2 -9.2 16.1 General review The AC drive market continued to pick up during the third quarter, having started to recover in the first half of the year. The impact of improved demand and the company's sales efforts could be seen in the sharp increase in the order intake in all market areas. The company's order intake has been higher than the level it reached before the recession since April this year. The strong demand for products for solar energy generation had also for its part a positive impact on the growth in order volumes. Vacon received new solar energy orders in several countries including Czech Republic, Italy and Belgium during the review period. Revenues have followed the growth in orders. Demand for low-power products in particular has risen sharply. In contrast, demand for AC drives in major industrial projects and the ship building industry has not started to pick up yet. These projects usually require a large number of high-power AC drives. The rapid recovery of the market has made it more difficult to obtain certain components and materials, and the company's delivery times have become slightly longer. The operating profit improved from the beginning of the year, but the growth in the operating profit was slowed by the focus in sales on low-power products with a lower profit margin. A further factor weakening any improvement in the operating profit was the costs for electronic components, which rose in consequence of spot market purchases with a onetime increase of about one million Euros in the third quarter compared to their costs earlier in the year. The company has invested in growth by for example recruiting new personnel for its R&D and production. This has increased the company's fixed costs. Vacon is keeping its market guidelines for 2010 unchanged. Order intake and order book Orders received increased 94.3 % during the third quarter from the corresponding period in the previous year. The order intake totalled EUR 110.9 million, which represents growth of 20.4 % from the previous quarter. During the third quarter the volume of orders increased from the corresponding period in the previous year in all geographical regions: in North and South America 121.7 %, in Asia 75.1 % and in Europe 92.1 %. The Group's order book stood at EUR 72.9 (32.7) million. This was an increase of EUR 40.9 million from the beginning of the year. Revenues Revenues in the third quarter totalled EUR 89.3 million, growth of 11.3 % from the previous quarter. Revenues increased 43.8 % from the corresponding period in the previous year. Revenues in the first nine months of the year were 13.0 % higher than in the previous year. Operating profit The operating profit in the third quarter was EUR 8.3 million, compared with EUR 3.4 million in the corresponding period in the previous year. Operating profit as a percentage of revenues in the third quarter was 9.3 %, compared to 8.2 % for the second quarter this year. The growth in the operating profit and operating profit percentage were boosted by the distinct increase in revenues. The operating profit percentage in the first nine months of the year declined from 8.8 % in the previous year to 8.3 %. Higher costs for electronic components and the focus in sales on low power products with a smaller profit margin reduced the operating profit percentage from the previous year. Earnings per share for the January-September period were EUR 0.76, a decline of EUR 0.07 from the previous year. Balance sheet and cash flow The balance sheet remained strong. Cash flow in the third quarter totalled EUR 6.6 million, a decline from the corresponding period in the previous year of EUR 4.2 million. This decline from the comparative period was due mainly to the extra working capital tied up by the growth in business operations. The balance sheet total stood at EUR 178.9 (143.0) million and the equity ratio was 47.9 % (55.3 %). The consolidated cash flow in the January - September period was EUR 14.3 (25.0) million. The reduction in the cash flow is due to the increase in committed working capital. The Group's equity structure and liquidity remained strong. Interest-bearing net debt at the end of the period totalled EUR 8.4 (8.6) million, and gearing was 10.1 % (11.0 %). Market position Vacon Group revenues by market area were as follows: MEUR 7-9/ % 7-9/ % 1-9/ % 1-9/ % 1-12/ % 2010 2009 2010 2009 2009 Europe, Middle East, Africa 56.1 62.8 42.1 67.8 155.0 66.0 148.1 71.3 190.8 70.1 North and South America 17.0 19.1 11.4 18.4 42.8 18.2 35.2 16.9 46.3 17.0 Asia & Pacific 16.2 18.2 8.6 13.8 37.0 15.8 24.5 11.8 34.9 12.8 Total 89.3 100.0 62.1 100.0 234.8 100.0 207.8 100.0 272.0 100.0 During 2010 Vacon has strengthened its global position. Based on market surveys, the company estimates that it has about five per cent of the global market. Developments in Vacon's revenues by market region during the nine month period were as follows: Europe, Middle East and Africa in total +4.7 %, North and South America +21.6 %, and Asia and Pacific +50.9 % from the corresponding period in the previous year. Vacon reports its regional sales based on the invoicing addresses, not the final location of the products. Breakdown of Vacon Group revenues by distribution channel: MEUR 7-9/ % 7-9/ % 1-9/ % 1-9/ % 1-12/ % 2010 2009 2010 2009 2009 Direct sales 7.6 8.5 7.2 11.6 21.3 9.1 21.3 10.3 26.5 9.8 Distri- butors 12.5 13.9 9.1 14.7 32.3 13.7 25.7 12.4 35.3 13.0 OEM 21.9 24.5 18.1 29.1 60.5 25.8 49.3 23.7 68.0 25.0 Brand label cus- tomers 20.0 22.4 13.7 22.0 50.0 21.3 39.7 19.1 52.6 19.3 System inte- grators 27.4 30.7 14.0 22.6 70.7 30.1 71.7 34.5 89.6 32.9 Total 89.3 100.0 62.1 100.0 234.8 100.0 207.8 100.0 272.0 100.0 Sales through several of Vacon's distribution channels rose in the first nine months of the year: OEM +22.7 %, distributors +25.4 % and brand label customers +26.2 %. Vacon Group structure No significant changes took place in the Group structure during the third quarter. Research and development R&D expenditure during the first nine months of the year totalled EUR 13.7 (13.0) million, and EUR 3.4 (3.9) million of this was capitalized as development costs. R&D costs accounted for 5.8 % of the Group's revenues (6.3 %). Development work on new products continued on schedule. During the third quarter the company supplied the first new products for solar energy applications. During the final part of the year the company will launch several new products. R&D focuses on improving cost-efficiency, functionality, usage of space, user friendliness, energy efficiency and visual properties. The company has also invested in growth by recruiting new personnel for its R&D. On 16 September 2010 Vacon announced that it was donating EUR 100,000 to Finnish universities to develop technical education. Investments Gross investments by the Group during the first nine months totalled EUR 12.1 (11.5) million. Expenditure focused mainly on R&D, on raising production testing capacity, expanding production capacity for new products and information systems. Organization and personnel The number of Vacon Group personnel has increased by 76 since the beginning of the year. At the end of September, the Group employed 1,304 (1,226) people, of whom 668 (640) were in Finland and 636 (586) in other countries. The table below shows the average number of Vacon employees during the review period: 1-9/2010 1-9/2009 1-12/2009 Office personnel 796 759 763 Factory personnel 495 474 468 Total 1,291 1,233 1,231 Shares and shareholders Vacon had a market capitalization at the end of September of EUR 533 million. The closing share price on 30 September 2010 was EUR 35.05. The lowest share price during the January-September period was EUR 24.90 and the highest EUR 37.59. A total of 2,178,504 Vacon shares were traded during the January- September period, in monetary terms EUR 68.1 million. Vacon's main shareholders on 30 September 2010: Number of Holding, % shares Ahlström Capital Group 3,061,215 20.0 Ilmarinen Mutual Pension Insurance Company 699,877 4.6 Tapiola Mutual Pension Insurance Company 584,500 3.8 Vaasa Engineering Oy 407,433 2.7 Koskinen Jari 362,403 2.4 Holma Mauri 347,171 2.3 Ehrnrooth Martti 333,000 2.2 Tapiola Group companies 245,300 1.6 Karppinen Veijo 185,586 1.2 Autio Heikki 147,060 1.0 Nominee registered and in foreign ownership 5,048,629 33.0 Vacon Plc own shares 80,565 0.5 Others 3,792,261 24.8 Total 15,295,000 100.0 Shares outstanding 15,214,435 On 30 September 2010 members of Vacon's Board of Directors, the President and CEO, and the Deputy to the CEO held directly a total of 22,954 shares, or 0.2 % of Vacon's share stock. Own shares On 30 September 2010 Vacon Plc held a total of 80,565 of its own shares. Risks and uncertainties in the near future The most significant risks for Vacon in the near future relate to the availability of critical components and materials, uncertainty about general demand and intensifying competition on price. On 19 March 2010 Vacon announced that the Chinese Customs were carrying out an audit of the customs clearance process at Vacon's factory in China. The investigation by the Chinese authorities is still in progress. Vacon has carried out its own internal audit of the matter but does not wish to comment on the issue while the official investigation is still in progress. At the request of the Chinese customs, the company has paid a bond of about RMB 26 million (EUR 2.8 million) into a blocked account. This amount has been entered in Vacon's balance sheet as a receivable. Vacon's order book has always been short term in nature, so there are no major risks connected with the timing of deliveries or their cancellation. Vacon has thousands of customers worldwide. The ten largest customers account for less than half of Vacon's revenues. Vacon does not finance customer projects and is also continuously assessing the creditworthiness of its customers and their ability to pay their debts. Vacon's balance sheet includes goodwill of EUR 9.0 million, most of which is related to the company acquisition at the beginning of 2008. The company tests goodwill for impairment annually. The availability of raw materials and components and changes in their prices can affect the profitability and scale of the company's business. There may be problems with the availability of certain components and materials in the last part of this year and in the first months of next year. Purchase agreements for raw materials and components are mainly annual agreements, which contain price and exchange rate clauses for changes in the global market prices of raw and other materials. Some of the most significant financial risks affecting the result are foreign exchange risks. Exchange rate fluctuations may have an impact on business, although the international expansion of business operations reduces the relative importance of individual currencies. The biggest exchange rate risks against the euro relate to the US dollar and the Chinese renminbi. Prospects for 2010 The AC drive market began to pick up in the second quarter of 2010, and this has continued in the third quarter. Despite this, market developments in the final quarter of the year are exposed to uncertainties arising from the global economy. During the recession Vacon invested strongly in developing skills and knowhow and in product development and established new subsidiaries. This creates a solid basis for future growth. Vacon keeps its market guidelines unchanged and estimates that revenues in 2010 will increase from 2009. It expects relative profitability to be similar to that in 2009 and earnings per share to improve from 2009. Publication of 2010 financial bulletin Vacon will publish its 2010 financial bulletin on 2 February 2011 at 9.30 am. Formal statement This release contains certain forward-looking statements that reflect the current views of the company's management. Due to the nature of these statements, they contain risks and uncertainties and are subject to changes in the general economic situation and in the company's business sector. Vacon in brief Vacon's operations are driven by a passion to develop, manufacture and sell the best AC drives in the world - and nothing else. AC drives are used to control electric motors and in renewable energy generation. Vacon has R&D and production units in Finland, the USA, China and Italy, and sales offices in more than 25 countries. In 2009 Vacon had revenues of EUR 272 million and globally employed 1200 people. The shares of Vacon Plc (VAC1V) are quoted on the main list of the Helsinki stock exchange. Vacon's long-term targets are to achieve annual revenues of EUR 500 million and an operating profit percentage (EBIT %) of more than 14 % by the end of 2012. An annual target of more than 30 % has been set for return on equity (ROE). Driven by Drives, www.vacon.com Vaasa, 27 October 2010 VACON PLC Board of Directors For more information please contact: Mr Vesa Laisi, President and CEO, phone: +358 (0)40 8371 510 Ms Eriikka Söderström, CFO and Vice President, Finance & Control, phone: +358 (0)40 8371 445 Conference for media and analysts Vacon will hold a briefing for analysts and the media at 11.30 am on 27 October 2010 at the Scandic Simonkenttä Hotel, Simonkatu 9, 00100 Helsinki. Dial-in conference for investors and investment analysts A dial-in conference in English for investors and investment analysts will be held at 3.00 pm on 27 October 2010. President and CEO Vesa Laisi and Eriikka Söderström, CFO and Vice President, Finance and Control, will participate in the conference. Lines can be booked ten minutes before the conference by calling the service number +44 207 162 0025. The conference ID code is "Vacon Oyj". To hear a recording of the conference, available for three working days, call +44 207 031 4064, ID code 855961. Conference link: http://wcc.webeventservices.com/view/wl/r.htm? e=189225&s=1&k=A088B96268E7FAE0E3EB44C1A8ACC144&cb=blank Distribution NASDAQ OMX Nordic Exchange Helsinki Financial Supervision Authority Main media Accounting principles This interim report has been prepared in accordance with IFRS (International Financial Reporting Standards) standard IAS 34 on Interim Financial Reporting. Vacon has prepared this interim report applying the same accounting principles as those decribed in detail in its 2009 consolidated financial statements The interim report is unaudited. Consolidated income statement, IFRS, MEUR 7-9/ 7-9/ 1-9/ 1-9/ 1-12/ 2010 2009 2010 2009 2009 Revenues 89.3 62.1 234.8 207.8 272.0 Other operating income 0.1 0.1 0.2 0.2 0.3 Change in inventories of finished goods and work in progress 3.4 0.0 4.6 0.0 -1.0 Materials and services -51.1 -32.2 -127.6 -106.1 -138.1 Employee benefit costs -17.2 -12.9 -46.8 -40.6 -53.6 Other operating costs -13.3 -11.2 -37.4 -36.0 -47.5 Depreciation -1.3 -1.1 -3.7 -3.2 -4.3 EBITA 9.9 4.7 24.1 22.1 27.8 Amortization -1.6 -1.3 -4.6 -3.9 -5.3 Operating profit 8.3 3.4 19.5 18.2 22.5 Financial income and expenses -1.0 0.3 -1.4 -0.5 -0.6 Profit before taxes 7.3 3.7 18.1 17.7 22.0 Income taxes -2.4 -0.6 -6.1 -4.6 -5.9 Profit for period 4.9 3.1 12.0 13.2 16.1 Attributable to: Equity holders of the parent 4.8 2.9 11.5 12.6 15.4 Minority interest 0.1 0.2 0.5 0.6 0.6 Earnings per share, euro 0.31 0.19 0.76 0.83 1.01 Earnings per share diluted, euro 0.31 0.19 0.76 0.83 1.01 Consolidated statement of comprehensive income, MEUR 7-9/ 7-9/ 1-9/ 1-9/ 1-12/ 2010 2009 2010 2009 2009 Profit for period 4.9 3.1 12.0 13.2 16.1 Other comprehensive income Cash flow hedging 0.0 0.0 0.0 0.0 -0.1 Exchange differences on translating foreign operations -1.0 -0.2 1.0 -0.3 -0.1 Total comprehensive income 3.9 2.9 13.0 12.8 15.9 Attributable to: Shareholders of parent company 3.7 2.7 12.5 12.2 15.3 Minority interest 0.2 0.2 0.5 0.6 0.6 Consolidated balance sheet, MEUR 30.9.2010 30.9.2009 31.12.2009 ASSETS Goodwill 9.0 8.1 8.1 Development costs 11.6 8.0 9.1 Intangible assets 10.8 13.0 13.3 Tangible assets 20.5 18.7 18.5 Loans receivable and other receivables 0.1 0.2 0.2 Deferred tax assets 4.8 3.8 3.3 Other financial assets 3.9 3.7 5.3 Total non-current assets 60.7 55.4 57.8 Inventories 28.2 20.5 19.3 Trade and other receivables 72.2 54.4 51.3 Cash and cash equivalents 17.8 12.8 17.2 Total current assets 118.2 87.7 87.8 Total assets 178.9 143.0 145.6 EQUITY AND LIABILITIES Share capital 3.1 3.1 3.1 Share premium reserve 5.0 5.0 5.0 Own shares -2.6 -2.6 -2.6 Retained earnings 76.7 71.3 74.4 Minority interest 1.4 1.4 1.5 Total equity 83.6 78.1 81.3 Deferred tax liabilities 5.1 4.3 4.6 Employee benefits 1.6 1.5 1.5 Interest-bearing liabilities 10.8 13.2 12.4 Total non-current liabilities 17.5 19.1 18.5 Trade and other payables 56.8 35.7 36.1 Income tax liabilities 3.5 0.4 1.3 Provisions 2.1 1.6 1.9 Interest-bearing liabilities 15.4 8.1 6.4 Total current liabilities 77.8 45.8 45.7 Total equity and liabilities 178.9 143.0 145.6 Q3/ 2009 Calculation of changes in shareholders' equity, IFRS, MEUR Attributable to equity holders of the parent Minority Total interest equity Share Share Own Retain Total capital pre- shares -ed mium earn- re- ings serve Shareholders' equity 31.12.2008 3.1 5.0 -2.6 68.7 74.1 1.4 75.5 Dividend paid -10.1 -10.1 -0.5 -10.6 Total comprehen- sive income for period 12.2 12.2 0.6 12.8 Share bonuses 0.2 0.2 0.2 Other changes 0.2 0.2 0.2 Shareholders' equity 30.9.2009 3.1 5.0 -2.6 71.3 76.7 1.4 78.1 Q3/2010 Calculation of changes in shareholders' equity, IFRS, MEUR Attributable to equity holders of the parent Minority Total interest equity Share Share Own Retain Total capital pre- shares -ed mium earn- re- ings serve Shareholders' equity 31.12.2009 3.1 5.0 -2.6 74.4 79.8 1.5 81.3 Dividend paid -10.7 -10.7 -0.5 -11.2 Total comprehen- sive income for period 12.5 12.5 0.5 13.0 Share bonuses 0.4 0.4 0.4 Other changes 0.1 0.1 0.0 0.1 Shareholders' equity 30.9.2010 3.1 5.0 -2.6 76.7 82.1 1.4 83.6 Consolidated cash flow statement, IFRS, MEUR 30.9.2010 30.9.2009 31.12.2009 Profit for period 12.0 13.2 16.1 Depreciation/amortization 8.3 7.0 9.6 Financial income and expenses 1.4 0.5 0.6 Taxes 6.1 4.6 5.9 Other adjustments -0.5 0.3 0.5 Change in working capital -6.3 6.1 11.0 Cash flow from financial items and tax -6.7 -6.7 -6.5 Cash flow from operating activities 14.3 25.0 37.1 Investments in tangible and intangible assets -10.4 -11.1 -16.1 Proceeds from disposal of tangible and intangible assets 0.0 0.0 1.4 Other investments 0.7 -0.2 -2.3 Proceeds from disposal of other investments 0.0 0.0 0.6 Cash flow from investing activities -9.8 -11.3 -16.5 Repayment of long-term loans -2.2 -2.4 -3.3 Proceeds from short-term borrowings 8.9 0.0 0.0 Repayment of short-term loans 0.0 -4.1 -5.8 Dividends paid -11.2 -10.4 -10.4 Cash flow from financial activities -4.5 -17.0 -19.5 Change in liquid funds 0.0 -3.3 1.2 Liquid funds at start of period 17.2 15.7 15.7 Translation differences for liquid funds 0.6 0.3 0.3 Liquid funds at end of period 17.8 12.8 17.2 Segment information Vacon has one business segment, AC drives. The figures for the business segment are identical with the figures for the whole Group. Vacon's operations are organized in the following functions: Products and Markets, Production, Research& Development, Finance and Administration, Human Resources, IT and Process Development. To ensure that the organisation is customer-oriented, operations are controlled by customer segments: Component Customers, Solutions Customers, OEM and Brand Label Customers, and Service and After-Market Services. Purchased business operations In March 2010 the Group acquired a controlling interest (85 %) in a small Spanish company Global Inver Sonne S.L. to promote its own technology in the utilization of solar energy. The estimated final price for the transaction is EUR 0.8 million. According to initial calculations, the acquisition of Global Inver Sonne S.L. gave rise to goodwill of EUR 0.7 million, which is based on the anticipated potential for expanding business operations. MEUR Acquisition cost Amount recognized on acquisition date 0.4 Estimated conditional transaction price 0.4 Possible variation in conditional price 0-0.4 Total acquisition cost 0.8 Fair value of net acquired assets 0.1 Goodwill 0.7 Allocation of goodwill: Europe, Middle East and Africa 0.7 The impact on the cash flow was as follows: Total acquisition cost -0.8 of which paid on acquisition date -0.4 Cash funds acquired 0.1 Net payment for acquisition from cash funds 0.3 Carrying amount Fair value Inventories 0.1 0.1 Receivables, total 0.0 0.0 Cash and bank balances 0.1 0.1 Total assets 0.1 0.1 Total liabilities 0.0 0.0 Net assets 0.1 Acquisition cost 0.8 Goodwill 0.7 Key indicators 30.9.2010 30.9.2009 31.12.2009 Orders received, MEUR 257.7 192.5 256.1 Change in orders received, % 43.2 -19.6 -16.4 Revenues, MEUR 234.8 207.8 272.0 Change in revenues, % 13.0 -4.7 -7.2 Operating profit, MEUR 19.5 18.2 22.5 Change in operating profit, % 6.9 -32.8 -35.0 Operating profit, % of revenues 8.3 8.8 8.3 Earnings per share, EUR 0.76 0.83 1.01 Equity per share, EUR 5.40 5.04 5.25 Equity ratio, % 47.9 55.3 56.5 Gross capital expenditure, MEUR 12.1 11.5 18.2 Gross capital expenditure, % of revenues 5.2 5.5 6.7 Interest-bearing net liabilities, MEUR 8.4 8.6 1.6 Gearing, % 10.1 11.0 2.0 Working capital, MEUR 38.0 37.2 31.2 Order book, MEUR 72.9 32.7 32.0 Adjusted average number of shares during the period 15,212,627 15,202,564 15,204,263 Number of shares at end of period 15,214,435 15,208,989 15,209,989 Number of personnel at end of the period 1,304 1,226 1,228 Commitments and contingencies, MEUR 30.9.2010 30.9.2009 31.12.2009 Commitments and contingencies 2.4 5.3 2.4 Financing commitments 0.2 0.3 0.3 Calculation of financial ratios Profit for financial period attributable to equity holders of parent company Earnings per share = ------------------------------------------------- Adjusted average number of shares Shareholders' equity - minority holding Equity per share = ------------------------------------------------- Adjusted number of shares at year end Shareholders' equity x 100 Equity ratio % = ------------------------------------------------- Balance sheet total - advances received (Interest-bearing liabilities - cash, bank balances and financial assets) x 100 Gearing, % = ------------------------------------------------- Shareholders' equity Inventories + non-interest-bearing current Working capital = receivables - non-interest-bearing current liabilities [HUG#1455630]
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