2015-10-27 13:00:00 CET
2015-10-27 13:01:05 CET
REGULATED INFORMATION
Vaisala - Interim report (Q1 and Q3)
Vaisala Corporation Interim Report January-September 2015
Vaisala Corporation
Interim Report
October 27, 2015 at 2.00 p.m. (EET)
Vaisala Corporation Interim Report January-September 2015
In the third quarter 2015, net sales increased by 5% to EUR 81.7 million and
operating result increased by 12% to EUR 14.1 million.
July-September 2015 highlights
* Orders received EUR 81.0 (68.8) million, increase 18%
* Order book EUR 139.7 (137.7) million, increase 1%
* Net sales EUR 81.7 (77.9) million, increase 5%
* Gross margin 53.3% (52.7%)
* Operating result EUR 14.1 (12.6) million, increase 12%
* Earnings per share EUR 0.58 (0.62)
* Cash flow from operating activities EUR 4.6 (10.3) million
* Business outlook for 2015: Vaisala estimates its full year 2015 net sales to
be in the range of EUR 305-325 million and the operating result (EBIT) in
the range of EUR 22-32 million.
January-September 2015 highlights
* Orders received EUR 227.8 (207.9) million, increase 10%
* Net sales EUR 217.4 (204.0) million, increase 7%
* Gross margin 49.8% (50.4%)
* Operating result EUR 10.5 (11.5) million, decrease 9%
* One-time expenses related to the restructuring EUR 1.8 million
* Earnings per share EUR 0.54 (0.57)
* Cash flow from operating activities EUR 9.8 (8.8) million
* Cash and cash equivalents EUR 34.1 (34.4) million
Vaisala's President and CEO Kjell Forsén comments on third quarter 2015"Vaisala's third quarter 2015 was strong as net sales increased by 5% and
operating result by 12%. Net sales developed especially well in Americas and
also sales in APAC performed well. Orders received increased by 18% driven by
Weather Business Area's order intake which grew 23% year-on-year. Following the
good sales performance operating result increased by 12% to EUR 14.1 million.
Operating result reached 17.2% of net sales during the third quarter.
Solid economic conditions of developed countries supported the market and
Vaisala's net sales grew by 5% compared to previous year reaching EUR 81.7
million during the third quarter. Weather Business Area's net sales were EUR
58.4 million and increased 2% year-on-year. Both Energy and Transportation
business units were growing but customer project deliveries were on a lower
level than in previous year. Weakening of euro had a notable positive effect on
Weather Business Area's net sales and at comparable exchange rates net sales
would have decreased by 6% from previous year. Controlled Environment Business
Area was performing well as its net sales increased by 14% year-on-year to EUR
23.4 million. Net sales grew in all regions even though market environment for
industrial measurement solutions remained stable.
In the third quarter 2015, Vaisala's orders received were EUR 81.0 million
representing an 18% increase from previous year. Order intake increased in both
Americas and APAC. Weather Business Area's orders received increased by 23% and
one highlight of the quarter is a EUR 5 million contract in APAC to deliver
sounding systems. Controlled Environment Business Area's orders received
increased by 6% as order intake grew in Americas and APAC. Vaisala's order book
remained strong at EUR 139.7 million and the growth year-on-year is EUR 2
million.
Operating result of the third quarter improved significantly to EUR 14.1 million
which is 12% increase from previous year. The positive development was mainly
due to higher net sales. The increase in operating result was somewhat diluted
by increase in operating expenses as USD based expenses grew due to continued
weakness of euro. In Controlled Environment Business Area growing volumes and
improved gross margin increased operating result from EUR 4.5 million to EUR
6.1 million. Weather Business Area's operating result decreased by 2% to EUR
8.2 million mainly due to lower sales volumes and related weakening in scale
economies.
Vaisala is expecting weather observation market to continue stable except in
some markets like Russia and Latin America where economic weakness is expected
to affect customers' decision making. Industrial measurement solutions market is
expected to remain stable in Americas and APAC and increase in EMEA. In the
short term, industrial measurement solutions and weather radars have the most
favorable market conditions.
Vaisala updated its business outlook for the full year 2015 on October 21, 2015
due to continued weakness of euro and simultaneous net sales growth in Americas.
The revised estimate for net sales is in the range of EUR 305-325 million and
the operating result (EBIT) in the range of EUR 22-32 million."
Key Figures
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Orders received, EUR million 81.0 68.8 227.8 207.9 295.0
Order book, EUR million 139.7 137.7 139.7 137.7 129.2
Net sales, EUR million 81.7 77.9 217.4 204.0 299.7
Gross profit, EUR million 43.6 41.1 108.1 102.9 153.1
Gross margin, % 53.3 52.7 49.8 50.4 51.1
Operating expenses, EUR million 29.6 28.5 96.2 91.7 127.2
Operating result, EUR million 14.1 12.6 10.5 11.5 26.4
Operating result, % 17.2 16.2 4.8 5.6 8.8
Profit (loss) before taxes, EUR million 13.6 14.6 12.8 13.5 29.1
Profit (loss) for the period, EUR million 10.4 11.1 9.8 10.3 23.4
Earnings per share, EUR 0.58 0.62 0.54 0.57 1.30
Return on equity, % 7.9 8.7 14.3
Capital expenditure, EUR million 2.1 2.1 5.4 5.8 7.9
Depreciation, EUR million 3.6 3.7 11.3 11.2 15.2
Cash flow from operating activities, EUR million 4.6 10.3 9.8 8.8 23.8
Cash and cash equivalents, EUR million 34.1 34.4 47.6
-------------------------------------------------------------------------------
Market situation in July-September 2015
Global economy decelerated slightly towards the end of the third quarter 2015,
as especially emerging economies and cyclical manufacturing industries were
slowing down. However, solid economic conditions of developed countries helped
to maintain overall market environment for weather observation and industrial
measurement solutions stable. Weather observation market activity was seasonally
improving in the third quarter 2015. Market environment for industrial
measurement solutions remained stable overall.
In EMEA weather observation market continues to be affected by difficult
economic conditions and depreciated currencies in Russia and its neighboring
countries. Western European weather observation market remains stable, but
demand has stabilized from strong previous year. Demand for industrial
measurement solutions continued to increase in EMEA.
In Americas weather observation market conditions improved significantly
compared to slow first half of the year, supported by demand from North American
customers. Market environment for industrial measurement solutions remained
good, but demand growth slowed down.
In APAC weather observation market was active. Demand for industrial measurement
solutions in APAC continued to increase. Deceleration of Chinese manufacturing
industry towards the end of the quarter started to affect demand in APAC but
market environment in Japan remained good.
July-September 2015 performance
Orders received
EUR million 7-9/2015 7-9/2014 Change, % 2014
---------------------------------------------------------
Weather 58.2 47.3 23 215.2
Controlled Environment 22.8 21.5 6 79.8
---------------------------------------------------------
Total 81.0 68.8 18 295.0
---------------------------------------------------------
Order book
EUR million 7-9/2015 7-9/2014 Change, % 2014
---------------------------------------------------------
Weather 132.2 131.7 0 123.7
Controlled Environment 7.5 6.1 23 5.5
---------------------------------------------------------
Total 139.7 137.7 1 129.2
---------------------------------------------------------
Orders received
In the third quarter 2015, Vaisala's orders received were EUR 81.0 (68.8)
million and increased by 18% compared to previous year. The increase came from
Americas and APAC.
In the third quarter 2015, Weather Business Area's orders received were EUR
58.2 (47.3) million and increased by 23% compared to previous year. The increase
came from all business units. In the third quarter 2015, Vaisala signed a
contract with its customer in Asia Pacific to deliver sounding systems which
will be integrated into customer's meteorological system. Deliveries will
commence late 2015 and will be completed during 2016. The value of the deal is
five million euros.
In the third quarter 2015, Controlled Environment Business Area's orders
received were EUR 22.8 (21.5) million and increased by 6% compared to previous
year. The increase came from Americas and APAC.
Order book
At the end of September 2015, Vaisala's order book was EUR 139.7 (137.7) million
and increased by 1% compared to previous year. The order book increased in APAC
and Americas and decreased in EMEA. Of the order book EUR 79.5 (86.3) million
will be delivered in 2016 or later.
At the end of September 2015, Weather Business Area's order book was EUR 132.2
(131.7) million and was at last year's level. Energy business unit's order book
decreased. Of the order book EUR 78.5 (85.2) million will be delivered in 2016
or later.
At the end of September 2015, Controlled Environment Business Area's order book
was EUR 7.5 (6.1) million and increased by 23% compared to previous year. The
increase came from Americas and APAC. Of the order book EUR 1.0 (1.2) million
will be delivered in 2016 or later.
Net sales by business area
EUR million 7-9/2015 7-9/2014 Change, % 2014
---------------------------------------------------------
Weather 58.4 57.3 2 219.6
Products 31.4 24.0 31 108.1
Projects 18.6 21.1 -12 74.7
Services 8.4 12.2 -31 36.7
Controlled Environment 23.4 20.6 14 80.2
Products 20.9 18.6 12 71.9
Services 2.4 1.9 26 8.3
---------------------------------------------------------
Total 81.7 77.9 5 299.7
---------------------------------------------------------
Net sales by region
EUR million 7-9/2015 7-9/2014 Change, % 2014
---------------------------------------------------------
EMEA 23.9 29.5 -19 111.8
Americas 36.9 28.4 30 112.1
APAC 20.9 20.0 5 75.9
---------------------------------------------------------
Total 81.7 77.9 5 299.7
---------------------------------------------------------
In the third quarter 2015, Vaisala's net sales were EUR 81.7 (77.9) million and
increased by 5% compared to previous year. Vaisala's net sales in EMEA was EUR
23.9 (29.5) million and decreased by 19%, in the Americas EUR 36.9 (28.4)
million and increased by 30% and in APAC EUR 20.9 (20.0) million and increased
by 5%. At comparable exchange rates net sales would have been EUR 75.4 (77.9)
million and decrease would have been EUR 2.5 million or 3% from previous year.
The positive exchange rate effect was EUR 6.3 million, which was mainly caused
by USD exchange rate appreciation against EUR.
In the third quarter 2015, Weather Business Area's net sales were EUR 58.4
(57.3) million and increased by 2% compared to previous year. The increase came
from Energy and Transportation business units. Net sales improved in product
business. At comparable exchange rates the net sales would have been EUR 54.1
(57.3) million and decrease would have been EUR 3.2 million or 6% from previous
year. The positive exchange rate effect was EUR 4.2 million, which was mainly
caused by USD appreciation against EUR.
In the third quarter 2015, Controlled Environment Business Area's net sales were
EUR 23.4 (20.6) million and increased by 14% compared to previous year. The
growth came from all regions. At comparable exchange rates the net sales would
have been EUR 21.2 (20.6) million and increase would have been EUR 0.6 million
or 3% from previous year. The positive exchange rate effect was EUR 2.2 million,
which was mainly caused by USD appreciation against EUR.
Gross margin and operating result
EUR million 7-9/2015 7-9/2014 Change, % 2014
-----------------------------------------------------------
Gross margin, % 53.3 52.7 51.1
Weather 49.6 50.1 48.4
Controlled Environment 61.7 60.4 58.4
Operating result
Weather 8.2 8.4 -2 17.0
Controlled Environment 6.1 4.5 35 12.1
Eliminations and other -0.2 -0.3 -2.8
-----------------------------------------------------------
Operating result, total 14.1 12.6 12 26.4
-----------------------------------------------------------
In the third quarter 2015, Vaisala's operating result was EUR 14.1 (12.6)
million and increased by 12% compared to previous year. The increase in
operating result was mainly due to higher net sales but was partially weakened
by increase in operating expenses. Gross margin was 53.3% (52.7%) and the
increase was mainly due to EUR depreciation and more favorable sales mix.
Operating expenses were EUR 29.6 (28.5) million and increased by 4%. The
increase came mainly from USD based expenses growing due to USD appreciation
against EUR.
In the third quarter 2015, Weather Business Area's operating result was EUR 8.2
(8.4) million and decreased by 2% compared to previous year. Operating result
decrease was due to lower gross margin as well as increase in operating
expenses. Gross margin was 49.6% (50.1%) and the decrease was mainly due to
lower sales volumes and related weakening in scale economies. Operating expenses
were EUR 20.8 (20.3) million and increased by 2%. The increase came mainly from
USD based expenses growing due to USD appreciation against EUR.
In the third quarter 2015, Controlled Environment Business Area's operating
result was EUR 6.1 (4.5) million and increased by 35% compared to previous year.
Operating result increase was due to higher net sales and positive gross margin
development. Gross margin was 61.7% (60.4%) and the increase was mainly due to
higher sales volumes and related improvement in scale economies as well as
positive impact of USD appreciation against EUR. Operating expenses were EUR
8.3 (7.9) million and increased by 5%. The increase came mainly from USD based
expenses growing due to USD appreciation against EUR as well as higher research
and development expenses.
In the third quarter 2015, financial income and expenses were EUR -0.5 (2.0)
million. The decrease was mainly due to foreign exchange losses related to
valuation of USD denominated receivables.
In the third quarter 2015, profit (loss) before taxes was EUR 13.6 (14.6)
million. Income taxes were EUR
-3.1 (-3.4) million. Net result was EUR 10.4 (11.1) million.
In the third quarter 2015, earnings per share were EUR 0.58 (0.62).
January-September 2015 performance
Orders received
EUR million 1-9/2015 1-9/2014 Change, % 2014
---------------------------------------------------------
Weather 157.3 149.8 5 215.2
Controlled Environment 70.5 58.1 21 79.8
---------------------------------------------------------
Total 227.8 207.9 10 295.0
---------------------------------------------------------
Order book
EUR million 1-9/2015 1-9/2014 Change, % 2014
---------------------------------------------------------
Weather 132.2 131.7 0 123.7
Controlled Environment 7.5 6.1 23 5.5
---------------------------------------------------------
Total 139.7 137.7 1 129.2
---------------------------------------------------------
Orders received
In January-September 2015, Vaisala' orders received were EUR 227.8 (207.9)
million and increased by 10% compared to previous year. The increase came from
Americas.
In January-September 2015, Weather Business Area's orders received were EUR
157.3 (149.8) million and increased by 5% compared to previous year. The
increase came from all business units.
In January- September 2015, Controlled Environment Business Area's orders
received were EUR 70.5 (58.1) million and increased by 21% compared to previous
year. The growth came from all regions.
Order book
At the end of September 2015, Vaisala's order book was EUR 139.7 (137.7) million
and increased by 1% compared to previous year. The order book increased in APAC
and Americas and decreased in EMEA. Of the order book EUR 79.5 (86.3) million
will be delivered in 2016 or later.
At the end of September 2015, Weather Business Area's order book was EUR 132.2
(131.7) million and was at last year's level. Energy business unit's order book
decreased. Of the order book EUR 78.5 (85.2) million will be delivered in 2016
or later.
At the end of September 2015, Controlled Environment Business Area's order book
was EUR 7.5 (6.1) million and increased by 23% compared to previous year. The
increase came from Americas and APAC. Of the order book EUR 1.0 (1.2) million
will be delivered in 2016 or later.
Net sales by business area
EUR million 1-9/2015 1-9/2014 Change, % 2014
---------------------------------------------------------
Weather 148.8 146.2 2 219.6
Products 74.9 72.2 4 108.1
Projects 47.9 48.2 -1 74.7
Services 26.1 25.8 1 36.7
Controlled Environment 68.5 57.8 19 80.2
Products 61.3 51.9 18 71.9
Services 7.2 5.9 23 8.3
---------------------------------------------------------
Total 217.4 204.0 7 299.7
---------------------------------------------------------
Net sales by region
EUR million 1-9/2015 1-9/2014 Change, % 2014
---------------------------------------------------------
EMEA 71.3 76.0 -6 111.8
Americas 89.7 75.8 18 112.1
APAC 56.3 52.2 8 75.9
---------------------------------------------------------
Total 217.4 204.0 7 299.7
---------------------------------------------------------
In January-September 2015, Vaisala's net sales were EUR 217.4 (204.0) million
and increased by 7% compared to previous year. Vaisala's net sales in EMEA was
EUR 71.3 (76.0) million and decreased by 6%, in the Americas EUR 89.7 (75.8)
million and increased by 18% and in APAC EUR 56.3 (52.2) million and increased
by 8%. Operations outside Finland accounted for 98% (98%) of net sales. At
comparable exchange rates the net sales would have been EUR 199.7 (204.0)
million and decrease would have been EUR 4.3 million or 2% from previous year.
The positive exchange rate effect was EUR 17.6 million, which was mainly caused
by USD exchange rate appreciation against EUR.
In January-September 2015, Weather Business Area's net sales were EUR 148.8
(146.2) million and increased by 2% compared to previous year. The increase came
from all business units. Weather Business Area improved its net sales in product
business. At comparable exchange rates the net sales would have been EUR 138.0
(146.2) million and decrease would have been EUR 8.2 million or 6% from previous
year. The positive exchange rate effect was EUR 10.9 million, which was mainly
caused by USD appreciation against EUR.
In January-September 2015, Controlled Environment Business Area's net sales were
EUR 68.5 (57.8) million and increased by 19% compared to previous year. Net
sales increased in all regions and at comparable exchange rates EMEA grew
fastest. At comparable exchange rates the net sales would have been EUR 61.7
(57.8) million and increase would have been EUR 3.9 million or 7% from previous
year. The positive exchange rate effect was EUR 6.8 million, which was mainly
caused by USD appreciation against EUR.
Gross margin and operating result
EUR million 1-9/2015 1-9/2014 Change, % 2014
----------------------------------------------------------
Gross margin, % 49.8 50.4 51.1
Weather 45.1 47.5 48.4
Controlled Environment 59.7 57.8 58.4
Operating result
Weather 0.1 4.3 -98 17.0
Controlled Environment 13.5 8.2 64 12.1
Eliminations and other -3.1 -1.0 -2.8
----------------------------------------------------------
Operating result, total 10.5 11.5 -9 26.4
----------------------------------------------------------
In January-September 2015, Vaisala's operating result was EUR 10.5 (11.5)
million and decreased by 9% compared to previous year. Vaisala's gross margin
was 49.8% (50.4%) and the decrease was mainly due to lower sales volumes and
related weakening in scale economies. Vaisala's operating expenses were EUR
96.2 (91.7) million and increased by 5% compared to previous year. The increase
came mainly from USD based expenses growing due to USD appreciation against EUR.
In addition, operating result was decreased by EUR 1.8 million one-time expenses
related to the restructuring.
In January-September 2015, Weather Business Area's operating result was EUR 0.1
(4.3) million and decreased by 98% compared to previous year. Gross margin was
45.1% (47.5%) and the decrease was mainly due to lower sales volumes and related
weakening in scale economies. Operating expenses were EUR 67.2 (65.5) million
and increased by 2%. The increase came mainly from USD based expenses growing
due to USD appreciation against EUR.
In January-September 2015, Controlled Environment Business Area's operating
result was EUR 13.5 (8.2) million and increased by 64% compared to previous
year. Gross margin was 59.7% (57.8%) and the increase was mainly due to higher
sales volumes and related improvement in scale economies as well as positive
impact of USD appreciation against EUR. Operating expenses were EUR 27.4 (25.3)
million and increased by 9%. The increase came mainly from USD based expenses
growing due to USD appreciation against EUR as well as higher research and
development expenses.
In January-September 2015, financial income and expenses were EUR 2.3 (2.0)
million. The increase is mainly due to foreign exchange gains related to
valuation of USD denominated receivables.
In January-September 2015, profit (loss) before taxes was EUR 12.8 (13.5)
million. Income taxes were EUR
-2.9 (-3.2) million. Effective tax rate for January-September 2015 was 23.0%
(23.5%). Net result was EUR 9.8 (10.3) million.
In January- September 2015, earnings per share were EUR 0.54 (0.57).
Statement of financial position and cash flow
Vaisala's financial position remained strong at the end of the September 2015.
Cash and cash equivalents amounted to EUR 34.1 (34.4) million at the end of
September 2015 and Vaisala did not have any material interest bearing
liabilities.
The statement of financial position total was EUR 240.4 (227.2) million. The
increase was due to EUR depreciation against other currencies and also increases
in inventories, receivables and short-term liabilities.
In January-September 2015, Vaisala's cash flow from operating activities was EUR
9.8 (8.8) million. The improvement compared to previous year was mainly related
to development of working capital.
Capital expenditure and divestments
In January-September 2015, gross capital expenditure totaled EUR 5.4 (5.8)
million. Depreciation was EUR 11.3 (11.2) million.
Research and development
In January-September 2015, research and development expenses totaled EUR 25.8
(24.6) million, representing 11.9% (12.1%) of net sales.
R&D by business area
7-9/ 7-9/ Change, 1-9/ 1-9/ Change,
EUR million 2015 2014 % 2015 2014 % 2014
----------------------------------------------------------------
Weather 6.1 5.9 2 19.2 18.5 4 25.7
Controlled Environment 2.0 1.7 12 6.6 6.1 8 8.2
----------------------------------------------------------------
Total 8.0 7.7 5 25.8 24.6 5 34.0
----------------------------------------------------------------
In January-September 2015, Weather Business Area R&D expenses were 12.9% (12.6%)
of net sales. Controlled Environment Business Area R&D expenses were 9.7%
(10.6%) of net sales.
Personnel
The average number of personnel employed in Vaisala during January-September
2015 was 1,616 (1,618). The number of employees at the end of September 2015 was
1,591 (1,616). At the end of 2014, the number of employees was 1,613.
At the end of September 2015, 42% (44%) of the personnel was based outside
Finland.
New business structure and completion of co-operation negotiations
Vaisala announced on January 27, 2015 its plans to restructure its business in
order to strengthen the capability to implement its strategy and to increase
agility. As of April 1, 2015, Weather Business Area was organized into three
business units, Meteorology Infrastructure, Transportation and Energy, and
Controlled Environment Business Area was organized into three regions with full
business responsibility, Americas, EMEA and APAC.
In order to foster the business areas to operate with different business models
the current Service function was integrated into Weather and Controlled
Environment Business Areas. In the new structure Information Services and Field
Services are part of the Weather Business Area, whereas Calibration and Repair
Services are part of the Controlled Environment Business Area. Vaisala's
Operations and Support units continue to serve as group functions.
Vaisala continues to invest in its growth businesses and to develop products and
services which combine its customers' business expertise and Vaisala's
technological leadership. The new organizational structure strengthens customer
focus across all functions and ensures operational efficiency through
simplification.
The planning of restructuring was finalized and in Finland the related co-
operation negotiations, which were initiated on February 2, 2015, were completed
on March 5, 2015. As a result, Vaisala reduced its workforce by a total of 52
positions, out of which 18 positions were reduced in Finland. The original
estimate for the reduction was 60 full-time equivalents, out of which about 25
were estimated to be in Finland. The reduction took place through redundancies,
retirement options and terminations of temporary contracts. Vaisala provided a
range of support measures for those affected by the restructuring.
This restructuring is estimated to result in annual cost savings of EUR 4
million by 2016. The cost savings for 2015 are estimated to be EUR 2 million.
The first quarter operating result includes EUR 1.8 million accrual for one-time
costs.
Change in Vaisala's Management Group
Hannu Katajamäki, Executive Vice President, Services and member of Vaisala's
Management Group since 2011 left Vaisala on April 1, 2015. The change followed
Vaisala's business restructuring where the Service function was integrated into
Weather and Controlled Environment Business Areas.
Kai Konola, Executive Vice President, Weather Business Area and member of
Vaisala's Management Group since 2010 decided to leave Vaisala as of December
15, 2015.
As of September 30, 2015 Vaisala's Management Group members were:
* Kjell Forsén, President and CEO, Chairman of the Management Group
* Marja Happonen, Executive Vice President, Human Resources
* Kai Konola, Executive Vice President, Weather Business Area
* Sampsa Lahtinen, Executive Vice President, Controlled Environment Business
Area
* Kaarina Muurinen, Chief Financial Officer
* Vesa Pylvänäinen, Executive Vice President, Operations
Near-term risks and uncertainties
Vaisala's business is exposed to changes in the global economy, politics,
conflicts, policies, regulations, Vaisala's supply chain and distribution
channels, and accidents as well as natural disasters and epidemics, which may
affect business e.g. through order cancellations, disturbance in logistics,
travel restrictions, and loss of market potential. Vaisala's capability to
successfully complete investments, acquisitions, divestments and restructurings
on a timely basis and to achieve related financial and operational targets
represent a risk which may impact revenue and profitability.
The most significant near-term risks and uncertainties that may affect both
revenue and profitability relate to the company's ability to maintain its
delivery capability, availability of critical components, interruptions in
manufacturing or IT systems, changes in the global economy, Russia sanctions,
spreading of epidemics, continuing conflicts in the Middle East and Africa,
currency exchange rates, patent trolls, customers' financing capability, changes
in customers' purchasing or investment behavior, and delays or cancellations of
orders. Changes in the competition may affect the volume and profitability of
business through introduction of new competitors and price erosion in areas
which traditionally have been strong for Vaisala. Changes in subcontractor
relations, their operations or operating environment as well as the quality of
the deliverables may have a negative impact on Vaisala's business.
A significant part of Vaisala's business is project business. Project business
performance and schedules have dependencies to third parties, which may impact
profitability and timing of revenue recognition. Assumptions regarding new
project and service business opportunities constitute a risk for both revenue
and profitability.
The importance of information services and decision support systems is
increasing in Vaisala's weather business. These Internet-based online services
are potential subjects to a variety of cyber risks.
Further information about risk management in Vaisala is available on the company
website at http://www.vaisala.com/investors, Corporate Governance.
Decisions by Vaisala Corporation's Annual General Meeting
Vaisala Corporation's Annual General Meeting was held on March 31, 2015 in
Vantaa, Finland. The meeting approved the financial statements and discharged
the members of the Board of Directors and the President and CEO from liability
for the financial period January 1-December 31, 2014.
Dividend
The Annual General Meeting decided a dividend of EUR 0.90 per share,
corresponding to the total of EUR 16,368,132.60. The record date for the
dividend payment was April 2, 2015 and the payment date was April 14, 2015.
Board of Directors
The Annual General Meeting confirmed that the number of Board members is seven.
Petra Lundström, Mikko Niinivaara, Yrjö Neuvo, Maija Torkko, Pertti Torstila and
Raimo Voipio will continue as members of the Board of Directors. Ville Voipio
was elected as a new member of the Board of Directors.
The Annual General Meeting decided that the annual fee payable to the Chairman
of the Board of Directors is EUR 45,000 and EUR 35,000 for each Board member.
Approximately 40 percent of the annual remuneration will be paid in Vaisala
Corporation's A shares acquired directly in the name of the Board members from
the market and the rest in cash. In addition, the Annual General Meeting decided
that the compensation for the Chairman of the Audit Committee is EUR 1,500 per
attended meeting and EUR 1,000 for each member of the Audit Committee. The
compensation for the Chairman and each member of the Remuneration and HR
Committee and any other committee established by the Board of Directors is EUR
1,000 per attended meeting.
Auditor
The Annual General Meeting re-elected Deloitte & Touche Oy as the auditor of the
Company and APA Merja Itäniemi will act as the auditor with the principal
responsibility. The Auditors are reimbursed according to their reasonable
invoice presented to the company.
Authorization for directed acquisition of own A shares
The Annual General Meeting authorized the Board of Directors to decide on the
directed repurchase of a maximum of 160,000 of the Company's own A shares in one
or more instalments with funds belonging to the Company's unrestricted equity.
The authorization is valid until the closing of the next Annual General Meeting,
however, no longer than September 30, 2016.
Authorization to transfer Company's own shares
The Annual General Meeting authorized the Board of Directors to decide on the
issuance of the Company's treasury A shares. The authorization is limited to a
maximum of 319,150 shares. The issuance of own shares may be carried out in
deviation from the shareholders' pre-emptive rights (directed issue). The
authorization entitles the issuance of treasury A shares as a directed issue
without payment as part of the Company's share based incentive plan. The Board
of Directors can also use this authorization to grant special rights entitling
subscription of the Company's own shares that are held by the Company. The
subscription price of the shares can instead of cash also be paid in full or in
part as contribution in kind. The authorization is valid until March 31, 2020.
Donations
The Annual General Meeting authorized the Board of Directors to decide on
donations of maximum EUR 250,000.
The organizing meeting of the Board of Directors
At its organizing meeting held after the Annual General Meeting the Board
elected Raimo Voipio to continue as the Chairman of the Board of Directors and
Yrjö Neuvo to continue as the Vice Chairman.
The composition of the Board committees was decided to be as follows:
Audit Committee
Maija Torkko was elected as the Chairman and Petra Lundström and Mikko
Niinivaara as members of the Audit Committee. The Chairman and all members of
the Audit Committee are independent both of the Company and of significant
shareholders.
Remuneration and HR Committee
Raimo Voipio was elected as the Chairman and Yrjö Neuvo and Maija Torkko as
members of the Remuneration and HR Committee. Raimo Voipio is independent of the
Company. Yrjö Neuvo and Maija Torkko are independent both of the Company and of
significant shareholders.
Vaisala's shares
In January-September 2015, a total number of 1,805,426 (751,225) Vaisala A
shares with a value totaling EUR 43.7 (17.4) million were traded on the NASDAQ
OMX Helsinki Ltd. On September 30, 2015 the closing price was EUR 23.71 (20.90).
The highest quotation during January-September 2015 was EUR 27.02 (24.98) and
the lowest EUR 21.55 (20.45).
On September 30, 2015, Vaisala had 18,218,364 shares, of which 3,389,351 are
series K shares and 14,829,013 are series A shares. The K shares and A shares
are differentiated by the fact that each K share entitles its owner to 20 votes
at a General Meeting of Shareholders while each A share entitles its owner to 1
vote. The A shares represent 81.4% of the total number of shares and 17.9% of
the total votes. The K shares represent 18.6% of the total number of shares and
82.1% of the total votes.
The market value of Vaisala's A shares on September 30, 2015 was EUR 348.3
(306.6) million, excluding the Company's treasury shares. Valuing the K shares -
which are not traded on the stock market - at the rate of the A share's closing
price on the last day of September, the total market value of all the A and K
shares together was EUR 428.7 (377.4) million, excluding the Company's treasury
shares.
More information about Vaisala's share and shareholders are presented on the
website, www.vaisala.com/investors.
Treasury shares and parent company shares
The Board of Directors of Vaisala Corporation decided on March 10, 2015 issuance
of directed shares without consideration for the payment of share-based
incentive 2012. In the issuance of shares a total of 63,800 Company's series A
treasury shares were transferred without consideration to Company's key
employees according to the terms and conditions of the Performance Share Plan
2012. The transfer of shares by means of a directed issuance of shares without
consideration is based on the authorization granted to the Board of Directors by
the Annual General Meeting of Shareholders held on 26 March, 2014.
The Board of Directors of Vaisala Corporation decided on March 10, 2015 to use
the authorization granted by the Annual General Meeting of Shareholders held on
March 26, 2014 for transferring the Company's series A treasury shares. Vaisala
Corporation sold a total of 63,800 series A treasury shares held by the Company
in order to cover the cash reward of the Performance Share Plan 2012. The cash
reward was used to cover withholding tax and other similar costs. The sale of
the Company's treasury shares commenced on March 11, 2015 and were concluded on
the same day.
On April 28, 2015, Vaisala Corporation's Board of Directors resolved to commence
repurchases of shares under the authorization given by the Vaisala Annual
General Meeting held on March 31, 2015. The Board of Directors resolved to
directed repurchase of a maximum of 160,000 of the Company's own A shares in one
or more instalments with funds belonging to the Company's unrestricted equity.
The repurchases commenced on April 30, 2015. During the period of April
30. 2015-Seprember 30, 2015 Vaisala had repurchased 107,374 shares.
At the end of September 2015, the Company held a total of 138,924 (159,150)
Vaisala series A treasury shares, which represented 0.8% of the share capital
and 0.2% of the votes.
Market outlook 2015
Even though global economy has recently slightly decelerated, the latest
forecasts still predict moderate development for the fourth quarter of 2015 and
Vaisala is expecting stable weather observation and industrial measurement
market conditions. As typical, weather observation market activity is expected
to improve seasonally towards the end of the year. However, differences in
business conditions between customer groups and regions are expected to remain.
In the short term, industrial measurement solutions and weather radars have the
most favorable market conditions. Heavy decline in commodity prices, especially
in crude oil and gas, is affecting market conditions in offshore business and
commodity exporting economies. Competition in weather observation market is
expected to continue intensifying. In weather observations market it continues
to be challenging to forecast customers' timing for decision making and
acceptance of larger customer projects, having potentially material impact on
overall Vaisala weather business.
In EMEA demand for weather observation solutions is expected to be constrained
by economic weakness in Russia and its neighboring countries. Weather
observation market outlook in the rest of EMEA is stable. Demand for industrial
measurement solutions is expected to increase.
In Americas weather observation market outlook is stable in North America, but
regional economic weakness is expected to delay progression of weather
infrastructure projects in Latin America. Market environment for industrial
measurement solutions is expected to remain stable in Americas.
In APAC demand for weather observation solutions is expected to remain active.
Market environment for industrial measurement solutions is expected to remain
stable in APAC, even though some parts of the market are affected by
deceleration of Chinese manufacturing industry.
Business outlook for 2015
Vaisala updated its business outlook on October 21, 2015 and estimates that for
the full year 2015 its net sales will be EUR 305-325 million. The increase in
net sales estimate is due to continued weakness of euro and simultaneous net
sales growth in Americas. Vaisala estimates that for 2015 the operating result
will be EUR 22-32 million.
Updated business outlook for 2015
Vaisala estimates its full year 2015 net sales to be in the range of EUR
305-325 million and the operating result (EBIT) in the range of EUR 22-32
million.
Previous business outlook from February 12, 2015
Vaisala estimates its full year 2015 net sales to be in the range of EUR
285-315 million and the operating result (EBIT) in the range of EUR 20-30
million.
Vantaa, October 27, 2015
Vaisala Corporation
Board of Directors
The forward-looking statements in this release are based on the current
expectations, known factors, decisions and plans of Vaisala's management.
Although the management believes that the expectations reflected in these
forward-looking statements are reasonable, there is no assurance that these
expectations would prove to be correct. Therefore, the results could differ
materially from those implied in the forward-looking statements, due to for
example changes in the economic, market and competitive environments, regulatory
or other government-related changes, or shifts in exchange rates.
Financial information and changes in accounting policies
This interim financial report has been prepared in accordance with IAS 34,
Interim Financial Reporting, following the same accounting policies and
principles as in the annual financial statements for 2014. All figures in the
interim report are Group figures. All presented figures have been rounded and
consequently the sum of individual figures may deviate from the sum presented.
The preparation of the financial statements in accordance with IFRS requires
Vaisala's management to make estimates and assumptions that affect the valuation
of the reported assets and liabilities and the recognition of income and
expenses in the statement of income. Although the estimates are based on the
management's best knowledge at the date of the interim report, actual results
may differ from the estimates.
In order to align Vaisala's business type reporting with the new organization
structure, the net sales of spare parts and systems are reported under Products
business starting from January 1, 2015. Previously spare parts were reported
under Services business and systems under Projects business. 2014 numbers have
been adjusted retrospectively.
The interim financial report is unaudited.
Consolidated Statement of Income
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR million 2015 2014 2015 2014 2014
-----------------------------------------------------------------------------
Net sales 81.7 77.9 217.4 204.0 299.7
Costs of sales -38.2 -36.8 -109.2 -101.1 -146.6
-----------------------------------------------------------------------------
Gross profit 43.6 41.1 108.1 102.9 153.1
Sales, marketing and administrative costs -21.6 -20.8 -70.4 -67.1 -93.2
Research and development costs -8.0 -7.7 -25.8 -24.6 -34.0
Other operating income and expense 0.1 0.0 -1.4 0.3 0.5
-----------------------------------------------------------------------------
Operating profit (loss) 14.1 12.6 10.5 11.5 26.4
Share of result in associated companies - - - - 0.1
Financial income and expenses, net -0.5 2.0 2.3 2.0 2.6
-----------------------------------------------------------------------------
Profit (loss) before taxes 13.6 14.6 12.8 13.5 29.1
Income taxes -3.1 -3.4 -2.9 -3.2 -5.7
-----------------------------------------------------------------------------
Profit (loss) for the period 10.4 11.1 9.8 10.3 23.4
Earnings per share, EUR 0.58 0.62 0.54 0.57 1.30
Diluted earnings per share, EUR 0.57 0.61 0.54 0.56 1.29
Consolidated Statement of Comprehensive Income
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR million 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Items that will not be reclassified to profit or
loss
-------------------------------------------------------------------------------
Actuarial loss on post-employment benefits 0.0 0.0 0.0 0.0 -0.5
-------------------------------------------------------------------------------
Total 0.0 0.0 0.0 0.0 -0.5
-------------------------------------------------------------------------------
Items that may be reclassified subsequently to
profit or loss
Currency translation differences -0.4 2.1 2.6 2.5 3.5
-------------------------------------------------------------------------------
Total -0.4 2.1 2.6 2.5 3.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total other comprehensive income -0.4 2.1 2.6 2.5 3.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total comprehensive income 10.0 13.2 12.5 12.8 26.4
-------------------------------------------------------------------------------
Consolidated Statement of Financial Position
EUR million
-------------------------------------------------------------------------------
September 30, September 30, December 31,
Assets 2015 2014 2014
-------------------------------------------------------------------------------
Non-current assets
Intangible assets 34.7 37.4 37.1
Property, plant and equipment 43.8 45.3 44.2
Investments 0.1 0.1 0.1
Investment in associated companies 0.8 0.8 0.8
Long-term receivables 0.3 0.3 0.3
Deferred tax assets 10.6 9.1 8.9
-------------------------------------------------------------------------------
Total non-current assets 90.3 93.0 91.5
Current assets
Inventories 42.1 36.7 33.9
Trade and other receivables 72.8 61.7 70.5
Income tax receivables 1.2 1.3 1.1
Cash and cash equivalents 34.1 34.4 47.6
-------------------------------------------------------------------------------
Total current assets 150.2 134.1 153.1
-------------------------------------------------------------------------------
Total assets 240.4 227.2 244.6
-------------------------------------------------------------------------------
Shareholders' equity
Share capital 7.7 7.7 7.7
Other reserves 0.9 2.2 2.5
Cumulative translation adjustment 2.4 -1.1 -0.2
Treasury shares -3.1 -2.5 -2.5
Retained earnings 155.9 149.9 162.6
-------------------------------------------------------------------------------
Total shareholders' equity 163.8 156.1 170.0
Non-current liabilities
Interest-bearing liabilities 0.0 0.0 0.0
Post-employment benefit obligations 2.4 0.7 1.3
Deferred tax liabilities 4.7 5.2 5.3
Provisions for other liabilities
and charges 0.2 - 0.2
Other long-term liabilities 1.1 3.4 2.9
-------------------------------------------------------------------------------
Total non-current liabilities 8.5 9.3 9.7
Current liabilities
Interest-bearing liabilities 0.0 0.0 0.0
Advances received 3.6 5.3 3.9
Income tax liabilities 1.4 0.9 1.5
Provisions for other liabilities
and charges 0.1 - 1.4
Trade and other payables 63.1 55.5 58.1
-------------------------------------------------------------------------------
Total current liabilities 68.2 61.7 64.9
-------------------------------------------------------------------------------
Total shareholders' equity and
liabilities 240.4 227.2 244.6
-------------------------------------------------------------------------------
Consolidated Statement of Changes in Shareholders' Equity
Share Other Treasury Translation Retained
EUR million capital reserves shares adjustment earnings Total
-------------------------------------------------------------------------------
Balance at Jan 1, 2014 7.7 1.5 -2.5 -3.6 155.9 158.9
Profit (loss) for the
period 10.3 10.3
Other comprehensive
income 0.0 2.5 2.5
Dividend paid -16.3 -16.3
Share-based payment 0.7 0.7
-------------------------------------------------------------------------------
Balance at Sep 30, 2014 7.7 2.2 -2.5 -1.1 149.9 156.1
-------------------------------------------------------------------------------
Share Other Treasury Translation Retained
EUR million capital reserves shares adjustment earnings Total
-------------------------------------------------------------------------------
Balance at Jan 1, 2015 7.7 2.5 -2.5 -0.2 162.6 170.0
Profit (loss) for the
period 9.8 9.8
Other comprehensive
income 0.0 2.6 2.6
Dividend paid -16.4 -16.4
Purchase of treasury
shares -2.6 -2.6
Sale of treasury shares 2.1 -2.1 0.0
Share-based payment -1.6 1.9 0.3
-------------------------------------------------------------------------------
Balance at Sep 30, 2015 7.7 0.9 -3.1 2.4 155.9 163.8
-------------------------------------------------------------------------------
Consolidated Cash Flow Statement
EUR million 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------------
Cash flows from operating activities
Cash receipts from customers 231.6 205.2 287.0
Other income from business operations -1.4 0.3 0.4
Cash paid to suppliers and employees -213.4 -194.9 -260.3
Financials paid, net -1.7 1.4 1.3
Income taxes paid, net -5.2 -3.2 -4.5
-------------------------------------------------------------------------------
Cash flow from operating activities 9.8 8.8 23.8
Cash flows from investing activities
Capital expenditure on fixed assets -5.4 -5.8 -7.9
Divestments 0.1 1.1 1.3
-------------------------------------------------------------------------------
Cash flow from investing activities -5.3 -4.7 -6.6
Cash flows from financing activities
Dividends paid -16.4 -16.2 -16.2
Purchase of treasury shares -2.6 - -
Change in loan receivables 0.0 0.0 -0.1
Change in leasing liabilities 0.0 0.0 0.0
-------------------------------------------------------------------------------
Cash flow from financing activities -19.0 -16.2 -16.3
Cash and cash equivalents at the beginning of
period 47.6 45.8 45.8
Net increase (+) / decrease (-) in cash and cash
equivalents -14.5 -12.2 0.9
Effect from changes in exchange rates 0.9 0.8 0.9
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of period 34.1 34.4 47.6
-------------------------------------------------------------------------------
Notes for Interim Report
Orders Received by Business Area
EUR million 7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------
Weather 58.2 47.3 157.3 149.8 215.2
Controlled environment 22.8 21.5 70.5 58.1 79.8
-------------------------------------------------------------------------
Total 81.0 68.8 227.8 207.9 295.0
-------------------------------------------------------------------------
Net Sales by Business Area
EUR million 7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------
Weather
Products 31.4 24.0 74.9 72.2 108.1
Projects 18.6 21.1 47.9 48.2 74.7
Services 8.4 12.2 26.1 25.8 36.7
-------------------------------------------------------------------------
Total 58.4 57.3 148.8 146.2 219.6
Controlled environment
Products 20.9 18.6 61.3 51.9 71.9
Services 2.4 1.9 7.2 5.9 8.3
-------------------------------------------------------------------------
Total 23.4 20.6 68.5 57.8 80.2
Sales, Other 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------
Total Sales 81.7 77.9 217.4 204.0 299.7
-------------------------------------------------------------------------
Operating Result by Business Area
EUR million 7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------
Weather 8.2 8.4 0.1 4.3 17.0
Controlled environment 6.1 4.5 13.5 8.2 12.1
Other -0.2 -0.3 -3.1 -1.0 -2.8
-------------------------------------------------------------------------
Total 14.1 12.6 10.5 11.5 26.4
-------------------------------------------------------------------------
Net Sales by Geographical Area
EUR million 7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------
EMEA 23.9 29.5 71.3 76.0 111.8
Americas 36.9 28.4 89.7 75.8 112.1
APAC 20.9 20.0 56.3 52.2 75.9
-------------------------------------------------------------------------
Total 81.7 77.9 217.4 204.0 299.7
-------------------------------------------------------------------------
Personnel
7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------------
Average personnel 1,614 1,640 1,616 1,618 1,617
Personnel at the end of period 1,591 1,616 1,591 1,616 1,613
-------------------------------------------------------------------------------
Financial Instruments
7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------------
Nominal value of financial 29.8 19.5 29.8 19.5 20.0
derivatives,
EUR million
Fair values of financial 0.3 0.0 0.3 0.0 0.0
derivatives,
assets, EUR million
Fair values of financial 0.6 1.3 0.6 1.3 1.4
derivatives,
liabilities, EUR million
Financial derivatives consist solely of foreign currency forwards and they are
measured based on price information derived from active markets and commonly
used valuation methods (Fair value hierarchy 2). Financial contracts are
executed only with counterparties that have high credit ratings.
Share Information
7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------------
Number of shares outstanding,
thousand 18,079 18,059 18,079 18,059 18,059
Number of treasury shares,
thousand 139 159 139 159 159
Number of shares, diluted,
thousand 18,212 18,249 18,212 18,249 18,234
Number of shares, weighted
average,
thousand 18,114 18,059 18,124 18,059 18,059
Number of shares traded,
thousand 241 129 1,805 751 1,110
Share price, highest, EUR 25.20 24.20 27.02 24.98 24.98
Share price, lowest, EUR 22.50 20.45 21.55 20.45 19.40
-------------------------------------------------------------------------------
Key Ratios
7-9/2015 7-9/2014 1-9/2015 1-9/2014 1-12/2014
-------------------------------------------------------------------------------
Earnings per share, EUR 0.58 0.62 0.54 0.57 1.30
Earnings per share, diluted, EUR 0.57 0.61 0.54 0.56 1.29
Equity per share, EUR 9.06 8.65 9.06 8.65 9.41
Return on equity, % 7.9 8.7 14.3
Cash flow from operating
activities per
share, EUR 0.25 0.57 0.54 0.49 1.32
Solvency ratio, % 69.2 70.4 69.2 70.4 70.6
-------------------------------------------------------------------------------
Further information
Kaarina Muurinen, CFO
Mobile +358 40 577 5066
Vaisala Corporation
Telephone conference and Audiocast
An English-language conference call for investors and analysts will be held
today on October 27, 2015 at 4:00 p.m. (Finnish time).
FI: +358 9 8171 0495
UK: +44 203 194 0552
SE: +46 856 642 702
US: +1 855 716 1597
Live audiocast of the presentation by Kjell Forsén, President and CEO will start
at 4:00 p.m. and will be available at www.vaisala.com/investors. A recording
will be published at the same address at about 6:00 p.m.
Distribution:
NASDAQ OMX Helsinki
Key media
www.vaisala.com
Vaisala is a global leader in environmental and industrial measurement. Building
on 79 years of experience, Vaisala contributes to a better quality of life by
providing a comprehensive range of innovative observation and measurement
products and services for chosen weather-related and industrial markets.
Headquartered in Finland, Vaisala employs approximately 1,600 professionals
worldwide and is listed on the NASDAQ OMX Helsinki stock exchange.
www.vaisala.com www.twitter.com/VaisalaGroup
[HUG#1961689]
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