Neo Industrial Oyj - Interim report (Q1 and Q3)

NEO INDUSTRIAL PLC BUSINESS REVIEW 3 May 2017 at 1.45 pm

NEO INDUSTRIAL PLC'S BUSINESS REVIEW 1 JANUARY - 3 MAY 2017

Turnover and operating result grew significantly from previous year

Neo Industrial's turnover for the period between 1 January and 31 March 2017
was EUR 26.0 million (EUR 19.3 million in the comparison period
1.1.–31.3.2016). Its operating result was EUR 1.2 million (0.6). 
During the first quarter of the year, the turnover increased by EUR 6.7 million
and the operating result improved by EUR 0.6 million compared to previous year. 

Managing Director Ralf Sohlström: “We succeeded well with loading our factories
during the low-demand winter season. As the summer approaches, the demand for
cables normally increases. In addition, we have had successes in export sales,
and we have put efforts into marketing and product development. Reka Cables is
launching a new installation cable family that has already been received well
in the market because of its improved safety, ease of use and
environmentally-friendliness. 


KEY FIGURES (IFRS)

                                    1-3/2017  1-3/2016  1-12/2016
-----------------------------------------------------------------
Turnover, EUR million                   26,0      19,3      101,0
Operating result, EUR million            1,2       0,6        5,9
Result for the period, EUR million       0,8       0,0        3,3
Earnings per share, EUR                 0,14      0,00       0,55
ROI, %                                   6,3       1,8       22,6
IAS 19 corrected Equity ratio, %        22,3      10,5       22,0



SEGMENTS

The business segment of Neo Industrial is Cable industry.

CABLE SEGMENT

The Cable Segment’s turnover for the period between 1 January and 31 March 2017
was EUR 26.0 million (EUR 19.3 million in the comparison period
1.1.–31.3.2016). Its operating result was EUR 1.8 million (0.8). 

During January – March 2017 the sales volumes in the cable market of Nordic
countries, the main market area of Reka Cables Ltd, increased significantly
from the previous year. The sales volumes in other markets were lower compared
to the previous year. 

At the end of the review period the raw material EUR prices of aluminium and
copper were slightly higher compared to the price level at the turn of the
year. 

The made investments, EUR 0.3 million, were mainly targeted at improving
productivity. 

Turnover for Nestor Cables Ltd, an associated company, was EUR 5.2 million (3.9
million) during January – March 2017. The operating result was negative but
better than previous year.  The company’s value on the consolidated balance
sheet is zero and the result of the company is not included in the Group
figures. 

RISKS AND UNCERTAINTY FACTORS

Neo Industrial’s financial risks include currency, interest rate, commodity,
liquidity, credit and investment market risks. Financial risks and the related
protection measures are described in more detail in the notes to the latest
financial statements. The company’s future risk factors are related to the
business development of its portfolio companies. 

In the Cable Segment the most significant risks are related to market
development, fluctuations of raw material prices and currencies as well as
working capital management in various situations. During considerable seasonal
changes, suppliers’ terms of payment affect significantly the ability to ensure
competitive delivery times through sufficient inventories. Also, operation
models are being developed in order to balance out the effects of seasonal
changes on the load rates of factories. 

In the Cable Segment the key raw materials are metals (copper and aluminium)
and plastics. In the metals purchases partial price hedging is used with the
aid of commodity derivatives. Important with metals are the development of both
the dollar-denominated price and the USD / EUR exchange rate. 

NEAR-TERM OUTLOOK

Construction continues to be on a good level in our main market areas. The
management believes that grid constructors will continue ground cabling
investments to ensure distribution reliability. The turnover and the operating
result are estimated to increase clearly in 2017 compared to previous year. 

The information presented in this release is unaudited.


Hyvinkää May 3, 2017

Neo Industrial Plc
Board of Directors


Further information:
Ralf Sohlström, Managing Director, tel. +358 40 770 2720


All comments in this report that do not refer to actual facts are future
estimates. Such estimates include expectations concerning market trends, growth
and profitability as well as statements including the words "believe", "assume"
or "will be" or a similar expression. Since these estimates are based on
current plans and estimates, they involve risks and uncertainty factors that
may cause the actual results to differ substantially from current statements.

Among other things, such factors include 1) operating conditions, such as
continued success in production and the ensuing efficiency benefits,
availability and cost of production inputs, demand for new products and changes
in circumstances affecting the acquisition of capital under acceptable
conditions; 2) sector-specific circumstances, such as the intensity of demand
for products, the competition, current and future market prices for the Group's
products and related pricing pressures, the financial situation of the Group's
customers and competitors and competitors' possible new products; and 3) the
general economic situation, such as economic growth in the Group's main market
areas and changes in exchange rates and interest rates.