2013-10-31 08:00:05 CET
2013-10-31 08:00:13 CET
REGULATED INFORMATION
Exel Composites Oyj - Interim report (Q1 and Q3)
Exel Composites Plc's Interim Report for January 1 - September 30, 2013
EXEL COMPOSITES PLC STOCK EXCHANGE RELEASE 31.10.2013 at
9.00
EXEL COMPOSITES PLC'S INTERIM REPORT FOR JANUARY 1 - SEPTEMBER 30, 2013
JULY - SEPTEMBER 2013 HIGHLIGHTS
- Net sales were EUR 17.1 (17.1) million in the third quarter of 2013
- Operating profit before non-recurring items improved to EUR 1.5 (1.4) million
or 8.5 (8.0) per cent of net sales
- Operating profit after non-recurring items was EUR 1.1 million (including EUR
-0.4 million non-recurring items) compared to EUR 1.4 million in the third
quarter of 2012, or 6.3 (8.0) per cent of net sales
- Net cash flow from operating activities was positive at EUR +2.3 (+0.3)
million
- Fully diluted earnings per share were EUR 0.05 (0.07)
- New CEO Riku Kytömäki was appointed in September to start on 2 January 2014
JANUARY - SEPTEMBER 2013 HIGHLIGHTS
- Net sales were EUR 51.5 (57.4) million in the first nine months of 2013, down
by 10.2 per cent on the previous year
- Operating profit before non-recurring items was EUR 3.7 (5.0) million or 7.2
(8.7) per cent of net sales
- Operating profit after non-recurring items was EUR 3.4 million (including EUR
-0.4 million non-recurring items) in the first nine months of 2013 compared to
EUR 5.0 million in the corresponding period in 2012, or 6.5 (8.7) per cent of
net sales
- Net cash flow from operating activities was positive at EUR +4.9 (+3.8)
million
- Fully diluted earnings per share were EUR 0.19 (0.29)
OUTLOOK FOR 2013
Major uncertainties relating to general growth prospects in the economy
continue. Visibility is low and the market pressure is expected to continue in
2013. The Company will continue to work on sales development and on adjusting
costs to market conditions. Additional contingency actions may be undertaken
which may impact the short-term profits, but protect long-term cash flow and
profitability.
COMMENTS BY THE CEO
“The market situation in Central Europe continued to be challenging. Net sales
were EUR 17.1 (17.1) million in the third quarter of 2013. Demand improved in
the building, construction and infrastructure market segment,
telecommunication, electrical industry and general industries market segments
in the third quarter of 2013 compared to the corresponding period in
2012.However, market demand decreased in the transportation industry, energy
industry and paper industry market segments compared to the third quarter of
2012.
The Group's operating profit before non-recurring items improved to EUR 1.5
(1.4) million or 8.5 (8.0) per cent of net sales in the third quarter of 2013.
Net cash flow from operating activities was strongly positive at EUR +2.3
(+0.3) million due to good working capital management.
A decision to invest in a new laminate production line at Mäntyharju factory
was made during the third quarter of 2013. The investment enables us to extend
our product range in high specification laminates and to grow in several market
segments.
Exel Composites has during the first nine months of 2013 continued to develop
several new customer-specific applications, especially in the building and
construction, machine industry and transportation industry market segments.
Corrective actions have started to have a positive impact in the British
business unit. Turnaround measures in Australia continue in the fourth quarter
of 2013. Co-determination negotiations were concluded in August in the Finnish
business units. Our operational focus will be on sales, efficiency and yield
improvement.
The general market situation is expected to remain unchanged in the last
quarter of 2013. The composite market is estimated to develop positively in the
longer run. Exel Composites is a market leader in pultruded composite profiles
and has a strong balance sheet. We are well-positioned to grow the business
when the market recovers. This is the right time for me to hand over the
company to Riku Kytömäki to raise Exel Composites to the next level.”
CONSOLIDATED KEY FIGURES, EUR million
(unaudited)
1.7. - 1.7. - Change 1.1. - 1.1.-30. Change, 1.1. -
30.9. 30.9. , 30.9. 9. % 31.12.
2013 2012 % 2013 2012 2012
Net sales 17.1 17.1 0.1 51.5 57.4 -10.2 76.0
Operating profit 1.1 1.4 -20.6 3.4 5.0 -33.0 3.4
% of net sales 6.3 8.0 6.5 8.7 4.5
Profit for the period 0.6 0.9 -35.6 2.3 3.5 -34.6 2.0
Shareholders' equity 28.6 33.2 -13.9 28.6 33.2 -13.9 31.4
Net interest-bearing -0.4 2.6 117.2 -0.4 2.6 117.2 -1.1
liabilities
Capital employed 35.8 43.4 -17.5 35.8 43.4 -17.5 39.6
Return on equity, % 8.1 10.8 10.2 13.7 6.1
Return on capital 12.1 12.7 11.9 15.6 8.4
employed, %
Equity ratio, % 58.9 59.0 58.9 59.0 61.0
Net gearing, % -1.6 7.8 -1.6 7.8 -3.4
Earnings per share, 0.05 0.07 0.19 0.29 0.17
EUR
Earnings per share, 0.05 0.07 0.19 0.29 0.17
diluted, EUR
Equity per share, EUR 2.41 2.79 2.41 2.79 2.64
IFRS REPORTING
This interim report has been prepared in accordance with the recognition and
measurement principles of IFRS, which are the same as in the 2012 financial
statements.
FINANCIAL PERFORMANCE
JULY - SEPTEMBER 2013
The market situation in Central Europe continued to be challenging.
The Group's net sales in July - September 2013 were EUR 17.1 (17.1) million.
Demand improved in the building, construction and infrastructure market
segment, telecommunication, electrical industry and general industries market
segments in the third quarter of 2013 compared to the corresponding period in
2012. However, market demand decreased in the transportation industry, energy
industry and paper industry market segments compared to the third quarter of
2012.
The Group's operating profit before non-recurring items improved to EUR 1.5
(1.4) million or 8.5 (8.0) per cent of net sales. Operating profit after
non-recurring items was EUR 1.1 (1.4) million (including EUR -0.4 million
non-recurring items) or 6.3 (8.0) per cent of net sales in the third quarter of
2013. Operating profit included non-recurring items of EUR -0.4 million
relating to the costs of the CEO change. Net cash flow from operating
activities was strongly positive at EUR +2.3 (+0.3) million due to good working
capital management.
In the local statutory level the parent company will recognize a non-cash
write-down of Australian subsidiary share holding value totaling EUR
5.5.million. The write-down has no impact on the Group financials but reduces
the distributable funds.
A decision to invest in a new laminate production line at Mäntyharju factory
was made during the third quarter of 2013. The investment enables us to extend
our product range in high specification laminates and to grow in several market
segments.
JANUARY - SEPTEMBER 2013
The Group's net sales in January - September 2013 were EUR 51.5 (57.4) million,
a decrease of 10.2 per cent on the corresponding period in 2012.
Exel Composites' operating profit before non-recurring items was EUR 3.7 (5.0)
million or 7.2 (8.7) per cent of net sales in January - September 2013.
Operating profit after non-recurring items was EUR 3.4 million (including EUR
-0.4 million non-recurring items) in the first nine months of 2013 compared to
EUR 5.0 million in the corresponding period in 2012, or 6.5 (8.7) per cent of
net sales. The main reasons for the decrease were lower sales especially in the
Finnish units. On the other hand, cost-saving measures and other corrective
actions taken had a positive impact on the operating profit.
Exel Composites has during the first nine months of 2013 continued to develop
several new customer specific applications, especially in the building and
construction, machine industry and transportation industry market segments.
The Group's net financial expenses in January - September 2013 were EUR -0.3
(-0.3) million. The Group's profit before taxes was EUR 3.1 (4.7) million and
profit after taxes EUR 2.3 (3.5) million.
Fully diluted total earnings per share were EUR 0.19 (0.29). Return on capital
employed was 11.9 (15.6) per cent. Return on equity was 10.2 (13.7) per cent.
BALANCE SHEET AND FINANCIAL POSITION
Net cash flow from operating activities was positive at EUR 4.9 (3.8) million
mainly due to decreased working capital. Cash flow before financing, but after
capital expenditure, amounted to EUR 3.0 (1.6) million.
Capital expenditure was financed with cash flow from business operations. At
the end of the review period, the Group's liquid assets stood at EUR 7.6 (7.5)
million.
The Group's consolidated total assets at the end of the period under review
were EUR 48.7 (56.5) million.
Interest-bearing liabilities amounted to EUR 7.2 (10.1) million. Net
interest-bearing liabilities were EUR -0.4 (2.6) million. Non-current
liabilities were amortized by EUR 5.0 million and new short-term loans were
withdrawn amounting to EUR 4.0 million.
Equity at the end of the period under review was EUR 28.6 (33.2) million and
equity ratio 58.9 (59.0) per cent. The net gearing ratio was -1.6 (7.8) per
cent.
CAPITAL EXPENDITURE AND DEPRECIATION
The capital expenditure on fixed assets amounted to EUR 1.9 (2.1) million.
Total depreciation of non-current assets during the period under review
amounted to EUR 2.0 (2.1) million.
PERSONNEL
The number of Exel Composites Group employees on 30 September 2013 was 426
(431), of whom 205 (197) worked in Finland and 221 (233) in other countries.
The average number of personnel during January - September 2013 was 431 (432).
The use of temporary workforce has been largely discontinued for the time
being. In addition, in Finland part of maintenance functions were transferred
back to Exel Composites, which increased its own personnel by 8 persons.
Co-determination negotiations were concluded in August 2013 in the Finnish
business units. As a result of the negotiations, 12 employment contracts were
terminated in the Joensuu unit. The negotiations did not incur non-recurring
items. Diverse working hours in accordance with the Collective Agreement will
be taken into use for non-salaried employees in all the Finnish units in order
to increase flexibility. Part of the salaried employees is laid off temporarily
in all the Finnish units.
Corrective actions have started to have a positive impact in the British
business unit. Turnaround measures in Australia continue in the fourth quarter
of 2013. Our operational focus will be on sales, efficiency and yield
improvement.
The ExelWay project that was launched in the latter half of 2011 was continued.
The project aims at improving co-operation and harmonizing processes between
the units. Project findings including new and efficient business processes and
best practices are to be implemented as the project proceeds.
SHARES AND SHARE CAPITAL
At the end of September 2013, Exel Composites' share capital was EUR
2,141,431.74 and the number of shares was 11,896,843. There were no changes in
the share capital during the review period.
Exel Composites did not hold any of its own shares during the period of review.
SHARE PERFORMANCE AND TURNOVER
The highest share price quoted was EUR 6.50 (8.79) and the lowest EUR 5.10
(6.00). The share price closed at EUR 5.80 (6.48). The average share price
during the period under review was EUR 5.82 (7.45).
A total of 822,895 (674,931) shares were traded during the reporting period,
which represents 6.9 (5.7) per cent of the average number of shares. Based on
the closing price on 30 September 2013, Exel Composites' market capitalization
was EUR 69.0 (77.1) million.
SHAREHOLDERS AND DISCLOSURES
Exel Composites had a total of 2,738 (2,710) shareholders on 30 September 2013.
Information on Exel Composites' shareholders is available on the Company
website at www.exelcomposites.com.
Exel Composites did not receive any flagging announcements during the period
under review.
MAJOR NEAR-TERM RISKS AND UNCERTAINTIES
The most significant near-term business risks are related to the general
economic development, government regulations and continued financial crisis in
the Euro area as well as to market demand in certain market segments. Success
of corrective actions as well as possible restructuring and impairment charges
can have an impact on the profitability. Raw material prices, energy cost and
other cost increases may continue to put pressure on profitability. Currency
rate changes, price competition and alternative competing materials may also
have a negative effect on the result. The availability and cost of financing
may continue to have an effect on the demand and increase the risk of credit
losses.
CHANGES IN GROUP MANAGEMENT
Mr. Kari Loukola was appointed VP Sales and Marketing and member of the Group
Management Team as of 1 August 2013 to reinforce sales and profitable growth.
Mr. Riku Kytömäki was appointed new President and CEO of Exel Composites in
September 2013. He will assume his duties on 2 January 2014 and succeeds Mr.
Vesa Korpimies, who will resign from his position. Vesa Korpimies will continue
in his role as CEO until Riku Kytömäki takes up his position.
EVENTS AFTER THE REPORTING PERIOD
A decision was made to consolidate the Australian units in one location.
Brisbane unit will be moved to Melbourne site. The move will have a negative
effect on the fourth quarter 2013 results, but will improve the profit in 2014.
OUTLOOK FOR 2013
Major uncertainties relating to general growth prospects in the economy
continue. Visibility is low and the market pressure is expected to continue in
2013. The Company will continue to work on sales development and on adjusting
costs to market conditions. Additional contingency actions may be undertaken
which may impact the short-term profits, but protect long-term cash flow and
profitability.
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
(unaudited)
EUR thousand 1.7. - 1.7. - Change 1.1. - 1.1. - Change 1.1. -
30.9. 30.9. , 30.9. 30.9. , % 31.12.
2013 2012 % 2013 2012 2012
Net sales 17,075 17,054 0.1 51,520 57,364 -10.2 75,998
Materials and -6,709 -6,706 0.0 -19,594 -22,316 12.2 -29,986
services
Employee benefit -4,983 -4,422 -12.7 -15,740 -15,982 1.5 -21,077
expenses
Depreciation and -650 -619 -5.0 -2,007 -2,083 3.6 -5,387
impairment
Other operating -3,731 -4,052 7.9 -11,223 -12,712 11.7 -17,057
expenses
Other operating 79 107 -26.2 401 736 -45.5 909
income
Operating profit 1,081 1,362 -20.6 3,357 5,007 -33.0 3,399
Net financial items -271 -206 -31.6 -295 -319 7.5 -428
Profit before tax 810 1,156 -29.9 3,062 4,688 -34.7 2,971
Income taxes -237 -266 10.9 -772 -1,186 34.9 -940
Profit/loss for the 573 890 -35.6 2,290 3,502 -34.6 2,031
period
Other comprehensive
income:
Other comprehensive
income to be
reclassified to
profit or loss in
subsequent periods:
Exchange differences -162 -23 604.3 -1,553 638 343.4 133
on translating
foreign operations
Other comprehensive -162 -23 604.3 -1,553 638 343.4 133
income, net of tax
Total comprehensive 411 867 -52.6 737 4,140 -82.2 2,164
income
Profit/loss
attributable to:
Equity holders of the 573 890 -35.6 2,290 3,502 -34.6 2,031
parent company
Comprehensive income
attributable to:
Equity holders of the 411 867 -52.6 737 4,140 -82.2 2,164
parent company
Earnings per share, 0.05 0.07 0.19 0.29 0.17
diluted and
undiluted, EUR
CONDENSED CONSOLIDATED BALANCE SHEET
EUR thousand 30.9.2013 30.9.2012 Change 31.12.2012
ASSETS
Non-current assets
Goodwill 9,850 12,192 -2,342 10,898
Other intangible assets 950 1,720 -770 1,220
Tangible assets 10,670 11,669 -999 10,681
Deferred tax assets 846 108 738 752
Other non-current assets 65 65 0 64
Non-current assets total 22,381 25,754 -3,373 23,615
Current assets
Inventories 8,320 10,445 -2,125 9,129
Trade and other receivables 10,342 12,725 -2,383 9,513
Cash at bank and in hand 7,625 7,533 92 9,245
Current assets total 26,288 30,703 -4,415 27,887
Total assets 48,669 56,457 -7,788 51,502
EQUITY AND LIABILITIES
Shareholders´ equity
Share capital 2,141 2,141 0 2,141
Other reserves 72 45 27 45
Invested unrestricted equity fund 8,488 8,488 0 8,488
Translation differences 2,784 4,842 -2,058 4,337
Retained earnings 12,845 14,223 -1,378 14,396
Profit for the period 2,290 3,502 -1,212 2,031
Total equity attributable to equity 28,621 33,241 -4,620 31,438
holders of the parent company
Total equity 28,621 33,241 -4,620 31,438
Non-current liabilities
Interest-bearing liabilities 1,770 8,132 -6,362 8,168
Interest-free liabilities 409 413 -4 411
Deferred tax liabilities 374 414 -40 377
Current liabilities
Interest-bearing liabilities 5,407 2,010 3,397 11
Trade and other non-current 12,088 12,247 -159 11,098
liabilities
Total liabilities 20,048 23,217 -3,169 20,064
Total equity and liabilities 48,669 56,457 -7,788 51,502
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
EUR thousand Share Other Invested Translatio Retained Total
Capita Reserves Unrestricted n Earnings
l Equity Fund Difference
s
Balance at 1 2,141 30 8,488 4,204 20,255 35,118
January 2012
Comprehensive 638 3,502 4,140
result
Other items 15 -84 -69
Dividend -5,948 -5,948
Balance at 30 2,141 45 8,488 4,842 17,725 33,241
September
2012
Balance at 1 2,141 45 8,488 4,337 16,427 31,438
January 2013
Comprehensive -1,553 2,290 737
result
Other items 27 -13 15
Dividend -3,569 -3,569
Balance at 30 2,141 72 8,488 2,784 15,135 28,621
September
2013
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
EUR thousand 1.1. - 1.1. - Change 1.1. - 31.12.
30.9. 30.9. 2012
2013 2012
Cash Flow from Operating Activities
Profit for the period 2,290 3,502 -1,212 2,031
Adjustments 2,877 3,782 -905 7,170
Change in working capital 902 -1,508 2,410 1,223
Cash Flow Generated by Operations 6,069 5,776 293 10,424
Interest paid -176 -186 10 -259
Interest received 16 68 -52 80
Other financial items -150 -30 -120 -155
Income taxes paid -886 -1,877 991 -1,897
Net Cash Flow from Operating Activities 4,873 3,751 1,122 8,193
Capital expenditure -1,916 -2,118 202 -2,846
Proceeds from sale of fixed assets 0 16 -16 16
Cash Flow from Investing Activities -1,916 -2,102 186 -2,830
Cash Flow from Financing
Proceeds from long-term borrowings 0 0 0 0
Instalments of long-term borrowings -5,000 0 -5,000 0
Change in short-term loans 4,000 2,000 2,000 0
Change in finance lease liabilities -8 -8 0 -10
Dividends paid -3,569 -5,948 2,379 -5,948
Net Cash Flow from Financing -4,577 -3,956 -621 -5,958
Change in Liquid Funds -1,620 -2,307 687 -595
Liquid funds in the beginning of period 9,245 9,840 -595 9,840
Change in liquid funds -1,620 -2,307 687 -595
Liquid funds at the end of period 7,625 7,533 92 9,245
QUARTERLY KEY FIGURES
EUR thousand III/ II/ I/ IV/ III/ II/ I/
2013 2013 2013 2012 2012 2012 2012
Net sales 17,075 17,548 16,897 18,634 17,054 19,791 20,519
Materials and services -6,709 -6,455 -6,430 -7,670 -6,706 -7,491 -8,119
Employee benefit -4,983 -5,448 -5,309 -5,095 -4,422 -5,942 -5,618
expenses
Depreciation and -650 -684 -673 -3,304 -619 -723 -742
impairment
Operating expenses -3,731 -3,510 -3,981 -4,345 -4,052 -4,209 -4,452
Other operating income 79 159 163 173 107 390 240
Operating profit 1,081 1,609 666 -1,608 1,362 1,816 1,828
Net financial items -271 -48 24 -109 -206 -30 -83
Profit before taxes 810 1,562 691 -1,717 1,156 1,786 1,745
Income taxes -237 -399 -136 246 -266 -485 -435
Profit/loss for the 573 1,162 555 -1,471 890 1,302 1,310
period
Earnings per share, EUR 0.05 0.10 0.05 -0.12 0.07 0.11 0.11
Earnings per share, EUR, 0.05 0.10 0.05 -0.12 0.07 0.11 0.11
diluted
Average number of
shares, undiluted,
1,000 shares 11,897 11,897 11,897 11,897 11,897 11,897 11,897
Average number of
shares, diluted,
1,000 shares 11,897 11,897 11,897 11,897 11,897 11,897 11,897
Average number of 427 427 436 431 433 435 428
personnel
COMMITMENTS AND CONTINGENCIES
EUR thousand 30.9.2013 30.9.2012
On own behalf
Mortgages 2,733 2,733
Corporate mortgages 12,500 12,500
Lease liabilities
- in next 12 months 878 789
- in next 1-5 years 1,587 2,972
Other commitments 6 6
DERIVATIVE FINANCIAL INSTRUMENTS
Nominal values 30.9.2013 30.9.2012
EUR thousand
Interest rate derivatives
Interest rate swaps 5,000 5,000
CONSOLIDATED KEY FIGURES
EUR thousand 1.1. - 30.9. 1.1. - Change, % 1.1.-
2013 30.9. 31.12.
2012 2012
Net sales 51,520 57,364 -10.2 75,998
Operating profit 3,357 5,007 -33.0 3,399
% of net sales 6.5 8.7 4.5
Profit before tax 3,062 4,688 -34.7 2,971
% of net sales 5.9 8.2 3.9
Profit for the period 2,290 3,502 -34.6 2,031
% of net sales 4.4 6.1 2.7
Shareholders´ equity 28,621 33,241 -13.9 31,438
Interest-bearing liabilities 7,177 10,142 -29.2 8,179
Cash and cash equivalents 7,625 7,533 1.2 9,245
Net interest-bearing liabilities -448 2,609 117.2 -1,066
Capital employed 35,798 43,383 -17.5 39,617
Return on equity, % 10.2 13.7 6.1
Return on capital employed, % 11.9 15.6 8.4
Equity ratio, % 58.9 59.0 61.0
Net gearing, % -1.6 7.8 -3.4
Capital expenditure 1,916 2,118 -9.5 2,846
% of net sales 3.7 3.7 3.7
Research and development costs 1,174 1,191 -1.4 1,606
% of net sales 2.3 2.1 2.1
Order stock 10,500 13,732 -23.0 10,677
Earnings per share, EUR 0.19 0.29 -34.5 0.17
Earnings per share, EUR, diluted 0.19 0.29 -34.5 0.17
Equity per share, EUR 2.41 2.79 -13.6 2.64
Average number of shares
- cumulative 11,897 11,897 0.0 11,897
- cumulative, diluted 11,897 11,897 0.0 11,897
Average number of employees 431 432 -0.2 431
PRESS CONFERENCE
Exel Composites will hold an analyst and press conference regarding the interim
report today Thursday 31 October 2013 at 12.30 pm in the Roba Cabinet of the
Scandic Hotel Simonkenttä at Simonkatu 9, Helsinki, Finland.
FORWARD-LOOKING STATEMENTS
Certain statements in this report, which are not historical facts, including,
without limitation, those regarding expectations for general economic
development and market situation; regarding customer industry profitability and
investment willingness; regarding Company growth, development and
profitability; regarding cost savings; regarding fluctuations in exchange rates
and interest levels; regarding the success of pending and future acquisitions
and restructurings; and statements preceded by "believes,""expects,""anticipates,""foresees" or similar expressions are forward-looking
statements.
These statements are based on current expectations and currently known facts.
Therefore, they involve risks and uncertainties that may cause actual results
to differ materially from results currently expected by the Company.
Other unknown or unpredictable factors or underlying assumptions subsequently
proving to be incorrect could cause actual results to differ materially from
those in the forward-looking statements. Exel Composites does not undertake any
obligation to publicly update or revise forward-looking statements, whether as
a result of new information, future events or otherwise, except to the extent
legally required.
Vantaa, 31 October 2013
Exel Composites Plc Vesa Korpimies
Board of Directors President and CEO
FURTHER INFORMATION:
Vesa Korpimies, President and CEO, tel. +358 50 590 6754, or email
vesa.korpimies@exelcomposites.comIlkka
Silvanto, CFO and Administrative Director, tel. +358 50 598 9553, or email
ilkka.silvanto@exelcomposites.com
DISTRIBUTION
NASDAQ OMX Helsinki Ltd.
Main news media
www.exelcomposites.com
EXEL COMPOSITES IN BRIEF
Exel Composites (www.exelcomposites.com) is a technology company which designs,
manufactures and markets composite profiles and tubes for industrial
applications. The Group is the leading composite profile manufacturer in the
world and concentrates on growing niche segments.
The core of the operations is based on own, internally developed composite
technology, product range based on it and a strong market position in selected
segments with a strong quality and brand image. Profitable growth is pursued by
a relentless search for new applications and development in co-operation with
customers. The personnel's expertise and high level of technology play a major
role in Exel Composites' operations.
Exel Composites Plc share is listed in the Small Cap segment of NASDAQ OMX
Helsinki Ltd.
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