Neo Industrial Oyj - Half Year financial report

NEO INDUSTRIAL PLC HALF YEAR FINANCIAL REPORT 10 AUGUST 2017 at 3.00 pm

Neo Industrial: Cable Segment's turnover grew significantly, operating profit was lower than year ago.

January–June
-The Group’s turnover was EUR 58.0 million (50.2 million).
-The operating result was EUR 2.3 (3.9) million.
-The operating result of the Cable Segment was EUR 3.0 (4.3) million.
-The Group’s result for the period was EUR 1.2 (2.3) million.


MANAGING DIRECTOR RALF SOHLSTRÖM:

We succeeded well with loading our factories during the first quarter of the year. During the second quarter of the year the delays of underground cable installation projects caused transfer of deliveries. Due to that the turnover increased less than targeted as part of the deliveries were postponed to the third quarter of the year. The turbulence of the raw material prices, started last fall, has increased uncertainty in the market. The actual sales margin remained lower than expected. The made price increases are expected to affect positively the development of profitability during the second half of the year.

We have put efforts into marketing and product development. The lauch of the new installation cable family LiteRex has been received well in the market due to the safety, ease of use and environmentally-friendliness of the products. In addition, Reka Cables started to make fire resistant classified cables according to the CPR directive by July 1st 2017.

KEY FIGURES

	1-6/2017	1-6/2016	1-12/2016
Turnover, EUR million	58.0	50.2	101.0
Operating result, EUR million	2.3	3.9	5.9
Result for the period, EUR million	1.2	2.3	3.3
Earnings per share, EUR	0.20	0.38	0.55
ROI, %	20.4	7.8	22.6
IAS 19 corrected Equity ratio, %	23.3	19.1	22.0

Due to a delay in including the increase of raw material prices to the sales prices the operating result during review period was lower than year ago.

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.

MAJOR EVENTS AFTER THE REVIEW PERIOD

There has been no major events after the review period.

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 in 2017 is estimated to increase clearly compared to previous year. There was a delay in including the increase of raw material prices to the sales prices and therefore the operating result in 2017 is estimated to remain on the same level as previous year.

DISCLOSURE POLICY OF HALF YEAR FINANCIAL REPORT

Neo Industrial discloses relevant information related to its Half Year Financial Report with this Stock Exchange Release. The entire Half Year Report for January–June 2017 is attached to this release and is also available on company's website at www.neoindustrial.fi/en.

Hyvinkää 10 August 2017

Neo Industrial Plc
Board of Directors

Further information:
Managing Director Ralf Sohlström, 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 thses 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 change in exchange rates and interest rates.
 

Neo Industrial's strategy is to invest mainly in industrial companies with similar synergic benefits. The aim of investments is with active ownership to develop the purchased companies and establish additional value. Returns are sought through both dividend flow and an increase in value. Neo Industrial's class B shares are listed on the main list of NASDAQ Helsinki Stock Exchange. Neo Industrial's business segment is Cable Industry.
 

Attachments:

NeoIndustrial_HalfYearFinancialReport_H12017.pdf