2012-08-09 14:00:00 CEST
2012-08-09 14:00:05 CEST
REGULATED INFORMATION
Honkarakenne Oyj - Interim report (Q1 and Q3)
HONKARAKENNE OYJ’S INTERIM REPORT, 1 JANUARY – 30 JUNE 2012
HONKARAKENNE OYJ INTERIM REPORT 09 August 2012 at 3:00 pm
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 30 JUNE 2012
SUMMARY
Second-quarter net sales and result fell short of the previous year.
April - June 2012
-- Honkarakenne Group's consolidated net sales for the second quarter of the
year amounted to MEUR 13.0 (MEUR 18.2 in 2011), representing a reduction
over the same period the previous year of 28.8 %.
-- Operating profit was MEUR 0.5 (MEUR 2.2).
Operating profit before non-recurring items was MEUR 0.5 (MEUR 2.2).
-- Profit before taxes was MEUR 0.1 (MEUR 2.0).
-- Earnings per share amounted to EUR 0.03 (EUR 0.30).
January - June 2012
-- Honkarakenne Group's consolidated net sales for January-June amounted to
MEUR 20.0 (MEUR 27.5), representing a reduction over the same period the
previous year of 27.2%.
-- Operating profit was MEUR -1.8 (MEUR 1.0).
Operating profit before non-recurring items was MEUR -1.8 (MEUR 0.8).
-- Profit before taxes was MEUR -2.0 (MEUR 1.0).
-- Earnings per share amounted to EUR -0.28 (EUR 0.18).
It is Honkarakenne's view that the net sales and profit before taxes in 2012
will be lower than the previous year. Honkarakenne's previous guidance was the
following: The company's goal for 2012 is to maintain its net sales and result
before taxes at 2011 levels.
KEY FIGURES 4-6/ 4-6/ 1-6/ 1-6/ Change 1-12/ 2012 2011 2012 2011 % 2011
Net sales, MEUR 13.0 18.2 20.0 27.5 -27.2 55.0
Operating profit/loss, MEUR 0.5 2.2 -1.8 1.0 1.9
Operating profit before non-recurring 0.5 2.2 -1.8 0.8 1.6
items, MEUR
Profit/loss before taxes, MEUR 0.1 2.0 -2.0 1.0 1.1
Average number of personnel 258 266 259 265 265
Earnings/share (EPS), EUR 0.03 0.30 -0.28 0.18 0.17
Equity ratio, % 48.5 46.0 52.6
Return on equity, % -7.9 5.1 4.6
Shareholders' equity/share, EUR 3.4 3.7 3.7
Gearing, % 34.6 56.5 34.5
Mikko Kilpeläinen, President and CEO of Honkarakenne Oyj, in connection with
the interim report:
”The decline in the Group's order book turned around in the second quarter. At
the end of June, the order book was only 8 % down on the previous year, as
compared to 17 % in March. Looking at individual market areas, the number of
orders in the East grew in the second quarter. The Group's net sales for the
second quarter were not at a satisfactory level. That said, considering the
order book at the end of the first quarter, net sales were in line with
expectations. The Group's result before taxes for the second quarter was in the
black. However, taking seasonal fluctuations into consideration, the earnings
level cannot be considered to be satisfactory.
The main focus area in 2012 is still to expedite sales. Honkarakenne will
continue to concentrate on its premium and luxury strategy in all market areas.
As part of our cooperation with designers, our marketing highlighted the
Finnish designers behind our houses, further emphasising the importance of
design. We started our website revamp in the first quarter and this work
continued in all of our market areas.
During the second quarter, our marketing in Finland focused on our overhauled
collection of detached houses. At the end of the first quarter, we launched new
modern city homes. In Finland, we're seeking growth from the detached house
market by offering individually designed house packages that are ecological and
promote healthy living. We focused on larger timber construction projects in
all of our markets.
At the end of 2011, we launched training designed to enhance the sales
expertise of our international sales network. This training was now completed
and is reflected in the better trend in our order book.”
NET SALES
Honkarakenne Group's consolidated net sales for the first quarter decreased by
29 % to MEUR 13.0 (18.2). The net sales in Finland decreased by 31 % to MEUR
5.8 (8.5). In export, net sales decreased by 23 % to MEUR 7.0 (9.1).
Geographical distribution of net sales:
DEVELOPMENT OF SALES
Distribution of 1-6 1-6
net sales, % /2012 /2011
Finland 45 % 44 %
West 15 % 15 %
East 23 % 24 %
Far East 14 % 9 %
Other markets 1 % 4 %
Process waste sales for recycling 2 % 3 %
Total 100 % 100 %
Net sales, MEUR 4-6/ 2012 4-6/ Change 1-6/ 1-6/ Change 2011 % 2012 2011 %
Finland 5.8 8.5 -31 % 9.0 12.0 -25 %
West 1.5 2.8 -45 % 3.0 4.0 -25 %
East 3.6 3.8 -6 % 4.5 6.7 -32 %
Far East 1.6 1.6 1 % 2.8 2.6 10 %
Other markets 0.3 0.9 -68 % 0.3 1.2 -79 %
Process waste sales for recycling 0.2 0.7 -72 % 0.3 1.0 -66 %
Total 13.0 18.2 -29 % 20.0 27.5 -27,2 %
West, includes the following countries: Netherlands, Belgium, Spain, Ireland,
Great Britain, Iceland, Italy, Austria, Greece, Cyprus, Latvia, Lithuania,
Luxembourg, Norway, Portugal, Poland, France, Sweden, Germany, Slovakia,
Slovenia, Switzerland, Denmark, Czech Republic, Hungary and Estonia.
East, includes the following countries: Azerbaijan, Kazakhstan, Ukraine, Russia
and other CIS countries.
Far East, includes South Korea and Japan.
Other markets, includes the following countries: Bulgaria, China, Croatia,
Mongolia, North and South America, Romania, Serbia, Turkey as well as new
target countries and markets.
In addition, the sales of factory process waste for recycling will be reported
separately from the actual Honkarakenne core business operations.
PROFIT AND PROFITABILITY TRENDS
Operating profit in January-June was MEUR -1.8 (MEUR 1.0), and profit before
taxes was MEUR -2.0 (MEUR 1.0).
The change in the operating result was due to lower net sales than in 2011, as
well as investments in marketing, training the Group's sales network, and
developing operations in Japan. The result for the comparison period was
improved by a non-recurring item of EUR 0.3 million from the divestment of our
holding in Karjalan Lisenssisaha Invest Oy.
FINANCING AND INVESTMENTS
In the course of the period under review, the financial position of the Group
remained satisfactory. The equity ratio stood at 48.5 % (46.0 %) and
interest-bearing net liabilities at MEUR 5.6 (MEUR 10.1). MEUR 2.7 (1.9) of the
interest-bearing net liabilities carries a 30% equity ratio covenant term.
Group liquid assets totalled MEUR 2.1 (MEUR 1.8). The Group also has a MEUR 8.0
(MEUR 10.0) bank overdraft facility, MEUR 0.4 (MEUR 2.3) of which was had been
drawn on at the end of the report period. Gearing stood at 35 % (56 %). The
Group's capital expenditure totalled MEUR 0.7 (MEUR 0.4).
MARKET DEVELOPMENT
Based on a report commissioned by RTS Oy, Finnish log house production is
expected to decrease by 5 % this year. The figure includes production for
Finland and for export.
PRODUCTS, MARKETING
In Finland, we focused on our overhauled collection of detached houses, which
includes modern city homes. In our marketing, we swung the spotlight on Finnish
designers. We continued to revamp our websites.
In the West, we focused on the acquisition of large-scale projects, especially
in Central Europe. In France, we opened the first day-care centre implemented
with the Honka Fusion™ concept.
In the East, we launched the second collection of our well-received Jewels
range, including additional buildings in the same style as the Jewels detached
houses, such as guardhouses, garages and guesthouses. We expanded our sales
network in Russia's neighbouring countries.
In the Far East, we rolled out a new house collection. The marketing
highlighted Finnish and Japanese designers and architects.
In our Other Markets, we engaged in negotiations for major projects.
In all of our markets, we updated our websites in line with the Honkarakenne
Group's strategic image. This revamp covered the Group's entire sales network
and continued during the second quarter.
RESEARCH AND DEVELOPMENT
R&D continued to focus on boosting the efficiency of log production. VTT
Technical Research Centre of Finland completed log fire safety test with good
results.
In the January-June period, the Group's R&D expenditure totalled EUR 0.2
million (EUR 0.3 million), representing 0.9 % of net sales (1.1 %). The Group
did not capitalise any development expenditure during the report period.
STAFF
At the end of the June, the Group employed 259 people (265) on average. This is
6 less than at the same time in the previous year.
The negotiations under the act on co-operation that began with Honkarakenne's
Finnish personnel at the end of 2011 were concluded on 12 January 2012. As a
result of the negotiations, Honkarakenne laid off 49 employees for an
indefinite period. It was also decided that the remainder of the company's
personnel could be temporarily laid off for a maximum of 90 days until the end
of September 2012.
The company's CEO, Esa Rautalinko, resigned on 27 January 2012. On 2 February
2012, the Board of Directors appointed the company's CFO, Mikko Jaskari, as
acting CEO. On 7 May 2012, the Board appointed Mikko Kilpeläinen as the new
CEO. Mikko Kilpeläinen started out in his new position on 1 August 2012.
HONKARAKENNE OYJ'S 2012 ANNUAL GENERAL MEETING, BOARD OF DIRECTORS, AND AUDITORS
The Annual General Meeting (AGM) of Honkarakenne Oyj was held at the company's
headquarters in Tuusula on 30 March 2012. The AGM confirmed the financial
statements of the parent company and Group, and discharged from liability the
board members and CEO for 2011. The AGM decided that no dividends be paid for
the 2011 financial year. The AGM decided that a repayment of capital totalling
EUR 0.08 per share be paid from the Fund for invested unrestricted equity.
Anders Adlercreutz, Lasse Kurkilahti, Mauri Saarelainen, Marko Saarelainen,
Mauri Niemi, Teijo Pankko, and Pirjo Ruuska were re-elected to the Board of
Directors. The Board's organisation meeting elected Lasse Kurkilahti the
Chairman of the Board. Mauri Saarelainen will serve as the Deputy Chairman.
Board of Directors decided not to set up any committees.
KPMG Oy Ab, Corporation of Authorized Public Accountants, was reappointed as
auditor of the company with Mr Reino Tikkanen, APA, as chief auditor.
HONKARAKENNE OYJ'S OWN SHARES AND AUTHORISATIONS OF THE BOARD OF DIRECTORS
Honkarakenne has not acquired its own shares during the report period. At the
end of the report period, the Group held 364,385 of its Honkarakenne B shares
with a total purchase price of EUR 1,381,750.23. These shares represent 7.05 %
of the company's capital stock and 3.35 % of all votes. The purchase cost has
been deducted from shareholders' equity in the consolidated financial
statements.
On 30 March 2012, the AGM decided that the Board of Directors will be
authorised to acquire a maximum of 400,000 of the company's own B shares with
assets included in the company's unrestricted equity. In addition, the AGM
authorised the Board to decide on a rights issue or bonus issue and on granting
special rights to shares referred to in Section 1 of Chapter 10 of the Limited
Liability Companies Act in one or more instalments. By virtue of the
authorisation, the Board may issue a maximum total of 400,000 new shares and/or
relinquish old B shares held by the company, including those shares that can be
issued by virtue of special rights. Both authorisations will be valid until 25
March 2013.
REDUCING THE RESERVE FUND
The AGM of 30 March 2012 decided to reduce the reserve fund recognised on the
balance sheet on 31 December 2011 by a sum of EUR 5,316,389.64 by transferring
all of the reserve fund's assets to the invested unrestricted equity fund. The
transfer of the reserve fund's assets to the invested unrestricted equity fund
will enhance the flexibility of the company's capital structure and increase
distributable equity.
OWNERSHIP CHANGES IN ASSOCIATED COMPANIES
Honkarakenne redeemed the shares of Honka Management Oy previously owned by Esa
Rautalinko based on the shareholders' agreement. Even before this redeeming
Honkarakenne Oyj has had control of Honka Management Oy based on the
shareholders' agreement and the company has also previously been included in
the consolidated financial statements.
CORPORATE GOVERNANCE
Honkarakenne Oyj follows the Limited Liability Companies Act and the Finnish
Corporate Governance Code, 1 October 2010, for listed companies issued by the
Finnish Securities Market Association. The company's website, www.honka.com,
provides more information on the corporate governance systems.
FUTURE OUTLOOK
The company believes an upswing in sales will occur during the third and fourth
quarters. General macroeconomic uncertainty factors, such as the European
Union's stabilisation measures, are likely to be reflected in customers'
unwillingness to make decisions on construction projects. Uncertainty about the
general economic situation will continue among customers. Sales are still
affected by longer sales times and a dearth of long-term pre-orders.
At the end of June, the Group's order book stood at MEUR 17.7, which is a 8 %
decrease from the MEUR 19.4 of the same time period in the previous year. The
order book refers to orders whose delivery date falls within the next 24
months. Some orders may include a financing or building permit condition.
FORTHCOMING RISKS AND UNCERTAINTIES
The Group's order book stands at a lower level than in 2011. Although the
decline in the order book turned around during the review period, there is a
risk that the Group will not be able to expedite sales in the desired manner.
The Group has one significant concentration of credit risks in sales
receivables, concerning the open sales receivables of one importer. No
provision for doubtful debt has been made for this. The new sales made with
this importer have been paid. Deliveries to the importer have continued, and
the risks with the open sales receivables have not increased.
REPORTING
This report contains statements that relate to the future, and these statements
are based on hypotheses that the company's management hold currently as well as
on the decisions and plans that are currently in place. Although the management
believes that the hypotheses relating to the future are well-founded, there is
no guarantee that the said hypotheses will prove to be correct.
The interim report has been drafted in accordance with IAS 34. The principles
adhered to in preparing the annual financial statements also apply to this
interim report. The interim report should be read together with the annual
financial statements for 2011. The new revised standards or interpretations
effective as of 1 January 2012 have no bearing on the figures presented for the
report period. The figures have not been examined by the auditor.
OUTLOOK FOR 2012
It is Honkarakenne's view that the net sales and profit before taxes in 2012
will be lower than the previous year. Honkarakenne's previous guidance was the
following: The company's goal for 2012 is to maintain its net sales and result
before taxes at 2011 levels.
HONKARAKENNE OYJ
Board of Directors
Further information:
Mikko Kilpeläinen, President and CEO, tel. +358 50 542 5884,
mikko.kilpelainen@honka.com or
Mikko Jaskari, CFO, tel. +358 400 535 337, mikko.jaskari@honka.com.
This and previous releases are available for viewing on the company's website
at www.honka.com/investors. The following interim report will be published on 8
November 2012.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(unaudited) 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2012 2011 2012 2011 2011
(MEUR)
Net sales 13.0 18.2 20.0 27.5 55.0
Other operating income 0.2 0.2 0.6 0.8 1.1
Change in inventories 0.0 -0.6 0.9 0.1 -2.0
Production for own use 0.0 0.0 0.0 0.0 0.0
Materials and services -7.2 -9.4 -12.4 -15.6 -28.9
Employee benefit expenses -2.6 -3.1 -5.1 -5.9 -11.1
Depreciations -0.7 -0.8 -1.5 -1.7 -3.3
Other operating expenses -2.2 -2.4 -4.2 -4.1 -8.9
Operating profit/loss 0.5 2.2 -1.8 1.0 1.9
Financial income and expenses -0.4 -0.2 -0.1 -0.0 -0.7
Share of associated companies' -0.0 -0.0 -0.0 -0.0 -0.1
profit
Profit/loss before taxes 0.1 2.0 -2.0 1.0 1.1
Taxes 0.0 -0.5 0.6 -0.1 -0.3
Profit/loss for the period 0.1 1.5 -1.4 0.9 0.8
Other comprehensive income:
Translation differences 0.1 -0.0 0.0 -0.1 0.1
Total comprehensive 0.3 1.5 -1.4 0.8 0.9
income for the period
Protif for the period attributable
to:
Equity holders of the parent 0.1 1.5 -1.4 0.9 0.8
Non-controlling interest 0.0 0.0 0.0 0.0 0.1
0.1 1.5 -1.4 0.9 0.9
Comprehensive income attributable
to:
Equity holders of the parent 0.3 1.5 -1.4 0.8 0.9
Non-controlling interest 0.0 0.0 0.0 0.0 0.0
1.3 1.5 -1.4 0.8 0.9
Earnings/share (EPS), EUR
Basic 0.03 0.30 -0.28 0.18 0.17
Diluted 0.03 0.30 -0.28 0.18 0.17
CONSOLIDATED BALANCE SHEET 30.6.2012 30.6.2011 31.12.2011
(unaudited)
(MEUR)
Assets
Non-current assets
Property, plant and equipment 17.7 20.5 19.0
Goodwill 0.1 0.1 0.1
Other intangible assets 0.8 0.9 0.7
Investments in associated companies 0.3 0.4 0.3
Other investments 0.1 0.2 0.2
Receivables 0.4 0.2 0.3
Deferred tax assets 1.6 1.5 1.1
21.0 23.6 21.7
Current assets
Inventories 7.6 9.6 7.1
Trade and other receivables 9.4 10.0 7.7
Cash and bank receivables 2.1 1.8 2.6
19.1 21.3 17.3
Total assets 40.1 44.9 39.0
Shareholders' equity and liabilities 30.6.2012 30.6.2011 31.12.2011
Equity attributable to equity holders
of the parent
Capital stock 9.9 9.9 9.9
Share premium 0.5 0.5 0.5
Reserve fund 5.3 5.3 5.3
Unrestricted equity reserve 1.5 1.9 1.9
Translation differences 0.5 0.2 0.5
Retained earnings -1.6 -0.2 -0.2
16.1 17.7 17.9
Non-controlling interests 0.2 0.2 0.2
Total equity 16.3 17.9 18.1
Non-current liabilities
Deferred tax liabilities 0.0 0.3 0.2
Provisions 0.3 0.4 0.3
Interest bearing debt 5.6 8.7 5.1
Non-interest bearing debt 0.0 0.0 0.0
5.9 9.4 5.6
Current liabilities
Trade and other payables 15.6 14.5 11.5
Tax liabilities 0.1 0.0 0.1
Interest bearing debt 2.2 3.2 3.7
17.9 17.6 15.3
Total liabilities 23.8 27.0 20.9
Total equity and liabilities 40.1 44.9 39.0
STATEMENT OF CHANGES IN EQUITY
(unaudited)
1,000 EUR Equity attributable to equity holders of
the parent
a) b) c) d) e) f) g) Total h) Total
equity
Total equity 9898 520 5316 1896 319 -1378 771 17342 200 17542
1.1.2011
Dividends -446 -446 -446
Repurchase of -91 -91 -91
own shares
Proceeds from 87 4 91 91
sale of
own shares
Total -110 883 772 47 819
comprehensive
income for the
period
Total equity 9898 520 5316 1896 209 -1382 1211 17668 247 17915
30.6.2011
a) b) c) d) e) f) g) Total h) Total
equity
Total equity 9898 520 5316 1896 462 -1382 1151 17859 242 18101
1.1.2012
Repayment of -384 -384 -384
capital
Repurchase of 0 -35 -35
own shares
Total 4 -1358 -1354 -1 -1355
comprehensive
income for the
period
Total equity 9898 520 5316 1512 466 -1382 -207 16121 206 16327
30.6.2012
a) Share capital
b) Premium fund
c) Reserve fund
d) Unrestricted equity reserve
e) Translation difference
f) Own shares
g) Retained earnings
h) Non-controlling interests
CONSOLIDATED CASH FLOW STATEMENT 1.1.- 1.1.- 1.1.-
(Unaudited) 30.6.2012 30.6.2011 31.12.2011
(MEUR)
Cash flow from operations 1.5 2.9 6.0
Cash flow from investments, net -0.3 0.3 0.9
Total cash flow from financing -1.6 -3.3 -6.3
Increase in credit capital 2.1 2.3 -0.8
Decrease in credit capital -3.2 -5.0 -6.7
Other financial items -0.1 -0.2 0.1
Dividends paid -0.4 -0.5
Repayment of capital -0.4
Change in liquid assets -0.5 -0.1 0.7
Liquid assets at the beginning of period 2.6 1.9 1.9
Liquid assets at the end of period 2.1 1.8 2.6
NOTES TO THE REPORT
Calculation methods
This interim report has been prepared in line with the IAS 34 standard. The
same principles of preparation as used in the annual report have been applied
to this interim report. The interim report should be read together with the
accounts for 2011. The new revised standards or interpretations effective as of
1 January 2012 have no bearing on the figures presented for the report period.
The figures have not been examined by the auditor.
Honka Management Oy, established year 2010 and owned by the top management of
the company, has been included in the consolidated financial statements due to
the terms and conditions of the shareholder agreement concluded between it and
Honkarakenne Oyj.
Honkarakenne has one operating segment, the manufacture, sales and marketing of
log houses, under the Honka brand. Geographically, the sales of the Group
divide as follows: Finland, West, East, Far East, Other markets and Process
waste sales for recycling. The internal reporting of the management is in line
with IFRS reporting. For this reason, separate reconciliations are not
presented.
TANGIBLE ASSETS
(Unaudited) Tangible
(MEUR) assets
Acquisition cost 1.1.2012 66.7
Translation difference (+/-) -0.1
Increase 0.5
Decrease -3.2
Transfers between balance sheet items 0.0
Acquisition cost 30.6.2012 63.8
Accumulated depreciation 1.1.2012 -47.7
Translation difference (+/-) 0.1
Disposals and reclassifications 2.8
Depreciation for the period -1.3
Accumulated depreciation 30.6.2012 -46.1
Book value 1.1.2012 19.0
Book value 30.6.2012 17.7
Own shares
Honkarakenne Oyj has not acquired its own shares during the report period. At
the end of the report period, the Group held 364,385 of its Honkarakenne B
shares with a total purchase price of EUR 1,381,750.23. These shares represent
7.05% of the company's capital stock and 3.35% of all votes.
CONTINGENT LIABILITIES
(Unaudited) 30.06.2012 30.6.2011 31.12.2011
MEUR
For own loans
- Mortgages 23.7 25.7 23.7
- Pledged shares
- Other quarantees 1.5 2.2 1.8
For others
- Guarantees 0.2 0.2 0.2
Leasing liabilities 0.3 0.3 0.4
Rent liabilities
Nominal values of forward exchange contracts 1.8 1.4 3.4
Derivative contracts 0.4 0.3 0.4
Events in the circle of acquaintances
The Group's circle of acquaintances consists of subsidiaries, associated
companies and the company's management. The management included in the circle
of acquaintances comprises the Board of Directors, CEO and the company's
managing committee.
In the period under review, there were general transactions conducted with
acquaintances totalling 213 thousand euros. The pricing of goods and services
in transactions with acquaintances conforms to market-based pricing.
KEY INDICATORS
(Unaudited) 1-6 1-6 1-12
2012 2011 2011
Earnings/share (EPS) eur -0.28 0.18 0.17
Return on equity % -7.9 5.1 4.6
Equity ratio % 48.5 46.0 52.6
Shareholders equity/share eur 3.4 3.7 3.7
Net debt MEUR 5.6 10.1 6.1
Gearing % 34.6 56.5 34.5
Gross investments MEUR 0.7 0.4 1.0
% of net sales 3.3 1.5 1.8
Order book MEUR 17.7 19.4 13.6
Average number of personnel Staff 121 122 123
Workers 138 143 142
Total 259 265 265
Adjusted number of shares At year-end 4805 4805 4805
Average during period 4805 4805 4805
CALCULATION OF KEY INDICATORS
Profit for the period attributable to equity
holders of parent
Earnings/share (EPS) -----------------------------------------------
Average number of outstanding shares
Profit before taxes - taxes
Return on equity % ----------------------------------------------- x 100
Total equity, average
Total equity
Equity ratio, % ----------------------------------------------- x 100
Balance sheet total - advances received
Net debt Interest-bearing debt - cash and cash equivalents
Interest-bearing debt - cash and cash equivalents
Gearing, % ------------------------------------------------ x 100
Total equity
Shareholders' equity
Shareholders ------------------------------------------------
equity/share
Number of shares outstanding at end of period
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