2011-05-12 14:00:00 CEST
2011-05-12 14:00:06 CEST
REGULATED INFORMATION
Honkarakenne Oyj - Interim report (Q1 and Q3)
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2011
Helsinki, Finland, 2011-05-12 14:00 CEST (GLOBE NEWSWIRE) --
HONKARAKENNE OYJ INTERIM REPORT 12 May 2011 at 3:00 pm
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2011
SUMMARY
Honkarakenne Group's loss halved from the corresponding time period of the
previous year.
January - March 2011
-- Honkarakenne Group's consolidated net sales for the first quarter of the
year amounted to MEUR 9.2 (MEUR 8.5 in 2010), an increase of 9% on the
previous year's corresponding period.
-- Operating loss was MEUR -1.1 (MEUR -1.8). Operating loss before
non-recurring items was MEUR -1.1 (MEUR -1.5).
-- Profit/loss before taxes was MEUR -0.9 (MEUR -2.0).
-- Earnings per share amounted to EUR -0.12 (EUR -0.47).
The goal for 2011 is to achieve better net sales and a better result than in
the previous year. It is the company's view that there exists potential for
growth in all main market areas, and an improvement programme is being run in
the Group.
KEY FIGURES 1-3/ 1-3/ 1-12/ Change
2011 2010 2010 %
Net sales, MEUR 9.2 8.5 58.1 9
Operating profit/loss, MEUR -1.1 -1.8 1.3
Operating profit before non-recurring items, MEUR -1.4 -1.5 2.5
Profit/loss before taxes, MEUR -0.9 -2.0 0.4
Average number of personnel 265 305 291
Earnings/share (EPS), EUR -0.12 -0.47 0.23
Equity ratio, % 41.7 33.6 42.5
Return on equity, % -3.3 -13.1 7.3
Shareholders' equity/share, EUR 3.5 2.9 3.6
Gearing, % 81.9 112.1 73.1
Esa Rautalinko, President and CEO of Honkarakenne Oyj, in connection with the
interim report:
“After the first quarter, the Group's result before taxes is at the expected
level, and the Group's net sales increased by 9% over the same period of last
year. In 2011, our main focus is on accelerating sales in all market areas, and
these measures will be continued. In Finland, Honkarakenne is seeking growth
particularly in the residential house market, as the Group's selection includes
environmentally friendly low-energy solutions for areas zoned for stone, brick,
and concrete buildings. Export will focus on premium product, such as the Honka
Fusion™ product concept, and on opening new markets for it. In the Far East,
West, and Other Markets segments, we will also aim for growth by means of
developing the sales network.
The goal of the improvement programme initiated by the Group at the beginning
of 2010 is to increase the result by MEUR 8 within two years. Of this, MEUR 5.1
was achieved in 2010, and for 2011 the targeted improvement is MEUR 2.9. During
the first quarter of the year, the effect of the improvement programme amounted
to MEUR 0.1.
In the first quarter, Honkarakenne continued to focus on its core business and
sold its shareholding in Karjalan Lisenssisaha Invest Oy to FM Timber Team Oy
in February. The trade has a positive effect of MEUR 0.3 on the result of the
first quarter. In future, Honkarakenne will purchase sawn timber from FM Timber
Team along with other suppliers.
The natural disaster that occurred in Japan in March has not yet affected
Honkarakenne's business operations. The reconstruction process may commence
fully after the devastated areas have been cleared and any possible changes to
zoning are complete. Honkarakenne is actively seeking to take part in
reconstruction projects, but it is still too early to estimate the effects on
the Group's operations in the Far East.”
NET SALES
Honkarakenne Group's consolidated net sales for the first quarter increased by
9% to MEUR 9.2 (8.5). The net sales in Domestic and in Process waste decreased
by 13% to MEUR 3.8 (4.3). In export, net sales increased by 31% to MEUR 5.5
(4.2).
Geographical distribution of net sales:
DEVELOPMENT OF SALES
Distribution of 1-3/2011 1-3/2010
net sales, %
Domestic 38% 48%
West 13% 24%
East 32% 14%
Far East 11% 9%
Other markets 4% 2%
Process waste sales for recycling 3% 3%
Total 100% 100%
Net sales, MEUR 1-3/2011 1-3/2010 Change 1-12/2010
%
Domestic 3.5 4.0 -13% 25.7
West 1.2 2.0 -41% 11.3
East 2.9 1.2 143% 12.8
Far East 1.0 0.8 30% 5.7
Other markets 0.4 0.2 95% 1.1
Process waste sales for recycling 0.2 0.3 -11% 1.4
Total 9.2 8.5 9% 58.1
The sales areas are:
Domestic, includes Finland.
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.
DEVELOPMENT OF PROFIT AND PROFITABILITY
Operating profit in January-March was MEUR -1.1 (MEUR -1.8), and profit before
taxes was MEUR -0.9 (MEUR -2.0).
The calculations below present the change in first-quarter operating profit
from 2010 to 2011.
Operating profit 1-3/2010 without non-recurring items -1.5
Improvement programme and increase in sales 0.1
Other items 0
Operating profit 1-3/ without non-recurring items -1.4
Non-recurring items 0.3
Operating profit 2011 -1.1
Non-recurring items includes a positive non-recurring item generated by the
sale of the sharehold 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 41.7% (33.6%) and
interest-bearing net liabilities at MEUR 13.8 (MEUR 15.9). MEUR 4.3 (4.4) of
the interest-bearing net liabilities carries a 30% equity ratio covenant term.
Group liquid assets totalled MEUR 1.3 (MEUR 1.9). The Group also has a MEUR
10.0 million bank overdraft facility, MEUR 5.4 (MEUR 4.3) of which was had been
drawn on at the end of the report period. Gearing stood at 82% (112%). The
Group's capital expenditure totalled MEUR 0.2 (MEUR 0.2).
MARKET DEVELOPMENT
Based on a report commissioned by RTS Oy, Finnish log house production is
expected to grow by 3% this year. The figure includes production for Finland
and for export.
PRODUCTS, MARKETING AND MARKET AREAS
In Finland during the first quarter, Honkarakenne focused on urban wood
construction projects and on creating a complete project concept. The complete
project concept is aimed at increasing the Group's opportunities for
involvement in construction projects of large and medium-sized single-family
houses. In addition, the Honka Säästö™ solution for recreational products was
launched in Finland. This is a unique structural solution that allows holiday
houses with modern comforts to remain completely cold during the winter. Honka
Säästö™ introduces significant reductions to the energy costs of vacation
houses. Like all Honkarakenne products, it is also an extremely environmentally
friendly solution.
In the West, the Group continued to push the Honka Fusion™ concept to the
market. Trade activity saw a clear increase in Eastern Europe but countries
that have traditionally been strong for Honkarakenne, Germany and France, did
not reach a satisfactory level. In the West, additional measures have been
initiated in order to increase sales towards the end of the year.
In the East market area, investment in the premium strategy paid off, resulting
in a clear increase in net sales and a positive outlook for the entire area.
During the first quarter of the year, the Group was in the process of
developing a new model of houses for the eastern markets. This selection aims
to meet the needs of demanding premium customers more than before. The models
will be launched during the second quarter.
In the Far East, the first quarter was overshadowed by Japan's natural disaster
in March. Due to the difficult situation caused by the destruction,
Honkarakenne rescheduled to the autumn of 2011 the marketing campaign planned
for March. The construction will pick up in Japan, but it is too early to
anticipate the extent to which Honkarakenne will be involved in the
reconstruction. In the Far East area, preparations were made during the first
quarter to renew the house models.
In the Other Markets group, the focus was on increasing operations particularly
in markets where construction during the winter is possible.
RESEARCH AND DEVELOPMENT
In January-March, the Group's R&D expenditure was MEUR 0.1 (MEUR 0.1), 1.6% of
the net sales (1.1%). The Group has not activated development costs during the
period under review.
STAFF
At the end of the March, the Group employed 265 people (305) on average. This
is 40 less than at the same time in the previous year.
HONKARAKENNE OYJ'S 2011 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 1 April 2011. The AGM confirmed the financial
statements of the parent company and Group, and discharged from liability the
board members and CEOs for 2010. The AGM decided to pay a dividend of EUR 0.10
on B shares for the 2010 financial year.
Anders Adlercreutz, Lasse Kurkilahti, Mauri Saarelainen, Marko Saarelainen,
Mauri Niemi, Teijo Pankko, and Pirjo Ruuska were 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 of
the Board. Lasse Kurkilahti, Pirjo Ruuska, and Teijo Pankko were elected to the
company's audit committee.
Chartered accountant community KPMG Oy Ab was reselected to be the auditor, the
new main auditor being Reino Tikkanen.
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 1,377,609.57. 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 1 April 2011, 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 2012.
OWNERSHIP CHANGES IN ASSOCIATED COMPANIES
On 17 February 2011, Honkarakenne Oyj signed an agreement to sell its 37.5%
sharehold in Karjalan Lisenssisaha Invest Oy to FM Timber Team Oy. Karjalan
Lisenssisaha Invest Oy and its subsidiaries operate in the field of sawmill
industry in Russia. Honkarakenne relinquished its sharehold in Karjalan
Lisenssisaha Invest Oy as part of its aim to focus on its core operations.
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/investors, provides more information on the corporate governance
systems.
FUTURE OUTLOOK
Demand is expected to have potential for growth in all markets. However,
general macroeconomic uncertainties, such as the European Union's stabilisation
measures, may affect customers' willingness to make decisions on large
construction projects. Sales numbers still show signs of a prolonged sales
process and lack of long-term orders.
At the end of March, the Group's order book stood at MEUR 19.8, which is a 7%
decrease from the MEUR 21.2 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 has been unable to grow at a satisfactory pace in the West market
area. In its forecasts, the Group is aiming for growth in all market areas but,
particularly in the West market area, achieving this is a definite risk.
The Group's order book decreased from the previous year. There is a risk that
the Group will not be able to accelerate sales according to the goals set.
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 according to the agreed terms. 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.
This interim report has been prepared in line with the IFRS principles of
bookkeeping and assessment, but it does not meet all of the requirements of
standard IAS 34 (Interim Financial Reporting). The figures have not been
examined by the auditor.
OUTLOOK FOR 2011
Honkarakenne holds the views on outlook for 2011 that it has published
previously.
The goal for 2011 is to achieve better net sales and a better result than in
the previous year. It is the company's view that there exists potential for
growth in all main market areas, and an improvement programme is being run in
the Group.
HONKARAKENNE OYJ
Board of Directors
Further information:
Esa Rautalinko, President and CEO, tel. +358 400 740 997,
esa.rautalinko@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 reports will be published on
11 August 2011 and 10 November 2011.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited) 1-3 1-3 1-12
/2011 /2010 /2010
(MEUR)
Net sales 9.2 8.5 58.1
Other operating income 0.6 0.3 1.0
Change in inventories 0.6 1.4 0.3
Production for own use 0.0 0.0 0.0
Materials and services -6.2 -5.9 -32.6
Employee benefit expenses -2.8 -3.3 -12.2
Depreciations -0.8 -0.9 -3.7
Other operating expenses -1.7 -2.1 -9.6
Operating profit/loss -1.1 -1.8 1.3
Financial income and expenses 0.1 -0.2 -0.7
Share of associated companies' profit 0.0 0.0 -0.2
Profit/loss before taxes -0.9 -2.0 0.4
Taxes 0.4 -0.0 0.7
Profit/loss for the period -0.6 -2.0 1.1
Other comprehensive income:
Translation differences -0.1 0.1 0.3
Total comprehensive -0.7 -1.9 1.4
income for the period
Attributable to:
Equity holders of the parent -0.7 -1.9 1.4
Non-controlling interest -0.0 0.0 -0.0
-0.7 -1.9 1.4
Earnings/share (EPS), EUR
Basic -0.12 -0.47 0.23
Diluted -0.12 -0.47 0.23
CONSOLIDATED BALANCE SHEET 31.03.2011 31.03.2010 31.12.2010
(unaudited)
(MEUR)
Assets
Non-current assets
Property, plant and equipment 20.9 23.5 21.6
Goodwill 0.1 0.1 0.1
Other intangible assets 0.9 1.2 1.0
Investments in associated companies 0.4 2.0 1.8
Other investments 0.4 0.4 0.4
Receivables 0.1 0.3 0.1
Deferred tax assets 2.0 1.5 1.6
24.8 29.0 26.5
Current assets
Inventories 10.1 10.9 9.9
Trade and other receivables 11.4 7.7 8.0
Cash and bank receivables 1.3 1.9 1.9
22.8 20.5 19.9
Total assets 47.6 49.5 46.4
Shareholders' equity and liabilities 31.3.2011 31.3.2010 31.12.2010
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 1.9 1.1 1.9
Translation differences 0.2 0.1 0.3
Retained earnings -1.2 -2.7 -0.6
16.6 12.3 17.3
Non-controlling interests 0.2 0.0 0.2
Total equity 16.8 14.2 17.5
Non-current liabilities
Deferred tax liabilities 0.3 0.9 0.3
Provisions 0.4 0.4 0.4
Interest bearing debt 11.9 13.8 11.1
Non-interest bearing debt 0.0 0.5 0.0
12.6 15.6 11.8
Current liabilities
Trade and other payables 15.0 15.6 13.5
Tax liabilities 0.0 0.0 0.0
Interest bearing debt 3.2 4.0 3.6
18.2 19.6 17.1
Total liabilities 30.7 35.3 28.9
Total equity and liabilities 47,6 49,5 46.4
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 7,498 520 5,316 29 -1,138 82 12,307 9 12,316
equity
1.1.2010
Share issue 2,400 1,088 3,480 3,480
Proceeds 758 -414 344 344
from sale
of
own shares
Total 77 -2,000 -1,923 0 -1,923
comprehens
ive income
for the
period
Total 9,898 520 5,316 1,088 106 -380 -2,332 14,208 9 14,217
equity
31.3.2010
Total 9,898 520 5,316 1,896 319 -1,378 771 17,342 200 17,542
equity
1.1.2011
Total -123 -568 -691 -3 -694
comprehens
ive income
for the
period
Total 9,898 520 5,316 1,896 196 -1,378 202 16,651 197 16,848
equity
31.3.2011
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) 31.3.2011 31.3.2010 31.12.2010
(MEUR)
Cash flow from operations -0.8 -1.1 2.8
Cash flow from investments, net -0.2 -0.3 -0.8
Total cash flow from financing 0.4 1.6 -1.8
Share issue 3.5 3.5
Increase in credit capital 5.4 4.3 3.1
Decrease in credit capital -4.9 -6.4 -8.5
Other financial items -0.1 -0.2 0.1
Change in liquid assets -0.6 0.2 0.2
Liquid assets at the beginning of period 1.9 1.7 1.7
Liquid assets at the end of period 1.3 1.9 1.9
NOTES TO THE REPORT
Calculation methods
This interim report has been prepared in line with the IFRS principles of
bookkeeping and assessment, but it does not meet all of the requirements of
standard IAS 34 (Interim Financial Reporting). The interim report should be
read together with the accounts for 2010. The new revised standards or
interpretations effective as of 1 January 2011 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: Domestic, 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 1.1.2011 67.0
Translation difference (+/-) -0.2
Increase 0.2
Decrease -0.1
Transfers between balance sheet items 0.0
Acquisition cost 31.3.2011 66.8
Accumulated depreciation 1.1.2011 -45.4
Translation difference (+/-) 0.2
Disposals and reclassifications 0.1
Depreciation for the period -0.7
Accumulated depreciation 31.3.2011 -45.9
Book value 1.1.2011 21.6
Book value 31.3.2011 20.9
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 1,377,609.57. These shares represent
7.05% of the company's capital stock and 3.35% of all votes.
CONTINGENT LIABILITIES
(Unaudited) 31.3.2011 31.3.2010
MEUR
For own loans
- Mortgages 25.7 25.7
- Pledged shares
- Other quarantees 2.9 3.6
For others
- Guarantees 0.2 0.8
Leasing liabilities 0.8 0.7
Rent liabilities 0.1
Nominal values of forward exchange contracts 2.1 2.3
Derivative contracts 0.2 0.3
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, no transactions were conducted with acquaintances
included in the company's management.
KEY INDICATORS
(Unaudited) 1-3 1-3 1-12
2011 2010 2010
Earnings/share (EPS) eur -0.12 -0.47 0.23
Return on equity % -3.3 -13.6 7.3
Equity ratio % 41.7 33.6 42.5
Shareholders equity/share eur 3.5 2.9 3.6
Net debt MEUR 13.8 15.9 12.8
Gearing % 81.9 112.1 73.1
Gross investments MEUR 0.2 0.2 0.5
% of net sales 2.1 2.4 0.8
Order book MEUR 19.8 21.2 18.0
Average number of personnel Staff 122 138 135
Workers 143 167 156
Total 265 305 291
Adjusted number of shares At year-end 4,805 4,854 4,805 Average during period 4,805 4,282 3,737
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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