Martela Oyj - Interim report (Q1 and Q3)

MARTELA CORPORATION INTERIM REPORT, 1 January – 31 March 2015

MARTELA CORPORATION      INTERIM REPORT     29 April 2015 at 8.30 a.m.


MARTELA CORPORATION INTERIM REPORT, 1 January - 31 March 2015

In the first quarter revenue decreased considerably and the operating result
remained at the previous year's level 

Key figures:



                             1-3    1-3   1-12
EUR million                 2015   2014   2014
- Revenue                   26.7   34.1  135.9
- Change in revenue, %     -21.8    7.0    2.7
- Operating result          -1.3   -1.4    0.2
- Operating result, %       -4.9   -4.0    0.1
- Earnings/share, EUR      -0.36  -0.37  -0.18
- Return on investment, %  -15.1  -15.0    0.5
- Return on equity, %      -30.1  -29.1   -3.4
- Equity ratio, %           37.7   37.2   38.1
- Gearing ratio, %          31.3   45.4   33.4




New guidance:

The Martela Group anticipates that its revenue in 2015 will remain at the
previous year's level or slightly decrease. The Group's operating result is
estimated to show a slight year-on-year improvement . The Group's operating
result is weighted towards the second half of the year due to normal seasonal
variation, and this weighting was further emphasised by the timing of larger
projects during 2015. 

Previous guidance:

The Martela Group anticipates that its revenue in 2015 will remain at the
previous year's level and its operating result will show a slight year-on-year
improvement . The Group's operating result is weighted towards the second half
of the year due to normal seasonal variation, and this weighting was further
emphasised by the timing of larger projects during 2015. 

Market

The overall demand for office furniture continued to be low in the review
period in the Group's main market areas: Finland, Sweden, Poland and Russia.
Instead of new offices, demand currently focuses on alteration and enhancement
projects, particularly in the Finnish and Swedish markets. This is reflected in
an increasing interest in activity-based office solutions and the Martela
Lifecycle model. Even though the overall demand continues to be low, the many
office alteration projects that are at the planning stage in the Nordic
countries are slightly improving the market situation. However, decision-making
is being slowed down by the general economic uncertainty and long-term leases.
In Russia, despite the slowing down of the property market and the uncertain
economic situation, plans seem to have progressed and activity to have
recovered in office construction, but decision-making has been particularly
slow because of the prevailing situation. 

New statistics on office construction in Finland are not available, as
Statistics Finland has discontinued its compilation of building and dwelling
production data for the time being. 

In addition to office construction, general economic development and companies'
need to use their office space more efficiently have an essential effect on the
demand for Martela's products and services. The need to boost efficiency often
leads to office alteration projects, which in turn generate demand for
Martela's products and services. The annual change in the volume of the gross
domestic product can be regarded as a good indicator of general economic
development. In Finland, this change was -0.1% in 2014. According to most
predictions, the change in Finland's gross domestic product is estimated to be
near zero or only slightly positive in 2015. Judging from these predictions,
strong recovery is not to be expected in the near future. 

Consolidated revenue and result

The Group's revenue for January-March was EUR 26.7 million (34.1). Despite the
challenging market situation in Finland, the Group's net sales in Finland
remained at the previous year's level. The activity-based office solutions
provided by Martela, as well as the Martela Lifestyle model, have been well
received in Finland. There were no major customer projects in the first quarter
in Finland. Instead, the revenue consisted of small and medium-sized
deliveries. In Poland, the revenue decreased markedly year-on-year. As in the
previous year, there were no major deliveries in Poland in early 2015. For this
reason, the revenue generated by Martela's operations in Poland remained low.
In Sweden and Norway, Martela had major customer deliveries in the first
quarter of 2014. In 2015, major deliveries will take place in the second half
of the year. For this reason, the revenue generated by Business Unit Sweden &
Norway decreased considerably year-on-year in the first quarter. As a result of
this, as well as the decrease in the revenue in Poland and Russia, the Group's
revenue showed a downward trend in the first quarter. 

The Group's operating result for the first quarter was EUR -1.3 million (-1.4).
In autumn 2013, the Group launched a savings programme of EUR 6 million, which
was completed in 2014. Approximately one-third of the savings were achieved in
2014, and the rest will be achieved during 2015. For this reason, the Group's
fixed costs decreased year-on-year according to plan, due to the adjustment
measures implemented. At the same time, as a result of the production
efficiency measures implemented in 2014, the sales margin on the Group's
products was slightly higher than in the previous year. Due to the measures
taken, the Group's operating result for the first quarter remained at the
previous year's level, even though its revenue decreased markedly. 

Measures to improve supply chain efficiency continued to be implemented in the
first quarter. In January, Martela Corporation launched statutory employee
negotiations to increase the efficiency of its logistics centre in Nummela and
its subsidiary, Kidex Oy, in Kitee. As a result of the negotiations, personnel
was reduced by four employees in the Nummela logistics centre and by 13
employees at Kidex. In addition, a decision was made to implement temporary
lay-offs of no more than 90 days. The lay-offs concerned employees in Nummela
and the entire staff at Kidex. The purpose of these measures is to adjust
capacity to the market demand and the changes in the structure of the demand. 

Martela also launched a new savings programme in April, after the review
period. The goal is to reduce costs by EUR 4 million a year by the end of 2016,
so that the cost savings will take full effect in 2017. Statutory employee
negotiations were launched as part of the savings programme, concerning all
office employees at Martela Corporation in Finland. The negotiations may result
in a reduction of no more than 20 employees as well as temporary lay-offs of no
more than 90 days. 

To enhance operational efficiency, a decision was made after the review period,
on 29 April 2015, to integrate Business Unit Poland into Business Unit
International. In future, Business Unit International will consist of sales
operations in Poland and Russia as well as export to countries where Martela
does not have a subsidiary. 

Over the past year, interest in activity-based office solutions has continued
to increase in Martela's main market areas. The Group has introduced modern
solutions suitable for activity-based offices and continues to invest in its
ability to provide even more high-quality comprehensive solutions and services
in the field of activity-based working. The Group has strengthened its
pioneering position as a supplier of comprehensive solutions and as a leading
service provider for offices and other working environments. 

The result before taxes was EUR -1.4 million (-1.5), and the result after taxes
was EUR -1.5 million (-1.5). 

Martela's full interim report for January - March 2015 is included in PDF
format as an attachment to this release. The interim report is also available
on the company's website at www.martela.com. 


Martela Oyj
Board of Directors
Heikki Martela
CEO



ATTACHEMENT: Martela's interim report January - March 2015


For more information, please contact
Heikki Martela, CEO, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606

Distribution
Nasdaq Helsinki
Main News Media
www.martela.com

Attachments:

2015 0429 Interim Report Q1.pdf