2015-02-12 07:00:07 CET
2015-02-12 07:00:12 CET
REGULATED INFORMATION
Uponor - Financial Statement Release
Financial statements bulletin 2014: Uponor’s performance continues on track, supported by strong U.S. growth
Uponor Corporation Financial statements bulletin January-December 2014 12
February 2015 8.00 EET
Uponor's performance continues on track, supported by strong U.S. growth
• All segments improve in October-December year-over-year, the strongest
performance was reported in Building Solutions - North America
• Net sales 1-12: €1,023.9m (2013: 906.0m), up 13.0%; growth at 2.0% from
combined historic figures
• Operating profit 1-12: €63.4m (€50.2m), up 26.3%
• Operating profit excluding non-recurring items at €67.7m (€55.2m), up 22.6%
• Earnings per share at €0.50 (€0.38); earnings per share excluding
non-recurring items at €0.54 (€0.43)
• Guidance for the year 2015: the Group's net sales and operating profit
(excluding any non-recurring items) are expected to improve from 2014
• The Board's dividend proposal is €0.42 (€0.38) per share
President and CEO Jyri Luomakoski comments on the reporting period:
• Our largest segment, Building Solutions - Europe was affected by volatile
markets but we achieved a solid performance thanks to our follow-through of
internal measures.
• The good tailwind lingered in Building Solutions - North America and our
traditional core market, residential new construction, continued to be buoyant.
We also pursued efforts to further penetrate the commercial segment, in both
plumbing and indoor climate, with good results. Strong sales growth was enabled
by diligently executed manufacturing capacity increases that were timed to meet
growing demand.
• Uponor Infra faced adverse developments in several markets, but measures
executed during the first wave of integration and thereafter are already
showing benefits in our cost base and helping to improve performance in the
last quarter.
• For 2015, we are issuing similar guidance to last year. Volatility in the
external environment is not helping us in forecasting, but the significant
technology investments, new product launches and the organisational
streamlining carried through all drive our confidence in continued steady
progress. There are, however, especially many risks that may materialise and
affect actual results.
The Board's dividend proposal
The Board proposes to the Annual General Meeting a dividend of €0.42 (€0.38)
per share. When making the proposal, the Board considered the solvency of the
company, the company's dividend policy, and the business outlook.
Key financial figures
Consolidated income statement 2014 2013 2012 2011 2010
(continuing operations), M€
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Net sales 1,023.9 906.0 811.5 806.4 749.2
Operating expenses 926.9 823.6 726.5 743.0 669.9
Depreciation 36.0 33.0 28.2 29.4 29.1
Other operating income 2.4 0.8 0.9 1.4 2.2
Operating profit 63.4 50.2 57.7 35.4 52.4
Financial income and expenses -7.4 -7.1 -8.6 -17.7 -10.7
Profit before taxes 56.3 43.2 49.4 17.7 41.7
Result from continuing operations 36.3 27.1 32.9 1.9 27.0
Profit for the period 36.0 26.8 32.8 1.6 24.7
Earnings per share 0.50 0.38 0.45 0.03 0.34
Information on the financial statements bulletin
This document is a condensed version of Uponor's 2014 financial statements
bulletin, which is attached to this release. It is also available on the
company website. The figures in brackets are the reference figures for the
equivalent period of the previous year. Unless otherwise stated, figures refer
to continuing operations. Any change percentages were calculated from the exact
figures and not the rounded figures published here.
Webcast and presentation
A webcast of the results briefing in English will be broadcast on 12 February
at 12:30pm EET. Connection details are available at
http://investors.uponor.com. Questions can be sent in advance to ir@uponor.com.
The recorded webcast can be viewed at http://investors.uponor.com shortly after
its publication. The presentation document will be available at
http://investors.uponor.com > News & downloads.
Next interim results
Uponor Corporation will publish its Q1 interim results on 28 April 2015. During
the silent period from 1 April to 27 April, Uponor will not comment on market
prospects or factors affecting business and performance.
Interim results October-December 2014
Markets
In the building and construction market in Europe, demand in the fourth quarter
remained subdued, continuing the trend of the two preceding quarters. The
European markets continued to be characterised by volatility, probably due to
the prolonged recovery of the European business environment. The situation was
further worsened by geopolitical issues related to the Ukraine crisis.
In Building Solutions - Europe, demand in Germany, the segment's single largest
market, was weak, as anticipated, while most other markets continued to be
flat. In the Nordic countries, demand for renovation partly offset the soft new
build markets. The market in Russia experienced a temporary boost, as customers
pre-stocked in anticipation of price increases due to changes in exchange
rates.
In the U.S., the building markets continued to grow, both in terms of
residential and commercial demand. Canada also remained resilient.
In terms of infrastructure solutions, demand picked up from the previous
quarters, the main improvement occurring in North America, Asia and Poland.
Net sales
Uponor's consolidated net sales came to €251.5m (€237.6m), showing an increase
of 5.9% from the final quarter of 2013, driven mainly by the strong growth
reported in North America. All segments reported growth. In local currency,
consolidated net sales grew by 5.7%.
Building Solutions - Europe's net sales improved from the corresponding period,
partly due to the temporary product approval cancellation that curbed sales in
France in 2013. Uponor Infra suffered from declining net sales in Finland, but
successfully offset this through positive net sales trend in North America,
technology sales and increased project business in Asia.
Breakdown of net sales, October - December:
M€ 10-12 10-12 Reported change
2014 2013
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----------------------------------------------------------------------
Building Solutions - Europe 112.7 112.0 0.6%
Building Solutions - North-America 56.1 43.6 28.4%
(Building Solutions - North-America, M$ 70.0 59.6 17.4%)
Uponor Infra 84.9 83.7 1.5%
Eliminations -2.2 -1.7
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Total 251.5 237.6 5.9%
Profits and profitability
Uponor's consolidated gross profit in the final quarter of 2014 totalled €83.2
(€72.0) million or 33.1% (30.3%). In 2013, the temporary cancellation of a
product approval in France negatively affected gross profit.
Consolidated operating profit for the fourth quarter came to €11.8 (€-3.8)
million. The operating profit margin came to 4.7% (-1.6%). Without
non-recurring items, the operating profit was 12.7 (0.1) million.
All segments improved in terms of profitability, against the comparison period.
In 2013, Building Solutions - Europe's operating profit was burdened by a cost
of ca €5 million related to the temporary cancellation of a product approval in
France. Uponor Infra's operating profit for the current quarter was supported
by the cost savings measures implemented. In the case of Building Solutions -
North America, Uponor was able to benefit from the successful measures
implemented to capture growth in the market's improving residential and
commercial segments.
Uponor Infra's performance improved due to operational leverage, as a result of
increased sales in international markets, projects and the technology business.
The segment continued to be burdened by restructuring costs from the programme
launched in Finland in 2014, amounting to €0.3 (€3.9) million in the fourth
quarter. These integration and efficiency programmes are proceeding according
to plan.
Breakdown of operating profit, October - December:
M€ 10-12 10-12 Reported change
2014 2013
----------------------------------------------------------------------
----------------------------------------------------------------------
Building Solutions - Europe 4.7 0.3 n/m
Building Solutions - North-America 9.3 5.8 59.9%
(Building Solutions - North-America, M$ 11.7 8.0 46.3%)
Uponor Infra -0.9 -9.0 n/m
Others -1.6 -0.5
Eliminations 0.3 -0.4
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Total 11.8 -3.8 n/m
Events during the period
In Central Europe, the relocation of distribution operations to the new
distribution centre presently being built in Hassfurt, Germany, proceeded ahead
of schedule, with the relocation of some operations already being finalised.
The centre, which will include a central warehouse and the small-scale
production of local heat distribution systems, will function as the main
Central European distribution hub. It will be taken into full commercial use
early in the second quarter of 2015.
In Finland, Uponor continued its determined efforts to develop its offering and
find new niche routes into the market. Together with leading professional
partners, Uponor established a business alliance to develop a pre-fabricated
wall solution for the renovation of existing buildings. The ‘Uponor technic
wall' concept includes the design, project management and installation of new
bathrooms and kitchens. This concept is specifically designed for renovating
the large number of buildings erected in Finland during the 1970s and 80s, and
the first pilot projects have been agreed on.
Financial statements January-December 2014
Markets
In 2014, the construction markets in Europe and North America developed as
mirror images of one another. An exceptionally cold winter in North America
slowed activity in the early months of the year but, as the snow melted,
activity gained strength. Meanwhile, in Europe, the mild winter provided a
jump-start for the industry, but this early momentum was largely lost by
mid-summer.
The Nordic countries saw new residential construction rise from 2013 levels in
Sweden and Denmark, but fall in Norway and Finland, while new non-residential
construction stabilised in the area following a number of years of contraction.
Meanwhile, renovation activity in the residential and non-residential markets
expanded in all countries. Civil engineering was flat in Sweden, contracted in
Finland and Denmark and, thanks to investments in transport and energy, grew in
Norway.
In Central Europe, an especially mild winter coupled with strong demand spurred
the area's largest country, Germany, to begin the year with accelerated
construction output levels across the residential and non-residential markets,
in both new builds and renovation. At the same time, the Netherlands began to
show the first signs of recovery after an extended period of contraction in
most building segments. The slowdown that began in the summer within the euro
area dampened sentiment in the region's construction industry. The year ended
with relatively high levels of building activity, but growth had clearly
decelerated.
The Southwest European markets were characterised by marked variation in
developments. In the UK, the non-residential segment returned to growth, and
the new residential segment exhibited a second year of improved activity. The
first signs of recovery were witnessed in Spain, where construction activity
and industry sentiment improved throughout the year, albeit from extremely low
levels. In France and Italy, on the other hand, slight growth in the renovation
segments fell well short of offsetting the significant reduction in new
non-residential and residential building.
In terms of Eastern Europe, the Russian market started the year well and,
despite an increasingly challenging business environment, residential
construction activity remained largely on a par with the previous year.
Meanwhile, businesses in Russia began scaling back investments in the
non-residential segment. Events related to the Ukraine crisis had a clearly
negative impact on the entire region, consumers and businesses became cautious
and a slowdown in activity was apparent. In the Baltics, residential and
non-residential construction grew during the year, but civil engineering
contracted slightly.
In general, the export markets outside Europe, in which Uponor does a
significant amount of business, continued to exhibit year-over-year growth in
the residential and non-residential new build segments.
Many parts of the U.S. and Canada were seriously affected by adverse weather in
the first months of the year, dampening both construction activity and builder
sentiment. As the summer approached, a slow but broad-based recovery took shape
in the U.S., leading to growth across nearly all residential and
non-residential segments. In Canada, both housing construction and
non-residential building activity slowed. The civil engineering segment
development in the U.S. and Canada was the same as for the other building
segments: steady growth in the U.S., but contraction in Canada.
Net sales
Uponor's 2014 net sales from continuing operations amounted to €1,023.9 (2013:
€906.0) million, up 13.0% year on year. In comparable terms, i.e. adjusting for
historic 2013 figures of the new Uponor Infra businesses, consolidated as of 1
July 2013, net sales grew by 2.0%. In local currency, this growth amounted to
3.9%.
Building Solutions - Europe's net sales declined by -0.1% but showed modest
growth of 1.7% in local currency. A key reason for this flattish development
was the weaker-than-anticipated market conditions in Germany in the latter part
of the year, which slowed growth.
Building Solutions - North America reported continued strong growth, both in
the local currency and in euro. Uponor was successful in growing net sales in
both the residential and commercial markets, and in expanding its geographical
presence in the U.S.
For the first time, Uponor Infra's net sales for 2014 included a full 12 months
of figures for the businesses that have been combined since the establishment
of the joint-venture with KWH Pipe on 1 July 2013. Reported growth from 2013
was therefore considerable, rising by 34.4%. Compared to the historic 2013 net
sales levels achieved by the combined businesses, there was a decline of 2.2%,
mainly driven by the impact of currency changes, but also due to plummeting
demand in some key markets, such as Finland and Denmark, and a negative
development in market share in Finland in particular.
In terms of business groups, as a result of the full-year consolidation of
Uponor Infra, the share of Infrastructure Solutions in 2014 grew to 34% (28%)
while Plumbing Solutions represented 39% (42%) and Indoor Climate Solutions 27%
(30%) of Group net sales.
Net sales by segment for 1 January - 31 December 2014:
M€ 1-12 1-12 Reported change
2014 2013
-------------------------------------------------------------------------
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Building Solutions - Europe 479.1 479.5 -0.1%
Building Solutions - North America 200.8 171.5 17.1%
(Building Solutions - North America (M$) 265.2 228.2 16.2%)
Uponor Infra 351.3 261.4 34.4%
Eliminations -7.3 -6.4
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Total 1,023.9 906.0 13.0%
Measured by reported net sales, and their respective share of Group net sales,
the 10 largest countries were as follows (2013 figures in brackets): the USA
17.6% (15.8%), Germany 13.9% (15.9%), Finland 13.2% (13.8%), Sweden 9.2%
(9.5%), Canada 8.2 % (6.1%), Denmark 4.7% (4.9%), Norway 3.6% (3.9%), the
United Kingdom 3.5% (3.3%), the Netherlands 3.1% (3.2%), and Russia 3.0%
(3.1%).
Results
The consolidated full-year gross profit ended at €340.1 (€320.1) million, a
change of €20.0 million or 6.2%. The gross profit margin came to 33.2% (35.3%).
The main influencer for this trend was an increased share of infrastructure
solutions business after the establishment of Uponor Infra.
Consolidated operating profit came to €63.4 (50.2) million, up 26.3% from the
previous year. The operating profit margin improved to 6.2% (5.5%) of net
sales. Operating profit included €4.3 (5.0) million in non-recurring items, of
which €3.7m was reported in Building Solutions - Europe and €0.6m (net) in
Uponor Infra. The non-recurring items in 2013 were related to the integration
programme in Uponor Infra, while the items in 2014 comprised the relocation of
Building Solutions - Europe's Central European distribution centre, relocation
and assembly of fixed assets in Uponor Infra related to the integration
programme, including the sale of former manufacturing facilities, as well as
costs incurred by Uponor Infra's streamlining in Finland in 2014.
Operating profit improved in all segments, although it remained slightly
negative in Uponor Infra. The biggest contributor was Building Solutions -
North America, with a 27.4% improvement in euro terms from last year.
Building Solutions - Europe's operating profit improved, especially in the
spring season, against the rather soft 2013 performance. In the fourth quarter
of 2013, the operating profit was burdened by a cost of €5 million related to
the temporary cancellation of a product approval in France, while in 2014 there
was a non-recurring cost of €3.7 million related to the relocation of the
distribution centre in Germany.
Building Solutions - North America's performance continued strong, in a
favourable market environment, and Uponor was able to capture more volume as a
result of capacity expansions.
Uponor Infra's performance improved, largely due to the synergic savings
generated by the merger between the Uponor and KWH Pipe infrastructure
businesses on 1 July 2013, the results of the streamlining actions implemented
in the Finnish market, as well as higher profitability in the foreign
businesses. Profitability was burdened by the declining volume development in
the Finnish market and the action begun to adjust operations to low demand. In
2014, Uponor Infra's operating profit was burdened by a non-recurring cost of
€0.6 million (net) due to merger-related integration initiatives, as well as
the streamlining of the Finnish operations in 2014.
Operating profit by segment for 1 January - 31 December 2014:
M€ 1-12 1-12 Reported change
2014 2013
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Building Solutions - Europe 35.0 32.7 7.0%
Building Solutions - North-America 31.5 24.7 27.4%
(Building Solutions - North-America (M$) 41.6 32.9 26.4%)
Uponor Infra -0.5 -2.3 77.9%
Others -2.6 -3.4
Eliminations 0.0 -1.5
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Total 63.4 50.2 26.3%
Uponor's financial expenses came to €7.4 (€7.1) million. Net currency exchange
differences in 2014 totalled €-1.2 (-0.6) million.
Profit before taxes was €56.3 (43.2) million. At a tax rate of 35.5% (37.3%),
income taxes totalled €20.0 (16.1) million.
Profit for the period totalled €36.0 (26.8) million, of which continuing
operations accounted for €36.3 (27.1) million.
Return on equity grew to 12.3% (10.8%). Return on investment reached 14.2%
(12.5%).
Earnings per share were €0.50 (0.38), and €0.50 (0.38) for continuing
operations. Equity per share was €3.16 (3.00). For other share-specific
information, please see the Tables section.
Consolidated cash flow from operations was €75.7 (92.1) million, while cash
flow before financing came to €45.1 (67.2) million. Comparison with the 2013
cash flow is impacted by significant positive one-time effects from the first
time consolidation of the former KWH Pipe business in the middle of 2013, i.e.
at the peak of the seasonal net working capital cycle. In line with the profit
improvement, net cash from operations in 2014 improved from €87.9 million to
€99.0 million.
Key figures are reported for a five-year period in the financial section.
Short-term outlook
The economic outlook in Uponor's key markets is likely to remain twofold in
2015: demand in North America, representing one fourth of Group net sales, is
expected to remain lively and offer room for continued construction industry
growth. The European markets, on the other hand, are expected to remain flat,
although supported by growing confidence in a gradual revival of the European
economy. However, this scenario is subject to certain risks, some of which are
geopolitical.
Uponor has focussed considerable effort in recent years on strengthening its
foothold in key markets. This has been achieved through measures such as
intensifying partnerships in the value chain and enhancing the product and
services offering in order to fulfil the diversified needs of customers and
partners on the road towards a more sustainable building industry. Internally,
the company has consistently executed a programme involving the further
development and harmonisation of operations, such as the supply and
distribution of products, the streamlining of operations, and reducing the
environmental footprint, while better serving the company's customers.
A key target for the future is continued investment in Uponor's platforms for
growth. This will mean securing supply and customer service capacity in growing
markets, such as North America, and ensuring the optimal allocation of
resources in areas that enable short and long term growth. At the same time,
the management continues to keep a sharp eye on the company's focus,
cost-efficiency and cash flow, in order to secure a solid financial position
for future growth initiatives.
Assuming that none of the major risks described materialise, Uponor issues the
following guidance for 2015: the Group's net sales and operating profit
(excluding any non-recurring items) are expected to improve from 2014.
Uponor's financial performance may be affected by a range of strategic,
operational, financial, legal, political and hazard risks. A more detailed risk
analysis is provided in the ‘Key risks associated with business' section of the
Financial Statements.
Uponor Corporation
Board of Directors
For further information, please contact:
Jyri Luomakoski, President and CEO, tel. +358 20 129 2824
Riitta Palomäki, CFO, tel. +358 20 129 2822
Tarmo Anttila
Vice President, Communications
Tel. +358 20 129 2852
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www.uponor.com
Uponor is a leading international provider of plumbing and indoor climate
solutions for residential and commercial building markets across Europe and
North America. In Northern Europe, Uponor is also a prominent supplier of
infrastructure pipe systems. The Group employs approx. 4,000 persons, in 30
countries. In 2014, Uponor's net sales exceeded €1 billion. Uponor Corporation
is listed on NASDAQ Helsinki in Finland. www.uponor.com
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