2015-10-28 09:00:04 CET
2015-10-28 09:01:06 CET
REGULATED INFORMATION
Aspo - Interim report (Q1 and Q3)
Aspo Group's Interim Report January 1 to September 30, 2015
ASPO Plc STOCK EXCHANGE RELEASE October 28, 2015, at 10:00 a.m.
ASPO GROUP'S INTERIM REPORT JANUARY 1 TO SEPTEMBER 30, 2015
Aspo: Strong profitability and cash flow
(Figures for the corresponding period in 2014 are presented in parentheses)
January-September 2015
- Aspo's comparable operating profit amounted to EUR 15.7 (17.9) million.
Operating profit stood at EUR 14.4 (17.9) million, including EUR 1.3 million in
impairment loss of goodwill of Kaukomarkkinat.
- Profit for the period grew and stood at EUR 16.1 (14.7) million, including the
sale of ESL Shipping's shares in Alandia, of which a sales gain of EUR 4.9
million was recognized in financial items.
- Earnings per share were EUR 0.50 (0.46).
- Of Aspo's business operations, Telko was able to improve its operating profit
to EUR 8.5 (7.1) million. The operating profit of ESL Shipping stood at EUR
10.2 (10.8) million. The operating profit of Leipurin was EUR 2.0 (3.9) million.
The comparable operating profit of Kaukomarkkinat was EUR -0.5 (0.3) million.
- Operational cash flow amounted to EUR 10.7 (6.2) million.
July-September 2015
- Aspo's operating profit stood at EUR 7.3 (7.8) million.
- Profit for the quarter decreased to EUR 5.8 (6.8) million.
- Earnings per share were EUR 0.18 (0.22).
- The operating profit of ESL Shipping was EUR 4.4 (4.8) million. The operating
profit of Telko amounted to EUR 3.2 (2.1) million. The operating profit of
Leipurin was EUR 0.8 (1.7) million and of Kaukomarkkinat EUR 0.1 (0.5) million.
- The relative profitability of Telko and Leipurin in Russia, Ukraine and other
CIS countries improved, accounting for approximately 7% of net sales.
- Operational cash flow amounted to EUR 14.8 (8.5) million.
General outlook for 2015
The markets will continue to be uncertain. Industrial production is not expected
to increase in the main market areas of Aspo's business operations during the
rest of the year. The prices of Aspo's key raw materials and international dry
bulk cargo rates are expected to remain at a low level. In Russia, the national
economy and industrial production are expected to remain at the same level or
continue their decline. The purchasing power of consumers has decreased during
2015 as a result of the fall in the value of the Russian ruble, as well as the
high inflation rate.
Guidance for 2015
The guidance will remain unchanged. Aspo's profit will increase compared to
2014 or remain at the same level.
KEY FIGURES
7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2015 2014 % 2015 2014 % 2014
Net sales, MEUR 111.5 129.6 -14.0 323.7 360.3 -10.2 482.9
Operating profit, MEUR
*) 7.3 7.8 -6.4 14.4 17.9 -19.6 23.4
Operating profit, % 6.5 6.0 4.4 5.0 4.8
Profit before taxes,
MEUR **) 6.3 7.4 -14.9 17.4 15.0 16.0 19.0
Profit for the period,
MEUR **) 5.8 6.8 -14.7 16.1 14.7 9.5 18.4
Earnings per share, EUR 0.18 0.22 -18.2 0.50 0.46 8.7 0.57
Operational cash flow,
MEUR 14.8 8.5 74.1 10.7 6.2 72.6 22.0
Equity per share, EUR 3.34 3.47 -3.7 3.42
Return on equity (ROE),
% 20.8 18.8 17.8
Equity ratio, % 33.5 33.2 35.2
Gearing, % 104.5 110.5 101.0
ESL Shipping, operating
profit, MEUR 4.4 4.8 -8.3 10.2 10.8 -5.6 16.0
Leipurin, operating
profit, MEUR 0.8 1.7 -52.9 2.0 3.9 -48.7 4.4
Telko, operating profit,
MEUR 3.2 2.1 52.4 8.5 7.1 19.7 9.9
Kaukomarkkinat,
operating profit, MEUR
*) 0.1 0.5 -80.0 -1.8 0.3 -700.0 0.1
*) The cumulative operating profit in 2015 includes a MEUR 1.3 impairment loss
of goodwill.
**) The cumulative profit in 2015 includes a MEUR 1.3 impairment loss of
goodwill and a MEUR 4.9 sales gain.
AKI OJANEN, CEO OF ASPO GROUP:"Our operating profit of EUR 7.3 million over the third quarter is a good result
compared with 2012 (EUR 2.9 million) and 2013 (EUR 4.6 million). However, our
operating profit fell behind our record-high quarterly result of EUR 7.8 million
reached during the third quarter of 2014. Our operational cash flow was at an
excellent level in the third quarter, being EUR 14.8 million.
ESL Shipping, our shipping company, produced a good result. The poor economic
situation, the global crash in raw material prices and low prices of energy have
had a dramatic impact on the general operating environment of dry bulk cargo
carriers. However, the shipping company was able to maintain its operating
profit at the comparative period's good level thanks to agreements on the
operation of large Supramax vessels in the Arctic and active loading and
unloading operations in the Baltic Sea. ESL Shipping's operating profit rate was
22%.
Of our businesses focused on Russia, Telko succeeded better than Leipurin and
was, yet again, able to improve its operating profit. Telko has done an
excellent job in developing new market areas and, in particular, low-cycle
plastic and lubricant operations. The relative profitability of the Russian
market area for Aspo's businesses improved from the comparative period.
We are not satisfied with the result produced by Leipurin, even though
profitability in bakery raw materials in Russia remained at the level of
approximately 10% from net sales. The profitability of bakery machinery remained
poor. Our objective is to perform more profitable business operations in all
economic cycles. Leipurin will specify its strategy during the rest of the year.
Kaukomarkkinat is preparing to significantly redefine its operational policy and
its business idea. More information will be given later in 2015.
Aspo will organize a Capital Markets Day on November 26, 2015."
ASPO GROUP
NET SALES
Net sales by segment
7-9/2015 7-9/2014 Change 1-9/2015 1-9/2014 Change 1-12/2014
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 19.9 21.6 -7.9 56.3 62.0 -9.2 85.2
Leipurin 28.3 34.1 -17.0 86.3 98.7 -12.6 134.9
Telko 56.5 61.1 -7.5 161.7 171.1 -5.5 226.8
Kaukomarkkinat 6.8 12.8 -46.9 19.4 28.5 -31.9 36.0
Other operations 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total 111.5 129.6 -14.0 323.7 360.3 -10.2 482.9
There is no considerable inter-segment net sales.
Net sales by market area
7-9/2015 7-9/2014 Change 1-9/2015 1-9/2014 Change 1-12/2014
MEUR MEUR % MEUR MEUR % MEUR
Finland 35.0 44.3 -21.0 108.9 121.5 -10.4 162.0
Scandinavia 15.6 12.1 28.9 40.2 35.2 14.2 47.9
Baltic
countries 12.8 13.3 -3.8 37.8 40.0 -5.5 55.7
Russia, Ukraine +
other CIS
countries 35.0 41.2 -15.0 93.6 114.0 -17.9 153.0
Other
countries 13.1 18.7 -29.9 43.2 49.6 -12.9 64.3
Total 111.5 129.6 -14.0 323.7 360.3 -10.2 482.9
The decrease in net sales in Finland was affected by the sale of Industrial
business, as well as major deliveries of rugged computers and bakery machines
which both took place in the comparative period. Net sales in Scandinavia
increased as a result of the transfer of invoicing processes concerning a
significant customer of ESL Shipping from Finland to Sweden. The main reasons
behind the decrease in net sales in Russia, Ukraine and other CIS countries
during the third quarter are the strong decline in the values of the local
currencies from the comparative period and the decrease in industrial output in
the market area. The decrease in net sales in other countries was mainly caused
by the sale of Industrial business of Kaukomarkkinat.
EARNINGS
Operating profit by segment
7-9/2015 7-9/2014 Change 1-9/2015 1-9/2014 Change 1-12/2014
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 4.4 4.8 -8.3 10.2 10.8 -5.6 16.0
Leipurin 0.8 1.7 -52.9 2.0 3.9 -48.7 4.4
Telko 3.2 2.1 52.4 8.5 7.1 19.7 9.9
Kaukomarkkinat
*) 0.1 0.5 -80.0 -1.8 0.3 -700.0 0.1
Other operations -1.2 -1.3 7.7 -4.5 -4.2 -7.1 -7.0
Total 7.3 7.8 -6.4 14.4 17.9 -19.6 23.4
*) The cumulative operating profit in 2015 includes a MEUR 1.3 impairment loss
of goodwill.
Earnings per share
Earnings per share were EUR 0.50 (0.46) for the review period. Equity per share
was EUR 3.34 (3.47).
Financial targets
Aspo is aiming at an operating profit level which is closer to 10% than 5%, an
average return on equity of over 20%, and gearing of up to 100%.
The cumulative comparable operating profit rate for the review period was 4.9%
(5.0) and the operating profit rate was 4.4% (5.0). Return on equity was 20.8%
(18.8) and gearing was 104.5% (110.5).
OUTLOOK FOR 2015
The period of low growth in the international economy and in industry in the EU
will continue. Uncertainty will continue in eastern growth markets, which are
important areas for Aspo. The future development of growth markets and the
financial impact of general uncertainty are particularly difficult to evaluate.
Currencies are expected to remain volatile, inflation is estimated to remain
high in Russia, and GDP is expected to decrease significantly. The price of oil
is likely to remain at a low level. In general, the prices of industrial raw
materials are expected to remain at a low level. The Group will continue to
increase its market shares in the strategically important eastern growth markets
following the withdrawal of some of its competitors from the markets.
International dry bulk cargo rates are expected to remain low, but the shipping
company has ensured sufficient capacity utilization, mainly through long-term
agreements.
The guidance remains unchanged. Aspo's profit will increase compared to 2014 or
remain at the same level.
ASPO'S BUSINESS OPERATIONS
ESL SHIPPING
ESL Shipping is the leading dry bulk cargo company in the Baltic Sea region. At
the end of the period, the company's fleet consisted of 14 vessels, of which the
company owned 13 in full and one was leased.
7-9/2015 7-9/2014 Change % 1-9/2015 1-9/2014 Change % 1-12/2014
Net sales,
MEUR 19.9 21.6 -7.9 56.3 62.0 -9.2 85.2
Operating
profit, MEUR 4.4 4.8 -8.3 10.2 10.8 -5.6 16.0
Operating
profit, % 22.1 22.2 18.1 17.4 18.8
International dry bulk cargo rates continue to be low. ESL Shipping's vessels
mainly operated in the Baltic Sea and the North Sea, and in international
traffic in the Russian Arctic. Transportation operations are mainly based on
long-term contracts and established customer relationships.
ESL Shipping's net sales in July-September stood at EUR 19.9 (21.6) million. The
decrease in net sales was affected by the fuel price which was significantly
lower than previous year and resulting in lower bunker surcharges, as well as
coal transportation volumes that were lower than in the comparative period. Two
vessel units were docked during the third quarter. ESL Shipping transported 3.0
(3.1) million tons of cargo in July-September. The shipping company has been
able to improve its operational efficiency and the fuel economy of its vessels.
The shipping company's relative profitability was good and its operating profit
stood at EUR 4.4 (4.8) million.
The actual freight rate level for Supramax vessels was higher than in the
comparative period, and good, considering the market situation. Transportation
in the Russian Arctic succeeded very well in terms of operations thanks to the
special expertise of the personnel, previous experience and vessels that are
more effective than those of competitors. However, new Russian import license
regulations on Norwegian crushed stone transported by the shipping company that
entered into force during the contract period have interrupted operations in the
Russian Arctic for the time being.
Loading and unloading operations at sea have continued actively in all customer
segments. ESL Shipping's vessels enable operations at shallow ports, economies
of scale offered by large vessels in distant imports and low total
transportation costs.
Transportation volumes in the steel industry increased substantially from the
comparative period, while the north-south freight balance in the Baltic Sea
became unfavorable for the shipping company. The transportation volume in the
energy industry was unusually low due to inventories resulting from the mild
winter and the low wholesale price of electricity.
ESL Shipping's net sales over the first three quarters stood at EUR 56.3 (62.0)
million and its operating profit was EUR 10.2 (10.8) million.
Outlook for ESL Shipping in 2015
International dry bulk cargo rates are expected to remain low in late 2015.
International market freights for large standard vessels remain at a low level
and the underlying imbalance between supply and demand is expected to continue.
In line with its strategy, ESL Shipping is focusing on bulk cargo transportation
that requires special expertise and equipment, which allows for cargo rates
higher than the market level. A significant part of ESL Shipping's
transportation capacity utilization has been secured through long-term contracts
in the Baltic Sea and the North Sea. Supramax vessels have stopped operating in
the Russian Arctic for the remainder of this fall, which reduces profitability.
Transportation volumes in the steel industry are estimated to be at a
satisfactory level in late 2015. The demand for loading and unloading large
vessels at sea will remain high. The transportation of energy coal used by the
energy industry in combined power and heat plants will remain close to the
previous year's level. Inventories in the production of condensing power and the
market price of electricity do not enable additional transportation, and the
total transportation volume of coal will decrease significantly.
The objective of ESL Shipping is to expand further into areas where it can make
use of the independent load handling capacity and ice-strengthening of its
vessels, and reduce the impact of seasonal and industrial cycles on its
operations.
LEIPURIN
Leipurin serves the bakery industry and other food industry by providing product
development services, raw materials needed for baking, and equipment from
individual machines to full-scale baking lines. Leipurin operates in Finland,
Russia, the Baltic countries, Poland, Ukraine, Belarus, and Kazakhstan. In
Russia, its operations cover all geographic areas. In its procurement
operations, Leipurin operates both internationally and by developing local
procurement.
7-9/2015 7-9/2014 Change % 1-9/2015 1-9/2014 Change % 1-12/2014
Net sales,
MEUR 28.3 34.1 -17.0 86.3 98.7 -12.6 134.9
Operating
profit, MEUR 0.8 1.7 -52.9 2.0 3.9 -48.7 4.4
Operating
profit, % 2.8 5.0 2.3 4.0 3.3
Continued for the third year in succession, the decrease in prices of cereal-
based and other key raw materials is evening out through the new harvest season.
However, the decrease in prices reduced net sales over the third quarter.
Overall demand for bakery products has decreased in Finland and been partly
replaced by foreign products. The Russian economic crisis has reduced the
purchasing power of consumers in Russia and strongly increased the rate of
inflation which is more than 20% in food products. In Russia, demand for bakery
products focuses on low-priced products, and the aim has been to replace raw
materials by less expensive locally produced raw materials.
Net sales of Leipurin fell during the third quarter and stood at EUR 28.3 (34.1)
million. Operating profit decreased to EUR 0.8 (1.7) million. As a consequence
of the poor results produced during the quarter, the operating profit rate fell
to 2.8%. The decrease in the value of the Russian ruble from the comparative
period and the lack of new investments had a significant impact on the delivery
volume of machines supplied by Leipurin. In the challenging market situation,
the sale of bakery raw materials has decreased in Russia, while operating profit
has remained at a good level. Ukraine and other CIS countries have developed
well. In Finland, net sales have fallen due to a decrease in Finnish industrial
baking and, as a result, profitability has gone down from the comparative
period.
During the third quarter, the level of machinery and equipment investments was
fairly low in all operating countries of Leipurin. Demand was the highest in
countries outside the home market area of Leipurin where the company has
invested in the development of sales during 2015. As a result of the unfavorable
development in Russia, machinery operations showed a loss in January-September.
Euro-denominated net sales from operations in Russia, Ukraine and other CIS
countries decreased in the third quarter compared with the comparative period
and stood at EUR 7.1 (9.9) million. In Russia, Leipurin has replaced imported
raw materials by locally produced raw materials, which has also decreased net
sales. However, relative profitability remained unchanged at approximately 7% in
eastern markets. In Estonian, Latvian and Lithuanian markets, raw material sales
proceeded favorably partly because of an increase in product sales towards
Finland.
Net sales of Leipurin over the first three quarters stood at EUR 86.3 (98.7)
million and its operating profit was EUR 2.0 (3.9) million. Net sales in Russia,
Ukraine and other CIS countries fell by 30% to EUR 21.4 (30.6) million.
Operating profit decreased in the market area, while profitability was
approximately 7%.
Outlook for Leipurin in 2015
Prices of raw materials sold by Leipurin are expected to rise from their low
level through the new harvest season. The economic situation in Russia is
expected to weaken and the rate of inflation is estimated to remain high, due to
which there will be fewer investments made in the market area. Leipurin will
continue to operate in line with its strategy in Russia by expanding into new
customer segments. The objective is to open a new test bakery in St. Petersburg
this year. Machine sales and deliveries are expected to be lower than in the
comparative period, even though the situation is returning to normal after this
spring's production stoppages. The situation of the Finnish bakery industry is
expected to remain a challenging one, but Leipurin expects that it will maintain
its market position in the sector of industrial baking.
Leipurin will specify its strategy during the rest of the year.
TELKO
Telko is the leading expert and supplier of plastic raw materials and industrial
chemicals in the Baltic Sea region. The company operates in Finland, the Baltic
countries, Scandinavia, Poland, the Czech Republic, Slovakia, Ukraine, Russia,
Belarus, Kazakhstan, Azerbaijan, Georgia and China. Procurement operations are
international. Business is based on the representation of the best international
principals and on the expertise of the personnel. Telko cooperates with its
regional customers to develop their production and competitiveness.
7-9/2015 7-9/2014 Change % 1-9/2015 1-9/2014 Change % 1-12/2014
Net sales,
MEUR 56.5 61.1 -7.5 161.7 171.1 -5.5 226.8
Operating
profit,
MEUR 3.2 2.1 52.4 8.5 7.1 19.7 9.9
Operating
profit, % 5.7 3.4 5.3 4.1 4.4
During the review period, the price of oil continued its decline, which reduced
the price levels of petrochemical products. The prices of plastic raw materials
sold by Telko continued to fall during the third quarter, which reduced net
sales. The overall demand for industrial raw materials continued to be low in
Telko's geographical area of operation. The volume of raw materials supplied
remained at the level of the previous quarter, but decreased year-on-year.
Telko's net sales during the third quarter stood at EUR 56.5 (61.1) million and
its operating profit increased and was EUR 3.2 (2.1) million. The operating
profit rate increased to 5.7% (3.4).
Of the company's market areas, the relative share of emerging markets from
Telko's net sales over the third quarter remained at the previous year's level.
Net sales in Russia, Ukraine and other CIS countries totaled EUR 27.0 (29.9)
million, representing a decrease of 10%. Operating profit in the market area
improved and exceeded Telko's average operating profit level, being
approximately 7%. The share of plastic raw materials from net sales increased to
65%, and profitability improved from the comparative period. Industrial
chemicals are more sensitive to changes in oil prices and economic cycles. The
profitability of industrial chemicals improved from the comparative period but
remained lower than that of plastics.
Telko's net sales increased in Scandinavia, remained unchanged in the Baltic
region and Poland, but fell in the markets of Russia, Ukraine and other CIS
countries due to a decrease in general industrial demand and the decline in the
values of local currencies from the comparative period. The decline in
industrial production and the economy in Russia and Ukraine has reduced the
demand for Telko's products in the market area. In Ukraine, net sales remained
close to the previous year's level, whereas profitability improved.
Preparations for the investment in a new logistics center in the St. Petersburg
region is proceeding, and Telko's preliminary contract on a land plot
transaction in the Gorelovo business park is expected to be completed with YIT
later this year. The investment supports Telko's strategy in Russia and
strengthens the company's future position in the Russian market. For a long-term
operator, it is cost efficient in the current situation to invest according to
the company's needs and strategy. The terminal is expected to be fully
operational in 2017.
Telko's net sales over the first three quarters stood at EUR 161.7 (171.1)
million and its comparable operating profit was EUR 8.5 (7.1) million. Net sales
in Russia, Ukraine and other CIS countries fell by 11% to EUR 70.6 (79.1)
million, while operating profit in the market area increased to more than 7%.
Telko's net sales in western markets fell to EUR 87.2 (88.7) million.
Outlook for Telko in 2015
Prices of raw materials sold by Telko are estimated to reach the bottom during
the fourth quarter. Russian industrial production is expected to continue to
decline. This is also supported by the most recent growth estimates on GDP.
Telko will continue to operate in line with its strategy in Russia by expanding
into new metropolises. The objective is to open a new sales office in
Novosibirsk this year. The future development of Ukraine is difficult to
evaluate, even if the situation there has stabilized.
KAUKOMARKKINAT
Kaukomarkkinat supplies products and systems that improve efficiency for the
real estate and industrial sectors, as well as tools for mobile professionals.
The goal is to increase the energy efficiency, process efficiency and safety of
our customers, as well as the profitability of their operations. The business is
based on an in-depth understanding of customer needs, an extensive network of
principals, and the ability to combine products and systems into functional
entities. Kaukomarkkinat operates in Finland and China.
7-9/2015 7-9/2014 Change % 1-9/2015 1-9/2014 Change % 1-12/2014
Net sales,
MEUR 6.8 12.8 -46.9 19.4 28.5 -31.9 36.0
Operating
profit, MEUR 0.1 0.5 -80.0 -1.8 0.3 -700.0 0.1
Operating
profit, % 1.5 3.9 -9.3 1.1 0.3
*)The operating profit for 1-9/2015 includes a EUR 1.3 million impairment loss
of goodwill.
Net sales of Kaukomarkkinat during the third quarter stood at EUR 6.8 (12.8)
million. Its operating profit was EUR 0.1 (0.5) million. Industrial business was
sold during the first quarter.
In Finland, demand for energy efficiency products remained at a satisfactory
level. Deliveries of solar power systems continued to increase. New special IT
equipment was delivered to the healthcare sector. As a result of this, sales
continued to grow at a good pace. In Finland, the market for desktop and laptop
computers decreased strongly. The sale of IT for demanding work environments, as
well as special computers and tablets, was at a good level.
Net sales of Kaukomarkkinat during the first three quarters was EUR 19.4 (28.5)
million. Its comparable operating profit was EUR -0.5 (0.3) million. Impairment
loss of goodwill of EUR 1.3 million on the sold loss-producing Industrial
business was recognized as a non-recurring item in the first quarter.
Outlook for Kaukomarkkinat in 2015
The sales of IT solutions based on special expertise in demanding work
environments, combined with wireless communications, will continue to be at a
good level. Kaukomarkkinat is seeking profitable growth in rugged computers and
tablets, special IT equipment and services for the healthcare sector, as well as
AV solutions for demanding environments.
Despite the challenges in the construction industry, Kaukomarkkinat believes
that the sales of energy efficiency equipment will remain at their present
level.
The divestment of the Industrial business, which specialized in industrial
machinery and equipment, will improve the profitability of Kaukomarkkinat and
increase its opportunities to focus on the further development of its profitable
operations in Finland.
Kaukomarkkinat is preparing to significantly redefine its operational policy and
its business idea. More information will be given later in 2015.
OTHER OPERATIONS
Other operations include Aspo Group's administration, the financial and ICT
service center, and a small number of other functions not covered by business
units.
7-9/2015 7-9/2014 Change % 1-9/2015 1-9/2014 Change % 1-12/2014
Net sales,
MEUR 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating
profit, MEUR -1.2 -1.3 7.7 -4.5 -4.2 -7.1 -7.0
The operating profit from other operations was EUR -1.2 (-1.3) million for the
third quarter and EUR -4.5 (-4.2) million for the review period.
FINANCING
The Group's financing position remained unchanged. The Group's cash and cash
equivalents amounted to EUR 32.5 (22.4) million. The consolidated balance sheet
included a total of EUR 138.9 (139.3) million in interest-bearing liabilities.
The average rate of interest-bearing liabilities was 1.7% at the end of the
review period. Non-interest-bearing liabilities totaled EUR 69.2 (77.5) million.
Aspo Group's gearing was 104.5% (110.5) and equity ratio 33.5% (33.2).
The Group's operational cash flow was positive in January-September, totaling
EUR 10.7 (6.2) million. Change in working capital from the beginning of the year
was EUR -10.3 (-16.8) million. During the third quarter, the Group's operational
cash flow was EUR 14.8 (8.5) million.
Cash flow from investments during the review period was EUR 0.3 million (-
13.3), i.e., the Group's free cash flow amounted to EUR 11.0 million (-7.1). In
addition to the low investment level, cash flow from investments was affected by
proceeds from the sale of shares in Alandia.
The amount of committed revolving credit facilities signed between Aspo and its
main financing banks stood at EUR 60 million at the end of the review period. At
the end of the review period, no revolving credit facilities were in use. Of the
commercial paper program of EUR 80 million, EUR 22 million were in use at the
end of the review period.
During the period, a TyEL employee pension loan of EUR 10 million with a
maturity of seven years was withdrawn. The loan will be repaid in equal semi-
annual installments. In addition, Aspo issued a bond of EUR 11 million with a
maturity of seven years. The bond will be repaid as a lump-sum payment at the
end of the loan period. The loans have fixed interest rates and lengthen the
average maturity of Aspo Group's loan portfolio. The loans withdrawn will be
used to repay short-term loans.
A term loan of EUR 15 million matured during the second quarter. Aspo signed a
loan agreement for an equal amount, with a maturity period of four years. No
other significant loan agreements will mature in 2015.
On November 18, 2013, Aspo issued a hybrid bond of EUR 20 million. The coupon
rate of the bond is 7% per annum. The bond has no maturity, but the company may
exercise an early redemption option in 2016 - that is, three years after the
date on which the bond was issued.
Aspo has hedged its interest rate risk by means of an interest rate swap subject
to hedge accounting. Its fair value on September 30, 2015, was EUR -0.7 million.
Previously, changes in its fair value were recognized in other comprehensive
income. After the loan restructuring, changes in the fair value of the interest
rate swap are recognized through profit or loss. The loss of EUR 0.6 million
accumulated in the equity reserve is recognized in profit or loss in accordance
with the original expected transaction by 2019. The financial instrument is at
level 2 of the fair value hierarchy.
INVESTMENTS
The Group's investments over the third quarter totaled EUR 2.4 (1.7) million,
consisting of maintenance investments and the planned earlier scheduled
periodical dockings of ESL Shipping's vessels.
Investments by segment, acquisitions excluded
7-9/2015 7-9/2014 Change 1-9/2015 1-9/2014 Change 1-12/2014
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 2.1 1.0 110.0 3.5 15.4 -77.3 16.0
Leipurin 0.1 0.1 0.0 0.4 0.4 0.0 0.7
Telko 0.1 0.5 -80.0 0.6 1.2 -50.0 1.8
Kaukomarkkinat 0.1 0.1 0.0 0.1 0.2 -50.0 0.2
Other operations 0.0 0.0 - 0.1 0.0 - 0.0
Total 2.4 1.7 41.2 4.7 17.2 -72.7 18.7
PERSONNEL
Personnel by segment, period-end
9/2015 9/2014 Change % 12/2014
ESL Shipping 222 223 -0,4 226
Leipurin 286 292 -2,1 297
Telko 258 254 1,6 258
Kaukomarkkinat 44 77 -42,9 69
Other operations 24 30 -20,0 29
Total 834 876 -4,8 879
At the end of the period, Aspo Group had 834 employees (876). The number of
personnel has decreased mainly as a result of the divestment of the Industrial
business of Kaukomarkkinat. The number of personnel in other operations
decreased as a result of the outsourcing for ledger operations made in 2014.
Rewarding
In 2012, Aspo's Board of Directors decided on a share-based incentive plan for
about 30 persons. The plan included three earnings periods, the calendar years
2012, 2013 and 2014. The reward was based on Aspo Group's earnings per share
(EPS) indicator for each earnings period of the plan. No reward was paid for the
2012 earnings period. Aspo has transferred 19,492 treasury shares to employees
included in the share-based incentive plan for the 2013 earnings period and
94,786 shares for the 2014 earnings period.
In February 2015, the Board of Directors of Aspo Plc approved a new share-based
incentive plan for about 30 persons. The plan includes three earnings periods,
the calendar years 2015, 2016 and 2017. The Board of Directors will decide on
the plan's performance criteria and required performance levels for each
criterion at the beginning of each earnings period. The reward from the earnings
period 2015 will be based on the Group's Earnings per share (EPS). The potential
reward from the earnings period 2015 will be paid partly in the company's shares
and partly in cash in 2016.
RISKS AND RISK MANAGEMENT
Economic uncertainty has for long increased risks associated with all of Aspo's
businesses, and Aspo's operating environment in its main market areas is more
challenging than in years. The Finnish economy has not recovered along with the
rest of Europe, and industrial production and investments have not moved
forward. Production in Russia has decreased and, even though the inflation rate
has evened out, it still remains very high. The poor economic situation in
Ukraine continues. The economic situation is more stable in the Baltic region,
Scandinavia and Aspo's other operating countries, apart from other CIS
countries.
Strategic risks
Aspo's eastern strategy has been tested as the Russian economy has deteriorated
and western countries have imposed sanctions. As the value of eastern currencies
is declining, for example, as a result of falling oil prices, inflation has
reduced purchasing power and Russia, in particular, has sought less expensive
local raw materials and products even at the expense of quality.
Russia has centralized its economic resources into three segments, agriculture,
weapon industry and energy, as a result of which it is difficult for other
segments to obtain funding and growth expectations have been postponed. The
Russian economy depends on oil and, even though the USD-denominated price of oil
has decreased, production costs in Russia are based on the ruble and therefore,
oil production remains to be profitable. Correspondingly, expenses arising from
Aspo's operations are ruble-denominated, and any decrease in exchange rates will
reduce net sales and expenses at the same time.
The deteriorating economic situation is reflected, not only in trade, but also
in the financing markets and payments in Russia and Ukraine. Aspo has reacted to
the deteriorating situation in Ukraine by reducing its regional inventories and
shortening turnover times of trade receivables. Amounts in foreign currencies
have been exchanged into euros, and any changes in exchange rates have rapidly
been transferred to prices in Ukraine and Russia.
If the current situation in Russia extends or even escalates, structural changes
within Aspo's strategy may become more difficult as investors and industrial
operators avoid the political and operational environment in Russia.
Coal transportation volumes originating from Russia and unloading services for
large vessels at sea may decrease as a result of financial sanctions or other
obstacles caused by the current situation in Russia. In Finland, the social
objective of reducing the consumption of coal in energy production has increased
in significance, which may reduce the need to transport coal. Correspondingly,
the transportation of energy products used to replace coal, such as bioenergy,
may increase. The low levels of international freight indices and the increases
in international vessels in some size categories have increased uncertainty over
the profitability of shipping companies.
In addition to the international political atmosphere, strategic risks result
from the outlook for industrial customers, as well as production solutions and
consolidation. The current decisions on energy production structures affected by
the environmental policy and other political choices may cause changes in
industry and energy production that may decrease the use of fossil fuels and
increase the use of alternative forms of energy. The flow of goods in the Baltic
Sea may change as a result of the cost structures, changes in the customer
structure such as centralization, or other reasons. These changes may have
negative consequences on operations as the need for transportation decreases,
but they can also be seen as increasing opportunities. Despite changes in the
freight rates of global maritime transport, competition for cargo may become
more intense, even in the Baltic Sea area.
Strategic risks are affected by changes in cargo prices, investment trends, and
changes in trading structures, especially in western markets. In eastern
markets, risks are increased by such factors as political instability, social
structures or their lack of reaction to the difficulties encountered by business
operations. Actions taken by the authorities, tighter interpretations and poor
predictability cause uncertainty, which is reflected in the lack of companies'
willingness to invest, also in Finland, and in the increased willingness to seek
other operating environments.
Rapid changes in economic structures may cause risks due to changes in the
customer or principal structure or technologies, and due to unutilized
opportunities that require a quick response. Despite the aggravation of the
political situation and the alarming direction of economic development, Aspo's
strategic risks are evened out by the distribution of business operations over
four segments, its engagement in business operations in a broad geographical
area, and its ability to react quickly to changing situations.
Operational risks
Operational risks have remained unchanged. These include risks related to supply
chains and people, for example. The focus of Aspo's growth is on emerging market
areas, where growth risks are affected by factors such as the level of and
changes in the global market prices for raw materials, exchange rates, interest
rate levels, industrial and commercial investments, customer liquidity, changes
in legislation and import regulations, and ineffective authorities. Similar
risks are also encountered in western markets, where changes in the operating
methods and established practices of the authorities may cause financial risks
for Aspo's administration and all of its business areas.
Economic growth and any deceleration or decrease in production, and
centralization in only a few production plants may have an impact on general
demand for raw materials. Currently, the political instability in Ukraine is
disturbing commercial activities. If the situation continues, the growth of
Aspo's business operations in Ukraine will slow down. There may be a similar
trend in Russia if purchasing power decreases. Furthermore, consumer behavior is
reflected in the risks generated through B-to-B customers and their risk levels.
The expected future growth opportunities presented by emerging markets may
increase interest among competitors in starting or expanding business operations
in these areas. The challenging emerging markets and the escalated situation in
Ukraine have also caused competitors to withdraw from the area, which has
created new potential for Aspo's business operations, increased their market
share and even improved profitability in some areas.
Hedging against exchange rate changes in emerging markets is not possible or
reasonable in all situations, and on a continuous basis. Changes in exchange
rates may also reduce profitability and equity on the balance sheet as a result
of translation differences. As changes in credit loss risks are diversified
across businesses and customers, Aspo's businesses have not been subjected to
any significant credit losses. However, the limits of credit insurers have
become even tighter and, in general, credit loss risks have increased and been
realized to some extent.
The quantity and probability of loss risks are assessed regularly. The amounts
insured are sufficient in view of the scope of Aspo's operations, but insurance
companies may restrict the validity of insurance policies in areas with military
operations.
Internal control and risk management
One of the responsibilities of Aspo's Audit Committee is to monitor the
efficiency of the Group's internal control, internal audits, and risk management
systems. The Audit Committee monitors the risk management process and carries
out necessary measures to prevent strategic risks, in particular. In accordance
with the internal control principles approved by the Board of Directors, risk
management is part of Aspo's internal control, and its task is to ensure the
implementation of the Group's strategy, development of financial results,
shareholder value, dividend payment ability, and continuity in business
operations. The operational management of the business areas is responsible for
risk management. The management is responsible for specifying sufficient
measures and their implementation, and for monitoring and ensuring that the
measures are implemented as part of day-to-day management of operations. Risk
management is coordinated by Aspo's CFO, who reports to the Group CEO. Aspo
Group's financing and financing risk management are centralized in the parent
company in accordance with the financing policy approved by the Board of
Directors.
A more detailed account of the risk management policy and the most significant
risks has been published in the 2014 Annual Report and on the company's website.
Financing risks are described in more detail in notes to the financial
statements.
SHARE CAPITAL AND SHARES
Aspo Plc's share capital on September 30, 2015 was EUR 17,691,729.57 and the
total number of shares was 30,975,524 of which the company held 478,599 shares;
that is, 1.5% of the share capital. Aspo Management Oy, has on September
30, 2015 merged into Aspo Plc. Due to the merger 477,612 Aspo shares owned by
Aspo Management Oy have transferred to direct ownership of Aspo Plc. Aspo Plc
has one share series. Each share entitles the shareholder to one vote at the
shareholders' meeting. Aspo's share is quoted on NASDAQ OMX Helsinki Oy's Mid
Cap segment under industrial products and services.
During January-September 2015, a total of 4,293,198 Aspo Plc shares with a
market value of EUR 31.1 million were traded on Nasdaq Helsinki, in other words,
13.9% of the stock changed hands. During the review period, the stock reached a
high of EUR 8.16 and a low of EUR 5.92. The average price was EUR 7.24 and the
closing price at period-end was EUR 6.46. At the end of the period, the market
value excluding treasury shares was EUR 197.0 million.
The number of Aspo Plc shareholders was 8,897 at period-end. A total of 785,137
shares, or 2.5% of the share capital, were nominee registered or held by non-
domestic shareholders.
DECISIONS AT THE SHAREHOLDERS' MEETING
Dividend
The Annual Shareholders' Meeting of Aspo Plc held on April 9, 2015 decided,
according to the Board of Directors' proposal, to pay a dividend of EUR 0.40 per
share. The payment date was April 20, 2015.
Board authorizations
Authorization of the Board of Directors to decide on the acquisition of the
company's own shares
The Annual Shareholders' Meeting on April 9, 2015, authorized the Board of
Directors to decide on the acquisition of no more than 500,000 of the company's
own shares using the unrestricted shareholders' equity of the company. The
authorization will remain in force until the Annual Shareholders' Meeting in
2016.
Authorization of the Board of Directors to decide on a share issue of the
company's own shares
The Annual Shareholders' Meeting authorized the Board of Directors to decide on
a share issue, through one or several installments, to be executed by conveying
the company's own shares. An aggregate maximum amount of 900,000 shares may be
conveyed based on the authorization. The authorization will remain in force
until September 30, 2018.
Authorization of the Board of Directors to decide on a rights issue
Furthermore, the Annual Shareholders' Meeting authorized the Board of Directors
to decide on a rights issue for consideration. The authorization also includes
the right to decide on a directed share issue. The total number of new shares to
be offered for subscription may not exceed 1,500,000. The authorization will
remain in force until September 30, 2018.
The Board has not used its authorizations.
LEGAL PROCEEDINGS
On February 27, 2015, the Helsinki District Court announced its judgement in the
case between ESL Shipping and the Finnish State regarding fairway dues levied
during the years 2001-2004. According to the judgement, the Finnish State will
be required to refund to ESL Shipping approximately EUR 3.0 million in
accordance with the company's claim, as well as legal expenses and interest. The
State has appealed against the judgement. If the district court judgement
becomes final, it will affect Aspo Group's result positively with an amount
corresponding to these items.
The shipping company and ABG Shipyard in India have been involved in
negotiations concerning the compensation payable for repairs made to m/s Alppila
during the warranty period. The vessel was delivered to ESL Shipping in 2011.
The negotiations have not proceeded in the way the shipping company had hoped
and, therefore, the shipping company has currently legal proceedings underway
against ABG Shipyard.
Helsinki October 28, 2015
ASPO Plc
Board of Directors
ASPO GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
7-9/2015 7-9/2014
MEUR % MEUR %
Net sales 111.5 100.0 129.6 100.0
Other operating income 0.1 0.1 0.4 0.3
Materials and services -78.9 -70.8 -94.6 -73.0
Employee benefit expenses -9.5 -8.5 -10.2 -7.9
Depreciation, amortization and impairment -2.9 -2.6 -2.8 -2.2
Other operating expenses -13.0 -11.7 -14.6 -11.3
Operating profit 7.3 6.5 7.8 6.0
Financial income and expenses -1.0 -0.9 -0.4 -0.3
Profit before taxes 6.3 5.7 7.4 5.7
Income taxes -0.5 -0.4 -0.6 -0.5
Profit for the period 5.8 5.2 6.8 5.2
Other comprehensive income
Items that may be reclassified to profit or loss
in subsequent periods:
Translation differences -3.5 -1.3
Cash flow hedges 0.0 0.0
Available-for-sale financial assets 0.0
Reclassification 0.0
Income tax on other comprehensive income 0.0 0.0
Other comprehensive income for the period, net
of taxes -3.5 -1.3
Total comprehensive income 2.3 5.5
Profit attributable to shareholders 5.8 6.8
Non-controlling interest 0.0 0.0
Total comprehensive income attributable to
shareholders 2.3 5.5
Non-controling interest 0.0 0.0
Earnings per share, EUR 0.18 0.22
EPS adjusted for dilution, EUR 0.18 0.22
1-9/2015 1-9/2014 1-12/2014
MEUR % MEUR % MEUR %
Net sales 323.7 100.0 360.3 100.0 482.9 100.0
Other operating income 1.0 0.3 0.6 0.2 0.8 0.2
Materials and services -229.5 -70.9 -259.5 -72.0 -345.3 -71.5
Employee benefit expenses -30.6 -9.5 -32.2 -8.9 -43.5 -9.0
Depreciation, amortization and
impairment -9.6 -3.0 -8.4 -2.3 -11.2 -2.3
Other operating expenses -40.6 -12.5 -42.9 -11.9 -60.3 -12.5
Operating profit 14.4 4.4 17.9 5.0 23.4 4.8
Financial income and expenses 3.0 0.9 -2.9 -0.8 -4.4 -0.9
Profit before taxes 17.4 5.4 15.0 4.2 19.0 3.9
Income taxes -1.3 -0.4 -0.3 -0.1 -0.6 -0.1
Profit for the period 16.1 5.0 14.7 4.1 18.4 3.8
Other comprehensive income
Items that may be reclassified
to profit or loss
in subsequent periods:
Translation differences -3.0 -5.4 -12.7
Cash flow hedges 0.1 -0.1 0.0
Available-for-sale financial
assets 1.8 3.1
Reclassification -4.9
Income tax on other
comprehensive income 0.6 0.0 -0.6
Other comprehensive income for
the period, net of taxes -5.4 -5.5 -10.2
Total comprehensive income 10.7 9.2 8.2
Profit attributable to
shareholders 16.1 14.7 18.4
Non-controlling interest 0.0 0.0 0.0
Total comprehensive income
Attributable to shareholders 10.7 9.2 8.2
Non-controlling interest 0.0 0.0 0.0 Earnings per share, EUR 0.50 0.46 0.57
EPS adjusted for dilution, EUR 0.50 0.46 0.57
ASPO GROUP BALANCE SHEET
9/2015 9/2014 Change 12/2014
MEUR MEUR % MEUR
Assets
Intangible assets 11.3 12.4 -8.9 12.3
Goodwill 42.7 44.4 -3.8 44.4
Tangible assets 108.7 112.6 -3.5 111.4
Available-for-sale assets 0.2 0.2 0.0 3.2
Long-term receivables 3.7 4.2 -11.9 4.0
Total non-current assets 166.6 173.8 -4.1 175.3
Inventories 52.8 52.6 0.4 47.3
Sales and other receivables 58.0 73.7 -21.3 56.4
Cash and cash equivalents 32.5 22.4 45.1 19.3
Total current assets 143.3 148.7 -3.6 123.0
Total assets 309.9 322.5 -3.9 298.3
Shareholders' equity and liabilities
Share capital 17.7 17.7 0.0 17.7
Other shareholders' equity 84.1 87.3 -3.7 86.4
Shareholders' equity attributable to
equity holders of the parent 101.8 105.0 -3.0 104.1
Non-controlling interest 0.0 0.7 -100.0 0.0
Non-current liabilities 98.2 87.2 12.6 83.3
Current liabilities 109.9 129.6 -15.2 110.9
Total shareholders' equity and liabilities 309.9 322.5 -3.9 298.3
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
A = Share capital F = Translation differences
B = Premium fund G = Retained earnings
C = Fair value fund H = Total
D = Other funds I = Non-controlling interest
E = Treasury shares J = Total shareholders' equity
MEUR A B C D E F G H I J
Balance at Dec.
31, 2014 17.7 4.3 1.9 32.0 -3.4 -16.0 67.6 104.1 0.0 104.1
Comprehensive income:
Profit for the period 16.1 16.1
Translation
differences -3.0 -3.0
Cash flow hedges* 0.1 0.1
Available-for-sale
financial assets* -2.5 -2.5
Total comprehensive
income -2.4 -3.0 16.1 10.7
Transactions with
owners:
Dividend payment -12.2 -12.2
Interest on hybrid
instrument -1.0 -1.0
Share-based incentive
plan 0.7 -0.5 0.2
Transfer of funds -0.1 0.1 0.0
Total transactions
with owners -0.1 0.7 -13.6 -13.0
Balance at Sept.
30, 2015 17,7 4,3 -0,5 31,9 -2,7 -19,0 70,1 101,8 0,0 101,8
Balance at Dec.
31, 2013 17.7 4.3 -0.6 33.7 -4.3 -3.3 55.1 102.6 0.7 103.3
Comprehensive income:
Profit for the period 14.7 14.7
Translation
differences -5.4 -5.4
Cash flow hedges* -0.1 -0.1
Total comprehensive
income -0.1 -5.4 14.7 9.2
Transactions with
owners:
Dividend payment -6.4 -6.4
Repayment of
convertible capital
loan -1.7 1.7 0.0
Interest on hybrid
instrument -0.9 -0.9
Share-based incentive
plan 0.2 0.3 0.5
Total transactions
with owners -1.7 0.2 -5.3 -6.8
Balance at Sept.
30, 2014 17.7 4.3 -0.7 32.0 -4.1 -8.7 64.5 105.0 0.7 105.7
* net of taxes
ASPO GROUP CASH FLOW STATEMENT
1-9/2015 1-9/2014 1-12/2014
MEUR MEUR MEUR
OPERATIONAL CASH FLOW
Operating profit 14.4 17.9 23.4
Adjustments to operating profit 10.2 9.1 12.7
Change in working capital -10.3 -16.8 -8.1
Interest paid -2.5 -3.0 -4.0
Interest received 0.6 0.2 0.3
Income taxes paid -1.7 -1.2 -2.3
Total operational cash flow 10.7 6.2 22.0
INVESTMENTS
Investments in tangible and intagible assets -4.3 -16.2 -17.5
Proceeds from sale of tangible and intangible
assets 0.1 0.1 0.2
Proceeds from available-for sale financial
assets 4.9
Subsidiaries acquired, contingent consideration -0.3 -0.3 -0.3
Business operations and subsidiaries sold -0.1 0.9 0.9
Associated companies sold 2.2 2.2
Total cash flow from investments 0.3 -13.3 -14.5
FINANCING
Change in short-term borrowings -1.2 2.9 -12.3
Change in long-term borrowings 15.9 5.2 5.3
Hybrid instrument -1.4
Dividends paid -12.2 -6.4 -6.4
Total financing 2.5 1.7 -14.8
Increase / Decrease in liquid funds 13.5 -5.4 -7.3
Liquid funds in beginning of year 19.3 28.5 28.5
Translation differences -0.3 -0.7 -1.9
Liquid funds at period end 32.5 22.4 19.3
ASSETS AND LIABILITIES BY SEGMENT
Segments assets, MEUR
9/2015 9/2014 12/2014
ESL Shipping 116.3 122.8 119.4
Leipurin 62.2 66.3 63.7
Telko 75.0 78.9 68.3
Kaukomarkkinat 21.4 26.6 19.4
Unallocated items 35.0 27.9 27.5
Total 309.9 322.5 298.3
Segments' liabilities, MEUR
9/2015 9/2014 12/2014
ESL Shipping 9.9 11.0 12.2
Leipurin 15.1 20.8 17.7
Telko 27.3 29.5 25.3
Kaukomarkkinat 7.4 5.8 4.9
Unallocated items 148.4 149.7 134.1
Total 208.1 216.8 194.2
ACCOUNTING PRINCIPLES
Aspo Plc's interim report has been prepared in accordance with the principles of
IAS 34 Interim Financial Reporting. As of January 1, 2015, Aspo applies certain
new or amended IFRS standards and IFRIC interpretations as described in the
2014 financial statements. The adoption of these new or amended standards has
not had any substantial impact on the reported figures. In other respects, the
same accounting principles have been adopted in the interim report as in the
Financial Statements on December 31, 2014. The calculation principles of key
figures are explained on page 94 of the 2014 Annual Report. The information in
this report is unaudited.
SEGMENT REPORTING
Aspo Group's operational segments are ESL Shipping, Leipurin, Telko and
Kaukomarkkinat. Other operations consists of Aspo Group's administration, the
financial and ICT service center, and a small number of other functions not
covered by business units.
The Group reports its net sales on the basis of the following geographical
division: Finland; Scandinavia; the Baltic countries; Russia, Ukraine and other
CIS countries; and other countries.
CAPITAL MARKETS DAY
Aspo will arrange a Capital Markets Day for analysts, investors, bankers and
representatives of the media on Thursday, November 26, 2015 in Helsinki.
PRESS AND ANALYST CONFERENCE
A press and analyst conference will be arranged today, Wednesday October
28, 2015 at 14.00 at the Akseli Gallen-Kallela cabinet at Hotel Kämp,
Pohjoisesplanadi 29, 00100 Helsinki.
Helsinki, October 28, 2015
ASPO Plc
Aki Ojanen Arto Meitsalo
CEO CFO
For more information: Aki Ojanen, 09 521 4010, 0400 106 592, aki.ojanen
(a)aspo.com
DISTRIBUTION:
Nasdaq Helsinki
Key media
www.aspo.com
Aspo is a conglomerate that owns and develops businesses in Northern Europe and
growth markets focusing on demanding B-to-B customers. The aim of our strong
corporate brands - ESL Shipping, Leipurin, Telko and Kaukomarkkinat - is to be
the market leaders in their sectors. They are responsible for their own
operations, customer relationships and the development of these. Together they
generate Aspo's goodwill. Aspo's Group structure and business operations are
developed persistently without any predefined schedules.
[HUG#1961795]
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