Neo Industrial Oyj - Company Announcement

NEO INDUSTRIAL PLC STOCK EXCHANGE RELEASE 25 October 2016 at 2.20 pm

NEO INDUSTRIAL PLC'S BUSINESS REVIEW 1.1.-25.10.2016

The Cable Segment’s turnover grew and operating result improved clearly from
previous year 

Neo Industrial's turnover for the period between 1 January and 30 September
2016 was EUR 74.8 million (EUR 64.4 million in the comparison period 1.1. -
30.9.2015). Its operating result was EUR 4.9 million (-1.4). 

During the first three quarters of the year, Cable segment’s turnover increased
16% and the operating result increased by EUR 5.7 million compared to previous
year. (The operating result of the comparison period was burdened by
non-recurring costs, total EUR 0.8 million.) 

According to Managing Director Ralf Sohlström, the turnover and operating
results increased due to delivery contracts of underground cables concluded
last year as well as active actions taken to increase the utilisation rates and
delivery capacities of the factories. The investments agreed upon earlier have
been implemented successfully, and the efficiency improvement program started
last October has resulted in improved cost-effectiveness of the cable industry
and improved productivity of the factories. 

The Group's financing debts have reduced significantly and, consequently, the
management has been able to focus more on business development. 

The market shows signs of recovery and grid builders are expected to continue
underground cabling investments to improve the reliability of electricity
distribution. 


KEY FIGURES (IFRS)                                               
                                                                 
                                    1-9/2016  1-9/2015  1-12/2015
-----------------------------------------------------------------
Turnover, EUR million                   74.8      64.4       84.6
Operating result, EUR million            4.9      -1.4       -2.0
Result for the period, EUR million       2.9      -2.7       -3.7
Earnings per share, EUR                 0.49     -0.45      -0.62
ROI, %                                  18,1      -3,9       -6,0
Equity ratio, %                         20,5      12,7       11,8



SEGMENTS
The business segment of Neo Industrial is Cable industry.

CABLE SEGMENT

The Cable Segment’s turnover for the review period 1.1.-30.9.2016 was EUR 74.8
million (64.4 million during the comparison period 1.1.-30.9.2015). The
operating result was EUR 5.5 million (-0.2). The operating result of the
comparison period was burdened by non-recurring costs, total EUR 0.8 million. 

The sales volumes in the cable market of Nordic countries, the main market area
of Reka Cables Ltd, increased clearly from the previous year. The sales volumes
in other markets were somewhat lower compared to the previous year. 
At the end of the review period the raw material EUR prices of aluminium and
copper were slightly higher compared to the price level at the last turn of the
year. 

The made investments, EUR 1.5 million, were particularly aimed at increasing
productivity. 
The turnover for Nestor Cables Ltd, an associated company of the Cable Segment,
was EUR 20.4 million (22.1) during the review period. The operating result was
positive but smaller than the year before. The value of the shares of Nestor
Cables Ltd in the consolidated balance sheet is zero due to the cumulative
results of the previous years, and its share of the 2016 result is not taken
into account in the Group's figures. 


RISKS AND UNCERTAINTY FACTORS

Neo Industrial’s financial risks include currency, interest rate, commodity,
liquidity, credit and investment market risks. Financial risks and the related
protection measures are described in more detail in the notes to the latest
financial statements. The company’s future risk factors are related to the
business development of its portfolio companies. The uncertainty of the global
economy and financial market possess a risk to the financial arrangements of
the Group. 

The Group has made financial arrangements since 2014. In addition to ensuring
liquidity and sufficient funding by conducting negotiations on financing and
payment terms, measures for boosting inventory turnover and freeing up capital
assets are taken into action Due to improved financial situation the management
has been able to concentrate on business development. 

In the Cable Segment the most significant risks are related to market
development, fluctuations of raw material prices and currencies as well as
working capital management in various situations. During considerable seasonal
changes, suppliers’ terms of payment affect significantly the ability to ensure
competitive delivery times through sufficient inventories. Also, operation
models are being developed in order to balance out the effects of seasonal
changes on the load rates of factories. 

In the Cable Segment the key raw materials are metals (copper and aluminium)
and plastics. In the metals purchases partial price hedging is used with the
aid of commodity derivatives. Important with metals are the development of both
the dollar-denominated price and the USD / EUR exchange rate. 


NEAR-TERM OUTLOOK

Construction has been picking up somewhat in Nordic countries and Western
Europe. The management believes that grid constructors will continue ground
cabling investments to ensure distribution reliability. The turnover of the
Cable Segment in 2016 is believed to clearly exceed the turnover of 2015. The
Group’s operating result is believed to be positive also during the second half
of the year and the operating result of the entire year is believed to be
clearly positive. 



The information presented in this statement is unaudited.

Hyvinkää October 25, 2016

Neo Industrial Plc.
Board of Directors


Further information:
Ralf Sohlström, Managing Director, tel. +358 40 770 2720


All comments in this report that do not refer to actual facts are future
estimates. Such estimates include expectations concerning market trends, growth
and profitability as well as statements including the words "believe", "assume"
or "will be" or a similar expression. Since these estimates are based on
current plans and estimates, they involve risks and uncertainty factors that
may cause the actual results to differ substantially from current statements.

Among other things, such factors include 1) operating conditions, such as
continued success in production and the ensuing efficiency benefits,
availability and cost of production inputs, demand for new products and changes
in circumstances affecting the acquisition of capital under acceptable
conditions; 2) sector-specific circumstances, such as the intensity of demand
for products, the competition, current and future market prices for the Group's
products and related pricing pressures, the financial situation of the Group's
customers and competitors and competitors' possible new products; and 3) the
general economic situation, such as economic growth in the Group's main market
areas and changes in exchange rates and interest rates.