Neo Industrial Oyj - Interim Management statement

NEO INDUSTRIAL PLC'S INTERIM MANAGEMENT STATEMENT FOR 1 JANUARY TO 30 OCTOBER 2013

NEO INDUSTRIAL PLC     STOCK EXCHANGE RELEASE      30 October 2013 at 2.00 pm

Neo Industrial's net sales for the period between 1 January and 30 September
2013 were EUR 68.3 million (83.9 million in 2012). Its operating result was 0.1
million (0.3 million), including a gain of EUR 0.4 million from the sale of the
Group's operations in Russia. The comparative figures for 2012 have been
adjusted to exclude the discontinued Viscose Fibres segment. The Cable segment
is now Neo Industrial's only segment. 

Cable segment's  Russian cable manufacturing companies OAO Expokabel and ZAO
Reka Kabel were sold in May. 

The divestment of the Russian cable manufacturing companies improved Neo
Industrial´s liquidity situation, but its working capital situation continued
to be challenging due to higher-than-expected increase in stock levels in the
summer. 

CABLE SEGMENT

The Cable segment's net sales for the period between 1 January and 30 September
were EUR 68.3 million (83.9 million). Its operating result was 1.4 million (2.3
million). 

During  the review period (from 1 January to 30 October 2013), demand in the
Nordic cable market , the main market of Reka Cables Ltd, was weaker than in
the corresponding period of the previous year. Projects have been delayed in
the Nordic countries as well as in Central Europe. This is also recognized as
harder competition in the Baltic markets. Projects have been postponed in
Russia, too. On the other hand, new projects have been received  from other CIS
countries. 

Excluding the early part of the year, the prices of copper and aluminium,
metals used as raw materials, have been on lower level than in the previous
year. The prices of plastics have varied heavily and are on higher level than
in the beginning of the year. 

In February, Reka Cables signed a short-term financing agreement of EUR 2.0
million for working capital financing, which created better conditions for
increasing delivery capacity for the high season in spring. The short-term loan
was repaid  and a short-term financing agreement lasting to the end of November
has been signed in the Cable segment. 

During the review period (from 1 January to 30 October 2013), the sales of
medium-voltage and high-voltage cables, as well as ground and installation
cables, were lower than in the previous year because of the delayed projects
and  weaker electrical wholesale market. 

The insurance company has paid EUR 0.2 million in compensation for the
breakdown at Reka Cables' Keuruu plant in 2011. The parties disagree on the
amount of compensation due, with Reka Cables estimating the damage at EUR 0.8
million. Negotiations with the insurance company continue. 

The sale of the Cable segment's Russian companies has no effect on Reka Cables'
operation. The company continues to sell and market cables in Russia and other 
CIS countries through its subsidiary in Russia. Its cables are manufactured in
Finland. 

Net sales for Nestor Cables, an associated company, were EUR 21.3 million (23.5
million) for the period between 1 January and 30 September 2013. The company's
operating result was positive. 

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 segment company. The uncertainty of the
international economy and financial markets poses a risk to the Group's
financial arrangements. 

The Group's liquidity situation is tight. The fluctuation of raw material
prices and currencies as well as seasonal market changes present challenges in
working capital management. 

The Cable segment's challenges include ensuring favourable operating conditions
so that the Group will be able to secure additional funding to replace the
remaining maturing loans and renegotiate payment terms or liquidate capital
from its operations in other ways. Measures are in progress to ensure funding. 

In the Cable segment, the most significant risks are related to market
development, working capital management and fluctuations in the prices of raw
materials and currencies. During considerable seasonal changes, suppliers'
terms of payment have an essential effect on the company's ability to ensure
competitive delivery times through sufficient inventories. 

The bankruptcy estate of Kuitu Finland Ltd brought an action against Neo
Industrial on 9 April. The action is related to the transaction of the
industrial premises of Avilon Fibres, Neo Industrial's subsidiary. The action
demands that Neo Industrial pays the remaining amount (EUR 5.0 million) as a
one-off payment plus penalty interest, legal expenses and an adjustment (EUR
309,000) based on the building cost index, contrary to the 25-year payment plan
stated in the agreement. Neo Industrial considers the action to be unfounded
and seeks to come to an agreement with the bankruptcy estate of Kuitu Finland.
The provisions in Neo Industrial's consolidated financial statements for 2012
include the discounted balance sheet value (EUR 2.7 million) of the instalments
of Avilon Fibres' industrial premises for the price remaining unpaid. In the
parent company's financial statements (FAS), the instalments are not
discounted, for which reason the related provision is EUR 5 million. If the
action is successful, the Group will have to pay the amount demanded as a
one-off payment, contrary to the 25-year payment plan stated in the sales
agreement. Neo Industrial has given a reply to this action. 

NEAR-TERM OUTLOOK

The outlook for the Cable segment weakened during the spring and early summer.
Construction has not picked up in Finland and Sweden, contrary to what was
expected in early 2013. Ground cabling volumes in Finland are likely to be
lower than expected as the projects will be postponed. The lower-than-expected
volumes in Reka Cables' main markets in the Nordic countries create pressures
for more intense price competition. Many significant investments and ground
cabling projects have been postponed in the Nordic countries until 2014 because
of the economic uncertainty. 

The demand has decreased and the Cable segment´s operational result will be
negative in the last quarter. In spite of the challenging market situation, the
Cable segment is expected to record positive operational result for the second
half of the year, and further, for the whole year 2013. 

The information presented in this statement is unaudited.

In accordance with Section 5c of Chapter 2 of the Securities Markets Act, Neo
Industrial will publish interim management statements for the first three and
nine months of the year instead of interim reports. 



Hyvinkää, 30 October 2013

Neo Industrial Plc
Board of Directors

Further information:
Jari Salo, Managing Director, tel. +358 20 720 9196
Sari Tulander, CFO, tel. +358 20 720 9192

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. 

www.neoindustrial.fi

Neo Industrial's strategy is to invest mainly in industrial companies with
similar synergic benefits. The aim of investments is with active ownership to
develop the purchased companies and establish additional value. Returns are
sought through both dividend flow and an increase in value. Neo Industrial's
class B shares are listed on the NASDAQ OMX Helsinki Stock Exchange. Neo
Industrial's business segment is Cable industry.