Uponor - Company Announcement

Uponor starts transformation programme in its European segments to accelerate profitable growth

Uponor Corporation   Stock exchange release       26 November 2015 14:00 EET

Uponor starts transformation programme in its European segments to accelerate
profitable growth 

  -- Transformation programme in Building Solutions – Europe targets profitable
     growth, greater agility and cost reductions
  -- Uponor Infra segment plans to consolidate operations to improve
     profitability
  -- Uponor will have a live webcast on the transformation today at 15.00 EET.
     The webcast will be available through http://investors.uponor.com, and
     later on as a recorded video.

Uponor is beginning a transformation programme involving the operations and
structure of its Building Solutions – Europe segment, in order to strengthen
the segment’s basis for profitable growth. The programme will address the
segment’s weak recent performance e.g. by means of initiatives targeted at
accelerating sales and reducing costs. The measures with respect to Uponor
Infra are related to the planned consolidation of manufacturing operations in
Finland. 

“Since the onset of the financial crisis in 2007, we have conducted various
efficiency and streamlining programmes which have helped us respond to the
major decline in market demand in the shorter term. Continued weak demand in
the European building and civil engineering markets and declining sales with
persistently high fixed costs have been eroding our profits in Europe. To
achieve our strategic objectives, we need to make fundamental changes in our
business and structure,” says Jyri Luomakoski, Uponor’s President and CEO. 

In addition to the initiatives to grow net sales, the transformation programme
as planned is also targeted at contributing a minimum of €25 million in
operational savings in the consolidated financial accounts by the end of 2017.
Of these savings, Building Solutions – Europe is seeking at least €20 million
and Uponor Infra €5 million. In total, the measures are expected to incur €32
million in non-recurring items, of which €13 million will be non-cash, to be
booked in the 2016 accounts for the most part. It is estimated that Building
Solutions – Europe’s non-recurring items will total €21 million, of which €5
million will be non-cash, while Uponor Infra’s share will be €11 million, of
which €8 million will be non-cash. 


Clarity and agility through a simplified structure in Building Solutions –
Europe 

For Building Solutions – Europe, which has been under new management since 1
September, a key ambition is to generate profitable growth through a range of
measures. Growth in Uponor’s established markets will be sought in the
commercial sector in particular, where Uponor has made major inroads in
selected markets over the last few years. For instance, Uponor will leverage
its special knowhow on building energy management and the recently launched
ready-to-install offerings more efficiently internationally. Uponor will
continue its active investment in new offerings and plans to double innovation
rate in the near-term future. Another focus area is a stronger entry in
geographies where Uponor is presently under-represented, especially major
capital regions. 

A central part of the transformation is the evolution of a more consolidated
and specialised manufacturing, warehousing and distribution network. Uponor
plans to introduce a streamlined, hub-based operational model for central
functions with fewer management layers and rapid decision-making. In this
respect, the segment will review its decentralised back-office and support
functions, which is likely to result in the closure of several smaller offices. 

The transformation will have a significant impact on personnel numbers
Europe-wide. Uponor estimates a maximum reduction of circa 300 full-time jobs
in Europe, with a net impact of approximately 250 after new hires in places
where additional work force is needed. 

In an effort to support growth plans in Asia, Uponor has decided to begin its
own manufacture of building solutions in China in 2016, to satisfy growing
demand in this large market. 


Uponor Infra aims at specialised sites to achieve operational savings

Since its establishment in July 2013, Uponor Infra has executed integration and
streamlining programmes to reduce overlaps and improve profitability. While
these initiatives have been completed successfully, the segment’s performance
remains below an acceptable level, mainly due to the prolonged weak demand and
tight competitive environment in Northern Europe. 

The Uponor Infra segment will focus on selling higher added-value solutions in
contrast to non-differentiating commodity offerings. The segment has completed
a review of its manufacturing network and plans to focus activities in Vaasa,
Finland on project competence, international projects and technology as well as
district heating, employing around 80 persons. Plans have been made to
consolidate all plastic pipe and chamber manufacturing operations to Nastola,
Finland, by the end of 2016. The consolidation, mainly affecting the Vaasa
unit, would mean a reduction of close to 170 full-time jobs, or a net reduction
of circa 80 jobs depending on the final outcome. 



A note to readers

In July, 2015 Uponor launched a streamlining programme in its Building
Solutions – Europe segment in order to adjust operations to the slack demand
environment in Europe. This programme has already resulted in a reduction of 70
jobs in Sweden and the UK, and a reduction of a further 30 jobs is being
evaluated in Central Europe, resulting in total annual savings of around €3
million. It is estimated that these initiatives will incur a total of €4–€5
million in non-recurring costs, most of which will be booked during 2015. 

The North American market has remained strong and Uponor’s building solutions
business there is developing as expected. Uponor, Inc.’s manufacturing
expansion in Apple Valley, Minnesota, is progressing according to plan and is
targeted for completion in the current quarter. 

Uponor will make every effort to support employees affected by the changes in
both segments. Today, Uponor will begin the employee consultation processes in
Finland, and later on in the other affected countries in accordance with local
practices. Further details will be communicated when the plans are ready. 




For further information, please contact:
Jyri Luomakoski, President and CEO, tel. +358 20 129 2824
Riitta Palomäki, CFO, tel. +358 20 129 2822 (after 16.00 EET)




Tarmo Anttila
Vice President, Communications
Tel. +358 20 129 2852


DISTRIBUTION:
Nasdaq Helsinki
Media
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. 3,800 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