2017-05-16 07:00:02 CEST
2017-05-16 07:00:02 CEST
REGULATED INFORMATION
Componenta - Interim report (Q1 and Q3)
Componenta Corporation Business Review January – March 2017
Componenta Corporation Stock Exchange Release on 16 May 2017 at 8.00
Comparable net sales corresponding to current continued business operations
increased 9% to EUR 46.3 (42.6) million and comparable adjusted EBITDA
increased from the previous year to EUR 1.9 (-1.1) million.
The information presented in this business review relates to the continued
operations of Componenta Group in the January – March period in 2017 and in the
corresponding period in 2016, unless otherwise stated. The figures are
unaudited.
January-March 2017 in brief
-- The current continued business operations are the foundry operations in
Finland in Pori and Karkkila, and in Sweden the machine shop in Främmestad
and the forges in Wirsbo and Arvika.
-- Comparable net sales for continued operations increased 9% to EUR 46.3
million. Comparable adjusted net sales in the period for comparison were
EUR 42.6 million and adjusted net sales according to IFRS in the period for
comparison were EUR 49.6 million. The comparable adjusted figure means the
current continued operations in 2017, from which the figures for the
divested units Suomivalimo and Pistons have been eliminated as well as the
impact of the trade mark and administration service fees charged to the
Netherlands and Turkey.
-- Adjusted comparable EBITDA for current continued operations increased from
the previous year to EUR 1.9 million. Comparable adjusted EBITDA in the
period for comparison was EUR -1.1 million and adjusted EBITDA according to
IFRS in the period for comparison was EUR -0.1 million.
-- The adjusted comparable operating profit for current continued operations
increased from the previous year to EUR 1.0 million. The comparable
adjusted operating profit in the period for comparison was EUR -2.8 million
and the adjusted operating profit according to IFRS in the period for
comparison was EUR -2.1 million.
-- The administrator of the corporate restructuring proceedings for Componenta
Corporation and Componenta Finland Oy filed the draft restructuring
programmes with the District Court of Helsinki. In its interim ruling on 4
April 2017, the District Court of Helsinki decided to continue processing
the draft restructuring programmes filed by the administrator on 30 March
2017. If the draft restructuring programme is carried out in line with its
proposals, the Group’s restructuring debt is estimated to be just around
EUR 23 million.
Key figures
Q1/201 Comparab Change Q1/201 Change 2016
7 le (Q1/2017 6 (Q1/2017
adjusted from from
Q1/2016 comparable Q1/2016)
(1 adjusted
Q1/2016)
--------------------------------------------------------------------------------
Net sales, continued 46.3 42.6 9% 49.6 -7% 183.6
operations, MEUR
--------------------------------------------------------------------------------
Adjusted EBITDA, 1.9 -1.1 - -0.1 - 3.1
continued operations,
MEUR
--------------------------------------------------------------------------------
Adjusted operating 1.0 -2.8 - -2.1 - -5.8
profit, continued
operations, MEUR
--------------------------------------------------------------------------------
Operating profit, 9.7 - - -2.2 - -46.0
continued operations
--------------------------------------------------------------------------------
Adjusted result after 1.0 - - -4.7 - -17.0
financial items,
continued operations,
MEUR
--------------------------------------------------------------------------------
Result after financial 9.7 - - -4.9 - -16.5
items, continued
operations, MEUR
--------------------------------------------------------------------------------
Items affecting 8.7 - - -0.1 - 0.5
comparability after
financial items,
continued operations,
MEUR
--------------------------------------------------------------------------------
Net resut, MEUR 10.0 - - -7.8 - -215.5
--------------------------------------------------------------------------------
Earnings per share, 0.06 - - -0.08 - -1.64
euro
--------------------------------------------------------------------------------
Adjusted return on - - - -0.2 - -0.2
investment, %
--------------------------------------------------------------------------------
Adjusted return on - - -165.2 - n/a
equity, %
--------------------------------------------------------------------------------
Gross investment in 1.1 0.3 216% 0.4 204% 1.3
continued operations
incl. finance
leasing, MEUR
--------------------------------------------------------------------------------
Cash flow from 0.9 - - 1.6 -46% -9.9
operations, continued
operations, MEUR
--------------------------------------------------------------------------------
Group’s restructuring 154 - - - - 163
debt, MEUR
--------------------------------------------------------------------------------
Number of personnel at 877 928 -5% 1,057 -17% 878
end of quarter, incl.
leased personnel,
continued operations
--------------------------------------------------------------------------------
Average number of 872 927 -6% 1,056 -17% 992
personnel during
review period, incl.
leased personnel,
continued operations
--------------------------------------------------------------------------------
Order book, continued 31.3 29.9 5% 32.4 -3% 30.8
operations, MEUR
--------------------------------------------------------------------------------
(1 The comparable adjusted figure means the current continued operations in
2017, from which the figures for the divested units Suomivalimo and Pistons
have been eliminated as well as the impact of the trade mark and administration
service fees charged to the Netherlands and Turkey. Suomivalimo was sold on 30
June 2016 and Pistons on 17 August 2016. The operations in the Netherlands were
declared bankrupt in the third quarter of 2016. Consolidation of the operations
in Turkey ended at the end of 2016.
Harri Suutari, President and CEO, Componenta Corporation:
”The positive result after financing costs in the first quarter (EUR 1.0
million, excluding items that affect comparability) ends a period of 14
successive loss-making quarters. Particular factors contributing to this
improvement are the reductions in fixed costs and in financing costs. In
addition productivity has improved at the plants in Sweden, especially in
forging operations. Profitability in the period for comparison was weakened by
the production stoppages caused by the tight liquidity situation at that time
and by extra transport costs.
Profitability was affected by the temporary cancellation of the refund of
Finland’s energy tax (2, by the impact at the foundries of the rise in material
prices and by the special transport in Sweden relating to delivery problems at
the iron foundry in Turkey. A further factor was that because of the corporate
restructuring situation the forges in Sweden have had to rely on more expensive
material supplies.
The Group has continued its actions to cut fixed costs during the first
quarter. Product prices have not been raised, apart from certain individual
adjustments to wrongly priced items. But the Group has continued its measures
to improve quality, raise productivity and reduce logistics costs. There is
still potential in continued operations to improve profitability. The 5%
increase from the previous year in the order book for foundry and forging
operations also supports the improvement target.
The positive trend shown here creates a basis for continuing the restructuring
proceedings and for their success.”
(2 The law states that refunds of energy tax are not granted to companies
undergoing corporate restructuring until the restructuring programme has been
approved.
Developments in business operations in the review period
Componenta’s continued operations are the foundry operations in Pori and
Karkkila, Finland, and in Sweden the machine shop in Främmestad and the forging
operations in Wirsbo and Arvika. Consolidation in accordance with IFRS of
Turkish subsidiary Componenta Dökümcülük as part of Componenta Group ended on
31 December 2016.
Comparable net sales corresponding to current continued operations in 2017
increased 9% to EUR 46.3 (42.6) million. Demand among heavy truck manufacturers
in Sweden in particular remained strong throughout the review period. Adjusted
EBITDA corresponding to current continued operations in 2017 was EUR 1.9 (-1.1)
million. The order book at the beginning of April for continued operations was
EUR 31.3 (32.4) million. The order book in the period for comparison excluding
orders for Pistons and Suomivalimo was EUR 29.9 million.
The profitability of continued operations in the review period was improved in
particular by the reduction in fixed costs and by efficient planning and
implementation of production and logistics that were made possible by the
improvement in liquidity compared to the period for comparison. On the other
hand, profitability was weakened by the temporary cancellation of the refund of
Finland’s energy tax, by the impact at the foundries of a rise in material
prices, by the special transport relating to delivery problems at the iron
foundry in Turkey, and by more expensive material supplies because of the
restructuring proceedings in the forge operations.
The adjusted comparable operating profit for continued operations increased
from the previous year to EUR 1.0 (-2.8) million. The operating profit for
continued operations for the first quarter of 2016 including the operating
profit for Suomivalimo and Pistons and the trade mark and administration
service fees charged to the Netherlands and Turkey was EUR -2.1 million. The
adjusted operating profit was improved not only by the improvement in EBITDA
but also by a reduction of EUR 1.2 million in depreciation on machinery and
equipment. The operating profit in the period according to IFRS for continued
operations, including items that affect comparability, was EUR 9.7 (-2.2)
million. Items affecting comparability in the operating profit totalled EUR 8.7
million positive (EUR -0.1 million). Items affecting comparability in the
review period, comprise mainly cuts of EUR -9.1 million in the restructuring
debts of the Wirsbo sub-group. In addition, impairment of EUR -0.4 million was
recorded on non-current production assets.
Net financing costs in the review period declined considerably to EUR -0.1
(-2.6) million. Financing costs declined due to the restructuring proceedings
and financing arrangements. No accrued interest costs have been recognized in
the review period for non-preferential interest-bearing restructuring debts,
since they will be treated as having lowest priority, and after the
restructuring proceedings have begun accumulated accrued interest will be cut
100 per cent.
Componenta has reached agreement on financing from its main customers in
Finland and Sweden, and this will cover the working capital needs for
operations. The Group’s liquid assets at the close of the period stood at EUR
4.1 million. In addition, the administrator for Componenta Främmestad AB has
control over funds of EUR 1.8 million that are recorded as receivables.
Restructuring proceedings
The administrator of the corporate restructuring proceedings for Componenta
Corporation and Componenta Finland Oy filed the draft restructuring programmes
with the District Court of Helsinki on 30 March 2017. In its interim ruling on
4 April 2017, the District Court of Helsinki decided to continue processing the
draft restructuring programmes.
The restructuring proposal for Componenta Wirsbo AB came into force on 14
January 2017 and for Componenta Arvika AB on 21 January 2017. In accordance
with the rulings of the local courts, the companies intend to pay some SEK 40
million of the Group’s external restructuring debt in July 2017. To achieve
this, Componenta must succeed in arranging external funding for the companies
in order to ensure sufficient liquidity. The primary goal is to postpone
payment of the restructuring debts until January 2018 and to arrange
refinancing by then. As previously announced, the Group’s preferred option is
to keep forging operations as part of the Group.
On 6 March 2017 an extension until 1 June 2017 was granted for the
restructuring process at Componenta Främmestad AB.
Componenta Corporation is aiming to sell its shares in Componenta Dökümcülük
Ticaret ve Sanayi A.S. Componenta’s objective is a comprehensive solution, in
which the Turkish subsidiary accepts the restructuring programme proposals for
Componenta Corporation, Componenta Finland Oy and Componenta Främmestad AB.
Another goal is for the Turkish club loan banks that have financed the Turkish
subsidiary to release Componenta Corporation and Componenta Främmestad AB from
all commitments and liabilities based on the club loan agreement, including
releasing them from a EUR 80 million loan guarantee.
The company considers that the restructuring proceedings in Finland and Sweden
will make it possible to put operations on a healthy footing and to develop
them in the future, but considerable uncertainty still exists concerning
operations and their ability to continue as a going concern. In the near future
Componenta Group’s operational and financial risks relate to the corporate
restructuring proceedings currently underway. The ability of the Group to
continue as a going concern depends on whether viable restructuring programmes
are approved for Group companies in Finland and Sweden, and where restructuring
programmes have been approved, that the companies involved are able to make the
payments stipulated in the restructuring programmes.
Guidelines unchanged for 2017
Componenta expects continued operations to have net sales of EUR 150 - 170
million in 2017. EBITDA excluding items affecting comparability is expected to
be EUR 5 - 10 million. Componenta’s comparable net sales in 2016 corresponding
to current continued operations in 2017 were some EUR 167 million.
Helsinki, 16 May 2017
COMPONENTA CORPORATION
Harri Suutari
President and CEO
APPENDIX: Business Review 1 January - 31 March 2017
Further information:
Harri Suutari
President and CEO
tel. +358 (0)10 403 2200
Marko Karppinen
CFO
tel. +358 (0)10 403 2101
Componenta is an international technology company. Componenta specializes in
supplying cast and machined components to its global customers, who are
manufacturers of vehicles, machines and equipment. The company’s share is
listed on Nasdaq Helsinki.
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