Martela Oyj - Financial Statement Release

MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2013

MARTELA CORPORATION         FINANCIAL STATEMENTS RELEASE       4 February 2014
at 8.30 a.m. 


MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2013

Consolidated revenue down, operating result lower than previous year

Key figures:

                           10-12  10-12   1-12   1-12
EUR mill.                   2013   2012   2013   2012
- Revenue                   36.9   40.8  132.3  142.7
- Change in revenue, %      -9.7    4.7   -7.3    9.2
- Operating result          -0.4    0.3   -2.9   -0.9
- Operating result, %       -1.0    0.8   -2.2   -0.6
- Earnings/share, EUR      -0.20  -0.02  -0.97  -0.51
- Return on investment, %   -4.2    2.4   -7.9   -2.7
- Return on equity, %      -13,4   -0.8  -16.3   -7.2
- Equity ratio, %                         37.6   41.4
- Gearing ratio, %                        51.2   32.8


The Martela Group anticipates that its revenue in 2014 will be at the 2013
level, and that its operating result will show a year-on-year improvement. Due
to normal seasonal variation, the Group's operating result is weighted towards
the second half of the year. 

Market

The demand for office furniture in Finland continued to be weak in the second
half of the year. Demand in Finland is currently focused largely on office
alteration and enhancement projects of different kinds instead of new offices.
In Sweden, too, the market weakened towards the end of the year. By contrast,
the Polish market remained at a normal level. 

Statistics on office construction are available for the first three quarters of
2013, and they indicate that 61 per cent fewer office buildings were completed
in Finland in terms of square metres in the first nine months than in the same
period a year earlier. In the same period, however, 49 per cent fewer office
building permits were granted, and there were about 66 per cent fewer new
office building starts than the previous year. Office construction activity
continued to be at a low level, but it is significant that the number of
building permits granted in the third quarter was 35 per cent more than in the
same quarter a year earlier. But as this concerns such a short period it is not
yet possible to draw any far reaching conclusions from it. 

Consolidated revenue and result

Consolidated revenue for the fourth quarter was EUR 36.9 million (40.8), a
decrease of 9.7 per cent on the previous year. Consolidated revenue for the
full year 2013 was EUR 132.3 million (142.7), a decrease of 7.3 per cent on the
previous year. The difficult market conditions in Finland were reflected in the
unit's revenue. Revenue decreased in Finland and also in Poland, both
cumulatively and in the final quarter of the year. By contrast, full-year
revenue in Sweden was at the previous year's level, although revenue in the
fourth quarter showed a year-on-year decrease. In other markets, the transfer
of the Danish business at the end of 2012 from the Martela subsidiary to a
dealer slightly reduced (2.2%) consolidated revenue for the review period.
Revenue in Russia grew once again, but is still relatively low compared with
the Group's overall revenue. 

Business Unit Finland's revenue was down by 5.9 per cent. Business Unit Sweden& Norway's revenue was down by 1.2 per cent, and Business Unit Poland's by 6.8
per cent, calculated in local currencies. Movements in exchange rates did not
have a significant impact on the Group's revenue. 

The operating result for the fourth quarter declined and was EUR -0.4 million
(0.3). The cumulative full-year operating result was EUR -2.9 million (-0.9),
which was -2.2 per cent (-0.6) of revenue. The consolidated third quarter
operating result was boosted by EUR 0.9 million from the sale of a residential
property in Nummela. Despite a reduction in the Group's costs, the full-year
operating result was down from the previous year due to a clear drop in
revenue. Nevertheless, the sales margin stabilised in the fourth quarter of the
year, having been falling during the previous quarters. 

The Group's fixed costs gradually fell during the year as a result of the
measures already taken. In the third quarter, the Group began to plan further
measures to reduce its costs, targeting an annual cost saving of about EUR 6
million. The savings programme will be implemented by the end of 2014, after
which the full impact of the savings will be felt. It is estimated that due to
the timing of the measures the cost reduction impact of the savings programme
in 2014 will be equivalent to about one third of the total savings target. The
measures being put in place allow the Group to adjust its cost structure to
correspond to the changed operating environment. 

As part of the savings programme, the company began codetermination
negotiations in Finland in August, and these were completed at the start of
October. The outcome of the negotiations was that the Group's cost level will
be reduced by costs equivalent to 35 employees by the end of 2014. In January
2014, the Group began codetermination negotiations aimed at improving
production efficiency. This improvement will be sought by production transfers
between the Group's units located in Nummela and Riihimäki in Finland, and in
Warsaw, Poland. It is estimated that the measures implemented and under way
will account for approximately EUR 3.5 million annually of the total savings
programme. Preparation of further measures to achieve the targeted savings is
continuing. 

As previously stated, the Group will nevertheless be investing resources at the
same time in improving its ability to offer even better comprehensive solutions
and services, especially to meet the growing customer need for Activity-Based
Office solutions. The Group's aim is to strengthen its pioneering position as a
supplier of comprehensive solutions and as the leading service provider for
offices and other working environments. 

The result before taxes was EUR -4.4 million (-1.8), and the result after taxes
was EUR -3.9 million (-2.0). The result for the review period was adversely
affected by the EUR 0.6 million recognised in financial expenses as a provision
for the realisation of the loan guarantee given to Martela's associated company
P.O. Korhonen Oy. 

Martela's full financial statements 2013 is included in PDF format as an
attachment to this release. The financial statements 2013 is also available on
the company's website at www.martela.com. 


Martela Oyj
Board of Directors
Heikki Martela
CEO


Additional information
Heikki Martela, CEO, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606


Distribution
NASDAQ OMX Nordic
Main News Media
www.martela.com

Attachments:

Finacial statements release 2013.pdf