Neo Industrial Oyj - Interim report (Q1 and Q3)

NEO INDUSTRIAL PLC’S INTERIM REPORT FOR JANUARY–JUNE 2014

NEO INDUSTRIAL PLCINTERIM REPORT31 July 2014 at 2.00 pm
NEO INDUSTRIAL PLC'S INTERIM REPORT FOR JANUARY-JUNE 2014 
Operating result turned positive and net cash provided by operating activities
improved. 

January-June
- The Neo Industrial Group´s turnover was EUR 42.0 million (45.5 million)
- Its operating result was EUR 0.6 million (-0.7 million). Operating result of
January-June 2013 include one-time gain of EUR 0.4 million of the sale of the
Group´s operations in Russia. 
- The Cable segment´s operating result was EUR 1.3 million (0.3 million).
- The Group´s result for the period was EUR -0.6 million (0.2 million).

MANAGING DIRECTOR JARI SALO:

During the review period the volumes in Cable segment's main markets in the
Nordic countries were slightly increased compared to the corresponding period
of the previous year. However the Cable segment´s turnover for the first half
of 2014 was lower than for the corresponding period of the previous year. The
decrease is mainly due Russia and the Baltic countries, where the sales volumes
have been lower than previous year. The comparable figures 2013 include EUR 2.8
million turnover of the Russian cable manufacturing companies sold in spring
2013. Taken that into the consideration the decrease of turnover was EUR 0.7
million. 

The Cable segment´s operating result improved by EUR 1.0 million to the
comparable figures 2013 and the Neo Industrial Group´s operating result turned
positive. The improvement of result was due to favourable product sortiment,
assertion of production and gained cost savings. 

During the review period the financial income was EUR 1.3 million smaller than
during the corresponding period last year. During January - June 2013 the
financial income consisted mainly of valuation of open hedges. In addition to
that there was deferred tax income during the corresponding period last year.
The result for the period was EUR -0.6 million (0.2). 

Cable segment has strong seasonal fluctuations. The high season is during
spring, summer and autumn months. During the high season the usage of factoring
financing and seasonal funding is at highest and also the stock levels are in
the high level. Equity ratio June 30 2014 was lower than 31 December 2013 and
30 June 2013 showing the capital employed impact of high season and the effect
of the result for the period. 

The financial negotiations of the Cable segment were finalised and new
financing agreement was signed in the beginning of the year.  With this
arrangement the Cable segment replaced previous short term loans with long term
loans and at the same time enabled a working capital increase with EUR 2
million. The arrangement supports positively the Cables operations in the
market place. However, the liquidity and funding are still paid special
attention by the Group and Neo Industrial actively negotiates financing and
payment terms. 

KEY FIGURES

                                     1-6/2014  1-6/2013  1-12/2013
Turnover  (EUR million)                  42.0      45.5       83.0
Operating result (EUR million)            0.6      -0.7       -1.0
Result for the period (EUR million)      -0.6       0.2       -1.2
Earnings per share, EUR                 -0.11      0.04      -0.20
Return on investment, (ROI)             2.2 %     2.1 %      1.7 %
Equity ratio                           11.0 %    13.8 %     15.8 %



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 poses a risk to the financial arrangements of the
Group. 

Neo Industrial's liquidity situation is tight. To assure liquidity, company
intensifies the working capital management and negotiates adjustments to
payment terms and agreements. 

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 effect significantly on the ability to
ensure competitive delivery times through sufficient inventories. 

NEAR-TERM OUTLOOK

The Cable segment weakened during 2013. On the horizon, construction is not
picking up in Finland or in Sweden yet, but at least some delayed projects are
believed to materialize in 2014. Additionally, grid companies have increased
their ground cabling projects to ensure better distribution reliability. It is
expected that the turnover of the Cable segment increase from 2013 and that the
operating result is positive. 

The company will continue to pay special attention to liquidity and funding for
growth. In addition to negotiations on financing and payment terms, the
measures for boosting inventory turnover and freeing up capital assets are 
taken into action. 

DISCLOSURE POLICY OF INTERIM REPORT

Neo Industrial discloses relevant information related to its Interim Report
with this Stock Exchange Release. The entire Interim Report for January-June
2014 is attached to this release and is also available on company's website at
www.neoindustrial.fi. 



Hyvinkää, 31 July 2014

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 thses 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 change 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. 

ENCL: Neo Industrial's Interim Report for January-June 2014

Attachments:

Neo Industrial Interim Report January-June 2014.pdf