Componenta - Interim report (Q1 and Q3)

Componenta Corporation Interim Report 1 January - 30 September 2014: Operating profit from business operations improved from previous year despite fall in net sales

Componenta Corporation    Interim Report 21.10.2014 at 13.30

January - September 2014 in brief

  -- Componenta completed the reorganization of its financing during August and
     September that it began in January 2014.
  -- The order book at the end of September was 5% lower than at the same time
     in the previous year, at MEUR 79 (MEUR 84).
  -- Net sales declined 3% from the previous year to MEUR 376 (MEUR 387).
  -- EBITDA excluding one-time items and exchange rate differences of balance
     sheet items was MEUR 30.3 (MEUR 24.4).
  -- Operating profit excluding one-time items and exchange rate differences of
     balance sheet items (“operating profit from business operations”) improved
     due to the cost savings achieved in the efficiency improvement program and
     was MEUR 16.6 (MEUR 11.0). Operating profit including these items was MEUR
     11.2 (MEUR 12.8).
  -- The result after financial items excluding one-time items and exchange rate
     differences of operative balance sheet items was MEUR -4.7 (MEUR -7.3).
  -- One-time items and exchange rate differences of operative balance sheet
     items that had an impact on the result for the period totalled MEUR -8.7
     (MEUR 1.8).
  -- Earnings per share were EUR -0.42 (EUR -0.32).

July - September 2014 in brief

  -- Net sales declined 7% from the previous year to MEUR 111 (MEUR 119).
  -- EBITDA excluding one-time items and exchange rate differences of balance
     sheet items was MEUR 5.6 (MEUR 4.5).
  -- Operating profit excluding one-time items and exchange rate differences of
     balance sheet items was MEUR 1.3 (MEUR 0.1) and including these items MEUR
     -0.8 (MEUR 1.5).
  -- The result after financial items excluding one-time items and exchange rate
     differences of operative balance sheet items was MEUR -5.5 (MEUR -6.5).
  -- One-time items and exchange rate differences of operative balance sheet
     items that had an impact on the result for the July - September period
     totalled MEUR -5.3 (MEUR 1.4).
  -- Earnings per share were EUR -0.21 (EUR -0.27).

Business environment

The uncertainty in the European economy in addition to to the effect of the
economic sanctions of EU and Russia has changed the business environment during
the past few weeks and weakened the demand for investment goods in almost all
customer segments of Componenta. 

The order book for Componenta's heavy trucks customer sector was 9% lower at
the end of the period than at the same time in the previous year. Demand in the
truck industry in Europe is expected to decline clearly in 2014. Componenta's
sales to heavy truck customers are expected to decline less than the market due
to growth obtained by new products. 

The order book for Componenta's construction and mining customer sector was 3%
lower at the end of the review period than at the same time in the previous
year. Demand in North America is clearly growing but in Europe demand remains
weak. Total demand is expected to be lower than in the previous year. Also
Componenta's sales to construction and mining sector customers are expected to
be lower than in the previous year. 

At the end of the review period, the order book for Componenta's machine
building customer segment was 10% higher than at the same time in the previous
year. Componenta's sales to the machine building industry are expected to rise
during 2014. 

The order book for Componenta's agricultural machinery customer sector was 22%
lower at the end of September than at the same time in the previous year. Due
to reciprocal economic sanctions by Western countries and Russia, the prices of
the agricultural products have decreased clearly. Due to decreased prices, the
demand for agricultural machinery has clearly in Europe declined in 2014.
Componenta's sales to manufacturers of agricultural machinery are expected to
decline less than overall demand because of an increase in market share. 

The order book for Componenta's automotive customer sector was 2% higher at the
end of September than at the same time in the previous year. Demand in 2014 is
estimated to improve from the previous year. Componenta's sales are expected to
stay at the same level as in the previous year. 

Prospects for Componenta

The prospects for Componenta in 2014 are based on general external economic
indicators, delivery forecasts given by customers, and on Componenta's order
intake and order book. 

Componenta's order book at the end of September was 5% lower than in the
previous year, standing at EUR 79 (84) million. 

Componenta expects the operating profit for 2014 excluding one-time items and
exchange rates differences of balance sheet items to improve from the previous
year due to efficiency improvement program being carried out. 

Key figures

                                                         1-9/20  1-9/20  1-12/20
                                                             14      13       13
--------------------------------------------------------------------------------
Order book, MEUR                                             79      84       87
--------------------------------------------------------------------------------
Net sales, MEUR                                             376     387      511
--------------------------------------------------------------------------------
Operating profit*), MEUR                                   16.6    11.0     14.5
--------------------------------------------------------------------------------
Operating profit*), %                                       4.4     2.8      2.8
--------------------------------------------------------------------------------
Result after financial items*), MEUR                       -4.7    -7.3     -9.9
--------------------------------------------------------------------------------
One-time items ja exchange rate differences of             -8.7     1.8      0.3
 operative balance sheet items, MEUR                                            
--------------------------------------------------------------------------------
Taxes, MEUR                                                 2.0     0.0     -6.0
--------------------------------------------------------------------------------
Net result for the period, MEUR                           -11.3    -5.6    -15.5
--------------------------------------------------------------------------------
Earnings per share, EUR                                   -0.42   -0.32    -0.75
--------------------------------------------------------------------------------
Net gearing, %                                              154     241      270
--------------------------------------------------------------------------------
Return on investment, excl. one-time items, %               6.3     6.2      5.9
--------------------------------------------------------------------------------
Return on equity, excl. one-time items, %                  -8.8    -3.9    -12.8
--------------------------------------------------------------------------------
Number of personnel at period end, incl. leased           4,440   4,561    4,431
 personnel                                                                      
--------------------------------------------------------------------------------

*) excluding one-time items and exchange rate differences of operative balance
sheet items 

President and CEO Heikki Lehtonen comments on the review period:

“The reorganization of Componenta interest bearing debts that began in January
2014 was completed as planned during August and September when short-term
interest bearing debts were refinanced through two separate funding agreements
and in addition, two share issues were carried out. As a result of these
arrangements the Group's equity ratio improved, net gearing declined and
interest bearing net debt decreased. At the same time the Group's liquidity
situation improved significantly, and in addition, the annual net financing
costs are expected to decrease considerably. 

The net sales of the review period were EUR 11 million lower than in the
previous year, but the operating profit from business operations improved EUR
5.6 million despite the decrease of net sales. The improvement was due to cost
savings achieved in the efficiency improvement program. 

A change has turned out in the business environment during the past few weeks,
when the uncertainty in Europe has increased due to the economic sanctions by
EU and Russia. Decrease in farm product prices has reduced demand for
agricultural machinery which has been seen clearly in our order book from
manufactures of agricultural machinery. At the same time, however, demand from
the machine building industry has remained favourable. As a result of the
demand fluctuations in different customer segments and markets Componenta's
order book at the end of September was 5% lower as in the previous year. 

Componenta's efficiency improvement program with a target to improve
profitability EUR 35 million by the end of 2015 from its level in 2012, has
made progress in accordance with expectations. EUR 26 million of the target has
been achieved by the end of the review period.  The rolling EBITDA for the past
12 months was EUR 38.4 million. The efficiency improvement measures that have
been implemented or decided on have savings impact of EUR 8.6 million, so the
EBITDA is expected to rise to the level of EUR 47.0 million.” 

Componenta's Interim Report 1 January - 30 September 2014 in PDF format is
attached to this release. The report is also available on the Componenta
website at www.componenta.com. 

Press conference for analysts and media representatives at 15.00 (EEST)

A press conference will be held at 15.00 (EEST) on 21 October 2014, in the
auditorium of the SATO building in Käpylä, at Panuntie 4, 00610 Helsinki. The
press conference will be webcast simultaneously via the internet. The link can
be found on Componenta's website at www.componenta.com. 

Helsinki, 21 October 2014

COMPONENTA CORPORATION

Heikki Lehtonen
President and CEO



ENCL. Interim Report 1 January - 30 September 2014



For further information, please contact:

Heikki Lehtonen
President and CEO
tel. +358 10 403 2200

Mika Hassinen
CFO
tel. +358 10 403 2723



Componenta is a metal sector company with international operations and
production plants located in Finland, Turkey, the Netherlands and Sweden. The
net sales of Componenta were EUR 511 million in 2013 and its share is listed on
the NASDAQ OMX Helsinki. The Group employs approx. 4,400 people. Componenta
specializes in supplying cast and machined components and total solutions made
of them to its global customers, who are manufacturers of vehicles, machines
and equipment.

Attachments:

Componenta_interim report Q3 2014.pdf