Neo Industrial Oyj - Interim Management statement

NEO INDUSTRIAL PLC’S INTERIM MANAGEMENT STATEMENT FOR 1 JANUARY TO 28 OCTOBER 2015

Significantly new orders, turnover increased slightly, operating result was
lower than year before. 

NEO INDUSTRIAL PLC        STOCK EXCHANGE RELEASE        28 October 2015 at
10.00 am 

NEO INDUSTRIAL PLC'S INTERIM MANAGEMENT STATEMENT FOR 1 JANUARY TO 28 OCTOBER
2015 
Significantly new orders, turnover increased slightly, operating result was
lower than year before. 

Neo Industrial's turnover for the period between 1 January and 30 September
2015 was EUR 64.4 million (63.3 million 1.1. - 30.9.2014). Its operating result
was -1.4 million (0.9 million). Operating result was burdened by extraordinary
costs total EUR 1.1 million. Extraordinary costs contains circa EUR 0.6 million
costs due to management changes. Total circa EUR 0.5 million was due to
investments in recruiting new production personnel and training as well as
larger than normal variations of factories´ load and utilisation rates. 

Mr. Ralf Sohlström, M.Sc. (El. Eng), was appointed as Managing Director of Reka
Cables Ltd, subsidiary of Neo Industrial Plc starting May 1, 2015 and as
Managing Director of Neo Industrial Plc starting September 1, 2015. 

Neo Industrial Plc's former Managing Director Jari Salo, M.Sc. (Tech.)
continues supporting the cable business development as member of the Board of
Reka Cables Ltd. 

CABLE SEGMENT

The Cable segment's turnover for the period between 1 January and 30 September
2015 was EUR 64.4 million (63.3 million). The operating result was EUR -0.2
million (1.7 million). The Cable segment's operating result was burdened by
extraordinary costs total EUR 0.8 million. 

In the review period (1 January to 30 September 2015), the sales volume in the
cable market of Nordic countries, the main market area of Reka Cables Ltd, was
on the same level as the year before. However, there were many regional
differences. The sales volume to other countries increased. 

The raw material prices of aluminium and copper have fluctuated a lot. At the
end of the review period the prices of aluminium and copper were lower than on
December 31 2014. The world market prices of plastics have also fluctuated
during the review period. 

Reka Cables Ltd got substantial underground power cable order in January. The
value of the order is EUR 6.0 million and the deliveries are made during 2015
and 2016. In September and October Reka Cables Ltd has made several underground
power cable delivery agreements, valued total over EUR 35 million. The
deliveries of these agreements are made mainly during 2016 and 2017. The
underground power cables are used when building grids that are not vulnerable
to weather conditions. 

Reka Cables Ltd invested EUR 1.5 million in cable manufacturing technology in
Hyvinkää Factory during the review period. With the investment the productivity
of cable manufacturing is enhanced and developing and manufacturing of new
products is enabled. 

Good financial situation of Cable industry enabled additional installment of
EUR 1.5 million to the financing agreement signed in March 2014. The payment
was made in January 2015. 

Reka Cables Ltd started in October efficiency improvement program which aims to
ensure competitiveness of the company in the long term. As a part of the
efficiency improvement program Reka Cables Ltd started the co-determination
negotiations to decrease maximum nine permanent officials. The co-determination
negotiations concern all permanent officials in Hyvinkää, Riihimäki and Keuruu. 

The turnover of Nestor Cables, an associated company of the Cable Segment, were
EUR 22.1 million (25.9 million) for the period between 1 January and 30
September 2015. The operating result was positive, but lower than in the
previous year. 

RISKS AND UNCERTAINTY FACTORS

Neo Industrial´s financial risks include currency, interest rate, commodity,
liquidity, credit and investment risks. Financial risks and the related
protection measures are described in more detail in notes to the financial
statements. The company´s future risk factors are related to the business
development of its portfolio companies. The uncertainty of the international
economy and financial markets poses a risk to the Group´s financial
arrangements. 

Due to the significant financial arrangements carried out in 2014 the financial
situation got better. However, Neo Industrial continues to pay extra attention
to ensure the sufficient funding and ensuring liquidity situation. The
financial negotiations are continued and 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 construction has been picking up slightly in Nordic countries and in
Western Europe. The management believes that grid constructors will boost
ground cabling projects to ensure distribution reliability. The turnover of the
Cable segment is believed to slightly exceed the turnover in 2014. The
operating result of the Cables segment is believed to be positive. 

Neo Industrial continues to pay extra attention to ensure the sufficient
funding and ensuring liquidity situation. The measures are negotiations on
financing and payment terms as well as boosting inventory turnover and freeing
up capital assets. 

The information presented in this statement is unaudited.

Hyvinkää, 28 October 2015

Neo Industrial Plc
Board of Directors


Further information:
Ralf Sohlström, Managing Director, tel. +358 40 770 2720

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 these 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 changes 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 main list of NASDAQ Helsinki Stock Exchange.
Neo Industrial's business segment is Cable Industry.