Martela Oyj - Company Announcement

MARTELA CORPORATION INTERIM REPORT, 1 January – 30 June 2015

MARTELA CORPORATION      INTERIM REPORT     11 August 2015 at 8.30 a.m.



MARTELA CORPORATION INTERIM REPORT, 1 January - 30 June 2015



Substantial decrease in revenue in the first half of the year, but operating
result remained at previous year's level 

Key figures:



                             4-6   4-6    1-6    1-6   1-12
EUR million                 2015  2014   2015   2014   2014
- Revenue                   30.0  34.1   56.6   68.1  135.9
- Change in revenue, %     -12.0  16.3  -16.9   11.5    2.7
- Operating result           0.2   0.4   -1.1   -1.0    0.2
- Operating result, %        0.8   1.1   -1.9   -1.5    0.1
- Earnings/share, EUR       0.01  0.03  -0.35  -0.34  -0.18
- Return on investment, %    2.5   4.1   -6.1   -5.4    0.5
- Return on equity, %        0.7   2.2  -14.7  -13.4   -3.4
- Equity ratio, %                        35.7   35.4   38.1
- Gearing ratio, %                       46.3   44.5   33.4



The Martela Group anticipates that its revenue in 2015 will remain at the
previous year's level or that there will be a slight decline. A slight
improvement in the operating result is expected. The Group's operating result
is weighted towards the second half of the year due to normal seasonal
variation, and this year the trend will be further emphasised by the fact that
there are large projects taking place during the final months of the year. 

Market

The market environment has remained largely unchanged. The overall demand for
office furniture continued to be low in the review period in the Group's main
market areas: Finland, Sweden, Poland and Russia. Demand currently focuses on
alteration and enhancement projects, which is reflected in an increasing
interest in activity-based office solutions and the Martela Lifecycle model.
Even though the overall demand continues to be low, the many office alteration
projects that are at the planning stage in the Nordic countries are improving
the market situation slightly. However, decision-making is being slowed by the
general economic uncertainty and the extent of long-term leases. In the Russian
market, the situation has been even more challenging than elsewhere. 

In addition to office construction, the demand for Martela's products and
services is significantly affected by the general economic situation and by the
extent to which companies need to use their office space more efficiently. The
need to boost efficiency often leads to office alteration projects, which in
turn generate demand for Martela's products and services. The annual change in
gross domestic product (GDP) can be regarded as a indicator of general economic
development. In Finland, this change was -0.1% in 2014. According to most
forecasts, the change in Finland's GDP is estimated to be near zero or only
slightly positive in 2015. Judging from these forecasts, there can still be no
expectation of a strong recovery in the near future. 

Consolidated revenue and result


Consolidated revenue for the second quarter was EUR 30.0 million (34.1), a
decrease of 12.0 per cent on the previous year. Consolidated revenue for
January-June was EUR 56.6 million (68.1), a decrease of 16.9 per cent. Despite
the challenging market situation in Finland, the Group's revenue in Finland in
the review period was slightly higher than in the previous year. This was due
to the positive response to the activity-based office solutions and the Martela
Lifecycle model in Finland.  There were no major customer projects in the first
half of the year in Finland. Instead, revenue consisted of small and
medium-sized deliveries. There was a substantial decrease in the revenue of
Business Unit International compared with the previous year. Since 1 May 2015,
the unit has been responsible for sales in Poland and Russia and exports to
countries where Martela does not have a subsidiary. Russia accounted for most
of the decrease, whereas the revenue in Poland was at the previous year's
level. In Sweden and Norway, Martela had major customer deliveries in the first
half of 2014, but in 2015 there are major deliveries taking place in the second
half of the year. For this reason, the revenue generated by Business Unit
Sweden & Norway decreased considerably year-on-year in the first half of 2015.
As a result of the developments in Sweden and Norway and the decrease in the
revenue in Russia, the Group's revenue decreased in the first half of the year. 

The consolidated operating result for the second quarter was EUR 0.2 million
(0.4) and the figure for the first half of the year was EUR -1.1 million
(-1.0). Efficiency improvement measures helped the Business Unit Finland to
achieve a good operating result during the review period. At the same time,
however, the operating results of Martela's foreign business units weakened due
to the decrease in revenue.  In autumn 2013, the Group launched a savings
programme of EUR 6 million, which was completed in 2014. About one third of the
savings were implemented in 2014 and the rest will be put into effect during
2015. The adjustment measures helped the Group to cut its fixed costs on a
year-on-year basis as planned. At the same time, as a result of the production
efficiency measures implemented in 2014, the sales margin on the Group's
products was slightly higher than in the previous year. Due to the measures
taken, the Group's operating result for the first half of 2015 remained at the
previous year's level, even though at the same time there was a substantial
decrease in revenue. 

Measures to improve supply chain efficiency continued in the first half of the
year. In January Martela Corporation launched statutory employee negotiations
to increase the efficiency of its logistics centre in Nummela and its
subsidiary, Kidex Oy, in Kitee. As a result of the negotiations, the number of
personnel was reduced by four employees in the Nummela logistics centre and by
13 employees at Kidex. In addition, a decision was made to implement temporary
lay-offs of no more than 90 days. The lay-offs concerned employees in Nummela
and the entire staff at Kidex. The purpose of these measures is to adjust
capacity to the market demand and the changes in the structure of demand. 

Martela also launched a new savings programme in April. The aim is to reduce
costs by EUR 4 million at the annual level by the end of 2016, such that these
cost savings will take full effect in 2017. As part the programme, the company
launched statutory employee negotiations in April that covered all office
employees at Martela Corporation. As a consequence of the negotiations the
decision was taken to give notice to a total of 15 employees. It was also
agreed that, if necessary, Martela will resort to temporary lay-offs lasting
for a maximum of 90 days. Costs savings will also be made as a result of normal
retirements and other personnel reductions, as these positions will not be
filled but instead the work will be reorganised. As a result of the
above-mentioned measures, Martela expects to achieve yearly cost savings of
about EUR 1.2 million by the end of 2016. 

To enhance operational efficiency, it was decided to integrate Business Unit
Poland into Business Unit International. From 1 May 2015, Business Unit
International has consisted of sales operations in Poland and Russia as well as
exports to countries where Martela does not have a subsidiary. 

Over the past year, interest in activity-based office solutions has continued
to increase in Martela's main market areas. The Group has introduced novel
solutions suitable for activity-based offices and continues to invest in its
ability to provide even more high-quality comprehensive solutions and services
in the field of activity-based working. The Group has strengthened its
pioneering position as a supplier of comprehensive solutions and as a leading
service provider for offices and other working environments. 

The result before taxes was EUR -1.4 million (-1.3), and the result after taxes
was EUR -1.4 million (-1.4). 

Martela's full interim report for January - June 2015 is included in PDF format
as an attachment to this release. The interim report is also available on the
company's website at www.martela.com. 



Martela Oyj
Board of Directors
Heikki Martela
CEO

ATTACHEMENT: Martela's interim report January - June 2015


For more information, please contact
Heikki Martela, CEO, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606

Distribution
Nasdaq Helsinki
Main News Media
www.martela.com

Attachments:

20150811_Interim report_Q2.pdf