PKC Group Oyj - Interim report (Q1 and Q3)

PKC Group Q1/2015: Profitability improved significantly, strategy execution proceeding

PKC Group Plc       Interim Report          6 May 2015  8.15 a.m.



PKC Group Q1/2015:

Profitability improved significantly, strategy execution proceeding



This release is a summary of PKC Group's Interim Report January-March 2015. The
complete report is attached to this release as a pdf-file. It is also available
on the company website at www.pkcgroup.com. 



January - March 2015 highlights

  -- Revenue increased 11.0% on the comparison period (1-3/2014), totalling EUR
     226.5 million (EUR 204.1 million).The changes in consolidation exchange
     rates increased the revenue by approximately +12%.
  -- EBITDA before non-recurring items increased 41.7% on the comparison period
     (1-3/2014), totalling EUR 16.7 million (EUR 11.8 million) and 7.4% (5.8%)
     of revenue.
  -- Operating profit before non-recurring items increased 71.8% on the
     comparison period (1-3/2014), totalling EUR 9.2 million (EUR 5.3 million)
     and 4.0% (2.6%) of revenue.
  -- Diluted earnings per share were EUR 0.18 (EUR 0.04) including the impact of
     EUR 0.6 million (EUR 2.7 million) non-recurring items in operating profit.
  -- Cash flow after investments was EUR -31.8 million (EUR -18.4 million).



PKC Group's outlook for 2015

  -- PKC Group estimates that with prevailing exchange rates 2015 revenue will
     be close to previous year level, and that comparable EBITDA will be higher
     than in 2014. In 2014, PKC's revenue was EUR 829.5 million and comparable
     EBITDA before non-recurring items was EUR 48.6 million*. Revenue and EBITDA
     estimates are based on current business structure.





Key figures*                                1-3/15    1-3/14   Change %  1-12/14
EUR 1,000 (unless otherwise noted)                                              
Revenue                                    226,494   204,057      +11.0  829,516
EBITDA**                                    16,732    11,806      +41.7   48,572
% of revenue                                   7.4       5.8                 5.9
Operating profit**                           9,150     5,325      +71.8   21,384
% of revenue                                   4.0       2.6                 2.6
Non-recurring items                           -582    -2,735             -28,362
Operating profit(loss)                       8,568     2,591     +230.7   -6,978
% of revenue                                   3.8       1.3                -0.8
Profit(loss) before taxes                    7,785     1,354     +474.8  -10,528
Net profit (loss) for the report period      4,360       907     +380.5  -29,051
Earnings per share (EPS), EUR                 0.18      0.04     +379.3    -1.21
Cash flow after investments                -31,796   -18,355              20,699
ROCE,%                                        13.3       7.2                 7.7
Gearing, %                                     8.8       8.6                -5.6
Average number of personnel                 19,683    18,806       +4.7   19,640
* PKC Group has reclassified certain financial items and operating expenses as  
 of the beginning of 2015. Comparison periods have been adjusted accordingly.   
 The changes to revenue and operating profit (loss) are minor and have no impact
 on the net profit (loss) for the period or shareholders' equity. The changes   
 are presented in detail in the table section of the interim report.            
** before non-recurring items                       





Matti Hyytiäinen, President & CEO:



Revenue in the first quarter increased on the comparison period by 11% and was
EUR 226.5 million. The changes in consolidation exchange rates increased the
revenue by approximately +12%. In North America, production of heavy-duty
Class-8 trucks continued to grow on the comparison period and on the final
quarter of 2014. However, production volumes of medium-duty trucks in North
America and trucks in Europe declined in comparison with the final quarter of
2014, but were higher than in the comparison period. In Brazil, general
economic and political uncertainty were reflected in the truck market, and
production volumes fell short of both the comparison period and the final
quarter of 2014. 



PKC's operating profit before non-recurring items increased on the comparison
period by 72% and was EUR 9.2 million. In North America, the company increased
its number of production personnel within overheated job markets. Because of
this, work productivity fell short of the target level, and overtime and
special freight encumbered profit. Ongoing production reorganisation in the
business areas of Europe and South America slightly encumbered profitability
but progressed as planned. Brazilian operating result improved significantly
although operations remained loss-making in deteriorating market conditions. 



The start of the year for the Electronics business has been excellent and
operating profit increased on the comparison period owing to an increased share
of the company's own products in revenue. 



During the first quarter, PKC announced two significant transactions. In
February, we announced that we were buying the Wiring Systems business of
Groclin, whose main customers are rolling stock manufacturers. In March, we
concluded a frame agreement on the establishment of a joint venture with
Chinese Wiring Systems company, Huakai. These two transactions are in
accordance with our strategy and are estimated to bring a total of some EUR 100
million per year in additional revenue. 



PKC's market position has remained strong in all key market areas. In March, we
won two significant new business contracts from our globally-operating
customers. The new contracts are estimated to launch by 2018 and to generate
annual revenue of about EUR 30 million. 



In North America and Europe, the full-year production volume forecasts for
trucks are almost unchanged and our customers are slightly more hopeful with
regard to production volumes for the rest of the year. Full-year production
volumes in Brazil, however, are expected to decline by more than previous
market forecasts suggested. 



PKC's personnel have once again been successful in their work, an indication of
which is the quality recognitions that we received from our customers during
the period. 



Market outlook



Wiring Systems Business



In 2015 the production of heavy-duty and medium-duty trucks in Europe is
expected to remain on previous year's level. 



In 2015 the production of heavy-duty trucks in North America is expected to
increase by about 14%, production of medium-duty trucks to decline by about 1%
and production of light vehicles to increase by about 3% compared to 2014. 



In 2015 the production of heavy-duty and medium-duty trucks in Brazil is
expected to be clearly lower than previous year. The governmental incentive
program to support the purchase of new trucks continues to be valid until
further notice, although the terms have been weakened significantly. The
weakened terms and both economic and political uncertainty in Brazil bear a
significant risk for Brazilian truck sales for 2015. 



Electronics Business



The market demand for Electronics segment's products is expected to slightly
decrease compared to the current level. 



PKC Group Plc

Board of Directors



Matti Hyytiäinen

President & CEO



For additional information, contact:

Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968

Juha Torniainen, CFO, PKC Group Plc, tel. +358 (0)40 570 8871



Press conference



A press conference on the interim report will be arranged for analysts and
investors today, 6 May 2015, at 10.00 a.m., at the address Event Arena Bank,
Unioninkatu 20, Helsinki. 



Attachment

PKC interim report Q1 2015



Distribution



Nasdaq Helsinki

Main media

www.pkcgroup.com



PKC Group is a global partner, designing, manufacturing and integrating
electrical distribution systems, electronics and related architecture
components for the commercial vehicle industry and other selected segments. The
Group has production facilities in Brazil, China, Estonia, Finland, Germany,
Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in
2014 totalled EUR 829.5 million. PKC Group Plc is listed on Nasdaq Helsinki.

Attachments:

PKC interim report Q1 2015.pdf