PKC Group Oyj - Interim report (Q1 and Q3)

PKC Group Q3/2016 Interim Statement

PKC Group Plc       Interim Statement       27 October 2016 8.15 a.m.



PKC Group Q3/2016 Interim Statement



Good progress continued across business areas except North America where there
was a negative impact stemming from extra ramp-down and ramp-up expenses of a
light vehicle program which took place during the end of the period. PKC
Group’s outlook for 2016 remains unchanged. 





Key figures (from continuing operations         1-9/16   1-9/15  Change  1-12/15
 unless otherwise noted)                                              %         
EUR 1,000 (unless otherwise noted)                                              
Revenue                                        631,457  627,386    +0.6  847,338
EBITDA*                                         44,421   44,125    +0.7   59,528
% of revenue                                       7.0      7.0              7.0
Items affecting comparability**                 -2,870   -7,746           -8,782
Operating profit                                18,126   14,063   +28.9   20,230
% of revenue                                       2.9      2.2              2.4
Earnings per share (EPS), EUR                     0.28     0.14  +100.3     0.23
                                                                                
Revenue by geographical locations                                               
Europe                                         224,965  176,386   +27.5  253,581
North America                                  343,938  415,720   -17.3  539,078
South America                                   26,826   29,791   -10.0   35,430
APAC                                            35,728    5,489  +550.8   19,250
                                                                                
Net cash from operating activities***          -39,550  -38,742           14,813
Working capital***                             141,531  124,501           92,711
Net debt***                                    119,267   99,926           49,375
ROCE, % ***                                        8.6      9.9              9.9
Gearing, %***                                     82.9     65.0             31.4
Equity ratio, %***                                27.9     29.3             29.0
Average headcount                               21,885   20,508    +6.7   20,855
* before items affecting comparability                  
** 2016: expenses related to North American organization and production capacity
 being adjusted to medium term demand outlook                                   
*** comparison periods include assets and liabilities of discontinued operations
                                                                                





The information presented in this statement is unaudited.



Matti Hyytiäinen, President & CEO:



PKC’s strong performance and momentum in other regions offset the extra product
launch cost and operational challenges encountered in the North American
business unit. As a consequence EBITDA remained at previous year level and
PKC’s operating profit from continuing operations improved and exceeded the
comparison period. All PKC business units improved their operating profit over
the comparison period, except PKC’s North American unit. 



Production volumes continued to fall in North America, and the drop in revenue
was greatest in the company’s most profitable segment, heavy-duty trucks. Also
the unsuccessful production ramp-down and ramp-up concerning a model change in
one light-vehicle programme at the Torreon plant in Mexico resulted in
additional net costs of about EUR 4.5 million at the end of the period. 



Typical of PKC’s business is increase of working capital in the early part of
the year and its freeing up towards the end of the year. Net cash from
operating activities in the period under review remained at the level of
comparison period, but it is improving as the year draws to a close, and net
cash from operating activities for the whole year is expected to be clearly
positive. 



PKC’s market position remained strong in all truck markets:

  -- In North America, demand for heavy-duty trucks continued to decline and, as
     a result, production volumes were 29% below the comparison period. The
     increase in demand for medium-duty trucks slowed but production volumes
     increased by 5% over the comparison period.
  -- In Europe, the growth in production volumes of heavy-duty trucks flattened
     out but volumes exceeded those in the comparison period by 5%. With regard
     to medium-duty trucks, production volumes increased by 23% over the
     comparison period.
  -- In China, production of trucks increased over the comparison period, by
     about 19% for heavy-duty trucks and about 16% for medium-duty trucks.
  -- In Brazil, the decline in production volumes of heavy-duty trucks settled
     at 22% below the comparison period.



Demand in the rolling stock market continued to increase. The framework
agreement we have concluded with Bombardier Transportation is proceeding as
planned, and Bombardier Transportation has allocated an increasing number of
orders to PKC. Other rolling stock customers have also increased their number
of orders. 



PKC’s strategic growth projects are continuing. The joint venture to be
established in China with JAC was granted a business license. The license was
granted later than had been expected, which is why the joint venture is
estimated to begin operations during the second quarter of 2017. 



Growth projects in the rolling stock business are focusing on speeding up
organic growth by seeking to conclude global framework agreements with key
rolling stock manufacturers, and on strengthening our product portfolio in
electrical systems. 



PKC's success stems from our expert personnel whose professional skills our
customers value. 



Market outlook



In 2016 the production of heavy-duty and medium-duty trucks in Europe is
expected to increase by about 8% and about 8% in China respectively compared to
2015. In 2016 the production of heavy-duty and medium-duty trucks in North
America is expected to decrease by about 16% compared to 2015 and decrease is
expected to take place in heavy-duty trucks. In 2016 the production of
heavy-duty and medium-duty trucks in Brazil is expected to decline by about 18%
compared to 2015. The demand for the rolling stock is expected to continue to
grow steadily. 



PKC Group’s outlook for 2016



PKC Group estimates that with prevailing exchange rates 2016 revenue from
continuing operations (i.e. excluding Electronics business) will be close to
previous year level and comparable EBITDA from continuing operations will be
higher than previous year level. In 2015, PKC’s revenue from continuing
operations was EUR 847.3 million and comparable EBITDA from continuing
operations was EUR 59.5 million. 



Outlook includes higher than average uncertainty related to the North American
heavy-duty truck production volumes and to a specific light vehicle program
performance during rest of the year. 



PKC Group Plc

Board of Directors



Matti Hyytiäinen

President & CEO



For additional information, contact:

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



Press conference



A press conference on the interim statement will be arranged for analysts and
investors today, 27 October 2016, at 10.00 a.m., at the address Event Arena
Bank, Unioninkatu 20, Helsinki. 



Attachment



PKC Interim Statement Q3 2016



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, rolling stock manufacturers 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 from continuing operations in 2015 totalled EUR 847
million. PKC Group Plc is listed on Nasdaq Helsinki.

Priedai:

PKC Interim statement Q3 2016.pdf