CORRECTION: Lemminkäinen´s Financial Statements Bulletin 2010
LEMMINKÄINEN´S FINANCIAL STATEMENTS BULLETIN 10.2.2011 AT 8:30 a.m.
The English pdf is now attached.
Weak earnings in 2010, outlook for the future significantly better
Development in 2010 (comparative figures are for 2009)
- The order book grew by 15% to EUR 1,226.4 million (1,064.5)
- Consolidated net sales were down 4% and amounted to EUR 1,892.5 million (1,965.5)
- Operating profit was EUR 29.0 million (23.2) and the operating margin was 1.5% (1.2). Operating profit for 2009 was burdened by the recognition of EUR 54 million of the infringement fine imposed by the Supreme Administrative Court
- Equity ratio was 35.2% (30.9) and return on investment was 7.0% (5.4)
- The Board of Directors proposes that a dividend of EUR 0.50 be paid per share (0.00)
- The Company estimates that in 2011 its net sales will increase and that its pre-tax profit will clearly improve on 2010
|Net sales, EUR million||1,892.5||1,965.5||518.9||525.1|
of which operations outside Finland,
|Operating profit, EUR million||29.0||23.2||4.7||12.0|
|Operating margin, %||1.5||1.2||0.9||2.3|
|Pre-tax profit, EUR million||6.8||-10.2||-0.7||4.0|
|Earnings per share, EUR||0.02||-1.54||-0.14||-0.04|
|Cash flow from operations, EUR million||-37.2||64.2||45.1||67.7|
|Return on investment, %||7.0||5.4|
|Equity ratio, %||35.2||30.9|
|Interest-bearing net debt, EUR million||349.2||324.7|
|Order book, EUR million||1,226,4||1,064.5|
|of which unsold||135.3||103.2|
|of which operations outside Finland||
- As from 1 January 2010, Lemminkäinen observes the interpretation IFRIC 15 – Agreements for the Construction of Real Estate in its reporting. The comparative figures for 2009 have also been calculated in accordance with this interpretation.
President & CEO Timo Kohtamäki:
"Last year, we still felt the effects of the deep recession that hit the construction industry in 2008. Business operations were hindered by the long and harsh winter, which had an impact on paving works in Norway and the Baltic countries in particular. I believe that the market has now bottomed out. The outlook for 2011 is more upbeat than last year," says Timo Kohtamäki, President and CEO of Lemminkäinen.
"We did not see any growth in 2010 due to market reasons and our profitability was weak. There were many reasons behind this: the severe winter, rising cost levels, tough competition in many sectors of construction and greater-than-anticipated lease liabilities for commercial properties that were sold during the worst period of the recession. Our earnings were also burdened by the recognition of non-recurring items stemming from restructuring and business adjustment measures."
Kohtamäki believes that Lemminkäinen’s competitiveness has now improved: "We have streamlined our corporate structure and renewed our ways of working. We are going forward into 2011 with a lighter and more efficient operating model. We can now more effectively pool the expertise of Lemminkäinen Group to benefit our customers. Our internal efficiency has improved and we’re more effectively harnessing benefits of scale in matters such as procurements. What’s more, our order book is healthy and larger than last year – and that means we’re starting 2011 on a solid footing."
Kohtamäki is satisfied with the stronger balance sheet. "Our equity ratio, 35.2 per cent, is now at the level of our long-term target. Our financing base is broader and the maturity structure of our debt portfolio is spread out over a longer period. The stronger balance sheet gives us greater latitude for the development and growth of the Group, and reduces our financial expenses."
"Thanks to the pickup in the market and our better order book, we’re well-poised to increase our net sales and improve our earnings in 2011," says Kohtamäki.
Outlook for 2011
The moderate growth in the volume of construction is expected to continue in Finland in 2011. Residential construction is still boosted by low interest rates and consumers’ confidence in their own finances. In 2010, Lemminkäinen more than trebled its own housing production compared to the previous year, starting up the construction of a total of 1,191 new residential units. It is estimated that if the housing market remains favourable, the number of start-ups will also be at the same level in the year ahead. Though the annual number of business premises start-ups has most likely bottomed out, great growth cannot be expected yet.
Residential construction is estimated to remain brisk in Russia, even though slightly fewer residential units will be completed in 2011 than last year. This dip is primarily due to the low number of start-ups during the recession years. Lemminkäinen currently has about 150 residential units under construction in St Petersburg, and intends to start up the construction of more than 500 units this spring.
In 2011, the total volume of infrastructure construction in all the Nordic countries is expected to either remain at the previous year’s level or grow slightly. Thanks to Lemminkäinen’s strong market position in infrastructure construction in all its business territories, the Company is well-poised for steady growth in the year ahead. The Company’s outlays, particularly on rock engineering in Sweden, have yielded good results, and this favourable trend is expected to continue in the near future. The work season for infrastructure construction in Norway is anticipated to be better than last year. Demand for infrastructure construction in Finland might be weakened by scant governmental financing and lower investments in the municipal sector.
The market for technical building services is expected to gradually return to normal as building construction picks up. In the next few years, renovation is expected to focus on piping renovation works and repairs to improve energy efficiency.
Lemminkäinen estimates that in 2011 its net sales will increase and that its pre-tax profit will clearly improve. This estimate is based on the better market situation and the fact that the order book is stronger than at the end of the previous year.
A Finnish-language briefing for analysts and the media will be held at 9.30 a.m. on Thursday, 10 February at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. The financial statement bulletin will be presented by President and CEO Timo Kohtamäki. Presentation material will be available in Finnish and English on the Company’s website at www.lemminkainen.com after the briefing.
New disclosure procedure
Lemminkäinen has adopted the new disclosure procedure permitted by Standard 5.2b of the Finnish Financial Supervisory Authority. The financial statement bulletin is published as a pdf attachment to this stock exchange release. The financial statement bulletin is also available on the Company’s website at www.lemminkainen.com.
Financial releases in 2011
Lemminkäinen Corporation will publish a financial statement bulletin and three interim reports in 2011:
10 February 2011 – Financial statement bulletin 2010
5 May 2011 – Interim report, January-March 2011
4 August 2011 – Interim report, January-June 2011
3 November 2011 – Interim report, January-September 2011.
The Annual Report for 2010 will be published during the week beginning on 14 March 2011 (week 11).
Timo Kohtamäki, President & CEO, tel. +358 2071 53263
Robert Öhman, CFO, tel. +358 2071 53515
Katri Sundström, Investor Relations, tel. +358 2071 54813
NASDAQ OMX Helsinki
Lemminkäinen Group operates in all areas of the construction sector. The Group's business sectors are Building Construction, Infrastructure Construction and Technical Building Services. Net sales in 2010 were approx. EUR 2.0 billion, of which international operations accounted for over a quarter. The Group employs about 8,300 people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Helsinki Ltd. www.lemminkainen.com