Lemminkäinen's Interim Report, 1 Jan. - 30 Sept. 2011: Good performance in Infrastructure Construction yields substantial improvement in profitability. In Building Construction, earnings are recognised mainly towards the end of the year.

 

LEMMINKÄINEN CORPORATION       INTERIM REPORT     3 NOVEMBER 2011 AT 8:00 A.M.

  

LEMMINKÄINEN'S INTERIM REPORT, 1 JANUARY-30 SEPTEMBER 2011: Good performance in Infrastructure Construction yields substantial improvement in profitability. In Building Construction, earnings are recognised mainly towards the end of the year.

 

Highlights for July-September 2011, compared with the corresponding period of the previous year:

 

  - The order book grew by 21% and amounted to EUR 1,485.4 million (1,230.0).

  - Q3 net sales were up 27% to EUR 748.8 million (589.2).

  - Operating profit for Q3 increased by 64% and amounted to EUR 51.7 million (31.5).
    Operating margin was 6.9% (5.4).

  - Pre-tax profit grew by 81% and was EUR 45.6 million (25.2).

  - Earnings per share rose by 63% to EUR 1.76 (1.08).

 

Highlights for January-September 2011, compared with the corresponding period of the previous year:

 

  - Net sales in January-September saw growth of 22% and were EUR 1,615.1 million (1,325.9).

  - Operating profit was up 83% and amounted to EUR 44.3 million (24.2). The operating margin for
    the review period was 2.7% (1.8).

  - Pre-tax profit was EUR 31.6 million (7.5).

  - Earnings per share for the review period were EUR 1.80 (0.15).

  - The Company’s interest-bearing net debt was EUR 363.0 million (401.0) at the end of the review period.

  - Operating profit and pre-tax profit for January-September do not account for the sale of
    the roofing business.

  - Earnings for the review period are improved by EUR 11.0 million in negative goodwill from
    the Mesta Industri AS acquisition.
The amount of goodwill was adjusted upwards in the third quarter.

  

Key figures, IFRS,
EUR million
7-9/
2011
7-9/
2010
Change 1-9/
2011
1-9/
2010
Change 1-12/
2010
Net sales 748.8 589.2 27% 1,615.1 1,325.9 22% 1,829.6
 - of which operations
 outside Finland

297.1

198.4

50%

549.1

416.5

32%

543.5
Operating profit 51.7 31.5 64% 44.3 24.2 83% 29.6
Operating margin % 6.9 5.4   2.7 1.8   1.6
Pre-tax profit 45.6 25.2 81% 31.6 7.5 over 100 7.6
Earnings from
discontinued operations
  0.9   11.3 -0.1   -0.6
Result for the period 35.0 19.7 78% 35.6 3.1 over 100 1.2
Earnings per share,
EUR
1.76 1.08 63% 1.80 0.15 over 100 0.02
Cash flow from
operations
148.7 14.7   13.7 -82.2   -37.2

 

  

Key figures, EUR million 30.9.2011 30.9.2010 Change 31.12.2010
Order book 1,485.4 1,230.0 21% 1,226.4
- of which unsold 178.0 102.2 74% 135.3
- of which operations
outside Finland
527.2 252.3 over 100 294.3
Balance sheet total 1,679.1 1,206.0 39% 1,065.3
Interest-bearing net debt 363.0 401.0 -9% 349.2
Equity ratio, % 23.5 30.7   35.2
Gearing, % 103.0 120.1   104.7
Return on investment
(rolling 12 months), %
9.2 7.0   7.0

 

 

President & CEO Timo Kohtamäki:

"So far, 2011 has been in line with our expectations. That said, large differences are seen between the business sectors. The Infrastructure Construction business sector has had a good season, especially in paving in Norway and Denmark, concrete construction and rock engineering. The Norwegian company Mesta Industri, which we acquired in the early summer, is an excellent addition to our portfolio. Mesta rounds out our offerings and we now racked up greater net sales from our paving operations in Norway than in Finland. In Building Construction, projects will be completed towards the end of the year, as we have already reported.

"Our order book soared to an all-time high in the second quarter, and has remained at a good level. This shows that the measures we have been taking throughout the Company to bolster our competitiveness are starting to yield results. The strategy updates that we announced in October steer our operations into areas in which we have specialist expertise or already hold a strong market position - this will ensure a solid foundation for profitable growth. In particular, these areas are infrastructure construction in the other Nordic countries, our own housing development in Finland and the St Petersburg region in Russia as well as maintenance and servicing for technical building systems.

"In order to accelerate the permanent improvement of our profitability, we launched an efficiency programme in October. Our goal is to lighten our cost structure by EUR 50 million at the annual level, effective after 2013. We estimate that the procurement project we kicked off in the summer will yield EUR 30 million of these cost savings. In addition, we will streamline our organisational and management structures, processes and network of business locations. Unfortunately, this will probably mean personnel reductions in Finland and our other business countries. However, it is essential for us to take these steps to improve competitiveness and profitability, as the general economic situation is more uncertain than in the early months of the year."

 

Profit guidance for 2011:

Lemminkäinen will keep its earlier profit guidance intact. The Company estimates that in 2011 its net sales will increase and that its pre-tax profit will clearly improve on 2010. The estimate is based on the good earnings trend in the third quarter and the high order book.

 

Market outlook:

According to the Confederation of Finnish Construction Industries RT, the total volume of construction in Finland will see further growth of 4 per cent this year; however, in 2012 it will most likely remain at the current year's level. Although the general economic situation has already weakened and fears of a new recession have mounted, such factors have a delayed impact on construction. Construction operations will thus remain at a reasonable level in the first half of next year thanks to the projects that have already been started up. Demand for new housing in Russia is still rising. Likewise, the volume of infrastructure construction in the Nordic countries is expected to grow by 3-6 per cent both this year and the next.

 

Briefing

A Finnish-language briefing for analysts and the media will be held at 2.00 p.m. on Thursday, 3 November at Lemminkäinen's head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. The interim report will be presented by President and CEO Timo Kohtamäki. Presentation material is available in Finnish and English on the Company's website, www.lemminkainen.com.

Lemminkäinen Corporation's interim report for January-September 2011 is attached in full to this stock exchange release.

 

LEMMINKÄINEN CORPORATION
Corporate Communications

 

MORE INFORMATION:

Timo Kohtamäki, President & CEO, tel. +358 2071 53263

Robert Öhman, CFO, tel. +358 2071 53515

Katri Sundström, Investor Relations, tel. +358 2071 54813

 

ATTACHMENTS:
 

Interim Report, 1 Jan. - 30. Sept. 2011
Tabulated section of the interim report

 

DISTRIBUTION:

NASDAQ OMX Helsinki Ltd
Key media
www.lemminkainen.com

 

Lemminkäinen Group operates in all areas of the construction sector. The Group's business sectors are building construction, infrastructure construction and technical building services. From the beginning of 2012, international operations will become Lemminkäinen's fourth business sector. Net sales in 2010 were about EUR 2.0 billion, of which international operations accounted for roughly a quarter. The Group employs an average of 8,000 people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com