Lemminkäinen´s Interim Report, 1 January - 31 March 2011
LEMMINKÄINEN CORPORATION INTERIM REPORT 5 MAY 2011 AT 9:00 A.M.
LEMMINKÄINEN’S INTERIM REPORT, 1 JANUARY – 31 MARCH 2011: Outlook for the rest of the year is good
- The order book amounted to EUR 1,471.7 million (1,296.3) at the end of March. Year-on-year growth was 14%.
- Q1 net sales were up 14% and amounted to EUR 316.3 million (276.4).
- The result for the review period was EUR -11.7 million (-26.4). The result for the review period includes capital gains of EUR 17.1 million from the sale of the roofing business.
- Only a small amount of income was recognised from completed own housing development in the first months of the year, and no business premises developed by the Company were sold.
- 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.
|Key figures, IFRS, EUR million||1-3/2011||1-3/2010||Change, %||1-12/2010|
|- of which operations outside Finland||71.9||64.0||12.3||543.5|
|Operating margin, %||-8.9||-9.7||1.6|
|Earnings from discontinued operations||11.3||-1.3||-0.6|
|Result for the period||-11.7||-26.4||1.2|
|Earnings per share, EUR||-0.59||-1.52||0.02|
|Cash flow from operations||-38.3||-49.9||-37.2|
|Key figures, IFRS, EUR million||31.3.2011||31.3.2010||Change, %||31.12.2010|
|- of which unsold||192.7||115.5||66.8||135.3|
|- of which operations outside Finland||445.7||287.3||55.1||294.3|
|Equity ratio, %||32.8||33.6||35.2|
|Return on investment (rolling 12 months), %||
|Interest-bearing net debt||369.9||349.0||6.0||349.2|
President & CEO Timo Kohtamäki:
"We post a loss in the first quarter due to the seasonal nature of infrastructure construction. Furthermore, the profitability of contracting in building construction remained weak, and only a small amount of income was recognised from completed own housing development. In fact, we estimate that more than 80 per cent of our own housing development slated for completion in 2011 will be recognised as income in the second half of the year. The outlook for the rest of the year is more upbeat than in 2010. Our net sales and order book are higher than in the corresponding period of 2010 and the favourable trends in the construction market support our earlier profit guidance," says Timo Kohtamäki, President and CEO of Lemminkäinen.
"In Finland, the volume of infrastructure construction is still at a low ebb, which is clearly evident in the poor condition of Finnish roads and railways. It is estimated that civil engineering investments in 2010 contracted by almost 10% compared with the previous year. In other Nordic countries, the investments in civil engineering have been clearly bigger. The paving contracts we won from the Norwegian state and our new mine excavation contract in Sweden further bolster our position in Nordic infrastructure construction. Furthermore, the profitability of our infrastructure construction operations outside Finland has improved, as loss-making maintenance contracts have ended and we have streamlined our cost structure to correspond to the market situation."
"This year, we'll focus particularly on improving profitability. We're seeking substantial savings from boosting the efficiency of both procurements and the management of projects and resources. We launched a more centralised operating model for internal support services at the turn of the year, and a more streamlined Group structure eases administration. We believe that our efficiency-boosting measures will already be reflected in our earnings in 2011," says Kohtamäki.
Outlook for 2011
According to the Confederation of Finnish Construction Industries RT, construction will see growth of about five per cent in Finland this year. Market-financed residential construction is growing, but state-supported housing production is on the wane. Lemminkäinen estimates that it will start up the construction of about 1,200 units in its own housing development in 2011. Own housing development projects will largely be completed and recognised as income towards the end of the year. The construction of business premises is picking up.
There is still a great demand for new housing in Russia, and Lemminkäinen estimates that it will start building about 500 units in its own housing development in St Petersburg in 2011. The Company expects that the housing project kicked off last year – comprising about 150 residential units – will be completed in the latter part of the year.
The volume of infrastructure construction in Finland has remained unchanged for a long time and is not expected to see growth this year, either. However, Lemminkäinen's order book in infrastructure construction was larger at the end of the review period than in the corresponding period of the previous year. Thanks to the Company's strong market position and specialised expertise in all subareas of infrastructure construction, it is well-poised for growth even in a tough market.
The volume of infrastructure construction in the other Nordic countries is expected to grow by 3-5 per cent this year. Lemminkäinen's outlook for the rest of the year is good in infrastructure construction in Sweden, Norway and Denmark. The Company has already commenced paving operations in the other Nordic countries, and thus the work season is expected to be longer than in the previous year. In order to step up competitiveness, Lemminkäinen has downscaled its operations in Norway and the Baltic countries, and streamlined its cost structure to match the market situation.
The technical building services market is expected to improve gradually, when other types of new construction recover on the heels of housing construction. In renovation, the focus is still on measures to boost the energy-efficiency of residential buildings as well as piping renovation works. Lemminkäinen estimates that renovation, servicing and upkeep will account for a greater share of the Company's operations in the near future.
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 market situation, which is better than in the previous year, and on the year-on-year growth in the order book and its margins.
A Finnish-language briefing for analysts and the media will be held at 2.00 p.m. on Thursday, 5 May 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 will be available in Finnish and English on the Company's website at www.lemminkainen.com after the briefing.
Lemminkäinen Corporation's interim report for January-March 2011 is attached in full to this stock exchange release.
Timo Kohtamäki, President & CEO, tel. +358 2071 53263
Robert Öhman, CFO, tel. +358 2071 53515
Katri Sundström, Investor Relations, tel. +358 2071 54813
Interim Report, 1 Jan. – 31 Mar. 2011
Tabulated section of the Interim Report
NASDAQ OMX Helsinki Ltd
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 around EUR 2.0 billion, of which international operations accounted for roughly a quarter. The Group employs about 8,300 people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Helsinki Ltd. www.lemminkainen.com