Lemminkäinen's interim report, 1 January - 30 June 2012

LEMMINKÄINEN CORPORATION            INTERIM REPORT    2 AUGUST 2012 AT 8:00 A.M.
  

LEMMINKÄINEN'S INTERIM REPORT, 1 JANUARY - 30 JUNE 2012:
Improvement in comparable earnings for the review period. Strong performance in infrastructure construction in Finland.


January-June 2012, compared with the corresponding period of 2011:

- Net sales in January-June were up 6% and amounted to EUR 915.0 million (864.5).
-
The order book grew by 11% and was EUR 1,931.2 million (1,734.8) at the end of the period.
-
The operating profit was EUR -9.8 million (-7.2). Operating margin was -1.1 (-0.8). The operating profit for the comparison period includes negative goodwill of EUR 8.1 million recognised from an acquisition.
-
Pre-tax profit amounted to EUR -18.1 million (-13.8). Pre-tax profit for the comparison period includes negative goodwill of EUR 8.1 million recognised from an acquisition.
-
Earnings per share were EUR -0.90 (0.03). Earnings per share for the review period include EUR 0.41 per share in negative goodwill and EUR 0.64 per share in capital gain from the divestment of the roofing business.
-
Cash flow from operations totalled EUR 9.2 million (-135.0).

April-June 2012, compared with the corresponding period of 2011:

- Net sales in April-June were up 7% and amounted to EUR 587.8 million (548.6).
-
The operating profit was EUR 11.4 million (20.7). Operating margin was 1.9 (3.8). The operating profit for the comparison period includes negative goodwill of EUR 8.1 million recognised from an acquisition.
-
Pre-tax profit amounted to EUR 5.7 million (16.1). Pre-tax profit for the comparison period includes negative goodwill of EUR 8.1 million recognised from an acquisition.
-
Earnings per share were EUR 0.12 (0.63). Earnings per share for the review period include EUR 0.41 per share in negative goodwill.
-
Cash flow from operations totalled EUR -26.4 million (-96.7).


Key figures, IFRS, EUR million
1-6/
2012
1-6/
2011

Change
4-6/
2012
4-6/
2011

Change
1-12/
2011
Net sales 915.0 864.5 6% 587.8 548.6 7% 2,268.5
Operating profit   -9.8 -7.2 -36% 11.4 20.7 -45% 53.9
Operating margin % -1.1 -0.8   1.9 3.8   2.4
Pre-tax profit -18.1 -13.8 -31% 5.7 16.1 -65% 35.0
Earnings from discontinued operations
-0.6

11.1
 
-0.4

0.0
 
11.0
Result for the period -16.5 0.6   3.5 12.3 -72% 35.6
Earnings per share, EUR -0.90 0.03   0.12 0.63 -81% 1.77
Cash flow from business operations 9.2 -135.0   -26.4 -96.7 73% -7.1
  1. 1-6/2011 and 4-6/2011: Operating profit, pre-tax profit and the result for the period include EUR 8.1 million in negative goodwill recognised from an acquisition. Earnings per share include EUR 0.41 per share in negative goodwill.
  2. 1-12/2011: Operating profit, pre-tax profit and the result for the period include EUR 11 million in negative goodwill recognised from an acquisition. Earnings per share include EUR 0.56 per share in negative goodwill.
  3. 1-6/2011 and 1-12/2011: Capital gain from the divestment of the roofing business - EUR 15.3 million - is evident in the result for the period and earnings per share (EUR 0.64/share). 
Key figures, EUR million 30.6.2012 30.6.2011 Change 31.12.2011
Order book 1,931.2 1,734.8 11% 1,400.4
-         of which unsold 240.7 222.6 8% 206.3
Balance sheet total 1,386.5 1,396.3 -1% 1,242.8
Interest-bearing net debt 348.9 501.7 -30% 401.2
Equity ratio, % 32.0 25.9   30.8
Gearing, % 89.5 157.8   114.5
Return on investment (rolling 12 months), % 8.3 6.4   10.8

 

 President & CEO Timo Kohtamäki:

"Lemminkäinen's earnings in the first half of the year improved on the previous year, when non-recurring items booked in the comparison period are not recognised. All of our business operations in Finland picked up the pace. In particular, Infrastructure Construction and the paving business performed well. Infrastructure Construction's earnings improvement was driven by our new operating model, which has boosted the efficiency of our operations and improved customer service. In Building Construction and Technical Building Services, our profitability improved. In Norway, our earnings performance did not meet our expectations. Our paving contracts focused mainly on northern Norway, where the work season starts later in the spring. The impact of seasonal variations on our earnings is now even more evident in our operations as our business volume in Norway has grown. That said, competitive contracting in building construction improved significantly in Russia," says Timo Kohtamäki, President and CEO of Lemminkäinen.

Kohtamäki states that Lemminkäinen's order book has become even stronger, with better margins. In addition, the Group's balance sheet is now stronger. "One of our strategic goals is to strengthen solvency. Our successful working capital project and the EUR 70 million hybrid loan that we issued in the first quarter have a positive effect on our equity ratio and gearing. The divestment of our concrete business after the end of the review period will also improve our solvency," adds Kohtamäki. 

On 3 July, Lemminkäinen announced that it will sell its concrete business to Rudus Oy for EUR 55 million. Lemminkäinen will recognise capital gains of EUR 20 million on the divestment. The transaction still requires the approval of the Finnish competition authorities, which is expected to be granted in the third quarter. Lemminkäinen will focus on its strategic key growth areas, which are infrastructure construction in the Nordic countries and residential construction in St Petersburg, Russia. Achieving substantial growth in the concrete business would have required sizeable investments.

Profit guidance for 2012

Lemminkäinen will keep its profit guidance intact. The company estimates that its 2012 net sales will remain at the same level as in 2011, and that its pre-tax profit will improve on 2011. Lemminkäinen's estimate is based on good performance during the first half of the year, as well as a larger order book and order book margin than in 2011.

Market outlook 

Due to the debt crisis in the euro zone, the general economic climate has remained uncertain. The total volume of construction in Finland is expected to fall in 2012. The greatest downswing will be seen in the construction of new housing. The market for infrastructure construction is expected to remain stable in all of the Nordic countries. Demand for infrastructure construction in Norway and Denmark is increased by large-scale road projects and investments in energy production. There is still a great need for new housing in St Petersburg, Russia. Residential construction in Russia is supported by lower interest rates and the increased availability of consumer mortgages.

Briefing 

A Finnish-language briefing for analysts and the media will be held at 2.00 p.m. on Thursday, 2 August 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.

2012 financial releases

1 November 2012 - Interim report, January - September 2012


LEMMINKÄINEN CORPORATION
Corporate Communications

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
Timo Kohtamäki, President & CEO, tel. +358 2071 53263
Robert Öhman, CFO, tel. +358 2071 53515
Katri Sundström, Vice President, Investor Relations, tel. +358 2071 54813

APPENDICES:
Interim Report, 1 January - 30 June 2012
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, technical building services and international operations. Net sales in 2011 were about EUR 2.3 billion, of which international operations accounted for roughly one third. The Group employs an average of 8,400 people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com