Lemminkäinen's Interim Report, 1 January - 31 March 2013
LEMMINKÄINEN CORPORATION INTERIM REPORT 8 MAY 2013 AT 8:00 A.M.
LEMMINKÄINEN INTERIM REPORT 1 JAN - 31 MAR 2013:
Efficiency measures the number-one priority in a challenging market situation
January - March 2013 in brief (1 - 3/2012)
- First-quarter net sales fell slightly short of the previous year and totalled EUR 306.4 million (315.4).
- On 31 March 2013, the order book stood at the same level as in the previous year: EUR 1,626.2 million (1,625.4).
- Operating profit noticeably weakened and totalled EUR -38.2 million (-21.6) with an operating margin of -12.5% (-6.9).
- Pre-tax profit was EUR -43.2 million (-24.3).
- Earnings per share were EUR -1.72 (-1.02).
- Cash flow from operations totalled EUR -24.4 million (35.7).
- The equity ratio stood at 35.4% (33.3) and gearing at 80.8% (77.9).
|Key figures, IFRS, EUR million||1-3/2013||1-3/2012||Change||1-12/2012|
|Operating margin, %||-12.5||-6.9||2.2|
|Profit from continuing operations||-32.3||-20.0||-62%||20.4|
|Profit from discontinued operations||0.0||5.7|
Capital gains from discontinued operations
|Profit for the period||-32.3||-20.0||-62%||44.1|
|Earnings per share, EUR|
|From continuing operations||-1.72||-1.02||-69%||0.83|
|From discontinued operations||0.00||1.21|
|From the profit for the period||-1.72||-1.02||-69%||2.04|
|Cash flow from operations||-24.4||35.7||57.8|
Business functions divested in 2012 are categorised as discontinued operations. On 28 September 2012, Lemminkäinen sold the entire share capital of Lemminkäinen Rakennustuotteet Oy, which comprised the company's concrete business. The transaction price was EUR 55 million, from which Lemminkäinen recognised pre-tax capital gains of EUR 17.3 million, primarily in the third quarter of 2012.
|Key figures, IFRS, EUR million||31.3.2013||31.3.2012||Change||31.12.2012|
|Order book, EUR million||1,626.2||1,625.4||1,443.9|
|Balance sheet total, EUR million||1,287.2||1,296.7||-1%||1,303.5|
|Interest-bearing net debt, EUR million||329.9||305.8||8%||277.3|
|Equity ratio, %||35.4||33.3||37.2|
|Return on investment (rolling 12 months), %||7.8||9.5||10.8|
President & CEO's review
"The first quarter was a disappointment for us. The clear decrease in operating profit compared to corresponding period last year was caused by the late start of the paving season in Northern Europe, the slow permit process in St Petersburg and unfavourable currency exchange rates. At the same time, the market outlook has grown weaker in Finland. For these reasons, we decided to downgrade our full-year guidance in mid-April: We estimate that our operating profit for 2013 will reach the same level as in 2012," says Timo Kohtamäki, President and CEO of Lemminkäinen Group.
"We still have much improvement potential in our operational efficiency. The 50-million-euro efficiency improvement programme launched in late 2011 has progressed as planned. It has most notably improved our competitiveness in a declining market. Proof of that is our order book, which has remained strong."
"To complement the efficiency improvement programme, we have implanted additional measures that should yield further cost savings of EUR 10 million within the next 12 months. For example, we are looking into new outsourcing possibilities to decrease the impact of seasonality and to lighten our cost structure. Since the beginning of the year, we have decided to either close or consolidate 10 units in Finland and Norway. The businesses with weak order books or profitability problems will adjust their volumes to the current market situation." says Mr. Kohtamäki.
There are signs of a weakening market in both Finland and Russia. The Ministry of Finance of the Russian Federation significantly lowered its GDP forecast for 2013. However, this uncertainty has not yet been reflected in construction. There is still substantial demand in St Petersburg, particularly for comfort-class apartments, and in infrastructure construction, several large-scale road projects are currently underway across Russia. In Finland, the total volume of construction is expected to either remain at the same level as in 2012 or fall slightly. Even though migration to urban growth centres and low interest rates are maintaining demand for housing, the market may be slowed by increased difficulty in obtaining mortgages and the general economic uncertainty. Slow economic growth and tight public-sector budgets are weakening demand for infrastructure construction. In Norway, Sweden and Denmark, multi-year State investments in energy production and road and railway networks are supporting growth in infrastructure construction.
Profit guidance for 2013
Lemminkäinen updated its profit guidance on 19 April 2013. In February, in conjunction with the publication of Lemminkäinen's 2012 Financial Statements Bulletin, the company estimated that although its net sales would remain at the same level as in 2012, its operating profit would improve on 2012. In its update on 19 April 2013, the company now estimates that both its net sales and operating profit for 2013 will remain at the same level as in 2012. In 2012, the company's net sales totalled EUR 2,268 million and its operating profit EUR 50 million. This estimate is based on the assumption that Lemminkäinen's efficiency programme will continue to progress according to plan and that the general market situation in construction will not significantly weaken compared to early 2013.
A Finnish-language briefing for analysts and the media will be held at 1.00 p.m. on Wednesday, 8 May at Lemminkäinen's head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. The President & CEO Timo Kohtamäki will present the Interim Report. Presentation materials are available in Finnish and English on the company's website, www.lemminkainen.com.
Financial Reports for 2013
The Interim Reports and Financial Statement Bulletin for 2013 will be published as follows:
8 August 2013 Interim Report, 1 Jan - 30 Jun 2013
7 November 2013 Interim Report, 1 Jan - 30 Sept 2013
7 February 2014 Financial Statement Bulletin 2013
Timo Kohtamäki, President & CEO, tel. +358 2071 53263
Robert Öhman, Chief Financial Officer, tel. +358 2071 53515
Katri Sundström, Vice President, Investor Relations, tel. +358 2071 54813
Interim Report, 1 Jan - 31 Mar 2013
Interim Report, tabulated section
Lemminkäinen Group operates in all areas of the construction sector. The Group's business segments are building construction, infrastructure construction, technical building services and international operations. Net sales in 2012 were about EUR 2.3 billion, of which international operations accounted for roughly 40 per cent. The Group employs an average of 8,200 people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com