Lemminkäinen Interim Report 1 January - 31 March 2014
LEMMINKÄINEN CORPORATION INTERIM REPORT 30 APRIL 2014 AT 8:00 A.M.
LEMMINKÄINEN'S INTERIM REPORT 1 JANUARY - 31 MARCH 2014:
TURNAROUND IS UNDER WAY
January-March 2014 (1-3/2013)
- Net sales totalled EUR 321.5 million (306.4).
- At the end of the review period, the order book stood at EUR 1,996.5 million (1,626.2).
- Operating profit was EUR -17.0 million (-38.2), or -5.3% (-12.5) of net sales.
- Earnings per share were EUR -1.10 (-1.72).
- Cash flow from operations totalled EUR -102.2 million (-24.4).
- The equity ratio stood at 32.5% (35.4) and gearing at 98.9% (80.8).
- The company adopted a new segment structure from the beginning of the year. Lemminkäinen's five business segments are as follows: Finland, Building construction; Finland and the Baltic countries, Infrastructure construction; Finland, Technical building services; Russia and Scandinavia
Profit guidance for 2014
Lemminkäinen estimates that its 2014 net sales will be slightly lower than in 2013 but its operating profit will improve clearly on 2013 (excluding non-recurring items). In 2013, net sales totalled EUR 2,218 million and operating profit excluding non-recurring items amounted to EUR -5 million.
|Key figures IFRS||
|Net sales||€ million||321.5||306.4||15.1||2,218.2|
|Operating profit, excluding non-recurring items||€ million||-17.0||-38.2||21.2||-5.2|
|% net sales||%||-5.3||-12.5||-0.2|
|Operating profit||€ million||-17.0||-38.2||21.2||-90.9*|
|Pre-tax profit||€ million||-24.1||-43.2||19.1||-117.5|
|Profit for the period||€ million||-19.9||-32.3||12.4||-93.5|
|Earnings per share||€||-1.10||-1.72||0.62||-5.06**|
|Cash flow from operations||€ million||-102.2||-24.4||-77.8||8.3|
* Includes non-recurring items: The District Court's decision on damages related to the asphalt cartel, EUR 65.6 million, and write-downs mainly related to commercial properties, EUR 20.1 million
** Includes non-recurring items: The District Court's decision on damages related to the asphalt cartel, EUR -3.35 per share, and write-downs mainly related to commercial properties, EUR -1.03 per share
|Key figures, IFRS||31 March 2014||31 March 2013||Change||31 December 2013|
|Order book||€ million||1,996.5||1,626.2||370.3||1,821.3|
|Balance sheet total||€ million||1,306.5||1,287.2||19.3||1,342,7|
|Interest-bearing net debt||€ million||364.2||329.9||34.3||326.5|
|Return on investment, rolling 12 months||%||-5.7||7.8||-9.4|
President and CEO's view
"During the first months of the year, Lemminkäinen's profitability developed into the right direction. Nevertheless, I cannot be satisfied with our negative result," says Berndt Brunow, Chairman of Lemminkäinen's Board of Directors and Lemminkäinen's interim President and CEO. "The impact of the efficiency measures carried out last year was visible in the paving business in the Nordic countries and in building construction in Finland. The profit development in infrastructure construction in Finland was supported by major on-going projects, such as the Rantaväylä tunnel in Tampere and the West Metro in Helsinki-Espoo. Commercial construction in the Helsinki metropolitan area was also successful. In Russia, Lemminkäinen's residential development finally picked up speed as the permit process returned to normal. However, if the political and economic uncertainty in Russia continues, it might have a negative impact on Lemminkäinen's business operations."
"The result development has been weak in recent years and the risks in our operating environment have increased. We must deliver a clear turnaround in order to reach our long-term financial targets. In addition to improving profitability, we must strengthen our balance sheet and improve cash flow. In March, we issued a hybrid bond to strengthen our capital structure. At this time, It was a suitable solution."
"In order to ensure the turnaround, we have launched the ambitious Deliver 2014 programme that aims at strengthening our operations, improving our competitiveness and naturally safeguarding our 2014 result. The programme consists of three modules: Norway, Russia and the cost structure in all countries. To achieve the programme targets we must renew our way of working and adjust it to the tight market situation. Personnel reduction can hardly be avoided in any of our operating countries. We estimate the personnel impact to be up to 500 full-time equivalent. Furthermore, we have launched the measures to develop the management of market and project risks," Brunow concludes.
In Finland, the total volume of construction is not expected to increase in 2014. In the Government's budget framework, some additional support was granted for rental housing production, whereas road maintenance funds were decreased significantly. In general, the decisions made are expected to affect the volume of construction starting from 2015. Demand for new housing will focus more intensely on small apartments in urban growth centres. Demand for commercial construction is not expected to increase outside the Helsinki metropolitan area. The growth outlook in Russia is expected to further weaken, and the declining exchange rate of the rouble will impair the euro-denominated net sales and result of companies operating in Russia. If uncertainty continues, the situation may also affect demand for apartments. In Sweden, Norway and Denmark, long-term investment plans targeted at infrastructure construction will strengthen the market situation in the near future. The growing market attracts Central European construction companies to these countries, which intensifies price competition in the industry.
A Finnish-language briefing for analysts and the media will be held at 10:00 a.m. on Wednesday, 30 April at Lemminkäinen's head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's Chairman of the Board and interim President and CEO Berndt Brunow will present the Interim Report. Presentation materials can be found in Finnish and English at the company's website, www.lemminkainen.com.
Financial Reports for 2014
The Interim Reports for 2014 will be published as follows:
30 April 2014 Interim Report, 1 Jan - 31 March 2014
30 July 2014 Interim Report, 1 Jan - 30 Jun 2014
29 October 2014 Interim Report, 1 Jan - 30 Sept 2014
Berndt Brunow, Interim President and CEO, tel. +358 2071 54524
Investors and analysts:
Ilkka Salonen, Interim CFO, tel. +358 2071 50246
Katri Sundström, Vice President, Investor Relations, tel. +358 2071 54813
NASDAQ OMX Helsinki
ATTACHMENT Interim Report Q1/2014