Lemminkäinen Interim Report 1 Jan–30 June 2015

LEMMINKÄINEN CORPORATION      STOCK EXCHANGE RELEASE 29 JULY 2015 AT 8:00 A.M.

 

LEMMINKÄINEN INTERIM REPORT 1 JAN–30 JUNE 2015
 

April–June 2015 (4–6/2014)

  • Order inflow was EUR 423.0 million (602.0)
  • Net sales totalled EUR 492.1 million (510.5)
  • Operating profit was EUR 15.6 million (14.8), or 3.2% (2.9) of net sales.
  • Profit for the period was EUR 5.0 million (28.2). Profit for the period in continuing operations was EUR 5.0 million (5.3).
  • Earnings per share were EUR 0.05 (1.24). Earnings per share in continuing operations were EUR 0.05 (0.13).
  • Cash flow from operations totalled EUR 23.5 million (-25.5).
  • Equity ratio at the end of the review period was 33.1% (32.1) and gearing 57.2% (85.4).
  • Interest-bearing net debt at the end of the review period was EUR 211.7 million (339.9).

January–June 2015 (1–6/2014)

  • Order inflow was EUR 809.2 million (1,014.8)
  • Net sales totalled EUR 781.8 million (789.8)
  • Operating profit was EUR -2.4 million (-2.5) or -0.3% (-0.3) of net sales.
  • Profit for the period was EUR -14.7 million (8.3). Profit for the period in continuing operations was EUR -14.7 million   (-14.9).
  • Earnings per share were EUR -0.90 (0.20). Earnings per share in continuing operations were EUR -0.90 (-0.92).
  • Cash flow from operations totalled EUR 26.0 million (-128.1).


Profit guidance for 2015

The profit guidance for 2015 is intact. Lemminkäinen estimates that its net sales in 2015 will not increase as compared to 2014 (EUR 2,044.5 million). Operating profit (IFRS) in 2015 is expected to improve as compared to 2014 (EUR 36.3 million).

 


Key figures, IFRS
  4-6/
2015
4-6/
2014
Change
Q2/15 vs. Q2/14
1-6/
2015
1-6/
2014
Change H1/15 vs. H1/14 1-12/
2014
Net sales M€ 492.1 510.5 -18.4 781.8 789.8 -8.0 2,044.5
   Paving M€ 258.8 243.8 15.0 323.2 303.8 19.4 907.5
   Infra projects M€ 65.7 75.5 -9.8 124.6 135.1 -10.5 286.0
   Building construction,
   Finland
M€ 127.0 135.2 -8.2 258.3 251.1 7.2 539.0
   Russian operations M€ 17.4 34.1 -16.7 36.0 50.1 -14.1 196.1
   Other items M€ 23.3 21.9 1.4 39.7 49.6 -9.9 115.9
Operating profit M€ 15.6 14.8 0.8 -2.4 -2.5 0.1 36.3
   Paving M€ 15.2 14.3 0.9 -11.8 -5.8 -6.0 32.2
   Infra projects M€ 4.3 -0.3 4.6 5.1 1.6 3.5 7.2
   Building construction,
   Finland
M€ -3.4 5.9 -9.3 3.8 12.0 -8.2 9.3
   Russian operations M€ 1.4 0.4 1.0 2.5 -1.0 3.5 19.7
   Other items M€ -1.9 -5.5 3.6 -2.1 -9.2 7.1 -32.2
Operating margin % 3.2 2.9   -0.3 -0.3   1.8
   Paving % 5.9 5.9   -3.6 -1.9   3.5
   Infra projects % 6.6 -0.4   4.1 1.2   2.5
   Building construction,
   Finland
% -2.7 4.4   1.5 4.8   1.7
   Russian operations % 8.1 1.2   7.0 -2.0   10.1
Pre-tax profit M€ 10.2 7.3 2.9 -13.7 -17.1 3.4 -1.7
Profit from continuing operations M€ 5.0 5.3 -0.3 -14.7 -14.9 0.2 -5.0
Profit for the period M€ 5.0 28.2 -23.2 -14.7 8.3 -23.0 18.1
Earnings per share,
continuing operations
0.05 0.13 -0.08 -0.90 -0.92 0.02 -0.68
Earnings per share for the period 0.05 1.24 -1.19 -0.90 0.20 -1.10 0.40
Cash flow from operations1) M€ 23.5 -25.5 49.0 26.0 -128.1 154.1 -48.4

1) 1–6/2014 and 1–12/2014: Cash flow from operations includes EUR 60 million of damages paid related to asphalt cartel.

 

Key figures, IFRS   30 June 2015 30 June 2014 Change
Q2/15 vs. Q2/14
31 March 2015 Change Q1/15 vs. Q2/15 31 December 2014
Order book, continuing operations M€ 1,667.1 2,086.8 -419.7 1,617.3 49.8 1,456.1
Operating capital M€ 547.0 697.0 -150.0 554.4 -7.4 590.4
Balance sheet total M€ 1,292.3 1,463.4 -171.1 1,206.4 85.9 1,257.8
Interest-bearing net debt M€ 211.7 339.9 -128.2 198.7 13.0 213.6
Equity ratio1) % 33.1 32.1   37.9   37.1
Gearing2) % 57.2 85.4   50.5   51.8
Return on investment, rolling 12 months % 10.9 0.2   13.2   13.5

1) Equity ratio, if hybrid bond was treated as debt: 6/2015: 23.1%, 6/2014: 20.9% and 12/2014: 24.6%.
2) Gearing, if hybrid bond was treated as debt: 6/2015: 125.2%, 6/2014: 184.4% and 12/2014: 128.4%.

The figures in the table include assets held for sale.


President and CEO Casimir Lindholm:

“Lemminkäinen’s net sales and operating profit in the second quarter were on a par with the previous year,” says Casimir Lindholm, President and CEO. “Our result improved in all business segments except Building construction, Finland. The segment’s profitability was weakened by expenses worth approximately EUR 5 million, such as losses from plot sales and provisions related to warranty repairs. In the Paving segment, the decreasing price of bitumen has led to higher volume but lower unit prices. In Infra projects, our result developed favourably. We see the market situation strong in infrastructure construction in our main markets. Nevertheless, we must continue to improve our operational efficiency in a market situation where the intense competition affects the contract prices also in Finland.”

“Our order book was on a lower level than last year. The order book declined primarily in Russia, where we have not started any new residential projects. In infra projects, we won new contracts in June totalling EUR 80 million that are not included in the order book for the review period.” 

“We have continued the sales of non-core businesses and assets in line with our strategy. During the review period and after it, we withdrew from the building construction business in Sweden and the road maintenance business in Norway. These measures had a negative impact on the second quarter result totalling approximately EUR 3 million. We have also continued to sell non-strategic plots and mineral aggregate areas. These actions support our intention to optimise our capital efficiency and to improve our long-term results.”

“Our cash flow from operations was positive during the first and second quarter. Our operating capital and interest-bearing debt are on a substantially lower level than in the previous year. We have achieved this by reducing investments, improving the efficiency of our invoicing and adjusting the housing production to meet the lower demand. During the review period, we completed the partial repurchase of our hybrid bond by repurchasing notes to a nominal amount of EUR 27.1 million in exchange for cash. Our strengthened balance sheet and the successfully implemented Deliver 2014 cost savings programme mean that we are well positioned to continuously develop our business and improve our competitive position,” Lindholm explains.


Market outlook

The total volume of construction in Finland in 2015 is likely to remain at the previous year’s level. Current infrastructure projects will not turn the volume of infrastructure construction to growth. Renovation in building construction continues to grow, but new residential construction is expected to decline by a few per cent from the previous year. The number of new residential startups is estimated to be 23,500 units (2014: 24,500). Paving volumes are growing, but the falling price of bitumen restricts the growth in net sales. In Sweden and Norway, infrastructure construction is supported by major road projects and investments in the repair and replacement of energy production infrastructure. In Russia, housing demand in comfort-class has decreased somewhat compared to the previous year. In the Baltic countries, the demand for infrastructure construction has remained stable. (Source: Euroconstruct June/2015).


Briefing

A Finnish-language briefing for analysts and the media will be held at 10:00 a.m. on Wednesday, 29 July at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's President and  CEO Casimir Lindholm will present the Interim report. Presentation material can be found in Finnish and English at the company’s website, www.lemminkainen.com/investors.

 

Financial reporting in 2015

In 2015 the Interim Reports will be published as follows:

5 February 2015            Financial statements bulletin 2014
29 April 2015                 Interim Report 1 Jan – 31 March 2015
29 July 2015                  Interim Report 1 Jan – 30 June 2015
30 October 2015           Interim Report 1 Jan – 30 Sep 2015

 

LEMMINKÄINEN CORPORATION
Corporate Communications

 

ADDITIONAL INFORMATION:
Casimir Lindholm, President and CEO, tel. +358 2071 53304
Ilkka Salonen, CFO, tel. +358 2071 53304
Katri Sundström, Head of Investor Relations, tel. +358 2071 54813

 

DISTRIBUTION:
NASDAQ OMX Helsinki
Key media
www.lemminkainen.com

 

Together with our customers we create conditions that make living, working and travelling functional, safe and healthy. We operate in Northern Europe and employ about 5,600 professionals. In 2014, our net sales were about EUR 2.0 billion. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com

 

ATTACHMENT: Interim Report Q2/2015