Interim Report Q3/2008 Exel Oyj Vesa Korpimies, President and CEO
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Transcript of Interim Report Q3/2008 Exel Oyj Vesa Korpimies, President and CEO
Interim Report Q3/2008
Exel OyjVesa Korpimies, President and CEO
30 October 2008
Q1-Q3/2008 and Q3/2008 highlights
Q1-Q3/2008 highlights
• The restructuring of the Group has been completed to a large extent and we concentrate
on developing our core business Exel Composites.
• The effects of the restructuring can be seen in the profit and cash flow development in Q3
2008.
• However, we are not satisfied with the current profitability and continue to focus on
improving the operating margins and to drive more efficient use of working capital.
• As disclosed in the second quarter interim report Exel expects the Group’s profit before
taxes for the full year to be negative. Due to the present challenging market conditions, the
fourth quarter profit before taxes could also be negative.
Interim Report Q3/2008
Financial performance
Q3/2008 financial performanceProfit of the Group improved
• Net sales EUR 23.9 (27.9) million
• Operating profit EUR 2.5 (-2.1) million including EUR 0.2 (-4.2) million
non-recurring items
• Operating profit margin improved to 10.4% (-7.4%) of net sales
• Fully diluted earnings per share EUR 0.07 (-0.19)
• Cash flow from business operations EUR +4.5 (-0.7) million
Interim Report Q3/2008
Effects of the restructuring can be seen in the Q3 profit development
Q3/2008 financial performance
• Return on equity 19.2% (-35.3%)
• Return on capital employed 12.0% (-17.0%)
• Equity ratio 26.8% (28.8%)
• Net gearing in Q3 2008 144.3% vs. 138.1% in Q3 2007, but better than in Q2
2008 (178.4%)
• EPS EUR 0.07 (-0.19)
• Equity per share EUR 1.54 (2.00)
Interim Report Q3/2008
Q3/2008
21.4
1.7
7.8
465
Net sales, M€
Operating profit, M€
as % of sales
Average no. of personnel
Q3/2007
25.3
2.6
10.1
500
change, %
-15.2
-35.1
-7.0
2007
104.3
15.2
14.6
500
Key figures of Exel Composites
Interim Report Q3/2008
Q1-Q3/2008
66.1
6.3
9.6
486
Q1-Q3/2007
79.5
11.3
14.2
502
change, %
-16.9
-44.0
-3.2
• Net sales in Q3 decreased by 15.2% to EUR 21.4 (25.3) million from the corresponding period previous year
• Main reasons:
• Procurement model change in the wind energy segment
• Divestment of Plastics business in Germany
• Sales to Exel Sports Brands declined during Q1-Q3
• Weaker market conditions in transportation and building and construction
• On the other hand, sales in new energy applications and telecommunication segment were strong
Interim Report Q3/2008
Exel CompositesNet sales development
Exel CompositesOperating profit development
• Operating profit in Q3 totaled EUR 1.7 million (EUR 2.6 million including EUR -0.7 million non-recurring items)
• Operating profit in January-September declined to EUR 6.3 (11.3) million including EUR -1.1 (-0.7) million of non-recurring items
• Major reasons behind the decrease were:
• Lower sales
• Increased energy and raw material costs
• A credit loss provision of EUR 0.3 million was made due to a customer insolvency
Interim Report Q3/2008
Net sales, M€
Operating profit, M€
as % of sales
Average no. of personnel
Q3/2008
2.8
0.7
25.1
20
Q3/2007
3.8
-5.2
-135.4
48
change, %
-26.5
113.6
-58.3
2007
13.6
-10.7
-78.1
49
Key figures of Exel Sports Brands
Interim Report Q3/2008
Q1-Q3/2008
8.4
-8.2
-98.2
38
Q1-Q3/2007
9.7
-7.6
-78.7
49
change, %
-13.8
-7.6
-22.4
• Net sales in Q3 decreased by 26.5% to EUR 2.8 (3.8) million from the corresponding period previous year
• Starting from June 1, 2008, Exel Sports Oy consist only of floorball products
• Exel concentrates on reinforcing and streamlining the floorball business and improving its profitability
• Operating profit in Q3 was EUR 0.7 million including EUR +0.2 million of non-recurring items (EUR -5.2 million including EUR -3.5 million non-recurring items)
Interim Report Q3/2008
Exel Sports BrandsNet sales and operating profit development
Exel Sports BrandsStreamlining continued during Q3/2008
• Streamlining was implemented to a large extent
• Divestment of the China-based Nordic Sports Products (Beijing) Co., Ltd. to ESB Sports Oy in September 2008
• Exel Sports Oy also no longer imports Björn Däehlie skiing textiles, Lars Kjus alpine skiing textiles, Tubbs snowshoes and Swany gloves
• Co-determination process started to finalize the restructuring in Q4 2008
Interim Report Q3/2008
M€
Exel Composites
Exel Sports Brands
Intra Group sales
Total
Q3/2008
21.4
2.8
-0.3
23.9
Q3/2007
25.3
3.8
-1.2
27.9
change, %
-15.2
-26.5
-14.3
2007
104.3
13.6
-4.4
113.5
Group net sales
Interim Report Q3/2008
Q1-Q3/2008
66.1
8.4
-1.6
72.8
The figures in the table are rounded and may not sum up.
Q1-Q3/2007
79.5
9.7
-3.8
85.4
change, %
-16.9
-13.8
-14.7
Group operating profitProfit of the Group improved in Q3/2008 compared to Q2/2008 and Q3/2007
M€
Exel Composites
Exel Sports Brands
Total
Q3/2008
1.7
0.7
2.5
Q3/2007
2.6
-5.2
-2.1
change, %
-35.1
113.6
2007
15.2
-10.7
4.8
Interim Report Q3/2008
Q1-Q3/2008
6.3
-8.2
-1.8
Balance sheet, cash flow and financingInterest-bearing liabilities decreased from MEUR 37.8 to MEUR 32.5Positive cash flow
• Consolidated total assets were EUR 68.1 (82.7) million at the end of reporting period
• Equity was EUR 18.3 (23.8) million and equity ratio 26.8 (28.8) per cent.
• Decrease in current assets due to the divestment of Exel Sports Brands’ Outdoor business and a rationalization project aiming at more efficient use of operating working capital
Interim Report Q3/2008
• Interest-bearing liabilities stood at EUR 32.5 (37.8) million
• Cash flow from business operations in Q1-Q3 was EUR +4.9 (-2.9) million
• Liquid assets were EUR 6.1 (5.0) million
Net gearing and equity ratioNet gearing decreased down compared to Q2/2008 (144.3% vs. 178.4%)
Net gearing ratio Q3/2008 144.3% (Q3/2007 138.1%)
Equity ratio Q3/2008 26.8% (Q3/2007 28.8%)
Interim Report Q3/2008
Exel’s target is to further decrease net gearing ratio below 100%
Outlook
Outlook
• Pultrusion market is affected by the worldwide business slow-down
• Weakened demand has been observed especially in the building and construction and transportation segments
• Increased price competition and higher energy and raw-material costs are all putting pressure on profitability
• The Group has a sharp focus on its core business, namely Exel Composites
• New applications are constantly being developed to capture growth opportunities within the advanced composites industry
• A cost reduction program has been reinforced to restore profitability to satisfactory levels
Interim Report Q3/2008
Outlook
Interim Report Q3/2008
• As disclosed in the second quarter interim report Exel expects the Group’s profit before taxes for the full year to be negative.
• Due to the present challenging market conditions, the fourth quarter profit before taxes could also be negative.
Appendix: Exel share
Major Shareholders (1 October 2008)
Nordstjernan AB
Ilmarinen Mutual Pension Insurance Company
Berling Capital Oy
OP-Suomi Small Cap Inv. Fund
Veikko Laine Oy
Varma Mutual Pension Insurance
Company
Ulkomarkkinat Oy
Alfred Berg Finland Inv. Fund
Fondita Nordic Small Cap Inv. Fund
Suutarinen Matti
SEB (nominee registered)
Number of shares
3,496,506
689,400
412,000
380,900
378,800
363,600
346,600
343,225
330,000
294,400
233,169
Percentage of share
capital
29.39
5.79
3.46
3.20
3.18
3.05
2.91
2.88
2.77
2.47
1.95
Interim Report Q3/2008
The ownerships of the major shareholders remained the same during Q3/2008
Exel share
1/2007 - 10/2008
Interim Report Q3/2008
6.9% (35.5%) of shares outstanding were traded in Jan-Sep 2008
The highest share quotation was EUR 12.20 (17.45) and the lowest EUR 6.53 (12.50)
The share price closed at EUR 6.93 (15.30) and the market capitalization at the end of the review period was EUR 82.4 (182.0) million
Consolidated key figures
Interim Report Q3/2008
EUR million
Net sales
Operating profit
% of net sales
Profit before taxes
Profit for the period
Shareholders’ equity
Net interest-bearing liabilities
Capital employed
ROE, %
ROCE, %
Equity ratio, %
Net gearing, %
EPS, €
EPS, fully diluted, €
Equity per share, €
Q3/2007
27.9
-2.1
-7.4
-2,9
-2.2
23.8
32.8
61.1
-35.3
-17.0
28.8
138.1
-0.19
-0.19
2.00
Q1-Q3/2008
72.8
-1.8
-2.5
-4.0
-2.8
18.3
26.4
50.8
-18.0
-6.8
26.8
144.3
-0.24
-0.24
1.54
2007
113.5
4.8
4.2
2.4
2.0
23.5
27.9
56.3
8.4
7.3
31.3
118.4
0.17
0.17
1.98
change, %
-14.3
219.9
138.9
138.5
-23.1
-19.7
-16.9
Q3/2008
23.9
2.5
10.4
1.1
0.9
18.3
26.4
50.8
19.2
12.0
26.8
144.3
0.07
0.07
1.54
Q1-Q3/2007
85.4
4.1
4.8
2.7
2.0
23.8
32.8
61.1
11.3
8.9
28.8
138.1
0.17
0.17
2.00
change, %
-14.7
143.8
245.1
238.1
-23.1
-19.7
-16.9