Uponor Q2 2015 presentation template - · PDF fileModest improvement in Uponor Infra as a...

Financial results briefing – Q2/2015 Jyri LuomakoskiPresident and CEOUponor Corporation

San Diego State University Aztec Center, California, USA

Q2/2015: Improving operating profit on nearly flat net sales April – June 4-6/2015 4-6/2014 Change

Net sales 277.6 264.5 4.9%

Operating profit 22.5 17.6 27.9%

- Operating profit w/o non-recurring items 23.3 17.1 36.4%

Net sales― Persistently weak business environment in Europe affects

both Building Solutions and Infra businesses― Growth in Building Solutions - North America driven by healthy markets

and market share gains― Considerable boost from USD/euro translation; growth without currency

impact at 0.3%

Operating profit― Building Solutions – North America’s growth is mainly volume driven― Unsatisfactory trend in Building Solutions – Europe― Modest improvement in Uponor Infra as a result of restructuring

benefits; resin scarcity driving manufacturing costs up

2Interim report 2015 21 July 2015

Developments by segment:

Building Solutions – Europe

Interim report 2015 21 July 2015

• Flat or declining markets in most of Europe, biggest drops in net sales in Germany, Finland and the UK― The Netherlands and Spain as the main

positive exceptions

• Profits down driven by business in Germany and some other key markets― Cost reduction plans under preparation― Costs increase due to start-up issues in

German distribution centre and non-recurring items booked in relation to the streamlining ahead

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Building Solutions – North America


• Net sales grows in step with healthy market trends― customer conversion and penetration

into low market share regions help strengthen market share

• Net sales and operating profit roughly doubled in 4 years― Careful cost management despite

continuous expansion and investments

• Manufacturing expansion on plan, completion by year-end 2015

4


Uponor Infra• Continued decline in net sales, due to

weak markets in Europe and the divestments made in Q1

• Resin price volatility with minor impact in Q2, negative effect to be expected during H2― Resin availability challenges put

pressure on manufacturing costs

Interim report 2015 21 July 2015 5

Financial statements Riitta PalomäkiCFOUponor Corporation

The new Children’s Hospital, Helsinki, Finland

Interim January – June 2015:

Key figures


M€ 1-6 1-6 12 1-122015 2014 # 2014

Net sales, continuing operations 514.7 495.4 # 1 023.9

Operating profit, continuing operations 33.8 22.4 # 63.4

Operating profit margin, continuing operations 6.6% 4.5% 2.1% pts # 6.2%

Earnings per share (diluted), € 0.23 0.17 # 0.50

Return on equity, % (p.a.) 11.6% 8.0% 3.6% pts # 12.3%

Return on investment, % (p.a.) 14.0% 8.8% 5.2% pts # 14.2%

Net interest bearing liabilities 138.8 154.3 # 82.0

Gearing, % 47.8% 56.9% -9.1%pts # 27.6%

Net working capital of Net sales, % (p.a.) 11.9% 12.8% -0.9%pts 7.1%

Average number of employees, continuing operations 3 881 4 174 # 4 127

Number of employees, end of period, continuing operations 3 906 4 225 # 3 982

-7.0%

-7.6%

ChangeY/Y

+3.9%

+50.6%

+35.3%

-10.0%

April – June 2015:

Income statement

• Net sales growth, adjusted for currency translation (mainly coming from USD), was flat at 0.3%

• Gross profit margin improvement driven by increased share of Building Solutions – North America and more favourable product mix there

• Increase in expenses due to Building Solutions – North America, driven by dollar-to-euro translation

• Operating profit includes a non-recurring cost of €0.8m from the streamlining programme in Building Solutions – Europe while the comparison year contained a non-recurring net gain of €0.5m. Translation impact on operating profit was €2.7m vs Q2/2014

M€ 4-6 4-6 Change2015 2014 Y/Y

Continuing operationsNet sales 277.6 264.5 +4.9%

Cost of goods sold 179.0 177.8 +0.7%

Gross profit 98.6 86.7 +13.7% - % of net sales 35.5% 32.8% +2.7% pts

Other operating income 0.0 0.9Expenses 76.1 70.0 +8.7%

Operating profit 22.5 17.6 +27.9% - % of net sales 8.1% 6.6% +1.4% pts

Financial expenses, net 1.3 3.7 -63.6%Share of result in associated companies 0.0 0.1

Profit before taxes 21.2 14.0 +51.2%

Profit for the period 13.3 9.4 +42.4%

EBITDA 31.5 26.4 +19.2%



Income statement


•Net sales growth, adjusted for the currency translation impact (mainly coming from USD), was flat at -0.6%

• Increase in expenses due to Building Solutions - North America, driven by dollar-to-euro translation. Comparison figures burdened by €3.0m in NRI

•Operating profit in 2015 includes €0.8m NRI related to streamlining programme in Building Solutions- Europe. Operating profit w/o NRI €34.6m (€25.7m), up 34.6% y-on-y

M€ 1-6 1-6 Change 1-122015 2014 Y/Y 2014

Continuing operationsNet sales 514.7 495.4 +3.9% 1 023.9

Cost of goods sold 330.9 330.6 +0.1% 683.8

Gross profit 183.8 164.8 +11.5% 340.1 - % of net sales 35.7% 33.3% +2.4% pts 33.2%

Other operating income 0.7 1.1 -34.9% 2.4Expenses 150.7 143.5 +5.0% 279.1

Operating profit 33.8 22.4 +50.6% 63.4 - % of net sales 6.6% 4.5% +2.0% pts 6.2%

Financial expenses, net 6.4 5.8 +9.8% 7.4Share of result in associated companies 0.1 0.1 0.3

Profit before taxes 27.5 16.7 +64.9% 56.3

Profit for the period 17.3 11.2 +55.1% 36.3

EBITDA 52.1 40.3 +29.3% 99.9


Net sales & operating profit by segment


• Building Solutions – Europe: operating profit margin (w/o non-recurring items) down from 7.6% to 5.7% driven by declining net sales in key markets

• Building Solutions – North America: profit margin up from 14.4% to 18.3 %, driven by solid sales growth and careful cost management. Q2/2015 profit margin 21.6%

• Uponor Infra: profit improved as a result of the restructuring measures during 2013 and 2014. Uponor Infra also benefited from input costs

Currency: M€Net sales Operating profit, w/o non-recurring items

242.9

90.0

166.1

231.6

126.7

158.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

Building Solutions -Europe

Building Solutions -North America

Uponor Infra

1-6 2014 1-6 2015

18.5

13.0

-3.7

13.1

23.1

1.7

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Building Solutions -Europe

Building Solutions -North America

Uponor Infra

1-6 2014 1-6 2015

Interim January – June 2015:Net sales development in key markets

11

Note: Countries are sorted by YTD 2015 net sales


Growth% in EUR 47.1 -7.2 -11.4 -8.6 19.2 -5.7 -6.4 -7.7

% in Curr. 19.2 -5.4 9.6 -16.3 -2.8-2.9 18.8 4.0-3.0

64.768.8

47.6

39.6

16.5 15.7

12.314.9

19.215.6

74.1

78.6

71.970.9

47.2

34.8

24.420.1

15.818.5

14.8

98.5

115.6

66.762.8

43.1 41.4

23.7

18.9 18.8 17.3 15.4

90.9

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USA Germany Finland Sweden Canada Denmark UK Netherlands Norway Spain Others

Jan-Jun 2013 Jan-Jun 2014 Jan-Jun 2015

M€

Net sales in North America (USA and Canada) represents 30.5% of Group net sales with a growth of 38.5% y-o-y


Balance sheet


M€ 30 Jun 30 Jun Change 31 Dec2015 2014 Y/Y 2014

Property, plant and equipment 209.5 197.5 +12.0 207.8Intangible assets 96.3 100.2 -3.9 98.4Securities and long-term investments 10.8 11.2 -0.4 11.2Inventories 131.2 130.8 +0.4 117.4Cash and cash equivalents 16.5 17.9 -1.4 60.2Other current and non-current assets 252.5 240.3 +12.2 186.8

Total equity 290.6 271.2 +19.4 297.9Non-current interest-bearing liabilities 100.4 130.3 -29.9 126.3Provisions 17.4 20.7 -3.3 16.2Non-interest-bearing liabilities 253.5 233.8 +19.7 225.5Current interest-bearing liabilities 54.9 41.9 +13.0 15.9

Balance sheet total 716.8 697.9 +18.9 681.8

• Net interest-bearing liabilities at €138.8m, down by €15.5m from LY• Non-controlling interest at Uponor Infra represents €65.2m of the total equity at €290.6m


Cash flow


M€ 1-6 1-6 Change 1-122015 2014 Y/Y 2014

Net cash from operations +47.1 +37.4 +9.7 +99.0Change in NWC -50.2 -44.3 -5.9 -3.5Net payment of income tax and interest -16.7 -11.8 -4.9 -19.8Cash flow from operations -19.8 -18.7 -1.1 +75.7

Cash flow from investments -12.5 -10.3 -2.2 -30.6Cash flow before financing -32.3 -29.0 -3.3 +45.1

Dividends and buy backs -30.7 -27.8 -2.9 -27.8Other financing +18.5 +21.2 -2.7 -9.9Cash flow from financing -12.2 -6.6 -5.6 -37.7

Change in cash and cash equivalents -43.7 -35.8 -7.9 +6.5

• Gross CapEx (€18.5m) at depreciation level and up €6.1m from LY, driven by investment in Building Solutions – North America

• Cash flow from investments includes a cash flow effect of €+5.9m from the divestments of the Thai infrastructure business and Extron Engineering Oy in Finland. The comparison year includes €1.7m in proceeds from the sale of fixed assets in Finland related to Uponor Infra’s integration

Outlook for the futureJyri LuomakoskiPresident and CEOUponor Corporation

Apartment building, Veendaal, the Netherlands

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Leading indicators in major markets

Indicator % change YTD

Data through

Trend since Q4 update

USA Housing starts1) +27% June 2015

Germany Housing permits -1% May 2015

Finland Building starts -10% April 2015

Sweden Housing starts +29% March 2015

Canada Housing starts1) -2% June 2015

Denmark Housing starts -30% March 2015

UK Housing starts2) +9% March 2015

Netherlands Housing permits +105% March 2015

Norway Housing permits +11% May 2015

Spain Housing permits +23% March 2015

1) Seasonally adjusted, annualised rate vs. same month in 2014; 2) England only


Country overview- USA

• After a harsh winter that clearly influenced the slow start to the year, gains have been made in most fundamental economic indicators

• Within the construction industry:

― Housing starts rebounded in June after disappointing May starts

― Other leading indicators of construction activity, such as permit levels and builder confidence, are positive and have reached pre-crisis levels

― Non-residential construction has grown versus last year, with businesses increasingly investing in offices, commercial properties and manufacturing facilities


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June 2015: 1,174,000Change from 2014: +27%

U.S. housing starts

(Seasonally adjusted, annual rate)

Source: U.S. Census Bureau


U.S. starts rebounded in June and builder confidence rose to a 10-year high

Housing Market Index (HMI) and housing starts

Source: US Census, NAHB/Wells Fargo


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Single-family starts (lhs) Total starts (lhs) Housing Market Index (rhs)

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Europe: Change in builder confidence

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(Apr-June avg vs. Jan-Mar avg, seasonally adjusted)

Source: Eurostat


Country overview- Germany

• A very strong labour market coupled with consumer confidence at a 13-year high has continued to drive growth in the economy, despite the headwinds created by external factors

• Within the construction industry:

― Building permit levels to-date are on par with 2014, with the multi-family segment outperforming the single-family segment

― Builder confidence has weakened somewhat, but remains relatively robust

― Non-residential spending continues to be restrained as businesses remain cautious


German housing permits and builder confidence

-35

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Rolling 12-month total (lhs) Construction confidence (rhs)

Source: Destatis and Eurostat


Management agenda for the near term

• Focus on cost and pricing management as demand and input costs remain volatile in the European markets

• Execution of North American expansion in building solutions, and tapping into growth opportunities partly created by the tailwind in the building markets

• September marks a one-year anniversary of the most recent restructuring programmes in Uponor Infra― follow the initiatives through and get stability in the

supply/demand situation

• Building Solutions – Europe’s streamlining programme


Guiding forward

• Macro-economic challenges and the geopolitical situation remain difficult and have not improved

• Plastic resin availability challenging although it may be easing after the summer― Main impact on Uponor Infra

• The guidance issued on 12 February 2015 remains intact:

The Group’s net sales and operating profit (excluding any non-recurring items) are expected to improve from 2014


The text may contain forward-looking statements, which are based on the present business scope and the management’s present expectations and beliefs about the future. The actual result may differ materially from such statements.

Building permits in Europe

• Building permits data through February indicates that permit levels have improved slightly from the all-time lows at the end of 2014, largely as a result of increased activity in Spain and Sweden

Source: Eurostat (Base year = 2010)

European building permits index (Euro Area 19, seasonally adjusted)

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Monthly (lhs) Rolling 12-month total (rhs)

Germany

Source: Destatis

Housing permits in Germany

Jan-Apr 2015: 77,240Change vs. 2014: 0%


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Quarterly (lhs) Rolling 4-quarter total (rhs)

SwedenHousing starts in Sweden

Source: Statistics Sweden

Jan-Mar 2015: 10,750Change vs. 2014: +29%


Canada

Source: CMHC/ Statistics Canada

Housing starts in Canada(Seasonally adjusted, annual rate)

June 2015: 202,818Change vs. 2014: -2%

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DenmarkHousing starts in Denmark

(Seasonally adjusted)

Source: Statistics Denmark

Jan-Mar 2015: 2,019Change vs. 2014: -30%


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NorwayHousing permits in Norway

Source: Statistics Norway

Jan-May 2015: 12,264Change vs. 2014: +11%


Uponor Q2 2015 presentation template - · PDF fileModest improvement in Uponor Infra as a...

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