PKC Group Plc INTERIM REPORT 4 May 2012 8.15 a.m.
PKC GROUP’S INTERIM REPORT 1-3/2012
- Net sales grew 149.7% on the comparison period (1-3/2011), totalling EUR 242.0 million (EUR 96.9 million).
- Operating profit before PPA depreciation amortization and non-recurring items was EUR 16.1 million (EUR 10.2 million). During the report period PPA depreciation and amortization totalled EUR 3.2 million (EUR 0.6 million).
- Operating profit was EUR 12.7 million (EUR 9.7 million) i.e. 5.3% (10.0%) of net sales.
- Net profit for the report period amounted to EUR 6.9 million (EUR 7.6 million).
- Diluted earnings per share were EUR 0.33 (EUR 0.38).
- Gross capital expenditure was EUR 4.8 million (EUR 2.5 million)
- Net cash from operating activities was EUR 25.9 million (EUR 2.4 million)
- Cash flows after investments were EUR 23.1 million (EUR 0.1 million).
- Gearing was 52.1% (3.8% negative).
- Equity ratio was 30.9% (52.4%)
- Net liabilities were EUR 85.1 million (EUR 4.6 million negative).
KEY FIGURES |
1-3/12 |
1-3/11 |
1-12/11 |
Net sales, EUR 1,000 | 241,967 | 96,886 | 550,208 |
Operating profit, EUR 1,000 | 12,735 | 9,670 | 34,505 |
% of net sales | 5.3 | 10.0 | 6.3 |
Net profit for the report period, EUR 1,000 | 6,895 | 7,592 | 23,445 |
Earnings per share (EPS), EUR | 0.33 | 0.38 | 1.16 |
ROI,% | 21.2 | 28.3 | 18.9 |
Net liabilities, EUR 1,000 | 85,098 | -4,624 | 110,739 |
Gearing, % | 52.1 | -3.8 | 72.6 |
Average number of personnel | 21,955 | 6,234 | 10,793 |
MATTI HYYTIÄINEN, PRESIDENT AND CEO:
“We can be satisfied with our performance in the first quarter. The Group’s net sales and operating profit increased over the comparison period. I am particularly pleased that actions to improve cash flow and reduce net working capital yielded results. Our net working capital was reduced by EUR 12.6 million during the first quarter and cash flow after investments improved significantly and was EUR 23.1 million.
PKC’s earnings per share was lower than in comparison period because the amount of income taxes increased in report period.
Production volumes for commercial vehicles and light vehicles continued to grow in North America. Production volumes for heavy-duty commercial vehicles increased by about 50% over the comparison period, and volumes for medium-duty vehicles increased more than 10% and volumes for light vehicles less than 10%. We were able to meet the increased demand without significant investments in production.
In Europe, production volumes for heavy- and medium-duty commercial vehicles fell by about 8% over the comparison period. We methodically adapted our European production level to correspond to the production volumes of our customers.
In Brazil, production volumes for heavy-duty commercial vehicles fell by 15% over the comparison period but fell close to 40% compared to last quarter of 2011. The main reasons for the reduced production volumes were the first-quarter transition to new emissions regulations (Euro 5) and the annual holidays that occurred over the same period of time. In Brazil, PKC also manufactures wiring harnesses for passenger cars, and their production volumes decreased significantly in the period under review. PKC is currently reorganising production and other operations in Brazil. As a result of low production volumes and on-going reorganisation, the operating profit of our Brazilian unit was negative. Measures to improve the situation have been started. The aim is to conclude the reorganisation, the related production transfers and improvement measures during 2012.
PKC’s Wiring Systems business developed favourably. Wiring Systems business’ EBIT was EUR 15.0 million. ODM deliveries by PKC’s Electronics business were at a very low level, and as a result operating profit for the first quarter was EUR 1.0 million negative.
The full-year prospects for demand for PKC’s customers vary by market. In North America, full-year production volumes for heavy-duty commercial vehicles are forecast to be 15-20% higher than in 2011, and correspondingly volumes for medium-duty and light vehicles 2-4% higher.
As far as Europe is concerned, production volumes for heavy- and medium-duty commercial vehicles are forecast to be 5−10% less than those for 2011.
In Brazil, production volumes in 2012 are expected to fall between 25-30% compared to year 2011.”
OPERATING ENVIRONMENT
Wiring Systems business
- Vehicles, Europe
Economic uncertainty continued in Europe and this had a negative impact to the market confidence. The truck buyers have placed fewer orders and truck manufacturers have responded to weakening demand by reducing their output rates. Among the truck market segments the heavy duty haulage has remained the key driver of sales.
First quarter 2012 production of heavy duty trucks reached 73,000 units which was 8% less than in the same period of time year earlier and 20% less than in the fourth quarter 2011.
First quarter 2012 production of medium duty trucks was 17,000 units which was 8% less than in the same period of time year earlier but remained almost in the same level as in the fourth quarter 2011.
The worries over the economic outlook in Europe will remain and the truck production for full year 2012 is expected to be lower than full year 2011. Full year 2012 heavy duty truck production is expected to be 300,000 units which is 6% less than last year. The comparable numbers for medium duty truck production are estimated to be 68,000 units and 9% less than year 2011.
- Vehicles, North America
The demand for new trucks remained robust as fleets continued to replace aging equipment. NAFTA first quarter 2012 production of class 8 reached 76,000 units which is close to 50% growth compared to same period year earlier and a small growth of 2% compared to the fourth quarter 2011. The order backlogs for heavy duty commercial trucks represented 3.5 month’s supply of production at the factories, a sharp change from the 8 months one year ago.
NAFTA first quarter 2012 medium duty truck production rose to 45,000 units which represented 10% growth compared to same period year earlier and 10% growth compared to last quarter of 2011.
Light vehicle production volumes reflected positive sentiment in the market and first quarter production increased by 6% compared to the first quarter 2011 and grew close to 9% compared to fourth quarter 2011.
The supply of drivers being moderately tight, freight demand good and freight companies’ profits healthy, new capacity is likely to be added to fleets moderately and the replacement of aging trucks will continue. The full year production for heavy duty (class 8) trucks is estimated to be just below 300,000 units. This is close to 20% growth compared to the full year 2011. Medium duty truck production is estimated to be close to 175,000 units which represents modest growth of 4% compared to year 2011. Light vehicle production is estimated to grow by 2% and to reach 6.7 million vehicles in 2012.
- Vehicles, South America
The demand of the commercial vehicles was adversely affected during the quarter by the transition to Euro 5 vehicles in Brazil. The first quarter heavy duty truck production reached 26,000 units and this was close to 15% less than first quarter of 2011 and 38% less than fourth quarter 2011. The medium duty truck production was 12,000 units and it was 9% less than same period of time year earlier, and 38% less than fourth quarter 2011.
Over the long term Brazilian truck market has a good growth potential but the truck production for full year 2012 will not reach the level achieved in year 2011. The estimate for heavy duty truck production year 2012 is 105,000 units which close to 30% less than year 2011. The medium duty truck production estimation is 52,000 units and compared to full year 2011 it represents decline of more than 20%.
- Agricultural Equipment Industry
Worldwide agricultural equipment industry retail unit sales decreased 2% compared to the first quarter of 2011. Global tractor sales were slightly down (-2%) and global combine sales decreased 5% for the quarter. North American sales of tractors over 40 horsepower were up 5% while combine sales were down 40% mainly due to equipment availability. Latin America sales of tractors and combines decreased 8% and 1%, respectively, as a result of the drought conditions. EAME & CIS markets improved for the quarter with tractor sales up 9% and combine sales up 21%. APAC unit retail sales were down 4% for tractors and 33% for combines.
- Construction Equipment Industry
Global construction equipment industry sales declined 6% in the first quarter compared to the prior year, as declining demand in China drove the APAC region down 24%. Light equipment global demand was up 12% and heavy equipment demand declined 19%, with the APAC region down 31%. The North American market registered a substantial year-over-year improvement with demand up 45% (light equipment volumes up 52% and heavy equipment up 30%). EAME & CIS markets continued to improve, up 14%, as the industry continued to rebuild from the prior year's low levels. Latin America demand was up 9% for light equipment and down 1% for heavy equipment.
Electronics business
Demand for the products of PKC Group’s key industrial electronics customers decreased during the first quarter of 2012. The weakening was a result of economic uncertainty in Europe and a reduction in wind power energy investments globally.
Due to on-going product strategy changes of a telecommunications customer, the demand for PKC’s Electronics business’ design and manufacturing services (ODM) remained significantly lower than the previous year.
NET SALES AND FINANCIAL PERFORMANCE
January-March 2012
Net sales from January-March amounted to EUR 242.0 million (EUR 96.9 million), up 149.7% on the same period a year earlier. During the report period EUR 0.3 million in non-recurring items were reported. During the comparison period no non-recurring items were recorded. Operating profit before non-recurring items, PPA depreciation and amortization totalled EUR 16.1 million, accounting for 6.7% of net sales. Consolidated operating profit totalled EUR 12.7 million (EUR 9.7 million), accounting for 5.3% of net sales (10.0%). Operating profit was burdened by the losses of the Brazilian unit. Depreciation amounted to EUR 7.4 million (EUR 2.8 million). Depreciation caused by acquisitions amounted to EUR 3.2 million. Financial expenses were EUR 2.3 million (EUR 0.3 million). Financial expenses include exchange rate gain totalling EUR 0.2 million net. Profit before taxes was EUR 10.5 million (EUR 9.4 million). The amount of income taxes increased during the report period. Net profit for the report period totalled EUR 6.9 million (EUR 7.6 million). Diluted earnings per share were EUR 0.33 (EUR 0.38).
Net sales generated by the Wiring Systems business in the report period amounted to EUR 226.6 million (EUR 78.2 million), or 189.9% more than in the comparison period. The segment’s share of the consolidated net sales was 93.7% (80.7%). Net sales increased along with the acquisition of AEES companies. During the report period EUR 0.1 million in non-recurring items were reported. During the comparison period no non-recurring items were recorded. Wiring Systems business generated an operating profit before non-recurring items, PPA depreciation and amortization of EUR 18.4 million (EUR 10.7 million), equivalent to 8.1% of the segment’s net sales (13.7%). Wiring Systems business generated an operating profit of EUR 15.0 million (EUR 10.1 million), equivalent to 6.6% of the segment’s net sales (12.9%). The comparable profitability weakened due to the losses of the Brazilian unit resulting from low production volumes and costs related to the reorganisation of operations.
Net sales generated by the Electronics business decreased by 18.0% to EUR 15.3 million (EUR 18.7 million). The segment’s share of the consolidated net sales was 6.3% (19.3%). During the report period EUR 0.1 million in non-recurring items were reported. During the comparison period no non-recurring items were recorded. Electronics business generated an operating profit before non-recurring items, PPA depreciation and amortization of EUR 0.9 million negative, equivalent to -5.7% of the segment’s net sales. Electronics business generated an operating profit of EUR 1.0 million negative (EUR 0.4 million), equivalent to -6.5% of the segment’s net sales (2.4%). The decline of net sales and operating profit is due to decreased demand of design and manufacturing services (ODM) of production and service devices for telecommunication industry. Decrease in demand was due to change of customer’s product strategy. Electronics segment’s result was further burdened by costs related to production transfers from Finland to more competitive production facilities.
FINANCIAL POSITION AND CASH FLOW
Consolidated total assets at 31 March 2012 amounted to EUR 529.1 million (EUR 230.2 million). Increase in total assets compared to comparison period is mainly due to the business acquisitions. Interest-bearing liabilities totalled EUR 160.0 million at the close of the report period (EUR 32.4 million). The Group’s equity ratio was 30.9% (52.4%). Net liabilities totalled EUR 85.1 million (EUR 4.6 million negative) and the gearing was 52.1% (3.8% negative).
Inventories amounted to EUR 108.4 million (EUR 63.4 million). Current receivables totalled EUR 129.7 million (EUR 65.3 million). Net cash from operating activities was EUR 25.9 million and cash flows after investments during the report period were EUR 23.1 million (EUR 0.1 million). Cash and cash equivalents amounted to EUR 74.9 million (EUR 37.0 million).
CAPITAL EXPENDITURE
During the report period, the Group’s gross capital expenditure totalled EUR 4.8 million (EUR 2.5 million), representing 2.0% of net sales (2.6%). The capital expenditure consisted mainly of production machinery and equipment.
RESEARCH & DEVELOPMENT
Research and development costs totalled EUR 2.0 million (EUR 1.6 million), representing 0.8% (1.6%) of the consolidated net sales. At the end of the report period, 156 (116) people worked in product development, excluding production development and process development personnel.
PERSONNEL
During the report period, the Group had an average payroll of 21,955 employees (6,234). At the end of the report period, the Group’s personnel numbered 21,919 employees (6,407), of whom 21,564 (5,986) worked abroad and 355 (421) in Finland. In addition the Group had at the end of the report period 283 rented employees.
During the report period a total of 14 persons were laid off from PKC Electronics Oy, which led to approximately EUR 0.1 million in non-recurring expenses.
QUALITY AND THE ENVIRONMENT
All of the Group’s factories are certified in accordance with requirements of the ISO/TS16949 quality standard for the automotive industry excluding factory in Traverse City (USA), which is certified in accordance with requirements of ISO9001 standard. In addition all of the Group’s factories, except factories in Sosnowiec (Poland), Campo Alegre (Brazil) and Sao Bento do Sul (Brazil), are certified in accordance with the ISO14001 environmental standard and all factories operate in accordance with the ISO9001 quality standard. Production units in Curitiba (Brazil), Itajuba (Brazil), Raahe (Finland) and Suzhou (China) have also certification in accordance with the OHSAS18001 occupational health and safety management system standard.
The certification in accordance with ISO14001 environmental standard in Sosnowiec factory will be achieved after report period in May. The certification in accordance with ISO14001 environmental standard in Campo Alegre (Brazil) and Sao Bento do Sul (Brazil) is planned to be completed during 2012. The certification of occupational health and safety management system in accordance with OHSAS18001 is in progress in electronics unit of Kostomuksha (Russia). The aim is to achieve certification in the second quarter of 2012.
MANAGEMENT
The Annual General Meeting held on 4 April 2012, re-elected Outi Lampela, Matti Ruotsala and Jyrki Tähtinen as Board members and elected Andres Allikmäe, Shemaya Levy, Robert Remenar and Harri Suutari as new Board members. In the Board’s organisation meeting, Matti Ruotsala was elected as Chairman of the Board with Harri Suutari as Vice-Chairman.
Outi Lampela was elected as the chairman of the Audit Committee and Andres Allikmäe, Shemaya Levy and Jyrki Tähtinen as members. The Board decided to expand the duties of the Nomination Committee and form it into Nomination and Remuneration Committee. The Board elected Matti Ruotsala as chairman of the Nomination and Remuneration Committee and Robert Remenar and Harri Suutari as members.
Authorised public accounting firm KPMG Oy Ab, which has announced Virpi Halonen, APA, to be the Auditor with principal responsibility, was selected as auditor.
Matti Hyytiäinen has started as President & CEO as of 4 April 2012.
The Group’s Executive Board shall consist of the following persons as of 4 April 2012 Matti Hyytiäinen, Chairman (President & CEO), Jyrki Keronen (Senior Vice President, Business Development), Harri Ojala (President, Wiring Systems, Europe & APAC), Sanna Raatikainen (General Counsel), Jarmo Rajala (President, Electronics), Marja Sarajärvi, (CFO until 30 June 2012) and Frank Sovis (President, Wiring Systems, North America). In addition, the following persons have been appointed to the Executive Board from later dates: Pekka Korkala (President, Wiring Systems, South America as of 1st of May 2012) and Juha Torniainen (CFO as of 1 July 2012).
DIVIDEND FOR 2011
The Annual General Meeting held on 4 April 2012 resolved to pay a dividend of EUR 0.60 per share: i.e. a total of about EUR 12.8 million. The dividend was paid out on 18 April 2012.
SHARE TURNOVER AND SHAREHOLDERS
PKC Group Plc’s share turnover on NASDAQ OMX Helsinki Ltd from 1 January to 31 March 2012 was 3,574,480 shares (2,884,673 shares), representing 17.2% of the average number of shares (14.7%). Shares were traded to a total value of EUR 54.7 million (EUR 43.3 million). The lowest share value during the report period was EUR 11.50 (EUR 13.90) and the highest EUR 18.30 (EUR 15.90). The closing price on the last trading day of the report period was EUR 17.19 (EUR 15.63) and the average price during the report period was EUR 15.29 (EUR 15.02). The company’s market capitalisation at 31 March 2012 was EUR 367.1 million (EUR 309.5 million).
The shares held by Board members, their closely associated persons and corporations in which they have a controlling interest accounted for 1.5% (0.7%) of the total number of shares at the end of the report period. PKC Group Plc had a total of 8,982 shareholders (8,096) at the end of the report period. The shares held by foreigners and through nominee registrations at the close of the report period totalled 26.5% of the share capital (20.3%).
SHARES AND SHARE CAPITAL
PKC Group Plc’s shares and share capital has changed during the report period as follows:
- A total of 110 PKC Group Plc’s shares have been subscribed for with 2006B options. The new shares and the corresponding increase in the share capital, EUR 37.4, have been entered into the Trade Register on 12 January 2012. The new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 13 January 2012. After the increase the Company’s registered share capital was EUR 6,103,098.92, divided into 21,155,966 shares.
- A total of 201,439 PKC Group Plc’s shares have been subscribed for with 2006 options (101,040 with 2006B options and 100,399 with 2006C options). The new shares and the corresponding increase in the share capital, EUR 68,489.26, have been entered into the Trade Register on 29 March 2012. The new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 30 March 2012. After the increase the Company’s registered share capital was EUR 6,171,588.18, divided into 21,357,405 shares.
THE BOARD'S AUTHORISATIONS
The Board of Directors was granted authorisation by the Annual General Meeting on 30 March 2011 to decide on share issue and granting of special rights defined in Chapter 10, Section 1 of the Companies Act and all the terms and conditions thereof. A maximum total of 6,000,000 shares may be issued or subscribed for on the basis of authorisation. The authorisation includes the right to decide on directed share issue. The authorisation is in force for five years from the date of the General Meeting's decision. At Board of Directors' discretion the authorisation may be used e.g. in financing possible corporate acquisitions, inter-company co-operation or similar arrangement, or strengthening company's financial or capital structure etc. PKC Group Plc’s Board of Directors has, on the basis of the authorisation granted by the shareholders’ meeting on 30 March 2011, resolved on a directed share issue without payment of 1,250,000 new shares to company’s wholly owned subsidiary PKC Group USA Inc for the payment of the purchase price for the shares in the AEES-companies. After this share issue, a maximum total of 4,750,000 shares may be issued or subscribed for on the basis of authorisation.
The Board of Directors does not possess a valid authorisation to acquire company’s own shares, and the company does not have any own shares (treasury shares) in its possession.
AMENDMENT OF ARTICLES OF ASSOCIATION
The Annual General Meeting resolved on 4 April 2012, in accordance with the Board of Directors proposal, to amend the 1§ of the Articles of Association so that PKC Group Plc shall be defined to be the company’s name in English and that Helsinki be changed to be the company’s domicile; 9§ so that the invitation to the General Meeting be published on the Company’s Internet pages no more than three (3) months and no less than three (3) weeks prior to the meeting; 10§ so that he meeting shall be held at Company's domicile.
STOCK OPTION SCHEMES
2006 options
The stock option scheme initiated in 2006, comprises a total of 697,500 options divided into A, B and C warrants. At the close of report period, the outstanding options and options held by key personnel totals 28,780 2006B warrants and 108,987 2006C warrants.
The share subscription price for the 2006 stock options is the volume-weighted average price of the PKC Group Plc share on NASDAQ OMX Helsinki, with dividend adjustments, as defined in the stock option terms (at present, EUR 8.94 for the 2006B and 2006C warrants). Through the exercise of the 2006 stock options, the share capital of PKC Group Plc may be increased by a maximum total of 697,500 new shares and EUR 237,150. After the registration of subscription made on 29 March 2012, the Company’s share capital can increase by a maximum of 139,417 shares i.e. EUR 47,401.78 as a result of the exercise of the remaining outstanding option rights. The share subscription period is for 2006B warrants 1 April 2010 – 30 April 2012, and for 2006C warrants 1 April 2011 – 30 April 2013. The 2006 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.
The share subscription period for 2006A warrants has ended 30 April 2011. During the share subscription period a total 200,300 shares were subscribed and 2,200 warrants remained unused.
2009 options
The Annual General Meeting held on 27 March 2009 decided to issue stock options to key personnel in the company and its subsidiaries. The maximum total number of stock options issued is 600,000 and they are divided into A, B and C warrants. At the close of the report period, the outstanding options and options held by key personnel totals 195,500 2009A, 200,000 2009B and 200,000 2009C warrants.
The subscription price for shares through the exercise of the 2009 stock options is the volume-weighted average price of the PKC Group Plc share on NASDAQ OMX Helsinki for April 2009, 2010 and 2011 + 20% with dividend adjustments, (at present, EUR 2.30 for the 2009A warrants, EUR 12.11 for the 2009B warrants and EUR 17.98 for the 2009C warrants). The subscription price for shares will be recorded in the invested non-restricted equity fund. The stock options entitle their owners to subscribe for a maximum total of 600,000 new shares in the company or existing shares held by the company. The share subscription period for 2009A warrants is 1 April 2012 — 30 April 2014, for 2009B warrants 1 April 2013 — 30 April 2015 and for 2009C warrants 1 April 2014 — 30 April 2016. The 2009 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.
2012 options
The Annual General Meeting held on 4 April 2012 decided to issue stock options to key personnel in the company and its subsidiaries. The maximum total number of stock options issued is 1,020,000. The stock options are marked with the symbol 2012A(i) and 2012A(ii); 2012B(i) and 2012B(ii); as well as 2012C(i) and 2012C(ii). A total of 170,000 stock options are included in each stock option class.
The subscription price for shares through the exercise of the 2012 stock options is the volume-weighted average price of the PKC Group Plc share on NASDAQ OMX Helsinki Ltd during first quarter in 2012, 2013 and 2014. The share subscription price is EUR 15.31 with the 2012A options. The subscription price for shares will be recorded in the invested non-restricted equity fund. The stock options entitle their owners to subscribe for a maximum total of 1,020,000 new shares in the company or existing shares held by the company. The share subscription period for stock options 2012A, will be 1 April 2015—30 April 2017, for stock options 2012B, 1 April 2016—30 April 2018, and for stock options 2012C, 1 April 2017—30 April 2019. The share subscription period for stock options 2012A(ii), 2012B(ii) and 2012C(ii) shall, however, not commence, unless certain operational or financial targets of the Group established for the exercise of stock options and determined by the Board of Directors have been attained. The Board of Directors shall annually decide on targets separately for each stock option class in connection with the distribution of stock options. Those stock options, for which the targets determined by the Board of Directors have not been attained, shall expire in the manner decided by the Board of Directors. The 2012 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.
SHORT-TERM RISKS AND UNCERTAINTIES
The public deficit and high indebtedness of many European countries and the United States may weaken economic growth and availability of financing for investment goods and increase uncertainty in the markets.
The resin shortage following a factory shutdown of German raw material manufacturer may cause some component availability problems and thus affect also sales, if alternative raw material or components cannot be found, and it may also have indirect effect on PKC’s sales if customers’ production is affected due to component problems.
A potential weakening of the euro against the Polish zloty and the Russian rouble as well as the potential weakening of the USD against the Mexican peso may increase PKC’s processing costs.
A significant increase in copper price may weaken PKC Group’s profit in short term. The customer prices are updated on average with 5 month delay on the basis of copper price changes.
OUTLOOK FOR THE FUTURE
PKC expects that its net sales and comparable operating profit will increase in 2012 from the previous year’s level. Net sales in 2011 amounted to EUR 550.2 million and operating profit without non-recurring items was EUR 42.6 million. Major part of net sales and profit is generated by the Wiring Systems business.
FINANCIAL REPORTS IN 2012
In 2012, the Interim Reports will be published as follows:
Interim Report 1-6/2012 Thursday, August 9, 2012 at about 8.15 a.m.
Interim Report 1-9/2012 Thursday, November 1, 2012 at about 8.15 a.m.
The text section of this release focuses on the interim report. Comparisons in accordance with IFRS standards have been made to the figures of the corresponding period in 2011, unless otherwise mentioned. The figures presented in the tables are independently rounded figures.
TABLES
The quartely figures have not been audited. This interim report has been prepared in accordance with IAS 34 (Interim Financial Reporting) standard. The interim report has been prepared in accordance with the same principles as the annual financial statements for 2011. The year 2012 IFRS standard changes have not had any effect.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000) | 1-3/12 3 mon. | 1-3/11 3 mon. | 1-12/11 12 mon. |
NET SALES | 241,967 | 96,886 | 550,208 |
Other operating income | 330 | 657 | 4,042 |
Increase (+) / decrease (-) in stocks of finished goods and work in progress | -733 | 1,664 | -1,679 |
Production for own use | 21 | 0 | 208 |
Materials and services | 147,690 | 60,220 | 332,646 |
Employee benefit expenses | 50,395 | 18,725 | 109,800 |
Depreciation | 7,360 | 2,813 | 17,531 |
Other operating expenses | 23,406 | 7,780 | 58,296 |
OPERATING PROFIT | 12,735 | 9,670 | 34,505 |
Interest expenses | -1,647 | -538 | -4,253 |
Other financial income | 47 | 247 | 599 |
Other financial expenses | -661 | 0 | -1,437 |
PROFIT BEFORE TAXES | 10,474 | 9,380 | 29,414 |
Income tax | -3,579 | -1,788 | -5,969 |
PROFIT FOR THE REPORT PERIOD | 6,895 | 7,592 | 23,445 |
Other comprehensive income: | |||
Interest derivatives | -208 | 0 | -464 |
Foreign currency translation differences - foreign operations | 3,614 | -2,739 | -1,112 |
Total comprehensive income for the period | 10,300 | 4,853 | 21,869 |
Attributable to equity holders of the parent company: | |||
Basic earnings per share (EPS), EUR | 0.33 | 0.39 | 1.18 |
Diluted earnings per share (EPS), EUR | 0.33 | 0.38 | 1.16 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000) | 3/12 | 3/11 | 12/11 |
ASSETS | |||
NON-CURRENT ASSETS | |||
Goodwill | 30,701 | 15,256 | 29,813 |
Other intangible assets | 48,774 | 8,588 | 50,099 |
Property, plant and equipment | 103,762 | 36,060 | 113,556 |
Deferred tax assets | 9,920 | 4,585 | 7,697 |
Other receivables | 22,926 | 40 | 20,207 |
Total non-current assets | 216,083 | 64,529 | 221,371 |
CURRENT ASSETS | |||
Inventories | 108,417 | 63,372 | 110,526 |
Receivables | |||
Trade receivables | 104,116 | 47,651 | 103,965 |
Other receivables | 22,861 | 17,381 | 20,490 |
Current tax assets | 2 717 | 246 | 165 |
Total receivables | 129,694 | 65,278 | 124,621 |
Cash and cash equivalents | 74,940 | 36,986 | 52,280 |
Total current assets | 313,051 | 165,636 | 287,426 |
Total assets | 529,133 | 230,165 | 508,798 |
EQUITY AND LIABILITIES | |||
EQUITY | |||
Share capital | 6,174 | 6,067 | 6,103 |
Share premium account | 10,114 | 7,291 | 8,259 |
Invested non-restricted equity fund | 34,444 | 21,840 | 35,639 |
Translation reserve | 9,671 | 842 | 6,257 |
Fair value reserve | -672 | 0 | -464 |
Share-based payments | 2,541 | 1,845 | 2,340 |
Retained earnings | 94,215 | 75,078 | 70,902 |
Profit for the report period | 6,895 | 7,592 | 23,445 |
Total equity | 163,381 | 120,555 | 152,482 |
LIABILITIES | |||
Non-current liabilities | |||
Interest-bearing liabilities | 140,925 | 24,310 | 146,789 |
Non-interest-bearing liabilities | 27,343 | 0 | 24,321 |
Provisions | 1,365 | 449 | 1,541 |
Deferred tax liabilities | 29,587 | 5,751 | 32,957 |
Total non-current liabilities | 199,220 | 30,509 | 205,608 |
Current liabilities | |||
Interest-bearing liabilities | 19,113 | 8,053 | 16,230 |
Trade payables | 101,566 | 36,007 | 90,779 |
Other non-interest-bearing liabilities | 45,853 | 35,041 | 43,700 |
Total current liabilities | 166,532 | 79,101 | 150,708 |
Total liabilities | 365,752 | 109,610 | 356,316 |
TOTAL EQUITY AND LIABILITIES | 529,133 | 230,165 | 508,798 |
CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000) | 1-3/12 3 mon. | 1-3/11 3 mon. | 1-12/11 12 mon. |
Cash flows from operating activities | |||
Cash receipts from customers | 263,345 | 96,562 | 564,533 |
Cash receipts from other operating activities | 117 | 624 | 5,357 |
Cash paid to suppliers and employees | -246,810 | -94,771 | -520,867 |
Cash flows from operations before financial income and expenses and taxes | 16,651 | 2,416 | 49,022 |
Interest paid and financial expenses | -1,644 | -449 | -3,695 |
Translation difference | 204 | 553 | 2,489 |
Interest received | 47 | 29 | 1,995 |
Income taxes paid | 10,644 | -132 | -9,822 |
Net cash from operating activities (A) | 25,903 | 2,415 | 39,990 |
Cash flows from investing activities | |||
Acquisition of property and equipment and intangible assets | -3,351 | -2,468 | -11,845 |
Proceeds from sale of property and equipment and intangible assets | 234 | 179 | 1,393 |
Acquisitions of subsidiaries | 0 | 0 | -79,565 |
Loans granted | 0 | 0 | -514 |
Proceeds from repayments of loans | 314 | 0 | 16 |
Dividends received | 0 | 0 | 301 |
Net cash used in investment activities (B) | -2,803 | -2,289 | -90,213 |
Cash flows after investments | 23,099 | 127 | -50,223 |
Cash flows from financing activities | |||
Drawing of long-term borrowings | 71 | 0 | 153,703 |
Drawing of short-term borrowings | 5,000 | 0 | 12,175 |
Share issue | 1,923 | 2,509 | 4,000 |
Repayment of short-term/long-term borrowings | -6,700 | -2,607 | -93,596 |
Dividends paid | 0 | 0 | -10,890 |
Net cash used in financing activities (C) | 295 | -98 | 65,391 |
Net increase (+) or decrease (-) in cash and equivalents (A+B+C) | 23,394 | 29 | 15,168 |
Cash and cash equivalents in the beginning of the period | 52,280 | 37,104 | 37,104 |
Effect of exchange rate fluctuations | -734 | -147 | 8 |
Cash and cash equivalents in the end of the period | 74,940 | 36,986 | 52,280 |
KEY FINANCIAL INDICATORS | 1-3/12 3 mon. | 1-3/11 3 mon. | 1-12/11 12 mon. |
Net sales, EUR 1,000 | 241,967 | 96,886 | 550,208 |
Operating profit, EUR 1,000 | 12,735 | 9,670 | 34,505 |
% of net sales | 5.3 | 10.0 | 6.3 |
Profit before taxes, EUR 1,000 | 10,474 | 9,380 | 29,414 |
% of net sales | 4.3 | 9.7 | 5.3 |
Net profit for the period, EUR 1,000 | 6,895 | 7,592 | 23,445 |
% of net sales | 2.8 | 7.8 | 4.3 |
Return on equity (ROE), % | 17.5 | 24.9 | 17.0 |
Return on investments (ROI), % | 21.2 | 28.3 | 18.9 |
Net liabilities, EUR 1,000 | 85,098 | -4,624 | 110,739 |
Gearing, % | 52.1 | -3.8 | 72.6 |
Equity ratio, % | 30.9 | 52.4 | 30.0 |
Current ratio | 1.9 | 2.1 | 1.9 |
Gross capital expenditure, EUR 1,000 | 4,759 | 2,535 | 101,532 |
% of net sales | 2.0 | 2.6 | 18.5 |
R&D expenditures, EUR 1,000 | 2,040 | 1,579 | 6,922 |
% of net sales | 0.8 | 1.6 | 1.3 |
Personnel average | 21,955 | 6,234 | 10,793 |
PER-SHARE KEY INDICATORS | 1-3/12 3 mon. | 1-3/11 3 mon. | 1-12/11 12 mon. |
Earnings per share (EPS), EUR | 0.33 | 0.39 | 1.18 |
Earnings per share (EPS),diluted, EUR | 0.33 | 0.38 | 1.16 |
Equity per share, EUR | 7.65 | 6.09 | 7.66 |
Share price at close of period, EUR | 17.19 | 15.63 | 11.48 |
Lowest share price, EUR | 11.50 | 13.90 | 8.60 |
Highest share price, EUR | 18.30 | 15.90 | 18.36 |
Average share price, EUR | 15.29 | 15.02 | 13.44 |
Turnover in shares, 1,000 shares | 3,574 | 2,885 | 11,804 |
Turnover in shares per (share issue adjusted) share capital, % | 17.2 | 14.7 | 59.6 |
Average number of shares, 1,000 shares | 20,737 | 19,591 | 19,816 |
Average number of shares, diluted, 1,000 shares | 21,054 | 19,999 | 20,127 |
Shares at end of period, 1,000 shares | 21,357 | 19,801 | 19,906 |
Unlisted shares at the end of period, 1,000 shares | 0 | 0 | 1,250 |
Market capitalisation, EUR 1,000 | 367,134 | 309,483 | 228,519 |
1. SEGMENT INFORMATION | ||||
1.1.-31.3.2012 (EUR 1,000) | Wiring Systems | Electronics | Unallocated amounts and eliminations | Group Total |
Sales to external customers | 226,620 | 15,347 | 0 | 241,967 |
Sales to other segments | 156 | 23 | -178 | 0 |
Net sales | 226,776 | 15,370 | -178 | 241,967 |
Operating profit before non-recurring items | 15,171 | -867 | -1,307 | 12,996 |
% of net sales | 6.7 | -5.7 | 5.4 | |
Non-recurring employee benefit expenses | 125 | 136 | 0 | 261 |
Total non-recurring other operating items | 125 | 136 | 0 | 261 |
Operating profit | 15,046 | -1,003 | -1,307 | 12,735 |
% of net sales | 6.6 | -6.5 | 5.3 | |
Segment's assets | 492,257 | 45,045 | -18,088 | 519,213 |
Unallocated assets *) | 9,920 | 9,920 | ||
Total assets | 492,257 | 45,045 | -8,168 | 529,133 |
*) Segment's assets do not include deferred taxes | ||||
1.1.-31.3.2011 (EUR 1,000) | Wiring Systems | Electronics | Unallocated amounts and eliminations | Group Total |
Sales to external customers | 78,174 | 18,712 | 0 | 96,886 |
Sales to other segments | 153 | 16 | -169 | 0 |
Net sales, EUR 1,000 | 78,327 | 18,728 | -169 | 96,886 |
Operating profit before non-recurring expenses | 10,103 | 443 | -876 | 9,670 |
% of net sales | 12.9 | 2.4 | 10.0 | |
Total non-recurring expenses | 0 | 0 | 0 | 0 |
Operating profit | 10,103 | 443 | -876 | 9,670 |
% of net sales | 12.9 | 2.4 | 10.0 | |
Segment's assets | 165,633 | 48,575 | 11,372 | 225,580 |
Unallocated assets *) | 4,585 | 4,585 | ||
Total assets | 165,633 | 48,575 | 15,957 | 230,165 |
*) Segment's assets do not include deferred taxes | ||||
1.1.-31.12.2011 (EUR 1,000) | Wiring Systems | Electronics | Unallocated amounts and eliminations | Group Total |
Sales to external customers | 477,212 | 72,995 | 0 | 550,208 |
Sales to other segments | 755 | 132 | -887 | 0 |
Net sales | 477,967 | 73,127 | -887 | 550,208 |
Operating profit before non-recurring items | 42,467 | 2,825 | -3,326 | 41,967 |
% of net sales | 8.9 | 3.9 | 7.6 | |
Donations to the universities | 0 | 150 | 0 | 150 |
Advisor fees | 7,100 | 0 | 0 | 7,100 |
Cancellation of the write-down of inventories | -317 | 0 | 0 | -317 |
Non-recurring employee benefit expenses | 218 | 310 | 0 | 528 |
Total non-recurring other operating items | 7,001 | 460 | 0 | 7,461 |
Operating profit | 35,466 | 2,365 | -3,326 | 34,505 |
% of net sales | 7.4 | 3.2 | 6.3 | |
Segment's assets | 483,593 | 48,910 | -31,402 | 501,101 |
Unallocated assets *) | 7,697 | 7,697 | ||
Total assets | 483,593 | 48,910 | -23,706 | 508,798 |
*) Segment's assets do not include deferred taxes |
NET SALES BY GEOGRAPHICAL LOCATIONS (EUR 1,000) | 1-3/12 3 mon. | 1-3/11 3 mon. | 1-12/11 12 mon. |
Finland | 12,991 | 15,586 | 62,521 |
Other Europe | 58,047 | 54,825 | 236,006 |
North America | 148,043 | 6,370 | 157,458 |
South America | 18,358 | 15,782 | 73,514 |
Other countries | 4,529 | 4,322 | 20,708 |
Total | 241,967 | 96,886 | 550,208 |
2. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR MILLION) | |||||||
A = Share Capital | |||||||
B = Share premium account | |||||||
C = Invested non-restricted equity fund | |||||||
D = Fair value reserve | |||||||
E = Translation difference | |||||||
F = Retained earnings | |||||||
G = Total equity | |||||||
A | B | C | D | E | F | G | |
Equity at 1.1.2011 | 6.0 | 4.9 | 21.8 | 0.0 | 7.6 | 83.5 | 123.7 |
Dividends | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -10.7 | -10.7 |
Share-based payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 0.2 |
Subscription of shares | 0.1 | 2.4 | 0.0 | 0.0 | 0.0 | 0.0 | 2.5 |
Comprehensive income for the period | 0.0 | 0.0 | 0.0 | 0.0 | -2.7 | 7.6 | 4.9 |
Other changes | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -0.1 | -0.1 |
Equity at 31.3.2011 | 6.1 | 7.3 | 21.8 | 0.0 | 4.9 | 80.5 | 120.6 |
Equity at 1.1.2012 | 6.1 | 8.3 | 35.6 | -0.5 | 6.3 | 96.7 | 152.5 |
Share-based payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 0.2 |
Share issue, exercise of options | 0.1 | 1.8 | 0.0 | 0.0 | 0.0 | 0.0 | 1.9 |
Comprehensive income for the period | 0.0 | 0.0 | 0.3 | -0.2 | 3.3 | 6.9 | 10.3 |
Other changes | 0.0 | 0.0 | -1.5 | 0.0 | 0.0 | 0.0 | -1.5 |
Equity 31.3.2012 | 6.2 | 10.1 | 34.4 | -0.7 | 9.6 | 103.8 | 163.4 |
3. PROPERTY, PLANT AND EQUIPMENT (EUR 1,000) | 3/12 | 3/11 |
Acquisition cost 1.1. | 141,551 | 76,270 |
+ Additions | 4,045 | 2,241 |
- Disposals | -452 | -331 |
Acquisition cost 31.3. | 145,144 | 78,180 |
Accumulated depreciation 1.1. | 35,182 | 40,378 |
- Accumulated depreciation on disposals | -166 | -174 |
+ Depreciation | 6,550 | 1,893 |
+/- Exchange difference | -184 | 10 |
Depreciation 31.3. | 41,382 | 42,107 |
Carrying amount 31.3. | 103,762 | 36,073 |
4. OTHER INTANGIBLE ASSETS (EUR 1,000) | 3/12 | 3/11 |
Acquisition cost 1.1. | 104,828 | 39,208 |
+ Additions | 714 | 294 |
+/- Other changes | 888 | 0 |
Acquisition cost 31.3. | 106,430 | 39,502 |
Accumulated depreciation 1.1. | 25,539 | 14,763 |
- Accumulated depreciation on disposals | 422 | 0 |
+ Depreciation | 1,024 | 891 |
+/- Exchange difference | -30 | 5 |
Depreciation 31.3. | 26,955 | 15,659 |
Carrying amount 31.3. | 79,475 | 23,843 |
5. CONTINGENT LIABILITIES AT END OF PERIOD (EUR 1,000) | 3/12 | 3/11 | 12/11 | |
Leasing liabilities | 1,741 | 2,715 | 1,898 | |
Liabilities for derivative instruments | ||||
Nominal values | ||||
Interest rate swaps | 41,341 | 0 | 45,974 | |
Currency derivatives | ||||
Forward contracts | 14,806 | 355 | 5,944 | |
Copper derivatives | ||||
Forward contracts | 2,784 | 2,477 | 2,450 | |
Total | 58,931 | 2,833 | 54,367 | |
Fair values | ||||
Interest rate swaps | -694 | 0 | -480 | |
Currency derivatives | ||||
Forward contracts | 169 | -3 | -64 | |
Copper derivatives | ||||
Forward contracts | 69 | -155 | 188 | |
Total | -456 | -158 | -356 | |
Currency and copper derivatives are used only in hedging currency and copper risks. PKC Group does not apply hedge accounting to currency and copper derivative instruments in accordance with IAS 39. Fair values of currency and copper derivatives are recognised through profit and loss. PKC Group applies hedge accounting to interest rate swaps. |
6. QUARTERLY KEY INDICATORS, CONSOLIDATED | 10-12/10 3 mon. | 1-3/10 3 mon. | 4-6/11 3 mon. | 7-9/11 3 mon. | 10-12/11 3 mon. | 1-3/12 3 mon. |
Net sales, EUR million | 91.9 | 96.9 | 109.3 | 102.0 | 242.0 | 242.0 |
Operating profit, EUR million | 9.8 | 9.7 | 7.1 | 9.0 | 8.8 | 12.7 |
% of net sales | 10.6 | 10.0 | 6.5 | 8.8 | 3.6 | 5.3 |
Profit before taxes, EUR million | 6.6 | 9.4 | 7.7 | 4.6 | 7.7 | 10.5 |
% of net sales | 7.2 | 9.7 | 7.0 | 4.5 | 3.2 | 4.3 |
Equity ratio, % | 56.5 | 52.4 | 54.3 | 36.1 | 30.0 | 30.9 |
Earnings per share (EPS), diluted (EUR) | 0.29 | 0.38 | 0.31 | 0.19 | 0.29 | 0.33 |
Equity per share, EUR | 6.33 | 6.09 | 6.38 | 6.44 | 7.66 | 7.65 |
QUARTERLY KEY INDICATORS, WIRING SYSTEMS | ||||||
Net sales, EUR million | 70.8 | 78.2 | 90.2 | 84.3 | 224.5 | 226.6 |
Operating profit, EUR million | 8.7 | 10.1 | 9.6 | 7.1 | 8.7 | 15.0 |
% of net sales | 12.3 | 12.9 | 10.6 | 8.4 | 3.9 | 6.6 |
QUARTERLY KEY INDICATORS, ELECTRONICS | ||||||
Net sales, EUR million | 21.1 | 18.7 | 19.1 | 17.7 | 17.5 | 15.3 |
Operating profit, EUR million | 2.0 | 0.4 | 0.4 | 1.7 | -0.2 | -1.0 |
% of net sales | 9.6 | 2.4 | 2.1 | 9.8 | -1.2 | -6.5 |
CALCULATION OF INDICATORS
Return on equity (ROE), %
= 100 x Profit for the report period / Total equity (average)
Return on investments (ROI), %
= 100 x (Profit before taxes + financial expenses) / (Total equity + interest-bearing liabilities (average))
Gearing, %
= 100 x (Interest-bearing liabilities – cash and cash equivalents) / Total equity
Equity ratio, %
= 100 x Total equity / (Total of the statement of financial position – advance payments received)
Current ratio
= Total current assets / Total current liabilities
Earnings per share (EPS), EUR
= Profit for the report period attributable to equity holders of the parent company / Average share issue-adjusted number of shares
Shareholders’ equity per share, EUR
= Equity attributable to equity holders of the parent company / Share issue-adjusted number of shares at the date of the statement of financial position
Market capitalisation
= Number of shares at the end of the report period x the last trading price of the report period
All the future estimates and forecasts presented in this stock exchange release are based on the best current knowledge of the company’s management and information published by market research companies and customers. The estimates and forecasts contain certain elements of risk and uncertainty which, if they materialise, may lead to results that differ from present estimates. The main factors of uncertainty are related, among other things, to the general economic situation, the trend in the operating environment and the sector as well as the success of the Group’s strategy.
PKC GROUP PLC
Board of Directors
Matti Hyytiäinen
President and CEO
For additional information, contact:
Matti Hyytiäinen, President & CEO, PKC Group Plc, +358 400 710 968
PRESS CONFERENCE
A press conference on the interim report will be arranged for analysts and investors today, 4 May 2012, at 10.00 a.m., at the address World Trade Center, Aleksanterinkatu 17, meeting room 2, 2nd floor, Helsinki.
DISTRIBUTION
NASDAQ OMX
Main media
The PKC Group offers design and contract manufacturing services for wiring systems and electronics. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Ireland, Mexico, Poland, Russia, Ukraine and the USA. The Group's net sales in 2011 totalled EUR 550.2 million. PKC Group Plc is listed on NASDAQ OMX Helsinki Ltd.