MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2013

MARTELA CORPORATION         FINANCIAL STATEMENTS RELEASE       4 February 2014 at 8.30 a.m.


MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2013

Consolidated revenue down, operating result lower than previous year

Key figures:

The Martela Group anticipates that its revenue in 2014 will be at the 2013 level, and that its operating result will show a year-on-year improvement. Due to normal seasonal variation, the Group’s operating result is weighted towards the second half of the year.

Market

The demand for office furniture in Finland continued to be weak in the second half of the year. Demand in Finland is currently focused largely on office alteration and enhancement projects of different kinds instead of new offices. In Sweden, too, the market weakened towards the end of the year. By contrast, the Polish market remained at a normal level.

Statistics on office construction are available for the first three quarters of 2013, and they indicate that 61 per cent fewer office buildings were completed in Finland in terms of square metres in the first nine months than in the same period a year earlier. In the same period, however, 49 per cent fewer office building permits were granted, and there were about 66 per cent fewer new office building starts than the previous year. Office construction activity continued to be at a low level, but it is significant that the number of building permits granted in the third quarter was 35 per cent more than in the same quarter a year earlier. But as this concerns such a short period it is not yet possible to draw any far reaching conclusions from it.

Consolidated revenue and result

Consolidated revenue for the fourth quarter was EUR 36.9 million (40.8), a decrease of 9.7 per cent on the previous year. Consolidated revenue for the full year 2013 was EUR 132.3 million (142.7), a decrease of 7.3 per cent on the previous year. The difficult market conditions in Finland were reflected in the unit’s revenue. Revenue decreased in Finland and also in Poland, both cumulatively and in the final quarter of the year. By contrast, full-year revenue in Sweden was at the previous year’s level, although revenue in the fourth quarter showed a year-on-year decrease. In other markets, the transfer of the Danish business at the end of 2012 from the Martela subsidiary to a dealer slightly reduced (2.2%) consolidated revenue for the review period. Revenue in Russia grew once again, but is still relatively low compared with the Group’s overall revenue.

Business Unit Finland’s revenue was down by 5.9 per cent. Business Unit Sweden & Norway’s revenue was down by 1.2 per cent, and Business Unit Poland’s by 6.8 per cent, calculated in local currencies. Movements in exchange rates did not have a significant impact on the Group’s revenue.

The operating result for the fourth quarter declined and was EUR -0.4 million (0.3). The cumulative full-year operating result was EUR -2.9 million (-0.9), which was -2.2 per cent (-0.6) of revenue. The consolidated third quarter operating result was boosted by EUR 0.9 million from the sale of a residential property in Nummela. Despite a reduction in the Group’s costs, the full-year operating result was down from the previous year due to a clear drop in revenue. Nevertheless, the sales margin stabilised in the fourth quarter of the year, having been falling during the previous quarters.

The Group’s fixed costs gradually fell during the year as a result of the measures already taken. In the third quarter, the Group began to plan further measures to reduce its costs, targeting an annual cost saving of about EUR 6 million. The savings programme will be implemented by the end of 2014, after which the full impact of the savings will be felt. It is estimated that due to the timing of the measures the cost reduction impact of the savings programme in 2014 will be equivalent to about one third of the total savings target. The measures being put in place allow the Group to adjust its cost structure to correspond to the changed operating environment.

As part of the savings programme, the company began codetermination negotiations in Finland in August, and these were completed at the start of October. The outcome of the negotiations was that the Group’s cost level will be reduced by costs equivalent to 35 employees by the end of 2014. In January 2014, the Group began codetermination negotiations aimed at improving production efficiency. This improvement will be sought by production transfers between the Group’s units located in Nummela and Riihimäki in Finland, and in Warsaw, Poland. It is estimated that the measures implemented and under way will account for approximately EUR 3.5 million annually of the total savings programme. Preparation of further measures to achieve the targeted savings is continuing.

As previously stated, the Group will nevertheless be investing resources at the same time in improving its ability to offer even better comprehensive solutions and services, especially to meet the growing customer need for Activity-Based Office solutions. The Group’s aim is to strengthen its pioneering position as a supplier of comprehensive solutions and as the leading service provider for offices and other working environments.

The result before taxes was EUR -4.4 million (-1.8), and the result after taxes was EUR -3.9 million (-2.0). The result for the review period was adversely affected by the EUR 0.6 million recognised in financial expenses as a provision for the realisation of the loan guarantee given to Martela’s associated company P.O. Korhonen Oy.

Martela’s full financial statements 2013 is included in PDF format as an attachment to this release. The financial statements 2013 is also available on the company’s website at www.martela.com.


Martela Oyj
Board of Directors
Heikki Martela
CEO


Additional information
Heikki Martela, CEO, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606


Distribution
NASDAQ OMX Nordic
Main News Media
www.martela.com