Investment in growth continues despite challenging market situation - Dovre Group Plc Interim Report January 1 - June 30 2014

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| Source: Dovre Group Oyj
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Helsinki, Finland, 2014-07-24 07:45 CEST (GLOBE NEWSWIRE) -- Dovre Group Plc     Interim report    July 24, 2014 at 8.45 a.m.  

 

INVESTMENT IN GROWTH CONTINUES DESPITE CHALLENGING MARKET SITUATION - DOVRE GROUP INTERIM REPORT JANUARY 1 – JUNE 30, 2014

April - June 2014
-
Net sales EUR 24.1 (25.3) million; change in net sales -4.7%, net sales growth in local currencies 3%
- Project Personnel: net sales EUR 22.2 (23.0) million; change -3%
- Consulting: net sales EUR 1.9 (2.3) million; change -18%
- Operating result EUR 0.0 (0.8) million; change -96%, change in local currencies -90%
- Result for the period EUR -0.3 (0.4) million
- Result for the period incl. discontinued operations EUR -0.3 (4.6) million
- Earnings per share (excl. discontinued operations) EUR 0.00 (0.01)
- Net cash flow from operating activities EUR 0.1 (-0.6) million
- Net cash flow from operating activities incl. discontinued operations EUR 0.1 (-0.8) million

January - June 2014

- Net sales EUR 48.8 (49.7) million; change in net sales -1.7%, growth in local currencies 8%
- Project Personnel: net sales EUR 45.2 (45.2) million
- Consulting: net sales EUR 3.7 (4.4) million; change -17%
- Operating result EUR 0.3 (1.1) million, which is 0.7 (2.3) % of net sales; change -71%, change in local currencies -53 %
- Result for the period EUR -0.2 (0.5) million
- Result for the period incl. discontinued operations EUR -0.2 (4.8) million
- Earnings per share (excl. discontinued operations) EUR 0.00 (0.01)
- Net cash flow from operating activities EUR -1.2 (-0.2) million
- Net cash flow from operating activities incl. discontinued operations EUR -1.2 (-0.7) million
- Guidance for 2014: In 2014, Dovre Group Plc’s net sales will be EUR 95-105 million and operating result EUR 1.0-2.0 million.

(Unless otherwise stated, last year’s corresponding period in parentheses.)


KEY FIGURES

 
EUR million
4-6
2014
4-6 2013 Change % 1-6
2014
1-6
2013
Change
%
1-12
2013
               
Net sales 24.1 25.3 -4.7 48.8 49.7 -1.7 98.5
Operating result 0.0 0.8 -96.2 0.3 1.1 -71.0 2.4
% of net sales 0.0 3.3   0.7 2.3   2.4
Result for the period -0.3 0.4 -161.4 -0.2 0.5 -135.4 1.2
% of net sales -1.1 1.7   -0.3 1.0   1.2
Result for the period incl. discontinued operations -0.3 4.6 -105.7 -0.2 4.8 -103.5 5.6
% of net sales -1.1 18.3   -0,3 9.7   5.5
Net cash flow from operations 0.1 -0.6 -109.0 -1.2 -0.2 -318.2 3.7
Net cash flow from operations incl. discontinued operations 0.1 -0.8 -106.7 -1.2 -0.7 88.8 3.2
Change in cash and cash equivalents, incl. discontinued operations -4.4 2.5 -264.1 -6.1 2.6 -310.5 4.4
Debt-equity ratio (Gearing), % -31.4 -41.8 -25.0 -31.4 -41.8 -25.0 -50.0
Earnings per share, EUR (excl. discontinued operations):              
  Basic 0.00 0.01   0.00 0.01   0.02
  Diluted 0.00 0.01   0.00 0.01   0.02

  
PATRICK VON ESSEN, CEO:

“Dovre Group’s growth in local currencies continues, but lower profit margins in Norway, strong investment in growth, and a number of extraordinary items in the second quarter affected the Group’s profitability.

In January – June 2014 the Group’s net sales were EUR 48.8 million. Net sales decreased in euros by approx. 2%, but grew in local currencies by almost 8%. Operating result was EUR 0.3 million, which is 0.7% of net sales, compared to EUR 1.1 million, or 2.3% of net sales, in the first half of the year 2013.


In the second quarter, the Group’s net sales were EUR 24.1 million. Net sales decreased in euros by approx. 5% from April-June 2013. Net sales grew in local currencies. Operating result was EUR 0.01 million. Operating result excluding non-recurring items was EUR 0.11 million.

In the second quarter, our operating resulting affected primarily by the market situation in our most important market area, Norway, where several clients have suspended, rescheduled, or cut back investments. According to our estimations, however, Dovre’s market share in Norway has increased, although our profitability has suffered. We have also reason to believe that the drop in market demand is temporary. In Canada, which is our second most important market area, market demand has remained stable, but the ending of a long-term project in the beginning of the year affected our net sales and operating result.

We continue investing in future growth in accordance with the Group’s strategy. Our main investments are targeted at strengthening both the Dovre Club service platform and our international sales functions. Investment in growth reduces profitability in the short-term, but I believe that developing Dovre Club further as well as strengthening our sales organization lead to net sales growth and improve profitability over the next 12 months.

In the Consulting business area, the first half of the year did not go as expected. However, order volumes in Norway, Finland, and Sweden have grown, and we expect both our net sales and profitability to improve towards the end of the year. In future, we will be focusing more clearly on project management, and decided, during the period under review, to withdraw from biorenewables consulting.

One of the most important events during the period under review was the signing of a five-year frame agreement with BP Norge AS. The frame agreement covers the delivery of project personnel for BP Norge’s projects. It also includes an option for a four-year extension. Also on a positive note, our associate SaraRasa Bioindo, which operates in Indonesia, secured in June an agreement for a delivery of pellets to an Asian client. This agreement is the first major sales agreement entered into by SaraRasa and it was signed following rigorous quality tests by the client. After the end of the period, we signed another important frame agreement in the Project Personnel business area, this time with Aramco Overseas Company, a subsidiary of Saudi Aramco.”

FUTURE OUTLOOK

Dovre Group Plc is an international company providing professional services to the energy industry. Dovre Group has two business areas: Project Personnel and Consulting. The Group’s strategic aim is to become the most advanced international player in its field. The company's long-term financial objective is an operating profit margin on the level of 5-10% with an average annual net sales growth of more than 15%.

General economic insecurity has not significantly affected investment levels among Project Personnel business area’s customers, but clients have become more cautious and lead times in certain markets are longer than previously. Dovre Group expects demand for the business area’s services to remain stable.

In the beginning of the year, the Group’s consulting business was affected by suspension of projects due to clients’ increased cautiousness, but volume of orders is growing in Norway, Finland, and Sweden. The Group expects increase in customer demand in the second half of 2014.

The Board of Directors has adjusted the Group’s guidance for 2014. The new guidance was released on July 21, 2014: In 2014, Dovre Group Plc’s net sales will be EUR 95-105 million and operating result EUR 1.0-2.0 million. Previous guidance, released on April 21, 2014: In 2014, net sales are expected to grow and operating result to improve in local currencies from 2013.

In 2013, Dovre Group’s net sales were EUR 98.5 million and operating result EUR 2.4 million. In 2014, operating result in euros is expected to decrease from the previous year. This is mainly due to a rapid weakening of the Norwegian market in the beginning of this year, lower margins in Canada compared to the previous year, strategic investment in future growth – especially in the development of Dovre Club -service platform and sales team – as well as currency changes and non-recurring items.


The Group expects increased investments to improve net sales and operating profit during the next 12 months. In the second half of 2014, net sales and operating result are expected to grow from the first half.

 

Helsinki, July 23, 2014

Dovre Group PLC

BOARD OF DIRECTORS

 

For additional information, please contact:
Dovre Group Plc
Patrick von Essen, CEO
Tarja Leikas, CFO
tel. +358-20-436 2000
email: firstname.surname@dovregroup.com
www.dovregroup.com

  

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