NEO INDUSTRIAL PLC INTERIM REPORT 31 July 2014 at 2.00 pm
NEO INDUSTRIAL PLC’S INTERIM REPORT FOR JANUARY–JUNE 2014
Operating result turned positive and net cash provided by operating activities improved.
January-June
- The Neo Industrial Group´s turnover was EUR 42.0 million (45.5 million)
- Its operating result was EUR 0.6 million (-0.7 million). Operating result of January-June 2013 include one-time gain of EUR 0.4 million of the sale of the Group´s operations in Russia.
- The Cable segment´s operating result was EUR 1.3 million (0.3 million).
- The Group´s result for the period was EUR -0.6 million (0.2 million).
MANAGING DIRECTOR JARI SALO:
During the review period the volumes in Cable segment's main markets in the Nordic countries were slightly increased compared to the corresponding period of the previous year. However the Cable segment´s turnover for the first half of 2014 was lower than for the corresponding period of the previous year. The decrease is mainly due Russia and the Baltic countries, where the sales volumes have been lower than previous year. The comparable figures 2013 include EUR 2.8 million turnover of the Russian cable manufacturing companies sold in spring 2013. Taken that into the consideration the decrease of turnover was EUR 0.7 million.
The Cable segment´s operating result improved by EUR 1.0 million to the comparable figures 2013 and the Neo Industrial Group´s operating result turned positive. The improvement of result was due to favourable product sortiment, assertion of production and gained cost savings.
During the review period the financial income was EUR 1.3 million smaller than during the corresponding period last year. During January - June 2013 the financial income consisted mainly of valuation of open hedges. In addition to that there was deferred tax income during the corresponding period last year. The result for the period was EUR -0.6 million (0.2).
Cable segment has strong seasonal fluctuations. The high season is during spring, summer and autumn months. During the high season the usage of factoring financing and seasonal funding is at highest and also the stock levels are in the high level. Equity ratio June 30 2014 was lower than 31 December 2013 and 30 June 2013 showing the capital employed impact of high season and the effect of the result for the period.
The financial negotiations of the Cable segment were finalised and new financing agreement was signed in the beginning of the year. With this arrangement the Cable segment replaced previous short term loans with long term loans and at the same time enabled a working capital increase with EUR 2 million. The arrangement supports positively the Cables operations in the market place. However, the liquidity and funding are still paid special attention by the Group and Neo Industrial actively negotiates financing and payment terms.
KEY FIGURES
| 1-6/2014 | 1-6/2013 | 1-12/2013 | |
| Turnover (EUR million) | 42.0 | 45.5 | 83.0 |
| Operating result (EUR million) | 0.6 | -0.7 | -1.0 |
| Result for the period (EUR million) | -0.6 | 0.2 | -1.2 |
| Earnings per share, EUR | -0.11 | 0.04 | -0.20 |
| Return on investment, (ROI) | 2.2 % | 2.1 % | 1.7 % |
| Equity ratio | 11.0 % | 13.8 % | 15.8 % |
RISKS AND UNCERTAINTY FACTORS
Neo Industrial’s financial risks include currency, interest rate, commodity, liquidity, credit and investment market risks. Financial risks and the related protection measures are described in more detail in the notes to the latest financial statements. The company’s future risk factors are related to the business development of its portfolio companies. The uncertainty of the global economy and financial market poses a risk to the financial arrangements of the Group.
Neo Industrial’s liquidity situation is tight. To assure liquidity, company intensifies the working capital management and negotiates adjustments to payment terms and agreements.
In the Cable segment, the most significant risks are related to market development, fluctuations of raw material prices and currencies as well as working capital management in various situations. During considerable seasonal changes, suppliers’ terms of payment effect significantly on the ability to ensure competitive delivery times through sufficient inventories.
NEAR-TERM OUTLOOK
The Cable segment weakened during 2013. On the horizon, construction is not picking up in Finland or in Sweden yet, but at least some delayed projects are believed to materialize in 2014. Additionally, grid companies have increased their ground cabling projects to ensure better distribution reliability. It is expected that the turnover of the Cable segment increase from 2013 and that the operating result is positive.
The company will continue to pay special attention to liquidity and funding for growth. In addition to negotiations on financing and payment terms, the measures for boosting inventory turnover and freeing up capital assets are taken into action.
DISCLOSURE POLICY OF INTERIM REPORT
Neo Industrial discloses relevant information related to its Interim Report with this Stock Exchange Release. The entire Interim Report for January-June 2014 is attached to this release and is also available on company's website at www.neoindustrial.fi.
Hyvinkää, 31 July 2014
Neo Industrial Plc
Board of Directors
Further information:
Jari Salo, Managing Director, tel. +358 20 720 9196
Sari Tulander, CFO, tel. +358 20 720 9192
All comments in this report that do not refer to actual facts are future estimates. Such estimates include expectations concerning market trends, growth and profitability as well as statements including the words "believe", "assume" or "will be" or a similar expression. Since thses estimates are based on current plans and estimates, they involve risks and uncertainty factors that may cause the actual results to differ substantially from current statements.
Among other things, such factors include 1) operating conditions, such as continued success in production and the ensuing efficiency benefits, availability and cost of production inputs, demand for new products and changes in circumstances affecting the acquisition of capital under acceptable conditions; 2) sector-specific circumstances, such as the intensity of demand for products, the competition, current and future market prices for the Group´s products and related pricing pressures, the financial situation of the Group´s customers and competitors and competitors´ possible new products; and 3) the general economic situation, such as economic growth in the Group´s main market areas and change in exchange rates and interest rates.
Neo Industrial's strategy is to invest mainly in industrial companies with similar synergic benefits. The aim of investments is with active ownership to develop the purchased companies and establish additional value. Returns are sought through both dividend flow and an increase in value. Neo Industrial's class B shares are listed on the NASDAQ OMX Helsinki Stock Exchange. Neo Industrial's business segment is Cable Industry.
ENCL: Neo Industrial's Interim Report for January-June 2014
