MARTELA CORPORATION INTERIM REPORT, 1 January – 30 September 2014

MARTELA CORPORATION      INTERIM REPORT     28 October 2014, 8.30 a.m.

MARTELA CORPORATION INTERIM REPORT, 1 January–30 September 2014

Group’s January-September revenue up and operating result positive  

Key figures:

The Martela Group anticipates that its revenue and operating result for 2014 will show an improvement on the previous year’s figures.

Market

The demand for office furniture in Finland and Sweden continued to be weak. Demand in Finland and Sweden is still largely focused on office alteration and enhancement projects of different kinds rather than new offices. Despite the weakness in the market, the activity based office concept, which is well-suited for alteration and enhancement projects, has attracted considerable interest among customers in Sweden, Norway, Finland and Russia. When implementing the activity based office model at its premises, the customer can achieve substantial savings in premises costs while also improving its employees’ job satisfaction and productivity. A weakening has been discernible in the Polish market during the third quarter. Property market activity has slowed down recently also in Russia. The prevailing weak market conditions cause uncertainty about the Group’s fourth-quarter performance.

Statistics on office construction in Finland are available for the first half of 2014. These statistics are presented below on the basis of a 12-month rolling average:

* Change in the 12-month rolling average between the dates is compared.

Martela has used the above office construction statistics as a key indicator when assessing overall market developments. Despite the weak general market conditions, the increase in the number of commenced buildings can be regarded as a mildly positive sign. However, in terms of square metres, the values remain at quite a low level, although the change in percentage terms is large. However, it should be remembered that there are also many other factors that affect the demand for Martela products, such as overall economic growth and the need for companies to use their premises more efficiently. The need to boost efficiency increases the number of office alteration projects, which in turn generates demand especially for Martela’s activity based office model. However, these projects also result in companies allocating fewer square metres of space for each employee, which means that they purchase fewer pieces of traditional office furniture, such as desks and cabinets. On the other hand, the demand for products and solutions for all kinds of meeting spaces and lobbies is on the increase.

Consolidated revenue and result

Consolidated revenue for the third quarter was EUR 36.5 million (34.3), an increase of 6.5 per cent on the previous year. Consolidated revenue for January-September was EUR 104.7 million (95.4), an increase of 9.7 per cent on the previous year. In Finland, revenue in the third quarter and during the first nine months was down year on year. There were no significant large customer projects in the review period in Finland, and revenue was largely from small and medium-sized deliveries. Revenue in Poland increased in the third quarter, but in January-September it was at the level of the previous year. By contrast, there were major customer deliveries in Sweden and Norway during the review period and, as a result, the revenue of the Business Unit in these countries grew substantially from the previous year. The most significant deliveries in Sweden and Norway were made in the first quarter, but revenue grew substantially on the previous year also in the third quarter. In Russia, revenue continued to grow on the previous year, but the weakening economic situation of the Russian market may cause a future weakening in the Group’s demand from Russia. Major customer deliveries in Sweden and Norway and the significant increase in Business Unit International’s revenue were the main reasons for the substantial increase in consolidated revenue during the review period.

The consolidated operating result for the third quarter was EUR 2.2 million (1.5). The operating result for January-September improved substantially and was EUR 1.2 million (‑2.5). The Group’s fixed costs decreased slightly from the previous year, as anticipated, due to the adjustment measures taken in 2013. The January-September sales margin on the Group’s products was unchanged from the previous year. The combined effect of these factors and the increase in revenue was a year-on-year improvement in Martela’s consolidated operating result.

The EUR 6 million savings programme launched in the Group in the autumn of 2013 has proceeded according to plan, and the measures taken so far or in progress are expected to achieve the targeted annual savings of EUR 6 million. It is estimated that due to the timing of the measures the programme’s impact on costs in 2014 will be equivalent to about one third of the total savings target. The full impact of the savings will be felt in 2015.

As part of the savings programme, measures aiming to increase the efficiency of production were implemented in the Group during the review period. Production transfers between the Group’s units located in Nummela and Riihimäki in Finland, in Warsaw, Poland, and in Bodafors, Sweden have proceeded according to plan, and most of these will be completed by the end of the year. These measures will create a distinct role for each of Martela’s production units and ensure a more flexible and efficient service for customers.

Demand for activity based office solutions strengthened further. Martela will thus continue to focus on providing ever higher quality comprehensive solutions and associated services in the field of activity based working. With its activity based office solutions Martela can reduce its customers’ property costs while increasing the job satisfaction and productivity of these customers’ employees. 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 Group’s profit before taxes for January-September was EUR 0.7 million (-3.3), and the profit after taxes was EUR 0.4 million (-3.1).

Martela’s full interim report for January-September 2014 is included in PDF format as an attachment to this release. The interim report is also available on the company’s website at www.martela.com.

Martela Oyj
Board of Directors
Heikki Martela
CEO


ATTACHEMENT: Martela’s interim report January - September 2014

For more information, please contact
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