MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2014

MARTELA CORPORATION        FINANCIAL STATEMENTS RELEASE    4 February 2015 at 8.30 a.m.


MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2014

Consolidated revenue increased slightly, the result improved significantly and the operating result was slightly positive.

Key figures:

The Martela Group anticipates that its revenue in 2015 will remain at the previous year’s level and that its operating result will show a slight year-on-year improvement. The Group’s operating result is weighted towards the second half of the year due to normal seasonal variation, and this weighting was further emphasised by the timing of larger projects during 2015.

Market

The demand for office furniture in Finland and Sweden continued to be weak and there are still no signs of a clear improvement. Demand in Finland and Sweden is still largely focused on office alteration and enhancement projects of different kinds rather than new offices. In spite of the weak market conditions, the activity-based office model, which is well suited to office alteration and enhancement projects, has aroused plenty of interest in customers in Sweden, Norway, Finland and Russia. Customers who choose the activity-based office model and the Martela Lifecycle model to modify and enhance their offices can make considerable savings in their premises costs, but at the same time they are also able to improve their employees’ job satisfaction and efficiency. The Polish market weakened during the second half of the year and this situation has continued. The instability in the Russian economy continued in the second half of the year and this has led to reduced activity in the property market.

Finnish office construction statistics are examined for the first nine months 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 weakness of the general market conditions, the increase in the number of building starts can be regarded as a mildly positive sign. Nonetheless, in terms of square metres, the values remain very low. However, the demand for Martela products is affected by many other factors too, 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. 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, cupboards and cabinets. However, the demand for products and solutions for all kinds of meeting spaces and lobbies is on the increase.

Consolidated revenue and result

The Group’s fourth-quarter revenue performance in all market areas reflected the weak market conditions. Fourth quarter revenue was EUR 31.2 million (36.9), a decrease of 15.2 per cent from the previous year. Consolidated revenue for the full year 2014 was EUR 135.9 million (132.3), an increase of 2.7 per cent on the previous year. Revenue in Finland declined significantly, both in the fourth quarter and cumulatively, as a consequence of the weak market conditions. In Poland, by contrast, slight growth was achieved during the review period measured in the local currency. In Sweden revenue declined in the fourth quarter, but, by contrast, revenue for the full year increased considerably as a consequence of the major customer deliveries in the first half of the year. Revenue and result grew significantly in Russia which is reported in the Group in the other segment. But in the latter half of the year, the turmoil on the Russian market and the impact on the rouble reduced market demand during the last part of the year.

Business Unit Finland’s revenue was down by 5.2 per cent. Business Unit Sweden & Norway’s revenue was up by 21.7 per cent, and Business Unit Poland’s by 4.9 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 -1.1 million (-0.6). The cumulative full-year operating result increased considerably and was EUR 0.2 million (-3.1), which was 0.1 per cent (-2.4) of revenue.

The Group’s full year revenue grew and fixed costs fell from the previous year, as anticipated, due to the adjustment measures taken. The sales margin on the Group’s products for the review period was unchanged from the previous year. The combined effect of these factors resulted in a clear 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 proceeded according to plan. As part of the savings programme, the company held codetermination negotiations during the latter part of 2013. Following the outcome of the negotiations, the Group’s cost level was reduced by costs equivalent to 35 employees during 2014. The Group’s delivery chain costs were considerably reduced with various production boosting measures 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 proceeded according to plan, and most of these were completed by the end of the year. These measures have created a distinct role for each of Martela’s production units and ensure a more flexible and efficient service for customers. Several more minor measures were also implemented during the review period, which will affect the efficiency of service production and the Group’s fixed costs. The measures taken 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 total costs in 2014 was equivalent to about one third of the total savings target. The full saving in costs, which will be felt as a reduction in the Group’s delivery chain costs and fixed costs, will be achieved during 2015.

Demand for activity-based office solutions continued to increase considerably during the review period, so Martela will continue to focus on providing even higher quality comprehensive solutions and associated services in the field of activity-based working. Launched in the review period, the Martela Lifecycle model offers customers a comprehensive solution that covers everything from planning to recycling. The model can help to reduce customers’ premises costs while also increasing employees’ job satisfaction and efficiency at customer companies. The Group’s aim is to further strengthen its pioneering position as a supplier of comprehensive solutions and as a leading service provider for offices and other working environments.

The result before taxes was EUR -0.6 million (-4.6), and the result after taxes was EUR -0.7 million (-4.2).

Martela’s full financial statements 2014 is included in PDF format as an attachment to this release. The financial statements 2014 is also available on the company’s website at www.martela.com.

 

Martela Oyj
Board of Directors
Heikki Martela
CEO


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.fi