PKC Group Plc Interim Report 6 May 2015 8.15 a.m.
PKC Group Q1/2015:
Profitability improved significantly, strategy execution proceeding
This release is a summary of PKC Group’s Interim Report January-March 2015. The complete report is attached to this release as a pdf-file. It is also available on the company website at www.pkcgroup.com.
January - March 2015 highlights
- Revenue increased 11.0% on the comparison period (1-3/2014), totalling EUR 226.5 million (EUR 204.1 million). The changes in consolidation exchange rates increased the revenue by approximately +12%.
- EBITDA before non-recurring items increased 41.7% on the comparison period (1-3/2014), totalling EUR 16.7 million (EUR 11.8 million) and 7.4% (5.8%) of revenue.
- Operating profit before non-recurring items increased 71.8% on the comparison period (1-3/2014), totalling EUR 9.2 million (EUR 5.3 million) and 4.0% (2.6%) of revenue.
- Diluted earnings per share were EUR 0.18 (EUR 0.04) including the impact of EUR 0.6 million (EUR 2.7 million) non-recurring items in operating profit.
- Cash flow after investments was EUR -31.8 million (EUR -18.4 million).
PKC Group’s outlook for 2015
- PKC Group estimates that with prevailing exchange rates 2015 revenue will be close to previous year level, and that comparable EBITDA will be higher than in 2014. In 2014, PKC’s revenue was EUR 829.5 million and comparable EBITDA before non-recurring items was EUR 48.6 million*. Revenue and EBITDA estimates are based on current business structure.
| Key figures* | 1-3/15 | 1-3/14 | Change % | 1-12/14 | |
| EUR 1,000 (unless otherwise noted) | |||||
| Revenue | 226,494 | 204,057 | +11.0 | 829,516 | |
| EBITDA** | 16,732 | 11,806 | +41.7 | 48,572 | |
| % of revenue | 7.4 | 5.8 | 5.9 | ||
| Operating profit** | 9,150 | 5,325 | +71.8 | 21,384 | |
| % of revenue | 4.0 | 2.6 | 2.6 | ||
| Non-recurring items | -582 | -2,735 | -28,362 | ||
| Operating profit(loss) | 8,568 | 2,591 | +230.7 | -6,978 | |
| % of revenue | 3.8 | 1.3 | -0.8 | ||
| Profit(loss) before taxes | 7,785 | 1,354 | +474.8 | -10,528 | |
| Net profit (loss) for the report period | 4,360 | 907 | +380.5 | -29,051 | |
| Earnings per share (EPS), EUR | 0.18 | 0.04 | +379.3 | -1.21 | |
| Cash flow after investments | -31,796 | -18,355 | 20,699 | ||
| ROCE,% | 13.3 | 7.2 | 7.7 | ||
| Gearing, % | 8.8 | 8.6 | -5.6 | ||
| Average number of personnel | 19,683 | 18,806 | +4.7 | 19,640 | |
| * PKC Group has reclassified certain financial items and operating expenses as of the beginning of 2015. Comparison periods have been adjusted accordingly. The changes to revenue and operating profit (loss) are minor and have no impact on the net profit (loss) for the period or shareholders’ equity. The changes are presented in detail in the table section of the interim report. | |||||
| ** before non-recurring items | |||||
Matti Hyytiäinen, President & CEO:
Revenue in the first quarter increased on the comparison period by 11% and was EUR 226.5 million. The changes in consolidation exchange rates increased the revenue by approximately +12%. In North America, production of heavy-duty Class-8 trucks continued to grow on the comparison period and on the final quarter of 2014. However, production volumes of medium-duty trucks in North America and trucks in Europe declined in comparison with the final quarter of 2014, but were higher than in the comparison period. In Brazil, general economic and political uncertainty were reflected in the truck market, and production volumes fell short of both the comparison period and the final quarter of 2014.
PKC’s operating profit before non-recurring items increased on the comparison period by 72% and was EUR 9.2 million. In North America, the company increased its number of production personnel within overheated job markets. Because of this, work productivity fell short of the target level, and overtime and special freight encumbered profit. Ongoing production reorganisation in the business areas of Europe and South America slightly encumbered profitability but progressed as planned. Brazilian operating result improved significantly although operations remained loss-making in deteriorating market conditions.
The start of the year for the Electronics business has been excellent and operating profit increased on the comparison period owing to an increased share of the company’s own products in revenue.
During the first quarter, PKC announced two significant transactions. In February, we announced that we were buying the Wiring Systems business of Groclin, whose main customers are rolling stock manufacturers. In March, we concluded a frame agreement on the establishment of a joint venture with Chinese Wiring Systems company, Huakai. These two transactions are in accordance with our strategy and are estimated to bring a total of some EUR 100 million per year in additional revenue.
PKC’s market position has remained strong in all key market areas. In March, we won two significant new business contracts from our globally-operating customers. The new contracts are estimated to launch by 2018 and to generate annual revenue of about EUR 30 million.
In North America and Europe, the full-year production volume forecasts for trucks are almost unchanged and our customers are slightly more hopeful with regard to production volumes for the rest of the year. Full-year production volumes in Brazil, however, are expected to decline by more than previous market forecasts suggested.
PKC’s personnel have once again been successful in their work, an indication of which is the quality recognitions that we received from our customers during the period.
Market outlook
Wiring Systems Business
In 2015 the production of heavy-duty and medium-duty trucks in Europe is expected to remain on previous year’s level.
In 2015 the production of heavy-duty trucks in North America is expected to increase by about 14%, production of medium-duty trucks to decline by about 1% and production of light vehicles to increase by about 3% compared to 2014.
In 2015 the production of heavy-duty and medium-duty trucks in Brazil is expected to be clearly lower than previous year. The governmental incentive program to support the purchase of new trucks continues to be valid until further notice, although the terms have been weakened significantly. The weakened terms and both economic and political uncertainty in Brazil bear a significant risk for Brazilian truck sales for 2015.
Electronics Business
The market demand for Electronics segment’s products is expected to slightly decrease compared to the current level.
PKC Group Plc
Board of Directors
Matti Hyytiäinen
President & CEO
For additional information, contact:
Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968
Juha Torniainen, CFO, PKC Group Plc, tel. +358 (0)40 570 8871
Press conference
A press conference on the interim report will be arranged for analysts and investors today, 6 May 2015, at 10.00 a.m., at the address Event Arena Bank, Unioninkatu 20, Helsinki.
Attachment
PKC interim report Q1 2015
Distribution
Nasdaq Helsinki
Main media
www.pkcgroup.com
PKC Group is a global partner, designing, manufacturing and integrating electrical distribution systems, electronics and related architecture components for the commercial vehicle industry and other selected segments. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in 2014 totalled EUR 829.5 million. PKC Group Plc is listed on Nasdaq Helsinki.
