Componenta Interim Report 1 January - 30 June 2015: Operating profit fell from previous year, restructuring proceeds as planned

Componenta Corporation Stock Exchange Release 15.7.2015 at 14.45


January - June 2015 in brief

  • The Group’s order book at the beginning of July was 2% higher than in the previous year, standing at MEUR 97 (MEUR 95).
  • Net sales in the review period were at a similar level as in the previous year, standing at MEUR 265 (MEUR 265).
  • EBITDA excluding one-time items and exchange rate differences of balance sheet items declined from the previous year to MEUR 18.9 (MEUR 24.7). EBITDA was significantly impacted by Turkish lira and local wage inflation, MEUR -5, strikes in Turkish automotive industry, MEUR -2, and problems arising from the change of the resource planning system at Främmestad, MEUR -2. In addition, loss of Dutch operations increased MEUR 1 from previous year. The efficiency improvement program had a positive impact of MEUR 4 on EBITDA.
  • Operating profit excluding one-time items and exchange rate differences of balance sheet items (“profit on business operations”) declined from the previous year to MEUR 9.7 (MEUR 15.3).
  • The result after financial items excluding one-time items and exchange rate differences of operative balance sheet items was MEUR -1.8 (MEUR 0.8).
  • One-time items and exchange rate differences of operative balance sheet items that had an impact on the result after financial items for the review period totalled MEUR 0.4 (MEUR -3.3).
  • The result for the review period was MEUR -1.6 (MEUR -2.1) and basic earnings per share were EUR    -0.02 (EUR -0.16).
  • New orders received during the review period totalled MEUR 52.7

April - June 2015 in brief

  • Net sales were at a similar level as in the previous year, standing at MEUR 132 (MEUR 133).
  • EBITDA excluding one-time items and exchange rate differences of balance sheet items was MEUR 8.6 (MEUR 12.6). EBITDA was significantly impacted by wage inflation in Turkey, MEUR -1.5, strikes in Turkish automotive industry MEUR -2, and problems arising from the change of the resource planning system at Främmestad, MEUR -2. In addition, loss of Dutch operations increased MEUR 0.5 from previous year. The efficiency improvement program had a positive impact of MEUR 2 on EBITDA.
  • Operating profit excluding one-time items and exchange rate differences of balance sheet items was MEUR 3.9 (MEUR 7.9).
  • The result after financial items excluding one-time items and exchange rate differences of operative balance sheet items was MEUR -2.3 (MEUR 0.9).
  • One-time items and exchange rate differences of operative balance sheet items that had an impact on the result for the April - June period totalled MEUR 1.8 (MEUR -2.4).
  • The result for the April - June period was MEUR 0.1 (MEUR -0.8) and basic earnings per share were EUR 0.00 (EUR -0.07).

Componenta’s guidance for 2015 unchanged

The prospects for Componenta in 2015 are based on general external economic indicators, delivery forecasts given by customers, and on Componenta’s order intake and order book.

Componenta’s order book at the beginning of July stood at MEUR 97 (MEUR 95). Componenta expects the 2015 operating profit excluding one-time items and exchange rate differences of operative balance sheet items to improve from the previous year, as a result of the efficiency improvement program being carried out.

President and CEO Heikki Lehtonen comments on the review period and events after end of period:

“For Componenta, the second quarter of 2015 did not go in every aspect according to expectations. The order book increased 2% from the previous year to EUR 97 million. Net sales remained the same compared to the previous year, standing at EUR 132 million, but the operating profit fell clearly short of the previous year’s figure. Strikes in Turkish automotive industry combined with local wage inflation and cost based on solving the problems arising from the change of the resource planning system at Främmestad negatively impacted operating profit more than EUR 5 million. These problems burdened the result of the second quarter have mainly been solved and they are not expected to have material impact during the second half of the year.

During the review period Componenta signed a contract to supply aluminium components with a value of more than EUR 100 million to the European market, and to safeguard these deliveries Componenta is building a new aluminium foundry in Manisa in Turkey. To secure the construction of the new foundry and to ensure the company has sufficient working capital, Componenta’s subsidiary Componenta Dökümcülük A.S. signed a new EUR 30 million long-term credit facility agreement with Turkish banks in June.

Componenta has on 14 July 2015 agreed to start cooperation on sales and production of large furan castings with Belgian company Ferromatrix NV. Ferromatrix belongs to Van de Wiele Group, a worldwide leader in carpet and textile machines, and has a highly automated furan foundry in Kortrijk in Belgium, where Componenta is transferring the furan casting production of Componenta’s Heerlen foundry by the end of 2015. Componenta will be responsible for sales of furan castings and customer cooperation from the beginning of 2016 through a joint venture that is to be set up. It is planned to carry out the agreed changes in the ownership of the sales company to be set up now and of production company Ferromatrix NV in 2017.

In consequence of starting this cooperation, the furan line at the Heerlen foundry in the Netherlands will be closed down by the end of 2015. The greensand line at the Weert foundry in the Netherlands is down by the end of 2016. As a consequence of these actions, the operating profit of Dutch operations is expected to improve annually EUR 6 million. Write-downs and one-time items are estimated to total EUR 12 million.

At the same time the Group is improving efficiency in its DISA production at the Orhangazi foundry in Turkey, where two smaller DISA lines will be replaced by a single efficient, modernized DISA line transferred from the Pietarsaari foundry that was closed down in 2014. This is expected to improve operating profit annually EUR 1 million. Related investments amount to EUR 1.5 million.

The measures to concentrate production in larger units and more efficient production plants will improve capacity utilization in production, reduce costs and at the same time improve Componenta’s competitiveness and profitability. The measures taken are part of the Group’s efficiency improvement program that began in 2012 but which did not in all respects made progress according to plan during the second quarter. The Group has already carried out measures accounting for EUR 38 million of the targeted savings in the program. EUR 31 million of these savings had a visible impact by the end of the second quarter. Finalizing the efficiency improvement program will decrease costs corresponding to the amount of more than EUR 14 million in total, and half of that is estimated to be achieved by the end of this year and rest during the next year.”

Key figures

  Q1-Q2
2015
Q1-Q2
2014
 
Change
 
2014
Rolling 12 mth
Order book, MEUR 96.8 94.8 2% 88.9 96.8
Net sales, MEUR 265 265 0% 495 496
EBITDA*), MEUR 18.9 24.7 -23% 35.8 30.0
Operating profit*), MEUR 9.7 15.3 -37% 17.8 12.2
Operating profit*), % 3.6 5.8 n/m 3.6 2.5
Result after financial items *), MEUR -1.8 0.8 n/m -9.5 -12.1
One-time items and exchange rate differences of operative balance sheet items, MEUR 0.4 -3.3 n/m -19.2 -15.4
Taxes, MEUR -0.2 0.4 n/m 0.2 -0.5
Net result for the review period, MEUR -1.6 -2.1 -25% -28.6 -28.0
Earnings per share, EUR -0.02 -0.16 -85% -0.63 -0.35
Net gearing, % 207 282 -27% 194 203
Return on investment*), % 5.8 9.7 -41% 5.6 3.7
Return on equity*), % -6.5 1.7 n/m -12.1 -16.2
Number of personnel at period end, incl. leased personnel 4,320 4,523 -4% 4,238 4,320

*) Excluding one-time items and exchange rate differences of operative balance sheet items

News conference

Due to the summer holiday season Componenta is not arranging a separate news conference or webcast regarding the Interim Report 1 January - 30 June 2015. The slide presentation related to the interim report is available on the company’s website www.componenta.com.

Helsinki, 15 July 2015

COMPONENTA CORPORATION


Heikki Lehtonen
President and CEO

 

For further information, please contact:

Heikki Lehtonen
President and CEO
tel. +358 10 403 2200

Mika Hassinen
CFO
tel. +358 10 403 2723

 

 

Componenta is a metal sector company with international operations and production plants located in Finland, Turkey, the Netherlands and Sweden. The net sales of Componenta were EUR 495 million in 2014 and its share is listed on Nasdaq Helsinki. The Group employs approx. 4,250 people. Componenta specializes in supplying cast and machined components and total solutions made of them to its global customers, who are manufacturers of vehicles, machines and equipment.  


Attachments

Componenta Q2 2015 Interim Report.pdf