Espoo, Finland, 2017-02-15 08:00 CET (GLOBE NEWSWIRE) --
EFORE PLC Financial Statements Release February 15, 2017 at 9.00 a.m.
This release is a summary of Efore's Financial Statements 2016. The full financial Statements 2015 is a PDF file attachment to this stock exchange release and is available on the company's website at the address www.efore.fi.
July – December 2016 in brief:
- Net sales totalled EUR 35.9 million (EUR 42.6 million), down 15.8 % compared with the corresponding period last year
- Adjusted operating result was EUR -2.2 million (EUR -2.3 million)
- Operating result was EUR -6.7 million (EUR -2.8 million)
- Earnings per share were EUR -0.16 (EUR -0.06)
- Outsourcing of manufacturing in China started in October 2016
Financial year 2016 in brief:
- Net sales totalled EUR 75.4 million (EUR 89.9 million), down 16.1 % compared with the corresponding period last year
- Adjusted operating result was EUR -4.8 million (EUR -1.6 million)
- Operating result was EUR -9.7 million (EUR -2.0 million)
- Earnings per share were EUR -0.22 (EUR -0.07)
- The Board of Directors proposes that no dividend will be distributed
| 7-12/16 | 7-12/15 | Change | 1-12/16 | 1-12/15 | Change | |
| Key indicators, EUR million | 6 mo | 6 mo | % | 12 mo | 12 mo | % |
| Net Sales | 35,9 | 42,6 | -15,8 | 75,4 | 89,9 | -16,1 |
| Telecommunication sector | 16,2 | 19,6 | -17,3 | 34,2 | 44,8 | -23,8 |
| Industrial sector | 19,7 | 23,1 | -14,7 | 41,2 | 45,1 | -8,6 |
| Adjusted operating result* | -2,2 | -2,3 | -4,8 | -1,6 | ||
| Operating result | -6,7 | -2,8 | -9,7 | -2,0 | ||
| Result before taxes | -7,3 | -3,1 | -10,4 | -3,3 | ||
| Net result | -8,1 | -3,0 | -11,4 | -3,4 | ||
| Earnings per share, EUR | -0,16 | -0,06 | -0,22 | -0,07 | ||
| Solvency ratio, % | 15,7 | 34,2 | -54,1 | 15,7 | 34,2 | -54,1 |
| Gearing, % | 99,5 | 24,5 | 99,5 | 24,5 | ||
| Cash flow from business operations | -2,3 | -2,4 | -1,1 | 1,8 | ||
| Key indicators Half year, EUR million | H2/2016 | H1/2016 | H2/2015 | H1/2016 | ||
| Net Sales | 35,9 | 39,5 | 42,6 | 47,2 | ||
| Telecommunication sector | 16,2 | 18,0 | 19,6 | 25,2 | ||
| Industrial sector | 19,7 | 21,5 | 23,1 | 22,0 | ||
| Adjusted operating result* | -2,2 | -2,6 | -2,3 | 0,7 | ||
| Operating result | -6,7 | -3,0 | -2,8 | 0,7 |
*Adjustments include items such as costs due to changes in organizational structure, impairments and impact from the sale of businesses or assets.
Financial estimate for 2017
Due to the financial situation of the Group and the structural changes currently taking place, giving earnings guidance is exceptionally challenging but the operating result and the cash flow for 2017 are estimated to be positive. Efore is not for the time being making forecasts about its long term development.
Jorma Wiitakorpi, Efore’s President and CEO:
“Efore’s net sales in 2016 fell short of previous year’s level and net result was weak. The whole year and especially the first half of the year was characterized by a weaker than forecasted demand in the telecommunications sector. At the beginning of the year the industrial sector sales were almost on the same level as in the corresponding period of last year. During the latter part of the year the industrial sales went down compared with the corresponding period of the last year.
The further development of the global operating model and the outsourcing of manufacturing in China associated with it were apparent in the form of weaker profitability during the financial year 2016.
Additional cost reduction actions have been implemented since autumn 2016. These actions reduce the fixed costs of the Group gradually starting in the end of 2016. Efore is targeting up to EUR 7 million annual savings in fixed costs.
There have been changes in the business environment which require adjustments to the strategy and business plan as well as the operating model of the organization. Actions related to these adjustments will be implemented in spring 2017.
The before mentioned actions, substantial growth of LED market and a slightly improved market situation in the telecommunications sector, together with the future new products, are expected to improve the profitability of the company. Despite the fact that two EMS-customers started to use services of other companies in the industrial sector Efore’s net sales for 2017 are forecast to be on the same level as in the previous year.“
July – December Net sales and result
July – December net sales totalled EUR 35.9 million (EUR 42.6 million).
During the second half of year 2016 net sales of telecommunications sector totalled EUR 16.2 million (EUR 19.6 million), with a year-on-year decrease of 17.3 %. The second half of the year was especially characterized by a demand weaker than previous year in the telecommunications sector. The demand improved during the fourth quarter of the year but Efore was not able to increase enough its delivery volume due to the simultaneous outsourcing of manufacturing in China.
The net sales of the industrial sector totalled EUR 19.7 million (EUR 23.1 million). Due to the outsourcing of manufacturing in China two EMS-customers started to use services of other companies and as a consequence of that the net sales in industrial sector fell especially during the fourth quarter of the year. Furthermore, the sales of the DC power systems continued to be weighed down by the economic situation in Russia and the weak ruble.
In the industrial sector, the sales of Digital Light and Digital Power products increased slightly compared with previous year. National Instruments awarded Efore again and named Efore as the Best in Class Tier 1 partner for outstanding quality performance and reliability in 2016.
The lower than forecasted utilization rate of the production capacity continued in Efore’s factory in Suzhou during the second part of the year and led to a significantly weaker productivity than expected. The outsourcing of manufacturing and manufacturing facilities temporarily in two locations reduced further the operating result. Furthermore, these both generated more extra costs than estimated. Adjusted operating result for the second half of the year was EUR -2.2 million (EUR -2.3 million). One-time items of EUR -4.5 million (EUR -0.4 million) related mainly to China outsourcing are included in the operating result.
Net sales and result of the full year
The full year net sales totalled EUR 75.4 million (EUR 89.9 million).
The full year 2016 net sales of the telecommunications sector totalled EUR 34.2 million (EUR 44.8 million) and the net sales of the industrial sector totalled EUR 41.2 million (EUR 45.1 million).
The whole year was characterized by a clearly weaker than forecasted demand in the telecommunications sector. The demand improved during the fourth quarter of the year but Efore was not able to sufficiently increase the volume of production due to the simultaneous outsourcing of the manufacturing in China.
Furthermore, the net sales of an important R&D project finalized at the end of 2015 remained lower than estimated in 2016. All these had a negative effect on the net sales and the profitability during the financial year.
The full year industrial sector sales decreased 8.6 % from the previous year. The main reason for the decrease was that two EMS-customers started cooperation with other suppliers due to the outsourcing of manufacturing in China during the fourth quarter of the year.
The weaker than expected productivity and manufacturing facilities temporarily in two locations reduced the operating result during the second part of the year.
Adjusted operating result for the fiscal year was EUR -4.8 million (EUR -1.6 million). The results from operating activities were lowered by the one-time items of EUR -3.8 (EUR 0 million) related mainly to China outsourcing and one-time items of EUR -1.0 million (EUR -0.4 million) related to the structural changes of the company.
Business development
During the financial year Efore had several new R&D projects for the power supply systems of small cell and macro base stations. A part of the ongoing R&D projects have also been developed for future 5G market. Efore’s technology portfolio has been expanded to include power supplies with power back-up and inverter technologies.
In 2016 Efore launched new Digital Light power products for industrial applications and introduced new dimming CIELO LED drivers. Efore’s technology portfolio has been expanded to include especially energy efficient power products and intelligent LED lighting systems.
Efore Plc and Wuxi Hodgen Technology Co Ltd signed the master supply and asset agreements related to the outsourcing of manufacturing as well as manufacturing support functions at the Suzhou plant in China in the end of August 2016. The negotiations concerning the outsourcing of manufacturing in China were finalized in October 2016.Efore will remain responsible for the quality of the delivered products as well as for the NPI (New Product Introduction) process. This arrangement is a key part of Efore’s strategy and will allow Efore to become focused on the demanding power products and their product development. At the same time the outsourcing will significantly reduce operational costs and net working capital.
New actions have been implemented in autumn 2016. These actions will reduce the fixed costs of the Group from the beginning of the year 2017. The target level of the fixed costs will be reached gradually by the end of the second quarter of the year.
There have been changes in the business environment which require adjustments to the strategy and business plan as well as the operating model of the organization. Actions related to these adjustments will be implemented in spring 2017.
Future outlook
The outlook for telecommunications market is expected to improve slightly in 2017. Efore continues R&D investments by widening the technology portfolio into power supply technology for new small cell products. The products based on the 5G technology are in a key role in future network expansions.
Power supplies for LED lighting, instrumentation, medical equipment and infrastructure offer still several growth opportunities for Efore in the industrial sector. In the future the Group will focus on a few sectors where high reliability and long product life cycles are the key factors in competition.
Factors of uncertainty have been presented in the section “Short-term risks and factors of uncertainty”.
Due to the financial situation of the Group and the structural changes currently taking place, giving earnings guidance is exceptionally challenging but the operating result and the cash flow for 2017 are estimated to be positive. Efore is not for the time being making forecasts about its long term development.
Board of Directors’ proposal for the Annual General Meeting
The Board of Directors will propose to the Annual General Meeting on April 5, 2017 that no dividend will be distributed.
Events after the end of the Financial year
The Extraordinary General Meeting of Efore Plc was held on 31 January 2017.
The Extraordinary General Meeting set the number of the members of the Board of Directors at four. Marjo Miettinen, Jarmo Simola, Antti Sivula and Tuomo Lähdesmäki were elected as members of the Board of Directors. In its first meeting held after the Extraordinary General Meeting, the Board of Directors elected Tuomo Lähdesmäki as Chairman of the Board of Directors.
It was resolved that the Board of Directors will not establish any separate committees of the Board of Directors and that the duties of the audit committee are discharged by the company’s entire board of directors.
On January 2, 2017 Efore Plc has drawn a loan of EUR 2 million from Jussi Capital Oy. The loan is due on June 30, 2017 and the interest rate is 14%. This credit arrangement has been conducted on market equivalent terms and in line with the interests of the business perspectives of the Group.
Efore Plc has received a waiver on February 13, 2017 concerning the breach of its loan covenants at the end of December 2016.
EFORE PLC
Board of Directors
Further information
For further information please contact Mr. Jorma Wiitakorpi, President and CEO, on February 15, 2017 at 10-11 a.m., tel. +358 40 175 8510
DISTRIBUTION
Nasdaq Helsinki Oy
Principal media
Efore Group
Efore is an international Group which develops and produces demanding power products. Efore's head office is based in Finland and its R&D functions are located in Finland, Sweden, Italy and China. Sales and marketing operations are located in Europe, United States and China. In the financial year ending in December 2016, consolidated net sales totalled EUR 75.4 million and the Group's personnel averaged 679. The parent company's share is quoted on the Nasdaq OMX Helsinki Ltd. www.efore.com
ENCL. Efore Plc Financial Statements 2016
