Business groups
Forest Industry
Net sales for the period under review were EUR 74.2 (78.9) million. Operating profit amounted to EUR 8.5 (9.8) million. The order stock was EUR 60.3 (at the end of 2001 74.2) million.
Forest Industry Consulting
Net sales for the period under review were EUR 20.3 (23.8) million. Operating profit was EUR 1.0 (0.6) million. Thehe operating profit for the period under review does not include any major fees from mergers & acquisitions activities. The order stock amounted to EUR 7.2 (18.5) million.
At the beginning of the year, Jaakko Pöyry Consulting Oy sold 75.0 per cent of its 90.0 per cent-owned subsidiary JP Development Oy, whose net sales for 2001 amounted to EUR 7.0 million and order stock to EUR 5.7 million at the end of 2001.
Energy
Net sales for the period under review were EUR 51.9 (67.1) million. Discontinued businesses reduced net sales by EUR 7.3 million. Operating profit was EUR -1.9 (-3.8) million. The order stock amounted to EUR 119.6 (123.5) million.
The operating profit for the period under review includes a provision of EUR 1.5 million related to business in Latin America and especially projects in Argentina.
Infrastructure & Environment
Net sales for the period under review were EUR 57.9 (53.2) million. Operating profit was EUR 3.6 (3.5) million. The order stock was EUR 93.8 (103.7) million.
Group structure
Efforts to further develop the Group's structure and business operations have continued during the period under review.
The Jaakko Pöyry Group has expanded its operations in North America by acquiring the business of Ajami, Bedard, Gagnon, Sexton Inc., a Canadian forest industry engineering company. The operations will continue in Jaakko Pöyry ABGS Inc., a company of which Jaakko Pöyry Group owns 100 per cent. The transaction is expected to be closed shortly and will be effective as of June 30, 2002. The company will be consolidated into the Jaakko Pöyry Group as of July 1, 2002. The acquired business employs about 100 forest industry experts and its net sales were EUR 14 million in 2001.
The Forest Industry Consulting business group has sold 75.0 per cent of its 90.0 per cent-owned subsidiary JP Development Oy. The divestment is a part of the on-going rationalisation of Jaakko Pöyry Consulting to focus exclusively on management consulting, operations consulting and investment banking for the global forest products industry value chain.
The Energy business group has acquired the air laboratory of Stora Enso's research centre in Imatra, Finland. The air laboratory specialises in air emission measurements and process analyses for pulp and paper mills and their power plants. Furthermore, the Energy business group has concluded a co-operation agreement with GreenStream Network Oy, Finland, acquiring a 13.3 per cent shareholding in this company. GreenStream Network is the first company in the Nordic countries to act as a broker in the trade in emissions and green certificates.
The Infrastructure & Environment business group has acquired the transport consulting business of Heusch/Boesefeldt GmbH in Germany. The acquired business employs 55 people, with net sales amounting to about EUR 3.4 million.
Efforts to further develop the Group's structure and business operations will continue during the current year. In response to the globalisation of the forest products industry, the local office network of the Forest Industry business group will be expanded especially in Western Europe. There are also plans to expand the operations of the Energy and the Infrastructure & Environment business groups.
Order stock
The Group's order stock has remained solid during the period under review, totalling EUR 280.9 million at the end of June, compared with EUR 292.6 million at the end of June 2001. Discontinued and divested operations reduced the order stock by EUR 13.1 million. At the end of December 2001 the order stock was EUR 319.9 million.
Capital expenditure
The Group's capital expenditure for the period under review totalled EUR 3.9 (3.7) million, consisting mostly of computer software, systems and hardware.
Share capital and shares
The Annual General Meeting on March 6, 2002 authorised the Board of Directors to annul the acquired 309 000 own shares and thus decrease the share capital from EUR 13 932 861 to EUR 13 623 561. After the cancellation, the total number of shares was 13 623 561. During the period under review 35 750 new shares were subscribed based on warrants pursuant to the Bond Loan with Warrants of 1998. In addition, 117 090 new shares were subscribed in July 2002. Following these subscriptions, the number of shares totals 13 776 401.
The warrants related to the Bond Loan with Warrants issued by Jaakko Pöyry Group Oyj in 1998 to the Group personnel and the parent company's Board of Directors carry subscription rights for a total of 1.3 million of the company's shares, with the subscription period beginning partly (390 000 shares) on April 1, 2000, partly (390 000 shares) on April 1, 2001, and partly on April 1, 2002 (520 000 shares). The subscription period ends for all warrants on April 30, 2005. A total of 415 415 shares have been subscribed based on the warrants.
The Annual General Meeting on March 6, 2002 authorised the Board of Directors to decide on an increase of share capital by a new issue and/or by taking a convertible loan and/or by issuing option rights so that based on the new issue, the convertible bonds and option rights, the share capital can be increased by a maximum of EUR 1.0 million by issuing for subscription a maximum of 1.0 million new shares. The authorisation is in force until March 6, 2003.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 5.0 per cent of the company's share capital. The Board of Directors decided on March 6, 2002 to exercise the authorisations. The authorisations are in force until March 6, 2003.
The company's shares are quoted on the Helsinki Exchanges. The average trading price during the period under review was EUR 17.37, with a high of EUR 19.00 and a low of EUR 16.00. A total of 1.1 million of the company's shares (equalling 7.8 per cent of the total number of shares) were traded, corresponding to a turnover of EUR 18.6 million.
The Annual General Meeting approved the Board of Directors' proposal that a dividend of EUR 0.60 be paid per share for the year 2001 (EUR 0.60 for the year 2000), totalling EUR 8.2 million. The dividend was paid on March 18, 2002.
Prospects
Prospects for the world economy during 2002 are still uncertain. Economic growth has not developed as expected and independent forecasts indicate that increased momentum will not occur until 2003. Economic uncertainty has also decreased overall investment activity and postponed investment decisions.
The forest products industry's economic prospects for 2002 reflect general economic trends. Feasibility studies and preliminary engineering activity volume is still good, but the amount of new major investment projects is slightly lower than in previous years. The Forest Industry business group's earnings for the first half were good. The business group's earnings for the full year 2002 are expected to be slightly lower than in 2001. Market prospects for the Forest Industry Consulting business group's services have improved compared with 2001. The consolidation and restructuring of the forest industry offer business opportunities for management consulting and investment banking services. The business group's earnings for the first half have improved compared to 2001, and annual earnings for 2002 are expected to be clearly better than the previous year. Market prospects for the energy sector are still uncertain. Investment projects have been postponed because of the uncertainty in the world economy, overcapacity in the power market and power companies' financial difficulties. On the other hand, demand has improved for services related to renewable energy, power plant rebuilds, operations improvement and consulting. The Energy business group's earnings for the first half were not satisfactory. Taking into account the market prospects in this sector, the rest of the year will also be challenging. In spite of these difficulties, the target is to improve the Energy business group's earnings compared to 2001. The Infrastructure & Environment business group's order stock is good and earnings are expected to remain at the same level as in 2001.
The Jaakko Pöyry Group's market position remains strong and the order stock is solid. The delay in the recovery of the global economy and in the associated investment decisions have an effect on the Group's operations. Based on the above presented prospects and general economic outlook of the business groups, the Group's earnings and return on investment for 2002 are expected to be somewhat lower than in 2001.
Vantaa, July 29, 2002
JAAKKO PÖYRY GROUP OYJ
Board of Directors
JAAKKO PÖYRY GROUP OYJ
Erkki Pehu-Lehtonen
President and CEO
Teuvo Salminen
Executive Vice President
The full report including tables can be downloaded from the enclosed link.
