Market situation
Recession in all our main market areas still continues. Growth in demand stopped at the beginning of 2002 and thereafter demand has remained unstable in most businesses. The volume of orders remained modest in the first quarter of 2003. The customers have significant investment programs underway but converting them into orders takes longer than expected.
Vaisala has retained its market share, and the company holds a strong position in the market.
Net sales and order book
The Vaisala Group's net sales for the review period was EUR 40.2 million (EUR 34.4 million for the corresponding period last year). Operations outside Finland accounted for 96% (95%) of net sales. The group received new orders worth EUR 39 (61) million. The order book at the end of the review period stood at EUR 71 (84) million.
Vaisala Soundings
The division Vaisala Soundings, formerly the Upper Air Division, generated net sales of EUR 12.4 (10.5) million.
During the review period the division introduced a new product family of digital radiosondes which will be launched to the market during 2003. The radiosonde, offering more accurate measuments, will gradually replace older radiosonde models.
Vaisala Solutions
The division Vaisala Solutions, formerly the Surface Weather Division, generated net sales of EUR 12.4 (11.0) million.
Vaisala Remote Sensing
The division Vaisala Remote Sensing, formerly Vaisala Remote Sensing Division, generated net sales of EUR 4.4 (1.8) million.
During the review period a wind profiler was delived to the UK Met Office. The contract is valued at EUR 0.7 million. Moreover, a digital interface receiver was launched during the review period which considerably improves wind profiler performance and allows more efficient signal processing.
Vaisala Instruments
The division Vaisala Instruments, formerly the Sensor Systems Division, generated net sales of EUR 11.0 (11.2) million.
Performance
Operating profit for the review period was EUR -0.1 (-0.3) million. Profit before extraordinary items represented -1.3% of the net sales, amounting to EUR -0.5 (0.3) million. Goodwill depreciation arising from acquisitions totalled EUR 1.1 (1.2) million.
The weakening of the US dollar did not have a significant effect on the profit, due to the dollar-based sales and expense structure in the review period.
The result includes a provision of EUR 0.3 million for reorganization expenses.
Balance sheet
The Vaisala Group's solvency and liquidity remained strong. The balance sheet total as at March 31, 2003 totaled EUR 161.1 (168.3) million. The Group's solvency ratio at the end of the review period was 83% (81%).
Research and development
Expenditure on research and development in the review period totalled EUR 5.6 (4.5) million, representing 14.0% of the Group's net sales.
Other events during the review period
Vaisala Oyj announced in July 2002 that it had received a USD 6.5 million claim for compensation related to claimed breach of a license agreement. The arbitration court in the United States rejected the claim in February 2003 and announced that the claimant does not have a right to claim for compensation from Vaisala Oyj.
The Annual General Meeting of Vaisala Oyj decided on March 19, 2003 to offer 896,000 warrants for subscription by the key employees of the Vaisala Group and of company's wholly owned subsidiary, Vaisala GmbH. The issued warrants entitle to subscribe, in total, 896,000 Vaisala A-shares. The terms and conditions of the warrants 2000 were published by a stock exchange release on February 24, 2003. The Board of Directors of Vaisala Oyj has decided that of the 896,000 warrants issued, 752,000 warrants are allocated to 79 key employees and 144,000 to Vaisala GmbH.
In the Annual General Meeting of March 19, 2003 two members of the Board of Directors professor Pekka Hautojärvi and Mikko Voipio, M.Sc.(Eng.) were re-elected for three years.
Capital expenditure
Gross investment in non-current assets during the review period was EUR 6.4 (18) million.
Vaisala share
The price of Vaisala A-share on the Helsinki Exchanges was EUR 22.98 at the beginning of the review period and EUR 19.00 at the the end of the review period. The highest share price quoted during the review period was EUR 23.00 and the lowest EUR 18.30.
Vaisala's share capital at the end of March was EUR 7,349,905.88 and the total number of shares was 17,479,000.
A total of 434,108 Vaisala shares were traded during the review period.
A total of 42,000 Vaisala shares were subscribed for during the review period with the warrants issued in 1997. Due to the subscriptions Vaisala's share capital increased by a total of EUR 17,660.97 The subscription period for the warrants issued in 1997 ended March 31, 2003.
Personnel
The total number of employees at the Vaisala Group was 1,152 at the end of the review period, compared to 1,242 for the corresponding period in 2002. Some 24% (23%) of the personnel worked at research and development. Some 36% (41%) of the Group's personnel worked outside Finland.
Events after the review period
On April 17, 2003 Vaisala started proceedings with the representatives of all personnel groups according to the Act on Co-operation within Undertakings at the office in Vantaa, Finland which aim at improving operational efficiency. The proceedings are related to some 50 man-years, mainly at Vaisala's office in Vantaa. The overall objective of the measures to increase the efficiency is to achieve an improvement of EUR 4 million in the Group's result.
Member of Management Group of Vaisala Oyj, Corporate Communications Director Tiina Hansson leaves Vaisala Oyj to join Aldata Solution Oyj. Mr Tapio Engström, Finance Director, has taken over the investor relations and for the time being, also for the media relations.
Board of Directors and President & CEO
The members of the Board of Directors are Raimo Voipio, M.Sc.(Eng.) Chairman; Professor Pekka Hautojärvi, Executive Vice President, Professor Yrjö Neuvo; Mikko Niinivaara M.Sc.(Eng.); Mikko Voipio, M.Sc.(Eng.) and Gerhard Wendt. The Group's President and CEO is Pekka Ketonen, M.Sc.(Eng.).
Outlook
Uncertainty in the international market prevails. The Vaisala Group's turnover and profit for the financial year is expected to remain on previous year's level. However, the performance during the next quarters will be better than in the review period. Our focus is to improve profitability which also includes reorganisation.
Vantaa, Finland, May 5, 2003
Vaisala Oyj
Board of Directors
The full report including tables can be downloaded from the following link.
