Kotkamills Group Oyj
STOCK EXCHANGE RELEASE
31 May 2017, at 10:30 pm (CET + 1)
This is a summary of the January - March 2017 interim report. The complete report is attached to this release and is also available at www.kotkamills.com/fi/kotkamillsgroup/keyfinancials
KOTKAMILLS INTERIM REPORT
January - March 2017 (1-3/2016)
The revenue of continuing operations of EUR 59,9 (EUR 51,0) million improved by EUR 8,9 million mainly due to increased Consumer Boards sales.
The operating profit of continuing operations was EUR -4,1 million (EUR -2,1 million) mainly due a negative impact from the commercial ramp-up of Consumer Boards business. The good financial performance of Industrial Products segment with operating profit of EUR 6,8 million (EUR 3,8 million) continued also in Q1/2017.
Events in January - March 2017
In January the Company was informed by Nordic Trustee Oy, acting as the Trustee under the bonds, that the bondholders have given the requested consent (as revised on 23 December 2016) for a disposal of the Imprex Business in accordance with the terms and conditions of the bonds.
In February the shareholders of the Company unanimously resolved to offer by direct issue both New A and B series shares. Pursuant to the terms of the share issue of the New A Shares, the holders of series A shares granted in connection with their participation in the share issue shareholder loans to the company in the aggregate amount of approximately EUR 17,9 million. The terms of the shareholder loans are in material respects equivalent to the terms of the existing shareholder loans.
As a result of the share issue and the utilisation of the new shareholder loans, the Company obtained financing in the aggregate amount of approximately EUR 20,0 million.
The purpose of the share issue and the utilisation of the shareholder loans was to ensure full utilization of the commercial ramp-up of the new board machine.
The delivery volumes of Industrial Products segment increased compared to the previous quarter and the demand continued to stay at a good level.
The commercial ramp-up of Consumer Boards products continued in the first quarter.
|Revenue, EUR million||59,9||51,0||219,1|
|EBITDA, EUR million||0,0||-0,7||9,5|
|Operating profit, EUR million||-4,1||-2,1||-0,4|
|Operating profit/ Revenue (%)||-6,8||-4,1||-0,2|
|Return on equity (%)||-35,2||-20,9||-53,2|
|Equity ratio (%)||5,9||11,5||7,8|
|Equity ratio, adjusted (%)*||53,7||45,3||50,1|
|*Equity includes shareholder loans and the junior term loan|
The Group monitors capital using an equity ratio and an adjusted equity ratio based on the financial covenants, which is total equity added with shareholder loans and the junior term loan and divided by total assets. The Group's policy is to keep the adjusted equity ratio above 30%. There have been no breaches of the financial covenants of equity ratio in the current period.
Events after reporting date
At the closing date the pending litigation of termination of an agent contract was in review process in the Court of Appeals in Turkey. On April 7, 2017 the Court of Appeals approved the decision of the court of first instance (it had dismissed the lawsuit based on the grounds that it lacks competence since the parties have agreed to settle all disputes arising out of the agency agreement by arbitration) and sent the lawsuit file back to court of first instance for finalization of the decision. Kotkamills Oy has not recognized any provision because of the claim.
At the closing date Kotkamills Oy's Seller and former owner prior to the Seller had a dispute related to the terms and conditions of the former acquisition. The dispute was related to certain voluntary pension obligations. Kotkamills Oy was a party to the dispute. Arbitration award was given on May 2, 2017. Based on both award and agreement between Kotkamills Group Oyj and Kotkamills Oy's Seller there won't be any financial impacts on Kotkamills Oy.
Kotkamills Oy has also one unsettled contractual dispute. The dispute relates to a potential compensation claim by a supplier related to performed construction work. In a pending arbitration the supplier claims Kotkamills Oy for compensation of preliminary EUR 1,5 million by appealing to rushing costs and increases of unit prices. Kotkamills Oy has disputed the claims as unfounded and has not recognized any provision because of the claim.
Outlook for 2017
The revenue of the second quarter in 2017 is estimated to be higher than in the first quarter 2017 due to increase in especially Consumer Boards delivery volumes. The profit of continuing operations for the second quarter of 2017 is estimated to improve from the previous quarter although the continuing commercial ramp-up of Consumer Boards business is estimated to have a diluting effect on the profit of the second quarter.
The demand of all business segments is expected to stay at the good level, but changes in economic situation in Europe and geopolitical risks may have weakening impact on demand.
Currency exchange rate changes and possible increases in raw material prices could adversely impact the Group's profit development.
Kotkamills Group Oyj
Board of Directors
For additional information, please contact:
CFO Petri Hirvonen, tel.+358 40 571 0834, firstname.lastname@example.org
Nasdaq Helsinki Ltd
Kotkamills Group in brief
Kotkamills is a responsible partner that delivers renewable products and performance to its customers' processes via product innovations created from wood, a renewable raw material. The key brands of the company include Absorbex® and Imprex®, both innovative laminating paper products for the laminate, plywood and construction industries. Moreover, Kotkamills offers ecological, technically sound and visually attractive wood products for demanding joinery and construction. In summer 2016, Kotkamills started up a new board machine producing AEGLE(TM) Folding Boxboard and ISLA(TM) Food Service Boards, including the capability to add barriers on-machine. All Consumer Board material solutions are fully recyclable and repulpable.
Kotkamills has two production sites in Finland, located in Kotka and Imatra. The majority shareholder of Kotkamills is MB Funds, a Finnish private equity firm.
The information contained in this release shall not constitute an offer to sell or the solicitation of an offer to buy securities of Kotkamills Group Oyj in any jurisdiction.