Panostaja Oyj Business Review Q3 September 3, 2020 10.00 a.m.
Panostaja Oyj Business Review Q3 1.11.2019-31.7.2020
Cutbacks support result in a challenging market situation
May 1, 2020-July 31, 2020 (3 months)
- Net sales increased in two of the seven segments. For the group as a whole, net sales dropped by 20% to MEUR 34.5 (MEUR 43.0).
- EBIT improved in five of the seven segments. The entire Group’s EBIT improved from the reference period, standing at MEUR 1.0 (MEUR 0.0).
- Grano’s net sales for the review period declined by 22% from the reference period in the previous year. EBIT totaled MEUR 0.7 (MEUR 0.0). The EBIT for the reference period includes an impairment of fixed assets in the amount of MEUR 0.9.
- Earnings per share (undiluted) were -0.4 cents (3.6 cents).
November 1, 2019-July 31, 2020 (9 months)
- Net sales increased in three of the seven segments. Net sales for the Group as a whole weakened by 13% to MEUR 118.3 (MEUR 135.2).
- EBIT improved in five of the seven segments. The entire Group’s EBIT declined from the reference period, standing at MEUR 1.5 (MEUR 2.1). The reference period’s EBIT includes sales profit for Ecosir Group in the amount of MEUR 1.6 and a fixed asset impairment of MEUR 0.9.
- Grano’s net sales for the review period declined by 32% from the reference period in the previous year. EBIT totaled MEUR 1.5 (MEUR 2.3).
- Earnings per share (undiluted) were -3.6 cents (3.7 cents).
CEO Tapio Tommila:
“During the nine-month review period, the total net sales dropped by 13% from the reference period. However, after nine months, the operational EBIT of the investment targets was almost at the reference year level, not including the Ecosir Group sales profit of MEUR 1.6 and fixed asset impairment of MEUR 0.9, which were included in the profit/loss of the reference period.
In the third quarter, the total net sales were further increased from the reference period by CoreHW and Oscar Software, which were fairly unaffected by the coronavirus pandemic. At the same time, the net sales of Grano and Carrot in particular declined during the third quarter due to the pandemic and related uncertainties. As a result of the decrease in net sales and the increase in general uncertainty, significant cutbacks were continued in the Panostaja segments. The streamlining measures supported the segments’ net sales, and, overall, the operational EBIT remained at the level of the reference during the third quarter.
The decline in Grano’s demand during the third quarter primarily affected sheet printing and large-scale prints. Net sales for the period dropped 22% from the reference period. Thanks to the adaptation measures, however, the operational EBIT increased nearly to the reference period level.
During the third quarter, Carrot’s net sales dropped by 34% from the reference period due to the slowdown in general economic activity. The development project initiated in March was actively continued and the company managed to significantly cut back on its expenditures. The company also furthered a number of measures to build growth by expanding its operations to two new municipalities.
During the spring season, the coronavirus pandemic had a significant impact on the corporate acquisition market as the effects of the economic lockdown measures, the growth in uncertainty and deteriorated loan terms led to a clear decline in activity as well as the suspension of many ongoing projects on the markets. That being said, activity in the corporate acquisitions market has increased after the summer. The availability of new projects has increased substantially, and we are still actively exploring new corporate acquisition opportunities.”
Impacts of Covid 19
The impacts of the coronavirus pandemic on the business operations of Panostaja and its segments started in mid-March with the pandemic itself and the lockdown and restriction measures implemented to prevent its propagation began to eat into demand and cause general uncertainty. Global and domestic forecasts regarding economic growth have declined significantly after the onset of the pandemic. Panostaja and its segments instituted a number of measures to safeguard their staff immediately after the outbreak.Remote work arrangements and restrictions on meetings were implemented where possible. The Panostaja companies also used these models to continue their efforts in the second half of the year. In addition to this, the companies have responded to the decreased demand through cutbacks and layoffs. The companies have also implemented a wide range of measures to secure funding in the event that the crisis persists. These measures include flexibility in terms of funding, such as postponing loan payments, utilizing the full extent of the payment terms of fiscal payments, and active efforts to repatriate any receivables.
Panostaja tests intangible and tangible assets for impairment whenever there are signs that their value may have decreased. Goodwill and other intangible assets with infinite useful life are tested for impairment at least once a year. For the purposes of the testing, goodwill and intangible assets with infinite useful life are allocated to cash-generating units. The amount recoverable by cash-generating units is based on calculations of service value. Formulating these calculations requires the use of estimates. Panostaja has recognized the impairment risk with regard to certain segments and prepared estimates on their future prospects. Panostaja segment Carrot has demonstrated weaker-than-expected development of net sales and EBIT, which is why Panostaja has, as part of goodwill impairment testing, reviewed Carrot’s prospects as well as the assumptions related to its activities and operating environment. Based on the impairment testing, Carrot’s consolidated goodwill will be written down by MEUR 3.3. Carrot’s remaining amount of goodwill is MEUR 4.6. During the coronavirus pandemic, the estimates for Panostaja’s other segments have entailed a significant degree of uncertainty and write-downs have been deemed unnecessary at this time. However, the situation will be monitored closely and reassessed during the financial period.
| Key Figures MEUR | Q3 | Q3 | 9 months | 9 months | 12 months |
| 5/20- 7/20 | 5/19- 7/19 | 11/19- 7/20 | 11/18- 7/19 | 11/18- 10/19 | |
| Net sales, MEUR | 34.5 | 43.0 | 118.3 | 135.2 | 182.9 |
| EBIT, MEUR | 1.0 | 0.0 | 1.5 | 2.1 | 3.8 |
| Profit before taxes, MEUR | 0.3 | -0.5 | -0.3 | 0.7 | 1.9 |
| Profit/loss for the financial period, MEUR | -0.2 | 1.7 | -1.9 | 2.1 | 2.5 |
| Distribution: | |||||
| Shareholders of the parent company | -0.2 | 1.9 | -1.9 | 1.9 | 1.6 |
| Minority shareholders | 0.0 | -0.2 | 0.0 | 0.2 | 0.9 |
| Earnings per share, undiluted (EUR) | 0.00 | 0.36 | -0.04 | 0.04 | 0.03 |
| Interest-bearing net liabilities | 65.8 | 54.6 | 65.8 | 54.6 | 53.7 |
| Gearing ratio, % | 90.2 | 68.4 | 90.2 | 68.4 | 67.5 |
| Equity ratio, % | 34.0 | 42.6 | 34.0 | 42.6 | 41.3 |
| Equity per share (EUR) | 0.87 | 1.00 | 0.87 | 1.00 | 0.96 |
| Division of the net sales by segment MEUR | Q3 | Q3 | 9 months | 9 months | 12 months |
| Net sales | 5/20- 7/20 | 5/19- 7/19 | 11/19- 7/20 | 11/18- 7/19 | 11/18- 10/19 |
| Grano | 23.1 | 29.6 | 80.9 | 96.4 | 129.7 |
| Helakeskus | 1.8 | 2.0 | 5.6 | 5.9 | 8.0 |
| Hygga | 1.0 | 1.2 | 3.1 | 3.6 | 4.7 |
| Heatmasters | 1.0 | 1.0 | 3.1 | 2.6 | 4.2 |
| CoreHW | 1.5 | 1.2 | 6.2 | 3.8 | 5.7 |
| Carrot | 3.6 | 5.6 | 11.4 | 15.5 | 20.8 |
| Oscar Software | 2.6 | 2.5 | 8.2 | 7.6 | 10.1 |
| Others | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Eliminations | 0.0 | -0.1 | -0.2 | -0.2 | -0.3 |
| Group in total | 34.5 | 43.0 | 118.3 | 135.2 | 182.9 |
| Division of EBIT by segment MEUR | Q3 | Q3 | 9 months | 9 months | 12 months |
| EBIT | 5/20- 7/20 | 5/19- 7/19 | 11/19- 7/20 | 11/18- 7/19 | 11/18- 10/19 |
| Grano | 0.7 | 0.0 | 1.5 | 2.3 | 4.1 |
| Helakeskus | 0.2 | 0.1 | 0.4 | 0.3 | 0.5 |
| Hygga | 0.1 | 0.0 | 0.0 | -0.1 | -0.2 |
| Heatmasters | 0.1 | 0.0 | 0.3 | -0.1 | 0.2 |
| CoreHW | -0.2 | 0.1 | 0.4 | 0.1 | 0.4 |
| Carrot | 0.0 | 0.1 | -0.5 | -0.5 | -0.4 |
| Oscar Software | 0.5 | 0.1 | 1.0 | 0.3 | 0.2 |
| Others | -0.4 | -0.5 | -1.5 | -0.3 | -1.1 |
| Group in total | 1.0 | 0.0 | 1.5 | 2.1 | 3.8 |
Outlook for the 2020 Financial Period
The onset of the coronavirus pandemic and the measures implemented to curb it are affecting the markets in which Panostaja Oyj’s segments operate. This has a substantial impact on Panostaja’s net sales and profit/loss for the 2020 financial period. At the moment, it is impossible to determine the full extent of the financial effects as they are dependent on the duration and scope of the measures to limit the propagation of the virus and the rate at which the markets eventually recover. Due to this, Panostaja withdrew the forecasts for the 2020 financial period on March 27, 2020 and has not released new forecasts.
Panostaja Oyj
Board of Directors
For further information, contact CEO Tapio Tommila, +358 (0)40 527 6311
Panostaja Oyj
Tapio Tommila
CEO
This is not an interim report compliant with the IAS 34 standard. The company observes the six-monthly reporting practice prescribed in the Finnish Securities Markets Act and publishes business reports for the initial three and nine months of each year, presenting the key information on the company’s financial development. The financial information presented in the business report has not been audited.
Panostaja is an investment company developing Finnish start-ups in the role of an active shareholder. The company aims to be the most sought-after partner for business owners selling their companies as well as for the best managers and investors. Together with its partners, Panostaja increases the Group's shareholder value and creates Finnish success stories.
Panostaja has a majority holding in seven investment targets. Grano Oy is the most versatile expert of content services in Finland. Heatmasters Group offers heat treatment services for metals in Finland and internationally, as well as produces, develops and markets heat treatment technology. Hygga Oy is a company providing health care services and the ERP system for health care providers. Suomen Helakeskus Oy is a major wholesaler of furniture fittings in Finland. CoreHW provides high added value RF IC design services. Carrot provides staffing, recruitment and outsourcing services. Oscar Software provides ERP systems and financial management services.
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