PKC Group Oyj STOCK EXCHANGE RELEASE 18 APRIL a.m.

Transcription

1 PKC Group Oyj STOCK EXCHANGE RELEASE 18 APRIL a.m. PKC GROUP S QUARTELY REPORT JANUARY MARCH/2008 The PKC Group s net sales in the January-March period increased by 21.6% on the previous year to EUR 85.1 million (70.0 million in Jan. Mar. 2007). Operating profit was EUR 9.3 million (6.5 million) and profit before taxes was EUR 7.3 million (6.1 million). Diluted earnings per share were EUR 0.26 (0.24). HARRI SUUTARI, PRESIDENT AND CEO: The continued vigorous growth in our customer sectors contributed to the excellent operational result in the early part of the year. In order to maintain good profitability also in the long term, we need to carry out measures for improving our cost-efficiency. These measures will boost our competitiveness. Our new line organisation, which is based on our production organisations, will increase management efficiency and considerably decrease management and administrative costs. By speeding up our rationalisation measures and carrying out production more efficiently, we will be able to cut our current annual costs by about EUR 20 million in the coming three years. OPERATING ENVIRONMENT The commercial vehicle market grew compared to the same period a year ago. Deliveries by the Wiring Harnesses business to the commercial vehicle industry in Europe and South America were at a high level. The deliveries of wiring harnesses for other vehicles enjoyed a favourable trend. Sales of wiring harnesses and cabling to the telecommunications and electronics industry have grown considerably compared to the previous year. Electronics contract design and manufacturing continued to exhibit strong growth during the report period. Investments made by telecommunications customers led to an increase in the volume of design services, and demand from the industrial electronics sector also remained robust. Competition for new supply contracts and customer relationships remains intense, requiring the adoption of cost-efficient operating models and the ability to rapidly respond to customers global needs. NET SALES AND FINANCIAL PERFORMANCE January-March 2008 Consolidated net sales in January-March amounted to EUR 85.1 million (70.0 million), up 21.6% on the same period a year earlier. Consolidated operating profit totalled EUR 9.3 million (6.5 million), accounting for 11.0% of net sales (9.3%). Depreciation amounted to EUR 2.0 million (2.1 million). Financial income and expenses were EUR 2.0 million negative (0.4 million negative). Profit before taxes was EUR 7.3 million (6.1 million). Profit for the report period totalled EUR 4.6 million (4.3 million). Diluted earnings per share were EUR 0.26 (0.24). Net sales generated in the report period by the Wiring Harnesses business amounted to EUR 69.3 million (58.1 million), or 19.3% more than in the comparative period. The segment s share of consolidated net sales was 81.5% (83.0%). It generated an operating profit of EUR 7.0 million (4.9 million), equivalent to 10.1% of the segment s net sales (8.5%). Net sales generated by the Electronics business grew 33.1% to EUR 15.8 million (11.8 million). The segment s share of consolidated net sales was 18.5% (16.9%). It generated an operating profit of EUR 2.3 million (1.5 million), equivalent to 14.7% of the segment s net sales (12.8%).

2 The Group s net sales grew in both business segments thanks to strong demand from customer sectors. Operational profitability was at a good level both in the Wiring Harnesses and the Electronics business. Business operations in North America were successfully brought to a profitable level during the period, but the result of North American operations is burdened by provisions made for their restructuring, which will be completed during the second and third quarters of this year. BALANCE SHEET AND FINANCING Consolidated total assets at 31 March 2008 stood at EUR million (156.0 million). Interest-bearing liabilities totalled EUR 46.2 million at the close of the report period (48.2 million). The Group s equity ratio was 46.0% (44.2%). Net liabilities totalled EUR 37.1 million (42.2 million) and gearing was 46.9% (61.2%). Inventories amounted to EUR 45.0 million (36.2 million). Current receivables totalled EUR 71.1 million (70.4 million). Cash flows from investing activities during the report period were EUR 8.5 million (4.8 million negative). Cash in hand and at bank amounted to EUR 9.1 million (6.1 million). In order to ensure financing flexibility, PKC has available credit facilities. CAPITAL EXPENDITURES During the report period, the Group s gross capital expenditures totalled EUR 2.5 million (3.3 million), representing 2.9% of net sales (4.7%). Capital expenditures consisted mostly of the acquisition of production machinery and equipment. RESEARCH AND DEVELOPMENT Research and development expenditure totalled EUR 1.6 million (1.1 million), representing 1.8% (1.6%) of consolidated net sales. At the end of the report period, 94 (79) people were employed in product development. PERSONNEL During the report period, the Group had an average payroll of 5,538 employees (4,740). At the end of the report period, the Group s personnel numbered 5,597 employees (4,831), of whom 4,857 (4,154) worked abroad and 740 (677) in Finland. QUALITY AND THE ENVIRONMENT The Group s wiring harnesses operations in Europe have been certified in accordance with the requirements of the ISO/TS and ISO 9001 standards and the ISO standard. The factories in China and Pskov, Russia, possess an ISO certificate and will be certified in accordance with the requirements of the ISO/TS and ISO 9001 standards in the first half of the year. The North American wiring harnesses operations have also been certified in accordance with ISO/TS 16949, and the objective is to obtain a ISO certificate for the environmental system at the Mexican factory in the spring of The Electronics business s European operations have been certified in accordance with the ISO 9001 and ISO standards. The electronics factory in China will also be certified in the spring of The improvement of the quality of operations is carried out in line with the Group s quality strategy and the global action plans based on it. In accordance with its environmental policy, PKC is committed to continuously minimising the environmental impacts of its operations. The Electronics business and materials sourcing operations strictly comply with the RoHS Directive.

3 ANNUAL GENERAL MEETING The Annual General Meeting on 27 March 2008 passed a resolution to pay a dividend of EUR 0.45 per share, or a total of about EUR 8.0 million. The dividend was paid out on 8 April The Annual General Meeting re-elected the following persons to seats on the Board of Directors: Matti Eestilä, Jaakko Niemelä, Endel Palla, Olli Pohjanvirta, Matti Ruotsala, Harri Suutari and Jyrki Tähtinen. At its organisation meeting, the Board of Directors elected Harri Suutari Chairman and Jyrki Tähtinen Vice Chairman. The firm of independent public accountants Ernst & Young Oy will continue as the company s auditor, with Rauno Sipilä, Authorised Public Accountant, acting as the principal auditor. SHARE TURNOVER AND SHAREHOLDERS PKC Group Oyj s share turnover on OMX Nordic Exchange Helsinki from 1 January to 31 March 2008 was 4,551,043 shares (4,020,843 shares), representing 25.6% of the average number of shares (22.6%). Shares were traded to a total value of EUR 34.7 million (43.8 million). The low during the report period was EUR 6.88 (9.4) and the high was EUR 9.48 (12.40). The closing price on the last trading day of the report period was EUR 7.04 (9.40) and the average price during the period was EUR 7.58 (10.86). The company s market capitalisation at 31 March 2008 was EUR million (167.1 million). Shares held by Board members, their related persons and corporations in which they have a controlling interest accounted for 2.9% (3.1%) of the total number of shares at the end of the report period. PKC Group Oyj had 7,172 shareholders (6,184) at the end of the report period. The proportion of shares held by foreigners and by way of nominee registrations at 31 March 2008 was 25.2% of the shares outstanding (32.7%). SHARE CAPITAL The Board of Directors has been granted authorisation by the Annual General Meeting on 29 March 2007 to decide on one or more share issues and the granting of special rights as defined in Chapter 10, Section 1 of the Companies Act and on all the terms and conditions thereof. A maximum total of 3,500,000 shares may be issued or subscribed for on the basis of the authorisation. The authorisation includes the right to decide on a directed share issue. The authorisation shall remain in force for five years from the date of the resolution of the Annual General Meeting. The authorisation may be used at the Board s discretion for financing corporate acquisitions, for carrying out inter-company co-operation or similar arrangements, or for strengthening the company s financing and capital structure. The Board of Directors does not have a valid authorisation to acquire the company s own shares, and the company does not have any own shares (treasury shares) in its possession. STOCK OPTION SCHEMES In 2006, PKC launched a stock option scheme according to which the maximum total number of stock options to be issued is 697,500, and they are divided into A, B and C warrants. At the close of the report period, the company s key personnel had a total of 192, A warrants and 213, B warrants in their possession. The subscription period for shares through the exercise of stock options shall be during the years The share subscription price for stock options shall be the volume-weighted average price of the PKC Group Oyj share on OMX Nordic Exchange Helsinki, with dividend adjustments, as defined in the stock option terms (at present, EUR for the 2006A, 2006B and 2006C warrants). Through the exercise of the 2006 stock options, the share capital of PKC Group Oyj may be increased by a maximum total of 697,500 new shares and EUR 234, The stock options 2006 are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company s President and CEO is obliged to own these shares for the duration of his managerial contract.

4 EVENTS AFTER THE CLOSE OF THE REPORT PERIOD The Board of PKC Group Oyj decided to terminate the service contract of President and CEO Mika Kari and appointed Chairman of the Board Harri Suutari the new President and CEO as from 3 April The Board elected Matti Ruotsala as its new Chairman. Harri Suutari has resigned from the Board, and the Board will continue with six members. Mika Rytky, Vice President, Wiring Harnesses, has resigned from PKC Group Oyj s service as from 3 April Pekka Korkala and Jaan Murdla have been appointed Vice Presidents in charge of the Wiring Harnesses business, with their areas of responsibility being divided between production units. Jyri Kontio has been appointed Vice President in charge of the Wiring Harnesses business s sourcing, quality and technology. The Corporate Management Team is composed of President and CEO Harri Suutari (Chairman), Pekka Korkala, Jaan Murdla, Jyri Kontio, Vice President (Electronics) Jarmo Rajala and CFO Sami Klemola. SHORT-TERM RISKS AND UNCERTAINTIES The PKC Group strives to manage and limit any adverse effects of risks encountered in its operations. The main risks are the market trend in the demand for the products of its main customers, price pressures imposed by customers and demands for tighter contractual terms, the availability of raw materials and components and changes in their world market prices, as well as the adequacy of production capacity in case demand rises rapidly. The principles, objectives and organisation of the company s risk management as well as key risk areas are described in the risk management section in the Corporate Governance guidelines, which are available on the company's website, OUTLOOK FOR THE FUTURE The higher degree of uncertainty in the global economy has not been reflected in customers orders or forecasts. In accordance with customer forecasts, we expect deliveries to the commercial vehicles industry to grow compared with the previous year. Because of the continuing consolidation trend among customers, competitors and suppliers and with overall demand potentially levelling off, the competitive situation is expected to continue to become tighter. The volume of wiring harnesses deliveries to the rest of the vehicle industry and to customers in the telecommunications and automation industries is expected to increase with the introduction of new product ranges. Competition on the electronics contract design and manufacturing market will remain stiff, calling for costefficiency and the capability to rapidly respond to customers worldwide needs. By offering customers services that cover all stages of a product s life cycle, we will guarantee the continuation of close co-operation based on trust in the future. Consolidated net sales are expected to grow during the current year on the previous year. Owing to the downward trend in selling prices, high raw materials expenses and restructuring expenses, we expect operational profitability to decline, while still remaining at a good level.

5 TABLES CONSOLIDATED INCOME STATEMENT (1000 EUR) 1-3/ / /07 12 NET SALES 85,092 69, ,649 Increase (+) / decrease (-) in stocks of finished goods and work in progress -2, ,668 Other operating income ,009 Raw materials and services 44,873 39, ,665 Staff expenses 19,244 15,742 66,824 Depreciation 1,950 2,085 7,644 Other operating expenses 7,584 6,876 29,022 OPERATING PROFIT 9,342 6,473 28,171 Interest and financial income and expenses ,310 Other financial income and expenses -1, PROFIT BEFORE TAXES 7,309 6,093 25,642 Income taxes -2,684-1,719-8,063 PROFIT FOR THE REPORT PERIOD 4,625 4,374 17,579 Attributable to: Shareholders of the parent company 4,602 4,321 17,374 Minority interest Total 4,625 4,374 17,579 From profit attributable to shareholders of the parent company Basic earnings per share (EPS), EUR Diluted earning per share (EPS), EUR CONSOLIDATED BALANCE SHEET (1000 EUR) 9/07 9/06 12/06 ASSETS NON-CURRENT ASSETS Goodwill 5,676 6,024 6,214 Other intangible assets 3,574 3,329 3,534 Tangible assets 34,624 31,532 34,454 Deffered tax assets 2,202 2,228 3,804 Other receivables Non-current assets total 46,500 43,338 48,393 CURRENT ASSSETS

6 Inventory 45,007 36,191 46,954 Receivables Trade receivables 61,474 62,421 61,176 Other receivables 8,605 7,981 9,001 Receivables total 71,117 70,401 70,176 Cash and cash equivalents 9,132 6,050 10,426 Current assets total 125, , ,556 ASSETS TOTAL 171, , ,949 EQUITY AND LIABILITIES EQUITY Share capital 5,983 5,983 5,983 Share premium account 4,862 4,862 4,862 Reserve fund Translation difference Share-based payment Retained earnings 62,364 53,021 52,970 Profit for the reporting period 4,602 4,321 17,374 Minority interest EQUITY TOTAL 78,956 68,909 82,980 LIABILITIES Non-current liabilities Interest-bearing liabilities 19,721 28,122 21,078 Non-interest-bearing liabilities Provisions Deffered tax liabilities Non-current liabilities total 20,631 28,597 21,752 Current liabilities Interest-bearing liabilities 26,481 20,110 34,606 Trade payables 21,822 17,453 21,173 Other liabilities 23,867 20,911 15,438 Current liabilities total 72,170 58,474 71,217 Liabilities total 92,687 86,848 92,855 EQUITY AND LIABILITIES TOTAL 171, , ,949 CONSOLIDATED CASH FLOW STATEMENT (1000 EUR) 1-3/ / /07 12 Cash flow from operating activities Cash receipts from customers 84,750 63, ,065 Cash receipts from other operating activities

7 Cash paid to suppliers and employees -72,092 62, ,486 Cash flow from operations before financial income and expenses and taxes 12,851 1,054 6,010 Interest paid -2, Interest received and other financial income Income taxes paid ,521 4,489 Net cash from operating activities (A) 10,961-1,496 1,550 Cash flows from investing activities Purchase of tangible and intangible assets 2,410-2,533-11,143 Proceeds from sale of tangible and intangible assets Acquisition of subsidiaries -1,298-1,380 Loans granted Loans received Dividens received Net cash flow from investing activities (B) -2,410-3,292-12,416 Cash flows from financing activities Increase of credits 148 5,000 18,843 Decrease of credits -9,992-2,251-8,642 Dividends paid 0 0-8,077 Net cash used in financing activities (C) -9,844 2,749 2,123 Net increase (+) or decrease (-) in cash and equivalents (A+B+C) -1,293-2,039 2,365 GROUP KEY FINANCIAL INDICATORS 1-3/ / /07 12 Net sales, 1000 EUR 85,092 69, ,649 Operating profit, 1000 EUR 9,342 6,473 28,171 % of net sales Profit before taxes, 1000 EUR 7,309 6,093 25,642 % of net sales Net profit for the period, 1000 EUR 4,602 4,321 17,374 % of net sales Return on equity,(roe) %

8 Return on investments, (ROI) % Net liabilities, 1000 EUR 37,070 42,182 45,258 Gearing, % Equity ratio, % Current ratio Gross capital expenditure, 1000 EUR 2,466 3,271 10,791 % of net sales R&D expenditures, 1000 EUR 1,566 1,141 5,511 % of net sales Personnel average 5,538 4,740 4,971 GROUP PER-SHARE KEY FIGURES 1-3/ / /07 12 Earnings per share (EPS), EUR Earnings per share (EPS),diluted, EUR Equity per share, EUR Share price at close of period, EUR Lowest share price, EUR Highest share price, EUR Average share price, EUR Turnover in shares, 1000 shares 4,551 4,021 17,640 Turnover in shares per (share issue adjusted) share capital, % Average number of shares, 1000 shares 17,782 17,782 17,782 Average number of shares, diluted, 1000 shares 17,585 17,748 17,782 Shares at end of period, 1000 shares 17,782 17,782 17,782 Market capitalisation, 1000 EUR 121, , , SEGMENT INFORMATION 1-3/ / /07 12 NET SALES BY BUSINESS SEGMENTS Wiring Harnesses, 1000 EUR 69,391 58, ,183 Net sales to other segments, 1000 EUR Wiring Harnesses, total, 1000 EUR 69,324 58, ,013

9 Wiring Harnesses, % of net sales Electronics, 1000 EUR 15,996 12,019 59,471 Net sales to other segments, 1000 EUR Electronics, total, 1000 EUR 15,768 11,846 58,636 Electronics, % of net sales Group Total 85,092 69, ,649 OPERATING PROFIT BY BUSINESS SEGMENTS Wiring Harnesses, 1000 EUR 7,018 4,940 18,746 Wiring Harnesses, % of net sales Electronics, 1000 EUR 2,324 1,533 9,424 Electronics, % of net sales Group Total 9,342 6,473 28,171 NET SALES BY GEOGRAPHICAL SEGMENTS (1000 EUR) Finland 15,606 12,487 54,411 Other Europe 45,040 39, ,727 North America 9,338 8,147 30,692 South America 10,711 7,804 36,145 Other Countries 4,396 1,724 13,673 Total 85,092 69, , RECONCILIATION OF EQUITY (MILLION EUR) A = Share Capital B = Share premium account C = Fair value and other reserves D = Retained earnings E = Minority interest F = Total equity A B C D E F Shareholders' equity Profit for the period Dividends Share options used Translation differences

10 Other changes Shareholders' equity Shareholders' equity Profit for the period Dividends Share-based payments Translation differences Other changes Shareholders' equity GROUP CONTINGENT LIABILITIES AT END OF PERIOD (1000 EUR) Leasing liabilities 5,414 6,906 5,668 Liabilities for derivate instruments Nominal values Currency derivates Forward contracts 2,055 6,248 5,740 Option agreements Call ,598 Total 2,846 6,248 7,338 Fair values Currency derivates Forward contracts Option agreements Call Total Currency derivates are used only in hedging currency risks. PKC Group does not apply hedge accounting to derivate instruments in accordance with IAS 39. Fair values of the derivates are entered directly in the income statement. 4. QUARTERLY KEY FIGURES, CONSOLIDATED 10-12/ / / / / /08 3 Net sales, EUR million Operating profit, EUR million % of net sales Profit before taxes, EUR million % of net sales Equity ratio, %

11 Earnings per share (EPS), diluted (EUR) Shareholders equity per share, EUR QUARTERLY KEY FIGURES, WIRING HARNESSESS Net sales, EUR million Operating profit, EUR million % of net sales QUARTERLY KEY FIGURES, ELECTRONICS Net sales, EUR million Operating profit, EUR million % of net sales CALCULATION OF INDICATORS Return on equity (ROE), % = 100 x (Profit before extraordinary items taxes) / Shareholders equity + minority interest (average) Return on investments (ROI), % = 100 x (Profit before extraordinary items - interest and other financial expenses) / Balance sheet total noninterest-bearing liabilities (average) Gearing, % = 100 x (Interest-bearing liabilities cash in hand and at bank and investments) / Shareholders equity + minority interest Equity ratio, % = 100 x (Shareholders equity + minority interest) / Balance sheet total advance payments received Quick ratio = Receivables and cash in hand and at bank / Current liabilities advance payments received Current ratio Receivables and cash in hand and at bank + inventories / Current liabilities Earnings per share (EPS), EUR Profit before extraordinary items income taxes +/- minority interest / Average share issue-adjusted number of shares Shareholders equity per share, EUR Shareholders equity / Share issue-adjusted number of shares on the balance sheet date Market capitalisation Number of shares at the end of the financial period x the last trading price of the financial period

12 The figures presented have not been audited. This Quarterly Report has been prepared in accordance with International Financial Reporting Standards (IFRS). All the future estimates and forecasts presented in this stock exchange release are based on the best current knowledge of the company s management. The estimates and forecasts contain certain elements of risk and uncertainty which, if they materialise, may lead to results that differ from present estimates. The main factors of uncertainty are related, among other things, to the general economic situation, the trend in the operating environment and the sector as well as the success of the Group s strategy. PKC GROUP OYJ Board of Directors Harri Suutari President and CEO For additional information, contact: Harri Suutari, President & CEO, PKC Group Oyj, PRESS CONFERENCE A press conference on the Quarterly Report will be arranged for analysts and investors today, 18 April 2008, at a.m., at the address World Trade Center, Marskin sali, Aleksanterinkatu 17, Helsinki. DISTRIBUTION OMX Nordic Exchange Helsinki Main media The PKC Group offers design and contract manufacturing services for wiring harnesses, cabling and electronics. The Group has production facilities in Finland, Brazil, China, Mexico, Estonia and Russia, and employs over 5,500 people. The Group s net sales in 2007 totalled EUR million. PKC Group Oyj is listed on OMX Nordic Exchange Helsinki.