Interim report 1 January 31 March

Transcription

1 2007 Interim report 1 January 31 March

2 2/15 - INTERIM REPORT JANUARY 1 - MARCH 31, 2007 Net sales totaled MEUR 28.9 (MEUR 26.5), up 9% on the comparison period. Operating profit, MEUR 1.9 (MEUR 1.1), and profit before tax, MEUR 2.2 (MEUR 1.4), improved. Earnings per share were EUR 0.41 (EUR 0.24). The order intake was MEUR 15 (MEUR 10), and the order book at the end of the period, MEUR 68 (MEUR 39), was at a good level. Net sales are expected to grow moderately in 2007 and operating profit to clearly improve over KEY FIGURES Q1/2007 Q1/ Net sales, MEUR Change 9 % 43 % 2 % Operating profit, MEUR Profit before tax, MEUR Equity ratio 61 % 53 % 60 % Assets total, MEUR Earnings per share (EPS), EUR Order intake (Projects), MEUR Order book, MEUR Capital expenditure, MEUR R&D, share of net sales 3,5 % 3,8 % 3,5 % MR TAPANI KIISKI, PRESIDENT AND CEO: PROMISING START ON THE YEAR Our customers continue to show solid faith and confidence in the development of their businesses. This has helped to keep the demand for Raute s technology at a healthy level during the first months of the year. Fluctuations in the order intake are normal in the project business. Our order book at the beginning of 2007 was strong enough to keep it at a good level despite the low order intake in the early part of the year. The result development was positive in the first quarter and are doing better than last year in terms of both net sales and result. Our performance has benefited most from order book scheduling, as well as the success and enhancement of our own operations. We have kept our project schedules and expenses to those planned. In technology services, the high order intake of early 2007 promises a good outlook for the rest of the year. We have been particularly delighted with the improvement in our profitability and order book in North America, which has taken place under extremely tough market conditions. Most of our operations and, consequently, our expenses are located in Finland, making the state and competitiveness of domestic labor markets critical to Raute s competitive edge in terms of costs, reliable deliveries, and quality. While our strategy focuses on developing our partner network and the subsidiary launched in China last year, the competitiveness of costs and available capacity in Finland and its neighboring areas is also very critical to Raute. Our positive first quarter performance in 2007 offers a good starting point for improving Raute s net sales and profitability from last year. We will all cooperate to achieve this goal.

3 3/15 MARKET SITUATION Market situation in customer industries The market situation in Raute s customer industries has continued to be good in early 2007 in all of the main market areas except for North America. The demand, production volumes, and prices of plywood and LVL have remained at a good level. and LVL industries. The company s position is based on the latest technology on the market, a comprehensive offering of technology and services, and successful reference deliveries. The investments made in product development maintain and reinforce Raute's competitive position. Several negotiations are now under way for deals on products that were in the first-delivery phase in The construction and renovation markets in North America are still slow, which has affected the demand for plywood and LVL, as well as their prices. The North American markets are not expected to show an upswing until Demand for wood products technology The demand for investments in the plywood, veneer, and LVL industries remained good, with the exception of North America. Compared to last year, demand has been brisker for medium-sized production line projects and modernizations. Several mill-scale projects are still in the planning phase, and some of them are expected to proceed to the decision-making phase this year. Technology services have seen healthy demand. Order intake and order book Raute s business consists of project deliveries and technology services to the wood products industry. Project deliveries encompass complete mills, production lines, and single machines and equipment. Technology services include maintenance, spare part services, modernizations, consulting, training, and sales of reconditioned machinery. The good order intake for technology services, especially for modernizations, is an indication of the development of Raute s service offering. NET SALES AND RESULT Net sales for the report period were EUR 28.9 million (MEUR 26.5), up 9 percent on the comparison period. The distribution of net sales by market area was influenced by the four big mill-scale orders received in North America s share of net sales rose to 32 percent (17%). Europe accounted for 31 percent (15%), Russia for 21 percent (9%), and other market areas for 16 percent (59%) of net sales. Net sales were generated exclusively by project deliveries and technology services related to the wood products technology business. Technology services were 45 percent up on the comparison period and they accounted for 22 percent (16%) of the net sales. The Group s operating profit, EUR 1.9 million (MEUR 1.1), and profit before tax, EUR 2.2 million (MEUR 1.4), increased from the comparison period. The profit for the period was EUR 1.6 million (MEUR 0.9), and earnings per share were EUR 0.41 (EUR 0.24). The first quarter order intake amounted to EUR 15 million (MEUR 10). As for projects, the order intake remained low at EUR 5 million (MEUR 4), while technology services were up on the previous year, recording an order intake of EUR 10 million (MEUR 6). The order book at the end of the report period was EUR 68 million (MEUR 39). Competitive position Raute is in a good competitive position and at its strongest in major projects for the plywood, veneer, FINANCING The Group's financial position remained good. At the end of the year, gearing was percent (-26.2%) and equity ratio 60.8 percent (52.9%). The balance sheet total decreased by EUR 12.1 million over the period, amounting to EUR 56.4 million (MEUR 54.4) at the end of the report period. The fluctuation in balance sheet items and the key ratios based on them results from differences in the timing of customer payments and the cost accumulation from project deliveries, which is typical of project business.

4 4/15 Liquid assets stood at EUR 11.7 million (MEUR 7.3) at the end of the report period. Operating cash flow was EUR 10.3 million negative (MEUR -2.0), and investing cash flow was EUR -0.4 million (MEUR -0.4). Financing cash flow, EUR -1.7 million (MEUR -1.7), includes EUR 2.8 million in dividend payments for The Meeting authorized the Board to decide on the acquisition of a maximum of 400,000 of the company s own series A shares using distributable funds. The Annual General Meeting authorized the Board to decide on a directed issue of a maximum of 400,000 of the company s series A shares. Interest-bearing liabilities amounted to EUR 0.6 million (MEUR 0.8) at the end of the period, and unused credit limits to EUR 15 million. The company also has a EUR 10 million commercial paper program. RESEARCH AND DEVELOPMENT COSTS AND CAPITAL EXPENDITURE Research and development costs totaled EUR 1.0 million (MEUR 1.0), representing 3.5 percent (3.7%) of net sales. The total amount of investments was EUR 0.4 million (MEUR 0.4). CORPORATE GOVERNANCE All of the Board members are independent of the company. Chairman Jarmo Rytilahti and two of the members (Pekka Paasikivi and Jorma Wiitakorpi) are independent of major shareholders. Mr. Jarmo Rytilahti continues as the chairman of the Appointments Committee, while Ms. Sinikka Mustakallio and Mr. Ville Korhonen, a representative of a major shareholder, continue as its members. As previously, the Working Committee is chaired by Mr. Jarmo Rytilahti and its members are Ms. Sinikka Mustakallio and Mr. Pekka Paasikivi. PERSONNEL SHARES The Group s headcount at the end of the report period was 556 (531). Group companies outside of Finland accounted for 23 percent (22%) of employees. The number of personnel converted to full-time employees was approximately 546 (530). ANNUAL GENERAL MEETING Raute Corporation s Annual General Meeting held on March 21, 2007, adopted the financial statements for 2006, released those accountable from liability, and decided to distribute a dividend of EUR 0.70 per share. After re-election, Mr. Jarmo Rytilahti will continue as Chairman of the Board, Ms. Sinikka Mustakallio as Vice- Chairperson, and Mr. Mika Mustakallio, Mr. Panu Mustakallio, Mr. Pekka Paasikivi, and Mr. Jorma Wiitakorpi as Board members. Authorized Public Accountants Anna-Maija Simola and Antti Unkuri were elected as auditors, and Ernst&Young Oy, an authorized public accounting company, as deputy auditor. The number of Raute Corporation s shares at the end of the report period totaled 4,004,758, of which 991,161 were series K shares (ordinary share, 20 votes/share) and 3,013,597 series A shares (1 vote/share). The shares have a nominal value of two euro. Series K shares can be converted to series A shares under the terms described in section 3 of the Articles of Association. If a series K share is transferred to a new owner who does not previously hold series K shares, other shareholders of the K series have the right to redeem the share under the terms described in Section 4 of the Articles of Association. Raute Corporation's series A shares are listed on the Nordic list of the OMX Nordic Exchange in Helsinki. The trading code is RUTAV. Raute Corporation has signed a market making agreement with Nordea Bank Finland plc in compliance with the Liquidity Providing (LP) requirements issued by the OMX Nordic Exchange in Helsinki. A total of 171,632 (311,104) series A shares worth EUR 2.3 million (MEUR 4.9) were traded in the report period. The share price at the end of the period was EUR 13.3

5 5/15 (EUR 16.31). The highest quotation was EUR (EUR 17.60) and the lowest EUR 12.4 (EUR 14.25). The average price was EUR (EUR 15.62). The company's market capitalization at the end of the report period was EUR 53.3 million (MEUR 62.2), with series K shares valued at the closing price of series A shares on March 31, 2007, that is EUR 13.3 (EUR 16.31). SEASONAL FLUCTUATION IN BUSINESS The Group s net sales and working capital fluctuate in every quarter due to different types of project deliveries and their schedules. Business does not involve systematic seasonal changes, with the exception of technology services delivered to Finland, many of which take place during service shutdowns in the summer. Board authorizations BUSINESS RISKS The company's Board of Directors has been authorized by the Annual General Meeting to decide on the buyback and directed issue of a maximum of 400,000 of the company's series A shares. The authorizations are effective until the next Annual General Meeting. The Board of Directors has not exercised this authorization. SHAREHOLDERS The number of shareholders totaled 1,144 at the beginning of the year and 1,170 (1,014) at the end of the report period. Series K shares are held by 46 private individuals (46). The management held 4.7 percent (4.6%) of company shares and 9.1 percent (8.9%) of votes. Nominee-registered shares accounted for 1.3 percent (1.0%) of shares. The company did not possess company shares during the report period or hold them as security. Hedging of foreign currency receivables Items related to business payments and denominated in foreign currency are hedged with currency derivatives when contracts take effect. Forward contracts in Canadian and US dollars related to the economic hedging of payments from binding sales agreements had a nominal value of EUR 10.3 million (MEUR 8.2) at the end of the report period. The measurement of these forward contracts in compliance with IFRS improved the company's net sales and operating profit by EUR 0.1 million (MEUR 0.2) compared to the Finnish Accounting Standards. Forward contracts in Canadian and US dollars related to fair value hedging had a nominal value of EUR 6.4 million (MEUR 0.0) at the end of the report period. Hedge accounting had a positive impact of EUR 25 thousand (MEUR 0.0) on the period s result. No flagging notifications were given to the company in the report period. DIVIDEND FOR THE REPORT PERIOD 2006 Forward contracts in Canadian dollars related to the economic hedging of financing items had a nominal value of EUR 2.6 million (MEUR 6.7) at the end of the year. The Annual General Meeting decided to distribute a dividend of EUR 0.70 per share for Dividends total EUR 2,803,330.60, with series A shares accounting for EUR 2,109, and series K shares for EUR 693, The date of dividend payment was April 2, OUTLOOK FOR 2007 The wood products industry is expected to continue its brisk investments. This year demand will spread more evenly over projects of various size. Strong demand for investments will continue in Russia. Thanks to a good order book and steady demand, the net sales for 2007 are predicted to grow moderately from last year s figures and operating profit is expected to clearly improve.

6 6/15 CONSOLIDATED INTERIM FINANCIAL STATEMENTS JANUARY 1 MARCH 31, 2007 (Figures in EUR 1 000) CONSOLIDATED INCOME STATEMENT Note NET SALES 2, 3, Other operating income Increase (+) or decrease (-) in inventories of finished goods and work in progress Materials and services Expenses from employee benefits Depreciation, amortization and impairment charges Other operating expenses Total operating expenses OPERATING PROFIT / LOSS % of net sales 7 % 4 % 4 % Financial income Financial expenses PROFIT / LOSS BEFORE TAX % of net sales 7 % 5 % 5 % Income taxes PROFIT / LOSS FOR THE PERIOD % of net sales 6 % 3 % 3 % Breakdown Minority interest Share of profit / loss that belongs to owners of the parent company Earnings per share, EUR Undiluted earnings per share 0,41 0,24 0,94 Diluted earnings per share 0,41 0,24 0,94 Shares Adjusted average number of shares Adjusted average number of shares diluted

7 7/15 CONSOLIDATED BALANCE SHEET Note ASSETS Fixed assets and other non-current assets - Intangible assets Tangible assets Available-for-sale investments Receivables Deferred tax assets Total Current assets - Inventories Account receivables and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents Total TOTAL ASSETS SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity - Share capital Share premium Other funds Retained earnings Profit / loss for the period Share of shareholders' equity that belongs to owners of the parent company Minority interest Total shareholders' equity Long-term liabilities - Provisions Deferred tax liabilities Long-term interest-bearing liabilities Total Current liabilities - Provisions Pension obligations Short-term interest-bearing liabilities Advance payments received Current tax liabilities Trade and other payables Total Total liabilities TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

8 8/15 CONSOLIDATED CASH FLOW STATEMENT CASH FLOW FROM OPERATING ACTIVITES Proceeds from sales Proceeds from other operating income Payments of operating expenses Cash flow before financial items and taxes Interests and other operating financial expenses paid Interests and other income received Dividends received Income taxes paid NET CASH FLOW FROM (+) / USED IN (-) OPERATING ACTIVITIES (A) CASH FLOW FROM INVESTING ACTIVITIES Capital expenditure in tangible and intangible assets Purchases of available-for-sale as investments Proceeds from sale of tangible and intangible assets Proceeds from other investments NET CASH FLOW FROM (+) / USED IN (-) INVESTING ACTIVITIES (B) CASH FLOW FROM FINANCING ACTIVITIES Repayments of long-term and short-term loan receivables Repayment of short-term liabilities Repayment of long-term liabilities Proceeds from issuance of shares Dividends paid NET CASH FROM (+) / USED IN (-) FINANCING ACTIVITIES (C) NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) increase (+) / decrease (-) CASH AND CASH EQUIVALENTS*) - AT THE BEGINNING OF THE PERIOD AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS IN THE BALANCE SHEET AT THE END OF THE PERIOD Financial assets at fair value through profit or loss Cash and cash equivalents Total *) Cash and cash equivalents comprise trading assets as well as cash and bank receivables, which wil be due within the following three month's period.

9 9/15 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Share Exchange Retained capital premium Other funds rate diff. earnings EQUITY Jan. 1, Exchange differences from net investments -25 Taxes related to items recognized in equity or transferred from equity 7 Translation differences 37 Other increase/decrease Net income recognized directly in equity Profit for the period Total income and expenses recognized in the period Share capital increase (options) Dividend Equity-settled share-based transactions 16 EQUITY March 31, CONSOLIDATED STATEMENT (continue) OF CHANGES IN SHAREHOLDERS' EQUITY Owners of the parent company Minority interest EQUITY TOTAL EQUITY Jan. 1, Exchange differences from net investments Taxes related to items recognized in equity or transferred from equity 7 7 Translation differences Other increase/decrease 0 0 Net income recognized directly in equity Profit for the period Total income and expenses recognized in the period Share capital increase (options) 0 0 Dividend Equity-settled share-based transactions EQUITY March 31,

10 10/15 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Share Exchange Retained capital premium Other funds rate diff. earnings EQUITY Jan. 1, Exchange differences from net investments Taxes related to items recognized in equity or transferred from equity Translation differences 263 Other increase/decrease Net income recognized directly in equity Profit for the period 927 Total income and expenses recognized in the period Share capital increase (options) Dividend Equity-settled share-based transactions EQUITY March 31, CONSOLIDATED STATEMENT (continue) OF CHANGES IN SHAREHOLDERS' EQUITY Owners of the parent company Minority interest EQUITY TOTAL EQUITY Jan. 1, Exchange differences from net investments 0 0 Taxes related to items recognized in equity or transferred from equity 0 0 Translation differences Other increase/decrease 0 0 Net income recognized directly in equity Profit for the period Total income and expenses recognized in the period Share capital increase (options) 0 0 Dividend Equity-settled share-based transactions 0 0 EQUITY March 31, NOTES GENERAL INFORMATION Raute Corporation s Board of Directors has on, reviewed the Group s Interim financial statements for January 1 March 31, 2007, and decided to publish Raute Corporation s Interim financial reporting for January 1 March 31, 2007, in compliance with this release. 1. ACCOUNTING PRINCIPLES Raute Corporation s Interim financial reporting has been drawn up in compliance with IFRS 34. Raute Group s Interim financial statements for January 1 March 31, 2007, included in the Interim financial reporting do not contain the full notes and other information presented in Financial statements. Therefore, the Interim financial reporting should be read in conjunction with the Financial statements published for The figures presented in the Interim financial reporting have not been audited. Figures in parentheses refer to the corresponding figures in the comparison year.

11 11/15 On January 1, 2007, the Group adopted the following standards and interpretations issued by IASB: - IFRIC 8: Scope of IFRS 2, - IFRIC 9: Reassessment of Embedded Derivatives, - IFRIC 10: Interim Financial Reporting and Impairment, - IFRS 7 Financial Instruments: Disclosures, and - IAS 1 Amendment to disclosures about capital in financial statements. The adoption of the standards has not had any material impact on the figures in the Interim financial statements. In other respects, the Group has followed the accounting principles described in the Financial statements for Segment information Primary reporting segment Raute's primary reporting segment is the business segment. Continuing operations belong to the wood products technology segment. Secondary reporting segment The secondary reporting segment is geographical. The geographical segment consists of market areas accounting for over 10% of the Group's net sales. Geographical reporting segment information Net sales to external clients by clients' geographical location 2007 % 2006 % 2006 % North America Europe Russia South America Rest of the world TOTAL Assets by geographical location North America Europe Russia South America Rest of the world TOTAL Capital expenditure by geographical location North America Europe Russia South America Rest of the world TOTAL

12 12/15 3. Proceeds from sales Net sales by market area 2007 % 2006 % 2006 % North America Russia Rest of Europe South America Finland Asia Oceania Others TOTAL Long-term projects Project revenues entered as income from currently undelivered long-term projects recognized by percentage of completion Amount of long-term projects revenues not yet entered as income Specification of combined asset and liability items: Accrued income corresponding to revenues by percentage of completion Advances received from project customers Project receivables included in short-term receivables Personnel effective, on average in books, on average in books, at the end of period Research and development costs Research and development costs on the period Depreciation of capitalized development costs Recognized as assets in balance sheet Research and development costs entered as expenses for the period Share-based payments The effect of the share-based remunerations to the profit of Raute Group was EUR 30 thousand. At the end of the report period the current value of the cash portion was EUR per share. The current value of share-based remunerations was EUR 0.30 million total. 8. Off balance sheet commitments Security of own debts - mortgages Security for Group's liabilities - guarantees issued Other own liabilities Leasing and rent liabilities - for the current accounting period for subsequent accounting periods No loans or pledges have been given or other commitments made on behalf of the company's management, shareholders or associated companies.

13 13/15 9. Currency derivatives Currency derivatives are used for currency hedging purposes. Nominal values of forward contracts in foreign currency Economic hedging - related to financing related to hedging of net sales Hedge accounting - related to the hedging of net sales Fair values of forward contracts in foreign currency Economic hedging - related to financing related to the hedging of net sales Hedge accounting - related to the hedging of net sales Purchased currency options - nominal values fair values 13 GROUP KEY RATIOS Return on investment, ROI 30,1 % 23,4 % 18,6 % Return on equity, ROE 22,7 % 14,5 % 13,1 % Quick ratio 2,1 1,7 2,7 Gearing -39,4 % -26,2 % -80,3 % Equity ratio 60,8 % 52,9 % 60,1 % Order book, EUR million Order intake, EUR million Exported portion of net sales 88,8 % 94,3 % 90,2 % Change in net sales 9,0 % 43,3 % 2,2 % Gross capital expenditure, EUR million 0,4 0,4 1,9 Gross capital expenditure of net sales 1,2 % 1,6 % 1,7 % Research and development 1,0 1,0 3,8 Research and development of net sales 3,5 % 3,8 % 3,5 % Earnings per share (EPS), EUR - basic 0,41 0,24 0,94 - diluted 0,41 0,24 0,94 Equity to share, EUR 7,03 6,50 7,32 Dividend per share series K shares, EUR 0,70 Dividend per share series A shares, EUR 0,70 Dividend per profit 74,5 % Effective dividend return 5,5 % Share price at the end of period, EUR 13,30 16,31 12,85 Number of shares - weighted average, pcs diluted, pcs

14 14/15 THE DEVELOPMENT OF QUARTERLY RESULTS Q 1 Q 4 Q 3 Q 2 Rolling Rolling NET SALES Other operating income Increase (+) or decrease (-) in inventories of finished goods and work in progress Materials and services Expenses from employee benefits Depreciation, amortization and impairment charges Other operating expenses Total operating expenses OPERATING PROFIT / LOSS % of net sales 7 % 7 % -2 % 5 % 5 % 4 % Financial income Financial expenses PROFIT / LOSS BEFORE TAX % of net sales 7 % 7 % -1 % 5 % 5 % 5 % Income taxes PROFIT / LOSS FOR THE PERIOD % of net sales 6 % 5 % -2 % 5 % 4 % 4 % Breakdown Minority interest Share of profit / loss that belongs to owners of the parent company Earnings per share, EUR Undiluted earnings per share 0,41 0,44-0,08-0,34 Diluted earnings per share 0,41 0,44-0,08-0,33 Shares Adjusted average number of shares Adjusted average number of shares, diluted

15 15/15 Number of K-shares (20 votes per share) Number of A-shares (1 vote per share) Total number of shares THE LARGEST SHAREHOLDERS 31, March Sundholm Göran Varma Mutual Pension Insurance Company Suominen Jussi Matias Suominen Tiina Sini-Maria Mustakallio Kari Pauli Kirmo Kaisa Marketta Suominen Pekka Matias Siivonen Osku Pekka Keskiaho Kaija Leena Särkijärvi Riitta Mustakallio Mika Mustakallio Risto Mustakallio Ulla Sinikka Op-Suomi Arvo Sijoitusrahasto Mustakallio Marja Helena Mustakallio Kai Henrik Kirmo Lasse Antti Särkijärvi Timo Juha Särkijärvi-Martinez Anu Riitta Sr Fides Finland Focus TOTAL Share of total amount of shares 67,8 % 51,4 % 55,4 % Share of total voting rights 67,8 % 51,4 % 65,6 % Administrative registered OTHER SHAREHOLDERS TOTAL MANAGEMENT'S SHAREHOLDING Share of total amount of shares 10,0 % 3,0 % 4,7 % Share of total voting rights 10,0 % 3,0 % 9,1 % Board of Directors FURTHER INFORMATION: Mr. Tapani Kiiski, President and CEO, Raute Corporation, tel , mobile Ms. Arja Hakala, CFO, Raute Corporation, tel , mobile RAUTE IN BRIEF: Raute is a technology company serving the wood products industry worldwide. Its most important customers are the plywood and LVL industries. The company is one of the world s leading suppliers of mill-scale projects to these customer industries. The total service concept also includes technology services, with which Raute supports its customers throughout the entire life cycle of their investments. Raute's head office and main production plant are in Nastola, Finland. Its other production plants are in the Vancouver area of Canada and in Jyväskylä and Kajaani, Finland. Net sales in 2006 were EUR 106 million and the number of personnel 540. More information about the company can be found at DISTRIBUTION: OMX Nordic Exchange in Helsinki, main media,