Year-end report 2009 Published on 11 February 2010

Transcription

1 Year-end report 2009 Published on 11 February 2010 Fourth quarter of 2009 Strong earnings and excellent cash flow Net sales rose to 703 MSEK (697) Operating profit increased 48 per cent to 80 MSEK (54) Profit after tax more than doubled to 68 MSEK (31) Earnings per share rose to 2.56 SEK (1.17) Operating cash flow was strong and totalled 143 MSEK (206) Favourable earnings thanks to forceful cost adjustments in a turbulent market Net sales totalled 2,608 MSEK (3,190), down 18 per cent Operating profit, excluding items affecting comparability, amounted to 261 MSEK (310). Including these items, profit amounted to 163 MSEK (310) Profit after tax, excluding items affecting comparability, amounted to 172 MSEK (183). Including these items, profit amounted to 102 MSEK (183) Earnings per share, excluding items affecting comparability, amounted to 6.48 SEK (6.89). Including these items, earnings per share amounted to 3.84 SEK (6.89) Operating cash flow totalled 462 MSEK (411), excluding items affecting comparability Restructuring costs, recognised during the first quarter, amounted to 98 MSEK The board of directors proposes a dividend of 1,00 SEK per share (0,00) President s comments Our fourth-quarter earnings were strong and a major improvement compared with the corresponding quarter in We more than doubled our earnings per share and our operating profit amounted to 80 MSEK (54), up 48 per cent. We had a continuous improvement in sales, particularly to automotive customers, and yet again we coped with this volume increase in a flexible manner. As a result of continued efficiency in the handling of working capital, combined with our healthy earnings, cash flow remained very strong was a turbulent marked by sharply deteriorating demand. We coped with this situation favourably by taking rapid and forceful actions. We succeeded in achieving earnings per share that were almost in line with the preceding at 6.48 SEK (6.89) (adjusted for items affecting comparability). The strong operating cash flow amounted to 462 MSEK and our net debt was reduced significantly. HEXPOL is well equipped to face Group total Georg Brunstam, President and CEO Key figures MSEK Net sales Operating profit, EBIT Operating margin, % Profit before tax Profit after tax Earnings per share, SEK Equity/assets ratio, % Return on capital employed, % HEXPOL is a world-leading polymers group with strong global positions in advanced rubber compounds (Compounding), gaskets for plate heat exchangers (Gaskets) and wheels made of plastic and rubber materials for truck and castor wheel applications (Wheels). Customers are primarily OEM manufacturers of plate heat exchangers and trucks, as well as global systems suppliers to the automotive industry. The Group is organised in two business areas, HEXPOL Compounding and HEXPOL Engineered Products, and had about 1,800 employees in nine countries at -end. In 2009, HEXPOL had sales of about 2,600 MSEK. Read more at

2 Group total, continued Key ratios, excluding items affecting Comparability, MSEK Operating profit, EBIT Operating margin, % Profit before tax Net profit for the period Earnings per share, SEK Return on capital employed, % Operating cash flow Fourth quarter of 2009 Group sales rose to 703 MSEK (697). Exchange-rate fluctuations had a negative impact of 13 MSEK on sales, primarily due to the strengthening of the Swedish krona compared with the US dollar. Group sales increased 8 per cent compared with the third quarter. During the fourth quarter, sales improved and volumes increased from our automotive customers in Europe. In NAFTA, volumes were satisfactory as a result of a stable market. HEXPOL improved its market positions in a market that had been strengthened in part by financial support to the automotive industry. In most countries, government-subsidised systems for paying a premium for the scrapping of cars, which had boosted car sales, have ceased. Stable demand was shown in customer segments in other sectors during the quarter. Operating profit amounted to 80 MSEK (54), corresponding to an operating margin of 11.4 per cent (7.7). Exchange-rate fluctuations had a positive impact of 3 MSEK on operating profit during the quarter. The cost-cutting programme announced during the first quarter has now been successfully concluded and, as previously announced, the cost of the programme amounted to 98 MSEK, although a certain redistribution (4 MSEK) occurred between the Group s business areas. Net sales M SEK Operating profit and operating margin * excluding items affecting comparability M SEK ,0% ,0% ,0% ,0% ,0% 0 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 0,0% Sales in business area HEXPOL Compounding rose 6 per cent during the quarter to 553 MSEK (520). Compared with the third quarter of 2009, sales increased 7 per cent. Operating profit rose 60 per cent to 69 MSEK (43), adjusted for items affecting comparability, corresponding to an operating margin of 12.5 per cent (8.3). The improved operating margin resulted from forceful cost adjustments combined with increased sales to automotive customers. Page 2 of 16

3 In business area HEXPOL Engineered Products, sales decreased 15 per cent to 150 MSEK (177). Compared with the third quarter, sales rose 14 per cent. Operating profit amounted to 11 MSEK (11), adjusted for items affecting comparability, corresponding to an operating margin of 7.3 per cent (6.2). Compared with the third quarter, operating profit improved, thanks mainly to internal actions taken in both HEXPOL Wheels and HEXPOL Gaskets. The surplus capacity in the market continues, resulting in continued price pressure on the business area s products. In the European market, demand increased during the quarter, compared with both the corresponding period in 2008 and the third quarter of The effects of the discontinuation of governmentsubsidised systems for paying a premium for the scrapping of cars remain difficult to evaluate. The Group s compounding volumes in NAFTA were stable compared with the preceding and the third quarter of Demand for polyurethane wheels was unchanged during the quarter. In Asia, volume growth for the Group s operations was favourable, with sales increasing in relation to both the corresponding period in 2008 and the third quarter of The number of employees during the quarter rose somewhat, primarily at the plants in Mexico and Sri Lanka. Notice has however been given to a small number of employees, mainly in the German operation. The price of raw materials rose slightly during the quarter, due to higher prices in the global market and the increase in demand. The higher raw-material prices had virtually no impact on the Group s margins. The Group s operating cash flow was very strong in the fourth quarter and amounted to 143 MSEK (206). Investments remained low and working capital decreased. The Group s net financial items during the fourth quarter amounted to 0 MSEK (expense: 11), whereby positive revaluation effects on cash and cash equivalents offset net interest expense, which amounted to 3 MSEK. The reduction in net interest expense was due to lower market interest rates for the Group s financing and to a decrease in net debt. Profit before tax rose 86 per cent to 80 MSEK (43). Profit after tax increased sharply to 68 MSEK (31), corresponding to earnings per share of 2.56 SEK (1.17). January-ember 2009 The Group s full- sales amounted to 2,608 MSEK (3,190), down 18 per cent. Exchange-rate fluctuations had a positive impact of 264 MSEK, primarily due to a substantial depreciation of the Swedish krona (SEK) against the US dollar and euro during the. Operating profit amounted to 261 MSEK (310), adjusted for items affecting comparability, corresponding to an operating margin of 10.0 per cent (9.7). Exchange-rate fluctuations, mainly resulting from a weaker average SEK during the, had a positive impact of 22 MSEK on operating profit. In business area HEXPOL Compounding, sales declined 17 per cent to 2,020 MSEK (2,425), while operating profit rose to 231 MSEK (224), adjusted for items affecting comparability. Accordingly, the operating margin was 11.4 per cent (9.2). Demand and sales in the business area were initially weak but then rose gradually during the. In Europe, demand from customers in the automotive industry was very weak during the early part of the, resulting in low volumes, although this was followed by a steady improvement. In NAFTA too, initially declining volumes in a weak market were followed by gradual improvements during In Asia, the compounding operations in China, showed a highly favourable volume trend, but from a relatively low level. Page 3 of 16

4 Sales in business area HEXPOL Engineered Products declined 23 per cent to 588 MSEK (765). Operating profit decreased to 30 MSEK (86), adjusted for items affecting comparability, corresponding to an operating margin of 5.1 per cent (11.2). During the, the market for gaskets for plate heat exchangers experienced slackening demand and thus a weak volume trend. The operations and the market were marked by excess capacity, pressure on prices and fewer project deliveries than in the preceding. In HEXPOL Wheels, the demand situation for polyurethane and rubber wheels gave rise to substantially lower sales during 2009 compared with the preceding. The Group s operating cash flow was strong during the and amounted to 462 MSEK (411). The factors underlying the strong cash flow were the favourable earnings, a reduction in working capital, mainly through a downsizing of inventories, and a lower rate of investment. The Group s net financial items amounted to an expense of 23 MSEK (expense: 52) during the. Profit before tax amounted to 140 MSEK (258). Profit after tax amounted to 102 MSEK (183), corresponding to earnings per share of 3.84 SEK (6.89). Adjusted for items affecting comparability, earnings per share amounted to 6.48 SEK (6.89). Profitability Return on average capital employed amounted to 10.3 per cent (13.2), adjusted for items affecting comparability. Return on average shareholders equity was 14.5 per cent (16.8), adjusted for items affecting comparability. Financial position and liquidity The equity/assets ratio was 43.7 per cent (36.1). The Group s total assets amounted to 2,788 MSEK (3,201). Net debt declined sharply and amounted to 760 MSEK (1,193), whereby the net debt/equity ratio amounted to a multiple of 0.6 (1.0). In May 2008, the Group signed a five- credit agreement totalling 1.7 billion SEK with a number of Nordic banks. Cash flow Operating cash flow amounted to 462 MSEK (411), adjusted for items affecting comparability. The operating cash flow includes the positive effects of inventory reductions and a low rate of investment. Cash flow from operations amounted to 359 MSEK (393). Investments, depreciation and amortization The Group s net investments totalled 23 MSEK (105) for the and mainly comprised investments in the finalisation of ongoing projects in China and Mexico. Depreciation, amortization and impairments during the totalled 118 MSEK (93), of which impairments accounted for 34 MSEK. Tax expenses The Group s tax expenses during the amounted to 38 MSEK (75). Adjusted for tax effects on restructuring costs, tax expenses amounted to 66 MSEK, corresponding to a tax rate of 27.7 per cent (29.1). Personnel The number of employees at -end was 1,827 (2,230). During the, the workforce was reduced by 403, mainly pertaining to operations in Canada, Sweden and Sri Lanka. At the end of the, 18 employees had been laid off temporarily and 17 given employment-termination notices. Page 4 of 16

5 Business area HEXPOL Compounding Business area HEXPOL Compounding is a world leader in the development and manufacture of high-quality advanced rubber compounds (Compounding). Customers are manufacturers of rubber products with stringent demands for performance and global delivery capacity. The largest market segments are the automotive industry, followed by the construction industry. Other key segments are the cabling, water treatment, pharmaceutical, energy and oil industries. MSEK Net sales Operating profit Operating margin, % excluding items affecting comparability Operating profit Operating margin, % Sales amounted to 553 MSEK (520), up 6 per cent. Operating profit increased 60 per cent to 69 MSEK (43), excluding items affecting comparability, corresponding to an operating margin of 12.5 per cent (8.3). Compared with the third quarter, the increase in sales was 7 per cent. The business area s cost-reduction programme gave rise to a lower cost base, whereby volume growth during the quarter could be credited in full to operating profit. The effects of the discontinuation of government-subsidised systems for paying a premium for the scrapping of cars remain difficult to evaluate. In Europe, the volume trend was favourable, and demand from automotive customers rose compared with the third quarter, primarily in the Czech Republic and Belgium. Compared with the corresponding quarter in 2008, demand in Europe was higher, which was largely attributable to the decline in the automotive industry which began in the fourth quarter of In NAFTA, the volume trend was satisfactory. Volumes from automotive customers rose somewhat compared with the third quarter. Volumes in other segments of NAFTA remained unchanged compared with the preceding. The operations in Mexico developed well and sales increased compared with the third quarter of In Asia, the volume trend for the business area s unit in China was favourable, with deliveries significantly higher that in the -earlier quarter. Raw-material prices rose slightly during the fourth quarter but had virtually no impact on the business area s margins. The price pressure on the business area s products continued, due to surplus capacity. Net sales Operating profit and operating margin * * excluding items affecting comparability M SEK 800 M SEK 80 15,0% ,0% 9,0% 6,0% 3,0% 0 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 0,0% Page 5 of 16

6 Business area HEXPOL Engineered Products Business area HEXPOL Engineered Products, through its considerable expertise in polymers and the production of rubber, plastic and polyurethane products, has gained a world-leading position as a supplier of advanced products, such as gaskets for plate heat exchangers (Gaskets) and wheels for truck and castor wheel applications (Wheels). MSEK Net sales Operating profit Operating margin, % excluding items affecting comparability Operating profit Operating margin, % Sales amounted to 150 MSEK (177), down 15 per cent. Operating profit amounted to 11 MSEK (11), adjusted for items affecting comparability, which corresponded to an operating margin of 7.3 per cent (6.2). The sequentially improved operating margin resulted mainly from the business area s reduced cost base, which is a consequence of the action programme initiated during the first quarter. Product area Gaskets continued to experience weak demand and reported reduced sales. Generally, the market was weak, with project-related sales remaining low. Capacity utilisation at the product area s units in Sweden and in Sri Lanka, continued to be low. Deliveries from the new unit in China are still low. The product area was under considered price pressure during the quarter. Product area Wheels continued to operate in a challenging market. During the quarter, the lower cost base improved profitability in the product area, compared with the third quarter. As a result of weak demand for polyurethane wheels from the OEM segment, volumes remained low. The market for wheels was subject to price pressure, making it difficult to offset increases in raw-material prices. All of the markets in the business area noted a weak volume trend and is subject to price pressure. Net sales Operating profit and operating margin * * excluding items affecting comparability M SEK 250 M SEK 50 20,0% ,0% ,0% ,0% ,0% 0 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 0,0% Page 6 of 16

7 Parent Company The Parent Company reported a loss of 15 MSEK (loss: 49) after tax. Shareholders equity amounted to 365 MSEK (363). Risk factors The Group s and the Parent Company s business risks, risk management and management of financial risks are described in detail in the 2008 Annual Report. No events of significant importance occurred during the that could affect or change these descriptions of the Group s or the Parent Company s risks and their management. Accounting policies This -end report was prepared in accordance with IAS 34 Interim Reporting.. The accounting and valuation policies applied in the 2008 Annual Report were also applied in this -end report. The following recently issued standards relative to HEXPOL s accounts have been relevant to the preparation of this interim report: IFRS 8 Operating segments. The Group s previously reported primary segments match the definitions of operating segments. IFRS 1 Presentation of financial reports. Owners and legal structure HEXPOL AB (publ), corporate registration number , is the Parent Company of the HEXPOL Group. HEXPOL s class B shares are listed on the Stockholm Mid Cap industrial segment of NASDAQ OMX Nordic. HEXPOL had 8,281 shareholders on 31 ember The largest shareholder is Melker Schörling AB with 27 per cent of the capital and 48 per cent of the voting rights. The 20 largest shareholders own 72 per cent of the capital and 80 per cent of the voting rights. Annual General Meeting, 7 May 2010 at 3:00 p.m. The Annual General Meeting will be held on 7 May 2010 at 3:00 p.m. in Malmö (Börshuset, Skeppsbron 2). The Annual Report for 2009 will be distributed to shareholders no later than during the week beginning 19 April and will also be made available on HEXPOL s website and at the company s headquarters. Shareholders who wish to participate in the Annual General Meeting must be included in the shareholders register maintained by the Swedish Securities Register Centre (VPC) by 30 April 2010 at the latest and must report their participation to HEXPOL s head office no later than noon on 30 April. Trustee-registered shareholders must temporarily register their shares in their own names before 30 April to be entitled to participate in the Meeting. Dividend proposal The Board of Directors has proposed that the Annual General Meeting on 7 May decide to pay a dividend of 1.00 SEK (0) for Proposal from the Nomination Committee The appointed Nomination Committee, comprising Mikael Ekdahl (Melker Schörling AB), Anders Algotsson (AFA Försäkring), Åsa Nisell (Swedbank Robur) and Henrik Didner (Didner & Gerge Fonder), has submitted to the Company the following proposal regarding nominations to the Board: reelection of Board members Melker Schörling, Alf Göransson, Anders Månsson, Malin Persson, Ulrik Svensson and Georg Brunstam. Page 7 of 16

8 Invitation to presentation of report This report will be presented at Ålandsbanken s offices at Stureplan 19, Stockholm, at 9:00 a.m. on 11 February. The presentation, as well as information concerning participation, will also be available at Calendar for financial information HEXPOL AB will publish financial information on the following dates: Event Date Publication of 2009 Annual Report April 2010 Annual General Meeting 7 May 2010, 3:00 p.m. Interim report January ch May 2010 Interim report, January e July 2010 Interim report, January tember October 2010 Year-end report 2010 February 2011 Financial information is also available in Swedish and English on HEXPOL AB s website at For further information, contact: Georg Brunstam, President and CEO Tel: Urban Ottosson, CFO Tel: The -end report for 2009 was not subject to special review by the HEXPOL AB s auditors. Malmö, 11 February 2010 HEXPOL AB (publ) Georg Brunstam, President and CEO Address: Skeppsbron 3 SE Malmö Sweden Corporate registration number: Tel: Fax: Website: This is the type of information that HEXPOL AB is obligated to disclose in accordance with the Swedish Securities ket Act and/or the Financial Instruments Trading Act. This report has been prepared in both swedish and english. In case of vacation in the content of the two versions, the Swedsih version shall take precendence. The information was submitted to the media for publication at 8:00 a.m. on February 11, Page 8 of 16

9 Group s income statement MSEK Net sales Cost of goods sold 1) Gross profit Selling and administration costs, etc. 2) Operating profit Financial income and expenses Profit before tax Tax Net profit for the period of which attributable to the Parent Company's shareholders Earnings per share, SEK 2,56 1,17 3,84 6,89 Earnings per share, excl. items affecting comparability, SEK 2,15 1,17 6,48 6,89 Shareholders' equity per share, SEK 45,83 43,57 Average number of shares. thousands Incl. depreciation, amortisation and impairment of ) of which, items affecting comparability ) of which, items affecting comparability Group s report of comprehensive income MSEK Profit for the period Cash-flow hedging, net after tax Currency translation difference Comprehensive income of which, attributable to Parent Company shareholders Page 9 of 16

10 Group s balance sheet MSEK Intangible fixed assets Tangible fixed assets Financial fixed assets 1 1 Deferred tax assets Total fixed assets Inventories Accounts receivable Other receivables Prepaid expenses and accrued income Cash and cash equivalents Total current assets Total assets Attributable to the Parent Company's shareholders Total shareholders' equity Interest-bearing liabilities Deferred tax liabilities Pension provisions Total non-current liabilities Interest-bearing liabilities Accounts payable Other liabilities Accrued expenses and deferred income, provisions Total current liabilities Total shareholders' equity and liabilities Page 10 of 16

11 Group s changes in shareholders equity MSEK Opening shareholders' equity Comprehensive income Dividend Stock option premium 1 7 Expenses in conjunction with stock listing 0-9 Closing shareholders' equity Number of shares, trend Total number of Class A shares Total number of Class B shares Total number of shares Number of shares at 1 January Number of shares at the end of the Incentive programme 2008/2011 At the Extraordinary General Meeting on 18 August 2008, it was resolved to offer a warrant programme to senior executives totalling 1,325,000 warrants. Each warrant entitles the holder to subscribe for one share. The redemption period is 1 ch 2011 to 1 tember During 2008, 933,250 warrants were subscribed for by senior executives at a subscription price of SEK. During 2009, 175,000 warrants were subscribed for by senior executives at a subscription price of SEK. The option premium on both occasions was 8 SEK per warrant. No increase in number of shares has occurred during 2009 due to incentive programme. Page 11 of 16

12 Group s cash flow statement MSEK Cash flow from operations before change in working capital Utilisation of structural reserves Change in working capital Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Change in cash and cash equivalents Cash and cash equivalents at 1 January Exchange-rate differences in cash and cash equivalents Cash and cash equivalents at the close of the period Operating cash flow, Group MSEK Operating profit excl. items affecting comparability Depreciation/amortisation Change in working capital Investments Operating cash flow Page 12 of 16

13 Other key figures Profit margin before tax, % Profit margin before tax, excl. items affecting comparability, % Return on shareholders' equity, % Return on shareholders' equity, excl. items affecting comparability, % Interest-coverage ratio, multiple Net debt, MSEK Net debt ratio, multiple Cash flow per share, SEK Cash flow per share before change in working capital, SEK Page 13 of 16

14 Quarterly data, Group Sales per business area MSEK HEXPOL Compounding HEXPOL Engineered Products Total Group Sales per geographic area MSEK Europe NAFTA Asia Total Group Operating profit per business area MSEK HEXPOL Compounding HEXPOL Engineered Products Total Group Operating profit per business area excluding items affecting comparability MSEK HEXPOL Compounding HEXPOL Engineered Products Total Group Operating margin per business area excluding items affecting comparability % HEXPOL Compounding HEXPOL Engineered Products Total Group Page 14 of 16

15 Parent Company income statement MSEK Net sales Selling and administration costs, etc Operating profit Financial income and expenses Loss before tax Tax Net loss for the period Parent Company balance sheet MSEK Total fixed assets Total current receivables Total assets Total shareholders' equity Total non-current liabilities Total current liabilities Total shareholders' equity and liabilities Page 15 of 16

16 Financial definitions Capital employed Total assets less non-interest-bearing liabilities. Cash flow Cash flow from operating activities after change in working capital. Cash flow per share Cash flow from operating activities after change in working capital, divided by average number of shares. Earnings per share Net profit divided by average number of shares. Equity/assets ratio Shareholders equity as a percentage of total assets. Interest-coverage ratio Profit before tax plus interest expenses divided by interest expenses. Investments Purchases less sales of tangible and intangible fixed assets, excluding those included in acquisitions and divestments of subsidiaries. Net debt/equity ratio Interest-bearing liabilities less cash and cash equivalents divided by shareholders equity. Net debt Interest-bearing liabilities less cash and cash equivalents and interest-bearing assets. Operating cashflow Operating result less depreciation and investments after change in working capital. Operating margin Operating profit as a percentage of net sales for the period. Profit margin before tax Return on capital employed Profit before tax as a percentage of net sales for the period. Profit before tax plus interest expenses as a percentage of average capital employed. Return on equity Net profit as a percentage of average shareholders equity. Shareholders equity per share Shareholders equity divided by the number of shares at period end. Page 16 of 16