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- 11/6/2008
Lemminkäinen´s Interim Financial Review 1.1.-30.9.2008: Net sales rose, but profitability weakened
LEMMINKÄINEN CORPORATION INTERIM FINANCIAL REVIEW 6.11.2008, 09:00 LEMMINKÄINEN'S INTERIM FINANCIAL REVIEW 1.1. - 30.9.2008: Net sales rose, but profitability weakened - Net sales rose 13 % to EUR 1,739.3 million (1,535.6) - International operations accounted for EUR 485.2 million (411.1) of net sales - The operating profit fell 17 % to EUR 85.7 million (103.6), representing 4.9 % (6.7) of net sales. - The
LEMMINKÄINEN CORPORATION INTERIM FINANCIAL REVIEW 6.11.2008, 09:00
LEMMINKÄINEN'S INTERIM FINANCIAL REVIEW 1.1. - 30.9.2008: Net sales rose, but
profitability weakened
- Net sales rose 13 % to EUR 1,739.3 million (1,535.6)
- International operations accounted for EUR 485.2 million (411.1) of net sales
- The operating profit fell 17 % to EUR 85.7 million (103.6), representing 4.9
% (6.7) of net sales.
- The profit before taxes fell 26 % to EUR 68.0 million (91.5)
- Earnings per share were EUR 2.73 (3.83)
- The equity ratio was 24.4 % (29.5) and gearing 161.8 % (113.7)
- The Company's order book at the end of the review period was EUR 1,341.4
million 1,524.3)
- The Group's full-year net sales are forecast to rise in 2008, but the result
is expected to be weaker than last year.
JANUARY-SEPTEMBER 2008 BY BUSINESS SECTOR
The net sales of Lemminkäinen's building construction business sector rose 10 %,
but its operating profit fell 22 %. The business sector's earnings were
depressed by a sharp decline in domestic demand for housing as well as the
cancellation of some already agreed commercial property deals due to financial
difficulties experienced by the buyers. Demand for housing in Russia weakened.
The net sales of Lemminkäinen's infrastructure construction business sector grew
13 %, but its operating profit was down 30 %. Domestic paving as well as mineral
aggregates and ready-mix concrete operations boosted the business sector's net
sales. The weakening of earnings was due mainly to increased input costs and the
poor market situation in the Baltic states.
The net sales of the technical building services business sector rose 19 % and
its operating profit improved by 73 %. Demand for the sector's services remained
good in all areas of its business.
The net sales of the building products business sector rose 23 % and its
operating profit improved 7 %. Demand for urban environment and sports
construction continued to be good. The downturn in the construction sector
weakened demand for roofing materials and pre-cast concrete staircase units.
GROWING UNCERTAINTY IN THE OPERATING ENVIRONMENT
Of Lemminkäinen's business sectors, the outlook has weakened the most in
building construction. In Finland demand for housing has declined sharply and
growth in commercial and office construction has peaked.
Lemminkäinen's operations in the infrastructure construction and technical
building services business sectors reduce the Company's dependence on
fluctuations in demand for building construction. The markets for these business
sectors are expected to remain stable in spite of the economic uncertainty.
As a consequence of the weakened outlook for the construction market, the
Company has initiated the necessary adjustment measures.
OUTLOOK FOR 2008
Lemminkäinen estimates that the full-year profit before taxes for 2008 will
weaken. The Company's net sales and balance sheet will both be stronger than
last year.
The results of the building construction and infrastructure construction
business sectors will be weaker than in 2007. The results of the technical
building services and building products business sectors will remain unchanged
or improve.
On 30.10.2008 Lemminkäinen issued a profit warning in which it amended the
outlook for 2008 reported in its interim financial review for the period 1.1. -
30.6.2008. In that interim financial review the Company reported that it
expected net sales to be higher than last year, and that earnings would remain
at the 2007 level. The Company's financial position was expected to remain
unchanged.
INTERIM FINANCIAL REVIEW MATERIAL AND FINANCIAL STATEMENTS FOR 2008
Presentation material concerning the result for the period 1.1.-30.9.2008 is
available on the Company's website at www.lemminkainen.com. Lemminkäinen's
financial statements for 2008 will be published on 12 February 2009 at 9.00 a.m.
LEMMINKÄINEN CORPORATION
Juhani Sormaala
Managing Director
Additional information:
Juhani Sormaala, Managing Director, tel. +358 2071 53302
Jukka Ovaska, Finance Director, tel. +358 2071 53334
Katri Sundström, Investor Relations Manager, tel. +358 2071 54813
APPENDICES:
Interim Financial Review 1.1.-30.9.2008
Tabulated Section of the Interim Financial Review
DISTRIBUTION:
NASDAQ OMX Helsinki
Key media
www.lemminkainen.com
INTERIM FINANCIAL REVIEW 1.1.-30.9.2008
OPERATING ENVIRONMENT
Finland
The Finnish economy is likely to grow by less than 3 per cent this year, and a
further slowdown of growth is expected next year. The risks of accelerating
inflation and higher interest rates have reduced somewhat. On the other hand,
the diminished availability of financing has become a significant uncertainty
factor.
According to the Confederation of Finnish Construction Industries, there will be
a downturn in construction next year and unemployment will start to rise. It is
expected that a total of 25,000 new housing starts will be made in Finland this
year, falling to 23,000 in 2009.
The growth of commercial and office construction has slowed down especially in
the second half of the year, and its volume is expected to contract next year.
Current projects have been postponed due to financing difficulties. The market
for industrial construction has remained good and the growth of refurbishment
contracting is expected to continue also next year.
The infrastructure construction market has remained reasonably good. Next year
there may be a short-lived downturn in growth due to the postponement of some
major projects.
Relevant markets for Lemminkäinen abroad
In Sweden, Norway and Denmark the economic growth rate will slow down in
2008-2009. In Norway and Sweden the growth of infrastructure construction will
be supported by additional appropriations decided by the governments of these
countries.
In the Baltic states new road construction and upgrade projects are still being
launched, but the difficult competitive situation and lower price level have
significantly weakened the operating conditions in the region.
In Russia construction continues to be brisk and inward foreign investment has
been growing. The availability of credit for consumers and businesses has
deteriorated in the third quarter, which may reduce the volume of construction
in the near future.
(Sources: Confederation of Finnish Construction Industries, Research Institute
of the Finnish Economy, Nordea)
LEMMINKÄINEN'S NEW STRUCTURE EFFECTIVE FROM 1.1.2008
Lemminkäinen Group was reorganised into four business sectors with effect from 1
January 2008. The business sectors are building construction, infrastructure
construction, technical building services and building products.
Lemminkäinen's operations in the building construction and infrastructure
construction business sectors are the responsibility of two newly established
companies, Lemminkäinen Talo Oy and Lemminkäinen Infra Oy, respectively.
Tekmanni Oy is a provider of technical building services, technical facility
services and industrial services. The building products business sector,
Lemminkäinen Building Products, comprises the subsidiaries Lemminkäinen Katto Oy
(roofing), Lemminkäinen Betonituote Oy (concrete products) and Omni-Sica Oy
(sports construction).
More detailed information on Lemminkäinen's reorganisation is provided in the
Company's Annual Report 2007 and on its website.
The comparative figures presented in this interim financial review for the
building construction and infrastructure construction business sectors are pro
forma figures.
GROUP NET SALES, EARNINGS AND BALANCE SHEET
The net sales of Lemminkäinen Group were EUR 1,739.3 million (1,535.6). The
Group generated 72 % (73) of its net sales in Finland, 14 % (14) in other Nordic
countries, 4 % (2) in Russia, 7 % (7) in Eastern Europe and the Baltic states,
and 3 % (4) in other countries.
--------------------------------------------------------------------------------
| Net sales by business sector, | 1-9/2008 | 1-9/2007 | Change, % |
| EUR million | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Building construction | 779.2 | 710.31) | 9.7 |
--------------------------------------------------------------------------------
| Infrastructure construction | 683.8 | 603.11) | 13.4 |
--------------------------------------------------------------------------------
| Technical building services | 193.2 | 161.9 | 19.3 |
--------------------------------------------------------------------------------
| Building products | 121.8 | 99.2 | 22.8 |
--------------------------------------------------------------------------------
| Other operations and intragroup | | | |
--------------------------------------------------------------------------------
| eliminations | -38.7 | -38.9 | 0.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group, total | 1,739.3 | 1,535.6 | 13.3 |
--------------------------------------------------------------------------------
1)pro forma
The operating profit was EUR 85.7 million (103.6) and the profit before taxes
EUR 68.0 million (91.5). The profit for the accounting period was EUR 50.8
million (70.2), of which EUR 46.5 million (65.2) was attributable to the
shareholders of the parent company. Earnings per share were EUR 2.73 (3.83).
--------------------------------------------------------------------------------
| Operating profit by business | 1-9/2008 | 1-9/2007 | Change, % |
| sector, | | | |
| EUR million | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Building construction | 35.8 | 45.91) | -22.0 |
--------------------------------------------------------------------------------
| Infrastructure construction | 31.5 | 44.91) | -29.8 |
--------------------------------------------------------------------------------
| Technical building services | 14.0 | 8.1 | 72.8 |
--------------------------------------------------------------------------------
| Building products | 9.6 | 9.0 | 6.7 |
--------------------------------------------------------------------------------
| Others | -5.3 | -4.3 | 23.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group, total | 85.7 | 103.6 | -17.3 |
--------------------------------------------------------------------------------
1)pro forma
The Company's cash funds at the end of the review period were EUR 94.2 million
(60.1) and the net interest-bearing debt EUR 543.4 million (350.1). The equity
ratio was 24.4 % (29.5) and gearing 161.8 % (113.7).
BUSINESS SECTORS
BUILDING CONSTRUCTION
The net sales of the building construction business sector were EUR 779.2
million (710.3)1), of which international operations accounted for EUR 161.3
million (136.1)1). The business sector generated 79 % of its net sales in
Finland, 5 % in other Nordic countries, 6 % in Russia, 4 % in North and South
America, and 6 % in other countries.
Net sales were boosted by the sustained level of active commercial and office
construction in Finland as well as building construction in Russia.
The business sector's operating profit was EUR 35.8 million (45.9)1). The result
was weakened by a sharp decline in demand for housing in Finland and the
cancellation of some already agreed commercial property deals due to financial
difficulties experienced by the buyers. The properties relating to the cancelled
deals are leased. Other operating income recognised during Q1-Q3 last year was
higher than in the review period.
The order book at the end of the review period was EUR 747.9 million (981.3)1),
of which international operations accounted for EUR 156.9 (154.5)1).
1)pro forma
Operations in Finland
There was a marked slowdown in Lemminkäinen's domestic housing sales at the end
of the review period. The number of unsold completed units has grown
significantly in some localities. Lemminkäinen made 504 (2007: 770) new
private-sector housing starts in Finland during the review period. In the fourth
quarter new housing starts will be made only in exceptional cases.
The growth of demand for commercial, industrial and logistics construction in
Finland has peaked. Office construction, which has long been brisk in the
Helsinki metropolitan area, is also slowing. The international financial crisis
has weakened the financing opportunities open to real estate investors and
raised the yield requirements of investors.
Demand for refurbishment contracting is expected to remain good also next year.
Refurbishment contracting already accounts for over 10 per cent of
Lemminkäinen's building construction, and that percentage is expected to rise in
the future.
--------------------------------------------------------------------------------
| Lemminkäinen's private-sector | 1-9/2008 | 1-9/2007 | 1-12/2007 |
| housing production in Finland, | | | |
| units | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Housing starts | 504 | 770 | 852 |
--------------------------------------------------------------------------------
| Housing units sold | 534 | 716 | 883 |
--------------------------------------------------------------------------------
| Unsold completed units | 443 | 210 | 283 |
--------------------------------------------------------------------------------
| Completed | 735 | 644 | 1,488 |
--------------------------------------------------------------------------------
| Under construction at 30.9.2008 | 882 | 1,583 | 1,123 |
--------------------------------------------------------------------------------
At the end of the review period Lemminkäinen owned a total of 856,000 m2 of
unused building rights, of which about 390,000 m2 were residential building
rights. The Company also has binding or conditional co-operation and zoning
agreements for a further 751,000 m2, of which about 272,000 m2 are residential
building rights.
International operations
Lemminkäinen is building about 600 housing units in St. Petersburg. Construction
of a 135-hectare industrial park in the province of Kaluga is also proceeding
according to original plan.
Lemminkäinen's project export opportunities have remained good as Finnish
industry continues to make plant investments around the world, most notably in
China, India and Poland.
The construction of telecom networks in the developing countries is expected to
remain brisk, although price competition in this area is fierce.
The arbitral tribunal held in its separate award rendered in Stockholm on 29
September 2008 that IKEA's termination in spring 2006 of the construction
contract for the MEGA shopping centre in St. Petersburg was not justified. The
arbitral tribunal will decide on the amount of compensation at a later date
(bulletin 1.10.2008).
--------------------------------------------------------------------------------
| Lemminkäinen's private-sector housing | 1-9/2008 | 1-12/2007 |
| production in other countries, units | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Housing starts | 559 | 91 |
--------------------------------------------------------------------------------
| Housing units sold | 93 | - |
--------------------------------------------------------------------------------
| Unsold completed units | - | - |
--------------------------------------------------------------------------------
| Completed | - | - |
--------------------------------------------------------------------------------
| Under construction at 30.9.2008 | 650 | 91 |
--------------------------------------------------------------------------------
INFRASTRUCTURE CONSTRUCTION
The net sales of the infrastructure construction business sector were EUR 683.8
million (603.1)1), of which international operations accounted for EUR 312.6
million (259.8)1). The business sector generated 54 % of its net sales in
Finland, 29 % in other Nordic countries, 14 % in the Baltic states and 3 % in
Russia.
The business sector's operating profit was EUR 31.5 million (44.9)1). The result
was weakened by increased input costs and the poor market situation in the
Baltic states. The price of crude oil has fallen significantly from the summer's
peak levels, but the simultaneous strengthening of the dollar has lessened the
benefit from the drop in price. Also, other operating income recognised in the
review period was lower than in Q1-Q3 last year.
The order book at the end of the review period was EUR 446.2 million (381.6)1),
of which international operations accounted for EUR 218.1 million (204.4)1).
1)pro forma
Operations in Finland
Increased input costs have reduced the demand for paving in Finland.
Lemminkäinen's order book in the end of review period for paving works is good
and, weather permitting, paving operations will continue until the onset of
winter.
Competition is fierce on the domestic markets for transport infrastructure
construction and rock engineering, and all of the industry's companies have
unused capacity. In foundation engineering the market for building repair works
has been good this year. The weakened economic outlook has led to
lower-than-expected demand for mining works.
The markets for mineral aggregates and ready-mix concrete have remained
favourable, even though the prices of cement and blasting materials have risen
substantially. Lemminkäinen is looking into the possibility of independently
importing cement in the future.
International operations
Net sales from the infrastructure construction business sector's international
operations grew, but profitability was reduced by, among other factors, asphalt
production costs, which rose by a fifth over the past twelve months.
In the Baltic states the development of the road network continues, but
competitive conditions in the region have become extremely challenging.
Resources are being liberated from building construction for use in
infrastructure construction, which is contributing to the intensification of
competition. On the other hand, it is also relieving the shortage of labour and
normalising the pay level trend.
In Norway and Denmark the outlook for paving operations is reasonably good and
the total volume of paving works is expected to remain unchanged. In Sweden the
rock engineering market remains good, and new projects will be starting up in
the coming months. Government appropriations for infrastructure construction in
the coming years have been increased in Sweden and Norway.
TECHNICAL BUILDING SERVICES
The net sales of the technical building services business sector were EUR 193.2
million (161.9). The business sector's operating profit rose by 73 % to EUR 14.0
million (8.1). The order book at the end of the review period was EUR 109.5
million (118.5).
Brisk commercial and office construction has sustained demand for technical
building services at a good level this year. However, demand growth peaked at
the end of the review period, and there has been a clear reduction in the both
the size and number of contracts.
The business of Tekmanni Service Oy, which specialises in the maintenance and
servicing of technical building and facility systems, continues to be brisk.
Among other contracts, the company is providing energy certificates for over 80
properties owned by Ilmarinen Mutual Pension Insurance Company and assessing the
condition and replacement needs of the properties' technical systems.
BUILDING PRODUCTS
The net sales of the building products business sector were EUR 121.8 million
(99.2), and its operating profit was EUR 9.6 million (9.0). The order book at
the end of the review period was EUR 37.8 million (43.0).
Demand for urban environment and sports construction has remained good. Exports
of building materials mainly to Sweden and Eastern Europe have continued
to be brisk. The slowdown of new construction has weakened demand for pre-cast
concrete staircase units and wall elements.
GROUP'S ORDER BOOK
Lemminkäinen's order book fell 12 % compared with the end of September last
year. The market breakdown of the order book was Finland 72 % (75), other Nordic
countries 16 % (12), Russia 6 % (5), the Baltic states 5 % (3), and other
countries 1 % (4).
--------------------------------------------------------------------------------
| Order book by business sector, | 9/2008 | 9/2007 | Change, % |
| EUR million | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Building construction | 747.9 | 981.31) | -23.8 |
--------------------------------------------------------------------------------
| Infrastructure construction | 446.2 | 381.61) | 16.9 |
--------------------------------------------------------------------------------
| Technical building services | 109.5 | 118.5 | -7.6 |
--------------------------------------------------------------------------------
| Building products | 37.8 | 43.0 | -12.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group, total, of which | 1,341.4 | 1,524.3 | -12.0 |
--------------------------------------------------------------------------------
| International orders | 378.5 | 365.0 | 3.7 |
--------------------------------------------------------------------------------
1)pro forma
Significant orders received during the review period
Lemminkäinen is constructing a production plant for Nokia Siemens Networks Oy in
Chennai, India. The total floor area of the plant is 33,700 m2.
An agreement has been signed with Nokian Tyres Plc concerning the technical
building works for a plant expansion in Vsevolozhsk. The total floor area of the
plant expansion is 29,000 m².
A service agreement has been signed with the Estonian Road Administration
whereby the company assumes responsibility for the summer and winter maintenance
of the road network in Ida-Viru County for a period of 8 years.
Lemminkäinen has received two railway tunnel construction contracts from
Ådalsbana line in Sweden. The combined length of the tunnels is about 5.5
kilometres.
FINANCING
According to the cash flow statement, the cash flow from operating activities
was EUR -188.1 million (-9.0), the cash flow from investing activities EUR -30.8
million (-19.7) and the cash flow from financing activities EUR 234.7 million
(28.1). The cash flow for the review period includes dividends totalling EUR
32.6 million (27.4) for 2007.
Interest-bearing liabilities at the end of the review period were EUR 637.6
million (410.2) and liquid funds were EUR 94.2 million (60.1). Interest-bearing
net debt was EUR 543.4 million (350.1). Net financing expenses were EUR 17.6
million (12.0), representing 1.0 % (0.8) of net sales.
The equity ratio was 24.4 % (29.5) and gearing 161.8 % (113.7).
The changes in cash flows are due to the growth of working capital, increased
financing expenses, and taxes paid. Working capital was increased mainly by
office construction projects and housing production in progress. Financing costs
were increased by the growth of net debt and higher interest rates.
In addition to liquid funds, the Group has TyEL pension premium loan allocations
and a committed credit limit of EUR 150 million.
LEMMINKÄINEN'S SHARE
The listed price of Lemminkäinen Corporation's share was EUR 31.50 (36.10) at
the beginning and EUR 18.80 (49.95) at the end of the review period. The market
capitalisation at the end of the review period was EUR 320.0 million (850.2).
Altogether 2,666,508 (4,052,265) shares worth EUR 79.5 million (187.9) were
traded in the review period. At the end of September the Company had 4,291
(3,357) shareholders.
INVESTMENTS
Investments in the accounting period amounted to EUR 49.2 million (45.6). The
investments were mainly purchases of paving, crushing and excavation equipment,
production plant for building materials, and building construction equipment.
PERSONNEL
The average number of employees in the Group over the review period was 9,847
(9,170). Approx. 72 % of the employees were working in Finland, 11 % in other
Nordic countries, 11 % in the Baltic states, and 7 % in other countries.
--------------------------------------------------------------------------------
| Personnel, average | 1-9/2008 | 1-9/2007 | Change, % |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Hourly paid employees | 6,570 | 6,050 | 8.6 |
--------------------------------------------------------------------------------
| Salaried staff | 3,275 | 3,120 | 5.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Personnel, total, of whom | 9,845 | 9,170 | 7.4 |
--------------------------------------------------------------------------------
| Working abroad | 2,814 | 2,597 | 8.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Personnel at the end | | | |
--------------------------------------------------------------------------------
| of the review period | 10,364 | 9,810 | 5.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Wages, salaries and other | | | |
--------------------------------------------------------------------------------
| remuneration, EUR million | 258.3 | 233.1 | 10.8 |
--------------------------------------------------------------------------------
CORPORATE GOVERNANCE AND DECISIONS OF THE ANNUAL GENERAL MEETING
Lemminkäinen Corporation's Annual General Meeting held on 14 March 2008 adopted
the Company's final accounts and consolidated financial statements for 2007 and
granted the Managing Director and the members of the Board of Directors
discharge from liability. The Annual General Meeting decided in accordance with
the Board of Directors' proposal to pay a dividend of EUR 1.80 per share, i.e. a
total dividend pay-out of EUR 30,638,250.00. The dividend's record date was 19
March 2008 and the payment date was 28 March 2008.
Messrs. Berndt Brunow, Heikki Pentti, Teppo Taberman, Sakari Tamminen and Ms.
Kristiina Pentti were re-elected to serve as members of the Board of Directors.
Mr. Juhani Mäkinen, Counsellor of Law, attorney, was newly elected to serve as a
Board member. PricewaterhouseCoopers Oy, a firm of authorised public
accountants, was re-elected to serve as the Company's auditor, with Jan
Holmberg, APA acting as the chief auditor.
Heikki Pentti, long-serving Chairman of Lemminkäinen Corporation's Board of
Directors and the Company's biggest shareholder, passed away on 19 April 2008.
Heikki Pentti was a Director of the Company for 39 years. He served as the
Company's Managing Director in the years 1983-1993 and as the Chairman of the
Board of Directors from 1994 onwards.
Lemminkäinen Corporation's Board of Director held an organisation meeting after
the death of Heikki Pentti. Berndt Brunow was elected to serve as the Chairman
of the Board, and Juhani Mäkinen as the Vice Chairman. The Board of Directors
will work as a five-member body until the next Annual General Meeting is held in
spring 2009.
On 5 November 2008 the Board of Directors appointed Timo Kohtamäki, Lic. Tech.
to serve as the Managing Director of Lemminkäinen Corporation with effect from 1
January 2009. The appointment was disclosed in a separate stock exchange
bulletin released on 6 November 2008.
MARKET COURT'S DECISION IN THE ASPHALT INDUSTRY CARTEL CASE
In December 2007 the Market Court ordered seven asphalt industry companies to
pay a total of EUR 19.4 million in infringement fines for contravention of
competition law. The infringement fine imposed on Lemminkäinen was EUR 14
million. The amount proposed by the Finnish Competition Authority was EUR 68
million.
In addition to Lemminkäinen, the Finnish Competition Authority and some asphalt
industry companies have appealed the decision to the Supreme Administrative
Court. Irrespective of the future of the proceedings, the competition
infringement fine of EUR 14 million imposed on Lemminkäinen by the Market Court
was recognised as an expense in the fourth quarter of 2007. Since the decision
has been appealed, the total amount of the fine may change.
On 18 June 2008 Lemminkäinen was informed of an application for a summons in
which the Finnish Road Administration is demanding compensatory damages from
different asphalt companies before the Helsinki District Court. Lemminkäinen's
share of the claimed compensation is at most EUR 10.5 million. The Finnish Road
Administration is also seeking damages of at most EUR 5.6 million from
Lemminkäinen, under joint and several liability with other defendant companies.
The Finnish Road Administration has asked the Helsinki District Court to
postpone the hearing of the case until the competition restriction case has been
resolved in the Supreme Administrative Court. (Bulletins 19.12.2007 and
18.6.2008)
RISKS AND UNCERTAINTIES IN THE NEAR FUTURE
The most significant risk for Lemminkäinen in the near future is market risk.
The international financial crisis is creating uncertainty in key sectors of
Lemminkäinen's operating environment and making it more difficult to foresee
future changes. As a consequence of this, the Company has initiated the
necessary adjustment measures.
In Finland the sharp fall in demand for housing production increases sales risk.
Lemminkäinen has significantly reduced the volume of its housing production
compared with last year, and in the fourth quarter new housing starts will be
made only in exceptional cases.
The starting point for Lemminkäinen's strategy is to direct operations to
business sectors that differ from one another in their business cycle
behaviours. Fluctuations in the demand for new construction in Finland are
balanced by international business operations as well as by repair and
maintenance work. The Group's building repair and maintenance operations account
for approximately 40% of its business.
The Company's Annual Report and its website provide more information on
Lemminkäinen's risk management.
THE ENVIRONMENT
Lemminkäinen's values include environmentally responsible construction.
Lemminkäinen Group takes into account life-cycle and environmental perspectives
when developing its operations, products and services. Environmental issues and
the environmental effects of the Group's operations are continuously managed by
means internal monitoring and control programs. The Company's Annual Report and
its website provide more information on Lemminkäinen's environmental issues.
OUTLOOK FOR 2008
Lemminkäinen estimates that the full-year profit before taxes for 2008 will
weaken. The Company's net sales and balance sheet will both be stronger than
last year.
The results of the building construction and infrastructure construction
business sectors will be weaker than in 2007. The results of the technical
building services and building products business sectors will remain unchanged
or improve.
On 30.10.2008 Lemminkäinen issued a profit warning in which it amended the
outlook for 2008 reported in its interim financial review for the period 1.1. -
30.6.2008. In that interim financial review the Company reported that it
expected net sales to be higher than last year, and that earnings would remain
at the 2007 level. The Company's financial position was expected to remain
unchanged.
Helsinki, 5 November 2008
LEMMINKÄINEN CORPORATION
Board of Directors
TABULATED SECTION OF THE INTERIM FINANCIAL REVIEW
This interim financial review has been prepared in accordance with the
recognition and accounting principles of the IFRS standards and it conforms to
the IAS 34 Interim Financial Reporting Standard. The same IFRS recognition and
measurement principles used in the annual financial statements for 2007 have
been observed in the preparation of this interim financial review with the
below-mentioned changes.
The Group's share of the results of affiliated companies that was earlier
recognised on the consolidated income statement as a financial item is now
included in operating profit. The business areas of Lemminkäinen Group's
affiliated companies are road maintenance and upkeep, road markings, asphalt
production and paving, and mineral aggregates production, so the change in
presentation format is in better keeping with the nature of these operations.
The change increases the operating profit by EUR 1.3 million in Q1-Q3 2008 and
by EUR 0.6 million in the comparative period. The change does not have any
effect on the result before taxes. The comparative figures have been adjusted.
Changes in accounting principles with effect from 1 January 2008:
- IFRIC 11 concerning the application of IFRS 2 to share-based payments
- IFRIC 12 Service Concession Arrangements
- IFRIC 14, IAS 19 The Limit and
Defined Benefit Assets, Minimum Funding Requirements and their Interaction
Adoption of the new interpretations does not have any bearing on the Group's
interim financial review.
On 3 July 2008 the International Financial Reporting Interpretations Committee
(IFRIC) issued interpretation IFRIC 15 - Agreements for the Construction of Real
Estate. The interpretation has not yet been approved in the European Union,
which is a prerequisite for its application. EU approval is not expected until
early 2009. However, according to the transitional rules, the interpretation
must be applied in the accounting period commencing on 1 January 2009. The
interpretation applies to agreements for the construction of real estate and
provides guidance on the recognition of revenues and their related costs. In
practice the new interpretation affects the income recognition practice for
Lemminkäinen Group's own developments, the basis of which will change from
percentage of completion to recognition at delivery. As a result, the
recognition of revenues from such projects on the income statement will be
slowed down.
The information contained in the interim financial review has not been audited.
--------------------------------------------------------------------------------
| FINANCIAL STATEMENTS AND OTHER TABULATED INFORMATION |
--------------------------------------------------------------------------------
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| 1) Consolidated income statement |
--------------------------------------------------------------------------------
| 2) Consolidated balance sheet |
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| 3) Consolidated cash flow statement |
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| 4) Consolidated statement of changes in shareholders' equity |
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| 5) Consolidated income statement, quarterly |
--------------------------------------------------------------------------------
| 6) Net sales by business sector |
--------------------------------------------------------------------------------
| 7) Net sales by business sector, quarterly |
--------------------------------------------------------------------------------
| 8) Operating profit by business sector |
--------------------------------------------------------------------------------
| 9) Operating profit by business sector, quarterly |
--------------------------------------------------------------------------------
| 10) Economic trends and financial indicators |
--------------------------------------------------------------------------------
| 11) Share-specific indicators |
--------------------------------------------------------------------------------
| 12) Guarantees and contingent liabilities |
--------------------------------------------------------------------------------
| 13) Litigation |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) CONSOLIDATED INCOME STATEMENT |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | 09/20 | 09/20 | Change | Change, | 12/200 |
| | 08 | 07 | | | 7 |
--------------------------------------------------------------------------------
| | | | | % | |
--------------------------------------------------------------------------------
| Net sales | 1,739 | 1,535 | 203.7 | 13.3 | 2,174. |
| | .3 | .6 | | | 1 |
--------------------------------------------------------------------------------
| Other operating income | | | | | |
--------------------------------------------------------------------------------
| and expenses | -1,62 | -1,40 | -220.6 | 15.7 | -2,013 |
| | 7.2 | 6.6 | | | .6 |
--------------------------------------------------------------------------------
| Depreciation | 27.7 | 26.1 | 1.6 | 6.1 | 34.2 |
--------------------------------------------------------------------------------
| Share of the results of | | | | | |
--------------------------------------------------------------------------------
| affiliated companies | 1.3 | 0.6 | 0.7 | Over 100 | 0.9 |
--------------------------------------------------------------------------------
| Operating profit | 85.7 | 103.6 | -17.9 | -17.3 | 127.2 |
--------------------------------------------------------------------------------
| Financial expenses | 22.8 | 15.5 | 7.3 | 47.1 | 22.2 |
--------------------------------------------------------------------------------
| Financial income | 5.2 | 3.5 | 1.7 | 48.6 | 6.2 |
--------------------------------------------------------------------------------
| Profit/loss before | 68.0 | 91.5 | -23.5 | -25.7 | 111.2 |
| taxes | | | | | |
--------------------------------------------------------------------------------
| Income taxes | -17.2 | -21.4 | 4.2 | 19.6 | -30.6 |
--------------------------------------------------------------------------------
| Profit/loss for the | | | | | |
| accounting | | | | | |
--------------------------------------------------------------------------------
| period | 50.8 | 70.2 | -19.4 | -27.6 | 80.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution of the profit/loss for the | | | |
| accounting period | | | |
--------------------------------------------------------------------------------
| To parent company | 46.5 | 65.2 | -18.7 | -28.7 | 72.9 |
| shareholders | | | | | |
--------------------------------------------------------------------------------
| To minority interests | 4.2 | 5.0 | -0.8 | -16.0 | 7.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EPS calculated from profit/loss attributable to parent company shareholders |
--------------------------------------------------------------------------------
| Earnings per share, diluted and undiluted, |
--------------------------------------------------------------------------------
| EUR | 0.71 | 1.55 | | | 4.29 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2) CONSOLIDATED BALANCE SHEET |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | 09/20 | 09/2007 | | 12/200 |
| | 08 | | | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Tangible assets | 187.7 | 170.6 | | 176.1 |
--------------------------------------------------------------------------------
| Goodwill | 76.1 | 74.4 | | 75.1 |
--------------------------------------------------------------------------------
| Other intangible assets | 2.7 | 2.7 | | 2.6 |
--------------------------------------------------------------------------------
| Investments | 11.4 | 9.8 | | 9.7 |
--------------------------------------------------------------------------------
| Deferred tax asset | 11.7 | 4.2 | | 4.9 |
--------------------------------------------------------------------------------
| Other non-current receivables | 7.6 | 7.9 | | 3.7 |
--------------------------------------------------------------------------------
| Total | 297.1 | 269.6 | | 272.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | 488.3 | 307.1 | | 330.9 |
--------------------------------------------------------------------------------
| Trade and other receivables | 612.8 | 498.6 | | 387.4 |
--------------------------------------------------------------------------------
| Cash funds | 94.2 | 60.1 | | 78.5 |
--------------------------------------------------------------------------------
| Total | 1,195 | 865.8 | | 796.9 |
| | .3 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets, total | 1,492 | 1,135.3 | | 1,069. |
| | .4 | | | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' equity and | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to parent company | | | |
| shareholders | | | |
--------------------------------------------------------------------------------
| Share capital | 34.0 | 34.0 | | 34.0 |
--------------------------------------------------------------------------------
| Share premium account | 5.8 | 5.8 | | 5.8 |
--------------------------------------------------------------------------------
| Revaluation reserve | 0.3 | 0.2 | | 0.2 |
--------------------------------------------------------------------------------
| Translation differences | -0.7 | 0.3 | | 0.1 |
--------------------------------------------------------------------------------
| Retained earnings | 224.8 | 182.5 | | 182.5 |
--------------------------------------------------------------------------------
| Profit/loss for the period | 46.5 | 65.2 | | 72.9 |
--------------------------------------------------------------------------------
| Shareholders' equity | | | | |
--------------------------------------------------------------------------------
| before minority interest | 310.8 | 288.0 | | 295.5 |
--------------------------------------------------------------------------------
| Minority interest | 25.0 | 19.9 | | 23.7 |
--------------------------------------------------------------------------------
| Shareholders' equity, total | 335.8 | 307.8 | | 319.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 16.1 | 17.2 | | 12.9 |
--------------------------------------------------------------------------------
| Pension liabilities | 0.7 | 0.9 | | 0.6 |
--------------------------------------------------------------------------------
| Provisions | 1.9 | 2.0 | | 1.7 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 119.1 | 170.6 | | 139.5 |
--------------------------------------------------------------------------------
| Other liabilities | 1.2 | 1.9 | | 1.9 |
--------------------------------------------------------------------------------
| Total | 139.0 | 192.5 | | 156.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Accounts payable and other | 492.9 | 389.1 | | 369.2 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Provisions | 6.1 | 6.4 | | 6.4 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 518.6 | 239.6 | | 217.6 |
--------------------------------------------------------------------------------
| Total | 1,017 | 635.0 | | 593.2 |
| | .6 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' equity | | | | |
--------------------------------------------------------------------------------
| and liabilities, total | 1,492 | 1,135.3 | | 1,069. |
| | .4 | | | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 3) CONSOLIDATED CASH FLOW STATEMENT |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | | 09/20 | 09/2007 | | 12/200 |
| | | 08 | | | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit before extraordinary | 68.0 | 91.5 | | 111.2 |
| items | | | | |
--------------------------------------------------------------------------------
| Depreciation according to plan | 27.7 | 26.1 | | 34.2 |
--------------------------------------------------------------------------------
| Other adjustments | 13.9 | 3.9 | | 7.7 |
--------------------------------------------------------------------------------
| Cash flow before change | | | | |
--------------------------------------------------------------------------------
| in working capital | 109.6 | 121.5 | | 153.1 |
--------------------------------------------------------------------------------
| Change in working capital | -238. | -100.6 | | -32.9 |
| | 3 | | | |
--------------------------------------------------------------------------------
| Financial items | -20.6 | -11.7 | | -17.9 |
--------------------------------------------------------------------------------
| Direct taxes paid | -38.9 | -18.2 | | -22.6 |
--------------------------------------------------------------------------------
| Cash flow from operating | -188. | -9.0 | | 79.6 |
| activities | 1 | | | |
--------------------------------------------------------------------------------
| Cash flow provided by investing | 9.5 | 23.4 | | 24.3 |
| activities | | | | |
--------------------------------------------------------------------------------
| Cash flow used in investing | -40.4 | -43.1 | | -53.8 |
| activities | | | | |
--------------------------------------------------------------------------------
| Change in non-current | -2.8 | -6.0 | | -1.4 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Drawings of loans | 1,757 | 220.2 | | 329.3 |
| | .8 | | | |
--------------------------------------------------------------------------------
| Repayments of loans | -1,48 | -158.7 | | -332.5 |
| | 7.6 | | | |
--------------------------------------------------------------------------------
| Dividends paid | -32.6 | -27.4 | | -27.4 |
--------------------------------------------------------------------------------
| Cash flow from financing | 234.7 | 28.1 | | -32.0 |
| activities | | | | |
--------------------------------------------------------------------------------
| Change in cash funds | 15.7 | -0.6 | | 18.1 |
--------------------------------------------------------------------------------
| Cash funds at beginning of | 78.5 | 60.6 | | 60.6 |
| period | | | | |
--------------------------------------------------------------------------------
| Translation difference of cash | -0.1 | 0.1 | | -0.2 |
| funds | | | | |
--------------------------------------------------------------------------------
| Cash funds at end of period | 94.2 | 60.1 | | 78.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 4) CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | | | | | Share- |
--------------------------------------------------------------------------------
| | | Shar | Trans | Reval | | | holder |
| | | e | - | u- | | | s' |
--------------------------------------------------------------------------------
| | Shar | prem | latio | ation | Retained | Minority | equity |
| | e | ium | n | | | | , |
--------------------------------------------------------------------------------
| EUR | capi | acco | diffe | reser | earnings | interest | total |
| million | tal | unt | rence | ve | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sharehold | | | | | | | |
| ers' | | | | | | | |
--------------------------------------------------------------------------------
| equity | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1.1.2007 | 34.0 | 5.8 | 0.1 | 0.1 | 208.0 | 19.7 | 267.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation | | | | | | |
--------------------------------------------------------------------------------
| difference | | 0.9 | | | | 0.9 |
--------------------------------------------------------------------------------
| Hedging of net | | | | | | |
--------------------------------------------------------------------------------
| investment in | | | | | | |
--------------------------------------------------------------------------------
| foreign | | | | | | |
--------------------------------------------------------------------------------
| subsidiary | | -0.7 | | | | -0.7 |
--------------------------------------------------------------------------------
| Cash flow | | | | | | |
--------------------------------------------------------------------------------
| hedges | | | 0.1 | | | 0.1 |
--------------------------------------------------------------------------------
| Change in | | | | | | |
--------------------------------------------------------------------------------
| fair value | | | 0.0 | | | 0.0 |
--------------------------------------------------------------------------------
| Reversal | | | | | | | |
| of | | | | | | | |
--------------------------------------------------------------------------------
| dividend | | | | | | | |
--------------------------------------------------------------------------------
| liability | | | | | 0.0 | | 0.0 |
--------------------------------------------------------------------------------
| Dividend | | | | | | | |
--------------------------------------------------------------------------------
| distribut | | | | | -25.5 | -1.8 | -25.5 |
| ion | | | | | | | |
--------------------------------------------------------------------------------
| Profit/lo | | | | | | | |
| ss for | | | | | | | |
--------------------------------------------------------------------------------
| the | | | | | | | |
| accountin | | | | | | | |
| g | | | | | | | |
--------------------------------------------------------------------------------
| period | | | | | 65.2 | 5.0 | 70.2 |
--------------------------------------------------------------------------------
| Change in | | | | | | | |
--------------------------------------------------------------------------------
| minority | | | | | | | |
--------------------------------------------------------------------------------
| interest | | | | | | -3.0 | -3.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sharehold | | | | | | | |
| ers' | | | | | | | |
--------------------------------------------------------------------------------
| equity, | | | | | | | |
--------------------------------------------------------------------------------
| 30.9.2007 | 34.0 | 5.8 | 0.3 | 0.2 | 247.7 | 19.9 | 307.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | | | | | Share- |
--------------------------------------------------------------------------------
| | | Shar | Trans | Reval | | | holder |
| | | e | - | u- | | | s' |
--------------------------------------------------------------------------------
| | Shar | prem | latio | ation | Retained | Minority | equity |
| | e | ium | n | | | | , |
--------------------------------------------------------------------------------
| EUR | capi | acco | diffe | reser | earnings | interest | total |
| million | tal | unt | rence | ve | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sharehold | | | | | | | |
| ers' | | | | | | | |
--------------------------------------------------------------------------------
| equity, | | | | | | | |
--------------------------------------------------------------------------------
| 1.1.2007 | 34.0 | 5.8 | 0.1 | 0.1 | 208.0 | 19.7 | 267.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation | | | | | | |
--------------------------------------------------------------------------------
| difference | | 0.4 | | | | 0.4 |
--------------------------------------------------------------------------------
| Hedging of net | | | | | | |
--------------------------------------------------------------------------------
| investment in | | | | | | |
--------------------------------------------------------------------------------
| foreign | | | | | | |
--------------------------------------------------------------------------------
| subsidiary | | -0.4 | | | | -0.4 |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
--------------------------------------------------------------------------------
| hedges | | | | 0.2 | | | 0.2 |
--------------------------------------------------------------------------------
| Change in | | | | | | |
--------------------------------------------------------------------------------
| fair value | | | 0.0 | | | 0.0 |
--------------------------------------------------------------------------------
| Effect of | | | | | | |
--------------------------------------------------------------------------------
| sold shares | | | -0.1 | | | -0.1 |
--------------------------------------------------------------------------------
| Reversal of | | | | | | |
--------------------------------------------------------------------------------
| dividend | | | | | | |
--------------------------------------------------------------------------------
| liability | | | | 0.0 | | 0.0 |
--------------------------------------------------------------------------------
| Dividend | | | | | | |
--------------------------------------------------------------------------------
| distribution | | | | -25.5 | -1.9 | -27.4 |
--------------------------------------------------------------------------------
| Profit/loss for | | | | | | |
--------------------------------------------------------------------------------
| the accounting | | | | | | |
--------------------------------------------------------------------------------
| period | | | | 72.9 | 7.6 | 80.6 |
--------------------------------------------------------------------------------
| Change in | | | | | | |
--------------------------------------------------------------------------------
| minority | | | | | | |
--------------------------------------------------------------------------------
| interest | | | | | -1.7 | -1.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' | | | | | | |
--------------------------------------------------------------------------------
| equity | | | | | | | |
--------------------------------------------------------------------------------
| 31.12.200 | 34.0 | 5.8 | 0.1 | 0.2 | 255.4 | 23.7 | 319.2 |
| 7 | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | | | | | Share- |
--------------------------------------------------------------------------------
| | | Shar | Trans | Reval | | | holder |
| | | e | - | u- | | | s' |
--------------------------------------------------------------------------------
| | Shar | prem | latio | ation | Retained | Minority | equity |
| | e | ium | n | | | | , |
--------------------------------------------------------------------------------
| EUR | capi | acco | diffe | reser | earnings | interest | total |
| million | tal | unt | rence | ve | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sharehold | | | | | | | |
| ers' | | | | | | | |
--------------------------------------------------------------------------------
| equity, | | | | | | | |
--------------------------------------------------------------------------------
| 1.1.2008 | 34.0 | 5.8 | 0.1 | 0.2 | 255.4 | 23.7 | 319.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation | | | | | | |
--------------------------------------------------------------------------------
| differences | | -1.4 | | | | -1.4 |
--------------------------------------------------------------------------------
| Hedging of net | | | | | | |
--------------------------------------------------------------------------------
| investment in | | | | | | |
--------------------------------------------------------------------------------
| foreign | | | | | | |
--------------------------------------------------------------------------------
| subsidiary | | 0.7 | | | | 0.7 |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
--------------------------------------------------------------------------------
| hedges | | | | 0.1 | | | 0.1 |
--------------------------------------------------------------------------------
| Effect of | | | | | | |
--------------------------------------------------------------------------------
| sold shares | | | 0.0 | | | 0.0 |
--------------------------------------------------------------------------------
| Reversal of | | | | | | |
--------------------------------------------------------------------------------
| dividend | | | | | | |
--------------------------------------------------------------------------------
| liability | | | | 0.0 | | 0.0 |
--------------------------------------------------------------------------------
| Dividend | | | | | | |
--------------------------------------------------------------------------------
| distribution | | | | -30.6 | -2.0 | -32.6 |
--------------------------------------------------------------------------------
| Profit/loss for | | | | | | |
--------------------------------------------------------------------------------
| the accounting | | | | | | |
--------------------------------------------------------------------------------
| period | | | | 46.5 | 4.2 | 50.7 |
--------------------------------------------------------------------------------
| Change in | | | | | | |
--------------------------------------------------------------------------------
| minority | | | | | | |
--------------------------------------------------------------------------------
| interest | | | | | -0.9 | -0.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sharehold | | | | | | | |
| ers' | | | | | | | |
--------------------------------------------------------------------------------
| equity | | | | | | | |
--------------------------------------------------------------------------------
| 30.9.2008 | 34.0 | 5.8 | -0.7 | 0.3 | 271.4 | 25.0 | 335.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 5) CONSOLIDATED INCOME STATEMENT, QUARTERLY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1-3/ | 4-6/ | 7-9/ | 10-12 | 1-3/ | 4-6/ | 7-9/ |
| | | | | / | | | |
--------------------------------------------------------------------------------
| EUR | 2007 | 2007 | 2007 | 2007 | 2008 | 2008 | 2008 |
| million | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 328. | 551. | 655.7 | 638.5 | 444.9 | 645.9 | 648.5 |
| | 0 | 9 | | | | | |
--------------------------------------------------------------------------------
| Other | | | | | | | |
| operating | | | | | | | |
--------------------------------------------------------------------------------
| income | | | | | | | |
| and | | | | | | | |
--------------------------------------------------------------------------------
| expenses | -322 | -498 | -585. | -607. | -445.3 | -599.4 | -582.5 |
| | .8 | .0 | 8 | 0 | | | |
--------------------------------------------------------------------------------
| Depreciat | 4.9 | 9.0 | 12.3 | 8.1 | 4.9 | 9.3 | 13.5 |
| ion | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | | |
| the | | | | | | | |
--------------------------------------------------------------------------------
| results | | | | | | | |
| of | | | | | | | |
--------------------------------------------------------------------------------
| affiliate | | | | | | | |
| d | | | | | | | |
--------------------------------------------------------------------------------
| companies | -0.1 | 0.1 | 0.7 | 0.3 | -0.2 | 0.4 | 1.1 |
--------------------------------------------------------------------------------
| Operating | | | | | | | |
--------------------------------------------------------------------------------
| profit/lo | 0.2 | 45.1 | 58.3 | 23.6 | -5.5 | 37.6 | 53.6 |
| ss | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | | |
--------------------------------------------------------------------------------
| expenses | 4.1 | 5.1 | 6.3 | 6.7 | 7.8 | 9.8 | 5.2 |
--------------------------------------------------------------------------------
| Financial | | | | | | | |
--------------------------------------------------------------------------------
| income | 1.0 | 1.9 | 0.6 | 2.7 | 1.7 | 3.3 | 0.2 |
--------------------------------------------------------------------------------
| Profit/lo | | | | | | | |
| ss | | | | | | | |
--------------------------------------------------------------------------------
| before | -3.0 | 41.9 | 52.6 | 19.6 | -11.6 | 31.0 | 48.6 |
| taxes | | | | | | | |
--------------------------------------------------------------------------------
| Income | 1.1 | -10. | -12.3 | -9.2 | 2.2 | -7.6 | -11.8 |
| taxes | | 2 | | | | | |
--------------------------------------------------------------------------------
| Profit/lo | | | | | | | |
| ss for | | | | | | | |
--------------------------------------------------------------------------------
| the | | | | | | | |
| accountin | | | | | | | |
| g | | | | | | | |
--------------------------------------------------------------------------------
| period | -1.8 | 31.7 | 40.3 | 10.4 | -9.4 | 23.4 | 36.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution of the profit/loss for the | | | |
| accounting period | | | |
--------------------------------------------------------------------------------
| To parent | | | | | | | |
--------------------------------------------------------------------------------
| company | | | | | | | |
--------------------------------------------------------------------------------
| sharehold | -3.7 | 30.2 | 38.7 | 7.8 | -10.0 | 22.1 | 34.5 |
| ers | | | | | | | |
--------------------------------------------------------------------------------
| To | | | | | | | |
| minority | | | | | | | |
--------------------------------------------------------------------------------
| interests | 1.9 | 1.5 | 1.6 | 2.6 | 0.6 | 1.4 | 2.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EPS calculated from profit attributable to parent company shareholders |
--------------------------------------------------------------------------------
| Earnings per share, diluted and undiluted |
--------------------------------------------------------------------------------
| EUR | -0.2 | 1.77 | 2.27 | 0.46 | -0.59 | 1.30 | 2.03 |
| | 2 | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 6) NET SALES BY BUSINESS SECTOR |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | | 09/20 | 09/20 | Change | Change, | 12/200 |
| | | 08 | 07 | | | 7 |
--------------------------------------------------------------------------------
| | | | | | % | |
--------------------------------------------------------------------------------
| Building construction | 779.2 | 710.3 | 68.9 | 9.7 | 1,042. |
| | | | | | 9 |
--------------------------------------------------------------------------------
| Infrastructure | 683.8 | 603.1 | 80.7 | 13.4 | 820.3 |
| construction | | | | | |
--------------------------------------------------------------------------------
| Technical building | 193.2 | 161.9 | 31.3 | 19.3 | 230.2 |
| services | | | | | |
--------------------------------------------------------------------------------
| Building products | 121.8 | 99.2 | 22.6 | 22.8 | 133.8 |
--------------------------------------------------------------------------------
| Others | -38.7 | -38.9 | 0.2 | 0.5 | -53.0 |
--------------------------------------------------------------------------------
| Group, total | 1,739 | 1,535 | 203.7 | 13.3 | 2,174. |
| | .3 | .6 | | | 1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 7) NET SALES BY BUSINESS SECTOR, QUARTERLY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1-3/ | 4-6/ | 7-9/ | 10-12 | 1-3/ | 4-6/ | 7-9/ |
| | | | | / | | | |
--------------------------------------------------------------------------------
| EUR | 2007 | 2007 | 2007 | 2007 | 2008 | 2008 | 2008 |
| million | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Building | | | | | | | |
--------------------------------------------------------------------------------
| construct | 192. | 250. | 268.0 | 332.6 | 276.6 | 295.3 | 207.3 |
| ion | 0 | 3 | | | | | |
--------------------------------------------------------------------------------
| Infrastru | | | | | | | |
| cture | | | | | | | |
--------------------------------------------------------------------------------
| construct | 81.4 | 220. | 301.7 | 217.2 | 95.5 | 250.5 | 337.8 |
| ion | | 0 | | | | | |
--------------------------------------------------------------------------------
| Technical | | | | | | | |
--------------------------------------------------------------------------------
| building | | | | | | | |
--------------------------------------------------------------------------------
| services | 46.2 | 57.2 | 58.5 | 68.3 | 56.5 | 68.0 | 68.7 |
--------------------------------------------------------------------------------
| Building | | | | | | | |
--------------------------------------------------------------------------------
| products | 18.5 | 39.5 | 41.2 | 34.5 | 25.0 | 45.8 | 51.0 |
--------------------------------------------------------------------------------
| Others | -10. | -15. | -13.6 | -14.1 | -8.6 | -13.7 | -16.3 |
| | 1 | 2 | | | | | |
--------------------------------------------------------------------------------
| Group, | 328. | 551. | 655.7 | 638.5 | 444.9 | 645.9 | 648.5 |
| total | 0 | 9 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 8) OPERATING PROFIT/LOSS BY BUSINESS SECTOR |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EUR million | | 09/20 | 09/20 | Change | Change, | 12/200 |
| | | 08 | 07 | | | 7 |
--------------------------------------------------------------------------------
| | | | | | % | |
--------------------------------------------------------------------------------
| Building construction | 35.8 | 45.9 | -10.1 | -22.0 | 71.7 |
--------------------------------------------------------------------------------
| Infrastructure | 31.5 | 44.9 | -13.4 | -29.8 | 39.3 |
| construction | | | | | |
--------------------------------------------------------------------------------
| Technical building | 14.0 | 8.1 | 5.9 | 72.8 | 11.9 |
| services | | | | | |
--------------------------------------------------------------------------------
| Building products | 9.6 | 9.0 | 0.6 | 6.7 | 11.1 |
--------------------------------------------------------------------------------
| Others | -5.3 | -4.3 | -1.0 | 23.3 | -6.7 |
--------------------------------------------------------------------------------
| Group, total | 85.7 | 103.6 | -17.9 | -17.3 | 127.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 9) OPERATING PROFIT/LOSS BY BUSINESS SECTOR, QUARTERLY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1-3/ | 4-6/ | 7-9/ | 10-12 | 1-3/ | 4-6/ | 7-9/ |
| | | | | / | | | |
--------------------------------------------------------------------------------
| EUR | 2007 | 2007 | 2007 | 2007 | 2008 | 2008 | 2008 |
| million | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Building | | | | | | | |
--------------------------------------------------------------------------------
| construct | 14.6 | 17.0 | 14.3 | 25.8 | 10.1 | 11.3 | 14.4 |
| ion | | | | | | | |
--------------------------------------------------------------------------------
| Infrastru | | | | | | | |
| cture | | | | | | | |
--------------------------------------------------------------------------------
| construct | -12. | 20.8 | 36.7 | -5.5 | -14.9 | 19.2 | 27.2 |
| ion | 7 | | | | | | |
--------------------------------------------------------------------------------
| Technical | | | | | | | |
--------------------------------------------------------------------------------
| building | | | | | | | |
--------------------------------------------------------------------------------
| services | 1.3 | 3.3 | 3.5 | 3.8 | 2.2 | 5.9 | 5.9 |
--------------------------------------------------------------------------------
| Building | | | | | | | |
--------------------------------------------------------------------------------
| products | -1.3 | 4.7 | 5.6 | 2.0 | -1.5 | 4.9 | 6.2 |
--------------------------------------------------------------------------------
| Others | -1.8 | -0.8 | -1.7 | -2.4 | -1.3 | -3.7 | -0.2 |
--------------------------------------------------------------------------------
| Group, | 0.2 | 45.1 | 58.3 | 23.6 | -5.5 | 37.6 | 53.6 |
| total | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 10) ECONOMIC TRENDS AND FINANCIAL INDICATORS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 09/20 | 09/2007 | | 12/200 |
| | 08 | | | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on equity, % | 15.5 | 24.4 | | 27.5 |
--------------------------------------------------------------------------------
| Return on investment, % | 11.0 | 16.1 | | 20.7 |
--------------------------------------------------------------------------------
| Operating profit/loss, % of net | 4.9 | 6.7 | | 5.9 |
| sales | | | | |
--------------------------------------------------------------------------------
| Equity ratio, % | 24.4 | 29.5 | | 32.7 |
--------------------------------------------------------------------------------
| Gearing, % | 161.8 | 113.7 | | 87.2 |
--------------------------------------------------------------------------------
| Interest-bearing net debt, EUR | 543.4 | 350.1 | | 278.5 |
| million | | | | |
--------------------------------------------------------------------------------
| Gross investments, EUR million | | | | |
--------------------------------------------------------------------------------
| (incl. leasing purchases) | 49.2 | 45.6 | | 61.4 |
--------------------------------------------------------------------------------
| Order book, EUR mill. | 1,341 | 1,524.3 | | 1,414. |
| | .4 | | | 1 |
--------------------------------------------------------------------------------
| - of which foreign orders, EUR | 378.5 | 365.0 | | 284.0 |
| mill. | | | | |
--------------------------------------------------------------------------------
| Average number of employees | 9,848 | 9,170 | | 9,201 |
--------------------------------------------------------------------------------
| Employees at end of period | 10,34 | 9,810 | | 8,718 |
| | 2 | | | |
--------------------------------------------------------------------------------
| Net sales, EUR mill. | 1,739 | 1,535.6 | | 2,174. |
| | .3 | | | 1 |
--------------------------------------------------------------------------------
| - of which operations abroad, | 485.2 | 411.1 | | 581.6 |
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| % of net sales | 27.9 | 26.8 | | 26.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11) SHARE-SPECIFIC INDICATORS | 09/20 | 09/2007 | | 12/200 |
| | 08 | | | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, EUR | 2.73 | 3.83 | | 4.29 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 18.26 | 16.92 | | 17.36 |
--------------------------------------------------------------------------------
| Dividend per share, EUR | | | | 1.80 |
--------------------------------------------------------------------------------
| Dividend to earnings ratio, % | | | | 42.0 |
--------------------------------------------------------------------------------
| Market capitalisation, EUR | 320.0 | 850.2 | | 536.2 |
| mill. | | | | |
--------------------------------------------------------------------------------
| Share price at end of period, | 18.80 | 49.95 | | 31.50 |
| EUR | | | | |
--------------------------------------------------------------------------------
| Trading volume during period, 1 | 2,667 | 4,052 | | 5,204 |
| 000 shares | | | | |
--------------------------------------------------------------------------------
| Number of issued shares, 1 000 | 17,02 | 17,021 | | 17,021 |
| shares | 1 | | | |
--------------------------------------------------------------------------------
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| 12) GUARANTEES AND CONTINGENT LIABILITIES |
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| EUR million | 09/20 | 09/2007 | | 12/200 |
| | 08 | | | 7 |
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| Securities for own commitments | | | | |
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| Property mortgages | 2.7 | 1.6 | | 3.1 |
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| Business mortgages | 94.9 | 95.3 | | 95.3 |
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| Bonds pledged as security | 1.0 | 0.8 | | 0.8 |
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| Total | 98.6 | 97.8 | | 99.2 |
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| Guarantees | | | | |
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| On behalf of affiliated | 1.0 | 0.8 | | |
| companies | | | | |
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| On behalf of others | 9.2 | 2.8 | | 9.9 |
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| Minimum lease payments of irrevocable lease agreements |
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| One year or less | 18.1 | 5.5 | | 5.7 |
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| One to five years | 48.5 | 17.9 | | 20.8 |
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| Over five years | 21.4 | 20.6 | | 20.2 |
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| Total | 88.0 | 44.0 | | 46.7 |
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| Purchase commitments of | 13.8 | 7.8 | | 11.3 |
| investments | | | | |
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| Derivative contracts | | | | |
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| Forward foreign exchange | | | | |
| contracts | | | | |
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| Nominal value | 84.8 | 42.9 | | 54.6 |
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| Fair value | 0.6 | -0.1 | | -0.2 |
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| Interest rate options, calls | | | | |
| purchased | | | | |
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| Nominal value | 2.5 | 33.9 | | 3.5 |
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| Fair value | 0.0 | 0.0 | | 0.0 |
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| Interest rate options, puts | | | | |
| written | | | | |
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| Nominal value | 2.5 | 4.5 | | 3.5 |
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| Fair value | 0.0 | -0.5 | | 0.0 |
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| Interest rate swap contracts | | | | |
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| Nominal value | 77.6 | 97.9 | | 95.6 |
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| Fair value | 0.3 | -0.3 | | -0.5 |
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| The fair value of contracts is the gain or loss arising from | |
| closure | |
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| of the contract based on the market price on the accounting date. | |
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13) LITIGATION
The arbitral tribunal decided that IKEA's termination in spring 2006 of the
construction contract for the MEGA shopping centre in St. Petersburg was not
justified. The arbitral tribunal will decide on the amount of compensation at a
later date.
The Market Court ordered Lemminkäinen to pay an infringement fine of EUR 14
million for contravening competition law in connection with its asphalt paving
operations in Finland. The infringement fine was recognised as an expense in the
fourth quarter of 2007. The decision has been appealed to the Supreme
Administrative Court, so the total amount of the fine may change.
Lemminkäinen has been informed of an application for a summons in which the
Finnish Road Administration is demanding compensatory damages from different
asphalt companies before the Helsinki District Court. Lemminkäinen's share of
the claimed compensation is at most EUR 10.5 million. The Finnish Road
Administration is also seeking damages of at most EUR 5.6 million from
Lemminkäinen, under joint and several liability with other defendant companies.