Lemminkäinen's interim report, 1 January-30 September 2012

LEMMINKÄINEN CORPORATION            INTERIM REPORT    1 NOVEMBER 2012 AT 8:00 A.M.

LEMMINKÄINEN'S INTERIM REPORT, 1 JANUARY-30 SEPTEMBER 2012:
The company strengthened its solvency and financial position.

January-September 2012, compared with the corresponding period of 2011:

- Net sales in January-September grew by 3% to EUR 1,599.0 million (1,548.7).
- The order book grew by 12% and was EUR 1,659.1 million (1,485.4) at the end of the period.
- The operating profit was EUR 26.4 million (36.3). Operating margin was 1.7% (2.3). The operating profit for the comparison period includes negative goodwill of EUR 11.0 million recognised from an acquisition.
- Pre-tax profit amounted to EUR 14.4 million (23.6). Pre-tax profit for the comparison period includes negative goodwill of EUR 11.0 million recognised from an acquisition.
- Earnings per share were EUR 1.76 (1.80). Earnings per share for the review period include EUR 0.91 per share in capital gains from the divestment of the concrete business. Earnings per share for the comparison period include negative goodwill of EUR 0.56 per share from an acquisition and capital gains of EUR 0.64 per share from the divestment of the roofing business.
- Cash flow from operations totalled EUR 38.7 million (13.7).
- The equity ratio was 35.2% (23.3) and gearing 62.1% (104.0).

July-September 2012, compared with the corresponding period of 2011:

- Net sales in July-September were EUR 716.6 million (722.1).
- The operating profit was EUR 40.4 million (47.8). Operating margin was 5.6% (6.6). The operating profit for the comparison period includes negative goodwill of EUR 2.9 million recognised from an acquisition.
- Pre-tax profit amounted to EUR 36.6 million (41.7). Pre-tax profit for the comparison period includes negative goodwill of EUR 2.9 million recognised from an acquisition.
- Earnings per share were EUR 2.67 (1.76). Earnings per share for the review period include EUR 0.91 per share in capital gains from the divestment of the concrete business. Earnings per share for the comparison period include EUR 0.15 per share in negative goodwill.
- Cash flow from operations totalled EUR 29.5 million (148.7).

Business functions divested during the review period are categorised as discontinued operations and thus the figures for the comparison periods have also been adjusted. On 31 January 2011, Lemminkäinen divested its roofing business at a price of about EUR 25 million, recognising pre-tax capital gains of EUR 17.1 million in the first quarter of 2011. On 28 September 2012, Lemminkäinen sold the entire share capital of Lemminkäinen Rakennustuotteet Oy, which comprised the company's concrete business.  The transaction price was EUR 55 million, from which Lemminkäinen recognised pre-tax capital gains of EUR 17.1 million in the third quarter of 2012.
 

1-9/2011 and 1-12/2011: Operating profit, pre-tax profit, earnings from continuing operations and the result for the period include EUR 11 million in negative goodwill recognised from an acquisition. Earnings per share include EUR 0.56 per share in negative goodwill.

7-9/2011: Operating profit, pre-tax profit, earnings from continuing operations and the result for the period include EUR 2.9 million in negative goodwill recognised from an acquisition. Earnings per share include EUR 0.15 per share in negative goodwill.

President & CEO Timo Kohtamäki:

"Our result for the January-September period shows that the efficiency programme we launched a year ago has improved our cost competitiveness and sharpened the operating models of our Finnish businesses. Our operating profit in the weakening Finnish market improved by EUR 12 million. We estimate that we will achieve cost savings of about EUR 20 million this year thanks to the efficiency programme. The programme seeks savings of a total of EUR 50 million after 2013," says Timo Kohtamäki, President and CEO of Lemminkäinen.

"The earnings of International Operations in January-September were weakened by paving operations in Norway, in which the operating profit fell about EUR 10 million short of the previous year. Although operations in the summer season were reasonably good, we were not able to make up for the losses posted in the first months of the year. The paving operations we acquired in Norway were only integrated into Lemminkäinen on 31 May 2011, and thus the early-year losses typical in the paving business did not burden our earnings for 2011.  We have identified the units whose production and earnings do not as yet measure up to our objectives, and our focus is now to improve their efficiency," says Kohtamäki.

"I am very satisfied that our solvency and financial position strengthened in January-September. Our equity ratio (35.2%) is now in line with our target for the strategy period and our gearing (62.1%) is clearly lower than in previous years, thanks to our determined efforts to optimise working capital, strategic divestments and financial arrangements. Our stronger balance sheet gives us greater financial flexibility in an uncertain market," says Kohtamäki.

Market outlook

The total volume of construction in Finland will fall in 2012 and this decline is expected to continue in 2013. The outlook for new construction in particular has weakened, while renovation is seeing further growth. The total volume of infrastructure construction will decline. In residential construction, the focus is on privately financed projects. Growth in infrastructure construction in Norway, Sweden and Denmark is supported by the governments' multi-year investments in the development of road and railway networks and energy production. Of Lemminkäinen's key market areas, Russia is seeing the fastest growth in its economy and construction.

Profit guidance for 2012

Lemminkäinen estimates that its 2012 net sales will remain at the same level as in 2011, and that its pre-tax profit will improve on 2011. This estimate is based on the cost savings achieved by the efficiency programme as well as the completion of 700 residential units built as development projects in the fourth quarter. In 2011 Lemminkäinen's net sales totalled EUR 2,183.9 million and pre-tax profit EUR 25.0 million.                                                                                                      

Briefing

A Finnish-language briefing for analysts and the media will be held at 1.00 p.m. on Thursday, 1 November at Lemminkäinen's head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. The interim report will be presented by President and CEO Timo Kohtamäki. Presentation material is available in Finnish and English on the company's website, www.lemminkainen.com.

Financial statement bulletin for 2012
The financial statement bulletin for 2012 will be published on 7 February 2013.

LEMMINKÄINEN CORPORATION
Corporate Communications

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

Timo Kohtamäki, President & CEO, tel. +358 2071 53263
Robert Öhman, CFO, tel. +358 2071 53515
Katri Sundström, Vice President, Investor Relations, tel. +358 2071 54813

APPENDICES:
Interim Report, 1 January-30 September 2012
Tabulated section of the interim report

DISTRIBUTION:
NASDAQ OMX Helsinki
key media
www.lemminkainen.com

Lemminkäinen Group operates in all areas of the construction sector. The Group's business segments are building construction, infrastructure construction, technical building services and international operations. Net sales in 2011 were about EUR 2.2 billion, of which international operations accounted for roughly one third. The Group employs an average of 8,000 people. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com