Lemminkäinen Interim Report 1 Jan–30 June 2014: The result improved year-on-year

LEMMINKÄINEN CORPORATION    INTERIM REPORT   30 JULY 2014 AT 8:00 A.M.

LEMMINKÄINEN INTERIM REPORT 1 JAN–30 JUNE 2014:
THE RESULT IMPROVED YEAR-ON-YEAR
 

January–June 2014 (1–6/2013)

• Net sales totalled EUR 789.8 million (736.0).
• At the end of the review period, the order book stood at EUR 2,086.8 million (1,973.5).
• Operating profit was EUR -2.5 million (-48.8), or -0.3% (-6.6) of net sales.
• Earnings per share were EUR 0.21 (-2.63).
• Cash flow from operations totalled EUR -126.9 million (-78.2).
• The equity ratio stood at 32.1% (29.2) and gearing at 85.4% (108.6).
• On 13 June 2014, Lemminkäinen divested its technical building services business to Are Group. The debt free purchase price was EUR 60.0 million. From the sale, Lemminkäinen booked EUR 23.7 million in capital gain in the second quarter of the year. The technical building services impact on financial performance and the capital gain from the sale have been eliminated from the income statement from continuing operations, as it’s classified as discontinued operations.

April–June 2014 (4–6/2013)

• Net sales totalled EUR 510.5 million (470.8).
• Operating profit was EUR 14.8 million (-11.9), or 2.9% (-2.5) of net sales.
• Earnings per share were EUR 1.30 (-0.91).
• Cash flow from operations totalled EUR -24.8 million (-53.8).

Profit guidance for 2014

Lemminkäinen estimates that its 2014 net sales will be slightly lower than in 2013 but its operating profit will improve clearly on 2013 (excluding non-recurring items). In 2013, net sales were EUR 2,020.1 million and operating profit excluding non-recurring items was EUR -3.9 million. The profit guidance remains unchanged for continuing operations. The impact of Technical building services has been eliminated from the 2013 figures.

¹⁾ Includes non-recurring items: The District Court’s decision on damages related to the asphalt cartel, EUR 65.6 million, and write-downs mainly related to commercial properties, EUR 19,8 million

²⁾ Includes non-recurring items: The District Court’s decision on damages related to the asphalt cartel, EUR -3.35 per share, and write-downs mainly related to commercial properties, EUR -1.01 per share

President and CEO’s view

"During the second quarter of 2014 Lemminkäinen took major steps in its turnaround. I am pleased to note that we achieved significant improvement in profitability compared to the first half of the year 2013," says Berndt Brunow, Chairman of Lemminkäinen’s Board of Directors and Lemminkäinen’s interim President and CEO. "Much of the improvement was due to our cost-cutting and efficiency improvement measures, successful infrastructure construction projects in Finland, paving business and building construction in the Helsinki metropolitan area."

"Our balance sheet is currently stronger than in the beginning of the year. We issued a 100-million-euro domestic bond in June which extended the maturity distribution of our debt portfolio. We also divested our technical building services business to Are Group in June. To further build our financial strength, we will continue to divest non-core operations and assets. We have also initiated a programme to release working capital."

"Our strategic focus is on infrastructure construction in Northern Europe and building construction in selected customer segments and areas in Finland and Russia. To enable future profitable growth in these businesses, we continue to take decisive actions to strengthen our balance sheet and improve our competitiveness. In building construction, we do not expect help from the market: In Russia the economic and political situation is uncertain, though it has not yet affected our apartment sales in St Petersburg. In Finland, the sales times are lengthening in residential construction."

"Unfortunately we have had to make many difficult decisions to initiate the turnaround, including the decision to reduce our personnel by nearly 500. Going forward, we need disciplined implementation of the decisions now taken and innovative approach for Lemminkäinen’s further renewal. Our new CEO Casimir Lindholm, as of August, and his Executive Team have a clear management agenda to build a firm foundation for Lemminkäinen’s future success."

Market outlook

Construction of new apartments will decrease for the third year in a row in Finland measured in value. Building construction will mainly be increased through renovation and somewhat by construction of public premises and industrial and warehouse premises. The weak economic situation of the public sector will most likely lower the demand for paving and road maintenance. On the other hand, the market situation in infrastructure construction will be supported by current and future major projects. In Scandinavia, the demand for infrastructure construction will be increased by multi-year national investment programmes as well as needs for renewing energy production. At the same time, the growing infrastructure market attracts Central European construction companies to these countries, which intensifies price competition in the industry. The growth outlook of the Russian economy will remain uncertain, and forecasting the operating environment has become more difficult.

Briefing

A Finnish-language briefing for analysts and the media will be held at 10:00 A.M. on Wednesday, 30 July at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's Chairman of the Board and interim President and CEO Berndt Brunow will present the Interim Report. Presentation materials can be found in Finnish and English at the company’s website, www.lemminkainen.com.

Financial Reports for 2014

7 February 2014: Financial Statements Bulletin 2013
30 April 2014: Interim Report, 1 Jan–31 March 2014
30 July 2014: Interim Report, 1 Jan–30 Jun 2014
29 October 2014: Interim Report, 1 Jan–30 Sept 2014

LEMMINKÄINEN CORPORATION
Corporate Communications

ADDITIONAL INFORMATION:

Media:
Berndt Brunow, Chairman of the Board of Directors and interim President and CEO, tel. +358 2071 54524

Investors and analysts:
Ilkka Salonen, CFO, tel. +358 2071 50246
Katri Sundström, Head of Investor Relations, tel. +358 2071 54813

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

ATTACHMENT: Interim Report Q2/2014