Lemminkäinen Interim Report 1 Jan–30 Sep 2014: Turnaround is proceeding as planned

LEMMINKÄINEN CORPORATION INTERIM REPORT 29 OCTOBER 2014 AT 8:00 A.M.

LEMMINKÄINEN INTERIM REPORT 1 JAN–30 SEP 2014: TURNAROUND IS PROCEEDING AS PLANNED
 

January–September 2014 (1-9/2013)

• Net sales totalled EUR 1,436.2 million (1,440.1). Adjusted for currency effects, net sales increased by 3%.
• At the end of the period, the order book stood at EUR 1,910.9 million (1,880.1).
• Operating profit was EUR 36.2 million (13.7), or 2.5% (1.0) of net sales.
• Earnings per share were EUR 0.81 (-0.61).
• Cash flow from operations totalled EUR -46.9 million (30.2).
• Interest-bearing net debt at the end of the period was EUR 233.5 million (304.4)
• The equity ratio stood at 33.0% (29.2) and gearing at 53.7% (74.3).
   

July–September 2014 (7-9/2013)

• Net sales totalled EUR 646.4 million (704.1). Adjusted for currency effects, net sales decreased by 6%.
• Order inflow in the quarter was EUR 389.4 million (538.3)
• Operating profit was EUR 38.7 million (62.5), or 6.0% (8.9) of net sales.
• Earnings per share were EUR 0.62 (2.02).
• Cash flow from operations totalled EUR 80.0 million (108.5).

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

3) Includes the payment of EUR 60 million in damages related to asphalt cartel paid on January 2014.

1) Includes discontinued operations.

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.

Casimir Lindholm, President and CEO:

“Lemminkäinen’s turnaround is proceeding as planned. Our financial condition is already better than it was at the start of the year, thus creating a solid foundation for further development. In September, we conducted a successful EUR 30 million rights offering, for which I would like to thank all of our shareholders. Our interest-bearing net debt is clearly lower than at the end of last year, and the bond issued in the spring extended our debt maturity. To strengthen the balance sheet, we will continue the divestment of non-strategic assets and operations. By improving our operating efficiency, we have managed to release approximately EUR 30 million of working capital during the summer and autumn,” says Casimir Lindholm, Lemminkäinen’s President and CEO.  

“In Norway, we have got our operations back on the profitability track. The operating model has been changed, and particular attention has been paid to the tendering practices and wintertime planning, for instance. The efficiency measures in Russia have also had the desired effect. In addition, the demand for apartments in our two projects in the St Petersburg city centre has continued at a good level, which does not necessarily describe the Russian market situation as a whole. Thanks to the efficiency measures taken, the Group cost structure at the end of the year will be about EUR 10 million less than at the beginning of the year. Our estimate is that next year our cost structure will be EUR 30 million lighter - as planned in the Deliver 2014 programme.” 

“In Finland, the market continues to be weak, especially in building construction. The demand for housing has slowed down, and, at the current sales pace, the number of unsold apartments will increase quickly. We are actively seeking alternatives to direct consumer sales, and we are also boosting the sales of completed apartments. At the same time, our order book includes several long-term projects, such as the infrastructure construction projects of the Rantaväylä tunnel in Tampere and the West Metro stations. In building construction, similar projects include the renovation of the Parliament Building and the Sibelius Academy as well as the school campus of timber to be built in Pudasjärvi, in northern Finland, with the PPP model.” 

“In accordance with our strategy, we are running several improvement initiatives that aim to increase operational efficiency and project management as well as to release capital. We expect to see results already during the first half of next year. I believe that together with our competent personnel we will turn Lemminkäinen into a more competitive and profitable company,” Lindholm says.

Market outlook

In Finland, the outlook for new construction is still weak. The demand for renovation is somewhat higher; however, the industry is very fragmented and the size of projects varies. The weak economic situation of the public sector, particularly municipalities, 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 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. The growth outlook of the Russian economy remains uncertain, and forecasting the operating environment is difficult. The declining exchange rate of the rouble and the possible increase in mortgage interest rates could reduce the demand for housing in the near future. 

Briefing

A Finnish-language briefing for analysts and the media will be held at 10:00 a.m. on Wednesday, 29 October at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's President and CEO Casimir Lindholm 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 2015

5 February 2015: Financial Statements Bulletin 2014

29 April 2015: Interim Report, 1 Jan–31 March 2015

29 July 2015: Interim Report, 1 Jan–30 Jun 2015

30 October 2015: Interim Report, 1 Jan–30 Sept 2015

LEMMINKÄINEN CORPORATION
Corporate Communications
 

Additional information:

Casimir Lindholm, President & CEO, tel. +358 2071 53304

Ilkka Salonen, CFO, tel. +358 2071 53304

Katri Sundström, Head of Investor Relations, tel. +358 2071 54813

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

Together with our customers we create conditions that make living, working and travelling functional, safe and healthy. We operate in northern Europe and employ about 6,000 professionals. In 2013, our net sales were about EUR 2.0 billion. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com

ATTACHMENT: Interim Report Q3/2014