Lemminkäinen Financial Statements Bulletin 2014: Stronger balance sheet and better profitability through efficiency measures

LEMMINKÄINEN CORPORATION FINANCIAL STATEMENTS BULLETIN  5 FEBRUARY 2015
AT 8:00 A.M.
 

LEMMINKÄINEN FINANCIAL STATEMENTS BULLETIN 2014: STRONGER BALANCE SHEET AND BETTER PROFITABILITY THROUGH EFFICIENCY MEASURES

October–December 2014 (10–12/2013)

• Net sales totalled EUR 608.3 million (580.0).
• Operating profit was EUR 0.1 million (-103.0), or 0.0% (-17.8) of net sales.
• The impact of currency exchange rate changes on euro-denominated net sales was EUR -29.3 million and on operating profit EUR -2.7 million
• Operating profit includes non-recurring items: write-downs related to assets in the balance sheet worth EUR 7.6 million as well as increase in provisions in damages related to the asphalt cartel worth EUR 4.9 million
• Operating profit, excluding the non-recurring items, was EUR 12.6 million (-17.6), or 2.1% (-3.0) of net sales.
• Order inflow was EUR 128.6 million (374.9).
• Profit for the period was EUR -6.3 million (-85.8).
• Earnings per share were EUR -0.42 (-4.23).
• Cash flow from operations totalled EUR -7.8 million (-22.0).

January–December 2014 (1–12/2013)

• Net sales totalled EUR 2,044.5 million (2,020.1).
• Operating profit was EUR 36.3 million (-89.3), or 1.8% (-4.4) of net sales.
• The impact of currency exchange rate changes on euro-denominated net sales was EUR -73.2 million and on operating profit EUR -5.0 million
• Operating profit includes non-recurring items: write-downs related to assets in the balance sheet worth EUR 9.6 million as well as increase in provisions in damages related to the asphalt cartel worth EUR 6.4 million
• Operating profit, excluding the non-recurring items, was EUR 52.3 million (-3.9), or 2.6% (-0.2) of net sales.
• Order inflow in 2014 was EUR 1,527.4 million (1,958.6).
• At the end of the review period, the order book stood at EUR 1,456.1 million (1,733.2).
• Profit for the period was EUR 18.1 million (-93.5).
• Earnings per share were EUR 0.40 (-4.81).
• Cash flow from operations totalled EUR -54.8 million (8.3). This includes EUR 60 million damages paid on January.
• Interest-bearing net debt at the end of the period was EUR 213.6 million (326.5).
• The equity ratio stood at 37.1% (27.3) and gearing at 51.8% (100.8).
• The Board of Directors proposes to the AGM that no dividend will be paid for 2014.

Profit guidance for 2015

Lemminkäinen estimates that its net sales in 2015 will not increase as compared to 2014 (EUR 2,044.5 million). Operating profit (IFRS) in 2015 is expected to improve as compared to 2014 (EUR 36.3 million).

Casimir Lindholm, President and CEO:

“The year 2014 was very challenging for Lemminkäinen. Nevertheless, the measures taken in the spring have been effective and our turnaround is well underway. Our main targets are strengthening the balance sheet as well as improving profitability and competitiveness,” says Casimir Lindholm, Lemminkäinen President and CEO.

“In the spring, we launched the Deliver 2014 cost savings programme that focused on the targets mentioned above. The programme enabled us to turn the result positive in Norway and improved our profitability in Russia. Unfortunately, the measures taken also resulted in personnel reductions.”

“Our result improved clearly from last year. In Finland, ongoing infra projects, the paving business and development projects in building construction in the Helsinki metropolitan area performed well. Despite the uncertainty in Russia, housing sales was brisk and we completed two large residential projects in St. Petersburg. The mild weather prolonged the paving season in all our operating countries.”

“The 5-year bond and the rights offering issued in 2014 lengthened our debt maturity and enhanced our solvency. We have strengthened our balance sheet by divesting individual non-core assets and operations. In addition, the divestment of technical building services business in the spring clarified our business portfolio. Through these actions, our liquidity and solvency have improved.”

“We have a good starting point for 2015, although the market situation remains challenging. We aim to enhance our competitiveness through operational efficiency measures. In addition, we focus on project and risk management, wintertime planning and fleet optimisation, among others. This will create a solid foundation to strengthen our competitive position in infrastructure construction in Northern Europe.”  

1) Non-recurring items included in IFRS operating profit are:
10-12/2014: Total EUR 12.5 million (EUR 7.6 million write-downs and EUR 4.9 million increase in provisions related to asphalt cartel)
10-12/2013: Total EUR 85.4 million (EUR 19.8 million write-downs and EUR 65.6 million damages paid and provisions related to asphalt cartel)
1-12/2014: Total EUR 16.0 million (EUR 9.6 million write-downs and EUR 6.4 million increase in provisions related to asphalt cartel)
1-12/2013: Total EUR 85.4 million  (EUR 19.8 million write-downs and EUR 65.6 million damages paid and provisions related to asphalt cartel)

2) 1-12/2014 cash flow from operations includes EUR 60 million of damages paid related to asphalt cartel
 

1) Includes discontinued operations.
 

Market outlook

In Finland, the outlook for new construction is still weak and building construction is supported by renovation projects, which are less dependent on the economic cycles. Ongoing urbanisation affects building construction in many ways. The demand is focused on urban growth centres and especially the Helsinki metropolitan area. Infrastructure construction will suffer from the cuts in state and municipality basic road maintenance appropriations and the decrease in foundation work in building construction. On the other hand, the market situation is supported by ongoing and future major infra 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 competition for infra projects is intense especially in Sweden and Norway. The growth outlook for the Russian economy is weak, and forecasting the operating environment is extremely difficult. The declining exchange rate of the rouble and the 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 2:00 p.m. on Thursday, 5 February at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's President and CEO Casimir Lindholm will present the Financial Statements Bulletin. Presentation material can be found in Finnish and English at the company’s website, www.lemminkainen.com/investors.
 

Financial reporting in 2015

LEMMINKÄINEN CORPORATION
Corporate Communications
 

Additional information:

Casimir Lindholm, President and CEO, tel. +358 2071 54518
Ilkka Salonen, CFO, tel. +358  2071 54518
Kati 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 5,600 professionals. In 2014, our net sales were about EUR 2.0 billion. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange Helsinki. www.lemminkainen.com