Lemminkäinen Interim Report 1 Jan–31 March 2015: Stronger balance sheet and clearly positive cash flow

LEMMINKÄINEN CORPORATION        INTERIM REPORT      29 APRIL 2015 AT 8:00 A.M.

LEMMINKÄINEN INTERIM REPORT 1 JAN–31 MARCH 2015: STRONGER BALANCE SHEET AND CLEARLY POSITIVE CASH FLOW
 

January–March 2015 (1–3/2014)

• Net sales totalled EUR 289.6 million (279.2).
• Order inflow in January–March was EUR 387.4 million (412.8).
• Operating profit was EUR -18.1 million (-17.3), or -6.2% (-6.2) of net sales.
• Profit for the period was EUR -19.6 million (-19.9).
• Earnings per share were EUR -0.96 (-1.04).
• Cash flow from operations totalled EUR 10.7 million (-102.2).
• At the end of review period the order backlog was EUR 1,617.3 million (1,901.2).
• The equity ratio was 37.9% (32.5) and gearing was 50.5% (98.9).
• Operating capital was EUR 554.4 million (691.1).
• Interest-bearing net debt was EUR 198.7 million (364.2).
• The company adopted a new segment structure from the beginning of the year. Lemminkäinen’s four business segments are as follows: Paving; Infra projects; Building construction, Finland; and Russian operations.

1) 1–3/2014 and 1–12/2014: Cash flow from operations includes EUR 60 million of damages paid related to asphalt cartel.

1) Equity ratio, if hybrid bond was treated as debt: 3/2015: 24.6%, 3/2014: 20.3% and 12/2014: 24.6%.

2) Gearing, if hybrid bond was treated as debt: 3/2015: 132.0%, 3/2014: 218.7% and 12/2014: 128.4%.

Profit guidance for 2015

The profit guidance for 2015 is intact. 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).

 

President and CEO Casimir Lindholm:

“The operating loss in the first quarter increased from the last year, which is a fact that I cannot be satisfied with”, says Casimir Lindholm, Lemminkäinen President and CEO. “In the Paving segment, the profitability was weakened by write-downs related to inventories and declining margins in individual projects. Nevertheless, the year-to-date order book in paving has grown faster than last year in Finland, Sweden and Norway. In addition, the demand for infrastructure construction is still good in our main markets. In 2015, we will continue the measures to improve our operational efficiency and complete the Deliver 2014 cost savings programme. I am confident that the targeted EUR 30 million lower cost structure will clearly be reflected in our full year operational result.”

“In Building construction, Finland, our result was boosted by residential and commercial development in the Helsinki metropolitan area. Due to the uncertain market situation, we have reduced the number of residential start-ups. In Russian operations, our profitability was improved by good housing sales, despite the uncertainties in the operating environment. In March, we decided to withdraw from our role as developer in a planned project in St Petersburg, including approximately 2,000 apartments. The reason for the decision was a too high risk level for Lemminkäinen. Negotiations of alternative ways to carry out the project are ongoing.”

“Our operating capital has decreased clearly compared to last year. Among other measures, we have improved the efficiency of our invoicing, divested non-core assets as well as optimised our residential production according to the market situation and our risk tolerance. The release of capital, together with good housing sales, also resulted in a positive cash flow from operations. A stronger balance sheet and the decreased risk level in individual projects provide us with a solid foundation for developing our business and strengthening our competitive position,” says Lindholm. 

Market outlook

In 2015, the total volume of construction in Finland is likely to remain at the 2014 level. The building construction sector is supported by renovation projects. Ongoing and future major infra projects especially in urban growth centres support the market situation in infrastructure construction. The weak economic situation in the public sector is expected to reduce investments in basic road maintenance and further increase the state’s road infrastructure repair backlog. The growing infrastructure market in Scandinavia attracts major Central European construction companies to these countries, which intensifies price competition. In Russia, the economic and political situation remains uncertain and the fluctuation of the rouble increases the instability of the business environment. Prices rise faster than salaries, which weakens consumer purchasing power and may weaken intentions to purchase an apartment. In the Baltic countries, the market situation in infrastructure construction will most likely remain unchanged.

Briefing

A Finnish-language briefing for analysts and the media will be held at 10:00 a.m. on Wednesday, 29 April 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 material can be found in Finnish and English at the company’s website, www.lemminkainen.com/investors.

Financial reporting in 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 June 2015

30 October 2015         Interim Report 1 Jan – 30 Sep 2015

LEMMINKÄINEN CORPORATION
Corporate Communications

ADDITIONAL INFORMATION:

Casimir Lindholm, President and 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 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

ATTACHMENT: Interim Report Q1/2015