DGAP-News: Uponor Oyj
2015-04-28 / 07:00
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Uponor Corporation Interim report January-March 2015 28
April 2015 08.00 EET
Uponor's
steady progress continues despite weak European trends
- Net sales in January - March totalled EUR237.1
(230.9) million; up by 2.7% or -0.7% excluding non-recurring items and currency
translation impact
- Operating profit came to EUR11.3
(4.8) million, a change of 132.9% or 31.1% on a like-for-like basis excluding a
non-recurring cost of EUR3.8 million in 2014
- Earnings per share were EUR0.06 (0.04)
- Return on investment was 7.2% (3.5%), and gearing 46.7%
(56.9%)
- Cash flow from business
operations came to EUR-22.4 (-18.4) million
- Uponor repeats its full-year guidance announced on 12 Feb 2015:
The Group's net sales and operating profit (excluding any non-recurring items)
are expected to improve from 2014
(This
interim report has been compiled in accordance with the IAS 34 reporting
standards and is unaudited. Figures in the report are for continuing
operations, unless otherwise stated.)
President and CEO Jyri Luomakoski comments on developments during
the reporting period:
- I am happy to report yet another successful quarter in Building
Solutions - North America. We have been able to sustain the brisk growth,
thanks to continued buoyancy in the U.S. residential housing market and our
success in customer conversion both amongst residential and commercial
contractors.
- We carried out a strategic
review of the total portfolio of Uponor Infra in order to define the best
synergic fit. As a result, we took the initiative and executed two non-core
divestments in a timely manner. We have also completed the streamlining
initiated last year and the results are visible in our numbers. With already
two improving quarters behind us, the management can now focus on developing
the core business further.
- In contrast to North America, our European business landscape with
only a few bright spots offers little consolation. In Germany, Europe's largest
building market, the construction sector remains solid but it has flattened or
even slowed a bit and has, at least temporarily, decoupled from the larger
economy, which is doing well and has rebounded from the autumn
slowdown.
Information on the January - March 2015 interim report
bulletin
This
document is a condensed version of Uponor's January - March 2015 interim report
bulletin, which is attached to this release. It is also available on the
company website. The figures in brackets are the reference figures for the
equivalent period in the previous year. Figures refer to continuing operations
unless otherwise stated. Any change percentages were calculated from the exact
figures and not the rounded figures published here.
Webcast of the results briefing and the presentation
A webcast
in English will be broadcast on 28 April at 10:00 a.m. EET. Connection details
are available at http://investors.uponor.com. Questions can
be sent to ir@uponor.com. The recorded webcast can be viewed at
http://investors.uponor.com shortly after publication. The presentation
document will be available at http://investors.uponor.com > News &
downloads.
Next
interim results
Uponor
Corporation will publish its Q2 interim results on 21 July 2015. During the
silent period from 1 to 21 July, Uponor will not comment on market prospects or
factors affecting business and performance.
Markets
In the first quarter of 2015 economic development in Uponor's core
geographical markets was characterised by continued weakness in Europe and
sustained healthy development in North America, the U.S. in particular.
International concerns, such as the geopolitical crisis in Ukraine and the
economic challenges in the Euro area, continued to disturb market conditions in
many parts of Europe. In addition, the dynamics around the lower price of oil
had a negative influence on the progress of several economies, in particular
Canada, Norway and Russia, to name a few.
There were fewer weather-related influencers than in the first
quarter of 2014. While North America did suffer from a lengthy period of severe
cold in the first two months of the year, resulting in business slowing down,
the European countries faced a rather normal winter.
In the Nordic countries, construction activity in Sweden sustained
much of its earlier liveliness. Meanwhile, the Norwegian market, influenced by
declining oil revenue, showed a weakening development, which was also the case
with Finland. Contradicting the general trend, Denmark made some gains,
although from a very low base.
In Central Europe, the German building market that had lost some
of its strength in the latter half of 2014 continued like that in the first
quarter too, in stark contrast to the booming general economic environment in
the country. The building activity was mostly driven by new residential
building. The renovation market continued to be subdued as it was lacking
drivers in the form of high energy costs or public incentives. Starting at a
low level after the lengthy decline, activity in the Netherlands was developing
positively while Austria and Switzerland continued to be rather soft.
The Eastern European markets were affected by the geopolitical
tension in the region. The biggest impact was felt in Russia, where demand
started to slow down clearly in the first quarter. Ignoring the general trend,
demand in the Baltic countries continued to grow briskly.
Amongst the South European markets, construction in the UK was
slowing, with the exception of the non-residential segments of the market. Most
other national markets in the region have stabilised at low levels. A notable
exception is France, where the market deteriorated further.
In North America, the gradual, broad-based recovery continued in
the U.S. despite another cold start to the year, which had an adverse impact on
housing starts in both countries. The Canadian residential segment remained
reasonably healthy, while the non-residential segment has been softening.
In terms of infrastructure solutions demand, the markets were very
much as in the first quarter of last year. In the Nordic countries, demand in
Sweden remained positive, while Denmark and Norway were more hesitant. A clear
contrast was Finland, whose market deteriorated even further from the weak
comparable period. The largest international market, Canada, was positive
overall as last year.
Net sales
The
Group's consolidated net sales reached EUR237.1 (230.9) million, up 2.7%. In
comparable terms, adjusted for the divestment of the Thai infrastructure
business and currency rate impact, the development was flat at -0.7%.
The
translation impact of currencies on net sales, compared to the first quarter of
2014, and mainly related to the USD, was considerable, boosting net sales by
EUR9.9 million, or 4.4%. The impact makes a notable variance in Building
Solutions - North America's reported Euro-based net sales.
Thus,
Building Solutions - North America reported a growth of 40.6% in euro. Growth
in local currency also stayed robust at 13.9%, reflecting the continued
favourable business environment, especially in the U.S., while the business in
Canada declined. The fact that Uponor offers products for the growing
renovation and remodelling market supported growth.
Building
Solutions - Europe continued to face headwinds in the European markets and its
net sales declined. This trend was mainly driven by weaker demand in certain
key markets, such as in the Nordic countries and Germany, and also in Russia
where the construction market clearly started to decline towards the end of the
quarter. In Germany, much of the drop from prior year was attributable to order
shipments being delayed till April on account of the transition of the
warehousing operations to the new distribution centre in March.
Similarly, Uponor Infra faced headwinds in its
European markets, and net sales for the quarter declined despite the robust
growth in North American operations. The drop in reported net sales compares to
the divestment of the Thai business effective on 1 March 2015.
Breakdown of net sales by segment (January - March):
1-3/ 1-3/ Change
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2014
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112.6 120.9 -6.8%
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ding
Solut
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Europ
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56.9 40.5 40.6%
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Solut
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North
Ameri
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63.2 55.5 13.9%)
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68.3 70.8 -3.6%
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Infra
-0.7 -1.3
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237.1 230.9 2.7%
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Results and profitability
The
positive trend in gross profit was supported by a favourable input cost
environment in the first two months of the quarter, influencing the
infrastructure business in particular. The trend, however, turned rapidly in
March driven by a sudden shortage in certain plastic raw materials.
Uponor's
consolidated operating profit for continuing operations in the first quarter of
2015 came to EUR11.3 (4.8) million, representing a change of 132.9% year-on-year.
On a like-for-like basis, excluding any non-recurring items, operating profit
was EUR11.3 (8.6) million, up 31.1%. The first quarter 2014 included a
non-recurring item of EUR3.8 million as a provision for the central European
distribution centre relocation. Profitability, as measured by operating profit
margin, more than doubled to 4.8% from the 2.1% reported a year ago.
Building
Solutions - Europe's reported operating profit grew modestly but, excluding the
non-recurring item in the first quarter 2014, there was a drop in profit. This
was largely driven by plummeting net sales in key markets. The negative trend
was most apparent in Germany, where increasing competition, commoditisation of
certain product groups as well as increasing share of project business reduced
margins. The decline in sales evidenced in Russia became even more prominent
due to currency translation, influencing numbers reported on segment
level.
Despite
the adverse impact of the Canadian currency, Building Solutions - North
America's operating profit continued to grow steadily, supported by efficiency
improvement measures and tight cost management. Although carefully managed,
expenses grew somewhat in pace with business volume growth.
Uponor
Infra's operating profit improved clearly as a result of the restructuring
measures and favourable input cost influence, but remained negative on account
of low volumes. Performance improved in the North American operations, in
particular, on account of higher sales but, due to the weaker-margin product
mix over there, it was not enough to compensate for the drop in the Nordic
countries.
Expenses
at EUR74.6 (73.5) million increased by EUR1.1 million. Dispatching and warehousing
costs remained on prior year level excluding the non-recurring cost of EUR3.0
million in the first quarter last year. Sales and marketing costs increased by
EUR3.2 million, mostly driven by Building Solutions - North America whose
influence was inflated by the dollar-to-euro translation.
Profit
before taxes for January - March totalled EUR6.3 (2.7) million. The effect of
taxes on profits was EUR2.3 million, compared to EUR0.9 million in the first
quarter of 2014. The estimated tax rate for the full year is 37.0%, compared to
35.5% at year-end, the increase coming from Estonian income tax arising from
dividends to the parent company in 2015.
Profit for the first quarter of 2015 amounted to EUR4.0 (1.8)
million.
Breakdown of operating profit by segment (January - March):
1-3/ 1-3/ Change
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MEUR
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6.1 5.7 7.6%
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ding
Solut
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Europ
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8.1 4.4 80.8%
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Solut
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Ameri
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8.9 6.1 46.4%)
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-1.3 -4.2 68.1%
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Infra
-1.3 -0.8
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-0.3 -0.3
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11.3 4.8 132.9%
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Key events
A new
distribution centre in Hassfurt, southern Germany, close to the main
manufacturing operations, was opened for business in March. The distribution
operations in Wettringen, north-western Germany, were shut down at the same
time. Due to optimised logistics and more flexible human resourcing
arrangements, Uponor expects to achieve EUR2 million savings annually from the
second quarter 2015 onwards.
On 23
February, Uponor announced that its U.S. subsidiary, Uponor, Inc. is expanding
its manufacturing facility in Apple Valley, Minnesota with completion expected
by December 2015. The EUR16 million investment will be mostly used toward
expansion of an additional 8,175 m2 of manufacturing and office space, including
manufacturing equipment that is required for capacity needs in the
near-term.
On 25
February, Uponor announced that its majority-held subsidiary Uponor Infra Oy
sold its majority shareholding of 65.99% of the shares in Wiik & Hoeglund PLC,
a company listed on the stock exchange of Thailand. Uponor Infra also signed a
license agreement with the buyers whereby Wiik & Hoeglund PLC was granted a
license for Uponor Infra's proprietary Weholite technology. The net sales of
the divested business amounted to EUR23 million in 2014, and it employed 210
staff. Uponor Infra Oy made a decision to withdraw from the business in
accordance with its strategy to focus on markets where it can command a strong
market position and achieve operational synergies.
Furthermore, on 30 March it was announced that
Uponor Infra Oy, for the same reasons, divested its fully owned Finnish
subsidiary, Extron Engineering Oy, a specialist in the business of designing
and manufacturing machinery for the plastic products industry. The net sales of
the divested business in 2014 amounted to EUR5.6 million, and it employed 19
staff. Uponor Infra will also in the future continue to license and sell
certain technologies relevant to the infrastructure business.
On 25
March, Uponor established a captive insurance company, Uponor Insurance Ltd, a
fully-owned subsidiary of Uponor Corporation. With the new company, Uponor aims
to improve its management of Uponor Group's global liability programmes and
gain access to comprehensive insurance coverage under favourable terms. The
domicile of Uponor Insurance Ltd is Guernsey, which has a tax treaty in force
with Finland. The company thus pays its taxes to Finland, in accordance with
domestic Finnish taxation regulations.
Short-term outlook
The
near-term economic outlook in Uponor's core geographical markets does not
contain any noteworthy changes comparing to the outlook given in February. The
scenario of the North American economies developing healthily and Europe,
overall, continuing rather flat remains more or less unchanged.
Customer
demand in the building and construction markets is expected to follow the
general economic trends. In Europe, the demand drivers in building and
construction remain weak, while in North America growth is likely to continue,
although at a somewhat slower pace than in the past few quarters.
The
supply chain environment in the plastic products industries, in Europe in
particular, is somewhat disturbed by an acute shortage of certain key raw
materials, which is putting pressure on input prices and affecting the
industry's ability to serve customer orders. This trend is expected to continue
into the foreseeable future, thus curbing business at the start of the high
season. Uponor is actively managing the situation to alleviate any customer
concerns but this unforeseen trend may still impact Uponor's infrastructure
solution business, in particular.
Uponor
repeats its guidance for the year 2015, announced on 12 February 2015:
The Group's net sales and operating profit (excluding any
non-recurring items) are expected to improve from 2014.
Uponor's
financial performance may be affected by a range of strategic, operational,
financial, legal, political and hazard risks. A more detailed risk analysis is
provided in the section 'Key risks associated with business' in the Financial
Statements 2014.
Uponor Corporation
Board of
Directors
For further information, please contact:
Jyri
Luomakoski, President and CEO, tel. +358 20 129 2824
Riitta
Palomäki, CFO, tel. +358 20 129 2822
Tarmo Anttila
Vice
President, Communications
Tel. +358
20 129 2852
DISTRIBUTION:
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Helsinki
Media
www.uponor.com
Uponor is a leading international provider of plumbing and indoor
climate solutions for residential and commercial building markets across Europe
and North America. In Northern Europe, Uponor is also a prominent supplier of
infrastructure pipe systems. The Group employs approx. 3,800 persons, in 30
countries. In 2014, Uponor's net sales exceeded EUR1 billion. Uponor Corporation
is listed on NASDAQ Helsinki in Finland. www.uponor.com
News Source: NASDAQ OMX
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2015-04-28 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: Uponor Oyj
Finland
ISIN: FI0009002158
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