Etteplan 1-9/2016: Growth continued, organic growth slowed down
ETTEPLAN OYJ INTERIM REPORT
OCTOBER 27, 2016 AT 2:00 PM
Etteplan 1-9/2016: Growth continued, organic growth slowed down
Review period July-September 2016
- The Group’s revenue increased by 31.7 per cent and was EUR 42.0 million (7-9/2015: EUR 31.9 million).
- EBIT from business operations* was EUR 2.4 million (EUR 1.9 million), or 5.8 per cent (5.9 per cent) of revenue. EBIT from business operations included exceptional items with a combined negative effect of EUR 0.3 million (EUR 0.3 million).
- Operating profit (EBIT) was EUR 1.9 million (EUR 1.7 million), or 4.4 per cent (5.2 per cent) of revenue.
- The profit for the review period was EUR 1.5 million (EUR 1.3 million).
- Operating cash flow decreased and was EUR -3.6 million (EUR -1.7 million).
- Earnings per share, adjusted for the share issue, were EUR 0.05 (EUR 0.06**).
- The number of personnel increased and the Group had 2,508 employees at the end of the review period (2,078).
- Etteplan is updating its estimate of market outlook and keeping its financial guidance unchanged.
Review period January-September 2016
- The Group’s revenue increased by 29.8 per cent and was EUR 130.8 million (1-9/2015: EUR 100.8 million). Organic growth was 2.5 (3.1) per cent.
- EBIT from business operations* was EUR 7.5 million (EUR 6.7 million), or 5.7 per cent (6.6 per cent) of revenue. EBIT from business operations included exceptional items with a combined negative effect of EUR 1.5 million (EUR 0.6 million).
- Operating profit (EBIT) was EUR 6.1 million (EUR 6.0 million), or 4.7 per cent (6.0 per cent) of revenue.
- The profit for the review period was EUR 4.7 million (EUR 4.4 million).
- Operating cash flow was EUR -4.2 million (EUR 2.1 million).
- Earnings per share, adjusted for the share issue, were EUR 0.20 (EUR 0.20**).
- Etteplan acquired Espotel and Soikea Solutions in April 2016 and expanded its business operations in Embedded Systems and into the Internet of Things (IoT). Etteplan carried out a rights offering in May 2016 to finance the acquisitions.
*EBIT from business operations reflects the Company’s operational performance: it does not include acquisition related items such as amortization on PPA allocations and earn out revaluations.
**The comparison period’s earnings per share have been issue adjusted. The rights issue factor was 1.050.
The most important factor in the development of Etteplan's business is the global development of the machinery and metal industry. We anticipate that the prevailing uncertainty in the world economy will slow new investments. The relatively good growth expectations for the European market in 2016 have weakened slightly due to increased economic uncertainty. In the Finnish market, the market situation is expected to remain weaker than in the rest of Europe. In Asia, the service market development is expected to continue.
Previous estimate of market outlook
The most important factor in the development of Etteplan's business is the global development of the machinery and metal industry. The relatively good growth expectations for Europe in 2016 were weakened by the result of the Brexit vote in the United Kingdom. In the Finnish market, the market situation is expected to remain weaker than in the rest of Europe. In Asia, the service market development is expected to continue. We expect that the good market situation in North America will continue.
Financial guidance March 15, 2016
We expect the revenue and operating profit for the full year 2016 to grow significantly compared to 2015.
|EBIT from business operations||2,425||1,894||7,514||6,656||9,540|
|EBIT from business operations, %||5.8||5.9||5.7||6.6||6.8|
|Operating profit (EBIT)||1,866||1,655||6,115||6,011||8,594|
|Basic earnings per share, EUR||0.05||0.06||*||0.20||0.20||*||0.28||*|
|Equity ratio, %||39.7||37.0||39.7||37.0||37.8|
|Operating cash flow||-3,640||-1,717||-4,174||2,115||9,932|
|Personnel at end of the period||2,508||2,078||2,508||2,078||2,074|
|*Comparison periods' earnings per share have been issue adjusted. The rights issue factor was 1.050.|
President and CEO Juha Näkki:
The third quarter got off to a very slow start after the summer holidays. Market uncertainty was visible particularly in equipment and plant engineering in Finland, where demand was at a low level. In addition more holidays fell on the third quarter than usual. Due to these reasons, our organic growth was negative and our profitability was weaker than expected.
Nevertheless, our revenue continued to grow, boosted by acquisitions. Many digitalization related projects started throughout the review period. Towards the end of the review period also the demand situation in equipment and plant engineering recovered slightly.
The revenue of our Engineering Services service area decreased primarily due to business being transferred to the Embedded Systems and IoT service area. The number of new equipment and plant investment projects was very low especially in Finland, which also affected revenue development. Nonetheless, our quotation base in engineering services is strong and interest in our service solutions is at a good level. The significant outsourcing agreement we signed with Outokumpu after the end of the review period is an excellent example of this. Our local business in China also developed favorably.
In technical documentation, strong growth continued and interest in our outsourcing solutions, in particular, is at a very good level. We improved our profitability slightly compared to the preceding quarter. This was attributable to the positive development of our business in Germany and a significant order received from the German Ministry of the Interior.
The Embedded Systems and IoT service area achieved excellent development. Our customers trust in our strong expertise and we received several large orders during the review period. The integration of Espotel and Soikea into Etteplan is progressing as planned. In the third quarter, we proceeded with system integration, which affected the Group’s result in the form of non-recurring costs.
As we move on from a challenging third quarter, we head into the final quarter of the year in a slightly better market situation. I am confident that our strong market position and quotation base will see our business develop favorably during the remaining part of the year.
Etteplan follows the disclosure procedure enabled by Disclosure obligation of the issuer (7/2013) published by the Finnish Financial Supervision Authority. This stock exchange release is a summary of Etteplan's January-September 2016 interim report. The complete interim report is attached to this stock exchange release in pdf format and is also available on Etteplan's website at www.etteplan.com. Investors are advised to review the complete interim report with tables.
Conference call and live webcast today, October 27, 2016
Etteplan’s President and CEO Juha Näkki will present Company’s results for January-September 2016 in a conference call and a live webcast for analysts and investors, held in English language, on October 27, 2016 starting at 3.30 p.m. Finnish time (EEST).
To participate in the conference call please dial 5-10 minutes prior to the start of the conference to +358 (0)9 7479 0360, the event password is 684516. Questions can be asked in English after President and CEO’s presentation only through conference call connection.
Juha Näkki’s presentation can be followed as a live webcast on http://www.goodmood.fi/webcaster/accounts/etteplan/live/. The webcast starts at 3.30 p.m. Finnish time (EEST). A recording of the webcast will be later available at www.etteplan.com/Investors.
Vantaa, October 27, 2016
Board of Directors
Juha Näkki, President and CEO, tel. +358 400 606 372
The information presented herein has not been audited.
Releases and other corporate information are available on Etteplan's website at www.etteplan.com.
Etteplan's services cover engineering, technical documentation, embedded systems and IoT solutions. Our customers are the world's leading companies in the manufacturing industry. Our services are geared to improve the competitiveness of our customers' products and engineering processes throughout the product life cycle. The results of Etteplan's innovative engineering can be seen in numerous industrial solutions and everyday products.
In 2015, Etteplan had turnover of EUR 141.1 million. The company has about 2,400 professionals in Finland, Sweden, the Netherlands, Germany, Poland and China. Etteplan's shares are listed on Nasdaq Helsinki Ltd under the ETT1V ticker.