Exel Composites Plc's interim report for January 1 - March 31, 2012

EXEL COMPOSITES PLC     STOCK EXCHANGE RELEASE                   4.5.2012 at 9.00 1 (11)

EXEL COMPOSITES PLC’S INTERIM REPORT FOR JANUARY 1 – MARCH 31, 2012 

JANUARY – MARCH 2012 HIGHLIGHTS

- Net sales were EUR 20.5 (21.5) million in the first quarter of 2012, down by -4.8 per cent on the previous year

- Operating profit was EUR 1.8 million in the first quarter of 2012 compared to EUR 3.1 million in the first quarter of 2011, or 8.9 (14.6) per cent of net sales

- Net operative cash flow was positive at EUR +1.5 (+1.6) million

- Fully diluted earnings per share were EUR 0.11 (0.20)

 

 

OUTLOOK FOR 2012

Major uncertainties relating to general growth prospects in the economy continue, and these uncertainties may affect the demand for composite products. Due to the prevailing state of the markets, the visibility is low. 

Exel Composites maintains its cautious stance in 2012, but will continue to drive the long-term initiatives to strengthen the Company’s competitive position and to invest in growing market segments to pursue the strategy of profitable growth.

COMMENTS BY THE CEO 

“The weak demand continued in the first quarter of 2012. Compared to the first quarter of 2011, net sales decreased by 4.8 per cent. However, our net sales improved slightly on the previous quarters and were EUR 20.5 million. Market demand continued to be good in the building, construction and infrastructure market segment, as well as in the electrical industry. Demand in telecommunication products and the machine industry decreased on the previous year.

The Group’s operating profit for the first quarter of 2012 was EUR 1.8 (3.1) million. The decreased sales volumes and increased employee expenses were the main reasons for the decrease in the operating profit. Moreover, increased raw material costs and ramp-up costs of new products had an adverse effect on the margins. We continued measures to mitigate the effects, and were able to pass part of the rising costs to the market by increasing product prices. We shall continue price increases to offset the negative impact. 

The ExelWay project that was launched in the latter half of 2011 was continued. The project aims at improving co-operation and harmonizing processes between the units. Project findings including new and efficient business processes and best practices are to be implemented to improve productivity.                            

Visibility remains low and we remain cautious. However, we will continue our strategy of profitable growth and to invest in the development of new products, to expand our customer base by reinforcing sales and to maintain good cost control. We are prepared to take more efficient actions to cope with continuing slow demand and uncertainty.”

 

CONSOLIDATED KEY FIGURES, EUR million

(unaudited)

  1.1. –
31.3.
2012
1.1 – 31.3.
2011
Change % 1.1. –
31.12.
2011
         
Net sales 20.5 21.5 -4.8 85.1
Operating profit 1.8 3.1 -41.7 11.1
% of net sales 8.9 14.6   13.0
Profit for the period  
1.3
 
2.3
 
-43.8
 
7.9
         
Shareholders’ equity  
30.3
 
34.0
 
-11.0
 
35.1
Net interest-bearing liabilities  
-2.4
 
-2.4
 
0.3
 
-1.7
Capital employed 38.4 44.2 -13.2 43.2
Return on equity, %  
16.0
 
28.1
 
 
 
23.5
Return on capital employed, %  
18.1
 
29.1
   
26.1
Equity ratio, % 51.5 57.0   61.6
Net gearing, % -8.1 -7.2   -5.0
         
Earnings per share, EUR  
0.11
 
0.20
   
0.67
Earnings per share, diluted, EUR  
 
0.11
 
 
0.20
   
 
0.67
Equity per share, EUR  
2.54
 
2.86
   
2.95

 IFRS REPORTING 

This interim report has been prepared in accordance with the recognition and measurement principles of IFRS, which are the same as in the 2011 financial statements. 

FINANCIAL PERFORMANCE

The softening of the overall demand that started towards the end of 2011 continued in the first quarter of 2012. Compared to the first quarter of 2011, net sales decreased by 4.8 per cent. However, our net sales improved slightly on the previous quarters and were EUR 20.5 million. Since year-end the order book increased by EUR 1.3 million to EUR 14.5 (14.4) million. Market demand continued to be good in the building, construction and infrastructure market segment, as well as in the electrical industry. Demand in telecommunication products and the machine industry softened on the previous year.

Exel Composites’ operating profit for the first quarter of 2012 was EUR 1.8 (3.1) million or 8.9 (14.6) per cent of net sales. The decreased sales volumes and increased employee expenses were the main reasons for the decrease in the operating profit. The increased raw material costs and ramp-up costs of new products had an adverse effect on the margins. Exel Composites continued measures to mitigate the effects, and passed part of the rising costs to the market by increasing product prices. Exel Composites shall continue price increases to offset the negative impact. 

The Group’s net financial expenses in the first quarter of 2012 were EUR 0.1 (0.0) million. The Group’s profit before taxes was EUR 1.7 (3.1) million and profit after taxes EUR 1.3 (2.3) million.

Earnings per share were EUR 0.11 (0.20). Return on capital employed was 18.1 (29.1) per cent. Return on equity was 16.0 (28.1) per cent.

BALANCE SHEET AND FINANCIAL POSITION

Cash flow from business operations was positive at EUR 1.5 (1.6) million. Cash flow before financing, but after capital expenditure, amounted to EUR 0.7 (1.1) million.

Capital expenditure was financed with cash flow from business operations. At the end of the review period, the Group’s liquid assets stood at EUR 10.6 (12.7) million.

The Group’s consolidated total assets at the end of the period under review were EUR 58.8 (59.8) million. 

Interest-bearing liabilities amounted to EUR 8.1 (10.2) million. Net interest-bearing liabilities were EUR -2.4 (-2.4) million. 

The dividend for 2011 resolved by the Annual General Meeting on 29 March 2012 totaling EUR 5.9 (5.9) was paid on 12 April 2012.

Equity at the end of the first quarter of 2012 was EUR 30.3 (34.0) million and equity ratio 51.5 (57.0) per cent. The net gearing ratio was -8.1 (-7.2) per cent.

CAPITAL EXPENDITURE AND DEPRECIATION

The capital expenditure on fixed assets amounted to EUR 0.8 (0.6) million.

Total depreciation of non-current assets during the period under review amounted to EUR 0.7 (0.7) million. 

PERSONNEL

The number of Exel Composites Group employees on 31 March 2012 was 433 (418), of whom 200 (196) worked in Finland and 233 (222) in other countries. The average number of personnel during the financial year was 428 (416). 

Kim Sjödahl was appointed SVP Product and Technology Development and member of the Group Management Team as of 1 February 2012.

The ExelWay project that was launched in the latter half of 2011 was continued. The project aims at improving co-operation and harmonizing processes between the units. Project findings including new and efficient business processes and best practices are to be implemented as the project proceeds.

SHARES AND SHARE CAPITAL

At the end of March 2012, Exel Composites’ share capital was EUR 2,141,431.74 and the number of shares was 11,896,843. There were no changes in the share capital during the review period.

Based on the closing price on 31 March 2012, the market capitalization totaled EUR 98.6 (110.4) million. During the reporting period 241,203 (343,137) shares were traded, accounting for 2.0 (2.9) per cent of the average number of shares outstanding. 

The highest share quotation was EUR 8.79 (9.30) and the lowest EUR 7.70 (6.85). The share price closed at EUR 8.29 (9.28). The average share price during the period under review was EUR 8.36 (7.90).

Own shares

Exel Composites did not hold any of its own shares during the period of review.

SHAREHOLDERS AND DISCLOSURES

Exel Composites had a total of 2,726 (2,522) shareholders on 31 March 2012. Information on Exel Composites’ shareholders is available on the Company website at www.exelcomposites.com. 

Exel Composites received no flagging notifications during the period under review.

ANNUAL GENERAL MEETING

Exel Composites’ Annual General Meeting (“AGM”) was held on 29 March 2012. The financial accounts of the Group were approved and the members of the Board of Directors and the President were discharged from their liabilities for the financial year 2011. The AGM approved the Board of Directors’ proposal to distribute a dividend of EUR 0.50 per share for the financial period that ended on 31 December 2011. 

The Annual General Meeting authorized the Board of Directors to acquire the Company’s own shares by using unrestricted equity. The maximum amount to be acquired is 600,000 shares. The authorization is valid until the next Annual General Meeting. 

The AGM confirmed the number of the members of the Board of Directors as five and elected a new Board. All the members of the Board of Directors were re-elected: Heikki Hiltunen, Peter Hofvenstam, Göran Jönsson, Reima Kerttula and Heikki Mairinoja. At the formative meeting of the Board of Directors held after the AGM, the Board of Directors elected from among its members Peter Hofvenstam as its Chairman.

The AGM decided that the annual remuneration for the Board members be unchanged, i.e. the Chairman of the Board of Directors be paid a yearly remuneration of EUR 34,000 and additionally EUR 1,500 for attendance at Board and committee meetings and other similar Board assignments and the other Board members be paid a yearly remuneration of EUR 16,000 and additionally EUR 1,000 for attendance at Board and committee meetings and other similar Board assignments and that travel expenses and other out-of-pocket expenses arising from the Board work be compensated in accordance with the Company’s established practice and travel rules. Out of the yearly remuneration 60 per cent will be paid in cash and 40 per cent in Exel Composites Plc shares, which were acquired directly for and on behalf of the members of the Board of Directors during 2 April – 10 April 2012 from the stock exchange in amounts corresponding to EUR 13,600 for the Chairman and EUR 6,400 for each of the other members.

MAJOR NEAR-TERM RISKS AND UNCERTAINTIES

The most significant near-term business risks are related to the general economic development, government regulations and a possible new financial crisis in the Euro area as well as to market demand in certain market segments. Raw material prices, energy cost and other cost increases may continue and put pressure on profitability. In case the European Commission decides on new anti-dumping tariffs to be imposed on Chinese glass fiber, it may have a negative effect on the profitability if the rising costs of glass fiber can only be transferred partially to product prices. Currency rate changes, price competition and alternative competing materials may also have a negative effect on the result. The availability and cost of financing may continue to have an effect on the demand and increase the risk of credit losses. 

OUTLOOK FOR 2012  

Major uncertainties relating to general growth prospects in the economy continue, and these uncertainties may affect the demand for composite products. Due to the prevailing state of the markets, the visibility is low. 

Exel Composites maintains its cautious stance in 2012, but will continue to drive the long-term initiatives to strengthen the Company’s competitive position and to invest in growing market segments to pursue the strategy of profitable growth.

 

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

(unaudited)

EUR thousand 1.1. – 31.3.
2012
1.1. – 31.3.
2011
Change, % 1.1. – 31.12.
2011
         
Net sales 20,519 21,548 -4.8 85,136
         
Materials and services  
-8,119
 
-8,378
 
3.1
 
-33,358
Employee benefit expenses  
-5,618
 
-5,221
 
-7.6
 
-21,133
Depreciation and impairment  
-742
 
-684
 
-8.5
 
-2,702
Other operating expenses  
-4,452
 
-4,262
 
-4.5
 
-17,709
Other operating income  
240
 
135
 
77.8
 
849
         
Operating profit 1,828 3,137 -41.7 11,082
         
Net financial items -83 -23 -260.9 -284
         
Profit before tax 1,745 3,115 -44.0 10,798
         
Income taxes -435 -782 44.4 -2,852
         
Profit/loss for the period  
1,310
 
2,333
 
-43.8
 
7,946
         
Other comprehensive income:  
 
 
     
         
Exchange differences on translating foreign operations  
 
 
-205
 
 
 
-867
 
 
 
76.4
 
 
 
893
         
Other comprehen-sive income, net of tax  
 
0
 
 
0
 
 
0
 
 
0
Total comprehensive income  
 
1,105
 
 
1,466
 
 
-24.6
 
 
8,839
         
Profit/loss attributable to:        
Equity holders of the parent company  
 
1,310
 
 
2,333
 
 
 
 
 
7,946
         
Comprehensive income        
attributable to:        
Equity holders of the parent company  
 
1,105
 
 
1,466
 
 
 
 
8,839
         
Earnings per share, diluted and undiluted, EUR  
 
0.11
 
 
0.20
   
 
0.67

  

CONDENSED CONSOLIDATED BALANCE SHEET

EUR thousand 31.3.2012 31.3.2011 Change 31.12.2011
         
ASSETS        
Non-current assets        
Goodwill 11,854 11,231 623 11,939
Other intangible assets 1,803 2,203 -400 1,961
Tangible assets 11,730 10,248 1,482 11,612
Deferred tax assets 147 1,661 -1,514 148
Other non-current assets 65 63 2 64
Non-current assets total 25,600 25,406 193 25,723
         
Current assets        
Inventories 10,278 9,480 798 10,499
Trade and other receivables 12,389 12,258 131 10,985
Cash at bank and in hand 10,551 12,662 -2,111 9,840
Current assets total 33,218 34,400 -1,182 31,323
Total assets 58,818 59,805 -987 57,046
         
EQUITY AND LIABILITIES        
Shareholders’ equity        
Share capital 2,141 2,141 0 2,141
Other reserves 30 30 0 30
Invested unrestricted equity fund 8,488 8,488 0 8,488
Translation differences 3,999 2,488 1,511 4,204
Retained earnings 14,306 18,536 -4,230 12,309
Profit for the period 1,310 2,333 -1,023 7,946
         
Total equity attributable to equity holders of the parent company  
30,274
 
34,017
 
-3,743
 
35,118
Total equity 30,274 34,017 -3,743 35,118
         
Non-current liabilities        
Interest-bearing liabilities 8,103 10,206 -2,103 8,088
Interest-free liabilities 400 364 36 392
Deferred tax liabilities 520 542 -22 539
         
Current liabilities        
Interest-bearing liabilities 10 10 0 10
Trade and other non-current liabilities  
19,512
 
14,667
 
4,845
 
12,900
         
Total liabilities 28,544 25,788 2,756 21,928
         
Total equity and liabilities 58,818 59,805 -987 57,046

 

 STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

EUR thousand Share
Capital
Other Reserves Invested Unrestricted  Equity Fund Translation Differences Retained Earnings Total
             
Balance at 1 January 2011  
2,141
 
37
 
8,488
 
3,311
 
18,529
 
32,507
             
Comprehensive result  
0
 
0
 
0
 
-867
 
2,333
 
1,466
Other items 0 -7 0 0 52 44
Dividend       0   0
             
Balance at 31 March 2011  
2,141
 
30
 
8,488
 
2,444
 
20,914
 
34,017
             
Balance at 1 January 2012  
2,141
 
30
 
8,488
 
4,204
 
20,255
 
35,118
             
Comprehensive result  
0
 
0
 
0
 
-205
 
1,310
 
1,105
Other items 0 0 0 0   0
Dividend       0 -5,948 -5,948
             
Balance at 31 March  2012  
2,141
 
30
 
8,488
 
3,999
 
15,616
 
30,274

  

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

EUR thousand 1.1. – 31.3.
2012
1.1. – 31.3.
2011
Change 1.1. – 31.12.2011
       
Cash Flow from Operating Activities      
Profit for the period 1,310 2,333 -1,023 7,946
Adjustments 1,153 1,222 -69 6,308
Change in working capital -179 -1,605 1,426 -2,216
         
Cash Flow Generated by Operations 2,284 1,950 334 12,038
Interest paid -47 -50 3 -349
Interest received 20 27 -7 129
Other financial items 14 41 -27 -191
Income taxes paid -767 -337 -430 -2,067
         
Net Cash Flow from Operating Activities 1,504 1,631 -127 9,560
       
Capital expenditure -790 -573 -217 -3,208
Proceeds from sale of fixed assets 0 0 0 0
         
Cash Flow from Investing Activities -790 -573 -217 -3,208
         
Cash Flow from Financing        
Share issue 0 0 0 0
Proceeds from long-term borrowings 0 0 0 0
Instalments of long-term borrowings 0 0 0 -2,160
Change in short-term loans 0 0 0 0
Instalments of finance lease liabilities -3 -2 -1 -10
Dividends paid 0 0 0 -5,948
Net Cash Flow from Financing -3 -2 -1 -8,118
         
Change in Liquid Funds 711 1,056 -345 -1,766
         
Liquid funds in the beginning of period 9,840 11,606 -1,766 11,606
Change in liquid funds 711 1,056 -345 -1,766
Liquid funds at the end of period 10,551 12,662 -2,111 9,840

 

QUARTERLY KEY FIGURES

EUR thousand I/
2012
IV/
2011
III/
2011
II/
2011
I/
2011
           
           
Net sales 20,519 19,758 20,463 23,367 21,548
Materials and services  
-8,119
 
-7,529
 
-8,156
 
-9,295
 
-8,378
Employee benefit expenses  
-5,618
 
-5,419
 
-4,820
 
-5,672
 
-5,221
Depreciation and impairment  
-742
 
-672
 
-683
 
-663
 
-684
Operating expenses  
-4,452
 
-4,668
 
-4,356
 
-4,424
 
-4,262
Other operating income  
240
 
284
 
113
 
317
 
135
           
Operating profit 1,828 1,754 2,560 3,630 3,137
           
Net financial items  
-83
 
-31
 
-126
 
-104
 
-23
           
Profit before taxes  
1,745
 
1,723
 
2,434
 
3,527
 
3,115
           
Income taxes -435 -459 -664 -948 -782
           
Profit/loss for the period from continuing operations  
 
 
1,310
 
 
 
1,264
 
 
 
1,770
 
 
 
2,579
 
 
 
2,333
           
Profit/loss for the period  
1,310
 
1,264
 
1,770
 
2,579
 
2,333
           
Earnings per share, EUR  
0.11
 
0.11
 
0.15
 
0.22
 
0.20
Earnings per share, EUR, diluted  
 
0.11
 
 
0.11
 
 
0.15
 
 
0.22
 
 
0.20
Average number of shares, undiluted,          
1,000 shares 11,897 11,897 11,897 11,897 11,897
Average number of shares, diluted,          
1,000 shares 11,897 11,897 11,897 11,897 11,897
Average number of personnel  
428
 
433
 
433
 
432
 
416

 

COMMITMENTS AND CONTINGENCIES

EUR thousand 31.3.2012 31.3.2011
     
On own behalf    
Mortgages 2,783 2,783
Corporate mortgages 12,500 12,500
     
Lease liabilities    
     
  -  in next 12 months 934 1,068
  -  in next 1-5 years 3,017 2,111
     
Other commitments 43 6

 

DERIVATIVE FINANCIAL INSTRUMENTS

Nominal values
EUR thousand
31.3.2012 31.3.2011
     
Interest rate derivatives    
Interest rate swaps 10,000 10,000

 CONSOLIDATED KEY FIGURES

EUR thousand 1.1. - 31.3.
2012
1.1. – 31.3.
2011
Change % 1.1. – 31.12.
2011
         
Net sales 20,519 21,548 -4.8 85,136
Operating profit 1,829 3,137 -41.7 11,082
% of net sales 8.9 14.6   13.0
Profit before tax 1,745 3,115 -44.0 10,798
% of net sales 8.5 14.5   12.7
Profit for the period 1,310 2,333 -43.8 7,946
% of net sales 6.4 10.8   9.3
         
Shareholders’ equity 30,274 34,017 -11.0 35,118
Interest-bearing liabilities 8,113 10,216 -20.6 8,098
Cash and cash equivalents 10,551 12,662 -16.7 9,840
Net interest-bearing liabilities -2,438 -2,446 0.3 -1,742
Capital employed 38,387 44,232 -13.2 43,216
Return on equity, % 16.0 28.1   23.5
Return on capital employed, % 18.1 29.1   26.1
Equity ratio, % 51.5 57.0   61.6
Net gearing, % -8.1 -7.2   -5.0
         
Capital expenditure 790 573 37.8 3,208
% of sales 3.8 2.7   3.8
Research and development costs 411 364 12.9 1,639
% of net sales 2.0 1.7   1.9
         
Order stock 14,459 14,430 0.2 13,114
         
Earnings per share, EUR 0.11 0.20 -43.9 0.67
Earnings per share, EUR, diluted 0.11 0.20 -43.9 0.67
Equity per share, EUR 2.54 2.86 -11.2 2.95
         
Average number of shares        
 - cumulative 11,897 11,897 0.0 11,897
 - cumulative, diluted 11,897 11,897 0.0 11,897
         
Average number of employees 428 416 2.9 428

 

 PRESS CONFERENCE

Exel Composites will hold an analyst and press conference regarding the interim report today Friday 4 May 2012 at 12.30 p.m. in the Pavilion Cabinet of the Scandic Hotel Simonkenttä at Simonkatu 9, Helsinki, Finland. 

 

FORWARD-LOOKING STATEMENTS

Certain statements in this report, which are not historical facts, including, without limitation, those regarding expectations for general economic development and market situation; regarding customer industry profitability and investment willingness; regarding Company growth, development and profitability; regarding cost savings; regarding fluctuations in exchange rates and interest levels; regarding the success of pending and future acquisitions and restructurings; and statements preceded by "believes," "expects," "anticipates," "foresees" or similar expressions are forward-looking statements. 

These statements are based on current expectations and currently known facts. Therefore, they involve risks and uncertainties that may cause actual results to differ materially from results currently expected by the Company.

Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Exel Composites does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. 

Vantaa, 4 May 2012

 

 

EXEL COMPOSITES PLC                           Vesa Korpimies

Board of Directors                                      President and CEO

 

 

FURTHER INFORMATION:

Vesa Korpimies, President and CEO, tel. +358 50 590 6754, or email vesa.korpimies@exelcomposites.com

Ilkka Silvanto, CFO and Administrative Director, tel. +358 50 598 9553, or email ilkka.silvanto@exelcomposites.com

 

 

DISTRIBUTION
NASDAQ OMX Helsinki Ltd.
Main news media
www.exelcomposites.com

 

EXEL COMPOSITES IN BRIEF 

Exel Composites (www.exelcomposites.com) is a technology company which designs, manufactures and markets composite profiles and tubes for industrial applications. The Group is the leading composite profile manufacturer in the world and concentrates on growing niche segments.

The core of the operations is based on own, internally developed composite technology, product range based on it and a strong market position in selected segments with a strong quality and brand image. Profitable growth is pursued by a relentless search for new applications and development in co-operation with customers. The personnel’s expertise and high level of technology play a major role in Exel Composites’ operations.

Exel Composites Plc share is listed in the Small Cap segment of NASDAQ OMX Helsinki Ltd.

About Us

Exel Composites is the world’s leading composite technology company that engineers and manufactures composite products and solutions to an extensive range of demanding industrial applications. The core of the business is based on the employees’ high level of expertise and own, internally developed composite technologies, which have been perfected over decades with a steady focus on innovation. With nine manufacturing plants across Europe, Asia, and North America, and a global sales network, Exel Composites is firmly driven by superior customer experience and world-class operations. Headquartered in Finland, Exel Composites employs approximately 650 people globally. The company’s shares are listed on the Nasdaq Helsinki exchange. www.exelcomposites.com

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