Exel Interim Report for 1 January - 30 September 2005
EXEL OYJ STOCK EXCHANGE RELEASE 3.11.2005 at 11.00 1 (10)
EXEL INTERIM REPORT FOR 1 JANUARY 30 SEPTEMBER 2005
First nine months in brief
Group
- Net sales rose to EUR 69.3 million for the first nine months, up 8.2 per cent
on the previous years EUR 64.1 million
- Net sales were EUR 22.4 (20.4) million in the third quarter
- Operating profit for the first nine months remained on a good level and was
EUR 10.2 (10.4) million
- Operating profit in the third quarter was EUR 3.0 (3.3) million or 13.4 (16.2)
per cent of net sales
- Earnings per share were EUR 0.17(0.19) based on the diluted number of shares
at the end of the reporting period
Divisions
- Demand for industrial profiles remained strong in the third quarter
- Industry Division posted strong growth in operating profit in the first nine
months, up 37.2 per cent to EUR 7.6 (5.5) million
- Sport Division sales remained on last years level
- Strong focus on opening Nordic Walking markets hampered profitability in the
Sport Division, posting an operating profit of EUR 0.5 (1.3) million in the
third quarter
KEY FINANCIAL FIGURES
(unaudited)
1.7.- 1.7.- Change, % 1.1.- 1.1.- Change, % 1.1.-
30.9. 30.9. 30.9. 30.9. 31.12.
2005 2004 2005 2004 2004
EUR million
Net sales 22.4 20.4 9.9% 69.3 64.1 8.2% 83.9
Operating profit 3.0 3.3 -8.9% 10.2 10.4 -1.6% 13.7
% of net sales 13.4% 16.2% -17.1% 14.7% 16.2% -9.1% 16.3%
Profit for the 2.1 2.2 -5.4% 7.2 6.9 4.5% 9.1
period
Equity 24.4 17.3 40.6% 24.4 17.3 40.6% 20.7
Net interest- 10.9 12.8 -14.7% 10.9 12.8 -14.7% 7.4
bearing liabilities
Invested capital 40.9 33.5 22.2% 40.9 33.5 22.2% 33.3
Return on equity, % 35.9% 49.8% -27.9% 42.5% 52.6% -19.2% 47.8%
Return on 29.4% 37.6% -21.8% 37.2% 45.5% -18.2% 45.2%
investment, %
Solvency ratio, % 43.1% 37.7% 14.3% 43.1% 37.7% 14.3% 44.9%
Net gearing, % 44.7% 73.6% -39.3% 44.7% 73.6% -39.3% 36.0%
Earnings per share, 0.18 0.2 -10.0% 0.64 0.64 0.0% 0.84
EUR
Earnings per share, 0.17 0.19 -9.7% 0.62 0.61 1.8% 0.80
EUR, diluted
Equity per share, 2.15 1.61 33.5% 2.15 1.61 33.5% 1.84
EUR
IFRS REPORTING
Exel has applied IFRS reporting since the beginning of 2005, and this interim
report has been prepared in accordance with the recognition and measurement
principles of IFRS. The reconciliation statement for the opening IFRS balance
sheet for 2004 was presented in the financial statements bulletin released on 24
February 2005. The effects of IFRS transition on 2004 financial statements on a
quarterly basis were explained in more detail in a stock exchange release
published on 3 May 2005. In the present interim report, the figures published on
that occasion have been used as comparative information.
NET SALES
Exels consolidated net sales for January-September grew this year by 8.2 per
cent over the previous years to EUR 69.3 (64.1) million. In Q3, net sales grew
by 9.9 per cent to EUR 22.4 (20.4) million. The net sales for April-September
include the operations of the Austrian company Faserprofil GmbH, which was
acquired on 1 April 2005. The company now operates as Exels subsidiary under
the name Exel Composites GmbH. Of the growth in net sales the majority, EUR 3.2
million, represented organic growth. The acquisition of Faserprofil accounted
for EUR 2.0 million of the net sales in the first nine months.
PROFIT PERFORMANCE
Exels operating profit for the first nine months remained close to last years
level at EUR 10.2 (10.4) million. Operating profit as a percentage of net sales
was 14.7 (16.2) per cent. The Industry Divisions operating profit improved due
to increased sales and improved cost efficiency. The Sport Divisions operating
profit was charged by ongoing investments in expanding the Nordic Walking
market.
The Groups net financial expenses were EUR 229 (335) thousand. The Groups pre-
tax profit was EUR 10.0 (10.1) million, and profit for the reporting period
totalled EUR 7.2 (6.9) million.
BALANCE SHEET AND FINANCIAL POSITION
The consolidated balance sheet total at the end of the reporting period stood at
EUR 56.6 (46.1) million. One-third of the increase was due to the Austrian
acquisition and the rest to an increase in working capital arising from
increased sales volumes, especially in Exels main markets, and increased liquid
assets.
At the end of the reporting period, equity stood at EUR 24.4 (17.3) million, and
the solvency ratio was 43.1 (37.7) per cent. Interest-bearing liabilities were
EUR 16.5 (16.1) million, of which short-term liabilities accounted for EUR 6.3
(6.7) million. Net interest-bearing liabilities were EUR 10.9 (12.8) million,
and net gearing amounted to 44.7 (73.6) per cent.
The development of cash flow from business operations remained clearly positive
in the third quarter and was EUR +5.4 (+11.0) million for the first nine months.
The lower cash flow compared to last year was due to the exceptionally low level
of working capital at the turn of the year resulting mostly from accounts
receivable. In addition, owing to the good results posted in 2004, EUR 1.5
million in taxes for last year was paid in H1. Operative capital expenditure was
financed with cash flow from business operations. Despite the acquisition, the
amount of interest-bearing liabilities remains at the same level as last year.
At the end of the reporting period, the Groups liquid assets stood at EUR 5.6
million, compared with EUR 5.1 million at the end of 2004.
CAPITAL EXPENDITURE
The Groups capital expenditure totalled EUR 3.2 million, containing some EUR
1.6 million operative investments and some EUR 1.5 million in the purchase price
of the fixed assets of Faserprofil GmbH. Capital expenditure for the third
quarter was EUR 0.6 million, consisting mainly of investments in a new
production line and maintenance and productivity-enhancing investments.
PERSONNEL
The number of people employed by the Exel Group on 30 September 2005 was 471
(438). Of these 321 (300) worked in Finland and 150 (138) abroad. The number of
employees during the reporting period averaged 467 (443). The increase from last
year is mainly due to the acquisition of the Austrian unit and the beginning of
operations of Exels subsidiary in the USA.
BUSINESS SEGMENTS
The Groups operations are divided into two main segments: the Industry Division
and the Sport Division.
INDUSTRY DIVISION
The Industry Divisions key financial figures for the reporting period were as
follows:
1.7.- 1.7.- Change, 1.1.- 1.1.- Change, 1.1.-
% %
30.9. 30.9. 30.9. 30.9. 31.12.
EUR thousands 2005 2004 2005 2004 2004
Net sales 13.8 11.5 19.4% 41.7 36.7 13.8% 48.3
Operating profit 2.5 2.0 21.7% 7.6 5.5 37.2% 7.8
% of net sales 18.1% 17.7 % 1.9% 18.2% 15.1% 20.6% 16.2%
Average personnel 257 237 8.4% 234 226 3.5% 224
The Industry Divisions net sales grew by 13.8 per cent on those posted a year
earlier. Of the increase, EUR 2.0 million arose from the acquisition of
Faserprofil, while the remaining two-thirds represented organic growth. Demand
in the profiles market has continued to be strong in the third quarter and
research and development in new applications is currently very active. In the
beginning of the year, new customer mould projects numbered some 40, which
reflects the increase in demand. The production utilisation rate was high at
most production plants. One new production line was opened in the third quarter
at the Voerde plant in Germany.
Profitability remained at a good level despite a considerable increase in raw
material prices. Some of this price pressure has been systematically passed on
within the production chain. Operating profit grew by 37.2 per cent to EUR 7.6
million from EUR 5.5 million the previous year. The improvement in profitability
is due to higher sales volumes and productivity gains at the main production
plants. Tight cost management has also reinforced profitability.
Carbon fibre raw materials were in short supply throughout the reporting period,
a situation that is expected to continue throughout the year. This is due to
massive new projects, the most significant of which are the Airbus A380
programme, defence projects in the USA, and the development of Chinas
infrastructure. The situation has remained essentially unchanged in the third
quarter. Exel has for the most part ensured adequate fibre supplies for this
years projects. The main carbon fibre suppliers have announced investments to
increase capacity. The new capacity will enter the markets in stages during the
second half of 2006.
Business licenses needed for a new production plant in China have been granted,
and negotiations for constructing the plant are in their final stages. According
to plans, the factory will be in full operation by the second half of 2006.
Establishing the factory will incur costs also in 2005, but the most significant
increases in costs will be encountered in 2006.
Sport Division
The Sport Divisions key financial figures for the reporting period were as
follows:
1.7.- 1.7.- Change, 1.1.- 1.1.- Change, 1.1.-
% %
30.9. 30.9. 30.9. 30.9. 31.12.
EUR thousands 2005 2004 2005 2004 2004
Net sales 8.6 8.9 -2.4% 27.6 27.4 0.7% 35.5
Operating profit 0.5 1.3 -58.4% 2.6 4.9 -45.7% 5.9
% of net sales 6.1% 14.2% -57.4% 9.6% 17.8% -46.1% 16.5%
Average personnel 241 219 10.0% 233 217 7.4% 217
The Sport Divisions net sales remained at last years level. The Nordic Walking
market continues to grow steadily in the German-speaking market, although
competition is increasing. Exel is investing heavily in opening new markets,
especially in North America, China and Japan. Floorball operations have
developed strongly due to new models and branding. Exel has signed an agreement
to become the main sponsor of the Floorball World Championships in 2006.
The Sport Divisions operating profit fell from last years EUR 4.9 million to
EUR 2.6 million. The strong focus on opening new Nordic Walking markets, the
strengthening of the Exel Sports Oy organisation, and the introduction of the
Exel concept continued. Marketing investments are expected to reduce the
divisions operating profit also in the fourth quarter.
Significant efforts are being made to open new markets in North America, where
the new subsidiary Exel USA, Inc. is investing in spreading the sport, and in
China, where joint marketing with our partner CISS is progressing. Although the
sale of Nordic Walking poles momentarily shows stagnation, the Nordic Walking
product category is expected to experience strong future growth, being one of
the few growing sporting goods segments.
In the OEM product group (surfing masts and laminate components) the market is
stable. The downward trend in surfing mast deliveries has stopped, and volumes
are expected to remain at the present level. Laminate sales have increased over
the previous year, and several new industrial applications are being developed.
SHARES
During the reporting period, on 9 September 2005, an increase in the share
capital of EUR 19,944 due to a subscription of shares under the warrant
programme was registered in the Finnish Trade Register. A total of 110,800
shares were subscribed. As a result of the increase, the share capital of Exel
Oyj is now EUR 2,041,344 and the total number of shares is 11,340,800, each with
a counter-value of EUR 0.18.
The highest share quotation during the reporting period was EUR 14.14 (11.97)
and the lowest EUR 11.35 (5.87). The share price closed at EUR 14.10 (11.90).
The average share price during the reporting period was EUR 12.61 (10.93).
During the reporting period 3,381,524 (5,235,416) shares were traded, accounting
for 30.0 (48.6) per cent of the average number of outstanding shares. Based on
the closing price in the reporting period, market capitalisation totalled EUR
159.8 (128.1) million.
OUTLOOK
Competition in existing Nordic Walking markets has become more fierce.
Intensified work is being done in consumer-oriented product development and in
sales and distribution to reinforce the competitive position of Exel. A strong
focus is being kept on opening up new Nordic Walking markets. These activities
will continue to hamper profitability.
Exels main core is the industrial operations, which is well positioned for
profitable growth through further acquisitions and organic growth. The
acquisition of Faserprofil GmbH strengthened Exels leading position in the
Central European pultrusion markets. Demand of industrial profiles remains
strong. The raw material markets have stabilised. In the short term, however,
carbon fibre prices continue to face inflationary pressures and the supply of
carbon fibre will restrain growth in the Industry Division.
The Groups net sales for 2005 are expected to substantially exceed last years
level, whilst profit after financial items is expected to be slightly below last
years level.
Mäntyharju, 3 November 2005
EXEL OYJ Ari Jokelainen
Board of Directors President
Further information:
Ari Jokelainen, President & CEO, tel. +358 50 590 6750
Ilkka Silvanto, CFO, tel. +358 50 598 9553
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
CONDENSED CONSOLIDATED INCOME STATEMENT, EUR thousands
1.7.- 1.7.- Change, % 1.1.- 1.1.- Change, 1.1.-
30.9. 30.9. 30.9. 30.9. 31.12.
%
2005 2004 2005 2004 2004
Net sales 22,402 20,386 9.9% 69,343 64,081 8.2% 83,857
Other operating 17 -42 140.5% 220 78 182.1% 111
income
Operating expenses -18,477 -16,304 -13.3% -56,775 -51,547 -10.1 % -67,085
Depreciation and -933 -736 -26.8% -2,569 -2,223 -15.6% -3,181
impairment
Operating profit 3,009 3,304 -8.9% 10,219 10,389 -1.6% 13,702
Net financial items -60 -137 56,2 % -229 -335 31,6 % -467
Profit before tax 2,949 3,166 -6.9% 9,989 10,053 -0.6% 13,236
Income taxes -878 -976 10.0% -2,812 -3,188 11.8% -4,110
Profit for the 2,071 2,190 -5.4% 7,177 6,865 4.5% 9,126
period
Earnings per share, 0.18 0.20 -10.0% 0.64 0.64 0.0% 0.84
EUR
Earnings per share, 0.17 0.19 -9.7% 0.62 0.61 1.8% 0.80
EUR, diluted
CONDENSED CONSOLIDATED BALANCE SHEET, EUR thousands
30.9. 30.9. Change 31.12.
2005 2005 2004
ASSETS
Non-current assets
Intangible assets 855 471 384 926
Goodwill 3,717 3,188 529 3,188
Tangible assets 15,725 14,266 1,459 13,742
Deferred tax assets 994 209 785 310
Other non-currents assets 102 99 3 100
Non-current assets total 21,393 18,233 3,160 18,266
Current assets
Inventories 15,458 12,734 2,724 13,269
Trade and other receivables 14,135 11,808 2,327 9,568
Cash and cash equivalents 5,637 3,369 2,268 5,150
Current assets total 35,230 27,911 7,319 27,987
Total assets 56,623 46,144 10,479 46,253
EQUITY AND LIABILITIES
Shareholders equity
Share capital 2,041 1,884 157 1,932
Share issue 4 -4 817
Share premium reserve 4,542 3,149 1,393 3,390
Retained earnings 10,614 5,431 5,183 5,427
Profit for the period 7,177 6,865 312 9,126
Total equity 24,374 17,333 7,041 20,692
Non-current liabilities
Interest-bearing liabilities 10,236 9,437 799 8,456
Deferred tax liabilities 375 139 236 297
Current liabilities
Interest-bearing liabilities 6,288 6,696 -408 4,141
Trade and other non-current 15,350 12,539 2,811 12,666
liabilities
Total liabilities 32,249 28,811 3,438 25,560
Total equity and liabilities 56,623 46,144 10,479 46,253
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY, EUR thousands
Share Share Share Retained Total
Capital Issue Premium Earnings
Reserve
Balance on 1.1.2004 1,870 135 3,028 12,429 17,462
Share issue 14 -131 121 4
Exchange rate 0 0
differences
Dividend -6,998 -6,998
Profit for the 6,865 6,865
period
Balance on 30.9.2004 1,884 4 3,149 12,296 17,333
Balance on 1.1.2005 1,932 817 3,390 14,553 20,692
Share issue 109 -817 1,152 444
Exchange rate -8 -8
differences
Dividend -3,931 -3,931
Profit for the period 7,177 7,177
Balance on 30.9.2005 2,041 0 4,542 17,791 24,374
CONDENSED CONSOLIDATED CASH FLOW STATEMENT, EUR thousands
1.1.30. 1.1.30. Change 1.1.-
9. 9. 31.12.
2005 2004 2004
Cash flow from operations
Profit for the period 7,177 6,865 312 9,126
Adjustments 5,653 5,861 -200 7,623
Change in working capital -3,880 -93 -3,787 1,657
Cash flow generated by
operations 8,950 12,633 -3,683 18,406
Net financial items -262 -324 62 -359
Income taxes paid -3,272 -1,333 -1,939 -2,136
Net cash flow
from operations 5,416 10,976 -5,560 15,911
Cash flow from investing activities
Acquisitions -2,056 -7,181 5,125 -7,181
Capital
expenditure -1,452 -2,000 548 -3,187
Proceeds from sale of fixed assets 44
Other cash flow from investing activities
Cash flow form investing activities -3,508 -9,181 5,673 -10,324
Cash flow from financing
Share issue 443 4 439 1,102
Change in long-term loans 401 2,798 -2,397
Change in short-term loans 1,666 3,011 -1,345 2,700
Dividends paid -3,931 -6,998 3,067 -6,998
Net cash flow from financing -1,421 -1,177 -244 -3,196
Change in liquid funds 487 610 -123 2,391
Liquid funds at the beginning of the period 5,150 2,759 2,391 2,759
Change in liquid funds 487 610 -123 2,391
Liquid funds at the end of the period 5,637 3,369 2,268 5,150
KEY FINANCIAL FIGURES BY QUARTER, EUR thousands
III/ II/ I/ IV/ III/ II/ I/ I-IV/
2005 2005 2005 2004 2004 2004 2004 2004
Net sales
by segment
Industry 13,755 15,459 12,509 11,689 11,523 13,408 11,730 48,349
Sport 8 647 9,744 9,229 8,087 8,864 9,773 8,784 35,308
Net sales, 22,402 25,203 21,738 19,776 20,387 23,181 20,514 83,857
total
Operating profit
by segment
Industry 2,484 3,271 1,818 2,327 2,041 2,512 965 7,845
Sport 525 1,735 386 987 1,263 2,653 955 5,858
Operating profit, 3,009 5,006 2,204 3,314 3,304 5,165 1,920 13,702
total
Net financial -60 -112 -58 -131 -138 -91 -107 -466
items
Profit before 2,949 4,894 2,146 3,182 3,167 5,074 1,813 13,236
taxes
Income -878 -1,332 -602 -922 -976 -1,613 -598 -4,110
taxes
Profit for 2,071 3,562 1,544 2,260 2,190 3,461 1,215 9,126
the period
Earnings per share, 0.18 0.32 0.14 0.21 0.20 0.32 0.11 0.84
EUR
Earnings per share, 0.17 0.31 0.13 0.19 0.19 0.31 0.11 0.80
EUR, diluted
Average number
of shares
undiluted, 11,302 11,230 11,230 10,998 10,768 10,766 10,766 10,826
1000 shares
Average number
of shares
diluted, 1000 shares 11,574 11,393 11,524 11,464 11,268 11,162 11,136 11,464
Average number 498 485 417 424 456 453 406 441
of personnel
COMMITMENTS AND CONTINGENCIES, EUR thousands
30.9.2005 30.9.2004 31.12.2004
On own behalf
Mortgages 2,954 2,954 2,954
Corporate mortgages 12,500 12,500 12,500
Lease liabilities
- in next 12 months 440 216 223
- in next 1-5 years 1,743 972 1,563
Other commitments 262 222 67
DERIVATIVE FINANCIAL INSTRUMENTS, NOMINAL VALUES, EUR thousands
30.9. 30.9. 31.12.
2005 2004 2004
On own behalf
Mortgages 2,954 2,954 2,954
Corporate mortgages 12,500 12,500 12,500
Lease
- in next 12 months 440 216 223
- in next 1-5 years 1,743 972 1,563
Other commitments 262 222 67
CONSOLIDATED KEY FIGURES, EUR thousands
1.1.-30.9. 1.1.-30.9. Change, % 1.1.-31.12.
2005 2004 2004
Net sales 69,343 64,081 8.2% 83,857
Operating profit 10,219 10,389 -1.6% 13,702
% of net sales 14.7% 16.2% -9.1% 16.3%
Profit before tax 9,989 10,053 -0.6% 13,236
% of net sales 14.4% 15.7% -8.2% 15.8%
Profit for the period 7,177 6,865 4.5% 9,126
% of net sales 10.3% 10.7% -3.4% 10.9%
Shareholders equity 24,374 17,333 40.6% 20,692
Interest-bearing liabilities 16,524 16,133 2.4% 12,597
Cash and cash equivalents 5,637 3,369 67.3% 5,150
Net interest-bearing liabilities 10,887 12,764 -14.7% 7,447
Capital employed 40,898 33,466 22.2% 33,290
Return on equity, % 42.5% 52.6% -19.2% 47.8%
Return on capital employed, % 37.2% 45.5% -18.2% 45.2%
Equity ratio, % 43.1% 37.7% 14.3% 44.9%
Net gearing, % 44.7% 73.6% -39.3% 36.0%
Capital expenditure 3,249 4,923 -34.0% 5,803
% of net sales 4.7% 7.7% -39.0% 6,9%
R&D costs 1,766 1,471 20.1% 1,956
% of net sales 2.5% 2.3% 10.9% 2.3%
Earnings per share, EUR 0.64 0.64 0.0% 0.84
Earnings per share, EUR, diluted 0.62 0.61 1.8% 0.80
Equity per share, EUR 2.15 1.61 33.5% 1.84
Average number of shares, 1,000
- cumulative 11,254 10,766 4.5% 10,826
- cumulative, diluted 11,574 11,162 3.7% 11,464
Average number of employees 467 443 5.4% 441