YEAR-END BOOST FOR KYRO FROM SAFETY GLASS MACHINES
Kyro Corporation STOCK EXCHANGE RELEASE 8 November 2006 8.30 a.m.
YEAR-END BOOST FOR KYRO FROM SAFETY GLASS MACHINES
January-September key issues
- Group net sales EUR 187.2 (184.1) million
- Comparable operating profit 13.8 (17.1) million
- Comparable profit before taxes EUR 14.2 (16.1) million
- Profit after taxes EUR 9.9 (10.5) million, earnings per share EUR 0.13
- Equity ratio 61.8% (61.2%).
- Glastons new orders EUR 138.1 (144.7) million, order book on 30 September
EUR 135.8 (142.4) million
- The Groups efficiency programmes aim to improve profit by an estimated six
million euros per year from 2007
KYRO GROUP STRUCTURE
Kyros business areas are Glaston Technologies and Energy. The main business
area Glaston Technologies consists of the Glass Machinery Group and the Glass
The Glass Machinery Group is the world market leader in glass processing
machines. The Glass Machinery groups products are glass pre-processing
machines as well as safety glass machines for the architectural and automotive
industries. The group consists of Tamglass, the technology and market leader in
safety glass machines, Uniglass, which manufactures flat tempering machines,
the leading supplier of glass pre-processing machines Bavelloni, which also
produces stone processing machines, and DiaPol, which manufactures tools for
glass and stone pre-processing.
The Glass Processing Group focuses on markets in Finland and neighbouring
countries and is the leading comprehensive supplier of architectural glass
products in Finland. Its safety and insulating glass products sold under its
Tamglass brand as well as its balcony systems are supplied to the building,
window and door industries, specialty vehicle manufacturers and construction
Kyros second business area is Energy, which consists of the electricity and
heat generating gas-fired combi power plant of Kyro Power Oy.
THE GROUPS EFFICIENCY PROGRAMMES
The Group has under way efficiency programmes by which Kyro aims to improve
profit by an estimated six million euros per year starting from the beginning
In July, Bavelloni announced an efficiency programme which includes, among
other things, the closure of its Bergamo assembly plant and the centralisation
of European warehousing operations in Italy. The programme also includes other
productivity-raising operational and process changes, with arrangements
affecting personnel. Personnel negotiations relating to this are under way in
Measures taken in the Glass Processing Group include the restructuring of
Tamglass Finton, the merger of three Glass Processing Group companies into one
company, and the personnel reductions that followed from these.
Kyro will adjust the profit improvement target of the programmes after the
final quarter. The costs of the programmes, an estimated five million euros,
will be recognised almost entirely in 2006.
NET SALES AND PROFIT
The Kyro Groups net sales in January-September were EUR 187.2 (184.1)
million. The Groups comparable operating profit was EUR 13.8 (17.1) million,
representing 7.4% (9.3%) of net sales.
Comparable operating profit does not include non-recurring items totalling
two million euros recognised in the first to third quarters for the above-
mentioned efficiency programmes. They consist of the restructuring of the
Glass Processing Group, EUR 0.9 million, and the Bavelloni efficiency
programme, EUR 0.8 million. In addition, a EUR 0.3 million non-recurring
expense item has been recognised in the third quarter for the Energy business
areas Partner project.
In addition to the latter, restructuring expenses amounting to around three
million euros are expected to be recognised in the fourth quarter.
Comparable profit before taxes was EUR 14.2 (16.1) million, representing 7.6%
(8.7%) of net sales.
Taking into account the recognised non-recurring items, profit before taxes
was EUR 12.2 (16.1) million. Profit for the financial period was EUR 9.9
(10.5) million. This includes a EUR 1.8 million tax refund from previous
years. Return on invested capital was 12.0% (17.4%). Earnings per share were
EUR 0.13 (0.13) and equity per share was EUR 1.69 (1.61).
Net financial items totalled EUR 0.5 (-1.0) million. This includes interest,
dividend and other financial income of EUR 1.8 (2.0) million, and interest
and other financial expenses of EUR -1.3 (-3.0) million.
The Groups order book on 30 September 2006 stood at EUR 135.8 (142.4)
Business areas net sales, operating profit and order book, EUR million
Net sales Operating profit Order book
1-9/06 1-9/05 1-9/06 1-9/05 30.9.2006 30.9.2005
Glaston Technologies 161.5 164.1 11.2 16.6 111.8 119.4
Energy 25.6 19.9 4.7 4.6 24.0 23.0
Non-recurring items -2.0
Parent company, 0.1 0.2 -2.1 -4.1
other operations and
Group, total 187.2 184.1 11.7 17.1 135.8 142.4
The Groups financial standing is good. Equity ratio was 61.8% (61.2%) on
30 September 2006. Cash flow from business operations was EUR -3.9 (12.2)
million. The most significant item of cash flow from financing was a total of
EUR 13.4 (5.6) million in dividends paid in the spring. Cash flow also includes
EUR 7.3 million in taxes for 2005 paid in 2006, including e.g. EUR 2.9 million
taxes on capital gains from the sale of hydropower operations in December 2005.
The Groups liquid funds on 30 September 2006 totalled EUR 10.5 (5.2)
million. Interest-bearing net debt stood at EUR 2.8 million (assets greater
than interest-bearing debt), whereas it was EUR 9.8 million the previous
year. Gearing stood at -2.1% (7.7%).
The Kyro Groups capital expenditure in January-September totalled EUR 8.3
(7.8) million. This includes the construction costs of a new production plant
in China and the extension of the head office in Finland (totalling c.
EUR 3.4 million), obligatory product development capitalisations under IFRS
(EUR 1.2 million) as well as normal repair and maintenance investments.
ORGANISATION AND PERSONNEL
The Kyro Group had 1,245 (1,215) employees on 30 September 2006. The number of
Group employees working in Finland was 440 (443), while the number working
abroad was 805 (771). The average number of employees was 1,272 (1,202). The
number of personnel has grown mainly through recruitment of maintenance and
installation staff in the early part of the year.
Glaston Technologies 1 213 1 184
Energy 24 23
Kyro Corporation 8 8
Kyro Group 1 245 1 215
SHARES AND SHARE PRICES
A total of 6,015,984 (16,151,459) Kyro Corporation (KRO1V) shares were traded
in January-September, representing 7.6% (20.4%) of the total number of
shares. The lowest price paid for a share on the Helsinki Stock Exchange was
EUR 3.75 and the highest price EUR 4.84. The average price during the period
was EUR 4.31.
ACQUISITION AND DISPOSAL OF OWN SHARES
The Annual General Meeting on 16 March 2006 authorised the Board of Directors
to acquire the companys own shares for the purpose of using them as
consideration in possible acquisitions, to finance investments or other
industrial arrangements or to be disposed of in other ways or to be
According to the authorisation the Board of Directors may acquire the companys
own shares using assets available for distribution of profits, provided that
the combined nominal value of the acquired shares together with any shares
already in the possession of the company corresponds to a maximum of 10 per
cent of the companys total share capital at the moment of acquisition. Shares
can be acquired or sold in public trading on the Helsinki Stock Exchange at the
market value of the shares at the time in question.
Authorisations to acquire and dispose of the companys own shares are valid for
a period of one year from the decision of the Annual General Meeting on
16 March 2006. On 30 September 2006, Kyro Corporation held a total of 329,904
(329,904) of its own shares, acquired on the basis of previous authorisations.
The company did not exercise the authorisation in April-September.
GLASTON TECHNOLOGIES - NET SALES, OPERATING PROFIT AND ORDER BOOK
Glaston Technologies net sales totalled EUR 161.5 (164.1) million in January-
September. Comparable operating profit was EUR 11.2 (16.6) million,
representing 6.9% (10.1%) of net sales.
Comparable operating profit does not include the non-recurring items totalling
EUR 1.7 million recognised in the period under review for the Glaston
Technologies business area.
New orders totalling EUR 138.1 (144.7) million were received. The order book
stood at EUR 111.8 (119.3) million at the end of September. The order book for
pre-processing machines has grown compared to last year. Moreover, the order
book for safety glass machines has turned to clear growth since June.
The Glass Machinery Groups net sales and profitability were reduced by lower
delivery volume of new and used safety glass machines than in 2005 as well as
the emphasis of deliveries being outside the eurozone. However, a strong
final quarter for safety glass machines is expected. The Machinery Groups
profitability is also affected by an emphasis of deliveries outside the
eurozone as well as expenses resulting from new products and product series.
Tamglass has initiated a programme of measures to improve the efficiency of
delivery processes, particularly the reduction in future of extra costs
caused by preliminary series.
The Glass Processing Groups net sales grew slightly from the previous year
and its comparable result improved.
GLASTON TECHNOLOGIES - GLASS MACHINERY GROUP
Market and sales
The general market situation for glass processing machines is good in all the
main market areas. Safety glass machine business activity in the first half
of the year was significantly lower than the high 2005 level, but in the
third quarter and thereafter it has been above the level of the corresponding
period in 2005.
In the third quarter, the overall level of Glastons safety glass machine
orders was good, even though the investment climate in Europe was still
guarded. The excellent market situation in North America, which is investing
strongly in high technology, continued and activity was also good, for
example, in the Middle East, South American and Chinese markets.
The offer book for automotive segment safety glass machines is growing, but the
level of orders remained cautious in the third quarter.
More glass pre-processing machine orders than the previous year were received
almost everywhere. Bavellonis sales are developing in line with strategy
towards larger machines, the architectural segment and Tamglass-Bavelloni joint
deliveries under the One-Stop-Partner concept.
One-Stop-Partner concept orders are continuing to grow. In the third quarter,
sales of combinations exceeded the targets set for them as well as total sales
for the whole of last year, EUR 12 million. A typical OSP delivery includes a
Tamglass flat tempering machine and one or more Bavelloni pre-processing
machines or a combination of these, i.e. a complete glass processing line.
At Uniglass, which specialises in flat tempering machines, demand strengthened
in the third quarter.
Production and new products
Glaston Technologies has a factory network covering Finland, Italy, the United
States, China and Brazil. Operations are based on own product development,
assembly and a strong subcontracting network, which can adjust capacity
flexibly. The utilisation rates of the machine factories were good in July-
The first deliveries of the many products launched last year have been
scheduled for the third and fourth quarters. The first of Bavellonis new pre-
processing lines started operating in early autumn. Moreover, a number of
orders for the Tamglass Sonic were received during the third quarter.
Glaston Technologies announced its most significant new products of the year
at Düsseldorfs Glasstec Fair in October. There is more information on the
success of the fair in the section Events after the review period.
Maintenance and service business, and tools
In July-September, orders for Glaston Technologies maintenance and service
business continued to grow in all areas of operations. Demand was buoyant for
Tamglass safety glass machine options, particularly control system updates.
Sales of machine options to date will be recognised to a large extent during
the final quarter. Due to the good order intake, prospects for the beginning of
next year are positive.
Used machine business has picked up in parallel with sales of new machines, but
2006 volume will remain modest, however, as many deliveries have been
rescheduled for 2007.
During the period, Bavelloni introduced a new maintenance contract model. The
service was well received, which is a clear indication of the benefits brought
to customers by Bavelloni-Tamglass cooperation, harmonisation of operating
models and clear productisation of services. Easy Life, a maintenance and
service concept offered by Glaston, is the only one of its kind in the
Bavellonis sales of spare parts and other maintenance products continued to
grow, as did sales of tools. Local tool manufacturing that began this year in
Brazil has achieved its targets, and manufacturing will also begin in China in
the near future.
GLASTON TECHNOLOGIES - GLASS PROCESSING GROUP
Market and sales
The Glass Processing Groups market situation continued to be positive in July-
September, mainly owing to an active domestic construction sector. The group
expects prospects for the construction sector to remain good for the rest of
the year. Safety and insulating glass units have increased their market share
from the previous year. Due to a rise in raw glass prices, the Glass Processing
Group increased its prices during the third quarter.
Project sales references include the Ideapark in Lempäälä, the West Terminal in
Helsinki harbour and the Järvenpää Swimming Hall.
The Glass Processing Group intends to develop its production and make expansion
and replacement machine investments at the beginning of next year. The measures
will boost the groups efficiency and improve its reference value as a Glass
Machinery Group customer.
The Glass Processing Groups companies Tamglass Safety Glass Ltd, Tamglass
Insulating Glass Oy and Tamglass Finton Oy will merge into a single legal
entity before the end of the year. As a result of the restructuring of Tamglass
Finton, sales and installation of balcony systems have been transferred to
partner network in September.
Net sales, operating profit and order book
The net sales of the Energy business area totalled EUR 25.6 (19.8) million in
January-September. Operating profit was EUR 4.7 (4.6) million, representing
18.3% (22.5%) of net sales. Both net sales and operating profit were again
boosted mainly by a rise in energy prices. Financial data for 2005 are not
fully comparable, because they include Kyro Powers then hydropower and
district heat distribution operations.
Kyro Powers order book was EUR 24.0 (23.2) million on 30 September 2006.
Development of the energy market
Due to lower rainfall levels, the water situation in the Nordic countries
remained weak in July-September, particularly in Norway and Sweden.
Consequently the price of electricity reached a historic high in August. The
price of emissions rights, on the other hand, moved with the range 15-20 euros.
Kyro Powers gas-fired combi power plant operated without interruption during
Development of operations
In Kyro Powers Partner project, at the end of September Kyro signed with M-
real Corporation an agreement by which Kyro has the right to sell and M-real
the right to buy Kyro Powers gas-fired combi power plant in summer 2007. If
realised, the transaction would cover the gas-fired combi power plant and
associated business operations. The agreement has no direct financial impact.
Kyro released a bulletin about the agreement on 29 September 2006.
EVENTS AFTER THE REVIEW PERIOD
On 4 October 2006, Kyro announced that Kyros President and CEO Pentti Yliheljo
is to retire. As of 1 January 2007, the new President and CEO will be MSc(Econ)
Mika Seitovirta, aged 44. Pentti Yliheljos expertise will be continue to
available to the Group until 30 June 2007.
At the end of October, Glaston Technologies agreed a record amount of new
orders, valued at EUR 27.8 million. The record intake was achieved in
connection with the Glasstec 2006 Fair in Düsseldorf, where orders were also
obtained for new products supporting the One-Stop-Partner concept. Tamglass
introduced a series of flat tempering products based on a completely new
automatic control system. Bavelloni launched a series of new modular cutting
lines, a compact, high-capacity CNC centre called NRG and the super-fast
PowerSeam edge grinding machine. Kyro released a bulletin about the fair
successes on 2 November 2006.
The industrys most extensive customer service network, widest product range
and the One-Stop-Partner concept create for Glaston Technologies good
opportunities to fulfil customers needs better than before. Glaston
Technologies is the technology and market leader in a growing business
The level of the Kyro Groups order and offer books for the latter part of
the year is good, and the final quarter is expected to be strong.
Consequently, Kyro is still aiming to increase its net sales and comparable
operating profit in 2006. Certain significant deliveries have, however, been
rescheduled for 2007 for reasons due to customers, which means that the
success of other year-end deliveries will decide whether Kyro exceeds its
previous years result.
Helsinki, 8 November 2006
Board of Directors
Additional information about the interim can be obtained from Kyro Groups
President and CEO Pentti Yliheljo and Chief Financial Officer Vesa Hopia,
tel. +358 3 372 3111.
Kyro Corporation, IR and Communications Manager Emmi Watkins, tel. +358 400
903 260 / email@example.com, IR pages at the Internet address www.kyro.fi.
Helsinki Exchanges, key media
KYRO GROUP 1-9/2006, INCOME STATEMENT AND BALANCE SHEET
7-9 7-9 7-9 1-9 1-9 1-9 1-12
/06 /06 /05 /06 /06 /05 /05
Statement, EUR million
Net sales 60.4 60.4 59.6 187.2 187.2 184.1 266.7
Other operating income 1.8 1.8 0.9 5.0 5.0 1.9 14.9
Operating expenses 55.6 57.0 61.1 172.6 174.6 162.5 237.4
Depreciation 2.0 2.0 2.1 5.8 5.8 6.4 8.7
Operating profit 4.6 3.2 6.3 13.8 11.7 17.1 35.5
% of net sales 7.6 5.4 10.5 7.4 6.3 9.3 13.3
Financial income and 0.5 0.5 -0.4 0.5 0.5 -1.0 -1.3
Profit before taxes 5.1 3.7 5.9 14.2 12.2 16.1 34.2
and minority interest
Income tax -1.2 -1.8 -2.3 -5.5 -11.9
Profit for the 2.6 4.1 10.0 10.5 22.4
Distribution of profit
for financial period
To parent company 2.6 4.1 9.9 10.5 22.4
To minority 0.0 0.0 0.0 0.0 0.0
Profit for the 2.6 4.1 10.0 10.5 22.4
Earnings per share, 0.04 0.05 0.13 0.13 0.28
Consolidated Balance 30.9.06 30.9.05 31.12.05
Sheet, EUR million
Non-current assets 123.7 121.7 106.2
Inventories 64.1 69.9 59.6
Trade and other 53.9 59.3 64.3
Assets recognised at
through profit and 0.1 0.1 0.1
Cash and cash 10.5 5.2 26.3
Assets, total 252.3 256.1 256.5
Shareholders equity 133.6 127.1 139.0
Minority interest 0.0 0.0 0.0
Shareholders equity, 133.6 127.1 139.0
Provisions 13.8 9.1 9.8
Non-current interest- 0.6 1.3 1.2
Non-current non- 8.1 10.4 7.8
Current interest- 7.3 13.8 1.7
Current non-interest- 88.9 94.4 97.0
Shareholders equity 252.3 256.1 256.5
and liabilities, total
Consolidated cash flow
30.9.2006 30.9.2005 31.12.2005
Cash flow from business operations
Profit for the financial period 9.9 10.5 22.4
Adjustments -0.3 12.7 17.6
Cash flow before change in working 9.6 23.2 40.0
Change in working capital: -6.7 -7.5 -15.8
Cash flow from operations before 2.9 15.7 24.2
financial items and taxes
Interest received 0.4 1.1 1.2
Dividends received 0.0 0.2 0.4
Interest paid -0.6 -3.1 -1.3
Taxes paid -6.7 -1.7 -2.0
Cash flow from business operations -3.9 12.2 22.6
Cash flow from investments
Investments in tangible and intangible -7.4 -7.4 -10.3
Proceeds from the sale of tangible and 5.8 0.1 25.7
Taxes on proceeds of sale of energy -2.9
business operations in 2005
Cash flow from investments -4.5 -7.3 15.4
Cash flow from financing
Change in long-term loan receivables 1.1
Drawings of short-term loans 5.6 2.4
Repayments of short-term loans -8.1 -16.8
Repayments of long-term loans -0.6 -1.0
Dividends paid -13.4 -5.6 -5.7
Other financing items 5.5 5.5
Cash flow from financing -7.4 -5.8 -17.9
Change in liquid assets -15.8 -0.9 20.1
Liquid assets at beginning of period 26.3 6.2 6.2
Liquid assets at end of financial 10.5 5.2 26.3
-15.8 -0.9 20.1
Key figures 30.9.2006 30.9.2005 31.12.2005
Number of shares, 1000 79,350 79,350 79,350
- of which outstanding 79,020 79,020 79,020
Return on invested capital, % 12.0 17.4 26.1
Return on equity, % 9.7 11.2 17.1
Equity ratio, % 61.8 61.2 64.4
Gearing, % -2.1 7.7 -17.7
Equity per share, EUR 1.69 1.61 1.76
Investments, EUR million 8.3 7.8 11.4
Personnel at end of year 1,245 1,214 1,222
Personnel (average) 1,272 1,208 1,218
Order book, EUR million 135.8 142.4 140.7
Business areas net sales, operating profit and
order book, EUR million
Net sales Compa- Compa-
1-3 4-6 7-9 10-12 1-3 1-3 4-6 7-9 7-9
/05 /05 /05 /05 /06 /06 /06 /06 /06
Glaston 50.7 60.6 52.8 74.8 54.8 54.8 55.3 51.3 51.3
Energy 8.0 5.1 6.8 7.7 8.9 8.9 7.6 9.0 9.0
Parent 0.1 0.1 0.1 0.0 0.1 0.1 0.1 0.1 0.1
Group, 58.7 65.8 59.6 82.5 63.8 63.8 63.0 60.4 60.4
Operating 1-3 4-6 7-9 10-12 1-3 1-3 4- 7-9 7-9
profit /05 /05 /05 /05 /06 /06 6/06 /06 /06
Glaston 4.5 6.2 5.8 5.5 3.2 3.8 4.5 1.8 2.8
Operating 9.0 10.3 11.1 7.4 5.7 7.0 8.1 3.5 5.5
Energy 2.0 1.1 1.5 14.3 1.6 1.6 1.1 1.9 1.9
Operating 25.1 20.5 22.4 185.9 18.1 18.1 14.8 21.5 21.5
Parent -1.4 -1.6 -1.1 -1.4 -0.7 -0.7 -1.2 -0.5 -0.1
Group, 5.1 5.7 6.3 18.4 4.0 4.7 4.5 3.2 4.6
Operating 8.7 8.7 10.5 22.3 6.3 7.4 7.1 5.4 7.7
Order book 03/05 6/05 9/05 12/05 03/06 03/06 06/06 09/06 09/06
Glaston 114.5 122.1 119.4 108.8 100.0 100.0 98.2 111.8 111.8
Energy 24.6 23.2 23.0 31.9 31.9 31.9 31.9 24.0 24.0
Group, 139.1 145.3 142.4 140.7 131.9 131.9 130.1 135.8 135.8
Contingent 30.9.2006 30.9.2005 31.12.2005
Company mortgages 0.2 0.2 0.2
Other own liabilities 13.4 15.0 14.7
Value of underlying
Forward currency 19.9 16.1 14.1
Electricity contracts 7.3 10.9 9.6
Positive fair value 0.1 0.0 0.0
Negative fair value -0.3 -0.2 -0.3
Positive fair value 0.0 0.0
Negative fair value -3.5 -1.9 -2.1
Statement of change in
Shareholders equity attributable to
parent company shareholders
1000 EUR Share Shar Own Trans Fair Retaí Tot. Mino- Share-
capi- pre- sha- la- value ned rity hold-
tal mium res tion fund assets inte- ers
fund diffe rest equity
Shareholders 12.7 25.3 -1.0 1.5 -1.6 102.0 139.0 0.0 139.0
Change in - -0.9 -0.9
Recognitions to -1.1 -1.1 -1.1
fair value fund
net investment, 0.1 0.1 0.1
Dividend - - -13.4
distribution 13.4 13.4
Profit for the 9.9 9.9 0.0 10.0
Shareholders 12.7 25.3 -1.0 0.6 -2.7 98.5 133.6 0.0 133.6
Share Shar Own Trans Fair Retaí Tot. Mino- Share-
capi- pre- sha- la- value ned rity hold-
tal mium res tion fund assets inte- ers
fund diffe rest equity
Shareholders 12.7 25.3 -1.0 0.0 84.6 121.6 0.5 122.2
and valuation 0.5 0.5 1.0 1.0
IAS 32, -0.1 -0.1 -0.2 -0.3
n of minority
Change in 1.5 1.5 1.5
Recognitions to -1.9 -1.9 -1.9
fair value fund
Dividend -5.5 -5.5 -5.5
Other changes -0.3 -0.3
Profit for the 10.5 10.5 -0.1 10.5
Shareholders 12.7 25.3 -1.0 1.5 -1.4 90.0 127. 0.0 127.1
The interim report has been prepared applying the
valuation and allocation principles of the IFRS
standards. The interim report applies the same
accounting principles and calculation methods as
the annual report.
The numbers are unaudited.