Lemminkäinen Financial Statements Bulletin 1 January - 31 December 2016

LEMMINKÄINEN CORPORATION FINANCIAL STATEMENTS BULLETIN   9 FEBRUARY 2017 AT 8:00 A.M.

LEMMINKÄINEN FINANCIAL STATEMENTS BULLETIN 1 JANUARY –  31 DECEMBER 2016

October‒December 2016 (10‒12/2015)

  • Order inflow was EUR 212.5 million (296.0).
  • Order book at the end of the period amounted to EUR 1,265.2 million (1,180.3).
  • Net sales totalled EUR 477.3 million (528.5).
  • Operating profit amounted to EUR 35.0 million (18.9), or 7.3% (3.6) of net sales. The operating profit includes EUR 19.4 million of reimbursements and EUR 8.3 million of lowered provisions related to the Helsinki Court of Appeal’s decisions regarding the asphalt cartel as well as write-downs related to non-core businesses worth EUR 4.9 million. Without these items the operating profit would have been EUR 12.5 million and operating margin 2.6%.
  • Profit for the period was EUR 22.9 million (9.9).
  • Earnings per share were EUR 0.83 (0.33).
  • Cash flow from operating activities totalled EUR 38.5 million (30.5).
  • Equity ratio at the end of the review period was 39.5% (40.6) and gearing 24.3% (33.6).
  • Interest-bearing net debt at the end of the review period was EUR 81.1 million (126.8).

January‒December 2016 (1‒12/2015)

  • Order inflow was EUR 1,347.2 million (1,417.4).
  • Net sales totalled EUR 1,682.7 million (1,879.0).
  • Operating profit amounted to EUR 67.6 million (37.3), or 4.0% (2.0) of net sales. The operating profit includes EUR 19.4 million of reimbursements and EUR 8.0 million of lowered provisions related to the Helsinki Court of Appeal’s decisions regarding the asphalt cartel as well as write-downs related to non-core businesses worth EUR 4.9 million. Without these items the operating profit would have been EUR 45.1 million and operating margin 2.7%.
  • Profit for the period was EUR 38.0 million (7.2).
  • Earnings per share were EUR 1.27 (-0.15).
  • Cash flow from operating activities totalled EUR 131.7 million (106.6).
  • The Board of Directors proposes to the AGM that for the financial year that ended on 31 December 2016, Lemminkäinen will distribute a per-share dividend of EUR 0.66 (0.12).

Profit guidance for 2017

Lemminkäinen estimates that its net sales in 2017 will grow from 2016 (EUR 1,682.7 million). Operating profit (IFRS) in 2017 is expected to improve from EUR 45.1 million which reflects the operational performance in 2016.

Key figures, IFRS 10-12/
2016
10-12/
2015
Change 1-12/
2016
1-12/
2015
Change
Net sales M€ 477.3 528.5 -51.2 1,682.7 1,879.0 -196.3
  Paving M€ 179.3 180.8 -1.5 757.6 796.2 -38.6
  Infra projects M€ 88.7 99.2 -10.5 317.1 341.4 -24.3
  Building construction, Finland M€ 196.0 176.1 19.9 581.2 537.8  43.4
  Russian operations M€ 15.2 70.0 -54.8 54.5 136.7  -82.2
  Other operations and Group eliminations M€ -1.9 2.4 -4.3 -27.7 66.8 -94.5
Operating profit M€ 35.0 18.9 16.1 67.6 37.3 30.3
  Paving M€ 0.6 -2.8 3.4 25.8 19.8 6.0
  Infra projects M€ 4.3 3.1 1.2 7.6 8.9 -1.3
  Building construction, Finland M€ 10.7 11.4 -0.7 17.2 12.9 4.3
  Russian operations M€ -4.4 10.9 -15.3 -3.8 2.9 -6.7
  Other operations M€ 23.9 -3.7 27.6 20.9 -7.2 28.1
Operating margin % 7.3 3.6 4.0 2.0
  Paving % 0.3 -1.6 3.4 2.5
  Infra projects % 4.9 3.1 2.4 2.6
  Building construction, Finland % 5.4 6.5 3.0 2.4
  Russian operations % -29.2 15.6 -7.0 2.1
Pre-tax profit M€ 30.2 13.7 16.5 49.2 16.7 32.5
Profit for the period M€ 22.9 9.9 13.0 38.0 7.2 30.8
Earnings per share for the period, basic 0.83 0.33 0.50 1.27 -0.15 1.42
Earnings per share for the period, diluted 0.82 0.33 0.49 1.26 -0.15 1.41
Cash flow from operating activities M€ 38.5 30.5 8.0 131.7 106.6 25.1


Key figures, IFRS 31 Dec
2016
31 Dec
2015
Change
12/16 vs
12/15
30 Sep
2016
Change
12/16 vs
9/16
Order book M€ 1,265.2 1,180.3 84.9 1,406.6 -141.4
Operating capital M€ 388.2 474.8 -86.6 394.6 -6.4
Balance sheet total M€ 968.0 1,035.5 -67.5 1,156.7 -188.7
Interest-bearing net debt M€ 81.1 126.8 -45.7 82.0 -0.9
Equity ratio 1) % 39.5 40.6 34.3
Gearing 2) % 24.3 33.6 23.7
Return on capital employed, rolling 12 months % 11.3 5.3 8.3

1) Equity ratio, if hybrid bonds were treated as debt: 12/2016: 35.4% and 12/2015: 28.6%.
2)   Gearing, if hybrid bonds were treated as debt: 12/2016: 38.8% and 12/2015: 89.6%.

President and CEO Casimir Lindholm:

“Our 2016 operating profit improved year-on-year,” says Casimir Lindholm, President and CEO. “In Paving, our performance improved. In Building construction, Finland, housing sales were strong especially during the second half of the year. In Infra projects, operating profit was weakened by lower volumes as well as declining margins in individual projects in Sweden and Finland. In Russian operations, operating profit decreased due to lower volumes in building construction. During 2016, we have shifted our focus in Russia from residential development to negotiated contracting in building construction.”

“A major part of the result improvement comes from the reimbursements and lowered provisions related to the Helsinki Court of Appeal’s decisions regarding the asphalt cartel given in October 2016, totalling EUR 27 million. After the decisions we settled the case with 17 municipalities, and in January 2017 also with the State of Finland. The case may still continue in the Supreme Court with those 19 municipalities with whom we have not settled.”

“Our financial position has developed favourably throughout the year. Year-on-year, our operating capital has decreased from EUR 475 million to EUR 388 million and our interest-bearing net debt has declined from EUR 127 million to EUR 81 million. In addition, we reduced the nominal amount of outstanding hybrid bonds by EUR 78 million."

“Our order book improved year-on-year. However, we have not succeeded in growing the Infra project’s order book as planned. During 2016, the segment renewed its operating model and strengthened its local organisation especially in Sweden. We have also started measures to improve our paving operations in Sweden.”

“We have now completed the first stage of our strategy for 2014-2019 which was the strengthening of our balance sheet. We have lightened our balance sheet, streamlined our business portfolio and decreased our debts significantly. We will continue to manage the balance sheet and cash flow, and our aim is to increase our plot investments in growth centres in building construction in Finland. Going forward, we will focus on improving our operational efficiency and competiveness in all operations in order to build a solid foundation for profitable growth.”

Market outlook

In Finland , the total volume of construction is expected to grow slightly in 2017. Residential construction is estimated to decline from 2016 but remain at a good level. Demand for apartments will still be focused on small units in urban growth centres. Investor sale is likely to decline but consumer sales are expected to continue to pick up. Non-residential construction is estimated to remain stable, due to individual major projects and public sector works. Renovation is expected to grow moderately due to increasing urbanisation and public sector works.

Infrastructure construction is expected to grow approximately 1.5% in 2017. The Government's decisions regarding transport projects in the General Government Fiscal Plan improve the outlook for both paving and infra projects. The state's planned investments in basic road maintenance are expected to keep demand stable for paving in 2017. Demand for infra projects is maintained by complex projects in urban growth centres and industrial investments but the competition is intense.

In Norway and Sweden , infrastructure construction is boosted by multi-year, state-funded traffic infrastructure development programmes. In both countries, infrastructure construction is expected to grow in 2017. Large-scale road and railway projects are ongoing or planned near urban growth centres in Sweden and Norway, which will increase demand for infra projects. In addition, especially Norway is investing in the development and renewal of energy production. In paving, public sector investments in roads are expected to increase demand in both countries.

In Denmark, demand for paving is expected to decline as public investments in road infrastructure are decreasing.

In Russia, economic growth is estimated to remain at a low level. The fluctuations in the price of oil are reflected in the currency exchange rate. In negotiated contracting in building construction, price competition is high but the reliability of the builder has become a competitive advantage. Construction and repair projects on major roads are expected to maintain demand for paving.

In the Baltic countries, the volume of infrastructure construction is expected to start growing moderately.

Briefing

A Finnish-language briefing for analysts and the media will be held at 12:00 noon (EET) on Thursday 9 February 2017 at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's President and CEO Casimir Lindholm will present the Financial statements bulletin. The presentation material can be found in Finnish and English at the company’s website, www.lemminkainen.com/investors.

Financial reporting in 2017

In 2017, financial reports are published as follows:

9 February 2017 Financial statements bulletin 2016
Week 9 Annual report 2016
27 April 2017 Interim report 1 Jan – 31 March 2017
27 July 2017 Half year financial report 1 Jan – 30 June 2017
26 October 2017 Interim report 1 Jan – 30 Sep 2017

LEMMINKÄINEN CORPORATION
Corporate Communications

Additional information:
Casimir Lindholm, President and CEO, tel. +358 2071 53304
Ilkka Salonen, CFO, tel. +358 2071 53304

DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media
www.lemminkainen.com

Lemminkäinen is an expert in complex infrastructure construction and building construction in Northern Europe and one of the largest paving companies in its market. Together with our customers and 4,700 professionals we employ, we build a sustainable society. In 2016, our net sales were EUR 1.7 billion. Lemminkäinen Corporation’s share is quoted on Nasdaq Helsinki Ltd. www.lemminkainen.com

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Financial bulletin 2016 pdf

About Us

Lemminkäinen is an expert in complex infrastructure construction and building construction in Northern Europe and one of the largest paving companies in its market. Together with our customers and 4,800 professionals we employ, we build a sustainable society. In 2015, our net sales were EUR 1.9 billion. www.lemminkainen.com

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