Year-End Report 2013
Read CEO Tom Erixon's comments on Ovako's Year End report and Fourth Quarter 2013 and get the financial report.
Fourth quarter 2013
- Order intake increased by 24 percent compared to the corresponding period in the previous year
- Delivery volumes increased by 13 percent compared to the same period in the previous year, and sales increased by 5 percent. The lower increase in sales is largely related to lower scrap and alloy surcharges as a consequence of lower raw material prices
- The quarter was charged with EUR 3.7 (3.9) million in restructuring costs associated with the previously communicated efficiency programme
- Operating profit before depreciation, amortisation and restructuring costs (EBITDA) was EUR 12 (4) million, and after restructuring costs EUR 8 (0) million
- Operating profit (EBIT) before restructuring costs amounted to EUR -1 (-9) million, and after restructuring costs EUR - 4 (-13) million
- Order intake increased by 10 percent compared to the previous year
- Operating profit before depreciation, amFourthortisation and restructuring costs (EBITDA) amounted to EUR 50 (70) million, and after restructuring costs EUR 47 (66) million
- The EBITDA margin before restructuring costs, 5.9 (7.5) percent, decreased due to unfavourable changes in price and mix.
(Amounts in brackets in this report refer to the corresponding period in the previous year.)
Group key figures
|Operating profit before depreciation (“EBITDA”)||EURm||8||0||47||66|
|% of net sales||%||3,8 %||-0,2 %||5,5 %||7,0 %|
|Operating profit (“EBIT”)||EURm||- 4||-13||-0,6||20|
|Operating margin (% of net sales)||%||-2,0 %||-6,7 %||0,0 %||2,1 %|
|Earnings per share||EUR||-128||-158||-412||-74|
|Cash flow from operating activities||EURm||4||33||20||87|
|Net debt/equity ratio||%||160 %||130 %||160 %||130 %|
|Return on capital employed (“ROCE”)||%||0 %||4 %||0 %||4 %|
|Full time employees at end of period (“FTE”)||No.||2 995||3 040||2 995||3 040|
Comments from the CEO
“Demand remained at a stable level during the fourth quarter compared with the third quarter, and compared with the same quarter in the previous year order intake increased by 24 percent. The order intake reflects both a more stable market situation and the initial effects of the increased focus on new market opportunities. Sales into new application areas and geographical markets amounted to a volume of 25,000 tonnes during the year. This has partly compensated for a European steel market that decreased by 4 percent in 2013. The order book at the end of the year was stronger than in 2012, and the European price trend in engineering steel has turned slightly positive.
EBITDA for the quarter improved significantly compared with the previous year, and amounted to EUR 12 million before restructuring costs. Profit and invoicing have steadily improved since August compared with 2012, but still remain at an unsatisfactorily low level. Invoicing in December was affected by a number of customers halting production during the latter part of the month.
The savings targets totalling EUR 25 million have with few exceptions been achieved during 2013. A continued efficiency programme to achieve savings of EUR 17 million during 2014 has previously been announced, and involves restructuring costs of EUR 3.7 million charged to the fourth quarter. As part of this programme, negotiations to close Ovako’s chrome-plated steel unit in Mora in 2014 have been initiated. The volumes can be absorbed by other units within the group. Other parts of the programme in sourcing, process improvement and personnel reductions are proceeding according to plan.
The operational improvement work has been successful in several areas. The improvements are supported by Ovako´s Operational Excellence program, based on lean principles. The program started in a pilot two years ago, and is now introduced in approximately 50 percent of our operations. The program will cover all operations by 2015, and continue for many years. Delivery precision is firmly on target at 90 percent, and in some areas significantly higher. The number of customer claims decreased at a good pace for the third consecutive year, which is a good measure of the quality of our processes. The number of accidents also continued to decrease for the third consecutive year, but a statistical improvement for the year waned in importance when a tragic death occurred in Smedjebacken in December. This was a stark reminder of how important it is to continue our efforts on safety in the workplace. The process of improving safety is our top priority.
Ovako´s order intake and invoicing has steadily increased over the previous year since August 2013. European price development for engineering steel has turned slightly positive in contracts signed for 2014. Ovako expects the positive trends to continue in the first quarter with invoicing increasing compared to the same quarter last year.”
President and CEO
Stockholm, February 11, 2014
Further information can be obtained from:
Viktoria Karsberg, Head of Group Communications, +46 70 209 93 96
Ovako is a leading European producer of engineering steel for customers in the bearing, transportation and manufacturing industries. Our production is based on recycled steel and includes steel in the form of bars,tubes, rings and pre-components. Ovako is represented in more than 30 countries and has sales offices in Europe, North America and Asia. Sales in 2013 amounted to EUR 850 million and the company had 2,995 employees. For further information please visit us at www.ovako.com.