INTERIM REPORT for January 1 - June 30,
LÄNNEN TEHTAAT PLC STOCK EXCHANGE RELEASE August 10, 2004 9;00 a.m.
INTERIM REPORT for January 1 - June 30, 2004
Lännen Tehtaats net turnover for January-June was EUR 254.3 million
(2003: EUR 249.3 million). The operating loss was EUR -0.6 million
(profit EUR 4.6 million) and the loss before extraordinary items EUR
-1.2 million (profit EUR 3.1 million). The losses arise from the
foreseeable realization of Lännen Tehtaats liabilities in Machinium
Ltds and its Swedish subsidiaries bankruptcy. The profit after taxes
and minority interests was EUR -1.9 million (EUR 2.5 million). The
earnings per share were EUR -0.31 (EUR 0.42).
Group restructuring
Kuopion Kalatukku Oy became part of the Food Division in June, when
Lännen Tehtaat plc acquired a majority holding in the company, the
name of which was changed to Apetit Kala Oy. A joint venture company,
Ateriamestarit Oy, which was set up with Raisio Nutrition Ltd, started
its operations in May. The business operations of Lännen Engineering
Oy, which was part of the Machinium Division, were sold in May. In
July, after the period under review, Machinium Ltd and its Swedish
subsidiaries filed for bankruptcy. Because of the commencement of the
bankruptcy proceedings, the Lännen Tehtaat Group disengaged itself
from the Machinium sub-group.
Net turnover
Lännen Tehtaats net turnover for January-June was EUR 254.3 million
(2003: EUR 249.3 million). The net turnover by division was as
follows: Food Division EUR 54.5 million (EUR 56.4 million);
Agricultural Division EUR 150.9 million (EUR 146.4 million); Machinium
Division EUR 48.9 million (EUR 46.5 million).
Financial performance
The operating loss for the period under review was EUR -0.6 million
(profit EUR 4.6 million) and the loss before extraordinary items EUR
-1.2 million (profit EUR 3.1 million). Lännen Tehtaats financial
performance for the period under review was poorer compared with both
the same period in 2003 and the target. The performance was weakened
by a provision of EUR 4.0 million recorded under other operating
charges for the foreseeable realization of Lännen Tehtaats
liabilities and other losses in Machinium Ltds bankruptcy. Without
these, the operating profit would have been EUR 3.4 million and the
profit before extraordinary items EUR 2.8 million.
The loss after taxes and minority interests was EUR -1.9 million (EUR
2.5 million). The earnings per share were EUR -0.31 (EUR 0.42).
Taxes for the period under review amounted to EUR 1.2 million (EUR 1.1
million).
Net turnover and financial performance for second quarter
The net turnover for April-June was EUR 130.4 million (EUR 135.8
million). The turnover by division was as follows: Food Division EUR
29.4 million (EUR 31.7 million); Agricultural Division EUR 72.8
million (EUR 79.6 million); Machinium Division EUR 28.2 million (EUR
24.5 million).
The financial performance was poorer in the second quarter compared
with the same period in the previous year. The operating loss was EUR
-1.1 million (profit EUR 4.5 million) and the loss before
extraordinary items was EUR -0.9 million (profit EUR 4.2 million).
Without the non-recurring expenses caused by Machiniums bankruptcy
the operating profit would have been EUR 2.9 million (EUR 4.5 million)
and the profit before extraordinary items EUR 3.1 million (EUR 4.2
million).
The Food Divisions operating profit for the second quarter was EUR
1.4 million (EUR 2.2 million) and the Agricultural Divisions EUR 1.7
million (EUR 2.8 million). The Machinium Divisions operating profit
was EUR -4.2 million (EUR -0.5 million). Without the losses and other
non-recurring items incurred by Lännen Tehtaat because of Machiniums
bankruptcy, the Machinium Divisions operating loss would have been
EUR -1,3 million (EUR -0.5 million).
Financing
The Groups interest-bearing liabilities at the end of the period
under review totalled EUR 66.0 million (EUR 80.8 million) and the
financial assets EUR 13.0 million (EUR 18.7 million). The consolidated
balance sheet total was EUR 234.8 million (EUR 242.5 million) and the
equity ratio 41% (40%). Commercial papers were used for short-term
financing and liquidity was secured with long-term committed credit
facilities. No credit facilities were used in the period under review.
The Groups financing position was good throughout the entire period
under review with the exception of Machinium Ltd and its Swedish
subsidiaries.
Investment, corporate acquisitions and disinvestments
Investment during the period under review amounted to EUR 5.5 million
(EUR 5.4 million). The most significant investment was the acquisition
of a majority holding in Kuopion Kalatukku Oy in accordance with a
share exchange agreement made in May. The share exchange was carried
out in June after approval by the Office of Free Competition. Lännen
Tehtaat plc launched 195,000 new shares and received in exchange about
51% of the shares in Kuopion Kalatukku Oy. Lännen Tehtaat plcs
balance sheet shows EUR 2.6 million as the acquisition cost of the
shares. Lännen Tehtaat plc sold the share capital of its subsidiary
Tresko Fish Ltd to Kuopion Kalatukku Oy as part of the arrangement.
Other Group investment comprised mainly replacement and maintenance.
In May Lännen Engineering Oy, which was part of the Machinium
Division, sold its business operations to Lännen Tractors Oy, a
company outside the Group.
Increase in share capital
In June the Board of Directors exercised the authorization given by
the Annual General Meeting to increase the share capital. The increase
was implemented in the form of a targeted share issue in which Antti
Räsänen subscribed for 195,000 shares in Lännen Tehtaat plc against
property given in exchange. The increase was registered in the Trade
Register on June 22, 2004. The new number of total shares is 6,317,576
and the new total share capital amounts to EUR 12,635,152. Trading in
the new shares began on the Helsinki Exchanges on June 23, 2004.
The Board of Directors has not as yet exercised the authorization
given by the Annual General Meeting to surrender company shares. The
company owns 65,000 of its own shares, which represents 1.1 per cent
of the companys share capital and voting rights.
Share trading
The volume of stock exchange trading in the companys shares during
the period under review was 1,317,200 shares (59,200), which was 21.5%
of the total number of shares (1.0%). The highest price for the shares
was EUR 14.50 (EUR 9.90) and lowest EUR 11.00 (EUR 8.20).
Sampo Life Insurance Company announced on May 28, 2004 that its
shareholding had fallen to 4.4 per cent (13.2.2004: 8.0%) of Lännen
Tehtaat plcs share capital and voting rights. Tapiola General Mutual
Insurance Company and Tapiola Mutual Life Insurance Company announced
on June 24, 2004 that their combined shareholding had been reduced to
8.6 per cent (13.2.2004: 13.2%).
BUSINESS DIVISIONS
Food Division
The Food Divisions net turnover for the period January-June was EUR
54.5 million (EUR 56.4 million). Sales by the Apetit Group were almost
at the level of the previous year. Sales of fish products and frozen
foods went up. Sales of frozen vegetables and jams and marmalades did
not reach the level of the previous year. Sales of sugar fell
considerably short of last years level in June, when the start of the
berry-picking season was delayed by cold, rainy weather. Imports of
sugar from Estonia into the retail trade that came with EU membership
also contributed to the drop in the sales of domestically produced
sugar.
The Food Divisions operating profit was EUR 2.2 million (EUR 3.0
million). Apetits profitability was poorer than in the corresponding
period of the previous year because of reduced sales prices and
increased raw-material costs. The fall in the contribution to the
profit from the associated company Sucros also made the operating
profit smaller.
Kuopion Kalatukku Oy became part of the Group and Food Division on
June 30, 2004. The companys new name, Apetit Kala Oy, was registered
in the Trade Register on July 21, 2004. The company engages in the
fish wholesale and retail trade and in processing fish and fish
products. It operates in Kuopio and Kerava. It carries on the fish
retail trade under the Kalatori registered trademark. Altogether the
company has more than 50 retail outlets of its own and Kalatori
franchising outlets, and they operate on the shop-in-shop principle in
major retail outlets for daily consumer goods, mainly in southern
Finland.
Agricultural Division
The Agricultural Divisions net turnover for January-June was EUR
150.9 million (EUR 146.4 million). Animal feeds net turnover was
slightly below what had been planned and the corresponding figure in
the previous year. The net turnover for Avena Nordic Grains grain
trade fell short of the targeted level, but it was higher than in the
same period in 2003. Other operations in the Agricultural Division
accounted for only a small proportion of the Divisions net turnover.
The Agricultural Divisions operating profit was EUR 3.1 million (EUR
3.0 million) The profitability of the animal feed business did not
reach the targeted figure, but it was almost the same as the figure
for the corresponding figure for the previous year. The profitability
of the grain trade was better than targeted, but slightly less than a
year ago.
Machinium Division
The Machinium Divisions net turnover during the period under review
was EUR 48.9 million (EUR 46.5 million). The net turnover fell short
of its target but was higher than a year previously. Sales of
earthmoving machinery went up in Finland but were smaller than a year
ago in Sweden. Sales in the Baltic States were at the same level as
twelve months previously. Sales of materials handling machinery did
not reach the target and were slightly down on the previous years
figure.
The Machinium Divisions operating loss was EUR -5.9 million (EUR -1.4
million), which includes non-recurring costs estimated at EUR 4.0
million. The profitability of the earthmoving machinery operations was
much worse than a year ago in Sweden. The Baltic operations were in
the black and almost at last years level. The basic activities in
Finland achieved a profit, although smaller than in the same period in
2003. The profitability of materials handling machinery was slightly
better than at the same time last year but still short of the target.
Machinium Ltd and its Swedish subsidiaries filed for bankruptcy on
July 28, 2004. The reason for doing so was mainly the long-term loss-
making by the Swedish companies and Machinium Ltd no longer being able
to take responsibility for its commitments to companies in Sweden. The
profit-making Suomen Rakennuskone Oy and its Baltic subsidiaries will
continue their operations.
Plan for changing EUs sugar regime
The EUs present sugar regime has come in for criticism from the World
Trade Organization. The regime has also been opened up by allowing
quota imports of sugar from the least developed countries onto the EU
market on the basis of the EBA agreement, which deals with the gradual
liberalization of trade between the EU and these countries. The EU has
also granted considerable concessions to imports by the Balkan
countries.
In July the EU Commission announced a plan for changing the sugar
regime. The proposed changes would lead to a cut in sugar quotas, a
reduction in the price of sugar beet and an end to quotas on a country-
by-country basis. The objective of the plan is to reduce
overproduction in sugar and lower the price of sugar in the EU region.
In the form proposed the plan is a threat to beet farming and the beet
sugar industry on the outer edges of the EU e.g. in Finland. The
present regime is effective until the end of June 2006. According to
the proposal, however, the new regime would come into effect during
2005.
If, as a result of the reform of the sugar regime, the production of
beet sugar is reduced considerably in Finland, it will have negative
effects on Lännen Tehtaats financial performance in the years to
come.
Outlook for the rest of the year
Food Division
The Food Divisions net turnover will rise as a result of Apetit Kala
Oy becoming part of the Division. Sales of frozen food are expected to
follow the general market trend. The overall consumption of sugar will
not go up. Sales of Lännen Sugars consumer products are forecast to
be slightly below the level for 2003.
Agricultural Division
In the Agricultural Division the net turnover for the animal feeds
business is expected to stay at the 2003 level. The grain trades net
turnover depends on the amount and quality of the harvest in the main
market area in the coming period. It is thought, however, that the net
turnover will exceed last years level.
Group
With the removal of the Machinium Division the Group will be able to
concentrate on developing the business operations in its main sectors.
Lännen Tehtaats consolidated net turnover for the whole year will go
down in the absence of the Machinium Division. It is, however,
expected to go up to almost EUR 500 million in 2004 as a result of the
increase brought by Apetit Kala.
The financial performance of the Groups main sectors is expected to
be at last years level. The loss by the Machinium Division in the
second half of 2003 amounted to EUR 1.8 million. In 2004 no additional
losses are expected further to the non-recurring costs caused by the
bankruptcy. However, the financial performance of the Lännen Tehtaat
Group will not be as good as in 2003.
The next interim report, which will cover the period January 1 to
September 30, 2004, will be published on November 2, 2004.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
EUR million
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2004 2003 2004 2003 2003
Net turnover 130.4 135.8 254.3 249.3 492.0
Other operating income 1.9 0.3 2.6 0.8 2.1
Costs and expenses -131.0 -130.0 -252.7 -241.3 -473.8
Depreciation -2.9 -2.7 -5.8 -5.5 -11.8
Share of profits of
associated undertakings 0.5 1.1 1.0 1.3 3.2
Operating profit/loss -1.1 4.5 -0.6 4.6 11.7
Financial income and
expenses 0.2 -0.3 -0.6 -1.5 -3.3
Profit/loss before
extraordinary items
and taxes -0.9 4.2 -1.2 3.1 8.4
Extraordinary income
Extraordinary expenses
Income taxes -0.9 -1.2 -1.2 -1.1 -2.6
Minority interests -0.1 0.0 0.5 0.5 0.9
Profit/loss for the
financial period -1.9 3.0 -1.9 2.5 6.7
The tax corresponding to the profit for the period has been taken into
account as tax shown in the profit and loss statement.
CONSOLIDATED BALANCE SHEET
EUR million
June 30, June 30, Dec 31,
2004 2003 2003
Assets
Intangible assets 19.6 18.7 21.6
Tangible assets 71.4 70.9 65.6
Investments 22.8 21.8 21.9
Own shares 0.8 0.8 0.8
Stocks 57.8 61.7 80.2
Receivables 49.5 49.9 46.5
Marketable securities 0.5 9.6 1.5
Cash and cash equivalents 12.4 9.1 11.6
Total 234.8 242.5 249.7
Liabilities
Share capital 12.6 12.2 12.2
Other capital and reserves 79.3 78.7 82.8
Minority interests 5.4 5.5 4.9
Provisions 5.9 0.1 2.1
Long-term liabilities 46.0 64.7 48.3
Current liabilities 85.6 81.3 99.4
Total 234.8 242.5 249.7
CONSOLIDATED CASH FLOW STATEMENT
EUR million
1-6/ 1-6/ 1-12/
2004 2003 2003
Operations
Cash flow from operations 6.9 6.5 18.8
Change in working capital 5.0 7.9 7.4
Net cash flow from
operations (A) 11.9 14.4 26.2
Investments
Investments in non-current
assets -10.3 -5.5 -9.5
Proceeds from sales of
non-current assets 0.6 1.3 1.5
Net cash flow from
investments (B) -9.7 -4.2 -8.0
Financing
Change in loans -1.5 -5.0 -18.0
Share issue 2.3
Dividends paid -3.9 -1.8 -1.8
Other changes in capital and
reserves and in minority
interests 0.8 -1.7 -2.4
Net cash flow from
financing (C) -2.3 -8.5 -22.2
Changes in liquid assets
(A+B+C) -0.1 1.7 -4.0
Liquid assets on Jan 1 13.1 17.0 17.0
Liquid assets on June 30 13.0 18.7 13.0
KEY INDICATORS
June 30, June 30, Dec 31,
2004 2003 2003
Earnings per share, EUR -0.31 0.42 1.11
Equity per share, EUR 14.30 14.60 15.29
Equity ratio, % 40.6 39.6 39.5
Gross investments, EURm 5.5 5.4 9.5
% of net turnover 2.1 2.2 1.9
BUSINESS SEGMENT INFORMATION
NET TURNOVER
EUR million
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
2004 2003 2004 2003 2003
Food Division 29.4 31.7 54.5 56.4 114.9
Agricultural Division 72.8 79.6 150.9 146.4 282.6
Machinium Division 28.2 24.5 48.9 46.5 94.5
Total 130.4 135.8 254.3 249.3 492.0
OPERATING PROFIT/LOSS
EUR million
Food Division 1.4 2.2 2.2 3.0 6.5
Agricultural Division 1.7 2.8 3.1 3.0 8.3
Machinium Division -4.2 -0.5 -5.9 -1.4 -3.1
Total -1.1 4.5 -0.6 4.6 11.7
AVERAGE PERSONNEL
1-6/ 1-6/ 1-12/
2004 2003 2003
Food Division 307 310 331
Agricultural Division 439 436 442
Machinium Division 365 380 388
Total 1111 1126 1161
CONTINGENT LIABILITIES
EUR million June 30, June 30, Dec 31,
2004 2003 2003
Securities given for debts
Real estate mortgages 35.1 37.6 32.6
Corporate Mortgages 77.3 54.7 76.0
Shares pledged 3.6 43.4 3.6
Other securities given
Pledges 0.3 0.0 0.0
Corporate Mortgages 5.2 8.2 6.9
Leasing liabilities 1.8 2.1 2.1
Contingent liabilities
for own commitments
Guarantees 0.0
Repurchasing commitments 18.0 17.9 19.0
Other commitments 2.8 1.0 2.4
Contingent liabilities on behalf
of associated undertakings
Guarantees 0.1 0.4
Other contingent liabilities
Redemption liability
of leased buildings 2.5 2.7 2.6
Outstanding derivative instruments
Forward currency contracts
Market value -0.1 -0.3 -0.3
Value of underlying instruments 2.2 5.0 9.5
Interest rate swaps
Value of underlying instruments 5.0 25.0 25.0
Commodity derivate contracts
Market value 0.0 -0.1 -0.5
Value of underlying instruments 0.2 6.6 10.6
The data in this interim report have not been audited.
LÄNNEN TEHTAAT PLC
Board of Directors
More details: Erkki Lepistö, President & CEO, tel. +358 2 8397 4001
Distribution:
Helsinki Exchanges
Main media
www.lannen.fi
