INTERIM REPORT JANUARY 1 ? MARCH 31, 200
LÄNNEN TEHTAAT PLC Stock exchange release May 13, 2003 at 9.00 a.m.
INTERIM REPORT JANUARY 1 MARCH 31, 2003
Lännen Tehtaats net turnover for January-March was EUR 113.5 million
(2002: EUR 52.7 million). Operating profit for the period was EUR 0.1
million (EUR 0.4 million) and result before extraordinary items was
EUR 1.1 million (EUR 0.1 million). Earnings per share came to EUR
0.08 (EUR 0.05).
Changes in Group structure and in the presentation of figures
The corporate structure was altered as a result of the Avena
acquisition in November 2002. The Lännen Tehtaat Group now consists of
three operating divisions: the Food Division, the Agricultural
Division and the Machinium Division. The new Agricultural Division
comprises Suomen Rehu Ltd and its subsidiaries acquired via Avena;
Avena Nordic Grain Oy; and three companies which used to form the
division Other Business Units: Lännen Feed, Lännen Plant Systems,
and Harviala Oy. Lännen Cultivation now operates in the Food Division,
while the Machinium Division retained its former structure.
In this interim report, presentation of data on the individual
divisions reflects the new organization. Comparative data for previous
years have been brought into line with the new organization structure.
The profit and loss account and the balance sheet are presented in two
ways: the actual data for the period under review are compared with
both the actual data and the pro forma data for the previous year. Pro
forma data consist of the combined data for the Lännen Tehtaat Group
and for the Avena Group for 2002.
Net turnover
Lännen Tehtaats net turnover for January-March was EUR 113.5 million
(2002: EUR 52.7 million); addition of Suomen Rehu and the Avena Nordic
Grain business units more than doubled the net turnover. Net turnover
for the Food Division was EUR 24.7 million (EUR 26.0 million); for the
Agricultural Division, EUR 66.8 million (EUR 6.6 million); and for the
Machinium Division, EUR 22.0 million (EUR 20.1 million).
Financial performance
During the period under review, Lännen Tehtaats financial performance
fell below that for the last year and the targets set for this period.
Operating profit was EUR 0.1 million (EUR 0.4 million) and result
before extraordinary items was EUR 1.1 million (EUR 0.1 million).
Result after taxes and minority interests stood at EUR 0.5 million
(EUR 0.3 million). Earnings per share came to EUR 0.08 (EUR 0.05).
Direct taxes for the period under review came to EUR 0.1 million
receivable (EUR 0.3 million).
Financing
The Groups financial structure was altered by the Avena acquisition,
which was mainly financed with external capital. As the acquisition
included Avenas debts, Lännen Tehtaats interest-bearing liabilities
increased to EUR 87.3 million by the end of the period under review
(EUR 25.2 million). Financial assets stood at EUR 13.5 million (EUR 23.6
million). The consolidated balance sheet total came to EUR
253.7 million (EUR 163.0 million) and the equity ratio was 37% (59%).
Short-term financing has been arranged through commercial paper. The
availability of short-term financing has been safeguarded with
sufficient and binding committed credit facilities; these were not
used during the period. The Groups financing situation remained good
for the entire period.
Investments
Investments during the period under review came to EUR 4.1 million. At
the beginning of the year, the parent company bought the buildings
housing the headquarters and the canteen facilities for EUR 3.4
million. These buildings were sold to a finance company in 1988 but
have always been used by Lännen Tehtaat. Other investments focused on
minor replacement or maintenance of technology and facilities. They
totalled EUR 0.7 million. Last years figure was EUR 0.6 million.
Decisions of the Annual General Meeting
The Annual General Meeting on April 3, 2003 decided to distribute a
dividend of EUR 0.30 (0.60) per share on 2002.
The Board was authorized to decide on surrender of the companys own
shares. In accordance with this authorization, the Board may surrender
the 65,000 company shares acquired. Shares can be surrendered in
connection with corporate acquisitions or for some similar purpose, or
sold in public trading on the Helsinki Exchanges. This authorization
is valid for one year as of the AGM.
The 65,000 company shares owned by the company represent 1.1% of share
capital and votes.
Share trading
The volume of trading in company shares on the stock exchange amounted
to 21,961 shares (198,531), or 0.4% of all shares (3.2%). The highest
share price was EUR 9.90 (EUR 11.90) and the lowest EUR 8.70 (EUR
10.30).
Merger plan
On January 31, 2003, the Boards of Directors of Lännen Tehtaat plc and
Avena Oy signed a merger plan. Avena Oy will merge with Lännen Tehtaat
plc by the end of 2003.
Business Divisions
Food Division
Net turnover for the Food Division was EUR 24.7 million (EUR 26.0
million). Apetits domestic sales were about the same last year, and
sugar sales were down slightly. Sales of both frozen pizzas and fish
products increased. Sales of frozen vegetables and the sale of jams
and marmalades, however, fell below last years figures. Net turnover
was affected most by the sale of Lannen Polska in late 2002.
Food Division profitability fell short of the target but remained at
the level of last year. Profitability from domestic business was lower
than last year and suffered from the fact that campaign-priced
products accounted for a larger proportion of sales and that energy
prices were higher. Operating profit improved as Lännen Tehtaat gave
up the loss-making subsidiary in Poland. Operating profit for the Food
Division was EUR 0.8 million (EUR 0.7 million).
Agricultural Division
Net turnover for the Agricultural Division was EUR 66.8 million (EUR
6.6 million). This figure is not comparable with last years figure,
as Suomen Rehu and Avena Nordic Grain were not acquired until the end
of 2002. Net turnover for the divisions animal feed industry fell
short of the targeted level. The demand for industrially produced
feeds fell because of the excess of milk quotas for the year ending on
March 31. Net turnover for Avena Nordic Grain was much the same as
last year. Net turnover for the rest of the Agricultural Division
business was low.
Agricultural Division profitability fell short of the target during
the first quarter. Because of the rising prices of raw materials and
turnover below target, the divisions feed industry business did not
meet the target results nor did it reach the last years comparative
figures. In spite of higher freight costs due to difficult ice
conditions at sea, the grain trade increased its operating profit on
the comparable period of last year. Operating profit for the
Agricultural Division was EUR 0.2 million (EUR 0.5 million).
A new subsidiary called Lännen Rehu Oy started operations at the
beginning of 2003. The new subsidiary had been formed through a
transfer of the assets and liabilities of Lännen Tehtaat plcs animal
feeds business to the new company under the Corporate Taxation Act.
Machinium Division
The Machinium Divisions net turnover was EUR 22.0 million (EUR 20.1
million), which was higher than targeted and exceeded last years
figure. In particular, sales of earthmoving machinery increased in
Sweden and the Baltic republics, which in turn increased deliveries
made by the Finnish sales company and manufacture of the machinery.
Sales of materials-handling machinery had a difficult time in Sweden,
and failed to meet both their target and last years figures.
Profitability for the Machinium Division during the first quarter was
about the same as last year, but did not meet the targets set for it.
The earthmoving machinery business met the targets and showed a profit
both in Finland and in the Baltic republics, and profitability in
Sweden also improved. The decline in the volume of sales and
maintenance of materials-handling machinery brought lower
profitability and the business did not meet its targets. Operating
loss for the Machinium Division was EUR 0.9 million (EUR 0.8
million).
Outlook for the rest of the year
Net domestic turnover for the Food Division is expected to be slightly
lower than last year because of the sale of the subsidiary in Poland.
Net domestic turnover for the Apetit Group is expected to exceed last
years figures. Net turnover for Lännen Sugar is likely to fall as the
domestic consumer market for sugar is expected to decline.
A significant boost to the Food Division's profits is expected against
last year, due to the sale of the loss-making Polish subsidiary and
the fact that the one-off costs related to withdrawing from Poland
will no longer have an impact. Tougher competition and rising costs
will affect business on the domestic market where profits are expected
to weaken on last year.
In the Agricultural Division, the net turnover for the feed industry,
compared with the figures for all of 2002, is expected to remain at
the level of last year. Net turnover for the grain trade will depend
on the volume and quality of this seasons crops in the main market
areas. Net turnover should still reach last years level.
Animal feed industry profitability is likely to improve on the first
quarter thanks to the growth expected in sales and net income and to
the campaign launched in February to cut costs. For the grain trade,
profitability will remain on the first quarter level for the rest of
the year. Despite a slack beginning, the Agricultural Divisions
profitability and financial performance are expected to reach the same
figures for this year as in 2002.
The market for earthmoving machinery in Sweden is experiencing a
slight downturn. While there was a rise in the domestic market in
early 2003, the overall figure for 2003 is not likely to exceed that
for 2002. The sales of earthmoving machinery in Sweden began to grow
in the first quarter and will continue to grow for the rest of the
year, one reason for this being the recent strengthening of the sales
organization. Sales in Finland and the Baltic republics will remain at
the 2002 level. The decline in the market for materials-handling
machinery in Sweden is expected to continue. However, rising sales in
the earthmoving machinery business will increase Machinium Divisions
overall net turnover.
Thanks to growing sales and the reorganization and restructuring
project carried out in Sweden, the profitability of the earthmoving
machinery business will improve. We also expect reduced losses from
the materials-handling machinery business, despite an expected decline
in sales. The Machinium Divisions financial performance will improve
considerably although it will not earn a profit.
Lännen Tehtaats net turnover for 2003 will amount to approximately
EUR 500 million. Despite the weak performance in the first quarter,
profits for the whole year are expected to rise to a satisfactory
level.
The next interim report for January 1 - June 30, 2003 will be
published on August 12, 2003.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
1-3/ 1-3/ 1-12/
2003 2002 2002
EUR million
Net turnover 113.5 52.7 283.4
Other operating income 0.5 0.2 4.2
Costs and expenses -111.3 -51.0 -278.3
Depreciation -2.8 -1.7 -8.5
Share of profits of
associated undertakings 0.2 0.2 2.5
Operating profit 0.1 0.4 3.3
Share of loss of
associated undertakings -0.2
Finacial income and
expenses -1.2 -0.3 -3.2
Profit/loss before extra-
ordinary items and taxes -1.1 0.1 -0.1
Extraordinary income
Extraordinary expenses
Income taxes 0.1 -0.3 0.5
Minority interests 0.5 0.5 2.0
Profit/loss for the financial
period -0.5 0.3 2.4
The tax corresponding to the profit for the period has been taken into
account as tax shown in the profit and loss statement.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, PRO FORMA
AVENA FIGURES INCLUDED IN COMPARISON DATA 2002
Pro forma
1-3/ 1-3/ 1-12/
2003 2002 2002
EUR million
Net turnover 113.5 116.9 506.5
Other operating income 0.5 0.6 5.2
Costs and expenses -111.3 -113.4 -491.5
Depreciation -2.8 -3.3 -13.9
Share of profits of
associated undertakings 0.2 0.2 2.6
Operating profit 0.1 1.0 8.9
Share of loss of
associated undertakings -0.1 -0.4
Finacial income and
expenses -1.2 -0.9 -6.2
Profit/loss before extra-
ordinary items and taxes -1.1 0.0 2.3
Extraordinary income
Extraordinary expenses
Income taxes 0.1 -0.3 0.0
Minority interests 0.5 0.4 1.5
Profit/loss for the financial
period -0.5 0.1 3.8
CONSOLIDATED BALANCE SHEET
Pro forma
March 31, March 31, March 31, Dec 31,
2003 2002 2002 2002
EUR million
Assets
Intangible assets 19.4 6.5 24.8 20.4
Tangible assets 71.5 38.4 80.9 69.4
Investments 21.8 19.4 21.4 21.5
Own shares 0.8 0.8 0.8 0.8
Stocks 79.5 40.5 73.3 81.9
Receivables 47.2 33.8 39.6 51.9
Marketable securities 3.3 6.6 10.9 5.7
Cash and cash equivalents 10.2 17.0 18.0 11.3
Total 253.7 163.0 269.7 262.9
Liabilities
Share capital 12.2 12.2 12.2 12.2
Other capital and reserves 78.4 80.8 80.6 79.0
Minority interests 5.6 5.2 7.3 6.1
Provisions 0.1 0.1 0.1 0.2
Long-term liabilities 68.2 23.4 76.7 68.9
Current liabilities 89.2 41.3 92.8 96.5
Total 253.7 163.0 269.7 262.9
CONSOLIDATED CASH FLOW STATEMENT
1-3/ 1-3/ 1-12/
2003 2002 2002
EUR million
Operations
Cash flow from operations 1.7 1.8 10.5
Change in working capital -4.1 0.8 -16.5
Net cash flow from
operations (A) -2.4 2.6 -6.0
Investments
Investments in non-current
assets -4.0 -0.3 -63.3
Proceeds from sales of
non-current assets 0.1 0.5 10.1
Net cash flow from
investments (B) -3.9 0.2 -53.2
Financing
Change in loans 3.4 0.2 58.5
Dividends paid -3.6
Other changes in capital and
reserves and in minority
interests -0.6 -0.2 0.5
Net cash flow from
financing (C) 2.8 0.0 55.4
Changes in liquid assets
(A+b+C) -3.5 2.8 -3.8
Liquid assets on Jan 1 17.0 20.8 20.8
Liquid assets on March 31 13.5 23.6 17.0
KEY INDICATORS
March 31, March 31, Dec 31,
2003 2002 2002
Earnings per share, EUR -0.08 0.05 0.40
Equity per share, EUR 14.55 14.95 14.66
Equity ratio, % 37.3 59.5 36.5
Gross investments, EURm 4.1 0.6 47.3
% of net turnover 3.6 1.1 16.7
BUSINESS SEGMENT INFORMATION
NET TURNOVER
1-3/ 1-3/ 1-12/
2003 2002 2002
EUR million
Food Division 24.7 26.0 120.8
Agricultural Division 66.8 6.6 70.8
Machinium Division 22.0 20.1 91.8
Total 113.5 52.7 283.4
OPERATING PROFIT
Food Division 0.8 0.7 3.3
Agricultural Division 0.2 0.5 5.2
Machinium Division -0.9 -0.8 -5.2
Total 0.1 0.4 3.3
AVERAGE PERSONNEL
1-3/ 1-3/ 1-12/
2003 2002 2002
Food Division 300 394 438
Agricultural Division 419 101 175
Machinium Division 376 375 380
Total 1095 870 993
CONTINGENT LIABILITIES
March 31, March 31, Dec 31,
2003 2002 2002
EUR million
Securities given for debts
Real estate mortgages 37.6 0.1 37.6
Corporate Mortgages 54.7 13.5 54.7
Shares pledged 43.4 39.8
Other securities given
Pledges 0.0 0.0 0.0
Real estate mortgages 1.7
Corporate mortgages 8.2 1.7 8.2
Leasing liabilities 2.4 0.4 1.6
Contingent liabilities
for own commitments
Guarantees 0.0 0.0 0.0
Repurchasing commitments 17.7 23.0 22.4
Other commitments 1.4 0.9 1.4
Contingent liabilities on behalf
of associated undertakings
Guarantees 0.4 0.4
Other contingent liabilities
Redemption liability
of leased buildings 2.7 6.1 6.0
Outstanding derivative instruments
Forward currency contracts
Market value -0.1 -0.2
Value of underlying instruments 8.9 4.7 11.8
Raw material futures
Market value 0.7 -0.5
Value of underlying instruments 16.3 15.5
The data have not been audited.
Säkylä, May 13, 2003
LÄNNEN TEHTAAT PLC
Board of Directors
More details: Erkki Lepistö, President and CEO, tel. +358 2 8397 4001
Distribution:
Helsinki Exchanges
Main media
www. lannen.fi
