Caverion Corporation’s Half Yearly Report for January 1 – June 30, 2017

Caverion Corporation Half Yearly Report July 20, 2017 at 9.00 a.m. EEST

Caverion Corporation’s Half Yearly Report for January 1 – June 30, 2017 

Turnaround progressing – Completion of a few older projects hurting profitability and cash flow

April 1 – June 30, 2017 

  • Order backlog: EUR 1,512.7 (3/2017: 1,543.5) million.
  • Revenue: EUR 565.1 (615.5) million.
  • EBITDA excluding restructuring costs: EUR -6.0 (-6.8) million, or -1.1 (-1.1) percent of revenue.
  • EBITDA: EUR -13.0 (-14.4) million, or -2.3 (-2.3) percent of revenue.
  • Working capital: EUR 31.0 (15.3) million.
  • Free cash flow: EUR -28.2 (-32.6) million.
  • Earnings per share, undiluted: EUR -0.13 (-0.13) per share.

January 1 – June 30, 2017 

  • Revenue: EUR 1,147.4 (1,176.1) million.
  • EBITDA excluding restructuring costs: EUR 0.8 (6.6) million, or 0.1 (0.6) percent of revenue.
  • EBITDA: EUR -6.2 (-2.9) million, or -0.5 (-0.2) percent of revenue.
  • Free cash flow: EUR -46.7 (-61.3) million.

Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.


EUR million  4–6/17  4–6/16  Change 1–6/17  1–6/16  Change  1–12/16 
Order backlog 1,512.7 1,554.2 -2.7% 1,512.7 1,554.2 -2.7% 1,408.1
Revenue  565.1 615.5 -8.2% 1,147.4 1,176.1 -2.4% 2,364.1
EBITDA excluding restructuring costs -6.0 -6.8 12.4%  0.8 6.6 -88.2% 15.6
EBITDA margin excluding restructuring costs, % -1.1 -1.1 0.1 0.6 0.7
EBITDA  -13.0 -14.4 9.8% -6.2 -2.9 -113.3% -11.4
EBITDA margin, %  -2.3 -2.3 -0.5 -0.2 -0.5
Operating profit  -20.5 -21.5 4.6% -21.3 -16.7 -28.1% -40.8
Operating profit margin, %  -3.6 -3.5 -1.9 -1.4 -1.7
Net profit for the period -15.9 -16.1 1.5% -18.4 -12.9 -42.7% -31.7
Earnings per share, undiluted, EUR -0.13 -0.13 -4.1% -0.15 -0.10 -49.7% -0.25
Working capital  31.0 15.3 102.5% 31.0 15.3 102.5% -2.6
Free cash flow -28.2 -32.6 13.3% -46.7 -61.3 23.8% -72.1
Interest-bearing net debt  98.6 130.6 -24.5% 98.6 130.6 -24.5% 145.5
Gearing, %  37.2 63.6    37.2 63.6    78.7
Personnel, end of period  16,750 17,664 -5.2% 16,750 17,664 -5.2% 16,913

Word from the President and CEO Ari Lehtoranta

“We continued the company’s turnaround and the stabilisation of our operations in the second quarter of 2017. While profitability-wise the quarter was a difficult one for the company, the work is progressing according to plan. The challenges in our risk projects impacted both profitability and cash flow and overshadowed the good progress we have done elsewhere. We continued to implement corrective actions to improve our project business performance and were able to avoid any new projects entering our risk project list this year.

Caverion’s revenue for the second quarter of 2017 was EUR 565.1 (615.5) million and EBITDA EUR -13.0 (-14.4) million. There was a negative impact for the period from currencies, lower number of working days, write-downs and our more selective tendering. Our market environment remains favourable. Divisions Finland and Austria improved their solid performance. Division Denmark-Norway continued its turnaround and I am delighted that Norway has stabilised its position among our well-performing countries. There are also signals that Sweden is starting to turn around, for example our cash flow in Sweden was clearly better than last year. In Services business, Technical Maintenance and Managed Services continued to improve the performance. The Services business grew by 3.1 percent in the second quarter, while the revenue of the Projects business decreased by 17.7 percent.

Our project business performance was burdened by large-scale write-downs particularly in Industrial Solutions and Germany. The write-downs and remaining project performance risks relate to about 15 risk projects, most of which will be completed this year. I am pleased that we have no new projects added to our risk list this year. Our profitability for the period was significantly burdened by cost overruns and write-downs in a set of Industrial Solutions projects in the new bioproduct plant in Finland, where we plan to finalise our work this summer.

We expect to realise savings from the completed restructuring actions and from discretionary fixed cost reductions. In the first half of the year, our personnel expenses decreased by about 3.7 percent and our other operating expenses by about 4.4 percent from the previous year. We launched further performance and utilisation improvement actions in divisions Sweden and Industrial Solutions in the second quarter. These additional actions amounted to restructuring costs of approximately EUR 6.3 million and their estimated total savings impact is approximately EUR 2.7 million in 2017 and EUR 5.5 million in 2018. Overall, these actions are estimated to lead to personnel reductions affecting approximately 160 employees in Sweden. In addition there were further restructuring costs of EUR 0.7 million in the second quarter in Industrial Solutions.

In the first half of the year, we made write-downs totalling EUR 18.3 million related to above mentioned risk projects in divisions Industrial Solutions and Germany. After these write-downs and following our latest assessment completed in July, the remaining project performance risks for the rest of the year are still estimated to be about EUR 20 million. The increase compared to our earlier estimates is caused almost solely by the above mentioned Industrial Solutions project in Finland where we have made write-downs totalling EUR 11.2 million. With respect to old overdue trade receivables, we have succeeded in collecting certain old receivables without major impact on profitability. The estimate for full-year risk related to old overdue trade receivables is slightly lower than the earlier anticipated up to EUR 10 million in 2017. The risk related to utilisation is estimated not to exceed the level of up to EUR 10 million indicated earlier. However, we are ready to implement further cost savings during 2017 if necessary.

In early June we issued a EUR 100 million hybrid bond. It was important for us in the middle of our turnaround, as the hybrid bond strengthened our capital structure and financial position and provided us with a platform to further develop our business. I am very pleased with the confidence the bond investors showed in our company.

Caverion’s financial performance in 2017 is negatively impacted mainly by our project business performance. In our current turnaround phase we must first complete the risk projects, restructurings and other corrective actions. We have further strengthened our management team and are currently completing our strategy towards 2020. We will tell more about it at our Capital Markets Day in Helsinki on November 7, 2017.”


Market outlook for Caverion’s services and solutions

The megatrends in the industry, such as the increase of technology in buildings, energy efficiency requirements, increasing digitalisation and automation as well as urbanisation continue to promote demand for Caverion’s services and solutions over the coming years.


The underlying demand for Technical Maintenance and Managed Services is expected to remain strong. As technology in buildings increases, the need for new services and the demand for Life Cycle Solutions are expected to increase. Clients’ tendency towards focusing on their core operations continues to open opportunities for Caverion in terms of outsourced operations and maintenance especially for public authorities, industries and utilities.


The Technical Installation and Large Projects markets are expected to remain on a good and stable level, however price competition is expected to remain tight in Technical Installation projects. In the Large Projects market, new tenders for buildings and industry are expected to remain on a good level and even to somewhat increase. Low interest rates and availability of financing are expected to support investments. The demand for Design & Build of Total Technical Solutions is expected to develop favourably in large and technically demanding projects. Good demand from both the public and private sector is expected to continue. Requirements for increased energy efficiency, better indoor conditions and tightening environmental legislation will be significant factors supporting the positive market development.

Turnaround programme ‒ Items affecting EBITDA and operating profit*

EUR million  4–6/17  4–6/16  1–6/17  1–6/16  1–12/16 
EBITDA  -13.0 -14.4 -6.2  -2.9 -11.4
EBITDA margin, %  -2.3 -2.3 -0.5  -0.2 -0.5
Items affecting EBITDA and operating profit 
-  Project write-downs** 12.6 15.0 18.3  15.0 59.0
-  Restructuring costs 7.0 7.5 7.0  9.5 26.9

* The effect of the risk from overdue trade receivables and the utilisation risk excluded for 2017.

** Including cost estimate adjustments, cost overruns and provision increases from the risk project list for 2017.

Guidance for 2017 

Caverion’s guidance for 2017 is unchanged. Caverion’s guidance for 2017 is: “Caverion estimates that the Group’s revenue will remain at the previous year's level in 2017 (2016: EUR 2,364 million). Caverion estimates that the Group’s EBITDA excluding restructuring costs will more than double in 2017 (2016: EUR 15.6 million).”

In its guidance Caverion applies the following guidance terminology, with a +/- 2pp (percentage point) threshold to the said limits.

Positive change   Lower limit Upper limit
% %
At last year’s level  -5% 5%
Grows  5% 15%
Grows clearly  15% 30%
Grows significantly  30% 100%
Doubles  100%
Negative change Lower limit Upper limit
% %
Decreases  -15% -5%
Decreases clearly  -30% -15%
Decreases significantly  -30%


Caverion will hold a news conference and webcast on the Half Yearly Report on Thursday, July 20, 2017, at 11:00 a.m. (Finnish Time, EEST) at the Glo Hotel Kluuvi (Videowall meeting room), Kluuvikatu 4, 2nd floor, Helsinki, Finland. The news conference can also be viewed live on Caverion’s website at It is also possible to participate in the event through a conference call by calling the assigned number +44 (0)330 336 9411 at 10:55 a.m. (Finnish time, EEST) at the latest. Participant code for the conference call is “9305052/ Caverion”. More practical information on the news conference can be found on Caverion's website,

Financial information and IR events in 2017

Caverion will arrange a Capital Markets Day in Helsinki, Finland on November 7, 2017 at 9:00 a.m. (EET). Further information on the programme will be published closer to the date.

Interim Report for the first nine months of 2017 will be published on October 27, 2017. Financial reports and other investor information are available on Caverion's website,, and IR App. The materials may also be ordered by sending an e-mail to


Distribution: Nasdaq Helsinki, principal media,

For further information, please contact:

Martti Ala-Härkönen, Chief Financial Officer, Caverion Corporation, tel. +358 40 737 6633,

Milena Hæggström, Head of Investor Relations, Caverion Corporation, tel. +358 40 5581 328,

About Us

Caverion provides smart technical solutions and services for buildings, industrial processes and infrastructure. Our unique service offering covers the entire life cycle: design, build and maintenance. Our vision is to be the first choice in digitalising environments for customers, employees, partners and investors. Our revenue in 2018 was approximately EUR 2.2 billion. Caverion has about 15,000 employees in 10 countries in Northern, Central and Eastern Europe. Caverion’s shares are listed on Nasdaq Helsinki. Twitter: @CaverionGroup



Turnaround progressing – Completion of a few older projects hurting profitability and cash flow
Half Yearly Report Q1 2017