Componenta Corporation's Financial Statements Release for 1 January - 31 December 2017: Net sales for continued operations at same level as in previous year, operating result turned positive
Componenta Corporation Stock Exchange Release on 29 March 2018 at 8.00
The information presented in this financial statement release relates to the continued operations of Componenta Group in the January – December period in 2017 and in the corresponding period in 2016, unless otherwise stated. Continued operations in the review period were the foundry operations in Pori and Karkkila, Finland, and the machine shop in Främmestad, Sweden. The items eliminated from the comparable adjusted net sales include the effects of Componenta Wirsbo AB and Componenta Arvika AB, which were classified as discontinued operations in July 2017, as well as the net sales of Suomivalimo and Pistons before the date of their divestment, and the impact of the trademark and administration service fees charged to the subsidiaries in the Netherlands and Turkey. The net sales for continued operations for 2016, EUR 138.9 million according to IFRS, have been adjusted by eliminating the effects of the operations discontinued in 2017, i.e. Componenta Wirsbo AB and Componenta Arvika AB. The net sales for 2017 include trademark and administration service fees charged to companies that were divested in 2017, namely the forges that filed for bankruptcy in Sweden and the Turkish foundry company, which was deconsolidated in 2016. For the comparison periods, Componenta publishes alternative key figures (comparable adjusted figures in tables and text) to describe the financial development of the business and to improve the comparability between different periods. In comparable key figures, certain value adjustment items not related to the ordinary business, items related to the sold and discontinued operations and other items with impact on comparability, have been adjusted. The figures are unaudited.
January-December 2017 in brief
- The net sales for continued operations in the review period remained on par with the previous year at EUR 122.4 million. The comparable adjusted net sales for the corresponding period last year amounted to EUR 122.0 million.
- Adjusted EBITDA for continued operations in the review period increased from the previous year to EUR 4.8 million. Comparable adjusted EBITDA during the corresponding period last year was EUR 0.8 million and adjusted EBITDA calculated from figures in accordance with IFRS in the period for comparison was EUR 4.6 million.
- The adjusted operating result for continued operations in the review period increased from the previous year to EUR 2.9 million. The comparable adjusted operating result during the corresponding period last year was EUR -6.1 million and the adjusted operating result calculated from continued operations in accordance with IFRS in the period for comparison was EUR -2.6 million. The operating result from continued operations, including items affecting comparability, was EUR 26.3 million (EUR -32.3 million).
- The Group’s net result for the review period, including continued and discontinued operations, was EUR 124.1 million (EUR -215.5 million) and basic earnings per share were EUR 0.70 (EUR -1.64), mainly resulting from the debt cuts.
- The order book of continued operations at the beginning of January was 16% higher than in previous year and was EUR 23.6 million (EUR 20.4 million).
October-December 2017 in brief
- The net sales for continued operations in the review period remained on par with the previous year at EUR 31.2 million. Comparable adjusted net sales in the comparison period amounted to EUR 31.3 million, while net sales according to IFRS in the comparison period totalled EUR 32.2 million.
- Adjusted EBITDA for continued operations in the review period increased from the previous year to EUR 1.1 million. Comparable adjusted EBITDA during the corresponding period last year was EUR 0.4 million and adjusted EBITDA calculated from figures in accordance with IFRS in the period for comparison was EUR 1.3 million. The effect of the exchange rate differences on EBITDA was EUR 0.0 million (EUR -0.5 million).
- The adjusted operating result for continued operations in the review period increased from the previous year to EUR 0.8 million. The comparable adjusted operating result during the corresponding period last year was EUR -1.9 million and the adjusted operating result calculated from continued operations in accordance with IFRS in the period for comparison was EUR -0.2 million. The operating result from continued operations, including items affecting comparability, was EUR 0.7 million (EUR -18.2 million).
- The items affecting comparability in result for October-December after financial items were EUR 0.6 million (EUR -18.5 million). Approximately EUR -1.2 million in write-downs and changes in value were recognised in the fourth quarter.
- The result for October-December, including continued and discontinued operations, was EUR 1.1 million (-194.9 million) and basic earnings per share were EUR 0.02 (EUR -1.15).
On 31 December 2017 the distributable equity of the parent company was EUR 14.2 million (EUR -138.9 million). Pursuant to Chapter 9 Section 58 of the Restructuring of Enterprises Act it is forbidden to pay dividend between confirmation and end of the restructuring program. Also, pursuant to Chapter 14 Section 2 of the Limited Liability Company Act, the company may not distribute the unrestricted equity to the shareholders during three years, since the company has reduced the share capital for loss coverage.
Componenta’s guidance for 2018
Componenta expects continued operations to have net sales of EUR 110 - 130 million in 2018 and corresponding EBITDA excluding items affecting comparability is expected to be EUR 4 - 6 million. In 2017 net sales for continued operations was EUR 122.4 million and adjusted EBITDA EUR 4.8 million. Componenta’s business outlook is based on the business outlook of its largest customers and the market outlook of the industry. Potential fluctuations in exchange rates, higher raw material prices and the general competitive climate may affect the business outlook. Changes to new accounting principles are not estimated to have a significant impact on future financial statements.
President and CEO Harri Suutari comments on the review period:
“The year 2017 was the Group’s first profitable financial year since 2009. We continued to systematically implement restructuring measures and focused on improving Componenta’s profitability. The restructuring programmes of the parent company and its operational subsidiaries were confirmed in Finland and Sweden. Following the confirmation of the restructuring programmes, the Group companies’ debt burden in foundry operations was reduced to a level that can, to the best of my understanding, be managed with cash flow from operations.
The Group is no longer engaged in the forge business after Componenta Wirsbo AB and Componenta Arvika AB, which had been under corporate restructuring, filed for bankruptcy in July. The forge companies were unable to pay their restructuring debts within the specified time. I have no regrets about the loss of the forge business, as its profitability was low and it would have required a very significant injection of working capital. As the forge business has had no synergies with the foundry business, its loss has no negative impact on the remaining business operations.
As planned, we divested the highly indebted Turkish foundry business by agreeing on the sale of our shares in Componenta Dökümcülük Ticaret ve Sanayi A.Ş. Componenta’s guarantee liabilities were reduced by EUR 80 million in connection with the transaction.
The restructuring measures taken by the Group have been essential for securing Componenta’s future. The measures have led to a downsizing of the Group’s business, but also a substantial reduction in the Group’s debt. At the balance sheet date, the Group’s equity ratio stood at 34.8% (-165.3%).
Componenta Främmestad AB paid off all of its short-term restructuring debt after the end of the financial year. As of the time of writing, the Group has approximately EUR 15.3 million in long-term external interest-free restructuring debt, of which EUR 2.5 million is in Sweden and the rest is in the Group companies in Finland, as well as EUR 0.8 million in interest-bearing long-term restructuring debt.
The Finnish Group companies must pay external restructuring debts amounting to approximately EUR 1.7 million per year from 2019 to 2022. The remaining amount, approximately EUR 7.2 million, must be paid in 2023. The Swedish Group company must pay an external restructuring debt of EUR 2.5 million within the next six years if the company’s result makes payment possible.
The improved profitability was primarily due to lower fixed costs. The Group also implemented operational efficiency improvement measures in 2017 to not only achieve cost savings, but also to ensure the quality of our products. Close cooperation with customers is at the heart of our day-to-day operations. Our goal has been to ensure that the renewal measures and changes in our operations correspond to customer needs. Having stabilised our operations, we will focus even more on the growth of our operations, particularly with respect to our existing customers. We adopted a flat line organization structure in 2016 and transferred the customer service function to our production facilities. This has substantially improved our service capacity and will enable improved profitability going forward.”
|Net sales, continued operations, MEUR||122.4||138.9||-12 %|
|EBITDA, continued operations, MEUR||29.8||-11.7||-|
|Operating result, continued operations, MEUR||26.3||-32.3||-|
|Operating result marginal, continued operations, %||21.5||-23.3||-|
|Result after financial items, continued operations, MEUR||128.3||0.8||15 812 %|
|Result, continued operations, MEUR||128.8||-6.1||-|
|Basic earnings per share, euro||0.70||-1.64||-|
|Cash flow from operations, continued operations, MEUR||2.8||-10.9||-|
|Net interest bearing debt, MEUR||-3.0||90.1||-|
|Equity ratio, %||34.8||-165.3||-|
|Investments in non-current assets incl. finance leases, continued operations, MEUR||1.6||0.8||101 %|
|Group’s restructuring debt, MEUR||19.0||163.4||-88 %|
|Number of personnel at end of quarter, incl. leased personnel, continued operations||691||664||4 %|
|Average number of personnel during review period, incl. leased personnel, continued operations||680||763||-11 %|
|Order book, continued operations, MEUR||23.6||20.4||16 %|
Componenta’s Financial Statements Release 2017 in pdf format is in the appendix to this release. It is also available on the company’s website at www.componenta.com.
Helsinki, 29 March 2018
President and CEO
ENCL. Financial Statements Release 1 January - 31 December 2017
For further information, please contact:
President and CEO
tel. +358 10 403 2200
tel. +358 10 403 2101
Componenta is an international technology company. Componenta specializes in supplying cast and machined components to its global customers, who are manufacturers of vehicles, machines and equipment. The company’s share is listed on Nasdaq Helsinki.