Financial Statements 1 January ? 31 Dece
Componenta Corp. Stock Exchange Release 24.1.2003 at 10.00 am
Componenta Corporation
Financial Statements 1 January 31 December 2002
Componenta Group had net sales in 2002 of EUR 180.8 million (net
sales in the previous year were EUR 193.8 million, net sales
declined 7%). The Group had an operating profit of EUR 7.0 (8.3)
million and a loss after financial items of EUR 2.1 million (profit
of EUR 2.3 million). The earnings per share were EUR 0.11 (0.77).
Low sales in the first quarter and increased net financial costs
reduced the Groups result from the previous years level. The
Groups equity ratio, including the preferred capital notes in
equity, was 31.4 per cent (32.0%). The Board of Directors proposes
to the Annual Shareholders Meeting that a dividend of EUR 0.10 per
share will be paid.
The weak performance of the global economy in 2002 coupled with
increased uncertainty about demand reduced Componenta Groups sales
and weakened the Groups result. In consequence of the weaker
performance and the uncertainty about demand, the Group has
initiated a programme to adjust cost and product structures. This is
estimated to improve the Groups operating profit by more than EUR 6
million in 2003. The cost structure has been enhanced through
programmes to raise productivity at individual units and by cutting
fixed costs. These actions account for two thirds of the programme.
The programme to adjust the product structure includes optimizing
production processes and correcting unhealthy price structures.
The Group reinforced its financing structure through an issue of
preferred capital note in February. The preferred capital note is
effective at the latest until 2009.
Market
The year 2002 was characterized by uncertainty about developments in
the global economy. Many industrial sectors had unused capacity,
which reduced the need for capital expenditure by industry.
However, the differences in developments between individual sectors
and between individual companies were considerable.
Demand for heavy trucks in Europe continued to fall throughout 2002,
and total demand was more than 10 per cent down on the previous
year. Heavy truck production declined by about 6% in Europe.
Componentas delivery volumes to the heavy truck industry were six
per cent lower than in the previous year. Componentas sales
followed general trends closely, despite the steps taken during the
year to eliminate non-profitable products.
Demand from the energy and power transmission sector was lower in
the final quarter than in the same period in the previous year.
Sales were affected by changes in the product structure of wind
turbine generator customers, which means that in future sales will
focus on larger units. During 2002 sales increased by 3%. The
purchase of Componenta Nisamo in the summer of 2001 contributed to
this improvement.
Output by Nordic machinery and equipment manufacturers declined in
2002, a consequence of low demand for investments in export and
domestic markets. The sector has much unused capacity. Cast and
Other Components deliveries to machine building industry fell 8% in
the final quarter of 2002 from the final quarter in 2001.
Componentas sales to machine building industry were 17% lower in
2002 than in the previous year.
Demand from European off-road manufacturers in 2002 was lower than
in the previous year. Componentas deliveries to off-road
manufacturers, however, grew slightly in the final quarter compared
to the same period in the previous year. For the whole year sales
were 5% down on the previous year, due to the weak sales performance
at the start of the year.
Changes in Group structure
In September Componenta sold the operations of metal foundry
Componenta Traryd, which was not part of the core business, in an
MBO to the companys operative management consisting of Chairman of
the Board Antti Lehtonen, Managing Director Bo Rosengren and Finance
Manager Gunnar Blomberg. The selling price was EUR 4 million.
Componenta continues to participate in Traryds business as a
financier.
Net sales and order book
The Group had net sales in the January December review period of
EUR 180.8 (193.8) million. Net sales fell 7% from the previous year.
The Groups order book at the end of the review period on 31
December 2002 stood at EUR 24.9 million (EUR 26.5 million on 31
December 2001). Net sales in the final quarter of the year totalled
EUR 44.5 (46.2) million, a fall of 4% from the previous year.
Exports and foreign operations accounted for 72% (72%) of the
Groups net sales. Net sales by market area were as follows: Finland
28% (28%), other Nordic countries 53% (52%), Central Europe 17%
(18%) and other countries 2% (2%).
Net sales by customer business sector were as follows: heavy truck
industry 54% (54%) of net sales, power and transmission 14% (13%),
machine building 15% (16%), off-road industry 12% (12%) and other 5%
(5%).
Result and financing
Componenta Group had an operating profit of EUR 7.0 (8.3) million,
and a loss after financial items of EUR 2.1 million (profit of EUR
2.3 million). The result includes EUR 1.8 (1.2) million in net
profit from the sale of non-current assets and other non-recurring
items. The remaining amount of the negative goodwill generated in
2001 in the restructuring of the Group was recognized in the final
quarter of the year. A total of EUR 2.9 (12.3) million of negative
goodwill was recognized as income during the year.
The Groups net financial costs totalled EUR 9.1 (6.0) million.
Financial costs increased mainly because the 2001 financial costs do
not include interest on preferred capital notes (EUR 1.6 million).
Another factor in the increase was the EUR 0.4 million currency
exchange losses. The Groups net profit was EUR 1.0 (7.4) million.
The income taxes for the review period were EUR 3.1 (5.0) million
positive. This consists partly of the reduction in deferred tax
liability through the reversal of depreciation difference and partly
of the change recorded in deferred tax assets for the losses for the
financial year and for confirmed losses. The prudence principle was
followed in recording the deferred tax assets.
Closing the Osby machine shop and the transfer of products to other
Componenta units took place largely according to plan. 60%
of Osbys production was transferred to other units in the Group.
The costs for closing the unit were, however, EUR 0.7 million higher
than had been estimated in 2001. Production was terminated at the
unit in March and operations ceased entirely in May.
The Groups equity ratio was 18.2% (18.7%). The equity ratio
including the preferred capital notes was 31.4% (32.0%).
The Group reinforced its financial structure in February with an
issue of preferred capital note which is effective at the latest
until 2009. The Group had unused committed credit facilities at the
end of the year of EUR 27 million.
The Group has a EUR 40 million commercial paper programme and EUR
16.6 million of this was in use at the end of the year. The Groups
net interest-bearing liabilities, excluding the EUR 28.6 million
preferred capital note, totalled EUR 116.5 (112.4) million.
Cast and Other Components
The Cast and Other Components business group, which forms the
Groups core business, supplies ready to install cast and machined
components to heavy truck industry, power and transmission
industries, machine building industry and off-road industry.
Cast and Other Components had net sales in the period January -
December of EUR 148.7 (158.4) million and an operating profit of EUR
5.8 (8.7) million. The order book on 31 December 2002 stood at EUR
19.6 (22.0) million.
Net sales in the fourth quarter were EUR 36.4 (38.5) million and the
operating profit was EUR 1.5 (1.1) million.
The fall of EUR 9.7 million in sales from the previous year and the
restructuring actions taken had a major impact on the result for the
whole year, resulting in lower capacity usage. The Alvesta unit was
still loss-making, even though its result improved from the previous
year.
Other Business
Componentas Other Business consists of operations that are not part
of the companys core operations, such as the Wirsbo forges,
associated companies, the Groups support functions and service
units, as well as divested businesses.
Other Business had net sales in January - December of EUR 32.1
(35.4) million and an operating profit of EUR 1.2 million (loss of
EUR 0.4 million). The order book at the end of the year stood at EUR
5.3 (4.5) million. Net sales in the fourth quarter were EUR 8.1
(7.7) million and the operating profit was EUR 1.0 (0.0) million.
Despite weak sales at the start of the year, Componenta Wirsbo
almost achieved the same level in its sales as in the previous year.
Wirsbos operative result failed to match expectations, however, and
the unit was heavily loss-making. A one-time writedown of inventory
in the third quarter was an extra burden on the units result. A
streamlining programme has been started at the unit to correct
prices and to increase efficiency in the unit.
In January 2002 Componenta raised its holding in the associated
company Thermia AB from 30 per cent to 36 per cent.
Componenta Groups share of the result of the associated companies
was EUR 0.2 (-0.5) million. Improved operating profits by Thermia
and Ulefos NV increased the Groups share and exchange rate losses
at Ulefos NV reduced it.
Investments
Investments in production facilities in 2002 totalled EUR 7.9 (15.6)
million. The largest of these were the expansion of Suomivalimo, new
production lines at Albin and Nisamo, and the pressing line for
forged components at Wirsbo, which was started in 2001 and taken in
use in the summer of 2002. The Group also invested EUR 1.1 million
in the shares of the associated company Thermia AB. Gross
investments totalled EUR 9.8 (53.1) million. Because of its
divestments the Groups cash flow for investments was EUR 5.7
million.
The Groups research and development costs are recorded as expenses
for the period in which they are incurred.
Share capital and shares
Componenta Corporations shares are quoted on the main list of the
Helsinki Exchanges. At the end of the review period, the companys
share capital stood at EUR 19.2 million. The share has a nominal
value of 2 euros. At the end of the year the quoted price of
Componenta Corporation shares stood at EUR 1.81. The lowest quoted
price during the year was EUR 1.71 and the highest was EUR 2.70. The
share capital had a market value at the end of 2002 of EUR 17.4
million. The volume of shares traded during the review year was the
equivalent of 11.3% of the share stock.
Authorization for share issues and purchasing own shares
The companys Board of Directors has no authorization to issue
shares or to purchase the companys own shares.
Preferred capital note
Componenta Corporation offered holders of the preferred capital
notes issued in 1997 by Componentas subsidiary Componenta Finance
Corporation the opportunity to exchange their notes for new
preferred capital note issued in February 2002 by Componenta
Corporation. The preferred capital notes issued by Componenta
Finance Corporation were in their entirety in the possession of
Componenta Corporation by the end of March, and as a result stock
exchange trading in Componenta Finance preferred capital notes also
ceased in March.
The preferred capital note issued by Componenta Corporation had a
principal of EUR 25.1 million and the loan period is 15 February
2002 19 March 2009. Annual interest is paid on the note at a rate
4% above the 12-month Euribor interest rate. The company repays 10%
of the principal annually, and the first instalment was repaid on 19
March 2002. Componenta Corporation also has the right to pay off
more than 10% of the note on the annual interest payment date.
On 31 December 2002 Componenta Corporation had preferred capital
note with a value of EUR 28.6 million.
Personnel
During the financial year the Group had an average of 1,705 (1,810)
employees. The Group had 1,616 (1,741) employees on 31 December
2002. 52.8% (50.8%) of the Groups personnel were in
Finland, 46.6% (48.7%) in Sweden and 0.5% (0.5%) in other countries.
Board of Directors and Management
Componentas Annual Shareholders Meeting on 12 February 2002
elected Heikki Bergholm, Antti Lehtonen, Heikki Lehtonen, Juhani
Mäkinen and Olli Reenpää as members of the Board of Directors. The
Board chose Olli Reenpää as its chairman and Juhani Mäkinen as its
vice chairman.
Antti Lehtonen resigned from the Board of Directors of Componenta
Corporation at the end of September.
Senior Vice President Yrjö Julin left to work at another company at
the beginning of May and Bengt Christensson, Director of Supply
Group 1, at the beginning of October. The corporate executive team
of Componenta Group is formed by President and CEO Heikki Lehtonen,
Lauri Huhtala, Director, Foundries, Olli Karhunen, Director, Power
and Transmission, Jari Leino, Director, Sales and Marketing, CFO
Sirpa Koskinen and Communications Manager Pirjo Aarniovuori.
Announcements in conformance with Chapter 2, Article 9 of the
Finnish Securities Markets Act in 2002
According to a statement made on 12 July 2002, the holding of Etra-
Invest Oy in Componenta Corporation exceeded 10 per cent, rising to
10.42 per cent of the shares and voting rights.
Shareholders Meeting
The Annual Shareholders Meeting of Componenta Corporation will be
held on 12 February 2003 at 2.00 pm.
Publication of Annual Report
Componenta Corporation will publish its 2002 annual report and the
Internet version of the report in week 6.
Prospects for 2003
This perception of Componentas prospects is based on publicly
available, external business cycle indicators, order forecasts given
by customers and on Componentas order intake and order book.
Uncertainty about developments in the global economy continues to
postpone decisions about capital expenditure in machinery and
equipment by industry. Demand is expected to be slack in 2003.
Demand for heavy truck components stopped falling in 2002. The
uncertainty about general economic developments may, however, also
affect demand for heavy truck components in 2003.
Judging from the order books, the first quarter of 2003 is likely to
be a weak period for wind turbine components due to a seasonal
trend. Demand is expected to pick up in the second quarter.
Demand in Nordic machine building industry remained weak at the end
of 2002 and any recovery in growth will probably be further
postponed, even though demand is expected to have stopped falling.
The Groups deliveries to European off-road manufacturers increased
in the final quarter of the year and this positive trend is expected
to continue in the first part of 2003.
Thanks to the restructuring programme initiated in 2002, in the
first quarter of 2003 the Groups cost structure will be EUR 1
million lighter than in 2002.
Componenta Groups net sales in the first quarter of 2003 should be
at the same level as in the corresponding period in the previous
year and the operating profit is expected to improve.
Income statement
M 1.1.-31.12.2002 1.1.-31.12.2001
Net sales 180.8 193.8
Other operating income 3.1 4.1
Share of the associated companies' result 0.2 -0.5
Operating expenses 167.7 184.1
Depreciation, amortization and write-down 12.3 17.3
Negative goodwill recognized as income -2.9 -12.3
Operating profit 7.0 8.3
% of net sales 3.9 4.3
Financial income and expenses -9.1 -6.0
Profit/loss after financial items -2.1 2.3
% of net sales -1.2 1.2
Income taxes 3.1 5.0
Minority interest 0.0 0.0
Net profit 1.0 7.4
Balance sheet
M 31.12.2002 31.12.2001
Assets
Non-current assets
Intangible assets 3.4 4.3
Group goodwill 1.8 -
Tangible assets 127.3 131.9
Investments 16.8 15.2
Total non-current assets 149.2 151.4
Current assets
Inventories 20.2 20.5
Receivables 45.6 42.8
Cash and bank accounts 2.9 1.7
Total current assets 68.8 65.1
Total assets 218.0 216.5
Liabilities and shareholders' equity
Shareholders' equity
Share capital 19.2 19.2
Other equity 18.5 19.2
Preferred capital note 28.6 28.7
Total shareholders' equity 66.3 67.1
Minority interest 2.1 2.1
Negative goodwill - 0.7
Provisions - 2.0
Liabilities
Non-current liabilities
Interest bearing liabilities 75.8 80.0
Interest free liabilities 0.0 0.0
Current liabilities
Interest bearing liabilities 43.7 34.1
Interest free liabilities 30.1 30.4
Total liabilities 149.6 144.6
Total liabilities and shareholders' equity 218.0 216.5
Consolidated cash flow statement 1.1.-31.12.
M 2002 2001
Cash flow from operations
Profit/loss before extraordinary items -2.1 2.3
Depreciation, amortization and write-down 9.4 5.0
Net financial income and expenses 9.1 5.0
Other income and expenses, adjustments to cash flow -3.5 2.4
Change in net working capital 1.6 7.8
Cash flow from operations before
financing and income taxes 14.4 22.5
Net financial income and expenses -7.9 -3.9
Income taxes 0.0 -0.1
Cash flow from operations 6.5 18.6
Cash flow from investing activities
Capital expenditure in tangible and
intangible assets -7.0 -23.6
Proceeds from tangible and intangible assets 3.6 1.0
Other investments and loans granted -2.4 -3.5
Proceeds from other investments &
repayments of loan receivables 0.0 14.4
Cash flow from investing activities -5.7 -11.8
Cash flow from financing activities
Dividends paid -1.4 0.0
Share issue - 1.2
Draw-down (+)/ repayment (-) of preferred
capital note -2.6 6.0
Draw-down (+)/ repayment (-) of current loans 9.5 -13.9
Draw-down (+)/ repayment (-) of non
current loans -5.0 1.7
Cash flow from financing activities 0.4 -5.0
Increase (+)/ decrease(-) in cash and
bank accounts 1.2 1.7
Key Ratios
2002 2001
Change in net sales, % -6.7 -14.1
Operating profit, % of net sales 3.9 4.3
Equity ratio, % 18.2 18.7
Equity ratio, %, preferred capital note in equity 31.4 32.0
Equity ratio, %, preferred capital note
and negative goodwill in equity 31.4 32.3
Return on equity, % 2.5 20.0
Invested capital at period end, M 187.8 186.0
Return on investment, % 4.4 5.6
Net interest bearing debt, M 116.5 112.4
Net interest bearing debt, M, preferred
capital note in debt 145.1 141.1
Net gearing, %, preferred capital note in debt 365.0 348.0
Net gearing, %, preferred capital note in equity 170.5 162.3
Net gearing, %, preferred capital note and
negative goodwill in equity 170.5 160.8
Order book, M 24.9 26.5
Share of export and foreign activities in
net sales, % 72.0 72.0
Investments in non-current assets, M (* 9.8 53.1
Investments in non-current assets, % of net sales 5.4 27.4
Average number of personnel during the period 1,705 1,810
Number of personnel 31.12. 1,616 1,741
*) Investments in year 2001 include the acquisition of Componenta
Finance Corporation shares.
Per Share Data
2002 2001
Number of shares at period end, 1,000
shares 9,615 9,615
Earnings per share (EPS), (* 0.11 0.77
Equity per share, 3.92 4.00
Dividend per share, (** 0.10 0.15
Payout ratio, % 94.73 19.58
Effective dividend yield, % 5.52 6.98
P/E multiple 17.15 2.81
Share price at period end, 1.81 2.15
*) For the year 2001 calculated with the number of shares at year
end.
**) For the year 2002 the proposal of the Board of Directors.
Contingent liabilities
M 2002 2001
Mortgages
For own debts 14.7 16.1
General charges
For own debts 16.9 15.8
Pledges
For own debts 9.7 2.7
Guarantees
For associated companies - 0.0
41.3 34.6
Other own commitments 12.5 14.5
Leasing commitments
Next year 0.8 0.8
In more than one year 2.4 1.2
15.7 16.4
Secured liabilities
Liabilities secured with mortgages
Loans from financial institutions 16.0 13.9
Loans from pension funds 14.4 16.8
Other interest bearing current liabilities - 0.6
30.4 31.2
Liabilities secured with pledges
Loans from financial institutions 6.8 1.3
Loans from pension funds 2.4 1.3
9.2 2.7
Derivative instruments
M 31.12.2002 31.12.2001
Nominal Current Nominal Current
value value value value
Interest derivatives
Interest rate swaps 21.0 -0.5 27.2 0.1
Currency derivatives
Forward exchange
agreements 37.6 0.0 47.1 -1.0
Currency swaps 3.0 0.0 0.6 0.0
Derivative instruments are used to hedge the Group's foreign
exchange and interest rate risks.
Group development by business group
Net sales (M) 1.1.-31.12.2002 1.1.-31.12.2001
Cast and Other Components 148.7 158.4
Others and internal sales 32.1 35.4
Componenta Group total 180.8 193.8
Operating profit (M) 1.1.-31.12.2002 1.1.-31.12.2001
Cast and Other Components 5.8 8.7
Others and internal sales 1.2 -0.4
Componenta Group total 7.0 8.3
Order book at period end (M) 2002 2001
Cast and Other Components 19.6 22.0
Others and internal sales 5.3 4.5
Componenta Group total 24.9 26.5
Group development by quarter
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
(M) 2002 2002 2002 2002 2001 2001 2001 2001
Net sales 44.5 39.1 50.1 47.1 46.2 39.8 51.5 56.3
Operating profit 2.5 0.3 3.1 1.1 1.1 -0.6 4.0 3.8
Net financial
items -2.4 -2.2 -2.4 -2.1 -0.6 -1.8 -1.7 -1.9
Profit/loss
after financial
items 0.1 -1.9 0.7 -1.0 0.6 -2.5 2.3 1.9
Quarterly development by business group
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
Net sales (M) 2002 2002 2002 2002 2001 2001 2001 2001
Cast and
Other Components 36.4 32.4 41.1 38.8 38.5 33.1 41.6 45.2
Others and
internal sales 8.1 6.7 9.0 8.3 7.7 6.7 9.9 11.1
Componenta
Group total 44.5 39.1 50.1 47.1 46.2 39.8 51.5 56.3
Operating Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
profit (M) 2002 2002 2002 2002 2001 2001 2001 2001
Cast and
Other Components 1.5 -0.4 3.3 1.4 1.1 0.2 3.7 3.6
Others and
internal sales 1.0 0.7 -0.2 -0.3 0.0 -0.8 0.3 0.2
Componenta
Group total 2.5 0.3 3.1 1.1 1.1 -0.6 4.0 3.8
Order book at
period end Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
(M) 2002 2002 2002 2002 2001 2001 2001 2001
Cast and
Other Components 19.6 22.5 23.8 22.9 22.0 26.3 25.9 27.0
Others and
internal sales 5.3 5.9 6.1 5.3 4.5 5.4 5.1 6.5
Componenta
Group total 24.9 28.4 29.9 28.2 26.5 31.7 31.0 33.5
Componenta Corporation
Largest registered shareholders on December 31, 2002
Share of
total
voting
Shareholder Shares rights %
1 Lehtonen Heikki 3,681,731 38.29
Lehtonen Heikki 3,336,731
Helsingin Santapaperi Oy 340,000
Oy Högfors-Trading Ab 5,000
2 Etra-Invest Oy Ab 1,001,800 10.42
3 Ilmarinen Mutual Pension
Insurance Company 457,600 4.76
4 Sampo Group 437,800 4.55
Sampo Life Insurance Company Ltd 237,800
If Insurance Company Ltd 200,000
5 Inkinen Simo-Pekka 287,644 2.99
6 Svenska Handelsbanken 286,200 2.98
7 Lehtonen Anna-Maria 178,823 1.86
8 Local Government Pension
Institution Finland 150,000 1.56
9 Federation of Finnish Metal
Engineering and
Electrotechnical Industries MET 122,600 1.28
10 Lehtonen Yrjö M 121,040 1.26
11 Alfred Berg Finland Investment
Fund 95,100 0.99
12 Bergholm Heikki 90,000 0.94
13 Finnish National Fund for
Research and Development (Sitra) 87,000 0.90
14 Lehtonen Antti 83,000 0.86
15 Alfred Berg Optimal Investment
Fund 77,000 0.80
16 Other shareholders 2,457,971 25.56
Total 9,615,309 100.00
The members of the Board of Directors own 39.3% of the shares. All
shares have equal voting rights. The members of the Board of Directors
hold 8.1% of the outstanding warrants. If all the warrants were converted
to shares, the holding of shares by the members of the Board of Directors
would decrease to 37.5%.
Componentas subsidiary Componenta Finance Corporation will publish
its own financial statements at a later date.
Helsinki, 24 January 2003
COMPONENTA CORPORATION
Board of Directors
Heikki Lehtonen
President and CEO
Further information:
Heikki Lehtonen
President and CEO
tel. +358 9 225 021
Sirpa Koskinen
CFO
tel. +358 9 225 021
