The net sales and operating profit of continued operations declined. The progress of the corporate restructuring process in Finland and Sweden will enable to restore profitability and future development.

Componenta Corporation Financial Statements Release on 30.3.2017 at 9.45

January - December 2016 in brief

  • On 1 September 2016 Componenta filed for its parent company Componenta Corporation and its subsidiaries in Finland and Sweden for a corporate restructuring, and filed for bankruptcy for its Dutch subsidiary. The Turkish subsidiary is continuing its operations without official proceedings.
  • The company believes that, once approved and implemented, the corporate restructuring programs in Finland and Sweden will enable the company’s operations to be brought back to profitability and developed in the longer term.
  • Because of the bankruptcy proceedings, the Company considers that it has lost control over the sub-group in the Netherlands and for this reason consolidation of the sub-group in the Group’s financial statements ended in the third quarter of 2016 and its operations have been classified as discontinued operations. Because of the restructuring proceedings at Componenta Corporation and shares given as security, the Company considers that it has lost control over the Turkish sub-group, and for this reason consolidation of the sub-group in the Group’s financial statements ended on 31 December of 2016 and its operations have been classified as discontinued operations in Componenta’s consolidated financial statements of 31 December 2016. The figures for comparison have been adjusted accordingly.
  • The Group’s current continued operations are the foundry operations in Pori and Karkkila, Finland, and in Sweden the machine shop in Främmestad and the forging operations in Wirsbo and Arvika.
  • Comparable net sales that corresponds current continued operations decreased 6% and was MEUR 166.8 (MEUR 177.9).
  • The turnover of the continued operations dropped during the review period, 12.6% lower than the previous year, and was EUR 183.6 million (EUR 210.1 million).
  • Adjusted EBITDA of continued operations declined from the previous year, standing at MEUR 3.1 (8.3) (MEUR 210.1). EBITDA including items affecting comparability was MEUR -16.1 (MEUR 3.9).
  • Profitability of continued operations in the review period was weakened by lower production volumes than in the previous year, by exchange rate differences and stoppages in production caused by filings for corporate restructuring and the tight liquidity situation. Exchange rate differences had an impact of MEUR -2.3 (MEUR 0.8) on EBITDA.
  • Adjusted operating profit of continued operations was down on the previous year, standing at MEUR -5.8 (MEUR 0.4). Operating profit of continued operations for the period, including items affecting comparability, was MEUR -46.0 (MEUR -18.5). Around MEUR -30 of write-downs and impairments affecting comparability were recorded. 
  • The adjusted result of continued operations after financial items was -17.0 (MEUR -16.2) and the result of continued operations after financial items, including items affecting comparability, was MEUR -16.5 (MEUR -35.1).
  • The Group’s net result for the review period, including continued and discontinued operations, was MEUR -215.5 (MEUR -82.7) and basic earnings per share were EUR -1.64 (EUR -0.86).
  • The order book of continued operations at the beginning of January was 2.0% down on the previous year, at MEUR 30.8 (MEUR 31.4).
  • Componenta believes that the corporate restructuring proceedings will proceed favourable and expects the net sales of continuing operations to be MEUR 150-170 in 2017. The EBITDA without items affecting comparability is expected to be MEUR 5-10.

October - December 2016 in brief, continued operations

  • Comparable net sales that corresponds current continued operations decreased 2% and was MEUR 43.4 (MEUR 44.5).
  • Net sales declined 16.0% from the previous year to MEUR 44.2 (MEUR 52.7).
  • Adjusted EBITDA improved from the previous year to MEUR 1.1 (MEUR -0.3). EBITDA including items affecting comparability was MEUR -10.1 (MEUR -3.0).
  • The effect of currency exchange rates on the EBITDA was MEUR -0.5 (MEUR 0.8).
  • The adjusted operating profit was MEUR -0.8 (MEUR -2.2) and the operating profit of continued operations, including items affecting comparability, was MEUR -28.8 (MEUR -19.4).
  • Adjusted result after financial items was MEUR -2.8 (MEUR -7.4) and the result after financial items, including items affecting comparability, was MEUR -33.5 (MEUR -24.6).
  • Items affecting comparability that had an impact on the result after financial items for the October-December period totalled MEUR -30.7 (MEUR -17.2). During the last quarter write-downs and impairments affecting comparability totalling around MEUR 25 were recorded.
  • The net result for the October-December period, including discontinued operations, was MEUR -194.9 (MEUR -73.6) and basic earnings per share were EUR -1.15 (EUR -0.76).

Dividend proposal

On 31 December 2016 the distributable equity of the parent company was negative EUR -138.9 (58.1) million, so it is not possible to pay a dividend. Furthermore, the Restructuring of Enterprises Act forbids the payment of dividends to shareholders during restructuring proceedings. 

Componenta’s guidance for 2017

Because of the Company’s financial situation and the restructuring proceedings and structural reorganisation in progress, giving earnings guidance has been exceptionally difficult. Because of this Componenta has not given forecasts for its financial performance when commenting on prospects during 2016. As the result of progress in the restructuring proceedings and more stable liquidity in the business operations that are continuing, Componenta is starting again to disclose guidance for its result.

The majority of the net sales comprises manufacturing of components to heavy trucks and machine building industries. In these segments European market looks stable for the current year. Componenta has remarkably decreased comparable fixed costs and improved productivity in continued operations.

Componenta believes that the corporate restructuring proceedings will proceed favourable and expects the net sales of continued operations to be EUR 150-170 million in 2017. The EBITDA without items affecting comparability is expected to be EUR 5-10 million. In 2016 Componenta’s comparable net sales that correspond to continued operations in 2017 was around EUR 167 million.

President and CEO Harri Suutari comments on the review period and events after the end of period

”Componenta Group’s result in 2016 was extremely weak, mainly due to the tight liquidity that continued throughout the first part of the year and ultimately in September resulted in Group companies filing for corporate restructuring in Finland and Sweden and in the Dutch subsidiary being declared bankrupt.

The difficulties related to liquidity had begun earlier and they hampered production, customer deliveries and new orders up until the filing for restructuring. Progress in the restructuring proceedings towards the end of the year still did not stimulate new sales, although the financing to cover working capital requirements previously agreed with major customers in Finland and Sweden significantly stabilised Componenta’s production and deliveries and secured the liquidity during the final quarter.

Strategic reviews of business operations have been carried out throughout the year at Componenta, resulting in corporate reorganisation aimed at focusing on core business. Several changes were implemented by the deadlines set; the largest of these were the sale of the Suomivalimo foundry in Iisalmi and of the Pistons production unit in Pietarsaari. However the proceeds from these divestments were very limited. The sale of the foundry and machine shop operations in Turkey, announced late last year, is still in process. The sale of the Swedish forging operations did not ended to acceptable industrial solution – instead, due to Wirsbo’s restructuring decision and the strong commitment of the customers, efforts will be made to keep them part of the Componenta Group.

The sale of the Turkish subsidiary has been prepared by the main local lenders, i.e. the club loan banks. In practice the banks have acted to realize the shares without conducting the normal discussions with the owner of the shares. Therefore we consider that we have lost control in the Turkish subsidiary, and the Turkish company is not being consolidated in the Group’s consolidated balance sheet in the 2016 financial statements.

Successful completion of the corporate restructuring proceedings is essential for building the future. At the end of the year the local district courts approved the restructuring proposals for Componenta Wirsbo AB and Componenta Arvika AB. A second three month extension until the beginning of June was granted for drafting the restructuring proposal for Componenta Främmestad AB, because reaching an agreement between Componenta Främmestad AB and Componenta Dökümcülük Ticaret ve Sanayi A.S. relating to extended payment terms of receivable of Componenta Dökümcülük Ticaret ve Sanayi A.S, is seen as a prerequisite for a viable composition proposal. In Finland the draft restructuring programs for Componenta Corporation and Componenta Finland Oy were submitted to the local district court on 30 March 2017.

The 2016 financial statements of Componenta Group and the parent company have been drawn up on the basis of a going concern. There is still uncertainty concerning the success of the restructuring proceedings and going concern.”

Key Figures

  Q4 2016 Q4
2015
 
Difference
 
2016
 
2015
 
Difference
Order book, continued operations, MEUR 30.8 31.4 -2 % 129.0 134.7 -4 %
Net sales, continued operations, MEUR 44.2 52.7 -16 % 183.6 210.1 -13 %
Adjusted EBITDA, continued operations, MEUR 1.1 -0.3 n/m 3.1 8.3 -63 %
Adjusted operating profit, continued operations, MEUR -0.8 -2.2 +63 % -5.8 0.4 n/m
Adjusted operating profit, continued operations, % -1.8 -4.2 +56 % -3.2 0.2 n/m
Adjusted result after financial items, continued operations, MEUR -2.8 -7.4 +62 % -17.0 -16.2 -5 %
Items affecting comparibility in the result, after financial items, continued operations, MEUR -30.7 -17.2 -78 % 0.5 -19.0 n/m
Taxes, continued operations, MEUR -5.4 -26.7 -79 % -7.2 -27.1 -73 %
Result, MEUR -194.9 -73.6 -161 % -215.5 -82.7 -165 %
Earnings per share, EUR -1.15 -0.76 -51 % -1.64 -0.86 -90 %
Net gearing, % n/a 1273 n/a n/m 1273 n/m
Adjusted return on investment, % 10 % -7 % n/m -0.2 2.3 n/m
Adjusted return on equity, % n/a -68 % n/a n/m -20.4 n/m
Employees at the end of the period, inc. leased personnel, Group (2016 inc. Turkey) 3350 4269 -21 % 3350 4269 -21 %
Employees at the end of the period, inc. leased personnel, continued operations 878 1 080 -19 % 878   1 080 -19 %


Componenta’s Financial Statements Release 2016 in pdf format is in the appendix to this release. It is also available on the company’s website at www.componenta.com.

 

Helsinki, 30 March 2017
 

COMPONENTA CORPORATION

   

Harri Suutari

President and CEO

 

ENCL. Financial Statements Bulletin 1 January - 31 December 2016

 

For further information, please contact:

Harri Suutari
President and CEO
tel. +358 10 403 2200

Marko Karppinen
CFO
tel. +358 10 403 2101
 

Componenta is an international technology company. Componenta specializes in supplying cast and machined components and total solutions made of them to its global customers, who are manufacturers of vehicles, machines and equipment. The company’s share is listed on Nasdaq Helsinki.