ETTEPLAN 2018: Strong operative performance produced excellent results

Etteplan Oyj Financial Statement Review February 7, 2019 at 1:00 pm

ETTEPLAN 2018: Strong operative performance produced excellent results 

Review period October-December 2018 

•  The Group’s revenue grew by 7.5 per cent and was EUR 62.9 million (10-12/2017: EUR 58.5 million). At comparable exchange rates, growth was 8.8 per cent.
•  Organic revenue growth was 2.8 per cent. At comparable exchange rates, organic growth was 4.1 per cent.
•  EBIT from business operations* improved and amounted to EUR 6.1 (4.8) million or 9.8 (8.2) per cent of revenue. EBIT from business operations included non-recurring items with a combined negative effect of EUR 0.2 (0.0) million.
•  Operating profit (EBIT) was EUR 5.7 (4.5) million or 9.1 (7.8) per cent of revenue. Operating profit included non-recurring items with a combined effect of EUR 0.0 (0.2) million.
•  The profit for the review period was EUR 4.4 (3.5) million.
•  Operating cash flow was EUR 15.8 (12.2) million.
•  Undiluted earnings per share were EUR 0.18 (0.14).

Review period January-December 2018 

•  The Group’s revenue grew by 10.1 per cent and was EUR 236.5 million (1-12/2017: EUR 214.8 million). At comparable exchange rates, growth was 11.7 per cent.
•  Organic revenue growth was 6.2 per cent. At comparable exchange rates, organic growth was 7.9 per cent.
•  EBIT from business operations* improved and amounted to EUR 21.9 (17.2) million or 9.3 (8.0) per cent of revenue. EBIT from business operations included non-recurring items with a combined negative effect of EUR 1.0 (0.7) million.
•  Operating profit (EBIT) was EUR 20.2 (15.5) million or 8.5 (7.2) per cent of revenue. Operating profit included non-recurring items with a combined negative effect of EUR 0.3 (0.4) million.
•  The profit for the review period was EUR 15.3 million (EUR 11.6 million).
•  Operating cash flow improved and was EUR 23.1 (18.3) million.
•  Undiluted earnings per share were EUR 0.62 (0.47).
•  The number of personnel increased by 9.0 per cent and the Group had 3,055 (2,802) employees at the end of December 2018.

•  The Board of Directors’ dividend proposal is EUR 0.30 (0.23) per share.  

* Etteplan also monitors non-IFRS performance measures, because they provide additional information on Etteplan’s strategic and financial development than other key indicators. More information on performance measures is provided on page 30. 

Market outlook 2019 

The most important factor affecting Etteplan's business is the global development of the machinery and metal industry. Our business environment continues to develop favorably in all market areas. In Europe, demand growth is expected to slow down slightly due to political uncertainty. In Asia, the growth of the service market is expected to continue.

Financial guidance 2019 

We expect the revenue and operating profit for the year 2019 to grow compared to 2018. 

President and CEO Juha Näkki: 

Etteplan had another successful year in 2018. The market situation was good throughout the year in all our market areas and our strong operational efficiency produced record results. Our operating profit rose to a new level, exceeding EUR 20 million for the first time. In addition, our cash flow was excellent. Our revenue also grew by more than 10 per cent. We cannot, however, be fully satisfied with this, as we fell short of our target level of 15 per cent. We continued our growth investments in China for example, and renewed our organization at the beginning of 2019 to respond even better to the changing competitive situation. Our balance sheet is healthy, which provides us with opportunities for developing our business and accelerating our growth as we move forward.

The Engineering Services service area performance was excellent throughout the year. Operational efficiency was at an excellent level, and our profitability exceeded our target level of 10 per cent in the second and third quarter. We were also active in developing our service offering with new technologies, such as additive manufacturing and digital twin solutions, which we expect to be sources of significant future growth.

The Embedded systems and IoT service area recovered in the latter part of the year from the challenges and performed according to our expectations. Growth was strong, supported by the acquisitions of Eatech Oy and Koodain Solutions Oy, and profitability was again excellent in the final quarter. With approximately 700 professionals employed by the service area, we are in an excellent position to support the accelerating digitalization of our customers’ business, and we expect continued strong growth from the service area.

Our Technical Documentation business did not reach our expected level during the latter part of the year. Growth slowed down as our customers’ investments in new operating models decreased from the previous year, and the number of new outsourcing agreements declined. However, activity in outsourcing discussions has now picked up again, and we currently have several discussions regarding outsourcing solutions ongoing. Business in the fourth quarter was also burdened by the continued challenges in Germany. We have initiated new immediate measures to rectify the situation and we believe the health of the business will improve during the spring.

Our revenue has now grown for 21 consecutive quarters and our operating profit has improved for 11 consecutive quarters. This has been enabled by excellent performance throughout the organization, and I want to thank everyone at Etteplan for these achievements. We are also pleased that our success has been reflected in the Company’s market capitalization, and we started the year 2019 in the Mid Cap category on the stock exchange. While the market situation is currently characterized by political uncertainty and demand growth has slowed down, we expect market growth and the positive development of our business to continue in 2019.  

Disclosure procedure

This stock exchange release is a summary of Etteplan's 2018 Financial Statement Review. The complete Financial Statement Review is attached to this stock exchange release in pdf format and is also available on Etteplan's website at www.etteplan.com.

Conference call and live webcast today, February 7, 2019

Etteplan’s President and CEO Juha Näkki will present the Company’s results for 2018 in a conference call and a live webcast, held in English language, on February 7, 2019 starting at 2.30 p.m. Finnish time (EET).

To participate in the conference call please dial 5-10 minutes prior to the start of the conference to +358 (0)9 8171 0310 and tell the operator that you wish to join Etteplan conference call. Questions can be asked in Finnish and in English after President and CEO’s presentation only through conference call connection.

Juha Näkki’s presentation can be followed as a live webcast on https://etteplan.videosync.fi/2019-02-07-financial-statement. The webcast starts at 2.30 p.m. Finnish time (EET). A recording of the webcast will be available later at www.etteplan.com/Investors.

Vantaa, February 7, 2019

Etteplan Oyj

Board of Directors

Additional information:
Juha Näkki, President and CEO, tel. +358 10 307 2077
Outi Torniainen, SVP, Communications and Marketing, tel. +358 10 307 3302

The information presented herein has not been audited.
Releases and other corporate information are available on Etteplan's website at www.etteplan.com.

DISTRIBUTION:
Nasdaq Helsinki
Major media
www.etteplan.com

Etteplan provides solutions for industrial equipment and plant engineering, software and embedded solutions, and technical documentation solutions to the world’s leading companies in the manufacturing industry. Our services are geared to improve the competitiveness of our customers’ products, services and engineering processes throughout the product life cycle. The results of Etteplan’s innovative engineering can be seen in numerous industrial solutions and everyday products.

In 2018, Etteplan had a turnover of approximately EUR 236 million. The company currently has more than 3,000 professionals in Finland, Sweden, the Netherlands, Germany, Poland and China. Etteplan's shares are listed on Nasdaq Helsinki Ltd under the ETTE ticker. www.etteplan.com