Exel interim report for 1 January - 31 March 2005
EXEL OYJ STOCK EXCHANGE RELEASE 3.5.2005 at 11.00 1 (11)
EXEL INTERIM REPORT FOR 1 JANUARY- 31 MARCH 2005
First quarter in brief
- Exel complied with the International Financial Reporting Standards (IFRS) for
the first time in this interim report
- Consolidated net sales rose to EUR 21.7 million, up 6 per cent on a year
earlier (EUR 20.5 in Q1/2004)
- Consolidated operating profit grew by 15 per cent, to EUR 2.2 (1.9) million
- Profit for the period improved by 27 per cent, to EUR 1.5 (1.2) million
- Earnings per share were EUR 0.27 (0.22), based on the diluted number of shares
at the period-end
- Exel made a decision to establish a factory in China
- Exel decided to acquire the pultrusion business of Faserprofil GmbH in Austria
- The Industry division posted strong growth in profit, EUR 1.8 (0.96) million,
+88%
- The Sport division focused strongly on opening new Nordic Walking markets
- In the short term, a shortage in the supply of carbon fibre will restrain
growth prospects in the Industry division
KEY FINANCIAL FIGURES
(Unaudited)
EUR 1,000 Q1/2005 Q1/2004 Change % 2004
Net sales 21,738 20,514 + 6.0 83,857
Operating profit 2,204 1,920 +14.8 13,702
% of net sales + 10.1 + 9.4 +8,4 16.3
Profit for the period 1 544 1,215 +27.2 9,126
Equity 22,238 18,676 +19,0 20,692
Interest-bearing net
liabilities 9,744 12,236 -20.4 7,447
Invested capital 36,006 34,342 +4.8 33,290
Return on equity, % 28.8 26.9 +7.1 47.8
Return on investment, % 25.6 25.2 +1,6 45.2
Solvency ratio, % 46.0 40.8 +12.7 44.9
Net gearing, % 43.8 65.5 -33.1 36.0
Earnings per share, EUR 0.28 0.23 +21.9 1.69
Earnings per share, EUR,
diluted 0.27 0.22 +22.9 1.59
Equity per share, EUR 3.96 3.47 +14.2 3.69
2 (11)
IFRS REPORTING
Exel has applied IFRS since the beginning of 2005. The reconciliation statement
for the opening IFRS balance sheet for 2004 was presented in the financial
statements bulletin released on 25 February 2005. The effects of IFRS transition
on 2004 financial statements on a quarterly basis are explained in more detail in
a separate stock exchange release published today. Compared with the Finnish
Accounting Standards, the most significant changes in the income statement and
balance sheet refer to the abandonment of goodwill depreciations, the
capitalisation of fixed production costs under finished products and semi-
finished products, the breakdown of finance leases into fixed assets and interest-
bearing liabilities in the balance sheet and into depreciation and interest in
the income statement, plus the treatment of pension liabilities and effects of
changes on deferred taxes in the balance sheet and income statement.
NET SALES
Exel's consolidated net sales for January-March grew by 6.0 per cent over the
previous year, to EUR 21.7 (20.5) million. Of this growth in net sales, EUR 0.7
million was due to organic growth, with the rest due to a Belgian acquisition
which was included in the Group's financial reporting on 21 January 2004.
PROFIT PERFORMANCE
Exel's operating profit for the period was up 14.8 per cent from a year earlier,
and stood at EUR 2.2 (1.9) million. Operating margin, as percentage of net sales,
rose to 10.1 (9.4) per cent. This relative increase in operating profit was due
to improved labour productivity and more efficient use of raw materials. However,
operating profit was affected by costs related to market expansion.
Net financial expenses fell clearly to EUR 58 thousand. Pre-tax profit was EUR
2.1 (1.8) million, and profit for the period totalled EUR 1.5 (1.2) million.
BALANCE SHEET AND FINANCIAL POSITION
Consolidated balance sheet total stood at EUR 48.5 (46.0) million at the end of
the period. This increase was mainly due to growth in inventories. Stocks of
finished goods in the main market areas were higher than last year because of
preparations for the Nordic Walking season, which has already started. In
addition, stocks were increased by the fact that US distribution has been managed
by Exel since the fourth quarter of last year.
At the end of the period, equity stood at EUR 22.2 (18.7) million and the
solvency ratio was 46.0 (40.8) per cent. Interest-bearing liabilities were EUR
13.8 (15.7) million, EUR 5.9 (4.9) million of which were short-term liabilities.
Interest-bearing net liabilities
3 (11)
came to EUR 9.7 (12.3) million and the debt-to-equity ratio was 43.8 (65.5) per
cent.
First-quarter cash flow from business operations was negative, amounting to EUR
-1.7 (+2.9) million, due to the exceptionally low level of working capital at the
turn of the year resulting mostly from accounts receivable. In addition, because
of the good results in 2004, EUR 1.5 million in taxes for last year were paid
during the first quarter of 2005. Need for finance resulting from business
operations was covered with short-term credit limits and by decreasing liquid
assets. At the end of the period, liquid assets stood at EUR 4.0 million,
compared with EUR 5.1 million at the turn of the year.
CAPITAL EXPENDITURE
Capital expenditure totalled EUR 0.5 million. The report period saw no launch of
major new investments, so the focus was on completing maintenance and
productivity-enhancing investments started earlier.
PERSONNEL
The number of Exel employees totalled 432 (428) on 31 March 2005, 302 (320) of
whom in Finland and 130 (108) abroad. The number of employees during the
reporting period averaged 424 (406). This increase from last year is mainly due
to the Belgian unit becoming a Group company. The use of temporary labour has
decreased within domestic units.
BUSINESS SEGMENTS
The Group's operations are divided into two main segments, Industry and Sport,
based on the primary IFRS-compliant reporting format.
Industry
The Industry division's key financial figures for the first quarter were as
follows:
Q1/2005 Q1/2004 Change, % 2004
EUR 1,000
Net sales 12,509 11,730 +6.6 48,349
Operating profit 1,819 965 +88.4 7,845
Operating margin, % 14.5 8.2 +76.8 16.2
Average personnel 204 197 +3.6 224
Industry's net sales grew by 6.6 per cent on a year earlier, due to new profile
applications in Finland and abroad, especially in Belgium. The antenna profile
market was down from last year, but still achieved a good volume level.
4 (11)
Profitability remained at a good level despite raw material prices that rose last
year. Part of this price pressure was successfully passed on within the
production chain. Operating profit grew by 88 per cent, to EUR 1,819 million, up
from EUR 0.965 million a year earlier. This improvement in profitability was
caused by higher sales volumes and productivity gains at the main factories. The
Belgian factory in particular has achieved better productivity than last year.
There was a short supply of carbon fibre throughout the reporting period, which
will continue during throughout the year. This is due to major new projects, the
most important of which are the Airbus A380 programme, defence projects in the US
and the development of China's infrastructure. The shortage of carbon fibre will
restrain the commercialisation of a few significant projects in 2005. Most carbon
fibre suppliers have announced new investments in raising production capacity.
The resulting new capacity will be available on the market in stages during 2006.
During the reporting period, the Industry division made a decision to build a
factory in China. Preliminary negotiations have progressed according to schedule,
and the aim is to start up a new production facility in Shenzhen, southern China,
by the autumn of 2006. Initially, the new factory will focus on serving existing
customers in the Far East, and on attracting new customers in the Chinese market.
The establishment of the Chinese factory will also incur additional costs during
2005.
Europe's pultrusion industry continues to consolidate. During the reporting
period, we concluded negotiations over the acquisition of the business of
Austria's Faserprofil GmbH, which will form part of the Industry division. This
acquisition will increase annual net sales by about EUR 4 million, and the
acquired business is more profitable than the industry average. Faserprofil will
enable Exel to become a component supplier for the electronics industry. The
company holds an expertise in epoxy pultrusion and skilled personnel.
Sport
The Sport division's key financial figures for the first quarter were as follows:
EUR 1,000 Q1/2005 Q1/2004 Change, % 2004
Net sales 9,229 8,784 +5.1 35,508
Operating profit 386 955 -59.6 5,858
Operating margin, % 4.2 10.9 -61.5 16.5
Average personnel 220 209 +5.3 217
5 (11)
Sport's net sales grew by 5.1 per cent during the reporting period. Growth was
significantly higher in the main products, winter sports
poles and floorball equipment, but a fall in sales of water sports equipment
reduced the division's total sales growth.
Operating profit fell from EUR 0.955 million last year to EUR 0.385 million. The
Sport segment continued its dedicated efforts to open new Nordic Walking markets
and launch our concept, reducing the division's operating profit markedly.
The Nordic Walking market remained buoyant also in the main markets in Central
Europe. The launch of this concept in new countries was mainly focused on North
America and China. In the US, we launched the operations of our subsidiary Exel
USA Inc, which is currently reflected in higher costs, but at the same time
Nordic Walking is gaining a clear foothold among American consumers. We expect
more active business at the very end of 2005, and especially in 2006. In China,
we have started co-operation with our partner CISS, and training provided to
Nordic Walking instructors has begun. Our publicity campaign for this activity
has progressed according to plan. We are in the process of applying for licences
in China and expect to move into the commercial phase during the second half of
2005.
The advance sales season in cross-country ski poles and floorball equipment has
made good progress, with advance sales higher than a year ago. This increase is
due to the greater popularity of cross-country skiing in Central Europe, as well
as successful new products within floorball equipment.
SHARES
On 1 March 2005, an increase of EUR 32,970 in Exel Oyj's share capital was
recorded in the trade register, based on the exercise of share options. A total
of 94,200 new shares were subscribed. Following this subscription, Exel Oyj's
share capital is EUR 1,965,250, consisting of 5,615,000 shares each at a book
value of EUR 0.35.
During the reporting period, the highest share quotation was EUR 26.98 (14.79)
and the lowest EUR 22.70 (13.95), and the share closed at EUR 25.60 (14.10). The
share price averaged EUR 24.89 (14.29) during the period.
A total of 611,207 (644,483) shares were traded during the period, accounting for
10.9 (11.9) per cent of the average number of outstanding shares. Based on the
closing price during the first quarter, market capitalisation totalled EUR 143.7
(75.9) million.
EVENTS AFTER THE PERIOD
Exel Oyj's wholly owned subsidiary, Exel Sports Oy, started operations on 1 April
2005. Exel Sports Oy assumed responsibility for the sales, marketing, logistics
and product development of consumer products, and 25 employees from Exel Oyj
joined the new company's payroll. Mika
6 (11)
Sulin, who was appointed as the new Managing Director, will resign from the Board
of Directors of Exel Oyj and assume his operational role on 1 June 2005.
On 1 April 2005, Exel acquired the business operations, fixed assets and
inventories of Austria's Faserprofil GmbH:n (FAS) to be transferred to Exel's new
subsidiary Exel Composites GmbH. The new subsidiary manufactures and sells
speciality fibreglass profiles for the electronics, railway, paper machine and
mechanical industries. It has production facilities in Kapfenberg, Austria and
has a staff of around 25. Its annual net sales total about EUR 4 millions. As a
result of this acquisition, it is estimated that Exel's annual net sales will
grow by about the same amount.
Held on 14 April 2005, the Annual General Meeting decided to double the number of
shares without increasing share capital. The meeting also decided on a bonus
issue and an alteration of the Articles of Association. It authorised Exel's
Board of Directors to acquire and convey the company's own shares, and to
increase the company's share capital by a maximum of EUR 100,000.
The AGM re-elected Ove Mattsson (Chairman), Kari Haavisto, Peter Hofvenstam and
Vesa Kainu to the Board, and elected Torgny Eriksson, Esa Karppinen and Matti
Virtaala to the Board. Mika Sulin, a former Board member, will take up his duties
as Exel Sports Oy's Managing Director on 1 June 2005.
OUTLOOK
Profitability has remained at a good level for the first quarter. However the
competition in existing Nordic Walking markets is expected to intensify and
opening new market will require major investments in marketing and sales.
Encouragingly, raw material markets have stabilised with the exception of carbon
fibre. In the short term, the supply of carbon fibre will slow growth in the
Industry division. The acquisition of Faserprofil will strengthen our position in
the Central European profile markets. The combined effect will result in revenue
growth whilst profit after financial items will remain close to the level of last
year.
Mäntyharju, 3 May 2005
EXEL OYJ
Board of Directors
Further information:
Mr. Ari Jokelainen, President, Exel Oyj, tel. +358 50 590 6750
Mr. Ilkka Silvanto, CFO, tel. +358 50 598 9553
7 (11)
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Summarised consolidated income Q1/2005 Q1/2004 Change, % 2004
statement
EUR 1,000
Net sales 21,738 20,514 + 6.0 83,857
Other operating income 50 21 + 140.1 111
Operating expenses -18,793 -17,895 + 5,0 -67,085
Depreciation and impairment -791 -720 + 9.9 -3,181
Operating profit 2,204 1,920 + 14.8 13,702
Financial income and expenses
Profit before income taxes -58 -107 - 45.7 -467
Income tax charge 2,146 1,813 + 18.4 13,236
Profit for the period -602 -598 + 0.6 -4,110
1,544 1,215 + 27.2 9,126
Earnings per share, EUR
Earnings per share, EUR, 0.28 0.23 +21.9 1.69
diluted
0.27 0.22 +22.9 1.59
Summarised consolidated balance
sheet 31 March 31 March Change 31 December
EUR 1,000 2005 2004 2004
ASSETS
Non-current assets
Intangible assets 862 436 426 926
Goodwill 3,188 3,188 0 3,188
Tangible assets 13,534 14,225 -691 13,742
Deferred tax assets 734 242 492 310
Other non-current assets 101 101 0 100
Current assets
Inventories 13,056 10,804 2,252 13,269
Trade receivables and other
receivables 13,002 13,536 -534 9,568
Cash in hand and at bank 4,024 3,430 594 5,150
Total assets 48,501 45,962 2,539 46,253
EQUITY AND LIABILITIES
Equity
Share capital 1,965 1,884 81 1,932
Share issue 817
Premium fund 4,174 3,149 1,025 3,390
Retained earnings 14,555 12,428 2,127 5,427
Profit for the period 1,544 1,215 329 9,126
Total equity 22,238 18,676 3,562 20,692
8(11)
Non-current liabilities
Non-current interest-bearing
liabilities 7,888 10,739 -2,851 8,456
Deferred tax liabilities 312 14 298 297
Current liabilities
Current interest-bearing
liabilities 5,880 4,926 954 4,141
Trade payables and other 12,183
non-interest-bearing liabilities 11,607 576 12,666
26,263
Total liabilities 27,286 -1,023 25,560
48,501
TOTAL EQUITY AND LIABILITIES 45,962 2,539 46,253
Statement of changes in the equity
EUR 1,000 Share Share Share Retained
capital issue premium earnings Total
fund
Equity 1 January 2004 1,870 135 3,028 12,429 17,462
Share issue 14 -135 121
Translation differences -1 -1
Dividend paid
Profit for the period 1,215 1,215
Equity 31 March 2004 1,884 0 3,149 13,643 18,676
Equity 1 January 2005 1,932 817 3,390 14,553 20,692
Share issue 33 -817 784
Translation differences 2 2
Dividend paid
Profit for the period 1,544 1,544
Equity 31 March 2005 1,965 4,174 16,099 22,238
Summarised consolidated funds Q1/2005 Q1/2004 Change 2004
statement
EUR 1,000
Cash flow from business
operations
Profit for the period 1,544 1,215 +329 9,126
Total adjustments 1,485 1,497 -12 7,623
Change in net working capital -2,700 1,181 -3,881 1,657
Cash flow from business
operations 329 3,893 -3,564 18,406
Net financial expenses -94 75 -21 -359
Taxes paid -1,925 834 -1,091 -2,136
Net cash flow from business 9 (11)
operations -1,690 2,984 -4,674 15,911
Investment cash flow
Acquisitions -7,181 +7,181 -7,181
Investments in tangible and
intangible assets -518 -450 -68 -3,187
Capital gains on assets 44
Other cash flow from investments
Net investment cash flow
-518 -7,631 +7,113 -10,324
Cash flow from financing
Rights issue
Change in long-term loans and 1,102
other liquid assets
Dividend paid 1,082 5,318 -4,236 2,700
Net cash flow from financing -6,998
1,082 5,318 -4,236 -3,196
Change in liquid assets
-1,126 671 -1,797 2,391
Liquid assets at period-start
Change in liquid assets 5,150 2,759 +2,391 2,759
Liquid assets at period-end -1,126 671 -1,797 2,391
4,024 3,430 + 594 5,150
Key Financial Figures by Quarter
EUR 1,000 Q1/2005 Q4/2004 Q3/2004 Q2/2004 Q1/2004 2004
Net sales by segment
Industry 12,509 11,689 11,523 13,408 11,730 48,348
Sport 9,229 8,087 8,864 9,773 8,784 35,509
Total net sales 21,738 19,776 20,387 23,181 20,514 83,857
Operating profit by
segment 1,819 2,327 2,041 2,512 965 7,845
Industry 386 987 1,263 2,653 955 5,858
Sport 2,204 3,314 3,304 5,165 1,920 13,702
Total operating profit
Financial income and -58 -131 -138 -91 -107 -467
expenses 2,146 3,182 3,167 5,074 1,813 13,236
Profit before income taxes -602 -922 976 -1,613 598 4,110
1,544 2,260 2,190 3,461 1,215 9,126
Income tax charge
Profit for the period 0.28 0.41 0.41 0.64 0.23 1.69
Earnings per share, EUR 0.27 0.37 0.38 0.62 0.22 1.59
Earnings per share, EUR,
diluted 5,615 5,499 5,384 5,383 5,383 5,413
Average number of
shares, 1,000 5,762 5,732 5,634 5,581 5,568 5,732
Average number of shares,
1,000, diluted 424 424 456 453 406 441
Average personnel
10 (11)
CONTINGENT LIABILITIES
EUR 1,000 31 March 31 March 31 December
2005 2004 2004
For own liabilities
Mortgages given on land and buildings
2,954 2,954 2,954
Corporate mortgages given 12,500 12,500 12,500
Lease liabilities
maturity of less than one year 456 190 223
maturity of one to five years 1,741 237 1,563
Other liabilities 64 59 67
Face value of derivative contracts
EUR 1,000 31 March 31 March 31 December
2005 2004 2004
Currency derivatives
Forward contracts 503 923 877
Purchased currency options 750 750
Sold currency options 371 371
Interest rate derivatives
Interest swaps 2,553 3,441 2,636
GROUP KEY FIGURES AND RATIOS
EUR 1,000 Q1/2005 Q1/2004 Change % 2004
Net sales 21,738 20,514 + 6.0 83,857
Operating profit 2,204 1,920 +14.8 13,702
% of net sales + 10.1 + 9.4 +8,4 16.3
Profit before income taxes
% of net sales 2,146 1,813 +18,4 13,236
Profit for the period 9.9 8.8 +11,7 15,8
% of net sales 1,544 1,215 +27.2 9,126
7.1 5.9 +19.9 10.9
Equity
Interest-bearing 22,238 18,676 + 19,0 20,692
liabilities
Liquid assets 13,768 15,666 -12.1 12,597
Net interest-bearing 4,024 3,430 +17.3 5,150
liabilities
Invested capital 9,744 12,236 -20.4 7,447
Return on equity, % 36,006 34,342 +4.8 33,290
Return on investment, % 28.8 26.9 +7.1 47.8
Solvency ratio, % 25.6 25.2 +0.4 45.2
Net gearing, % 46.0 40.8 +12.7 44.9
43.8 65.5 -33.1 36.0
Gross capital
expenditure
% of net sales 518 2,968 -82,5 5,803
Research and development 2.4 14,5 -16,6 6.9
costs
% of net sales 681 612 +11.3 1,956
3.1 3.0 +5.0 2.3
Earnings per share, EUR
Earnings per share, EUR, 0.28 0.23 +21.9 1.69
diluted
Equity per share, EUR 0.27 0.22 +22.9 1.59
3.96 3.47 +14.2 3.69
Outstanding shares,
thousands
undiluted, average
diluted, average 5,615 5,383 +4.3 5,413
5,762 5,568 +3.5 5,732
