EXEL OYJ INTERIM REPORT 1 January ? 31 M
EXEL OYJ STOCK EXCHANGE RELEASE 29.4.2004 11:00 AM 1 (8)
EXEL OYJ INTERIM REPORT 1 January 31 March 2004
Overview:
- Very strong sales growth continues in both divisions; net sales
for the first quarter grew by 67% to EUR 20.5 million (EUR 12.3
million).
- This growth was driven by the expansion of Nordic Walking in
Central Europe, the acquisition of Bekaerts pultrusion operations,
and strong demand for specialty profiles.
- Operating profit grew by 392% to EUR 2.1 million (EUR 0.4
million).
- The markets for Nordic Walking and specialty profiles continue to
look strong in the near term.
Operating environment
Despite weak general economic growth in Exels main market areas in
Central Europe, demand for our specialty products, particularly carbon
fibre profiles and products under our Nordic Fitness SportsTM (NFS)
concept, has remained strong. We expect this trend to continue in the
near term.
The markets for our raw materials have been stable with the exception
of carbon fibre. Demand for carbon fibre is growing strongly mainly
due to large aircraft projects. Growing demand has caused prices to
escalate quickly, which may negatively affect the overall market for
carbon fibre-based products.
Industry division
The Industry divisions net sales grew by 82% to EUR 11.7 million
(EUR 6.4 million). The divisions net sales grew due to the addition
of a new production facility, acquired from Bekaert in Belgium
(roughly EUR 2.1 million) and strong growth in the specialty profiles
market, while the major industrial customers activity still remains
at a low level with respect to non-specialty products. Profitability
also remained good as operating profit grew to EUR 1.2 million (EUR
0.9 million) due to e.g. strong sales and improved operating
efficiency. Keen price competition continues in the marketplace,
however. Profitability was also affected negatively by a credit loss
recorded during the period under review in relation to the Belgian
operations in the amount of EUR 0.2 million.
The cautiousness of the major industrial customers notwithstanding,
the demand for specialty profiles is high. Product development
projects continue in our profiles product segment mainly in relation
to automotive applications, infrastructure construction and wind
power.
Antenna profile markets have remained strong throughout the winter due
to a pick-up in the construction of GSM and 3G networks. The strong
2 (8)
network construction is expected to continue at least through the
summer.
Paper machine utilisation rates remain low but paper machine profile
sales have still grown slightly over the period under review.
The sales of lattice masts reached record levels during the period
under review. Demand is expected to grow further in anticipation of
the International Civil Aviation Organizations (ICAO) frangibility
regulations that take effect in 2005 and require airport lighting
system support masts to be breakable upon impact.
The integration of the pultrusion operations acquired from Bekaert in
January, 2004 has commenced both in Belgium and Spain. Efficiency
enhancing measures are progressing on schedule, and the profitability
of the acquired operations is expected to improve by the end of the
year.
Sport division
The net sales of the Sport division totalled EUR 8.8 million (EUR 5.9
million) during the period under review, or 50% more than during the
same period last year. Profitability improved significantly; operating
profit totalled EUR 0.8 million (EUR -0.4 million). The NFSTM concept
is gaining customers and attracting strong interest in otherwise
slowly growing sporting goods markets.
NFSTM, and particularly Nordic Walking in German-speaking Central
Europe, continues its strong growth. Exels market share has remained
very solid. Nordic Walking is currently being introduced to new
countries. Pre-season sales of other pole products have been on
approximately the same level as last year.
Floorball pre-season sales in our main markets, i.e. Finland, Sweden
and Switzerland, have also remained at last years levels. These
markets will not grow materially this year.
Laminate sales have remained flat compared to the same period last
year, although the sales of Exel GmbHs Plastics products have grown
slightly year over year. In water sports, the demand for Exels
surfing masts is holding steady but the overall market continues to
shrink worldwide.
Net sales and profits
Consolidated net sales grew by 67% year over year during the first
quarter. Net sales growth by division were as follows:
Net sales
(EUR million) 1-3/2004 1-3/2003 Change
Industry 11.7 6.4 82.1%
Sport 8.8 5.9 49.9%
3 (8)
Total 20.5 12.3 66.7%
Consolidated operating profit totalled EUR 2.1 million
(EUR 0.4 million). Operating profit by division was as follows:
Operating profit
(EUR million) 1-3/2004 1-3/2003 Change
Industry 1.2 0.9 45.7%
Sport 0.8 -0.4 292.3%
Total 2.1 0.4 391.8%
The improvement in operating profit was mainly due to increased sales
volumes and improved operating efficiency in both divisions.
Net financial expenses
Net financial expenses totalled EUR 97,000 (EUR 129,000). Savings in
financial expenses stemmed from the repayment of long-term debt during
2003. Funding arrangements for the acquisition of Bekaerts pultrusion
operations did not yet materially increase financial expenses during
the period under review.
Balance sheet, financing and liabilities
The balance sheet total stood at EUR 43.1 million on 31 March 2004
(EUR 32.1 million). The acquisition of Bekaerts pultrusion operations
contributed by approximately EUR 6.6 million to this total. Interest-
bearing net liabilities grew to EUR 9.8 million (EUR 9.2 million) due
to the acquisition. Total liabilities remained roughly unchanged.
Investments
The Groups investments in fixed assets totalled EUR 3.1 million (EUR
0.4 million). The acquisition of Bekaerts pultrusion operations
represented EUR 2.3 million of this in fixed assets (total acquisition
some EUR 6.5 million). Capacity expansion projects are underway in the
Sport division (Nordic Walking products). A new production line was
completed during the period under review at Exels Kiihtelysvaara
facility for the production of larger profiles.
Personnel
Group personnel stood at 428 (357) on 31 March 2004. This increase
related to the integration of the pultrusion operations acquired from
Bekaert into the Exel group (some 40 persons) and additional labour
needs at Exels Finnish manufacturing facilities (some 30 persons)
brought on by increased demand for production volumes.
Shares and ownership
Exels share capital totals EUR 1,884,120 and consists of 5,383,200
shares, each of which is nominally valued at EUR 0.35. The members of
4 (8)
the Board of Directors and the President hold 98,100 shares, i.e.
1.8%.
The number of shares traded on the Helsinki Exchanges during the
period under review amounted to 11.97% of all shares. During the
period the highest share price quoted was EUR 14.79, and the lowest
EUR 11.75. The closing price for the review period was EUR 14.10.
Market capitalization was EUR 75.9 million on 31 March 2004.
Decisions by Exels Annual General Meeting
The Annual General Meeting held on 14 April 2004 re-elected Kari
Haavisto, Peter Hofvenstam, Vesa Kainu, Ove Mattsson and Mika Sulin to
the companys Board of Directors. Ove Mattsson was re-elected Chairman
of the Board.
Increase in share capital
The AGM authorised the Board to increase the Companys share capital
under the following terms: the Board was authorized to decide to
increase the Companys share capital by one or more rights issues in
such a way that the Companys share capital may be increased at the
most by EUR 352,500. The authorization is valid until 14 April, 2005.
In virtue of the authorization the Board may decide on who is entitled
to exercise subscription rights in connection with the rights issue,
the subscription price of the shares and the criteria used to
determine the subscription price and other terms of the rights issue.
The pre-emptive right of shareholders to acquire shares may be
deviated provided that from the Companys perspective important
financial grounds exist, such as the financing, implementation or
enabling of a business acquisition or another cooperative arrangement,
the strengthening or development of the Companys financial or capital
structure or the implementation of other measures relative to the
development of the Companys business. No decision may be taken for
the benefit of the Companys insiders.
In virtue of the authorization the Board is entitled to decide on a
rights issue in such a way that a share subscription may be made in
kind or otherwise under certain terms.
Acquisition of the Companys own shares
The AGM authorised the Board to acquire the Companys own shares using
funds available for distribution of profits so that the total
accounting par value of the own shares held by the Company or its
subsidiary organizations, or the number of votes they carry after the
acquisition, corresponds to no more than five (5) per cent of the
Companys total share capital or the total voting rights of the
company. The Company may acquire a maximum of 269,160 shares.
The shares can be acquired either
5 (8)
(a) through a tender offer made to all the shareholders on equal terms
and for an equal price determined by the Board, or
(b) through public trading in which case the shares will be acquired
in another proportion than that of holdings of the current
shareholders, and the purchase price is based on the market price of
the Company shares in public trading.
The shares may be acquired in order to finance, implement or carry out
business acquisitions or other cooperative arrangements, to strengthen
or develop the Companys financial or capital structure, to implement
other measures relating to the development of the Companys business,
to grant incentives to selected members of the personnel, or in order
to be transferred in other ways or to be cancelled.
Since the maximum number of the shares subject to the acquisition
equals a maximum of five (5) per cent of the total amount of the
shares and voting rights of the Company, the acquisition of the shares
will have no material impact on the distribution of the share
ownership and the voting power in the Company.
The authorization is valid until 14 April 2005.
Right to convey the Companys own shares
The AGM authorised the Board to resolve to convey the Companys own
shares so that the authorization would cover all such own shares of
the Company that are acquired on the basis of the acquisition
authorization granted to the Board of Directors.
The authorization entitles the Board of Directors to decide to whom
and in which order the own shares are conveyed. The Board may resolve
to convey the shares in another proportion than that of the
shareholders pre-emptive rights to the Companys shares, provided
that from the Companys perspective important financial grounds exist,
such as financing, implementing or carrying out business acquisitions
or other cooperative arrangements, implementation of other measures
relating to the development of the Companys business or granting
incentives to selected members of the personnel. The shares may also
be conveyed at the public trading on the Helsinki Exchanges.
No decision may be taken in favour of anyone belonging to the
Companys insiders.
The authorization comprises the right to decide on the price of the
conveyance and the grounds for price determination and the right to
convey the shares against other compensation than cash or to use the
right of set-off.
The authorization is valid until 14 April 2005.
Prospects for the rest of 2004
6 (8)
The Nordic Walking markets are expected to remain very active
throughout the year. The demand for specialty profiles is expected to
continue strong through the summer. The integration of the Belgium
operations into the Exel Group is progressing according to plan and
will require significant resources. Raw materials prices are assumed
to stay at current levels with the exception of carbon fibre prices,
which are expected to increase. Net sales are expected to grow
significantly, compared to last year, during the remainder of the
year, both through the acquisition of Bekaerts pultrusion operations
and organic growth. During the remainder of this year, however, the
net sales growth is not expected to continue in the same pace as
during the first quarter of this year. Operating profit is expected to
grow in line with net sales.
Mäntyharju, 29 April 2004
Exel Oyj Ari Jokelainen
Board of Directors President
EXEL GROUP
CONSOLIDATED INCOME STATEMENT
EUR 1,000 1-3/04 1-3/03 change % 1-12/03
NET SALES 20,514 12,303 67 57,281
Increase (+)/decrease (-) of
Finished goods and work in
progress 1,016 420 142 834
Production for own use 78 54 44 323
Other operating income 21 94 -78 342
Materials and services -8,498 -4,747 79 -21,716
Personnel expenses -4,570 -3,491 31 -14,329
Depreciation -815 -815 0 -3,184
Other operating expenses -5,679 -3,397 67 -14,205
OPERATING PROFIT 2,067 420 392 5,345
Financial income and expenses (net) -97 -129 -25 -436
PROFIT BEFORE EXTRAORDINARY ITEMS 1,970 291 576 4,910
Extraordinary items
PROFIT BEFORE INCOME TAXES 1,970 291 576 4,910
Income taxes -658 -98 574 -1,537
PROFIT FOR THE PERIOD 1,312 194 577 3,373
7 (8)
The taxes taken into account are based on the profit for the period.
CONSOLIDATED BALANCE SHEET
EUR 1,000 31.3.04 31.3.03 change% 31.12.03
ASSETS
Non-current assets
Intangible assets 2,969 3,349 -11 3,126
Consolidation goodwill 312 384 -19 330
Tangible assets 12,973 10,403 25 10,470
Investment 95 127 -25 95
Current assets
Inventories 10,409 8,435 23 8,747
Receivables 12,894 8,342 55 8,626
Marketable securities 652
Cash in hand and at bank 2,770 1,030 232 2,753
Total 43,076 32,069 34 34,147
LIABILITIES AND SHAREHOLDERS EQUITY
Equity
Share capital 1,884 1,855 2 1,870
Other equity 16,963 13,280 28 15,666
Liabilities
Deferred tax liability 14 106 -87 14
Non-current 8,494 5,517 54 4,077
Current 15,720 11,311 39 12,521
Total 43,076 32,069 34 34,147
FUNDS STATEMENT
EUR 1,000 1-3/04 1-3/03 change % 1-12/03
Cash flow from business operations 2,552 -511 599 6,409
Acquired business operations -6,440
Investment in tangible and
intangible assets -804 -393 105 -2 599
Income from surrender of tangible
and intangible assets 79
Rights issue 282
Withdrawal of non-current loans 5,052 53
Repayments of non-current loans -724 -705 3 -2,192
Withdrawals of/repayments of
current loans 1,029 112 819 -747
Dividend paid -1,060
Other 5 2 150 4
Change in liquid funds 670 -1,495 145 229
8 (8)
31.3.04 31.3.03 change% 31.12.03
Indicators (EUR 1,000)
Gross investment 3,144 395 696 2,519
% of net sales 15% 3% 4%
R&D expenses 612 431 42 1,707
% of net sales 3% 4% 3%
Average personnel 421 356 18 355
Personnel at end of period 428 357 20 355
Order book 16,255 7,571 115 11,449
Solvency ratio, % 44% 47% 52%
Return on investment, % 29% 6% 21%
Net gearing, % 52% 61% 29%
Earnings per share, EUR 0.24 0.04 577 0.64
Equity per share, EUR 3.50 2.81 25 3.26
Derivatives
Derivatives are used for hedging purposes only.
Interest rate risk
The companys long-term debt is subject to interest rate risk, which
is why it has fixed the rate of interest on some of its borrowings
through swap agreements that extend to the years 2007-2009.
Currency risk
The companys US dollar-denominated raw materials purchases are
partially hedged against currency risk through 11-month forward
contracts.
Interest rate derivatives Face value Fair market value (NPV)
Interest swaps 3,441 -43
Currency derivatives
Forward contracts 923 26
Consolidated contingent liabilities on 31 March 2004
Corporate mortgages 12,500 12,500 12,500
Mortgages on land and buildings 2,954 2,954 2,954
Other contingent liabilities 2,174 2,569 2,390
The columns 1-3/04 and 1-3/03 are unaudited.
