CLEAR GROWTH IN JANUARY-JUNE NET SALES A
Kyro Corporation STOCK EXCHANGE RELEASE 14 August 2003, 8:30
CLEAR GROWTH IN JANUARY-JUNE NET SALES AND OPERATING PROFIT
- Net sales grew with acquisitions by 53% to EUR 109.5 (71.6) million
- Operating profit before amortisation of goodwill grew by 38% to
EUR 10.6 (7.7) million
- Profit before taxes grew by 19% to EUR 9.2 (7.8) million
- Financial position is good, equity ratio 30.6.2003 at 57.3% (74.6%)
- Glaston Technologies received a record amount of orders of EUR 20
million in July,
- Kyros order book at all-time high of EUR 88.0 million on 31.7.2003
- Tamglass and Z. Bavelloni introduced at the Milan trade show a One-
Stop-Shop concept which is unique in the glass processing industry.
PRESIDENTS COMMENTARY
Corporate acquisitions completed in 2002 and early 2003 in accordance
with Kyros growth strategy have increased the Groups net sales. The
good result from the period under review is based on a strong market
position, measures taken for production efficiency, and improved
productivity. These create a basis for good profitability also during
the rest of the yearö, notes Pentti Yliheljo, President & CEO of Kyro.
Long-term growth of the glass processing industry outpaces that of the
general economy. Glaston Technologies has further strengthened its
market share as the leading supplier of glass processing machinery and
equipment, even while the current economic cycle has slowed down
industry growth and investments. Kyros operating subsidiaries are
well positioned to respond quickly even to rapid market growth should
an economic upturn take placeö, Yliheljo elaborates.
GROUP STRUCTURE AND COMPARISON FIGURES
Kyros Safety Glass Technology business area has expanded through
acquisitions to become the Glass and Stone Technology business area,
which operates under the name of Glaston Technologies. While Kyro
already previously was the technology and market leader in safety
glass machinery, it now is also the biggest supplier of machinery and
equipment for the glass processing industry as a whole. Kyros second
business area is Energy, which consists of the energy supplier Kyro
Power Oy.
Kyro purchased all the equity of Uniglass Engineering Oy in April
2002, and a majority stake in Finton Parvekejärjestelmät Oy in
November 2002, which after an additional capital infusion now amounts
to a 65% ownership share. In January 2003 Kyro purchased the Z.
Bavelloni and Glasto groups in their entirety, and a 70% share of
Suomen Lämpölasi Oy.
Consolidated Kyro Group figures include Uniglass Engineering Oy as of
1.5.2002, Finton Parvekejärjestelmät Oy as of 1.11.2002, and Z.
Bavelloni, Glasto and Suomen Lämpölasi Oy as of 1.1.2003. The 1-6/2002
comparison figures for the Glass and Stone Technology business area do
not include companies acquired after 30.6.2002.
NET SALES AND PROFIT
Kyro Group net sales grew with acquisitions by 53% to EUR 109.5 (71.6)
million for the period under review. The Groups operating profit
before amortisation of goodwill grew by 38% to EUR 10.6 (7.7) million,
representing 9.7% (10.7%) of net sales. Amortisation of goodwill
increased to EUR 1.6 (0.1) million. Unamortised goodwill stood at EUR
57.6 million on 30.6.2003. Operating profit after amortisation of
goodwill grew by 19% to EUR 9.0 (7.6) million.
Net financial income amounted to EUR 0.2 (0.2) million for the period
under review. This includes interest, dividend and other financial
income of EUR 1.2 (2.0) million and interest and other financial
expenses of EUR 1.0 (1.8) million. These consist of EUR 0.2 (0.1)
million in interest expenses, EUR 0.5 (0.4) million in foreign
exchange losses, EUR 0.2 (1.3) million in securities valuation losses,
and EUR 0.1 (0.0) million in other financing expenses.
Profit before taxes totalled EUR 9.2 (7.8) million. Profit for the
period after taxes and minority interest was EUR 4.6 (4.9) million.
Earnings per share were EUR 0.12 (0.13).
Kyro Groups total order book stood at EUR 76.2 million on 30.6.2003
(EUR 67.4 million on 31.12.2002). The total order book was boosted by
the order books of the new Group companies. Kyros order book
increased in July and stood at EUR 88.0 million on 31.7.2003.
Figure 1. Net sales, operating profit before amortisation of goodwill,
and order book by business area, EUR million
Net Sales EBITDA** Order Book
1-6/03 1-6/02* 1-6/03 1-6/02 6/03 6/02
Glass and Stone Technology* 94.6 59.3 8.8 6.4 54.0 49.7
Energy 14.9 12.2 3.2 2.4 22.2 23.0
Parent company, other
operations & eliminations 0.0 0.1 -1.3 -1.1
Group total 109.5 71.6 10.6 7.7 76.2 72.7
* 1-6/2002 figures for the Glass and Stone Technology business area do
not include companies acquired after 30.6.2002.
** Operating profit before amortisation of consolidation goodwill.
FINANCING
The Groups financial position is good. The equity ratio on 30.6.2003
stood at 57.3% (74.6%). Liquid cash assets and securities totalled EUR
30.4 (53.6) million at the end of the period (EUR 32.4 million on
31.3.2003). Interest-bearing liabilities totalled EUR 33.8 (6.7)
million. Net interest-bearing liabilities amounted to EUR 3.7 (-47.5)
million. Net debt to equity (gearing) stood at 2.7% (38.5%). Equity
per share totalled EUR 3.38 (3.21) on 30.6.2003.
INVESTMENTS
The Groups investments totalled EUR 61.5 (1.7) million during the
period under review. The purchase cost of Z. Bavelloni, Glasto and
Suomen Lämpölasi Oy shares represented the bulk of the investments.
PERSONNEL
Kyro Group had a total of 1,170 (531) employees at the end of the
period under review. The number of employees has mainly grown through
acquisitions and the expansion of Tamglass Brazilian and Chinese
units. The acquired companies employed 634 persons on 30.6.2003.
Number of employees
30.6.2003 30.6.2002*
Glass and Stone Technology 1,134 496
Energy 26 25
Kyro Corporation 10 10
Kyro Group 1,170 531
* 1-6/2002 figures for the Glass and Stone Technology business area do
not include companies acquired after 30.6.2002.
SHARES AND SHARE PRICES
A total of 1,043,086 Kyro Corporation shares were traded during the
period under review, which equals 2.6% of the total number of shares.
The highest price quoted on the Helsinki Exchanges was EUR 6.84 and
the lowest EUR 5.40. The average price for the period was EUR 6.26.
REPURCHASE AND CONVEYANCE OF OWN SHARES
Kyro Corporation did not make use of the authorisation by the Annual
General Meeting to repurchase or convey own shares during the second
quarter. Kyro Corporation held on 30.6.2003 a total of 248,292
(1,483,830) own shares representing 0.6% (3.7%) of its share capital.
GLASS AND STONE TECHNOLOGY BUSINESS AREA GLASTON TECHNOLOGIES
Net sales, operating profit and order book
Kyros Glass and Stone Technology business area, Glaston Technologies,
consists of Tamglass, the market and technology leader in safety glass
machinery; Z. Bavelloni, the leading supplier of glass pre-processing
machinery and tools; Glasto, a group of distribution companies;
Uniglass Engineering, a supplier of flat tempering machines; and
Tamglass Glass Processing, a significant full-range supplier of glass
processing products in Finland.
The net sales of Glaston Technologies during the period under review
grew with acquisitions by 60% to EUR 94.6 (59.3) million. Operating
profit before amortisation of goodwill grew by 36% to EUR 8.8 (6.4)
million. Its share of net sales was 9.3% (10.9%).
The net sales of the Tamglass Group and Uniglass Engineering remained
at the previous years levels despite the strengthening of the euro.
Profitability was clearly better due to new products and measures
undertaken at the Finnish, U.S., and Chinese manufacturing plants to
improve production efficiency.
The net sales and profitability of the Bavelloni Group declined from
the previous years levels, mainly due to the weakening of its main
billing currencies against the euro and a shift of demand toward
smaller and more basic machinery.
The order book of Glaston Technologies stood at EUR 54.0 million on
30.6.2003 (EUR 45.2 million on 31.21.2002). New orders in July
amounted to a record EUR 20 million, thanks to success at the Milan
trade show. As a consequence, the order book stood at the high level
of EUR 65.9 million on 31.7.2003.
The order book of Z. Bavelloni is generally modest in relation to its
total business volume because, apart from the largest CNC machines,
its machinery and tools are mostly sold and delivered from stock.
Monthly changes in business volume are consequently also greater than
for Tamglass.
Synergies between Tamglass, Z. Bavelloni and Glasto
Z. Bavelloni, Glasto and Tamglass co-operate with one another closely.
Synergy benefits are derived from the cross selling of the companies
products to their respective customer bases in particular, and from
purchasing, logistics and maintenance co-operation.
Tamglass and Z. Bavelloni introduced a One-Stop-Shop concept in June
at their combined stand at the Vitrum 2003 trade show. This concept
facilitates the ordering of all the required glass processing
machinery and equipment, or a complete set of machinery for a glass
processing plant, from one supplier.
Synergy benefits in logistical co-operation between Tamglass and Z.
Bavelloni will be achieved most rapidly in the joint procurement of
materials and components, bringing cost savings already this year.
Markets and sales
The demand for processed glass products grows due to the evolution of
glass architecture, the proliferation of value-added glass products,
the increasing volume and diversity of glass surfaces on vehicles, and
advances in safety glass legislation and regulations. This growth in
glass processing creates the basis for the long-term growth of the
glass processing machinery business. Safety glass is the fastest
growing segment within glass processing.
The demand for glass processing machinery in the second quarter
remained at the level of the first quarter. Weak economic growth
continued to hold investment decisions at a low level in Central
Europe and the United States. Glass processors postponed purchase
decisions to the connection of Vitrum 2003 show in June. However,
sales of Z. Bavelloni stone processing machinery grew from the
corresponding period last year.
Tamglass and Z. Bavelloni presented a combined stand for the first
time at the Vitrum 2003 trade show. The companies combined business
model has gained strong customer approval. Accordingly, Glaston
Technologies agreed on as much as EUR 15 million worth of new
machinery orders in connection with the show, despite the current
economic cycle and the exceptional timing of the trade show.
Production and products
The capacity utilisation rate of Glaston Technologies machinery plants
was good at the beginning of the year. The machinery plants are
capable of even a rapid capacity increase in case demand picks up.
All operations of Uniglass Engineering were centralised at the
companys machinery plant in June, which brings cost savings and
improves operational efficiency.
The product range of safety glass and pre-processing machinery at
Glaston Technologies is the broadest in the industry. Tamglass, Z.
Bavelloni and Uniglass Engineering introduced several new products at
the Vitrum trade show in Milan.
Tamglass launched a new HTF Super version of the worlds best selling
HTF flat tempering machine, Z. Bavelloni brought out a CNC line for
large sheets of glass, and Uniglass Engineering introduced an updated
model of its UGC convection oven.
Maintenance services, spares parts and tools
The number of maintenance agreements continues to grow. The cautious
investment climate was reflected in the sales of maintenance services,
auxiliary equipment and machinery upgrade packages during the period
under review, and slowed down the growth of the maintenance business.
A limited number of used machines were traded in, which restricted the
sale of reconditioned machines despite robust demand.
The strengthening of the euro against other billing currencies also
impacted the euro-denominated sales of spare parts and glass
processing tools by Z. Bavelloni. However, the sales of these products
typically grows quickly whenever the economy turns up.
Tamglass Glass Processing
Tamglass Glass Processing includes Tamglass Safety Glass, a safety
glass processor; Tamglass Finton, a balcony systems manufacturer; and
Tamglass Insulating Glass, an insulating glass element manufacturer.
Tamglass Glass Processing plays an important role in the technology
development of Glaston Technologies. The newly acquired companies,
Tamglass Finton and Tamglass Insulating Glass, enhance this role
further. The comprehensive combined product range of these three glass
processing companies makes them significant suppliers to the Finnish
construction industry.
Tamglass Glass Processing benefitted already during the period under
review from synergies in sales and comprehensive deliveries. Tamglass
Safety Glass and Tamglass Insulating Glass supplied during the second
quarter tempered insulating glass for the South Harbours Makasiini
Terminal in Helsinki and the main post office in Stockholm, for
example. Tamglass also delivered all safety glass required for the new
annex at the University of Tampere. Significant synergy benefits were
also achieved within Tamglass Glass Processing by centralising the
procurement of materials for the various business units.
GPD 2003, the leading glass processing conference
The Glass Processing Days (GPD) conference organised by Tamglass every
two years brought over 900 glass experts from some 60 countries to
Tampere in June. This conference seeks to promote the safe and
comfortable use of glass and to advance the development of glass
processing. GPD strengthens the specialist status of Glaston
Technologies in the glass processing industry. The Tamglass
Glassfiles.com portal, which supplements the GPD conference, set a new
record of over 12,000 registered users during the period under review.
ENERGY KYRO POWER
Net sales of Kyro Power for the January-June period grew by 22% to
EUR 14.9 (12.2) million. Operating profit increased by 33% to EUR 3.2
(2.4) million, representing 21.4% (19.6%) of net sales. Net sales and
operating profit grew due to good demand for energy and higher
electricity rates. The order book of Kyro Power (for the following 12
months) totalled EUR 22.2 million on 30.6.2003 (EUR 22.2 million on
31.12.2002).
Demand for electricity remained at a high level in the second quarter.
The market price for electricity came down in the second quarter, but
it has been increasing again in July and August. In Central Europe the
market price for electricity is higher than in the Nordic Countries.
The power plants of Kyro Power did not experience any operating
problems during the period under review. Scant water resources
restricted the utilisation of the hydroelectric plant, which ran at
43% of normal output. Long-term energy supply contracts under current
market conditions provide Kyro Powers customers with steady
electricity rates, and Kyro Power with a predictable business.
FUTURE OUTLOOK
Kyro Group and its business areas are well positioned for the
remainder of 2003.
Glaston Technologies is the global market leader in its field, and its
order and offer books are at a good level despite unfavourable
currency developments.
Kyro Powers net sales and operating profit in 2003 are expected to
grow slightly from the level of the previous year.
Kyro Group net sales in 2003 will grow strongly following the
acquisitions that have been made.
Investments in these acquisitions, the business cycle, and foreign
exchange movements reduce the Groups relative profitability this
year, but the cash flow from operations is expected to increase.
The profitability of the Kyro Group is expected to be at a good level
in 2003, despite the prevailing general economic uncertainty.
TIMING OF FINANCIAL RELEASES
Interim report 1-9/2003 (1.1-30.9.2003) on 5 November 2003
Kyros online and printed annual report for 2002 were published in
March 2003. The electronic annual report is available at www.kyro.fi,
and the printed report can be ordered by e-mail from
kristiina.springfelt@kyro.fi.
Helsinki, 14 August 2003
Board of Directors
Additional information on Kyros interim report is available from
Kyros President, Pentti Yliheljo, and Chief Financial Officer, Veli
Kronqvist. Phone: +358 3 372 3111.
Investor Kyro Corporation, Mika Nevalainen, Corporate
relations: Communications, Phone: +358 400 882 024
Distribution: Helsinki Exchanges
Key media
KYRO GROUP 1-6/2003, INCOME STATEMENT AND BALANCE SHEET
Consolidated Income Statement, EUR million
1-6/03 1-06/02* 1-12/02*
Net sales 109.5 71.6 144.3
Other operating income 0.3 0.1 0.9
Expenses 95.9 61.4 121.1
Depreciation and amortisation
without consolidation goodwill 3.2 2.5 5.2
Operating profit before amortisation
of consolidation goodwill 10.6 7.7 18.9
% of net sales 9.7 10.7 13.1
Amortisation of consolidation goodwill 1.6 0.1 0.2
Operating profit 9.0 7.6 18.7
% of net sales 8.3 10.6 13.0
Financial income and expenses 0.2 0.2 -0.6
Profit before tax 9.2 7.8 18.1
Income taxes -4.1 -2.4 -5.7
Minority interest -0.5 -0.4 -0.6
Net income 4.6 4.9 11.7
* Comparison figures for 2002 do not include subsequent acquisitions.
Consolidated Balance Sheet, EUR million
30.6.03 30.6.02 31.12.02
Fixed assets 122.8 75.9 73.6
Current assets
Inventories 39.1 16.6 15.7
Deferred tax receivable 7.8 6.2 6.1
Financial assets 80.3 88.1 91.7
Total assets 250.0 186.8 187.1
Shareholders equity 135.2 131.6 137.1
Minority interest 1.6 0.5 0.7
Non-discretionary reserves 5.3
Liabilities
Interest bearing liabilities 33.8 6.7 3.7
Non-interest bearing liabilities 65.4 40.9 38.7
Deferred tax liability 8.7 7.0 6.9
Total equity and liabilities 250.0 186.8 187.1
Key figures 1-06/03 1-06/02* 1-12/02*
Earnings per share, EUR 0.12 0.13 0.31
Equity per share, EUR 3.38 3.21 3.36
Total shares,in thousands 39,675 39,675 39,675
of which outstanding 39,427 38,191 38,191
Return on capital, % 12.6 11.7 13.6
Return on equity, % 7.7 8.3 9.4
Equity ratio, % 57.3 74.6 77.1
Gearing, % 2.7 -38.5 -40.5
Investments, EUR million 61.5 1.7 6.8
Personnel, end of period 1,170 531 531
Personnel, average 1,012 518 536
Order book, EUR million 76.2 72.7 67.4
Contingent liabilities, EUR million
Liens 0.7 0.9 0.5
Other liabilities 18.8 6.6 7.8
Derivatives contracts
Value of underlying assets
Forward currency contracts 30.8 32.5
18.4
Market value
Forward currency contracts 30.7 29.5
17.5
Cash Flow, EUR million
Cash flow from operations
before taxes and financing 14.3 7.8 20.5
Net financing expenses -0.4 1.4 -0.5
Taxes paid -1.8 -2.4 -5.3
Cash flow from operations 12.2 6.7 14.7
Cash flow from investments -1.5 -0.4 -1.1
Acquisition of subsidiaries -72.1 -0.8 -2.3
Cash flow from investments -73.5 -1.2 -3.4
Dividends paid -5.9 -13.3 -13.3
Disposal of treasury shares 7.4 0.7 0.7
Change in net debt 34.5 -1.7 -2.2
Cash flow from financing 36.0 -14.4 -14.7
Change in cash and equivalents 25.4 -8.9 -3.4
The above figures are unaudited.
NET SALES, OPERATING PROFIT BEFORE AMORTISATION OF CONSOLIDATION
GOODWILL, AND ORDER BOOK BY QUARTER
Net sales, EUR Million
1-3/02 4-6/02 7-9/02 10-12/02 1-3/03 4-6/03
Glass and Stone Technology 25.0 34.3 23.0 35.4 46.4 48.2
Energy 6.5 5.7 6.0 8.2 8.0 6.8
Parent company, other
operations & eliminations 0.1 0.0 0.0 0.0 0.0 0.0
Group total 31.6 40.0 29.0 43.6 54.4 55.1
Operating profit before amortisation of
consolidation goodwill, EUR Million / EBITA%
1-3/02 4-6/02 7-9/02 10-12/02 1-3/03 4-6/03
Glass and Stone Technology 2.5 3.9 2.4 6.7 4.3 4.5
EBITA% 10.0 11.5 10.3 18.9 9.3 9.3
Energy 1.3 1.1 1.1 2.0 1.7 1.5
EBITA% 20.6 18.5 19.1 24.3 20.8 22.1
Parent company, other
Operations & eliminations -0.5 -0.7 -0.6 -0.4 -0.8 -0.6
Group total 3.4 4.3 2.9 8.3 5.2 5.4
EBITA% 10.6 10.8 10.1 19.1 9.6 9.9
Order book, EUR Million
3/02 6/02 9/02 12/02 3/03 6/03
Glass and Stone Technology 49.5 49.7 42.1 45.2 63.6 54.0
Energy 23.6 23.0 23.0 22.2 22.0 22.2
Group total 73.1 72.7 65.1 67.4 85.6 76.2
