GLASTON’S INTERIM REPORT 1 JANUARY – 30 SEPTEMBER 2015: NET SALES GREW, PROFITABILITY IMPROVED

Glaston Corporation           INTERIM REPORT           26 October 2015 at 13.00 (EET)


GLASTON’S INTERIM REPORT 1 JANUARY – 30 SEPTEMBER 2015: Net sales grew, profitability improved

This release is a summary of Glaston Corporation’s Interim Report for January-September 2015. The complete report is attached to this release as a pdf-file. The stock exchange release is also available on the company’s website at the address www.glaston.net.

CHANGE IN REPORTING
In the second quarter, Glaston sold 100% of the shares of Glaston Italy S.p.A., which specialised in pre-processing operations. As a result, Glaston reassessed its reporting segments and, as of 1 July 2015, combined the operating segments into a single reporting segment. This interim report has been prepared in accordance with the new segment structure.

As of the second quarter of 2015, pre-processing machines business has been classified in Discontinued Operations. Comments in the text refer only to Continuing Operations. Income statement comparison figures have been restated.

 

JULY-SEPTEMBER 2015

  • Orders received totalled EUR 28.2 (32.1) million.
  • Net sales totalled EUR 34.3 (21.9) million.
  • The comparable operating profit, excluding non-recurring items, was EUR 2.5 (1.1) million.1)
  • The comparable operating profit was EUR 2.4 (1.1) million, i.e. 7.0% (5.1%) of net sales.1)

 

JANUARY-SEPTEMBER 2015

  • Orders received totalled EUR 83.2 (81.6) million.
  • The order book on 30 September 2015 was EUR 47.8 (41.7) million.
  • Net sales totalled EUR 90.8 (73.1) million.
  • The comparable EBITDA was EUR 7.8 (4.8) million, i.e. 8.6 (6.6)% of net sales.1)
  • The comparable operating profit, excluding non-recurring items, was EUR 5.5 (2.6) million.1)
  • The comparable operating profit was EUR 5.2 (1.9) million, i.e. 5.7% (2.6%) of net sales.1)
  • Continuing Operations’ return on capital employed (ROCE) was 18.6 (12.9)%.
  • Continuing Operations’ earnings per share were EUR 0.01 (0.03).
  • Interest-bearing net liabilities amounted to EUR 5.2 (9.5) million.


 1) Due to the sale of the pre-processing machines business, internal purchases eliminated in the comparison figures up to 30 June 2015 change from 1 July 2015 to external purchases. This impacts the comparability of Continuing Operations’ operating profit. In Continuing Operations’ comparable operating profit, those internal items that in future will be external items have been restated.
 

PRESIDENT & CEO ARTO METSÄNEN:
“The third quarter was good in terms of net sales growth. Compared with the corresponding period of the previous year, net sales grew by 57% to EUR 34.3 million. Both the Machines business and the Services business increased their net sales. Growth was mainly in North America, where net sales increased by 60% compared with July-September 2014, and in the EMEA, where net sales grew by 25%. The Asian market, too, showed signs of recovery. Our profitability improved, and the comparable operating profit, excluding non-recurring items, was EUR 2.5 million. Profitability was improved by increased net sales, although fixed costs relating to pre-processing business will adversely affect the year-end result. In respect of these, corrective measures are under way.

The positive mood that prevailed in the EMEA area deteriorated during the summer. This was reflected in third-quarter orders received, which totalled EUR 28.2 (32.1) million. The order book on 30 September, however, was better than the previous year, EUR 47.8 (41.7) million. We expect order flow to increase slightly during the latter part of the year.

In the third quarter, we initiated measures in South America and Asia to restructure our operations in accordance with the company’s structure and the prevailing market situation. With these measures, we are seeking significant annual savings of fixed costs.”

GLASTON’S OUTLOOK FOR 2015 UNCHANGED
Glaston expects that Continuing Operations’ 2015 net sales and comparable operating profit, excluding non-recurring items, will exceed the level of 2014 (in 2014 net sales were EUR 109.7 million and comparable operating profit, excluding non-recurring items, was EUR 5.5 million).

 

KEY FIGURES

 

    restated   restated restated
  7–9/2015 7–9/2014 1–9/2015 1–9/2014 2014
           
Order book, EUR million 47.8 41.7 47.8 41.7 56.0
Orders received, EUR million 28.2 32.1 83.2 81.6 133.6
Net sales, EUR million 34.3 21.9 90.8 73.1 109.7
EBITDA, comparable, EUR million 3.3 2.0 7.8 4.8 8.6
EBITDA, comparable, % net sales 9.5 9.3 8.6 6.6 7.8
EBIT, comparable, EUR million 2.4 1.1 5.2 1.9 4.9
EBIT, comparable, % net sales 7.0 5.1 5.7 2.6 4.5
Profit/loss for the period, EUR million -1.3 -0.1 -12.4 0.5 1.1
Earnings per share, Continuing and Discontinued Operations, EUR -0.01 -0.00 -0.06 0.00 0.01
Cash flow from operations, EUR million 2.0 2.0 -3.6 0.7 16.6
Return on capital employed, %, annualised -12.4 4.8 -12.4 4.8 7.9
Gross capital expenditure, Continuing and Discontinued Operations, EUR million 0.8 1.1 3.7 2.1 3.6
Equity ratio, % 45.3 47.2 45.3 47.2 47.7
Gearing, % 38.2 42.5 38.2 42.5 29.6

 

OPERATING ENVIRONMENT
In the third quarter of 2015, Glaston’s markets continued to develop positively. In the North American and EMEA area markets, growth continued. In Asia, the machines market showed signs of recovery. In South America, the market remained subdued.

Machines

In the third quarter, the market situation remained favourable in North America and the EMEA area. The positive development of the North American market was intensified by construction, as glass processors prepared for additional investments. In the EMEA area, market development was stable.

In Asia, the market showed signs of picking up, although the recovery has been at a slower pace than expected. In the third quarter, Glaston received a significant order, when a customer in China ordered two Glaston CCS1000™ glass tempering furnaces. In total, the deal is worth approximately EUR 2.4 million. In the Pacific area, the market developed in a more positive direction, and in the summer Glaston received machine orders from both Australia and New Zealand.

In South America, the market remained weak. Of the area’s largest markets, the unstable economic situation in Brazil in particular slowed customers’ decision-making.

In the heat treatment machines segment, Glaston maintained its strong market position.

Services
The services market developed favourably during the third quarter. All product groups, excluding tools, developed positively, and Glaston’s market position remained strong.

In modernisation and refurbishment products, the third quarter was very good.
Glaston received a significant modernisation order worth approximately EUR 1 million from an automotive glass manufacturer in Spain. Large modernisation and refurbishment deals were also closed for New Zealand, the United Arab Emirates, Israel, Germany, Portugal, the USA and Colombia.

In the third quarter, sales of heat treatment machine spare parts continued to be good. The number of service work orders also grew. With regard to tools, competition continued to be aggressive, and market situation was challenging.

OUTLOOK UNCHANGED
We continue to expect that Glaston’s markets will grow moderately in 2015. In sales of new machines, we expect good development to continue in the EMEA area and in North America. Economic uncertainty in the EMEA area as well as its local political tensions might, however, reduce customers’ willingness to invest.

The very subdued Asian market showed signs of recovery in July-September and we expect the favourable development to continue in the latter part of the year.
We expect demand in the South American market to remain subdued in the fourth quarter. In the services market, we expect growth to continue in all product groups and particularly in upgrades.

Glaston expects that Continuing Operations’ 2015 net sales and comparable operating profit, excluding non-recurring items, will exceed the level of 2014
(in 2014 net sales were EUR 109.7 million and comparable operating profit, excluding non-recurring items, was EUR 5.5 million).

PRESS MEETING
An analyst and press conference is organized at Glaston’s office on Yliopistonkatu 7, Helsinki, on 26 October 2015 at 14.00 p.m.


For further information, please contact:
President & CEO Arto Metsänen, tel. +358 10 500 6100
Chief Financial Officer Sasu Koivumäki, tel. +358 10 500 500

GLASTON CORPORATION
Agneta Selroos
Communications Director
tel. +358 10 500 6105

Glaston Corporation
Glaston is a leading company in glass processing technologies. We provide high-quality heat treatment machines and services for architectural, solar, appliance and automotive applications. We are committed to our customers’ success over the entire lifecycle of our offering. Moreover, we continuously innovate and develop technologies to enable the glass processing industry to reach ever higher standards in quality and safety. Glaston's shares (GLA1V) are listed on the NASDAQ OMX Helsinki Ltd. in Finland. For more information, please visit: www.glaston.net

Distribution: OMX, key media, www.glaston.net

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