KYRO?S INTERIM REPORT FOR JANUARY-JUNE 2006
Kyro Corporation STOCK EXCHANGE RELEASE 16 August 2006, 15.00
KYROS INTERIM REPORT FOR JANUARY-JUNE 2006
January-June key figures
- Group net sales EUR 126.8 (124.5) million
- Comparable operating profit EUR 9.2 (10.8) million
- Comparable profit before taxes EUR 9.1 (10.2) million
- Profit (after taxes) for the financial period EUR 7.4 (6.5) million
- Group order book on 30 June 2006 EUR 130.1 (145.3) million
- Equity ratio 62.2% (60.3%)
- Earnings per share EUR 0.09 (0.08), equity per share EUR 1.67 (1.56)
KYRO GROUP STRUCTURE
Kyros business areas are Glaston Technologies and Energy. The main business
area Glaston Technologies consists of the Glass Machinery Group and the Glass
Processing Group.
The Glass Machinery Group is the world market leader in glass processing
machines. The Glass Machinery Groups products are glass pre-processing
machines as well as safety glass machines for the architectural and automotive
industries. The group consists of Tamglass, the technology and market leader in
safety glass machines, Uniglass, which manufactures flat tempering machines,
the leading supplier of glass pre-processing machines Z. Bavelloni, which also
produces stone processing machines, and DiaPol, which manufactures tools for
glass and stone pre-processing.
The Glass Processing Group focuses on markets in Finland and neighbouring
countries and is the leading comprehensive supplier of architectural glass
products in Finland. Its safety and insulating glass products sold under its
Tamglass brand are supplied to the building, window and door industries,
specialty vehicle manufacturers and construction projects.
Kyros second business area is Energy, which consists of the electricity and
heat generating gas-fired combi power plant of Kyro Power Oy.
NET SALES AND PROFIT
The Kyro Groups net sales in January-June were EUR 126.8 (124.5) million.
The Groups comparable operating profit was EUR 9.2 (10.8) million,
representing 7.2% (8.7%) of net sales. Comparable operating profit does not
include a non-recurring expense provision of EUR 0.7 million for the
restructuring of Tamglass Finton.
Comparable profit before taxes was EUR 9.1 (10.2) million, representing 7.2%
(8.2%) of net sales. Taking the EUR 0.7 million Finton expense provision into
account, profit before taxes was EUR 8.5 million. Profit for the financial
period was EUR 7.4 (6.5) million. This includes a tax refund of EUR 1.8
million from previous years. Return on invested capital was 12.5% (15.3%).
Earnings per share were EUR 0.09 (0.08) and equity per share was EUR 1.67
(1.56).
Net financial items totalled EUR 0.0 (-0.6) million. This includes interest,
dividend and other financial income of EUR 1.3 (1.9) million, and interest
and other financial expenses of EUR -1.3 (-2.5) million.
The Groups order book on 30 June 2006 stood at EUR 130.1 (145.3) million.
Business areas net sales, operating profit and order book, EUR million
Net sales Order book
Operating profit
1-6/06 1-6/05 1-6/06 1-6/05 30.6.06 30.6.05
Glaston Technologies 110.1 111.3 8.3 10.8 98.2 122.1
Energy 16.6 13.1 2.7 3.0 31.9 23.2
Non-recurring items -0.7
Parent company, other 0.1 0.1 -1.9 -3.0
operations and
eliminations
Group, total 126.8 124.5 8.5 10.8 130.1 145.3
FINANCING
The Groups financial standing is good. Equity ratio on 30 June 2006 was 62.2%
(60.3%). Cash flow from business operations on 30 June 2006 was EUR -5.7 (10.4)
million. The most significant item of cash flow from financing was a total of
EUR 13.4 (5.6) million in dividends paid in the spring. Cash flow also includes
EUR 3.7 million in taxes for 2005, which were paid in 2006, e.g. EUR 2.9
million taxes on capital gains from the sale of hydropower operations in 2005.
The Groups liquid funds on 30 June 2006 totalled EUR 5.6 (6.5) million.
Interest-bearing net debt stood at EUR 0.2 million (assets greater than
interest-bearing debt), whereas it was EUR 9.2 million the previous year.
Gearing stood at -0.1% (7.5%).
CAPITAL EXPENDITURE
The Kyro Groups capital expenditure in January-June totalled EUR 4.6 (5.1)
million. This includes the construction costs of the factory in China and of
the extension of the Finnish office (totalling c. EUR 2.2 million),
obligatory product development capitalisations under IFRS (EUR 1.1 million)
as well as normal repair and maintenance investments.
ORGANISATION AND PERSONNEL
The Kyro Group had 1,265 (1,240) employees on 30 June 2006. The number of Group
employees working in Finland was 469 (461), while the number working abroad was
796 (779). The average number of employees was 1,245 (1,202). The number of
personnel has grown mainly through recruitment of maintenance and installation
staff in the early part of the year.
Personnel
30.6.2006 30.6.2005
Glaston Technologies 1 233 1 207
Energy 24 23
Kyro Corporation 8 10
Kyro Group 1 265 1 240
SHARES AND SHARE PRICES
A total of 4,770,722 (14,965,295) Kyro Corporation (KRO1V) shares were traded
in January-June, representing 6.5% (18.9%) of the total number of shares. The
lowest price paid for a share on the Helsinki Stock Exchange was EUR 3.85 and
the highest price EUR 4.84. The average price during the period was EUR 4.44.
ACQUISITION AND DISPOSAL OF OWN SHARES
The Annual General Meeting on 16 March 2006 authorised the Board of Directors
to acquire the companys own shares for the purpose of using them as
consideration in possible acquisitions, to finance investments or other
industrial arrangements or to be disposed of in other ways or to be
invalidated.
According to the authorisation, the Board of Directors may acquire the
companys own shares using assets available for distribution of profits,
provided that the combined nominal value of the acquired shares together with
any shares already in the possession of the company corresponds to a maximum of
5 per cent of the companys total share capital at the moment of acquisition.
Shares can be acquired or sold in public trading on the Helsinki Stock Exchange
at the market value of the shares at the time in question.
Authorisations to acquire and dispose of the companys own shares are valid for
a period of one year from the decision of the Annual General Meeting on
16 March 2006. On 30 June 2006, Kyro Corporation held a total of 329,904
(329,904) of its own shares, acquired on the basis of previous authorisations.
The company did not exercise the authorisation in April-June.
GLASTON TECHNOLOGIES NET SALES, OPERATING PROFIT AND ORDER BOOK
Glaston Technologies net sales totalled EUR 110.1 (111.3) million in January-
June. Comparable operating profit was EUR 8.3 (10.8) million, representing 7.6%
(9.5%) of net sales. New orders totalling EUR 83.6 (101.5) million were
received.
The order book was EUR 98.2 (122.1) million at the end of June. Safety glass
machines accounted for the reduction. The order book for pre-processing
machines, on the other hand, is growing.
The net sales of the Glass Machinery Group were nearly at the previous years
level, but operating profit was lower. The profitability of the Glass
Machinery Group was reduced by a higher proportion of deliveries outside the
eurozone, expenses resulting from new products and product series as well as
the scheduling of machine option and used machine deliveries towards the end
of the year.
The Glass Processing Groups net sales grew slightly from the previous year
and its comparable result improved.
GLASTON TECHNOLOGIES - GLASS MACHINERY GROUP
Market and sales
Glaston Technologies market situation was generally positive in all the main
market areas, which was evident particularly as growth in orders for pre-
processing machines, tools and maintenance. Safety glass machines orders were
lower than the previous year, even though the offer book and demand for
safety glass machines is good.
Fewer orders for safety glass machines were received from the architectural
segment than in the previous year. In the EMA area (Europe, Middle East and
Africa) the offer book is good, but investment decisions were deferred.
Demand and orders continued to be good in North America, were high technology
safety glass machines are needed due to the increasing use of energy glass.
The South American market has developed very favourably. In China, the
government has curtailed investment, but activity turned again to a growth
track during the second quarter. In the Asia-Pacific region and India demand
and orders exceeded expectations.
Fewer orders of safety glass machines than expected were received from the
automotive segment in the second quarter.
More orders of glass pre-processing machines were received than the previous
year, particularly in Europe and South America. Bavellonis operations are
developing in line with strategy towards larger machines and the architectural
segment.
One-Stop-Partner (OSP) concept orders again grew in the second quarter. Demand
and the offer book for OSP combinations have exceeded targets. A typical OSP
delivery includes a Tamglass flat tempering machine and one or more Bavelloni
pre-processing machines.
Production and new products
Glaston Technologies has a factory network covering Finland, Italy, the United
States, China and Brazil. Operations are based on own product development,
assembly and a strong subcontracting network, which can adjust capacity
flexibly.
The utilisation rates of the machine factories were generally on a good level
in April-June. The new Glaston Technologies assembly plant built in Tianjin,
China, began operating in July and immediately received new orders.
The first series of deliveries for the many new products that came on sale
last year have been scheduled for the first three quarters of this year. Of
the new products, deliveries to customers of the worlds fastest flat
tempering machine, the Tamglass Sonic, and Bavellonis integrated VX-Magnum
pre-processing line, for example, will begin in the second half of the year.
Tamglass and Bavelloni will present this years most significant new products
in Dusseldorf this October, at the Glasstec fair, the most important glass
industry event of the year.
Maintenance and service business, and tools
Orders for Glaston Technologies maintenance and service business are growing,
particularly pre-processing machine maintenance and sales of tools. Tamglass
maintenance contract book and sales of spare parts are also growing. Order
intake of safety glass machine updates (machine options) and spare parts was
good, although deliveries of these and of used machines are mostly scheduled to
take place towards the end of the year.
GLASTON TECHNOLOGIES GLASS PROCESSING GROUP
Market and sales
The Glass Processing Groups market situation continued on a positive note in
all areas of operations during April-June. Volume increased mainly due to a
healthy level of construction activity in Finland. The group expects prospects
for the construction sector to remain good for the rest of the year. As
activity increases, the Glass Processing Group has improved its market share
from last year.
The biggest references in project sales were the ABB production and office
building in Helsinki, the Falcon Business Park in Espoo, As. Oy Villa Aquarius
in Tampere and the Blue One office at Helsinki-Vantaa Airport.
In the specialty vehicle segment, the Glass Processing Group made two important
openings. The group gained new customers in the shape of Case New Holland, an
important agricultural machinery manufacturer, and Fritzmeier, Europes largest
cabin manufacturer. Deliveries of cabin glazing to the new customers will begin
during the autumn. The Glass Processing Group also obtained new insulating
glass customers during the reporting period.
The Glass Processing Groups companies Tamglass Safety Glass Ltd, Tamglass
Insulating Glass Oy and Tamglass Finton Oy will merge into a single legal
entity before the end of the year.
As a consequence of the restructuring of Tamglass Finton that began in March,
balcony systems installation operations will end in September. Owing to the
arrangement, Fintons volume declined from the previous year. From now on, the
Glass Processing Group will sell balcony systems according to a new business
model via a partner network.
ENERGY
Net sales, operating profit and order book
The net sales of the Energy business area totalled EUR 16.6 (13.1) million in
January-June. Net sales were boosted by a rise in the price of energy.
Operating profit was EUR 2.8 (3.1) million and represented 16.6% (23.3%) of
net sales. Operating profit was reduced by further increases in the price of
natural gas, a longer than normal maintenance shutdown and hedging of market
electricity sales.
Financial data for 2005 is not completely comparable, because they include
Kyro Powers then hydropower and district heat distribution operations.
Kyro Powers order book was EUR 31.9 (23.2) million on 30 June 2006.
Development of the energy market
In April-June the water situation in the Nordic countries weakened and prices
of emission rights fluctuated sharply. At the end of April, the price of
emissions rights reached its highest value, 31-32 euros per tonne. Emissions in
2005 proved to be smaller than the rights distributed on a European level,
however, and the price settled around the 15 euros per tonne level.
At the same time the market price of electricity has fallen.
Due to the dry, hot summer, the price of electricity has been rising since May
and is at historically high prices for the time of year. The average price in
June was EUR 45.3/MWh, which is 45% higher than the previous record in 2004.
Energy production
Kyro Powers gas-fired combi power plant operated continuously during April-
June except for annual maintenance to the combi unit carried out in June.
Development of operations
The purpose of the Partner project, which is still continuing, is to find for
the Energy business area partnership or ownership arrangements that will
promote its competitiveness. Nothing of significance happened in the project
during the second quarter.
EVENTS AFTER THE REVIEW PERIOD
Bavelloni, which belongs to the Glass Machinery Group, will initiate an
efficiency programme in Italy this September. The programme will include,
among other things, the closure of the Bergamo factory as well as the
reduction of costs, such as personnel expenses. An expense provision relating
to the Bavelloni arrangements will be made in the third quarter. A separate
stock exchange release on the matter was issued on 28 July 2006 and Kyro will
provide further information on the programme as it progresses.
FUTURE OUTLOOK
The industrys most extensive customer service network, widest product range
and the One-StopPartner concept create for Glaston Technologies good
opportunities to fulfil customers needs better than before. The main
business area, Glaston Technologies, is a technology and market leader in a
growing business sector.
Although investment decisions for safety glass machines have slowed in some
markets, Kyro Groups order book for 2006 is good. In addition, the Group is
implementing efficiency measures, the impact of which is expected to be
apparent during 2006. Kyro is therefore aiming to increase its net sales and
comparable operating profit in 2006.
Helsinki,
16 August 2006
Kyro Corporation
Board of Directors
Additional information about Kyros financial statements can be obtained from
Kyro Group President & CEO Pentti Yliheljo and Chief Financial Officer Vesa
Hopia, tel. +358 3 382 3111.
Investor relations:
Kyro Corporation, IR and Communications Manager Emmi Watkins, tel. +358 400
903 260 / emmi.watkins@kyro.fi, IR pages at the Internet address www.kyro.fi
Distribution
Helsinki Exchanges, key media
KYRO GROUP 1-6/2006, INCOME STATEMENT AND BALANCE SHEET
Comparable
1-6/2006 1-6/2006 1-6/2005 1-12/2005
Consolidated Income Statement,
EUR million
Net sales 126.8 126.8 124.5 266.7
Other operating income 1.1 1.1 0.9 14.9
Operating expenses 114.9 115.6 110.3 237.4
Depreciation 3.9 3.9 4.3 8.7
Operating profit 9.2 8.5 10.8 35.5
% of net sales 7.2 6.7 8.7 13.3
Financial income and expenses 0.0 0.0 -0.6 -1.3
Profit before taxes and 9.1 8.5 10.2 34.2
minority interest
Income tax -1.1 -3.7 -11.9
Profit for the financial 7.4 6.5 22.4
period
Distribution of profit for
financial period
To parent company shareholders 7.4 6.5 22.4
To minority 0.0 0.0 0.0
Profit for the financial 7.4 6.5 22.4
period
Earnings per share, EUR 0.09 0.08 0.28
Consolidated Balance Sheet, 30.6.2006 30.6.2005 31.12.2005
EUR million
Assets
Non-current assets 111.4 121.7 106.2
Inventories 65.0 65.5 59.6
Trade and other receivables 64.4 54.2 64.3
Assets recognised at fair
value
through profit and loss 0.0 0.1 0.1
Cash and cash equivalents 5.6 6.5 26.3
Assets, total 246.4 248.1 256.5
Shareholders equity and
liabilities
Shareholders equity 131.6 122.9 139.0
Minority interest 0.0 0.0 0.0
Shareholders equity, total 131.6 122.9 139.0
Provisions 10.5 8.4 9.8
Non-current interest-bearing 0.7 1.2 1.2
liabilities
Non-current non-interest- 8.1 8.6 7.8
bearing liabilities
Current interest-bearing 4.7 15.2 1.7
liabilities
Current non-interest-bearing 90.7 91.7 97.0
liabilities
Shareholders equity and 246.4 248.1 256.5
liabilities, total
30.6.2006 30.6.2005 31.12.2005
Cash flow from business operations
Profit for the financial period 7.4 6.5 22.4
Adjustments 3.2 8.1 17.6
Cash flow before change in working 10.6 14.6 40.0
capital
Change in working capital -10.8 -3.9 -15.8
Cash flow from operations before -0.3 10.7 24.2
financial items and taxes
Interest received 0.3 1.1 1.2
Dividends received 0.0 0.2 0.4
Interest paid -0.1 -1.1 -1.3
Taxes paid -5.6 -0.5 -2.0
Cash flow from business operations -5.7 10.4 22.6
Cash flow from investments
Investments in tangible and intangible -4.1 -5.6 -10.3
assets
Proceeds from the sale of tangible and 2.0 0.0 25.7
intangible assets
Taxes on proceeds of sale of energy -2.9
business operations in 2005
Cash flow from investments -5.0 -5.5 15.4
Cash flow from financing
Change in long-term loan receivables 1.1
Drawings of short-term loans 2.9 1.7
Repayments of short-term loans -6.1 -16.8
Repayments of long-term loans -0.5 -1.0
Dividends paid -13.4 -5.6 -5.7
Other financing items 5.5 5.5
Cash flow from financing -10.0 -4.5 -17.9
Change in liquid assets -20.7 0.4 20.1
Liquid assets at beginning of period 26.3 6.2 6.2
Liquid assets at end of financial period 5.6 6.5 26.3
-20.7 0.4 20.1
Key figures 30.6.2006 30.6.2005 31.12.2005
Number of shares, 1000 79,350 79,350 79,350
- of which 79,020 79,020 79,020
outstanding
Return on invested 12.5 15.3 26.1
capital, %
Return on equity, % 10.9 10.6 17.1
Equity ratio, % 62.2 60.3 64.4
Gearing, % -0.1 7.5 -17.7
Equity per share, EUR 1.67 1.56 1.76
Investments, EUR 4.6 5.1 11.4
million
Personnel at end of 1,265 1,240 1,222
year
Personnel (average) 1,245 1,210 1,218
Order book, EUR 130.1 145.3 140.7
million
Business areas net sales,
operating profit and order
book, EUR million
Net sales 1-3-/05 4-6/05 7-9/05 10-12/05 1-3-/06 4-6-/06
Glaston 50.7 60.6 52.8 74.8 54.8 55.3
Technologies
Energy 8.0 5.1 6.8 7.7 5.9 7.6
Parent company, 0.1 0.1 0.1 0.0 0.1 0.1
other
operations and
eliminations
Group, total 58.7 65.8 59.6 82.5 60.8 63.0
Operating 1-3-/05 4-6/05 7-9/05 10-12/05 1-3-/06 4-6-/06
profit
Glaston 4.5 6.2 5.8 5.5 3.2 4.5
Technologies
Operating 9.0 10.3 11.1 7.4 5.7 8.1
profit %
Energy 2.0 1.1 1.5 14.3 1.6 1.1
Operating 25.1 20.5 22.4 185.9 18.1 14.8
profit %
Parent company, -1.4 -1.6 -1.1 -1.4 -0.7 -1.2
other
operations and
eliminations
Group, total 5.1 5.7 6.3 18.4 4.0 4.5
Operating 8.7 8.7 10.5 22.3 6.3 7.1
profit %
Order book 03/05 6/05 9/05 12/05 03/06 06/06
Glaston 114.5 122.1 119.4 108.8 100.0 98.2
Technologies
Energy 24.6 23.2 23.0 31.9 31.9 31.9
Group, total 139.1 145.3 142.4 140.7 131.9 130.1
Contingent liabilities, EUR million 30.6.2006 30.6.2005 31.12.2005
Company mortgages 0.2 0.2 0.2
Other own liabilities 12.7 13.8 14.7
Derivatives contracts
Value of underlying assets
Forward currency contracts 16.3 16.4 14.1
Electricity contracts 7.1 10.6 9.6
Fair value
Forward currency contracts
Positive fair value 0.5 0.1 0.0
Negative fair value -0.3 -0.5 -0.3
Electricity contracts
Positive fair value 0.0 0.0
Negative fair value -2.8 -2.0 -2.1
Statement of change in consolidated shareholders
equity
1000 EUR Share Share Own Trans Fair Retai- Total Minor- Share-
capi- premium- sha- la- val ned ity hold-
tal fund res tion lue assets inte- ers
diffe- fund rest equity
rences total
Sharehold 12.7 25.3 -1.0 1.5 -1.6 102.0 139.0 0.0 139.0
ers
equity
1.1.2006
Change in -1.0 -1.0 -1.0
translati
on
differenc
e
Recogniti -0.5 -0.5 -0.5
ons to
fair
value
fund
Profits
and
losses
from
hedging
of net 0.1 0.1 0.1
investment, less
taxes
Dividend -13.4 -13.4 -13.4
distribut
ion
Profit 7.4 7.4 0.0 7.4
for the
financial
period
Sharehold 12.7 25.3 -1.0 0.6 -2.0 96.0 131.6 0.0 131.6
ers
equity
30.6.2006
1000 EUR Share Share Own Trans Fair Retain Total Minor- Shareh
capita premium shar la- valu ed ity old-
l fund es tion e assets inter- ers
diffe fund est equit
r- y,
ences total
Sharehold 12.7 25.3 -1.0 0.0 84.6 121.6 0.5 122.2
ers
equity
1.1.2005
IAS 39, Financial
instruments,
recognition
and 0.5 0.5 1.0 1.0
valuation
IAS 32, -0.1 -0.1 -0.2 -0.2
Reclassification
of minority
interest
Change in 1.4 1.4 1.4
translati
on
difference
Recogniti -2.1 -2.1 -2.1
ons to
fair
value
fund
Dividend -5.5 -5.5 -5.5
distribut
ion
Other -0.3 -0.3
changes
Profit 6.6 6.6 -0.1 6.5
for the
financial
period
Sharehold 12.7 25.3 -1.0 1.4 -1.6 86.1 122.9 0.0 122.9
ers
equity
30.6.2005
This bulletin has been prepared in accordance with
the recognition and valuation principles of the IAS
34 standard. The interim report has been prepared
applying the valuation and allocation principles of
the IFRS standards.
