KYRO'S NET SALES CONTINUED TO GROW
Kyro Corporation STOCK EXCHANGE RELEASE 10 May 2006
KYRO'S NET SALES CONTINUED TO GROW
January-March key figures
- The Group's net sales were EUR 63.8 (58.7) million, up by 8.8%
- Comparable operating profit EUR 4.7 (5.1) million, comparable
profit before taxes 4.9 (5.2) million
- Tamglass Finton's operating model will be renewed, expense provision for
adjustment EUR 0,7 million
- New machine orders EUR 29.4 (39.8) million
- Group order book on 31 March 2006 was EUR 131.9 (139.1) million
- Equity ratio 58.2% (58.9)
KYRO GROUP STRUCTURE
Kyro's 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 Group's 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. The products sold under its Tamglass brand are safety,
insulating and balcony glasses and balcony systems.
Kyro's 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 Group's net sales in January-March were EUR 63.8 (58.7) million. The
Group's comparable operating profit was EUR 4.7 (5.1) million, representing 7.4%
(8.7%) of net sales. In addition, Kyro recognised a non-recurring expense
provision of EUR 0.7 million for future costs arising from the restructuring of
Tamglass Finton realised during 2006.
Comparable profit before taxes was EUR 4.9 (5.2) million, representing 7.7%
(8.9%) of net sales. Taking the above-mentioned expense provision EUR 0,7 million
into account, profit before taxes was EUR 4.2 million. Profit for the financial
year was EUR 2.9 (3.4) million. Return on invested capital was 12.6% (15.2%).
Earnings per share were EUR 0.04 (0.04) and equity per share was EUR 1.61 (1.52).
Net financial items totalled EUR 0.2 (0.1) million. This includes interest,
dividend and other financial income of EUR 0.5 (1.2) million, and interest and
other financial expenses of EUR 0.3 (1.1) million.
The Group's order book on 31 March 2006 was EUR 131.9 (139.1) million.
Business areas' net sales, operating profit and order book, EUR million
Net Operating Order
sales profit book
1-3/06 1-3/05 1-3/06 1-3/05 1-3/06 1-3/05
Glaston Technologies 54.9 50.7 3.8 4.5 100.0 114.5
Energy 8.9 8.0 1.6 2.0 31.9 24.6
Non-recurring items -0,7
Parent company, other 0.0 0.1 -0.7 -1.4
operations and
eliminations
Group, total 63.8 58.7 4.0 5.1 131.9 139.1
FINANCING
The Group's financial standing is good. The equity ratio on 31 March 2006 was
58.2% (58.9%). By a decision of the Annual General Meeting, a total of EUR 13.4
million was distributed as dividends for 2005.
Cash flow from business operations on 31 March 2006 was EUR 2.0 (3.1) million.
The Group's liquid funds on 31 March 2006 totalled EUR 15.9 (5.2) million.
Interest-bearing net debt stood at EUR -12.6 million (assets greater than
interest-bearing debt), whereas it was EUR 13.3 million the previous year.
Gearing stood at -9.9% (11.0%).
CAPITAL EXPENDITURE
The Kyro Group's capital expenditure in January-March totalled EUR 2.3 (1.9)
million. This includes the construction of Glaston Technologies' new production
plant in China (EUR 0.6 million), the extension of the Tampere office (EUR 0.4
million), obligatory product development capitalisations under IFRS (EUR 0.6
million) as well as normal repair and maintenance investments.
ORGANISATION AND PERSONNEL
The Kyro Group had 1,247 (1,204) employees on 31 March 2006. The number of Group
employees working in Finland was 448 (430), while the number working abroad was
799 (774). The average number of employees was 1,240 (1,201). The number of
employees has grown from the end of March 2005, mainly due to a strengthening of
human resources in maintenance and service operations.
Personnel
31 March 2006 31 March 2005
Glaston Technologies 1 216 1 170
Energy 23 23
Kyro Corporation 8 11
Kyro Group 1 247 1 204
SHARES AND SHARE PRICES
A total of 3,150,052 (1,807,251) Kyro Corporation (KRO1V) shares were traded in
January-March 2006, representing 4.0% (2.3%) of the total number of shares. The
lowest price paid for a share on the Helsinki Exchanges was EUR 4.10 and the
highest price EUR 4.83. The average price during the period was EUR 4.48.
ACQUISITION AND DISPOSAL OF OWN SHARES
The Annual General Meeting on 16 March 2006 authorised the Board of Directors to
acquire the company's own shares for the purpose of using them as consideration
in possible acquisitions, to finance investments or in 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 company's
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
company's total share capital at the moment of acquisition. Shares can be
acquired or sold in public trading on the Helsinki Exchanges at the market value
of the shares at the time in question.
The authorisations to acquire and dispose of the company's own shares are valid
for a period of one year from the decision of the Annual General Meeting on 16
March 2006. On 31 March 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 January-March.
MANAGEMENT INCENTIVE SCHEME
The Group operates a management incentive scheme, approved in 2002, which covers
key Tamglass personnel and Kyro's management. A total of 23,250 A share options,
with an exercise period of 1 May 2005 to 31 May 2009, and 21,375 B share options,
with an exercise period of 1 May 2007 to 31 May 2009 have been awarded.
In accordance with a restriction in the incentive scheme, share subscription by
exercising the options is possible only with the permission of Kyro Corporation,
but the options may be sold to Kyro Corporation during their exercise period at a
price which is defined as the difference between the imputed value of the share
and the subscription price. Two thirds of the imputed value of the share is based
on the results of the Tamglass and Kyro Groups and one third on the development
of the Kyro share price. The total value of share options at the time of
realisation must not exceed 15% of the Kyro Group's cumulative net profit,
starting from financial year 2002.
BOARD OF DIRECTORS AND AUDITORS
The Annual General Meeting on 16 March 2006 elected as new members of the Board
of Directors Claus von Bonsdorff MBA MSc(Eng), Jan Hasselblatt MBA and Andreas
Tallberg MBA. Member of the Board of Directors member Barbro Koljonen had
submitted her registration from the board.
The members of the Board of Directors as of 16 March 2006 are Claus von
Bonsdorff, Klaus Cawén, Lars Hammarén, Jan Hasselblatt, Heikki Mairinoja, Carl-
Johan Numelin, Carl-Johan Rosenbröijer, Christer Sumelius and Andreas Tallberg.
The Board of Directors elected Carl-Johan Numelin as Chairman of the Board of
Directors and Christer Sumelius as Deputy Chairman.
The Annual General Meeting decided on a change to the Articles of Association,
according to which the term of office of members of the Board of Directors is one
year as of 2006.
The Board of Directors appointed to the Audit Committee are Heikki Mairinoja,
Carl-Johan Numelin (Chairman) and Carl-Johan Rosenbröijer, and as members of the
Remuneration Committee Klaus Cawén, Carl-Johan Numelin (Chairman), Christer
Sumelius and Andreas Tallberg.
The Annual General Meeting elected KPMG Wideri Oy Ab as the auditor of Kyro
Corporation, with Sixten Nyman, Authorised Public Accountant, as the responsible
auditor.
GLASTON TECHNOLOGIES - NET SALES, OPERATING PROFIT AND ORDER BOOK
Glaston Technologies' net sales totalled EUR 54.8 (50.7) million. Comparable
operating profit was EUR 3.8 (4.5) million, representing 7,0% (9.0%) of net
sales.
New orders totalling EUR 35.1 (44.1) million were received. The order book was
EUR 100.0 (114.5) million at the end of March. The offer book was higher than the
level in 2005.
The Glass Machinery Group's net sales rose from the previous year, but
profitability weakened slightly. Profitability deteriorated due to, among other
things, the emphasis of deliveries for the period being outside the eurozone. The
Glass Machinery Group's profitability was also influenced by the expenses of
strengthening the maintenance and service network as well as by sales of used
machines and machine options being weighted towards the latter part of the year.
The Glass Processing Group's net sales rose slightly from the previous year and
its profitability was better than in 2005 despite the started restructuring of
Tamglass Finton. To cover costs arising from the restructuring, a non-recurring
expense provision of approximately EUR 0.7 million was recognised in the Group's
interim financial statements.
The profitability of balcony operations has suffered mainly from an altered
competitive situation. In March, Tamglass Finton Oy began the restructuring of
its operations in order to improve its profitability and operational efficiency.
A separate Stock Exchange Release on the company's new operating model and the
outcome of statutory employer-employee negotiations was published on 3 May 2006.
GLASTON TECHNOLOGIES - GLASS MACHINERY GROUP
Market and sales
The demand and offer book for safety glass and pre-processing machines made by
Glaston Technologies was on a good level in January-March as a whole.
Capital investment decisions in respect of safety glass machines were postponed,
particularly in Europe and in certain markets in the Asian- Pacific region.
Decision-making in China and the Middle East has also slowed. In North America,
on the other hand, sales continued to grow and activity also strengthened in the
South American market. Sales under the One-Stop-Partner concept, i.e.
combinations of safety glass and pre-processing machines, grew according to
expectations.
Demand for glass pre-processing machines was slightly higher than in the
comparison period. Sales developed in line with strategy, because orders received
by Bavelloni, as well as machine sizes, have grown, and sales have begun as
expected to be weighted towards machines suitable for pre-processing of
architectural glass as well as One-Stop-Partner comprehensive deliveries. Demand
for stone processing machines was up from the previous year.
Demand for tools made by Glaston Technologies was also better than in 2005 and
growth was focused on the United States, South America and the EMA area.
Sales of Uniglass Engineering, which mainly focuses on flat tempering machines,
were according to expectations. Uniglass, which celebrates its 10th anniversary
in June, delivered its one hundredth high quality flat tempering machine in
February.
Production and new products
Glaston Technologies has a factory network in its main market areas, namely
Finland, Italy, the United States, China and Brazil. Operations are based on own
product development, assembly and a strong subcontracting network, whose use of
capacity is flexible. The utilisation rates of the machine factories were on a
good level in January-March. Particularly in the United States the unit's load
factor was high. Glaston Technologies' new assembly plant, in Tianjin, China,
will open in the early summer.
Glaston Technologies is strengthening its product concept in Asia, where Tamglass
has expanded its tempering machine range in the mid-segment by launching on to
the market the new SuperT flat tempering machine, and Bavelloni by introducing
cutting machines into the same segment.
Maintenance and service business
Glaston Technologies's maintenance and service business is still growing and it
represents an important priority area. During the period under review, human
resources in maintenance operations were boosted strongly. The maintenance
contract book grew further and spare parts sales have picked up from the previous
year. Demand for updates and accessories was good. Sales of used machines and
machine options were weighted towards the latter part of the year.
GLASTON TECHNOLOGIES - GLASS PROCESSING GROUP
Market and sales
The Glass Processing Group increased its volumes compared to the previous year
despite the tight competitive climate. The total volume of the building industry
grew, and Glass Processing increased its market share due to its high quality
level and more efficient sales and production activity. The group also increased
its special automotive glass exports to Europe.
Glass Processing's biggest façade glazing projects were the Kalasatama Metro
Station in Helsinki, the Höjskole in Bergen, Norway, the TAYS and Hermia building
extensions in Tampere and the Kuriirinmuuri office building in Vantaa. Glass
Processing successfully delivered the first Tamglass Pro series balcony glass
systems. The Pro series technology, design and ease-of-installation are the best
on the market.
ENERGY
Net sales, operating profit and order book
The net sales of the Energy business area totalled EUR 8.9 (8.0) million in
January-March. Net sales were boosted by a rise in the price of energy. Operating
profit was EUR 1.6 (2.0) million and represented 18.1% (25.1%) of net sales. The
relative share of operating profit declined mainly due to selling out the
hydropower and increase in gas price.
Order book data for 2005 is not completely comparable, because they include Kyro
Power's then hydropower and district heat distribution operations.
Kyro Power's order book was EUR 31.9 (24.6) million on 31 March 2006.
Development of the energy market
The market price of electricity was increased in the period under review by the
weak water and snow situation in the Nordic countries and the high prices of oil
and emission rights. The price of emissions rights passed the 30 euro per tonne
level in March, but fell back to nearly half that figure after the period under
review. In the early part of the year, the price level of electricity and
derivatives rose in accordance with the price of emissions rights in the Nordic
countries and in Finland. A new gas tariff, on the other hand, increased the
price of natural gas used by the gas-fired power plant as its main fuel at the
turn of the year.
Kyro Power's current price contracts with M-real and Finnforest expire in mid-
2007. After this, the company's profitability will be affected particularly by
the level of the market prices of natural gas and electricity.
Development of operations
Kyro sold Kyro Power's hydropower business and district heat distribution company
in December 2005 as part of the Partner project. The purpose of the Partner
project, which is ongoing, is to find for Kyro's energy business area partnership
or ownership arrangements that will promote its competitiveness.
FUTURE OUTLOOK
The industry's most extensive customer service network, widest product range and
the One-Stop-Partner 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. The
levels of its order and offer books are good.
Despite the slowing of investment decisions in some market areas Kyro aims in
2006 to again increase its net sales and comparable operating profit.
Helsinki, 10 May 2006
Kyro Corporation
Board of Directors
Additional information about Kyro's 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 1-3/2006, INCOME STATEMENT AND BALANCE SHEET
Comparable 1-3/2006 1-3/2005 1-12/2005
1-3/2006
Consolidated Income
Statement, EUR million
Net sales 63.8 63.8 58.7 266.7
Other operating income 0.9 0.9 0.5 14.9
Operating expenses 58.0 58.0 52.1 237.4
Non-recurring items 0.7
Depreciation 1.9 1.9 2.1 8.7
Operating profit 4.7 4.0 5.1 35.5
% of net sales 7.4 6.3 8.7 13.3
Financial income and 0.2 0.2 0.1 -1.3
expenses
Profit before taxes and 4.2 5.2 34.2
minority interest 4,9
Income tax -1.3 -1.8 -11.9
Profit for the financial 2.9 3.4 22.4
period
Distribution of profit 2.9 3.5 22.4
for financial period to
parent company
shareholders
Minority interest 0.0 -0.1 0.0
Profit for the financial 2.9 3.4 22.4
period
Earnings per share, EUR 0,04 0.04 0.04 0.28
Consolidated Balance 31.3.2006 31.3.2005 31.12.2005
Sheet, EUR million
Assets
Non-current assets 112.9 120.8 106.2
Inventories 61.7 65.1 59.6
Trade and other 67.1 47.3 64.3
receivables
Assets recognised at
fair value
through profit and loss 0.2 6.3 0.1
Cash and cash 15.9 5.2 26.3
equivalents
Assets, total 258.0 244.7 256.5
Shareholders' equity and
liabilities
Shareholders' equity 127.2 120.1 139.0
Minority interest 0.0 0.2 0.0
Shareholders' equity, 127.2 120.3 139.0
total
Provisions 11.1 7.7 9.8
Non-current 1.3 1.3 1.2
interest-bearing
liabilities
Non-current non-interest 7.4 7.9 7.8
bearing liabilities
Current interest-bearing 3.7 23.5 1.7
liabilities
Current 107.4 84.1 97.0
non-interest-bearing
liabilities
Shareholders' equity and 258.0 244.7 256.5
liabilities, total
Consolidated cash flow
statement, EUR 1000
31.3.2006 31.3.2005 31.12.2005
Cash flow from business
operations
Profit for the financial 2 902 3 431 22 365
period
Planned depreciation 1 946 2 784 8 696
Financial income and expenses -168 -643 -951
Other adjustments 1 472 1 786 9 881
Cash flow before change in 6 153 7 358 39 991
working capital
Change in working capital -2 929 -4 604 -15 773
Cash flow from operations 3 523 2 754 24 217
before financial items and
taxes
Interest received 163 1 026 1 205
Dividends received 32 369
Interest paid -51 -711 -1 255
Taxes paid -1 592 32 -1 986
Cash flow from business 2 043 3 133 22 551
operations
Cash flow from investments
Investments in tangible and -2 244 -1 656 -10 296
intangible assets
Proceeds from the sale of 25 733
tangible and intangible assets
Cash flow from investments -2 244 -1 656 15 437
Cash flow from financing
Change in long-term loan 100
receivables
Drawings of short-term loans 1 946 3 451
Repayments of short-term loans -20 -16 788
Repayments of long-term loans -985
Dividends paid -12 178 -5 066 -5 653
Other financing items -836 5 531
Cash flow from financing -10 132 -2 471 -17 894
Change in liquid assets -10 333 -994 20 094
Liquid assets at beginning of 26 276 6 183 6 183
period
Liquid assets at end of 15 942 5 188 26 276
financial period
-10 333 -994 20 094
Key figures 31.3.2006 31.3.2005 31.12.2005
Number of shares, 1000 79 350 79 350 79 350
- of which outstanding 79 020 79 020 79 020
Return on invested capital, % 12.6 15.2 26.1
Return on equity, % 8.7 11.3 17.1
Equity ratio, % 58.2 58.9 64.4
Gearing, % -9.9 11.0 -17.7
Equity per share, EUR 1.61 1.52 1.76
Investments, EUR million 2.3 1.9 11.4
Personnel at end of year 1 247 1 204 1 222
Personnel (average) 1 240 1 201 1 218
Order book, EUR million 131.9 139.1 140.7
Business areas' net sales, operating profit and order book, EUR million
Net sales 1-3/05 4-6/05 7-9/05 10-12/0 1-3/06 Comparab
5 le
1-3/06
Glaston 50.7 60.6 52.8 74.8 54.9 54.9
Techologies
Energy 8.0 5.1 6.8 7.7 8.9 8.9
Parent company, 0.1 0.1 0.1 0.0 0.0 0.0
other
operations and
eliminations
Group, total 58.7 65.8 59.6 82.5 63.8 63.8
Operating 1-3/05 4-6/05 7-9/05 10-12/0 1-3/06 1-3/06
profit 5
Glaston 4.5 6.2 5.8 5.5 3.2 3.8
Technologies
Operating 9.0 10.3 11.1 7.4 5.7 7.0
profit %
Energy 2.0 1.1 1.5 14.3 1.6 1.6
Operating 25.1 20.5 22.4 185.9 18.1 18,1
profit %
Parent company, -1.4 -1.6 -1.1 -1.4 -0.7 -0.7
other
operations and
eliminations
Group, total 5.1 5.7 6.3 18.4 4.0 4.7
Operating 8.7 8.7 10.5 22.3 6.3 7.4
profit %
Order book 3/05 6/05 9/05 12/05 3/06 3/06
Glaston 114.5 122.1 119.4 108.8 100.0 100.0
Technologies
Energy 24.6 23.2 23.0 31.9 31.9 31.9
Group total 139.1 145.3 142.4 140.7 131.9 131.9
Contingent liabilities, EUR 31.3.2006 31.3.2005 31.12.2005
million
Company mortgages 0.2 0.4 0.2
Other own liabilities 14.3 15.1 14.7
Derivatives contracts
Value of underlying assets
Forward currency 14.6 13.4 14.1
contracts
Electricity contracts 9.1 5.8 9.6
Fair value
Forward currency
contracts
Positive fair value 0.1 0.0 0.0
Negative fair value 0.0 -0.3 -0.3
Electricity contracts
Positive fair value 0.0 0.1 0.0
Negative fair value -3.5 -0.4 -2.1
Statement of change in consolidated shareholders' equity
Share Share Own Transl Fair Retain Tota Minor Share
capita premiu shares a-tion value -ed l -ity holde
l m fund differ fund earn-i inter rs'
-ences ngs -est equit
y,
total
1000 EUR
Share-ho 12.7 25.3 -1.0 1.5 -1.6 102.0 139. 0.0 139.0
lders' 0
equity
1.1.2006
Change -0.3 -0.3 -0.3
in
translat
ion
differen
ce
Recogni -1.1 -1.1 -1.1
tions to
fair
value
fund
Dividend -13.4 -13. -13.4
distri- 4
bution
Profit 2.9 2.9 0.0 2.9
for the
financia
l period
Share-ho 12.7 25.3 -1.0 1.3 -2.6 91.5 127. 0.0 127.2
lders' 2
equity
31.3.200
6
Share Share- Own Transl Fair Retain Tota Minor Share
capita shares a-tion value -ed l -ity -hold
l premiu differ fund earn-i inter ers'
m fund -ences ngs -est equit
y,
total
1000 EUR
Share-ho 12.7 25.3 -1.0 0.0 84.6 121. 0.6 122.2
lders' 6
equity
1.1.2005
IAS 39,
Financia
l
instrume
nts,
recognit
ion
and
valuatio
n
0.5 0.5 1.0 1.0
IAS 32, -0.1 -0.1 -0.4 -0.4
Reclassificatio
n of minority
interest
Change in 0.5 0.5 0.5
translation
difference
Recognition -0.8 -0.8 -0.8
s to fair
value fund
Dividend -5.5 -5.5 -5.5
distributio
n
Profit for 3.4 3.4 -0.1 3.4
the
financial
period
Shareholder 12. 25.3 -1.0 0.5 -0.3 82.9 120. 0.2 120.3
s' equity 7 1
31.3.2005
