KYRO?S RECORD-BREAKING FOURTH QUARTER
Kyro Corporation STOCK EXCHANGE RELEASE 3 February 2005, 8.30 a.m.
KYROS RECORD-BREAKING FOURTH QUARTER
- Net sales EUR 231.7 (226.7) million; EUR 237.7 million and 5.0%
growth if calculated with foreign exchange rates from 2003
- Operating profit before amortisation of goodwill EUR 21.8 (22.9)
million
- Profit before taxes EUR 21.0 (20.4) million
- Equity ratio was 62.6% (58.6%).
- Boards dividend proposal EUR 0.06/share
- Group order book on 31 December 2004 was EUR 86.7 (81.4) million
- Glaston Technologies orders in December were at a record level of
EUR 27.7 million
- Q4 was record-breaking: net sales EUR 77.5 (70.6) million and
operating profit EUR 9.6 (8.2) million
KYRO GROUP STRUCTURE
Kyros main business area, Glaston Technologies, consists of the Glass
Machinery group, which operates worldwide and is the world market
leader in glass processing machines, and the Glass Processing group,
which focuses on markets in Finland and neighbouring countries, and is
the leading comprehensive supplier of glass processing products in
Finland.
The Glass Machinery groups products are glass pre-processing machines
as well as safety glass machines for the architectural, automotive and
furnishing industries. The group consists of Tamglass, the technology
and market leader in safety glass machines, Uniglass, which
manufactures flat tempering machines, and the leading supplier of
glass pre-processing machines Z. Bavelloni, which also produces stone
processing machines.
The Glass Processing group consists of the units of Tamglass Glass
Processing, whose products are safety and insulating glasses as well
as railings and balconies and their installation.
Kyros second business area is Energy, which consists of the
electricity and heat generating plants of Kyro Power Oy.
NET SALES AND PROFIT
Kyro Groups net sales in 2004 were EUR 231.7 (226.7) million. The
continuing strength of the euro had an adverse impact on net sales and
profitability. If calculated at the foreign exchange rates from the
corresponding period in 2003, net sales would have been EUR 237.7
million, i.e. 5.0% higher than in the previous year.
The Groups operating profit before amortisation of goodwill was
EUR 21.8 (22.9) million. This represented 9.4% (10.1%) of net sales.
Amortisation of goodwill was EUR 2.9 (3.1) million and operating
profit after amortisation amounted to EUR 18.8 (19.8) million.
Operating profit was weakened by the strength of the euro and
investments by Glaston Technologies in Bavellonis new Brazilian
factory and in the development of the sales and service network.
Net financial items totalled EUR 2.1 (0.6) million. These include
interest, dividend and other financial income of EUR 4.0 (2.5)
million, and interest and other financial expenses of EUR 1.9 (1.9)
million.
Profit before taxes was EUR 21.0 (20.4) million. This represented 9.1%
(9.0%) of net sales. Profit for the financial year was EUR 11.6 (12.2)
million. Return on invested capital stood at 12.3% (14.1%). Earnings
per share were EUR 0.15 (0.16)(after adjustment for the bonus issue)
and equity per share EUR 1.64 (1.70).
The Groups order book rose to EUR 86.7 (81.4) million due to a good
business performance in the final quarter. The order book of Glaston
Technologies, the main business area, grew to stand at EUR 62.2 (58.8)
million on 31 December 2004. This represented 5.8% growth from the
previous year.
The business of the Group's parent company consists of financing and
investing activities, as well as group administration services. The
parent companys net sales totalled EUR 0.8 (0.7) million and its
profit for the financial year was EUR 10.5 (41.2) million. The result
was influenced by a Group contribution received of EUR 11.1 million.
Net sales, operating profit and order book, EUR million
Net sales Operating profit* Order book
2004 2003 2004 2003 2004 2003
Glaston Technologies 203.3 198.4 19.7 19.7 62.2 58.8
Energy 28.4 28.3 5.7 5.6 24.5 22.6
Parent company,
other operations
and eliminations -0.1 0.0 -3.6 -2.4
Group total 231.7 226.7 21.8 22.9 86.7 81.4
* Operating profit before amortisation of consolidated goodwill
FINANCING
The Groups financial standing is good. Equity ratio was 62.6%
(58.6%). A total of EUR 15.8 million was paid as dividends, EUR 11.8
million as dividends decided by the Annual General Meeting and EUR 4.0
million as supplementary dividends decided by an Extraordinary
Shareholders' Meeting in December.
Cash flow from business operations was EUR 13.4 (19.6) million. The
Groups liquid funds totalled EUR 11.5 (29.1) million. Interest-
bearing net liabilities amounted to EUR 8.2 (4.4) million. Gearing
stood at 6.1% (3.2%).
INVESTMENTS
Kyro Groups investments totalled EUR 4.6 (62.7) million. They
consisted mainly of new production lines in Glass Processing as well
as maintenance investments.
RESEARCH AND PRODUCT DEVELOPMENT EXPENSES
Research and development expenses entered in the income statement for
the financial period totalled EUR 9.4 (9.8) million. All of these
related in practice to Glaston Technologies.
PERSONNEL
At the end of the period under review, the Kyro Group had 1,208
(1,127) employees, of whom 775 (706) worked outside of Finland. The
average number of employees was 1,175 (1,150). The start-up of
Bavellonis factory in Brazil as well as the opening of Tamglass-
Bavelloni sales offices in Shanghai and Moscow contributed to the
growth of personnel.
Personnel
31.12.2004 31.12.2003
Glaston Technologies 1,175 1,093
Energy 23 24
Kyro Corporation 10 10
Kyro Group 1,208 1,127
SHARES AND SHARE PRICES
An Extraordinary Shareholders Meeting held on 25 November 2004
approved the proposal by the Board of Directors to increase the
companys share capital through a bonus issue of EUR 6,348,000 from
EUR 6,348,000 to EUR 12,696,000. In the bonus issue, one (1) old share
conferred the right on 30 November 2004 to receive one (1) new share
without consideration. The number of shares rose by 39,675,000 shares
to 79,350,000 shares.
A total of 15,424,328 Kyro Corporation shares were traded on the
Helsinki Exchanges in 2004, which equals 19.4% (7.9%) of the total
number of shares. The lowest price paid for a Kyro Corporation share
on the Helsinki Exchanges was EUR 3.40 and the highest price EUR 4.16,
after adjustment for the bonus issue. The average price during the
year was EUR 3.92.
ACQUISITION AND DISPOSAL OF OWN SHARES
On 17 March 2004, the Annual General Meeting of Kyro Corporation
authorised the Board of Directors to acquire the companys own shares,
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% of the companys total share capital at
the moment of acquisition. The companys own shares may be used as
consideration in possible business acquisitions, to finance
investments and in other industrial arrangements in a way and scope
determined by the Board of Directors.
The Annual General Meeting authorised the Board of Directors to decide
on the transfer of acquired own shares. The companys own shares may
be transferred for use as consideration in possible business
acquisitions, to finance investments and in other industrial
arrangements or otherwise transferred or cancelled.
The authorisation granted by the Annual General Meeting on 17 March
2004 to acquire and transfer the companys own shares is valid for a
period of one year beginning from the decision of the Annual General
Meeting. The company had not exercised the authorisation by 2 February
2005.
On 31 December 2004, Kyro Corporation held 329,904 of the companys
own shares, representing 0.4% of total share capital.
MANAGEMENT INCENTIVE SCHEME
The Group operates a management incentive scheme, approved in 2002,
which covers key Tamglass personnel and Kyros management. The
management incentive scheme consists of 35,000 A options, with an
exercise period of 1 May 2005 to 31 May 2009, and 35,000 B options
with an exercise period of 1 May 2007 to 31 May 2009. The options
entitle their holders to subscribe for a maximum of 70,000 Tamglass
Ltd. Oy shares, corresponding to 8.0% of the companys shares.
In accordance with restrictions 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.
BOARD OF DIRECTORS AND AUDITORS
The term of office of Kyro Corporations Board of Directors is 2004-
2007. The following were elected members of the Board of Directors at
the Annual General Meeting on 17 March 2004: Klaus Cawén (new), Lars
Hammarén, Barbro Koljonen, Heikki Mairinoja, Carl-Johan Numelin, Carl-
Johan Rosenbröijer and Christer Sumelius. Carl-Olaf Homén and Gerhard
Wendt were members of the Board of Directors up until the Annual
General Meeting. They were not candidates for membership of the new
Board of Directors due to an age provision in the Articles of
Association.
On 17 March 2004, the Board of Directors elected Carl-Johan Numelin to
continue as the chairman and Christer Sumelius to continue as the
deputy chairman.
Under the Articles of Association the company has one auditor, which
must be an auditing firm approved by the Finnish Central Chamber of
Commerce. The auditors term of office covers the current financial
year and ends at the conclusion of the Annual General Meeting that
follows its election. The 2004 Annual General Meeting elected as
auditor the authorised public accounting firm KPMG Wideri Oy Ab, with
the responsible auditor being Sixten Nyman APA, who supervises
auditing guidelines and coordination for the entire Group.
BOARDS DIVIDEND PROPOSAL FOR THE FINANCIAL YEAR 2004
Kyro Corporations Board of Directors proposes that a dividend of
EUR 0.06 per share be distributed for the financial year ending 31
December 2004. Shares conferring entitlement to a dividend totalled
79,020,096 on 2 February 2005. The dividend shall be paid to
shareholders entered in the register of shareholders maintained by the
Finnish Central Securities Depository Ltd by the date of record 18
March 2005. The Board proposes that the dividend be paid on 29 March
2005.
CORPORATE GOVERNANCE
Kyro Corporation adheres where applicable to the recommendation on the
corporate governance of listed companies issued by the Helsinki
Exchanges on 1 July 2004. At the beginning of 2005 a re-evaluation and
revision of the principles of corporate governance was under way
within the Group.
The Board of Directors of Kyro Corporation has established Audit and
Remuneration Committees consisting of its own members. The members of
the Audit Committee are Lars Hammarén, Heikki Mairinoja and Carl-Johan
Numelin (chairman). The members of the Remuneration Committee are
Klaus Cawén, Carl-Johan Numelin (chairman) and Christer Sumelius.
IFRS ACCOUNTING POLICIES
Kyro Group will adopt accounting policies compliant with the
international IFRS standard as of 1 January 2005. Financial statements
and interim reports for 2004 will be based on the old accounting
principles, but the company will also prepare financial statements for
2004 in accordance with IFRS principles, which will be used as
comparison data for 2005. The most significant differences will be
changes in the principles of sales recognition and the replacement of
goodwill amortisation with annual impairment testing. Kyro Group will
publish an opening balance sheet according to IFRS as well as its 2004
financial statements on 6 April 2005.
GLASTON TECHNOLOGIES NET SALES, OPERATING PROFIT AND ORDER BOOK
Glaston Technologies net sales totalled EUR 203.3 (198.4) million in
the period under review. Net sales would have been EUR 6.0 million
higher if calculated with foreign exchange rates from 2003. Operating
profit before amortisation of goodwill was EUR 19.7 (19.7) million,
representing 9.7% (9.9%) of net sales. Operating profit amounted to
EUR 17.5 (17.6) million.
Glastons machinery group improved its efficiency and productivity.
Tamglass volume and profit rose. Regional machine manufacturing in
Tamglass has been set up to partly hedge against strong exchange rate
fluctuations and this partly compensated for the impact on profits of
the euro, which strengthened further during 2004. Successful products
and more efficient logistics also contributed to the improvement in
profitability. Bavellonis net sales improved, but profitability was
weakened by the high euro exchange rate.
Glaston Technologies order book grew to EUR 62.2 (58.8) million
thanks to a record level of machine orders in December worth EUR 27.7
million. Bavellonis order book is clearly smaller than that of
Tamglass relative to business volumes because the companys products
are mainly supplied from stock, except for some of the biggest
machines.
GLASTON TECHNOLOGIES - GLASS MACHINERY GROUP
Glaston Technologies glass machinery group consists of Tamglass, the
market and technology leader in safety glass machinery, Z. Bavelloni,
the market leader in glass and stone preprocessing machines and tools,
and Uniglass Engineering, which supplies flat tempering glass
machines.
Markets and sales
The developing glass processing market requires increasingly higher
energy economy and efficiency as well as new glass shapes and larger
surfaces. These factors, as well as growth in demand for safety glass
and, in turn, for safety glass machines, are expanding the market for
machines manufactured by Glaston Technologies.
Global demand for glass processing machines was weak at the beginning
of the year, but it picked up to nearly record levels at the end of
the year. Economic conditions emphasized demand for basic machines
early in the year. At the end of the year, demand was strong for all
the main products, i.e. safety glass machines and glass pre-
processing machines, as well as for tools and maintenance services.
Orders exceeded the previous years level and interest shifted towards
larger and higher specification machines.
One-Stop-Partner concept
During 2004 Tamglass and Bavelloni further developed their One-
StopPartner concept. Glaston Technologies industry-leading full
range offering of products and services consists of machine and
production line deliveries, maintenance services and tools. From the
different modules of the concept, customers can select products and
services according to their needs from a single supplier, all the way
to a complete glass processing factory.
Production and new products
The manufacturing of all machinery companies is based on own assembly
and a strong input from subcontracting. For that reason, capacity
utilisation is flexible, which was evident e.g. as the good throughput
of high volume at the end of the year.
Tamglass most important new products were the worlds largest Low-E
glass flat tempering machine, the ProE MAGNUM, and the ProConvection
flat-tempering furnace with TAPC automation. In addition to the
tempering of large glass sizes, the most significant new products in
2004 were developed for flat laminating and bending-tempering. Among
Bavellonis new products were the new Rev series of high-speed
cutting machines, the Alpa N remote CNC grinding machines as well as
new polishing tool set.
Uniglass Engineering improved its position as one of the worlds
leading suppliers of flat tempering machines.
Maintenance services
Glaston Technologies maintenance business grew strongly. Demand for
machine options particularly increased, as did business based on
maintenance agreements. Demand for second-hand machines also grew.
Sales of glass grinding tools manufactured by Bavelloni also improved.
Tamglass launched the Tamglass Reactor production-monitoring service,
which develops the entire manufacturing process. The service, based on
remote technology, helps customers analyse the production efficiency
of their machines.
GLASTON TECHNOLOGIES GLASS PROCESSING
Glaston Technologies Glass Processing group consists of the safety
glass manufacturer Tamglass Safety Glass, the insulating glass element
manufacturer Tamglass Insulating Glass and the balcony systems
manufacturer Tamglass Finton.
Markets and sales
Office construction was at a very low level in Finland in 2004. The
renovation, residential and commercial construction sectors picked up,
however. In a tight market, Tamglass Glass Processing succeeded in
increasing its volumes and market share.
The Glass Processing group has supplied a number of challenging
comprehensive projects. It delivered tempered insulating glass to, for
example, Bauhaus Pirkkala and the Scandic hotel in Linköping. In
addition, Tamglass Glass Processing delivered external and internal
glazing to two luxury cruise ships.
At the FinnBuild Fair in September, Tamglass Glass Processing
presented its fire resistant glass product range and a new balcony
glazing system, deliveries of which will begin in early 2005.
In cooperation with important customers, Tamglass Glass Processing
developed its supply chain, ranging from raw material procurement to
end-customer deliveries. Glass Processings goal is further networking
and improved cooperation with subcontractors, raw material suppliers
and customers.
ENERGY
Net sales, operating profit and order book
The net sales of the Energy business area totalled EUR 28.4 (28.3)
million in the period under review. Operating profit amounted to
EUR 5.7 (5.6) million. The operating profit represented 20.0% (19.6%)
of net sales. Kyro Powers order book at the end of the year was
EUR 24.5 (22.6) million.
Development of the energy market
On the electricity market the price level remained good, although it
declined as the water situation improved towards the end of the year.
Overall, the market price was clearly more stable than in previous
years.
Energy production
In 2004 energy production at the gas-powered plant exceeded the
previous years record. The increase resulted from forest industry
customers increased need for heat and from a growth in the amounts of
electricity supplied.
Despite dry weather early in the year, hydropower production was
nearly 60 per cent higher than in the extremely dry 2003 and was 31
gigawatt hours. Despite this growth, the figure was one third smaller
than in a normal year for water conditions. An improved water
situation means that production in the 2004-2005 winter season has
been at near record levels.
Strengthening of business operations
At the beginning of October, Kyro Group initiated a study project
aimed at finding a possible energy partner. The objective is to
safeguard and boost operations as well as simultaneously to improve
the service capacity and operating fundamentals of the energy
business. Negotiations with possible partners are continuing.
FUTURE OUTLOOK
Kyro Groups basic set-up as it enters 2005 is fundamentally sound.
Glaston Technologies is the world technology and market leader in a
growing business sector. Its order and offer books are at a good
level. Kyro Powers business is stable and profitable.
The industrys most extensive customer service network, widest product
range and the One-StopPartner concept give Glaston Technologies good
opportunities to further improve its response to customers needs.
Kyro aims to improve its net sales and profit by utilising its strong
position in the market and by boosting its operations through synergy
benefits.
The strength of the euro and the weakness of demand for glass
processing machines in Central Europe are the most significant risk
factors that may slow growth of Kyro Groups net sales and
profitability in the current financial period.
SCHEDULE OF FINANCIAL RELEASES
The company will publish three interim reports in 2005.
Interim report 1/2005 (1.1-31.3.2005) will be published on 11 May 2005
Interim report 2/2005 (1.1-30.6.2005) will be published on 17 August
2005
Interim report 3/2005 (1.1-30.9.2005) will be published on 4 November
2005
The publication of the IFRS financial statements and balance sheet
will take place on 6 April 2005.
The printed version of the annual report will be sent to shareholders
in week 11. The electronic version will also be published on the
Internet, at www.kyro.fi, the same week.
Kyros Annual General Meeting will be held on 15 March 2005 at 4 p.m.
in Hilton Helsinki Kalastajatorppa Hotel.
Helsinki 3 February 2005
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 Kyro Corporation, Chief Financial Officer Vesa Hopia,
relations: tel. +358 3 382 3111, IR pages at the Internet
address
www.kyro.fi
Distribution: Helsinki Exchanges
Key media
KYRO GROUP 1-12/2004, INCOME STATEMENT AND BALANCE SHEET
Consolidated Income Statement, EUR million
-12/2004 1-12/03
Net sales 231.7 226.7
Other operating income 1.1 1.6
Expenses 204.2 198.6
Depreciation without amortisation
of consolidated goodwill 6.9 6.8
Operating profit before amortisation
of consolidated goodwill 21.8 22.9
% of net sales 9.4 10.1
Amortisation of consolidation goodwill 2.9 3.1
Operating profit 18.8 19.8
% of net sales 8.1 8.7
Net financial income and expenses 2.1 0.6
Profit before taxes and minority
interest 21.0 20.4
Income taxes -7.5 -6.7
Minority interest -1.9 -1.5
Profit for the financial year 11.6 12.2
Consolidated Balance Sheet, EUR million
2004 2003
Fixed assets 111.4 118.6
Current assets
Inventories 34.7 32.2
Deferred tax receivable 5.7 8.3
Financial assets 73.7 86.9
Assets 225.6 246.1
Shareholders equity 130.5 135.9
Minority interest 4.1 2.2
Non-discretionary reserves 5.9 5.6
Liabilities
Interest-bearing liabilities 19.8 33.4
Non-interest-bearing liabilities 58.1 60.6
Deferred tax liability 7.2 8.4
Equity and liabilities 225.6 246.1
Key figures 1-12/04 1-12/03
Return on invested capital, % 12.3 14.1
Return on equity, % 9.9 10.3
Equity ratio, % 62.6 58.6
Gearing, % 6.1 3.2
Investments, EUR million 4.6 62.7
% of net sales 2.0 27.7
Research and development,
EUR million 9.4 9.8
Personnel, average 1,175 1,150
Personnel at end of year 1,208 1,127
in Finland 433 421
Order book, EUR million 86.7 81.4
Share-related key figures 1-12/04 1-12/03
Earnings per share 0.15 0.16
Equity per share, EUR 1.64 1.70
Number of shares, 1,000 79,350 79,350
- of which outstanding at 31.12. 79,020 79,020
Number of shares, average 79,020 78,776
Share price development
Average price 3.92 3.58
Lowest 3.40 2.70
Highest 4.16 4.10
Share price at end of year 4.10 3.95
Market value of shares outstanding
at end of financial year,
EUR million 325.3 313.4
Share turnover, no. of shares 15,424,328 6,232,942
Share turnover, % of total no. 19.4 7.9
Share turnover, EUR million 60.5 22.3
Dividend per share, EUR 0.06 0.08
Supplementary dividend per share, EUR 0.13
Dividend/result, % 40.0 129.0
Effective dividend yield, % 1.5 5.1
P/E ratio 27.3 25.5
2004 2003
Contingent liabilities, EUR million
Mortgages on company assets 0.4 0.4
Other liabilities 15.6 18.6
Derivative contracts
Value of underlying assets
Forward currency contracts 18.2 24.1
Electricity contracts 2.8 2.7
Market value
Forward currency contracts 17.6 22.7
Electricity contracts 2.3 2.5
Cash flow, EUR million 31.12.2004 31.12.2003
Cash flow from business operations
before financial items and taxes 22.4 25.6
Financial items 0.4 -0.5
Taxes paid -9.5 -5.5
Cash flow from business operations 13.4 19.6
Cash flow from investments -4.2 -5.3
Acquisition of subsidiaries -69.4
Cash flow from investments -4.2 -74.7
Dividends paid -15.9 -11.7
Disposal of own shares 8.0
Change in net debt -7.8 30.3
Cash flow from financing -23.7 26.6
Change in liquid assets -14.6 -28.5
NET SALES, OPERATING PROFIT BEFORE AMORTISATION OF CONSOLIDATED
GOODWILL
GOODWILL AND ORDER BOOK BY QUARTER
Net sales
2003 2004
1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12
EUR million
Glaston
Technologies 46.4 48.2 40.2 63.6 44.0 49.8 39.7 69.8
Energy 8.0 6.8 6.5 7.0 7.5 6.5 6.7 7.7
Parent company.
other operations
and elim. 0.0 0.0 -0.1 0.0 0.0 0.0 -0.1 0.0
Group total 54.4 55.1 46.6 70.6 51.5 56.3 46.3 77.5
Operating profit before amortisation of consolidated goodwill/EBITA%
2003 2004
1-3 4-6 7-9 10-12 1-3 4-6 7-9 10-12
EUR million
Glaston
Technologies 4.3 4.5 3.3 7.6 4.0 3.8 2.7 9.3
EBITA% 9.3 9.3 8.3 12.0 9.0 7.6 6.8 13.3
Energy 1.7 1.5 1.1 1.3 1.7 1.2 1.0 1.7
EBITA% 20.8 22.1 16.9 18.4 23.1 18.3 15.5 22.3
Parent company, other
other operations
and elim. -0.8 -0.6 -0.4 -0.7 -0.8 -0.6 -0.8 -1.4
Group total 5.2 5.4 4.0 8.2 4.9 4.4 2.9 9.6
EBITA% 9.6 9.9 8.6 11.7 9.5 7.7 6.3 12.4
Order book
3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04
EUR million
Glaston
Technologies 63.6 54.0 60.3 58.8 48.9 56.6 64.7 62.2
Energy 22.0 22.2 22.6 22.6 22.7 22.7 22.7 24.5
Group total 85.6 76.2 82.9 81.4 71.6 79.3 87.4 86.7
