PROFIT BEFORE EXTRAORDINARY ITEMS GREW
Kyro Corporation STOCK EXCHANGE RELEASE 5 May 2004, 8.30 a.m.
PROFIT BEFORE EXTRAORDINARY ITEMS GREW
- Net sales EUR 51.5 (54.4) million; EUR 54.5 million if
calculated with foreign exchange rates from 2003
- Operating profit before amortisation of goodwill EUR 4.9 (5.2)
million
- Profit before extraordinary items grew by 29% to EUR 4.8 (3.7)
million, 9.4% (6.9%) of net sales.
- Earnings per share EUR 0.08 (0.05), equity per share EUR 3.19 (3.33)
- Equity ratio on 31 March 2004 56.1% (54.7%)
- Growth of offer book and After Sales business indicates increasing
capacity utilisation in the glass processing industry
- Group order book on 31 March EUR 71.6 (85.6) million, order book
rose in April to EUR 75.4 (80.7) million
PRESIDENT'S COMMENTARY
"Our volumes have grown in the glass machine markets of the Far East
and America. The strengthening of the euro, however, has reduced
growth of net sales and earnings outside Europe. In the EU area, a
weak level of investment has also been reflected in the glass machine
market. We view growth in After Sales business and pre-processing
machine orders as a sign that the market is beginning to turn around
for Glaston Technologies. This positive outlook is supported by an
offer book which has risen to a near record level," says President and
CEO Pentti Yliheljo.
"The widest customer service network and the most comprehensive
product range in the glass machine sector as well as the One-Stop-
Partner concept have strengthened Glaston Technologies market
position in tight economic conditions. Customer loyalty has also grown
further. We therefore hold a clear competitive advantage as the
leading and growing supplier of glass processing machines."
"Kyros strategy is to is profitably grow Glaston Technologies, both
organically and through acquisitions. As demand in the glass machine
market starts to return to normality, we have all the prerequisites
for growth in place. Our synergy and development projects will then
provide a good basis for improvements in earnings," Yliheljo
continues.
KYRO GROUP STRUCTURE
Kyro's main business area, Glaston Technologies, consists of the Glass
Machinery group, which operates world-wide, and the Glass Processing
group, which focuses on markets in Finland and neighbouring countries.
The Glass Machinery group is number one in the world for glass
processing machines and the Glass Processing group is the leading
comprehensive supplier of glass processing products in Finland. Kyros
second business area is Energy, which consists of the electricity and
heat generating plants of Kyro Power Oy.
The Glass Machinery groups products are glass pre-processing machines
as well as safety glass machines for the architectural and automotive
glass 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 Bavelloni, which also produces stone processing
machines. The Glass Processing group consists of Tamglass Glass
Processing, whose business area includes production of safety, balcony
and insulating glasses and their installation.
NET SALES AND PROFIT
Kyro Groups net sales in the period under review totalled EUR 51.5
(54.4) million. The euro remained at a high level against other key
billing currencies. This reduced both turnover and sales at the
beginning of the year and had a clearly negative impact on the
operating profit. Net sales would have been EUR 54.5 million if
calculated at the foreign exchange rates of the corresponding period
from 2003.
The Groups operating profit before amortisation of goodwill was EUR
4.9 (5.2) million. This represented 9.5% (9.6%) of net sales. The
Groups amortisation of goodwill was EUR 0.8 (0.8) million and
operating profit after amortisation amounted to EUR 4.1 (4.4) million.
Net financial items totalled EUR 0.8 (-0.6) million. These include
interest, dividend and other financial income of EUR 1.1 (0.9)
million, and interest and other financial expenses of EUR 0.3 (1.5)
million.
Profit before extraordinary items grew by 29% to EUR 4.8 (3.7)
million. This represented 9.4% (6.9%) of net sales. Profit for the
financial year grew by 42% to EUR 3.0 (2.1) million. Return on
invested capital stood at 12.4% (10.3%). Earnings per share were 0.08
(0.05) euros.
The Groups order book on 31 March was EUR 71.6 (85.6) million. The
strong euro and the postponement of investment decisions for safety
glass machines weakened order intake in the period under review. Good
machine sales in April (around EUR 17.5 million in new machine orders)
increased the order book to EUR 75.4 (80.7) million.
Figure 1. Net sales, operating profit and order book, EUR million.
Net sales Operating profit* Order book
Q1/04 Q1/03 Q1/04 Q1/03 Q1/04 Q1/03
Glaston Technologies* 44.0 46.4 4.0 4.3 48.9 63.6
Energy 7.5 8.0 1.7 1.7 22.7 22.0
Parent company, other
operations & eliminations -0.0 -0.0 -0.8 -0.8
Group total 51.5 54.4 4.9 5.2 71.6 85.6
* Operating profit before amortisation of consolidation goodwill
FINANCING
The Groups financial standing is good. Cash flow from business
operations was EUR 7.3 (4.1) million. A total of EUR 11.8 million was
paid in dividends; EUR 5.9 million in basic dividends and EUR 5.9
million in supplementary dividends. In the corresponding period of the
previous year, only basic dividends totalling EUR 5.8 million were
paid.
The Groups liquid funds and securities totalled EUR 24.0 (32.4)
million. Interest-bearing liabilities amounted to EUR 32.8 (43.1)
million and interest-bearing net debt to EUR 8.9 (11.1) million.
Gearing stood at 6.9% (8.4%). Equity per share was EUR 3.19 (3.33).
Equity ratio was 56.1% (54.7%).
INVESTMENTS
Kyro Group investments totalled EUR 1.0 (60.8) million, the bulk of
which consisted of maintenance investments. Significant acquisitions
took place during the comparison period in 2003.
PERSONNEL
At the end of the period under review, Kyro Group had 1,126 (1,147)
employees. The reduction in the number of employees took place mainly
in Bavelloni. The number of Group employees working abroad was 701
(727). The average number of employees during the period under review
was 1,128 (1,143).
Figure 2. Personnel
31 March 2004 31 March 2003
Glaston Technologies 1,092 1,113
Energy 24 24
Kyro Corporation 10 10
Kyro Group 1,126 1,147
SHARES AND SHARE PRICES
A total of 2,639,252 (565,214) Kyro Corporation shares were traded on
the Helsinki Exchanges during the period under review, representing
6.7% (1.4%) of the total number of shares. The lowest price paid for a
Kyro Corporation share on the Helsinki Exchanges was EUR 7.19 and the
highest price EUR 9.20. The average price during the period was EUR
7.90
ACQUISITION AND DISPOSAL OF OWN SHARES
The Annual General Meeting on 17 March 2004 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 in other industrial arrangements or to be disposed of in other ways
or to be invalidated.
The shares may also be sold through public trading on the Helsinki
Exchanges. Authorisations granted by the Annual General Meeting to
acquire and dispose of the companys own shares are valid for a period
of one year beginning from the decision of the Annual General Meeting.
On 31 March 2004 Kyro Corporation held a total of 164,952 (248,292) of
its own shares, acquired previously on the basis of earlier
authorisations. No own shares were acquired during the period under
review.
BOARD OF DIRECTORS AND AUDITORS
On 17 March 2004 the Annual General Meeting of Kyro Corporation
decided that there would be seven members in the Board of Directors
for the next three-year term.
From the previous Board of Directors were re-elected Lars Hammarén,
Barbro Koljonen, Heikki Mairinoja, Carl-Johan Numelin, Carl-Johan
Rosenbröijer and Christer Sumelius. As a new member of the Board of
Directors was elected Klaus Cawén, Master of Laws. Former members of
the Board of Directors, Carl-Olaf Hómen and Gerhard Wendt, were not
eligible for re-election under the age rule in the Articles of
Association.
At its meeting on 17 March 2004, the new Board of Directors elected
Carl-Johan Numelin as Chairman of the Board of Directors and Christer
Sumelius as Vice Chairman. The Annual General Meeting elected KPMG
Wideri Oy Ab as the auditor, with Sixten Nyman, Authorised Public
Accountant, as the responsible auditor.
IFRS ACCOUNTING POLICIES
Kyro Group will adopt accounting policies compliant with the
international IFRS standard during 2005. Financial statements and
interim reports for 2004 will be based on the present Finnish
accounting principles, but the company will simultaneously collect
comparison data during this transition period for 2005.
GLASTON TECHNOLOGIES
NET SALES, OPERATING PROFIT AND ORDER BOOK
Glaston Technologies net sales totalled EUR 44.0 (46.4) million in
the period under review. Net sales would have been EUR 47.0 million if
calculated using the foreign exchange rates of the corresponding
period from 2003. The strengthening of the euro had a significant
negative impact on profitability.
Operating profit before amortisation of goodwill was EUR 4.0 (4.3)
million, representing 9.0% (9.3%) of net sales. Profitability has been
burdened by expenditure-type investments to strengtheni Glaston
Technologies distribution network and to start manufacturing of pre-
processing machines in Brazil.
The Glass Machinery groups net sales and profitability were
approximately at the level of the corresponding period of last year.
Regional machine manufacturing partly compensated for the negative
impact on profitability of the strong euro.
The Glass Processing groups net sales fell slightly due to
exceptionally large orders delivered in the corresponding period of
2003. Relative profitability, however, remained at the previous years
level.
Glaston Technologies order book on 30 April was EUR 52.7 (58.7)
million. Orders of pre-processing machines grew from the corresponding
period of the previous year.
GLASS MACHINERY GROUP
Markets and sales
Demand for glass processing machines, particularly in Central Europe,
is still restricted by the current economic cycle. In the United
States demand has improved from the previous year. In Latin America
the focus of demand is still mainly on Brazil, where sales of pre-
processing machines have take off following Bavellonis investment in
its own local sales and manufacturing unit, along the lines of
Tamglass. Demand for glass processing machines in the Far East
continues to be good.
The Glass Machinery groups companies, Tamglass and Bavelloni, are
consolidating those customer service units which are located in the
same regions. The arrangement will generate cost savings and will
boost cross-selling of products as well as the offering of
comprehensive deliveries under the One-Stop-Partner concept.
Competitors who make glass pre-processing machines and safety glass
machines have suffered from the recent economic downturn. Glaston
Technologies strengthened market share, financial solidity and
comprehensive product range are a competitive advantage in tight
economic conditions.
Production and new products
The capacity utilisation rate at Glaston Technologies factories was
good during the period under review. The manufacturing of all safety
glass machines and glass pre-processing machines is based on an
efficient subcontracting network, which enables capacity to be
increased quickly as demand rises. The joint procurement of components
begun by Tamglass and Bavelloni last year is already producing cost
savings.
The first glass pre-processing machines made by Bavelloni in Brazil
will be delivered in the second quarter of this year.
Glaston Technologies has the widest product range in the business. The
glass processing machines developed by the Glass Machinery group for
demanding glass shapes and machining processes represent the
industrys most advanced technology. They occupy a strong position,
for example, in the processing of large glass sizes.
Maintenance services
In the period under review, net sales of maintenance business grew
clearly from the corresponding period of the previous year, which
indicates an increase in the utilisation rate of glass processors
machines. Moreover, the supply and sales of second-hand machines are
also growing.
Similarly, demand for machine accessories and upgrade packages is good
and their order book is at a record level. Sales of tools intended for
glass pre-processing have also been growing since last autumn.
GLASS PROCESSING GROUP
Despite the low level of office construction, Tamglass Glass
Processing has strengthened its market position as a comprehensive
supplier of glass processing products. A robust level of renovation
and residential building compensated for the low volume of office
construction.
In the period under review, the combined Tamglass Glass Processing
brand was launched, covering the product groups Tamglass Balcony
Systems, Tamglass Safety Glass and Tamglass Insulating Glass. Sales of
Tamglass Balcony Systems were enhanced by a new reseller network.
Tamglass Glass Processing began safety glass deliveries to Pilkington
Marine, which makes cruise liner and ship glazing. Tamglass Glass
Processing also supplies e.g. cabin glazing for Valtras latest
tractor model.
ENERGY
Net sales, operating profit and order book
Net sales of the energy business area totalled EUR 7.5 (8.0) million
in January-March. Operating profit before amortisation of goodwill was
EUR 1.7 (1.7) million. The operating profit represented 23.1% (20.8%)
of net sales.
Relative profitability increased due to improved hydro power plant
utilisation and the acquisition at the end of 2003 of the district
heating network in the municipality of Hämeenkyrö. Kyro Powers order
book (12 months) stood at EUR 22.7 (22.0) million.
Development of the energy market
During the period under review, the electricity market was stable
compared to the corresponding period of the previous year, when the
price of electricity fluctuated greatly. The water situation in the
Nordic countries improved slightly in the early part of the year,
although water reserves are still exceptionally low, also in lake
Kyrösjärvi.
FUTURE OUTLOOK
The Kyro Groups basic business set-ups for the current year are good.
Glaston Technologies is the world market leader in a growing business
sector. Glaston Technologies order book has decreased since last
year, but its offer book has grown to a nearly record high level. The
business of Kyro Power is stable and profitable.
The present exchange rate of the euro will reduce growth of net sales
and profitability in the current year. Uncertainty is increased by the
general economic development, particularly in the large European Union
countries.
Glaston Technologies is aiming in 2004 to improve its profitability by
developing its operations and by exploiting synergy benefits.
Helsinki 5 May 2004
Kyro Corporation
Board of Directors
Additional information about Kyros financial reports can be obtained
from Kyros President and CEO Pentti Yliheljo and Chief Financial
Officer Veli Kronqvist, tel. +358 3 372 3111.
Investor Kyro Corporation, Mika Nevalainen, Vice President,
relations: Corporate Communications tel. +358 400 882 024,
IR pages at the Internet address www.kyro.fi
Distribution: Helsinki Exchanges
Key media
KYRO GROUP 1-3/2004, INCOME STATEMENT AND BALANCE SHEET
Consolidated Income Statement, EUR million
1-3/04 1-3/03 1-12/2003
Net sales 51.5 54.4 226.7
Other operating income 0.4 0.3 1.6
Expenses 45.4 47.9 198.6
Depreciation and amortisation of goodwill 1.7 1.6 6.8
Operating profit before amortisation
of goodwill 4.9 5.2 22.9
% of net sales 9.5 9.6 10.1
Amortisation of consolidation goodwill 0.8 0.8 3.1
Operating profit 4.1 4.4 19.8
% of net sales 7.9 8.1 8.7
Net financial items 0.8 -0.6 0.6
Profit before extraordinary items 4.8 3.7 20.4
Income tax -1.8 -1.5 -6.7
Minority interest 0.0 -0.1 -1.5
Profit for the financial period 3.0 2.1 12.2
Consolidated Balance Sheet, EUR million
31.3.2004 31.3.2003 31.12.2003
Fixed assets 116.2 124.9 118.6
Current assets
Inventories 38.4 37.2 32.2
Deferred tax receivable 8.4 6.7 8.3
Other current assets 79.7 88.2 86.9
Assets 242.7 257.0 246.1
Shareholders equity 127.3 133.2 135.9
Minority interest 2.3 1.3 2.2
Non-discretionary reserves 6.0 5.1 5.6
Liabilities
Interest-bearing liabilities 32.8 43.1 33.4
Non-interest-bearing liabilities 66.3 65.7 60.6
Deferred tax liability 7.9 8.6 8.4
Equity and liabilities 242.7 257.0 246.1
Cash flow, EUR million
31.3.2004 31.3.2003 31.12.2003
Cash flow from operations
before financial items and taxes 7.7 5.1 25.6
Financial items 0.0 -0.3 -0.5
Taxes paid -0.4 -0.7 -5.5
Cash flow from business operations 7.3 4.1 19.6
Cash flow from investments -1.0 -0.7 -5.3
Acquisition of subsidiaries -72.1 -69.4
Cash flow from investments -1.0 -72.8 -74.7
Dividends paid -11.8 -5.8 -11.7
Disposal of own shares 7.4 8.0
Change in net debt -0.5 44.5 30.3
Cash flow from financing -12.2 46.1 26.6
Change in liquid assets -5.9 -22.6 -28.5
Key figures 1-3/04 1-3/03 1-12/03
Earnings per share, EUR 0.08 0.05 0.31
Number of shares, 1,000 39,675 39,675 39,675
Number of own shares held, 1,000 165 248 165
Return on invested capital, % 12.4 10.3 14.1
Return on equity, % 9.1 6.8 10.3
Equity ratio, % 56.1 54.7 58.6
Gearing, % 6.9 8.4 3.2
Equity per share, EUR 3.19 3.33 3.41
Investments, EUR million 1.0 60.8 62.7
Personnel, average 1,128 1,143 1,150
Personnel at end of period 1,126 1,147 1,127
in Finland 425 420 421
Order book, EUR million 71.6 85.6 81.4
Contingent liabilities, EUR million
Mortgage on company assets 0.4 0.8 0.4
Other liabilities 17.4 18.7 18.6
Derivatives contracts
Value of underlying assets
Forward currency contracts 23.3 31.2 24.1
Electricity contracts 2.7 3.4 2.7
Market value
Forward currency contracts 23.5 30.5 22.7
Electricity contracts 2.8 3.1 2.5
NET SALES, OPERATING PROFIT BEFORE AMORTISATION OF CONSOLIDATION
GOODWILL AND ORDER BOOK BY QUARTER, EUR million
Net sales 2003 2004
1-3/03 4-6/03 7-9/03 10-12/03 1-3/04
Glaston Technologies 46.4 48.2 40.2 63.6 44.0
Energy 8.0 6.8 6.5 7.0 7.5
Parent company, other
operations and eliminations 0.0 0.0 -0.1 0.0 0.0
Group total 54.4 55.1 46.6 70.6 51.5
Operating profit before amortisation of consolidation goodwill/EBITA%
2003 2004
1-3/03 4-6/03 7-9/03 10-12/03 1-3/04
Glaston Technologies 4.3 4.5 3.3 7.6 4.0
EBITA-% 9.3 9.3 8.3 12.0 9.0
Energy 1.7 1.5 1.1 1.3 1.7
EBITA-% 20.8 22.1 16.9 18.4 23.1
Parent company, other
operations and eliminations -0.8 -0.6 -0.4 -0.7 -0.8
Group total 5.2 5.4 4.0 8.2 4.9
EBITA-% 9.6 9.9 8.6 11.7 9.5
Order book 2003 2004
03/03 06/03 09/03 12/03 03/04
Glaston Technologies 63.6 54.0 60.3 58.8 48.9
Energy 22.0 22.2 22.6 22.6 22.7
Group total 85.6 76.2 82.9 81.4 71.6
Figures are unaudited.
