Interim Report for Second Quarter 2012
Second quarter 2012
- Sales amounted to EUR 263 (307) million, a decrease of 14 percent compared to the second quarter of 2011.
- Operating profit (EBIT) was EUR 19 (39) million, corresponding to 7.0 (12.6) percent of sales.
- Net profit for the quarter was EUR 7 (24) million.
- Cash flows from operating activities were EUR 21 (27) million.
January - June 2012
- Sales amounted to EUR 540 (610) million, a decrease of 11 percent compared to the corresponding period of 2011.
- Operating profit (EBIT) was EUR 40 (74) million, corresponding to 7.3 (12.2) percent of sales.
- Net profit for the period was EUR 17 (44) million.
- Cash flows from operating activities were EUR 38 (19) million.
- The net debt/equity ratio was 117 percent, compared to 137 percent at 31 December 2011.
(In the report, amounts in brackets refer to the corresponding period of last year.)
The name of the parent company Ovako Group AB has been changed from Triako Midco AB in July 2012.
Group key figures
| 2012Q2 | 2011Q2 | 2012Q1-2 | 2011Q1-2 | 2011Full year | ||
| Net Sales | EUR million | 263 | 307 | 540 | 610 | 1 121 |
| Operating profit before depreciation (”EBITDA”) | EUR million | 30 | 50 | 62 | 97 | 134 |
| as % of Net Sales | % | 11,3 % | 16,2 % | 11,4 % | 15,9 % | 12,0 % |
| Operating profit (”EBIT”) | EUR million | 19 | 39 | 40 | 74 | 90 |
| Operating margin (% of Net Sales) | % | 7,0 % | 12,6 % | 7,3 % | 12,2 % | 8,0 % |
| Net profit/loss for the period | EUR million | 7 | 24 | 17 | 44 | 38 |
| Earnings per share | EUR | 142 | 483 | 329 | 888 | 755 |
| Cash flow from operations | EUR million | 21 | 27 | 38 | 19 | 56 |
| Net debt/equity ratio | % | 117 % | 123 % | 117 % | 123 % | 137 % |
| Return on Capital Employed (”ROCE”) | % | 10 % | n/a | 10 % | n/a | 17 % |
| Full time employees at end of period (FTE) | no | 3 101 | 3 268 | 3 101 | 3 268 | 3 239 |
Comments from the President and CEO
"Ovako's sales and profits during the second quarter were at the same level as in the first quarter, which was in line with expectations. The demand pattern in the second quarter, as in the first, was characterised by late orders with requests for short delivery times. Measures to reduce working capital have been implemented during the quarter with good results. Operating cash flow developed positively and amounted to EUR 38 million in the first half. Delivery security remained at our target level, significantly above last year.
Capacity adjustments to respond to a weaker market in 2012 were started in autumn 2011 and the number of employees has continued to decrease during the year. Since Q3 2011 approximately 300 full-time equivalents have left the company, including about 140 during 2012, slightly more than we indicated earlier. Production capacity has been largely in balance with demand in the first half.
Following earlier announcements on investments, major installation and maintenance work is executed over the summer. Work is ongoing in Hofors on the new large-dimension ring mill and the first phase of renovating the tube works is being implemented. The first phase of a new de-dusting system at the steel mill is being implemented in Smedjebacken to comply with tougher air emission standards. Investments are made in Imatra to reduce processing time at the steel mill and to enhance quality assurance capacity for finished products. These long-term investments mean that Ovako will be able to meet future demands as a leading European producer of engineering steel.
Short-term outlook
The financial crisis in Europe continues to adversely affect the business climate. Demand is expected to remain weak for the rest of the year. Our readiness to adjust to a weaker market is high. The third quarter is affected by seasonal shutdowns as a result of holidays and maintenance. As in previous years, results in the third quarter will therefore be significantly lower than in the first two quarters."
Stockholm, July 24, 2012
Tom Erixon
President and CEO
You will find the full report for second quarter 2012 on the website: http://www.ovako.com/IR
Further information can be obtained from:
Viktoria Karsberg, Head of Group Communications, +46 70 209 93 96
Ovako is a leading European producer of engineering steel for customers in the bearing, transportation and engineering industries. Our production covers low-alloy steels and carbon steels in the form of bars, tubes, rings and pre-components. The company has production plants in 11 locations and several sales companies in Europe and the USA. Net sales in 2011 were EUR 1,121 million and the number of employees was 3,239. Total steel production capacity is 1.3 million tonnes per year.
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