Interim Report for Third Quarter 2013
Read CEO Tom Erixon's comments on Ovako's Interim Report for Third Quarter 2013 and get the financial report.
Third quarter 2013
- Order intake increased by 9 percent compared to the corresponding period last year
- Delivery volumes increased by 2 percent compared with the same period last year, whereas sales decreased by 8 percent, mainly due to reduced scrap and alloy surcharges as a result of lower prices for raw material, and to a lesser degree mix and price
- Operating profit before depreciation and amortisation (EBITDA) ended marginally above last year and amounted to EUR 5 (5) million
- Cash flow from operations improved to EUR 22 (16) million
- An efficiency programme has been initiated within all parts of the group and is estimated to reduce costs by EUR 35 million by 2016
January - September 2013
- Order intake increased by 6 percent compared to the same period last year
- Operating profit before depreciation and amortisation (EBITDA) amounted to EUR 39 (66) million
(Amounts in brackets in this report refer to the corresponding period in the previous year.)
| 2013 Q3 |
2012 Q3 |
2013 Q1-3 |
2012 Q1-3 |
2012 Full year |
||
| Net Sales | EURm | 185 | 201 | 645 | 741 | 937 |
| Operating profit before depreciation (”EBITDA”) | EURm | 5 | 5 | 39 | 66 | 66 |
| % of Net Sales | % | 2,9 % | 2,3 % | 6,0 % | 9,0 % | 7,0 % |
| Operating profit (”EBIT”) | EURm | -6 | -7 | 4 | 33 | 20 |
| Operating margin (% of Net Sales) | % | -3,4 % | -3,3 % | 0,6 % | 4,5 % | 2,1 % |
| Net profit/loss | EURm | -12 | -12 | -14 | 4 | -4 |
| Earnings per share | EUR | -248 | -245 | -284 | 84 | -74 |
| Cash flow from operating activities | EURm | 22 | 16 | 16 | 54 | 87 |
| Net debt/equity ratio | % | 155 % | 124 % | 155 % | 124 % | 130 % |
| Return on Capital Employed (”ROCE”) | % | -2 % | 8 % | -2 % | 8 % | 4 % |
| Full time employees at end of period (FTE) | No. | 2 988 | 3 120 | 2 988 | 3 120 | 3 040 |
Comments from the CEO
“Demand was stable during the third quarter. Order intake improved and was at a higher level than in the same period last year. Delivery volumes were negatively impacted by an extended maintenance shutdown in Smedjebacken and by stoppages in Imatra. In Smedjebacken, the final installation of the new de-dusting filter was completed and in Imatra the casting platform was reinstated following the production disturbance in the second quarter. Since mid-August production has been running normally at all steel mills. Although profit for the period was negatively impacted by maintenance shutdowns and stoppages, cash flows from operations were better than last year. EBITDA was marginally above last year, but still on an unsatisfactory level.
During the period 2011-2013, a number of important investments and efforts have been undertaken in both marketing and production. With the installation of the new continuous casting machine in Smedjebacken in summer 2014 and completion of the new tube concept in Hofors 2014/15, we will have taken important steps in the upgrade of production. Meanwhile, the marketing organisation has been expanded with new sales units in China, Italy and Eastern Europe. Stronger coordination and reinforcement of existing sales units in the Nordic region and Northern Europe have also been implemented. The foundation for stable growth has been laid for the coming years.
As previously announced, Ovako has an ongoing savings programme of EUR 25 million for 2013, which has developed according to plan. To ensure continued improvement in profitability we are now initiating a long-term efficiency programme in all parts of the group. The foundation for these efficiency measures has already been laid in the existing strategic direction, based on stronger synergies in group-wide functions and long-term process improvements in production, with the aim of strengthening Ovako’s competitiveness. Overall, the programme is estimated to reduce costs by EUR 35 million by 2016, of which approximately EUR 17 million will impact profit by 2014. The estimated effect on the workforce will be a reduction in excess of 100, including white-collar and blue-collar employees. Capacity will be maintained at the current level to meet the growth targets for 2014. The program will be detailed during the fourth quarter.
Short-term outlook
Demand in the fourth quarter is expected to be better than in the same period last year and in line with the third quarter of this year. Although many customers will optimise inventory levels in December, we believe that inventory levels are broadly in balance and that current demand reflects the rate of production in industry.”
Tom Erixon
President and CEO
Stockholm, November 4, 2013
You will find the full Interim Report for Third Quarter 2013 on the website:
http://www.ovako.com/Financial-information/
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 manufacturing industries. Our production is based on recycled steel and includes steel in the form of bars, tubes, rings and pre-components. Ovako is represented in more than 30 countries and has sales offices in Europe, North America and Asia. Sales in 2012 amounted to EUR 937 million and the company had 3,040 employees. For further information please visit us at www.ovako.com.