PONSSE INTERIM REPORT 1 JANUARY - 30 JUNE 2006
PONSSE OYJ STOCK EXCHANGE RELEASE 18 JULY 2006, 9:00 a.m.
PONSSE INTERIM REPORT 1 JANUARY - 30 JUNE 2006
- Turnover EUR 108.6 million (EUR 112.9 million H1/2005)
- Q2 turnover EUR 56.3 million (Q2/2005, EUR 56.4 million)
- International business operations accounted for 66.6% of turnover (H1/2005,
65.5%)
- Operating profit EUR 13.3 million (H1/2005, EUR 13.5 million)
- Operating profit 12.3% of turnover (H1/2005, 12.0%)
- Q2 turnover EUR 6.6 million (Q2/2005, EUR 6.3 million)
- Earnings per share EUR 0.32 (EUR 0.34)
The comparison figures are Ponsse's figures presented in the adjusted financial
statement for the corresponding period in 2005. The Group's interim report has
been prepared in accordance with the valuation and accounting principles of
International Financial Reporting Standards (IFRS). The reporting conforms to
the standards valid at the time of the end of the period under review.
Arto Tiitinen, Ponsse's President and CEO, states the following at the time of
the publication of the interim report:
- The objectives set for the second quarter of 2006 were achieved
despite the fact that the timber trade in Finland was weak and the machinery
markets in Sweden were slower than usual after the peak in machinery selling in
2005 owing to the repairing of the heavy storm damages. In Finland the slow
timber market also affected machinery sales. Our order books and our relative
profitability during the period remained at the previous year's level.
- During the second quarter the production capacity of our Vieremä
plant was improved as set in the objectives. The Group's subsidiary Epec Oy
introduced a new production line in Seinäjoki in May. The deliveries of
control systems to the Vieremä plant were started at the beginning
of June. These new computer systems improve the quality level of Ponsse's
machinery and their reliability. These investments allow the technology
company to significantly increase its production volumes. Ponsse Latin
America's plant was completed in May. Our cooperation with Volvo in Latin
America enables us to offer comprehensive sales and maintenance services to our
customers.
TURNOVER
Ponsse's turnover for the period under review amounted to EUR 108.6 million
(EUR 112.9 million). International business operations accounted for 66.6 per
cent (65.5 per cent) of the total turnover. Domestic sales accounted for 33.4
per cent (34.5 per cent) of the total turnover.
PROFIT PERFORMANCE
Ponsse recorded an operating profit of EUR 13.3 million (EUR 13.5 million).
Operating profit remained at the previous year's level and accounted for 12.3
per cent (12.0 per cent) of the turnover. Return on investment (ROI) stood at
30.5 per cent (37.6 per cent).
Personnel costs in the period amounted to EUR 19.5 million (EUR 17.4 million)
and other operating expenses to EUR 10.8 million (EUR 10.1 million). Net
financial expenses were EUR -0.8 million (EUR -0.3 million). Income and
expenses resulting from currency risk hedging were included in financial items.
Five thousand euro was recorded as income under extraordinary items. No
extraordinary items were recorded for the comparison period.
Profit for the period totalled EUR 8,9 million (EUR 9,6 million).
Earnings per share were EUR 0.32 (EUR 0.34).
BALANCE SHEET AND FINANCIAL POSITION
At the end of the period under review the consolidated balance sheet total
amounted to EUR 119.8 million (EUR 105.0 million). Interest-bearing liabilities
totalled EUR 37.7 million (EUR 26.6 million) and net liabilities EUR 32.9
million (EUR 13.9 million). Equity ratio stood at 41.0 per cent (40.0 per
cent). Trade receivables totalled EUR 19.8 million (EUR 18.4 million). Cash in
hand and at banks came to EUR 4.6 million (EUR 12.7 million).
Reported cash flow from business operations totalled EUR -5.5 million (EUR 9.0
million), while that from investing activities was EUR -4.1 million (EUR -3.6
million). During the period under review the company decided to start a group-
level project in order to reduce working capital. Engineer, M.Sc. (Econ) Heikki
Ojala was nominated the leader of the project as of 1st July. Ojala has
previously operated as the Industrial Director of Ponsse Group.
ORDER INTAKE AND ORDER BOOKS
The order intake for the period totalled EUR 96.1 million (EUR 109.9 million),
and the period-end order books were valued at EUR 42.4 million (EUR 41.1
million. Based on previous practice, the order books include dealers' minimum
purchase commitments.
RETAIL CHANNEL
During the period under review Ponsse signed a distribution agreement with
Chadwick-BaRoss, Inc. headquartered in the United States. The new dealer
operates in the north-eastern part of the United States in the area stretching
from Maine to Connecticut. A representative office, located in St. Petersburg,
was established in Russia. In addition to this, Ponsse and Volvo signed an
agreement on cooperation in Latin America. In June the company also signed a
cooperation agreement with Stora Enso´s Russian wood procurement, according to
which the maintenance operations of Stora Enso's Russian wood procurement´s
forestry machines in the Ladoga Carelia region are transferred to Ponsse.
CAPITAL EXPENDITURE AND R&D
Capital expenditure totalled EUR 4.1 million (EUR 3.6 million). The expenditure
was concentrated to machinery and equipment of the assembly plant, renovation
of office premises in Vieremä and other maintenance investments.
R&D expenses totalled EUR 1.8 million (EUR 2.3 million).
MANAGEMENT
On 1 July, Doctor of Engineering Juho Nummela was named Factory Director for
the Vieremä plant.
PERSONNEL
The Group had an average staff of 793 (701) during the period and employed 828
(767) people at the period-end.
SHARE PERFORMANCE
The trading volume of Ponsse Oyj shares for 1 January - 30 June 2006 totalled
2,436,263, accounting for 8.7 per cent of the total number of shares. Share
turnover came to EUR 30.2 million, with the periods lowest and highest per-
share price amounting to EUR 10.89 and EUR 15.00 respectively.
At the end of the period the share closed at EUR 12.10, and the market
capitalisation totalled EUR 338.8 million.
ADMINISTRATION
The company has adopted insider guidelines that comply with the insider
regulations of the Helsinki Exchanges and operates in accordance with the
administration and operation recommendations concerning listed companies
(Corporate Governance). The principles regulating administration are included
on Ponsse's Website on the Investors page.
RISK MANAGEMENT
The Group's risk management policy seeks to further develop and maintain an
extensive monitoring system that supports the Group's operative functions. This
includes systematic risk assessment for each function and unit, integration of
risk management as part of business operations, continuous quality development
and dissemination of information on best practices.
Internal supervision forms an integral part of the totality of risk management.
The Group's Board of Directors is responsible for supervising the organisation
and adequacy of the operations. The practical implementation of the actions is
the responsibility of the company's CEO. The core internal supervision methods
consist of internal guidelines, reporting and various technical systems
relating to activities. The company will improve in the development of internal
supervision by nominating an internal surveyor during the third quarter.
PROSPECTS
The company estimates that the development trends in its global operational
environment do not show significant changes. Active forest industry investment
actions in Russia and Latin America in particular are continuing. According to
a survey conducted by Pöyry Oyj, the consumption of paper and board will grow
steadily until 2020. Ponsse estimates that this will increase the demand for
environmentally-friendly cut-to-length method-based forest machines. According
to the estimates, the market prospects in primary areas will continue to be
good throughout year. The company will continue to improve the distribution
network by expanding it through independent dealers and maintenance companies.
The demand situation in the primary markets in the Nordic countries is expected
to improve during the second half of the year. In Finland the machine sales are
estimated to recover owing to the revival of the timber market.
The company is looking at good period-end order books. The company aims to
shorten delivery times to ensure a quicker response to growing demand. The goal
will be achieved by the implementation of the components factory expansion in
Vieremä. The work started in July. The favourable development of the market
prospects proposes that the full year's result will be better than in 2005.
PONSSE GROUP
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
IFRS IFRS IFRS
1-6/06 1-6/05 1-12/05
TURNOVER 108 556 112 871 226 095
Increase (+) / decrease (-) in stocks 6 932 4 525 730
of finished goods and work in progress
Other operating income 803 717 1 326
Raw materials and services -70 514 -75 344 -139 304
Staff costs -19 510 -17 431 -34 317
Depreciation -2 203 -1 688 -4 041
Other operating expenses -10 764 -10 130 -21 437
OPERATING PROFIT 13 300 13 520 29 051
Share of results of associated 197 56 285
companies
Financial income and -787 -285 -1 225
expenses
RESULT BEFORE EXTRAORDINARY ITEMS 12 710 13 291 28 111
Extraordinary items 5 0 -1
RESULT AFTER EXTRAORDINARY
ITEMS 12 715 13 291 28 110
Income taxes -3 810 -3 623 -8 480
Minority interest 0 -103 0
RESULT FOR THE FINANCIAL 8 905 9 565 19 629
PERIOD
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
IFRS IFRS
4-6/06 4-6/05
TURNOVER 56 261 56 390
Increase (+) / decrease (-) in stocks 2 242 1 467
of finished goods and work in progress
Other operating income 261 295
Raw materials and services -35 025 -36 463
Staff costs -10 333 -8 997
Depreciation -1 152 -857
Other operating expenses -5 640 -5 541
OPERATING PROFIT 6 614 6 294
Share of results of associated 96 39
companies
Financial income and -355 -315
expenses
RESULT BEFORE EXTRAORDINARY ITEMS 6 355 6 018
Extraordinary items 4 0
RESULT AFTER EXTRAORDINARY
ITEMS 6 359 6 018
Income taxes -2 060 -1 826
Minority interest 0 -71
RESULT FOR THE FINANCIAL 4 299 4 121
PERIOD
In the financial statements for 2005, Ponsse Group has changed the accounting
policy concerning the purchase of used machines in connection with the sale of
new machines. In accordance with the general IFRS principles (Chapter 35), the
value adjustment made at the time of purchase of used machinery has been
interpreted as actually being a discount on the sales price of new machinery
and, therefore, the change in value has been accounted for as an adjustment
item in the consolidated turnover. Previously, until Q3/2005, this type of
change in value has been presented under the item 'Materials and services'. The
comparison figures for 2005 have been adjusted accordingly. Actual changes in
the value of used machinery that are made after the time of sale will be
handled as a write-down of inventory value in the same manner as previously.
CONSOLIDATED BALANCE SHEET (EUR 1,000)
IFRS IFRS IFRS
ASSETS 30.6.06 30.6.05 31.12.05
FIXED AND OTHER NON-CURRENT ASSETS
Intangible assets 3 209 1 987 2 652
Goodwill 3 818 3 686 3 773
Property, plant and equipment 25 590 20 182 24 270
Financial assets 37 52 35
Holdings in associated companies 1 083 885 1 013
Non-current receivables 131 106 103
Deferred tax assets 1 097 1 182 537
TOTAL FIXED AND OTHER NON-CURRENT 34 965 28 080 32 383
ASSETS
CURRENT ASSETS
Stocks 57 761 43 803 45 161
Trade receivables 19 770 18 384 14 782
Other current receivables 2 740 2 037 3 594
Current investments 2 0 2
Cash in hand and at banks 4 582 12 650 12 339
TOTAL CURRENT ASSETS 84 855 76 874 75 879
TOTAL ASSETS 119 820 104 954 108 262
CAPITAL AND RESERVES, AND LIABILITIES
SHAREHOLDER´S EQUITY
Share capital 7 000 7 000 7 000
Other reserves 20 19 19
Translation differences -658 -518 -442
Retained earnings 42 690 34 979 44 811
CAPITAL AND RESERVES OWNED
BY PARENT COMPANY SHAREHOLDERS 49 052 41 480 51 389
Minority interest 0 522 0
TOTAL CAPITAL AND RESERVES 49 052 42 002 51 389
NON-CURRENT CREDITORS
Interest-bearing liabilities 19 298 23 759 18 953
Deferred tax liabilities 899 598 1 142
Other non-current creditors 198 359 359
TOTAL NON-CURRENT CREDITORS 20 395 24 716 20 453
CURRENT CREDITORS
Interest-bearing liabilities 18 400 2 876 5 444
Provisions 5 290 6 041 6 324
Tax liabilities for the period 1 553 2 463 1 216
Trade creditors and other current 25 130 26 856 23 436
creditors
TOTAL CURRENT CREDITORS 50 373 38 236 36 420
TOTAL CAPITAL AND RESERVES, AND 119 820 104 954 108 262
LIABILITIES
CONSOLIDATED CASH FLOW STATEMENT (EUR 1,000)
IFRS IFRS IFRS
1-6/06 1-6/05 1-12/05
BUSINESS OPERATIONS:
Profit for the period 8 905 9 565 19 629
Adjustments:
Financial income and expenses 787 285 1 225
Share of the result of associated -197 -56 -285
companies
Depreciation 2 203 1 688 4 041
Deferred taxes -524 -771 22
Income taxes 4 334 4 394 8 458
Other adjustments 135 153 256
Cash flow before change in working 15 643 15 258 33 346
capital
Change in working capital:
Increase (-)/ decrease (+) of
non-interest-bearing -4 027 -544 1 501
receivables
Increase (-) /decrease (+) of -12 600 -7 694 -9 052
stocks
Increase (-)/decrease (+) of
non-interest-bearing creditors 1 359 4 645 1 279
Change in provisions for -1 034 1 888 2 171
liabilities and charges
Interest received 82 86 277
Interest paid -446 -493 -932
Other financial items -326 41 -656
Income taxes paid -4 174 -4 216 -9 517
NET CASH FLOW FROM BUSINESS -5 523 8 971 18 417
OPERATIONS (A)
INVESTMENTS
Investment in tangible and intangible -4 142 -3 597 -11 209
asset
Investment in other assets 0 0 -11
Dividends received 0 0 101
CASH OUTFLOW FROM INVESTING -4 142 -3 597 -11 119
ACTIVITIES (B)
FINANCING
Withdrawal/repayment
of current loans 12 964 -5 145 -2 677
Increase (-) / decrease (+) in
current interest-bearing -4 0 0
liabilities
Withdrawal/repayment
of non-current loans 184 -155 -4 961
Payment of finance lease liabilities -9 -332 -231
Increase (-)/ decrease (+) in non- -27 2 4
current receivables
Paid dividends -11 200 -2 800 -2 800
NET CASH OUTFLOW FROM 1 908 -8 430 -10 665
FINANCING (C)
Increase (-)/ decrease (+) in -7 757 -3 056 -3 367
liquid assets (A+B+C)
Liquid assets 1 Jan 12 339 15 706 15 706
Liquid assets 30 Jun/31 Dec 4 582 12 650 12 339
RECONCILIATION OF CAPITAL AND RESERVES (EUR 1,000)
A = Share Capital
B = Share premium and other reserves
C = Translation
differences
D = Retained earnings
E = Minority interest
F = Total capital and reserves
CAPITAL AND RESERVES OWNED BY
PARENT COMPANY SHAREHOLDERS
A B C D E F
CAPITAL AND RESERVES 1 7 000 20 -838 28 425 419 35 025
JAN 2005
Translation differences 0 0 320 -211 0 109
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND 0 0 320 -211 0 109
RESERVES
Net profit for the 0 0 0 9 565 0 9 565
period
TOTAL RECOGNISED INCOME
AND EXPENSES 0 0 320 9 354 0 9 674
Dividend distribution 0 0 0 -2 800 0 -2 800
Change in minority 0 0 0 0 103 103
interest
CAPITAL AND RESERVES 30 7 000 20 -518 34 979 522 42 002
JUN 2005
CAPITAL AND RESERVES 1 7 000 20 -442 44 811 0 51 389
JAN 2006
Translation differences 0 0 -216 174 0 -42
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND 0 0 -216 174 0 -42
RESERVES
Net profit for the 0 0 0 8 905 0 8 905
period
TOTAL RECOGNISED INCOME 0
AND EXPENSES 0 -216 9 079 0 8 863
Dividend distribution 0 0 0 -11 200 0 -11 200
Change in minority 0 0 0 0 0 0
interest
CAPITAL AND RESERVES 30 7 000 20 -658 42 690 0 49 052
JUN 2006
SEGMENT INFORMATION (EUR 1,000)
GEOGRAPHICAL SEGMENTS
1-6/06 1-6/05 1-12/05
TURNOVER
Nordic countries 72 445 86 787 154 017
Rest of Europe 42 717 31 388 71 758
North and South America 14 315 14 643 33 775
Elimination -21 914 -20 214 -34 697
Unallocated 993 267 1 242
GROUP TOTAL 108 556 112 871 226 095
OPERATING PROFIT
Nordic countries 6 073 10 285 18 825
Rest of Europe 6 590 3 754 10 761
North and South America 497 1 200 2 027
Unallocated 140 -1 719 -2 562
GROUP TOTAL 13 300 13 520 29 051
PLEDGES GIVEN, CONTINGENT AND OTHER LIABILITIES (EUR 1,000)
30.6.06 30.6.05 31.12.05
1. FOR OWN DEBT
Debts for which mortgages have been pledged as
collateral
Loans from financial 0 0 0
institutions
Mortgages given on land and buildings 0 790 101
Chattel mortgages given 0 483 336
MORTGAGES GIVEN AS PLEDGES, TOTAL 0 1 273 437
2. LEASING COMMITMENTS (EUR 2 206 412 1 996
1,000)
3. CONTINGENT LIABILITIES ON BEHALF OF GROUP COMPANIES (EUR 1,000)
Guarantees given on behalf of Group
companies 823 857 884
4. LIABILITIES BASED ON DERIVATIVE CONTRACTS (EUR 1,000)
4.1 Nominal values
Currency derivatives
Forward contracts 21 979 19 644 14 690
4.2 Market values
Currency derivatives
Forward contracts 294 -477 -70
5. OTHER CONTINGENT LIABILITIES (EUR 1,000)
Guarantees given on others 1 324 334 1 289
behalf
Repurchase commitments 2 992 8 121 7 163
Other liabilities 0 0 0
Total 4 316 8 455 8 452
KEY FIGURES AND RATIOS 30.6.06 30.6.05 31.12.05
R&D expenditure, MEUR 1,8 2,3 3,7
Capital expenditure, MEUR 4,1 3,6 11,2
% of turnover 3,8 3,2 5,0
Average number of staff 793 701 729
Order books, MEUR 42,4 41,1 54,9
Equity ratio, % 41,0 40,0 47,6
Earning per share, EUR 0,32 0,34 0,70
Equity per share, EUR 1,75 1,50 1,84
Per-share figures have been adjusted with the share split.
Income taxes based on profit for the financial period are included in the
Profit and Loss Account and earnings per share.
ORDER INTAKE, MEUR 1-6/06 1-6/05 1-12/05
Ponsse Group 96,1 109,9 236,9
Ponsse Group has applied International Financial Reporting Standards (IFRS) to
its financial reporting as of 1 January 2005. The first IFRS-compliant annual
financial statement was drawn up for the accounting period 2005. Prior to the
adoption of IFRS, Ponsse Oyj's consolidated financial statements have been
prepared according to Finnish Accounting Standards (FAS).
The above figures have not been audited.
The above figures have been rounded and may differ from those given in the
official financial statements.
Vieremä, 18 July 2006
Arto Tiitinen
President and CEO
FOR FURTHER INFORMATION, PLEASE CONTACT:
Arto Tiitinen,
President and CEO, tel. +358 (0)20 768 4621 or +358 (0)400 566 875
Mikko Paananen,
CFO, tel. +358 (0)20 768 8648 or +358 (0)400 817 036
DISTRIBUTION
Helsinki Stock Exchange
Principal media
www.ponsse.com
