PONSSE?S 2003 FINANCIAL STATEMENTS
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PONSSE OYJ STOCK EXCHANGE RELEASE 12 FEBRUARY 2004 AT
9A.M.
PONSSES 2003 FINANCIAL STATEMENTS
Ponsse Groups turnover rose by 22.7 per cent to reach EUR
163.5 million (EUR 133.2m in 2002) of which foreign
operations accounted for 56.9 per cent (57.8% in 2002). The
Groups operating profit amounted to EUR 11.7 million (EUR
9.4m), equivalent to 7.2 per cent (7.1%) of turnover. The
result after financial items was EUR 13.1 million (EUR
9.8m). The equity ratio strengthened further to 55.7 per
cent (52.4%). Earnings per share were EUR 1.31 (EUR 0.99)
The Board of Directors is to recommend to the Annual General
Meeting that a dividend of EUR 2.00 (EUR 0.65) per share be
paid for 2003. The Board also proposes to the Annual General
Meeting the payment of a bonus to employees
OVERVIEW
Although the Ponsse Group made good progress in both volume
and performance during 2003, currency exchange rates
nevertheless made the year a challenging one, especially on
the North American market. The year under review saw the
launch of the 2004 model series, which was immediately
enthusiastically received by the market. New machine models
are the Wisent Dual, a medium sized harwarder, and Gazelle,
a 10-tonne forwarder.
The operating profit for the year under review can be termed
good. The Group had a healthy order book at year-end.
TURNOVER AND RESULT
Group turnover rose by 22.7 per cent on the year to EUR
163.5 million (EUR 133.2m), with particularly strong sales
being witnessed in Q2 and Q4.
Exports and foreign business operations accounted for 56.9
per cent (57.8 %) of the groups turnover. The number of
exported new machines rose 21.0 per cent to 242 (200).
Finland accounted for 43.1 per cent (42.2 %) of turnover,
the rest of Europe for 40.1 per cent (37.0 %), North America
for 15.1 per cent (18.7 %) and the rest of the world for 1.7
per cent (2.1 %). The slight fall in exports is primarily
attributable to a weakening of the US dollar against the
euro. In some places, the market for forest machines also
reflected the prevailing general economic uncertainty.
During the year under review, Ponsse secured new orders
worth EUR 165.4 million (EUR 142.0m). At year-end, the
Groups order stock was EUR 33.7 million (EUR 32.1m). In
keeping with the practice of earlier years, order stock
includes dealers minimum purchase commitments.
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Group operating profit amounted to EUR 11.7 million (EUR
9.4m), equivalent to 7.2 per cent (7.1%) of turnover.
The Groups net financial income during the year under
review totalled EUR 1.1 million
(EUR 0.2m). This high figure is owing to yields on
derivatives taken to hedge against currency exchange rate
risks. The result after financial items was EUR 13.1 million
(EUR 9.8m). There were no extraordinary items during the
year under review or during 2002.
The parent companys tax inspection was taken place during
the year under review. Inspection was covering companys
whole taxation. The total amount of taxes and penalty
interests was EUR 87.2 thousand which has been handled as a
cost in book keeping.
Group profit for the 2003 financial year was EUR 9.1 million
(EUR 6.9m). The parent companys profit for the 2003
financial year was EUR 8.9 million (EUR 7.2m).
FINANCIAL SITUATION
The consolidated balance sheet total at 31 December 2003 was
EUR 78.2 million (EUR 73.9m). The EUR 16.7 million (EUR
11.0m) under trade debtors was high because a considerable
number of machines were scheduled for delivery towards the
end of the year.
The Groups interest-bearing debts totalled EUR 17.8 million
(EUR 22.2m). Net debt was EUR 6.3 million (EUR 10.0m). There
was a further strengthening of the equity ratio to 55.7 per
cent (52.4%).
Liquidity remained good throughout the year under review. At
year-end, the Groups cash assets totalled EUR 10.6 million
(EUR 12.0m). To maintain financing flexibility and balance
seasonal fluctuations, Ponsse has the use of finance credit
agreements of which EUR 43.7 million remained unused at the
end of the year.
Total contingent liabilities related to outside customer
financing and refinancing commitments amounted to EUR 8.7
million (EUR 7.4m) at year-end.
INVESTMENTS
Fixed asset investments totalled EUR 4.5 million (EUR 2.5m).
The most significant investments were an extension to the
Vieremä plant, updating enterprise resources planning and
other IT purchases.
The enlargement and modernization of the repair workshop
centre at Iisalmi and the construction of R&D and office
premises at the Vieremä plant account for the most
significant investments during 2004. The construction work
is expected to cost EUR 2.7 million.
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MARKETS AND SALES
Global economic uncertainty continued throughout 2003. A
strengthening of the euro by around 20 per cent against the
US dollar eroded our profitability in North America.
Customer confidence in the series of machines launched in
2001 continued to strengthen. Ponsse gained leadership of
the general purpose machine and forwarder markets at home.
During 2003, Ponsse manufactured a total of 399 (330) new
machines, up by 20.9 per cent on the figure a year earlier.
Ponsse conducts a customer satisfaction survey twice a year.
Customers have particularly commended the high productivity
and reliability of Ponsse forest machines and the quality of
Ponsses maintenance services. The Mercedes-Benz engines
introduced three years ago have shown themselves capable of
delivering effective performance and fuel economy.
The Road Show held in February to mark the 60th birthday of
chairman of Ponsses Board of Directors, Einari Vidgrén
Counsellor of Industry (Hon), had a major impact on the
encouraging improvement in demand for forest machines at
home. On its three-week tour, the Road Show visited ten
different places throughout Finland.
In June 2003, Kone Corporation announced its intention to
divest certain businesses (Valtra tractors, Valmet forest
tractors and Sisu Diesel engines). In the summer and early
autumn, Ponsse was part of a Finnish consortium that sought
to buy the Valtra and Sisu Diesel businesses. The project
floundered when the vendor announced that it had chosen to
sell to Agco Corporation of the United States.
The Groups international sales take place through the
parent companys wholly-owned subsidiaries in the United
Kingdom, Norway, France, Sweden and the United States of
America and through independent dealers.
During the year under review, Tanquay Industry became
Ponsses new dealer in the Province of Quebec in Canada.
Other major dealers operate in Germany, the Baltic area, St
Petersburg in Russia, Spain, Portugal, Chile and New
Zealand. Ponsse additionally sells machines directly to
other countries through its subsidiaries in Sweden, Norway,
France, the UK and the USA.
PONSSE AB
Ponsses Swedish subsidiary strongly improved its
performance in 2003. Turnover rised to EUR 17.0 million (EUR
13.0m) and an encouraging increase was witnessed in Ponsses
share of the market during the year. Ponsse ABs managing
director is Benny Sondell. The company has been trading
since 1994. No major changes took place in Ponsse ABs
organization during the year under review.
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PONSSE AS
Ponsses Norwegian subsidiary reported a turnover EUR 7.8
million (EUR 6.2m) for 2003. The Norwegian market for forest
machines was somewhat quieter than anticipated. Ponsse AS
celebrated its fifth anniversary in spring. Environmental
conditions in Norway place tough demands on machine quality,
efficiency and dependability. Customers have
highly commended the companys forest machines for their
performance. Ponsse ASs managing director is Lyder Hove
Ellevold.
PONSSÉ S.A.S.
Established in 1995, the turnover of Ponsses French
subsidiary rose to EUR 13 million (EUR 9.8m) during the year
under review. New models and especially Dual harwarders
consolidated Ponsses position on the French, Swiss and
Benelux markets. Technical modifications to companys
Articles of Association resulted in Ponsse Oyj acquiring
full ownership of the French subsidiary. Ponssé S.A.S.s
managing director is Tapio Ingervo.
PONSSE UK LTD
The UK forest machine market made very encouraging progress
during 2003, with Ponsse UKs turnover rising to EUR 14.5
million (EUR 10.2m). Some minor changes in the companys
organization took place during the year under review. Ponsse
UKs managing director is Jukka Karjalainen.
PONSSE USA INC
Ponsses US subsidiary reported a turnover of EUR 21.1
million (EUR 20.8) for the year under review. Given the
prevailing conditions, this result can be termed
satisfactory. Established in 1995, the company moved into
new office premises in Rhinelander, in the state of
Wisconsin in April 2003. Ponsse USA Incs managing director
is Mikko Laurila.
RESEARCH AND DEVELOPMENT
Group R&D expenses amounted to EUR 3.0 million (EUR 3.2m)
during the year under review, accounting for 1.8 per cent
(2.4%) of Group turnover.
At year-end 2003, a total of 55 people (51), 9.9 per cent
(9.5%) of Group personnel, were employed in R&D.
The year under review saw the launch of three new machine
models: the Wisent Dual harwarder and the Gazelle forwarder.
The Wisent Dual can be used as both a harvester and a
forwarder. For harvesting, remove the front load gate and
load bunks and replace
the loader grapple by an H53 harvester head. Transforming
the machine from a harvester to a forwarder or vice versa
takes less than 10 minutes and can be done on site. The
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Gazelle forwarder replaces the Caribou forwarder, which is
no longer made, in the ten tonne range.
The new features of the Opti 4G information system used in
Ponsse harvesters were launched during the latter part of
2003. Remote diagnostics innovated by Ponsse considerably
increase the operational reliability of measuring instrument
and control systems. Through a remote connection, from the
service office Ponsses service advisers are able to operate
the Opti 4G and OptiControl measuring instrument and machine
control systems installed in Ponsse forest machines. This
new function also enables service advisers to guide and
advise the machine operator so that the malfunction can be
located and even repaired in real-time.
Several other enhancements were made to the machine
information systems during the year under review. For
example the Gentle Drive function minimizing tree surface
impacts is now a standard accessory.
During the year under review, Ponsse continued working
closely together with universities, forestry colleges and
forestry companies.
PERSONNEL
The Group employed an average number of 553 (521) persons
during the year under review. At 31 December 2003, the Group
employed 555 (536) people.
Focal training themes during the year under review were the
development of communications and teamwork skills and the
enhancement of professional competence. The importance of
occupational safety and prevention of workplace accidents in
particular were also strongly emphasized during 2003.
QUALITY
Ponsse is committed to complying with the ISO 9001:2000
quality management standard, ISO 14001 environmental
management standard and the OHSAS 18001 occupational health
and safety management system in its operations. ISO
9001:2000 is certified and DNV audited it in August 2003.
The operational system of three different standards creates
a congruent model on which to further develop the companys
operations. The system seeks to maintain and improve the
ability of different functions to cooperate, in-house
customer relationships, to improve customer service and to
secure customers a product of choice taking environmental
and safety aspects into account when manufacturing that
product.
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The companys operational quality was improved during the
year under review by specifying the quality indicators and
by intensifying and increasing efficiency and cooperation in
four core operational processes: New Product Development,
Marketing,
Order to Delivery and After Sales Service.
The year under review saw the company draw up a data
security policy, which includes
both data security and physical safety. The policy comprises
document classification, use of email and the internet and
instructions applying to physical safety.
MANAGEMENT AND AUDITORS
The following persons were members of the Board of Directors
during the year under review:
Einari Vidgrén (chairman), Juha Vidgrén (deputy chairman),
Ilkka Kylävainio, Heikki Ojala (until 20 March 2003),
Samuli Perttala, Orvo Siimestö, Heikki Tallgren (until 20
March 2003)
and Mika Vidgrén.
The Board of Directors convened 12 times during 2003. Board
members actively attended meetings and the attendance rate
was 95.8 per cent.
The companys president and CEO during 2003 was Tommi Ruha
MSc (For) and his deputy was the companys vice president
and CEO Juha Vidgrén MSc (Educ).
The Annual General Meeting of 20 March 2003 re-appointed
Authorised Public Accountants Ernst & Young Oy as the
companys auditors, with Heikki Laitinen APA as the
principal auditor.
GROUP ORGANIZATION
There were no changes in the Groups structure during the
year under review. The Group includes the subsidiaries
Ponsse AB in Sweden, Ponsse AS in Norway, Ponssé S.A.S. in
France, Ponsse UK Ltd. in the UK and Ponsse USA Inc. in the
USA. Sunit Oy in Kajaani is an associated company in which
Ponsse Oyj has a 34 per cent stake.
SHARE TRADING AND PRICES
Ponsse Oyj shares are listed on the Main List of the
Helsinki Exchanges. The trading code of the companys share
on the Helsinki Exchanges is PON1V. The shares are
registered in the book-entry system.
A total of 1,155,759 Ponsse Oyj shares, 16.5 % of the total
number, were traded between 1 January and 31 December 2003
for a total of EUR 15.0 million. The lowest price was EUR
9.50 and the highest EUR 19.00.
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The closing price on the last trading day of the financial
year was EUR 16.45. The market capitalization value at 31
December 2003 was EUR 115 million.
SHAREHOLDERS
At year-end 2003, Ponsse Oyj had 1,890 shareholders (1,478
at 31 December 2002). 240,023 shares (3.43 per cent of
total) were nominee-registered and 12,892 were in foreign
ownership.
MANAGEMENT INTERESTS
At 31 December 2003, members of the Board of Directors and
the President and CEO owned 4,123,852 shares, equivalent to
58.9 per cent of the total shares and votes.
INSIDER HOLDING
Under Chapter 5, Section 5 of the Securities Market Act,
Ponsse Oyj keeps a list of insider holdings at HEXGate,
Fabianinkatu 14, Helsinki.
Ponsse Oyj complies with the insider holding regulation
A6.24 adopted by the Board of Directors of the Helsinki
Exchanges on 28 October 1999.
REDEMPTION OBLIGATION CLAUSE
Under Article 14 of Ponsses Articles of Association, a
shareholder whose share of all the companys shares or the
votes conveyed by shares, either alone or jointly with other
shareholders, acquires or exceeds ownership of 331/3 per
cent or 50 per cent shall be obliged to redeem, on request,
the shares of other shareholders and other securities
entitling thereto under the Companies Act subject to the
more detailed terms and conditions provided for in Article
14 of the Articles of Association.
SHAREHOLDER AGREEMENTS
Ponsse Oyj is not aware of any shareholder agreements
related to ownership of the companys shares or exercising
of votes that would materially affect the value of the
companys share.
INTRODUCTION OF IAS/IFRS
In the late winter of 2003, Ponsse embarked on preparations
for the introduction of IAS/IFRS by establishing a project
team whose work will be supervised by a steering group.
During the year under review, the team identified the
differences between IFRS accounting principles and those of
the Ponsse Group and outlined new IFRS compliant principles
for Ponsses consolidated financial statements. The project
also studied the impact of the changes in accounting
practice, revamped the Groups accounting and
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reporting instructions and systems. Training within the
organization and setting up other preparations for the new
accounting standard will continue during 2004. Due to
preliminary study, changes in accounting principles and
practices are not going to cause any significant impacts on
results.
The company will report the effects on results in connection
with its interim reports and financial statements for 2004.
The first financial statements in compliance with IFRS will
be prepared for the financial year commencing 1 January
2005.
EVENTS AFTER REVIEW PERIOD
Mr Arto Tiitinen has appointed the CEO of Ponsse Oyj
effective 1 April 2004. Mr Tiitinen will join Ponsse from
Valtra, where he is currently Vice President, Marketing and
Sales. He will replace current CEO, Mr Tommi Ruha, who has
agreed to terminate his employment agreement 12 February
2004.
Vice President Juha Vidgrén takes over the CEO task of
Ponsse Oyj in intervening time.
OUTLOOK FOR THE CURRENT YEAR
Positive progress in the overall market for forest machines
is expected in 2004. The company predicts that cut-to-length
harvesting will account for an increasing share of total
harvesting. Higher demand is anticipated in North America,
too.
Whilst Ponsse expects turnover to rise in its main markets
during the current year, the growth rate is nevertheless
expected to remain modest given the current uncertainty
surrounding the global economic climate. The company
forecasts a better result for the current year than that for
2003. Seasonal fluctuations typical of the market for forest
machines mean that the current years accumulated profits
are likely to be weighted towards the end of the year.
BOARD OF DIRECTORS PROPOSAL FOR THE DISPOSAL OF PROFIT
Ponsse Oyjs Board of Directors is to recommend to the
Annual General Meeting that a dividend of EUR 2.00 per share
be paid for 2003. The record date for the payment of
dividend is 19 March 2004. Dividends will be paid on 26
March 2004. In its meeting the Board of Directors
ascertained that the year has required considerable efforts
on the part of the entire staff. Dispite of hard
circumstances Company made good progress in both volume and
performance during 2003. Consequently the Board of Directors
proposes to the Annual General Meeting that a salary bonus
be paid to all Ponsse Oyj personnel.
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ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Iisalmi Cultural
Centre, Kirkkopuistonkatu 9, 74100 Iisalmi on 16 March 2004,
commencing at 10am.
ANNUAL REPORT
The companys annual report for 2003 will be published
during week 11.
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Numerical data will arrive a bit late because of the technical problems
FURTHER INFORMATION FROM:
Tommi Ruha, President, CEO, tel. +358 (0)17 768 4621 or +358
(0)400 323 509 and
Mikko Paananen, CFO, tel +358 (0)17 768 4648 or +358 (0)400
817 036
www.ponsse.com
DISTRIBUTION
HEX Helsinki Exchanges
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