PONSSE´S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2006
PONSSE OYJ STOCK EXCHANGE RELEASE 17 OCTOBER 2006 9:00 AM
PONSSE´S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2006
- Turnover: EUR 156.0 million (Q1-Q3/2005: EUR 158.3 million)
- Q3 turnover: EUR 47.4 million (Q3/2005: EUR 45.4 million)
- International business operations accounted for 65.0% of turnover (Q1-
Q3/2005: 65.2%)
- Operating profit: EUR 19.4 million (Q1-Q3/2005: EUR 19.5 million)
- Operating profit accounted for 12.4% of turnover (Q1-Q3/2005: 12.3%)
- Q3 operating profit: EUR 6.1 million (Q3/2005: EUR 6.0 million)
- Earnings per share: EUR 0.45 (EUR 0.48)
The comparison figures are Ponsses figures presented in the adjusted financial
statement for the corresponding period in 2005. The Group 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, Ponsses President and CEO, states the following at the time of
the publication of the interim report:
- Our business has developed positively despite the difficult market
situation. Machinery sales in the Nordic countries were slow at the beginning
of the year, but picked up towards the end of the summer. The FinnMETKO forest
machinery show held in Jämsänkoski at the end of August was the best show ever
for our company in commercial terms. At the FinnMETKO show Ponsse launched a
new harvester and a new forwarder, as well as a new crane family, that will
significantly expand our product range and increase our competitive edge.
- In September Ponsse signed the largest retail agreements in the
companys history in Brazil. The new distributors will provide full coverage
of areas with the worlds largest eucalyptus plantations. Our distribution
network was also expanded to the Pacific Northwest of the United States, in
areas where logging volumes are at about the same level as in Finland.
- The construction of new component manufacturing facilities was
started at our Vieremä plant in the summer, and they are expected to be
completed in early 2007. These additional facilities will allow us to double
our production.
TURNOVER
Ponsses turnover for the period under review amounted to EUR 156.0 million
(EUR 158.3 million). International business operations accounted for 65.0%
(65.2%) of the total turnover. Domestic sales accounted for 35.0% (34.8%) of
the total turnover.
PROFIT PERFORMANCE
Ponsse recorded an operating profit of EUR 19.4 million (EUR 19.5 million)
during the period under review. Operating profit remained at the previous
years level and accounted for 12.4% (12.3%) of the turnover. Return on
investment (ROI) stood at 30.2% (37.5%).
Personnel costs for the period amounted to EUR 27.3 million (EUR 24.6 million)
and other operating expenses to EUR 16.8 million (EUR 14.7 million). Net
financial expenses were EUR -1.3 million (EUR -0.6 million). Income and
expenses resulting from currency risk hedging were included in financial items.
Six thousand euro was recorded as income under extraordinary items. No
extraordinary items were recorded for the comparison period.
Profit for the period totalled EUR 12.7 million (EUR 13.5 million). Earnings
per share were EUR 0.45 (EUR 0.48).
BALANCE SHEET AND FINANCIAL POSITION
At the end of the period under review the consolidated balance sheet total
amounted to EUR 128.1 million (EUR 105.0 million). Stocks amounted to EUR 61.4
million (EUR 47.5 million). Interest-bearing liabilities totalled EUR 41.7
million (EUR 26.9 million), of which current creditors totalled EUR 22.0
million (EUR 3.2 million) and non-current creditors EUR 19.7 million (23.7
million). Net liabilities totalled EUR 32.2 million (EUR 18.4 million). Equity
ratio stood at 41.4% (44.0%). Accounts receivable totalled EUR 19.8 million
(EUR 15.5 million). Cash in hand and at bank amounted to EUR 8.8 million (EUR
8.1 million).
Cash flow from business operations totalled EUR -4.3 million (EUR 8.2 million),
while that from investments totalled EUR -5.1 million (EUR -7.6 million).
ORDER INTAKE AND ORDER BOOK
Order intake for the period amounted to EUR 152.0 million (EUR 162.3 million),
while the period-end order book stood at EUR 50.9 million (EUR 48.2 million).
The order book includes dealers minimum purchase commitments, based on
previous practice.
RETAIL CHANNELS
Ponsse Latin America Ltda signed co-operation agreements with Brazilian
companies Linck S.A., Motiva S.A. and Tracbel S.A. in September. These
companies operate in those areas of Brazil where the countrys eucalyptus
plantations are located. The agreements relate to the retail sales and
maintenance of forest machinery and associated equipment manufactured at
Ponsses Finnish factories, and harvester heads manufactured at the companys
Brazilian factories. All three partners have extensive experience in the field
of heavy machinery sales.
Ponsse North America, Inc. and Clyde/West, Inc. signed an agreement on co-
operation in the US states of Oregon, Washington and Idaho in September.
Clyde/West, Inc. is a well-established reseller of heavy machinery in its
operating region, and they are an authorised dealership for several leading
brands.
The operations of Ponsse UK Ltd were consolidated and reorganised during the
review period. In July 2006, Rory Longmore was appointed Managing Director of
Ponsse UK Ltd.
CAPITAL EXPENDITURE AND R&D
Ponsse introduced a new harvester, a new forwarder, a new harvester head and
two new harvester cranes in the third quarter.
The new models fall in the largest size-category in the PONSSE product range.
The PONSSE Bear harvester is specifically designed for large clear cuts.
The PONSSE Elephant is a new forwarder in the 18-tonne class. It is designed
for demanding operating conditions and requirements.
Capital expenditures totalled EUR 5.1 million (EUR 7.6 million). The
expenditure was concentrated on the acquisition of machinery and equipment
related to the construction and startup of the Brazilian plant, machinery and
equipment for the Vieremä plant, the renovation of office premises in Vieremä
and other maintenance investments. In addition, the company has made
significant investments in the development of its operations. This is why the
level of provisions was reduced during the third quarter.
R&D expenses totalled EUR 2.8 million (EUR 2.9 million).
PERSONNEL
The Group had an average staff of 797 (723) during the review period, and
employed 787 (763) people at the period-end.
SHARE PERFORMANCE
The trading volume of Ponsse Oyj shares for 1 January - 30 September 2006
totalled 2,806,744, accounting for 10.0% of the total number of shares. Total
share turnover amounted to EUR 34.7 million, with the periods lowest and
highest per-share prices amounting to EUR 10.89 and EUR 15.00 respectively.
At the end of the period the share closed at EUR 12.90 and the market
capitalisation totalled EUR 361.2 million.
ADMINISTRATION
The company has adopted insider guidelines that comply with the insider
regulations of the Helsinki Stock Exchange and operates in accordance with the
administration and operation recommendations concerning listed companies
(Corporate Governance). These Corporate Governance guidelines are available in
the Investors area of our website.
RISK MANAGEMENT
The Groups risk management policy seeks to further develop and maintain an
extensive monitoring system that supports the Groups 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 Groups 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 companys CEO. The core internal supervision methods
consist of internal guidelines, reporting and various technical systems
relating to activities.
In the third quarter, Ponsse appointed Matti Pitkänen, M. Econ, M. Eng., as
Group Internal Auditor.
FUTURE PROSPECTS
The Nordic market picked up towards the end of the review period. The European
market has developed favourably and this trend is expected to continue. The
distribution channel agreements signed in North and South America create
further opportunities to increase sales volumes in future years. The increasing
demand for the cut-to-length harvesting method will also contribute to the
companys growth. Considering the business development initiatives and
investments successfully completed, the company forecasts that the result of
the current financial year will be better than that of the previous year,
provided there are no significant changes in the market situation or the
companys operating environment during the rest of the year.
PONSSE GROUP
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
IFRS IFRS IFRS
1-9/06 1-9/05 1-12/05
TURNOVER 155,971 158,271 226,095
Increase (+)/decrease (-) in stocks of 10,134 5,138 730
finished goods and work in progress
Other operating income 1,103 1,017 1,326
Raw materials and services -100,570 -103,044 -139,304
Staff costs -27,283 -24,581 -34,317
Depreciation -3,213 -2,567 -4,041
Other operating expenses -16,790 -14,733 -21,437
OPERATING PROFIT 19,351 19,499 29,051
Share of results of associated 271 141 285
companies
Financial income and -1,273 -552 -1,225
expenses
RESULT BEFORE EXTRAORDINARY ITEMS 18,350 19,088 28,111
Extraordinary items 6 0 -1
RESULT AFTER EXTRAORDINARY
ITEMS 18,356 19,088 28,110
Income taxes -5,692 -5,391 -8,480
Minority interest 0 -164 0
RESULT FOR THE FINANCIAL 12,664 13,533 19,629
PERIOD
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1,000)
IFRS IFRS
7-9/06 7-9/05
TURNOVER 47,415 45,400
Increase (+)/decrease (-) in stocks of 3,202 613
finished goods and work in progress
Other operating income 300 300
Raw materials and services -30,056 -27,700
Staff costs -7,773 -7,150
Depreciation -1,010 -879
Other operating expenses -6,027 -4,603
OPERATING PROFIT 6,051 5,978
Share of results of associated 74 85
companies
Financial income and -486 -267
expenses
RESULT BEFORE EXTRAORDINARY ITEMS 5,641 5,797
Extraordinary items 1 0
RESULT AFTER EXTRAORDINARY
ITEMS 5,642 5,797
Income taxes -1,882 -1,767
Minority interest 0 -61
RESULT FOR THE FINANCIAL 3,759 3,968
PERIOD
In the financial statements for 2005 Ponsse Group changed the accounting policy
concerning the purchase of used machines in connection with the sale of forest
machinery. 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 forest machinery
and, therefore, the change in value has been accounted for as an adjustment
item in the consolidated turnover. Previously, until the end of Q3/2005, this
type of change in value has been presented under the item 'Materials and
services'. A corresponding adjustment has been made in the financial statement
for 2005. Actual changes in the value of used machinery that are made after the
time of sale will we handled as a write-down of inventory value in the same
manner as before.
CONSOLIDATED BALANCE SHEET (EUR 1,000)
IFRS IFRS IFRS
ASSETS 30 Sep 30 Sep 31 Dec
2006 2005 2005
FIXED AND OTHER NON-CURRENT ASSETS
Intangible assets 3,327 2,043 2,652
Goodwill 3,804 3,686 3,773
Property, plant and equipment 25,393 22,038 24,270
Financial assets 37 1,212 35
Holdings in associated companies 1,158 970 1,013
Non-current receivables 130 103 103
Deferred tax assets 1,442 1,278 537
TOTAL FIXED AND OTHER NON-CURRENT 35,292 31,330 32,383
ASSETS
CURRENT ASSETS
Stocks 61,354 47,544 45,161
Accounts receivable 19,806 15,509 14,782
Other current receivables 2,806 2,517 3,594
Current investments 2 0 2
Cash in hand and at bank 8,831 8,135 12,339
TOTAL CURRENT ASSETS 92,800 73,705 75,879
TOTAL ASSETS 128,092 105,035 108,262
CAPITAL AND RESERVES, AND LIABILITIES
SHAREHOLDERS EQUITY
Share capital 7,000 7,000 7,000
Other reserves 20 20 19
Translation differences -647 -506 -442
Retained earnings 46,429 38,956 44,811
CAPITAL AND RESERVES OWNED
BY PARENT COMPANY SHAREHOLDERS 52,801 45,470 51,389
Minority interest 0 582 0
TOTAL CAPITAL AND RESERVES 52,801 46,052 51,389
NON-CURRENT CREDITORS
Interest-bearing liabilities 19,697 23,687 18,953
Deferred tax liabilities 921 612 1,142
Other non-current creditors 147 359 359
TOTAL NON-CURRENT CREDITORS 20,765 24,658 20,453
CURRENT CREDITORS
Interest-bearing liabilities 22,026 3,163 5,444
Provisions 3,409 5,276 6,324
Tax liabilities for the period 2,214 2,586 1,216
Trade creditors and other current 26,877 23,299 23,436
creditors
TOTAL CURRENT CREDITORS 54,526 34,325 36,420
TOTAL CAPITAL AND RESERVES, AND 128,092 105,035 108,262
LIABILITIES
CONSOLIDATED CASH FLOW STATEMENT (EUR 1,000)
IFRS IFRS IFRS
1-9/06 1-9/05 1-12/05
BUSINESS OPERATIONS:
Profit for the period 12,664 13,533 19,629
Adjustments:
Financial income and expenses 1,273 552 1,225
Share of the result of associated -271 -141 -285
companies
Depreciation 3,213 2,567 4,041
Deferred taxes -831 -853 22
Income taxes 6,523 6,244 8,458
Other adjustments 214 221 256
Cash flow before change in working 22,785 22,123 33,346
capital
Change in working capital:
Increase (-)/decrease (+) of
non-interest-bearing -4,157 1,894 1,501
receivables
Increase (-) / decrease (+) of -16,193 -11,435 -9,052
stocks
Increase (-)/ decrease (+) of
non-interest-bearing creditors 2,973 1,202 1,279
Change in provisions for -2,915 1,123 2,171
liabilities and charges
Interest received 129 131 277
Interest paid -750 -809 -932
Other financial items -482 -63 -656
Income taxes paid -5,653 -5,950 -9,517
NET CASH FLOW FROM BUSINESS -4,263 8,216 18,417
OPERATIONS (A)
INVESTMENTS
Investment in tangible and intangible -5,082 -6,388 -11,209
assets
Investment in other assets 0 0 -11
Repayment of loan receivables -1,187 0
Dividends received 0 0 101
CASH OUTFLOW FROM INVESTING -5,082 -7,575 -11,119
ACTIVITIES (B)
FINANCING
Withdrawal/repayment
of current loans 16,824 -4,698 -2,677
Increase (-) / decrease (+) in
current interest-bearing -2 0 0
liabilities
Withdrawal/repayment
of non-current loans 485 -227 -4,961
Payment of finance lease liabilities -243 -491 -231
Increase (-) / decrease (+) in non- -27 4 4
current receivables
Paid dividends -11,200 -2,800 -2,800
NET CASH OUTFLOW FROM 5,837 -8,212 -10,665
FINANCING (C)
Increase (-) / decrease (+) in -3,508 -7,571 -3,367
liquid assets (A+B+C)
Liquid assets 1 Jan. 12,339 15,706 15,706
Liquid assets 30 Sep/31 Dec 8,831 8,135 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 0 333 -202 0 131
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND 0 0 333 -202 0 131
RESERVES
Net profit for the 0 0 0 13,533 0 13,533
period
TOTAL RECOGNISED INCOME
AND EXPENSES 0 0 333 13,331 0 13,664
Dividend distribution 0 0 0 -2,800 0 -2,800
Change in minority 0 0 0 0 163 163
interest
CAPITAL AND RESERVES 30 7,000 20 -505 38,956 582 46,052
SEP 2005
CAPITAL AND RESERVES 1 7,000 20 -442 44,811 0 51,389
JAN 2006
Translation differences 0 0 -206 154 0 -52
NET INCOME RECOGNISED
DIRECTLY IN CAPITAL AND 0 0 -206 154 0 -52
RESERVES
Net profit for the 0 0 0 12,664 0 12,664
period
TOTAL RECOGNISED INCOME 0
AND EXPENSES 0 -206 12,818 0 12,612
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 -648 46,429 0 52,801
SEP 2006
SEGMENT INFORMATION (EUR 1,000)
GEOGRAPHICAL SEGMENTS
1-9/06 1-9/05 1-12/05
TURNOVER
Nordic countries 105,731 117,755 154,017
Rest of Europe 59,959 44,184 71,758
North and South America 18,873 24,376 33,775
Elimination -30,394 -28,729 -34,697
Unallocated 1,802 685 1,242
GROUP TOTAL 155,971 158,271 226,095
OPERATING PROFIT
Nordic countries 11,039 13,744 18,825
Rest of Europe 8,031 5,454 10,761
North and South America -106 1,697 2,027
Unallocated 388 -1,396 -2,562
GROUP TOTAL 19,351 19,499 29,051
PLEDGES GIVEN, CONTINGENT AND OTHER LIABILITIES (EUR 1,000)
30 Sep 2006 30 Sep 31 Dec
2005 2005
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 2,189 443 1,996
1,000)
3. CONTINGENT LIABILITIES ON BEHALF OF GROUP COMPANIES (EUR 1,000)
Guarantees given on behalf of Group
companies 827 860 884
4. LIABILITIES BASED ON DERIVATIVE CONTRACTS (EUR 1,000)
4.1 Nominal values
Currency derivatives
Forward contracts 21,249 16,162 14,690
4.2 Market values
Currency derivatives
Forward contracts -26 -281 -70
5. OTHER CONTINGENT LIABILITIES (EUR 1,000)
Guarantees given on others 1,534 1,105 1,289
behalf
Repurchase commitments 2,849 8,735 7,163
Other liabilities 2,947 0 0
Total 7,330 9,840 8,452
KEY FIGURES AND RATIOS 30 Sep 30 Sep 31 Dec
2006 2005 2005
R&D expenditure, MEUR 2.8 2.9 3.7
Capital expenditure, MEUR 5.1 7.6 11.2
% of turnover 3.3 4.8 5.0
Average number of staff 797 723 729
Order book, MEUR 50.9 48.2 54.9
Equity ratio, % 41.4 44.0 47.6
Earnings per share, EUR 0.45 0.48 0.70
Equity per share, EUR 1.89 1.62 1.84
Per-share figures have been adjusted with the split share.
Income taxes based on profit for the financial period are included in the
Profit and Loss Account and earnings per share.
ORDER INTAKE, MEUR 1-9/06 1-9/05 1-12/05
Ponsse Group 152.0 162.3 236.9
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 so may differ from those given in the
official financial statements.
Vieremä, 17 October 2006
Arto Tiitinen
President and CEO
FOR FURTHER INFORMATION, PLEASE CONTACT:
Arto Tiitinen, President and CEO, tel. +358 20 768 4621 or +358 400 566 875
Mikko Paananen, CFO, tel. +358 (0)20 768 8648 or +358 (0)400 817 036
DISTRIBUTION
Helsinki Stock Exchange
Principal media
www.ponsse.com
