PONSSE’S INTERIM REPORT FOR 1 JANUARY – 31 MARCH 2012
PONSSE PLC, STOCK EXCHANGE RELEASE, 24 APRIL 2012, 9:00 a.m.
PONSSE’S INTERIM REPORT FOR 1 JANUARY – 31 MARCH 2012
– Net sales amounted to EUR 76.8 (71.9) million.
– Operating result totalled EUR 4.5 (5.4) million, equalling 5.9 (7.5) per cent of net sales.
– Profit before taxes was EUR 4.0 (3.0) million.
– Cash flow from business operations was EUR -1.9 (7.9) million.
– Earnings per share were EUR 0.09 (-0.01).
– Equity ratio was 47.1 (47.3) per cent.
– Order books stood at EUR 67.3 (85.8) million.
PRESIDENT AND CEO JUHO NUMMELA:
In the first quarter of the year, the demand for new forest machines was normal. Demand improved towards the end of the period under review. At period end, the company’s order books remained good amounting to EUR 67.3 (85.8) million, which is 21.5 per cent less than in the corresponding period.
Net sales for the period amounted to EUR 76.8 (71.9) million, representing a growth of 6.7 per cent compared with the corresponding period. The service business grew during the period.
The operating result amounted to EUR 4.5 (5.4) million during the first quarter, equalling 5.9 (7.5) percent of net sales. Challenges in the sales of trade-in machines affected profitability.
Operating costs (staff costs, depreciation and amortisation and other operating costs) increased by 6.0 per cent during the period under review.
Cash flow from business operations during the period was negative by EUR -1.9 (7.9) million. Capital was released from materials and supplies, but, correspondingly, was tied into trade-in machines. The stock of new products consisted of machines on their way to customers and was at a normal level.
The 8000th Ponsse forest machine was supplied to the customer during the period under review. The factory operated as planned in two shifts during the period under review. The update of the Group’s ERP system timed to the past quarter succeeded according to plan.
NET SALES
Consolidated net sales for the period under review amounted to EUR 76.8 (71.9) million, which is 6.7 per cent more than in the comparison period. International business operations accounted for 61.3 (59.9) per cent of net sales.
Net sales were regionally distributed as follows: Northern Europe 59.8 (57.7) per cent, Central and Southern Europe 15.7 (15.8) per cent, Russia and Asia 10.8 (10.9) per cent, North and South America 13.7 (15.6) per cent and other countries 0.0 (0.0) per cent.
PROFIT PERFORMANCE
The operating result amounted to EUR 4.5 (5.4) million. The operating result equalled 5.9 (7.5) per cent of net sales for the period under review. Consolidated return on capital employed (ROCE) stood at 15.0 (12.4) per cent.
Staff costs for the period totalled EUR 13.1 (12.4) million. Other operating expenses stood at EUR 8.2 (7.8) million. The net total of financial income and expenses amounted to EUR -0.5 (-2.3) million. Exchange rate gains and losses with a net effect of EUR -0.1 (-2.0) million were recognised under financial items for the period. Profit for the period under review totalled EUR 2.8 (0.1) million. Diluted and undiluted earnings per share (EPS) came to EUR 0.09 (-0.01). The interest on the subordinated loan for the period, less tax, has been taken into account in the calculation of EPS.
STATEMENT OF FINANCIAL POSITION AND FINANCING ACTIVITIES
At the end of the period under review, the total consolidated statements of financial position amounted to EUR 174.2 (162.1) million. Inventories stood at EUR 87.6 (79.6) million. Trade receivables totalled EUR 26.8 (27.4) million, while liquid assets stood at EUR 9.8 (9.5) million. Group shareholders’ equity stood at EUR 81.7 (75.9) million and parent company shareholders’ equity at EUR 78.7 (65.5) million. Group shareholders’ equity includes a hybrid loan of EUR 19 million issued on 31 March 2009. The interest paid on the hybrid loan totalling EUR 6.8 million, less tax, is recognised as a deduction from Group equity. The amount of interest-bearing liabilities was EUR 38.1 (32.6) million. The company has used 22 per cent of its credit facility limit. The parent company's net receivables from other Group companies stood at EUR 78.4 (62.5) million. The parent company’s receivables from subsidiaries mainly consisted of trade receivables. Consolidated net liabilities totalled EUR 27.7 (21.3) million, and the debt-equity ratio (gearing) was 46.6 (43.0) per cent. The equity ratio stood at 47.1 (47.3) percent at the end of the period under review.
Cash flow from business operations amounted to EUR -1.9 (7,9) million. Cash flow from investment activities came to EUR -2.4 (-1.7) million.
ORDER INTAKE AND ORDER BOOKS
Order intake for the period totalled EUR 74.3 (90.7) million, while period-end order books were valued at EUR 67.3 (85.8) million.
DISTRIBUTION NETWORK
No changes took place in the Group structure during the period under review.
The subsidiaries included in the Ponsse Group are: Epec Oy, Finland; OOO Ponsse, Russia; Ponsse AB, Sweden; Ponsse AS, Norway; Ponsse Asia-Pacific Ltd, Hong Kong; Ponsse China Ltd, China; Ponsse Latin America Ltda, Brazil; Ponsse North America, Inc., the United States; Ponssé S.A.S., France; Ponsse UK Ltd, the United Kingdom; and Ponsse Uruguay S.A., Uruguay. Sunit Oy, based in Kajaani, Finland, is an affiliated company in which Ponsse Plc has a holding of 34 per cent.
CAPITAL EXPENDITURE AND R&D
During the period under review, the Group’s R&D expenses totalled EUR 2.3 (1.7) million, of which EUR 479 (309) thousand was capitalised.
Capital expenditure totalled EUR 2.4 (1.7) million. It mainly consisted of ordinary maintenance and replacement investments for machinery and equipment.
MANAGEMENT
The following persons were members of the Management Team: Juho Nummela, President and CEO, acting as the chairman; Pasi Arajärvi, Purchasing and Logistics Director; Juha Haverinen, Factory Director; Petri Härkönen, CFO; Juha Inberg, Technology and R&D Director; Timo Karppinen, Executive Director, Corporate Development and Strategy; Tapio Mertanen, Service Director; Paula Oksman, HR Director and Jarmo Vidgrén, Deputy CEO, Sales and Marketing Director. The company management has regular management liability insurance.
The area director organisation of sales is lead by Jarmo Vidgrén, Group’s Sales and Marketing Director and Tapio Mertanen, Service Director. The geographical distribution and the responsible persons are presented below:
Northern Europe: Jarmo Vidgrén (Finland), Eero Lukkarinen (Sweden, Denmark) and Sigurd Skotte (Norway),
Central and Southern Europe: Janne Vidgrén (Austria, Poland, Romania, Germany, the Czech Republic and Hungary), Clément Puybaret (France), Jussi Hentunen (Spain, Italy, Portugal and Norrbotten/Sweden) and Gary Glendinning (the United Kingdom),
Russia and Asia: Jaakko Laurila (Russia, Belarus), Norbert Schalkx (Japan and the Baltic countries) and Risto Kääriäinen (China),
North and South America: Pekka Ruuskanen (the United States) Marko Mattila (North American dealers), Fabio Nogueira (Brazil) and Martin Toledo (Uruguay).
Jerry Wannberg acted as the Managing Director of Ponsse's Swedish subsidiary Ponsse AB until 7 February 2012. Financial Manager Glenn Nyman acted as the Managing Director of Ponsse AB in addition to his own duties from 7 February 2012 to 11 March 2012. The release was issued on 7 February 2012.
M.Sc. (Forestry Econ.) Eero Lukkarinen took up his post as the President and CEO of Ponsse AB on 12 March 2012. The release was issued on 15 February 2012.
Claudio Costa acted as the Managing Director of Ponsse's Latin American subsidiary Ponsse Latin America Ltda until 7 February 2012. Fabio Nogueira is a Financial Director and is managing the operations in Ponsse Latin America Ltda in addition to his own duties from 7 February 2012 to 9 May 2012. The release was issued on 7 February 2012.
M.Sc. (Eng.) and M.Sc. (Econ.) Teemu Raitis will take up his post as the President and CEO of Ponsse Latin America Ltda on 10 May 2012. The release was issued on 17 February 2012.
PERSONNEL
The Group had an average staff of 981 (892) during the period and employed 987 (909) people at period-end.
SHARE PERFORMANCE
The company’s registered share capital consists of 28,000,000 shares. The trading volume of Ponsse Plc shares for 1 January – 31 March 2012 totalled 496,815, accounting for 1.8 per cent of the total number of shares. Share turnover amounted to EUR 3.9 million, with the period’s lowest and highest share prices amounting to EUR 7.10 and EUR 8.55, respectively.
At the end of the period, shares closed at EUR 8.05, and market capitalisation totalled EUR 225.4 million.
At the end of the period under review, the company held 212,900 treasury shares.
ANNUAL GENERAL MEETING
A separate release was issued on 17 April 2012 regarding the authorizations given to the Board of Directors and other resolutions at the AGM.
GOVERNANCE
In its decision-making and administration, the company observes the Finnish Limited Liability Companies Act, other regulations governing publicly listed companies and the company’s Articles of Association. The company’s Board of Directors has adopted the Code of Governance that complies with the Finnish Corporate Governance Code approved by the Board of the Securities Market Association in 2010. The purpose of the code is to ensure that the company is professionally managed and that its business principles and practices are of a high ethical and professional standard.
The Code of Governance is available on Ponsse’s website in the Investors section.
RISK MANAGEMENT
Risk management is based on the company’s values, as well as strategic and financial objectives. Risk management aims to support the achievement of the objectives specified in the company’s strategy, as well as to ensure the financial development of the company and the continuity of its business.
Furthermore, risk management aims to identify, assess and monitor business-related risks which may influence the achievement of the company’s strategic and financial goals or the continuity of its business. Decisions on the necessary measures to anticipate risks and react to observed risks are made on the basis of this information.
Risk management is a part of regular daily business, and it is also included in the management system. Risk management is controlled by the risk management policy approved by the Board.
A risk is any event that may prevent the company from reaching its objectives or that threatens the continuity of business. On the other hand, a risk may also be a positive event, in which case the risk is treated as an opportunity. Each risk is assessed on the basis of its impact and probability. Methods of risk management include avoiding, mitigating and transferring risks. Risks can also be managed by controlling and minimising their impact.
SHORT-TERM RISK MANAGEMENT
The rapid escalation of the problems in the economies of Europe and the United States in the financial market may have an impact on the availability of customer financing.
The parent company monitors the changes in the Group’s internal and external trade receivables and the associated risk of impairment.
The key objective of the company’s financial risk management policy is to manage liquidity, interest and currency risks. The company ensures its liquidity through credit limit facilities agreed with a number of financial institutions. The effect of adverse changes in interest rates is minimised by utilising credit linked to different reference rates and by concluding interest rate swaps. The effects of currency rate fluctuations are mitigated through derivative contracts.
Changes taking place in the fiscal and customs legislation in countries to which Ponsse exports may hamper the company’s export trade or its profitability.
OUTLOOK FOR THE FUTURE
The Group’s operating result in euros is expected to remain at the same level as in 2011.
Exacerbation of the problems in the economy or an extension of the current economic situation may affect the making of investment decisions on forest machines and lead to weakening demand.
The factory and service operate normally at full capacity. The development of operating costs is monitored in an enhanced manner, and any decisions to initiate investments will be made with discretion.
PONSSE GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000)
| IFRS | IFRS | IFRS | |||
| 1-3/12 | 1-3/11 | 1-12/11 | |||
| NET SALES | 76,756 | 71,933 | 328,191 | ||
| Increase (+)/decrease (-) in inventories of finished goods and work in progress | 3,428 | 6,115 | 2,672 | ||
| Other operating income | 141 | 189 | 1,297 | ||
| Raw materials and services | -53,129 | -51,454 | -214,137 | ||
| Expenditure on employment-related benefits | -13,092 | -12,355 | -49,176 | ||
| Depreciation and amortisation | -1,369 | -1,262 | -5,221 | ||
| Other operating expenses | -8,203 | -7,756 | -34,781 | ||
| OPERATING RESULT | 4,531 | 5,410 | 28,844 | ||
| Share of results of associated companies | -44 | -50 | -181 | ||
| Financial income and expenses | -454 | -2,334 | -2,617 | ||
| RESULT BEFORE TAXES | 4,033 | 3,026 | 26,046 | ||
| Income taxes | -1,213 | -2,917 | -11,233 | ||
| NET RESULT FOR THE PERIOD | 2,820 | 109 | 14,812 | ||
| OTHER ITEMS INCLUDED IN TOTAL COMPREHENSIVE RESULT: | |||||
| Translation differences related to foreign units | 303 | 602 | -943 | ||
| TOTAL COMPREHENSIVE RESULT FOR THE PERIOD | 3,123 | 711 | 13,869 | ||
| Diluted and undiluted earnings per share* | 0.09 | -0.01 | 0.47 | ||
* The interest on the subordinated loan for the period, less tax, was taken into account in this figure.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000)
| IFRS | IFRS | IFRS | |
| ASSETS | 31 Mar 12 | 31 Mar 11 | 31 Dec 11 |
| NON-CURRENT ASSETS | |||
| Intangible assets | 9,529 | 6,869 | 9,057 |
| Goodwill | 3,440 | 3,440 | 3,440 |
| Property, plant and equipment | 26,737 | 24,613 | 26,165 |
| Financial assets | 111 | 111 | 111 |
| Investments in associated companies | 1,250 | 1,425 | 1,294 |
| Non-current receivables | 1,364 | 2,636 | 1,535 |
| Deferred tax assets | 2,257 | 1,746 | 2,826 |
| TOTAL NON-CURRENT ASSETS | 44,688 | 40,840 | 44,428 |
| CURRENT ASSETS | |||
| Inventories | 87,576 | 79,558 | 80,475 |
| Trade receivables | 26,814 | 26,305 | 28,258 |
| Income tax receivables | 679 | 182 | 4 |
| Other current receivables | 4,644 | 5,713 | 4,499 |
| Cash and cash equivalents | 9,762 | 9,487 | 16,267 |
| TOTAL CURRENT ASSETS | 129,476 | 121,245 | 129,504 |
| TOTAL ASSETS | 174,164 | 162,085 | 173,932 |
| SHAREHOLDERS’ EQUITY AND LIABILITIES | |||
| SHAREHOLDERS’ EQUITY | |||
| Share capital | 7,000 | 7,000 | 7,000 |
| Other reserves | 19,030 | 19,030 | 19,030 |
| Translation differences | -1,672 | -430 | -1,975 |
| Treasury shares | -2,228 | -2,228 | -2,228 |
| Retained earnings | 59,556 | 52,505 | 56,736 |
| EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS | 81,686 | 75,877 | 78,563 |
| NON-CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 18,623 | 16,011 | 18,630 |
| Deferred tax liabilities | 610 | 601 | 1,110 |
| Other non-current liabilities | 19 | 107 | 20 |
| TOTAL NON-CURRENT LIABILITIES | 19,252 | 16,720 | 19,760 |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 19,480 | 16,603 | 20,434 |
| Provisions | 4,947 | 4,755 | 4,627 |
| Tax liabilities for the period | 236 | 755 | 3,527 |
| Trade creditors and other current liabilities | 48,563 | 47,374 | 47,022 |
| TOTAL CURRENT LIABILITIES | 73,226 | 69,488 | 75,609 |
| TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES | 174,164 | 162,085 | 173,932 |
CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000)
| IFRS | IFRS | IFRS | ||
| 1-3/12 | 1-3/11 | 1-12/11 | ||
| CASH FLOW FROM BUSINESS OPERATIONS: | ||||
| Net result for the period | 2,820 | 109 | 14,812 | |
| Adjustments: | ||||
| Financial income and expenses | 454 | 2,334 | 2,617 | |
| Share of the result of associated companies | 44 | 50 | 181 | |
| Depreciation and amortisation | 1,369 | 1,262 | 5,221 | |
| Income taxes | 1,284 | 2,968 | 10,878 | |
| Other adjustments | 557 | 358 | 1,284 | |
| Cash flow before changes in working capital | 6,528 | 7,080 | 34,994 | |
| Change in working capital: | ||||
| Change in trade receivables and other receivables | 1,611 | 5,303 | 5,034 | |
| Change in inventories | -7,101 | -7,167 | -8,084 | |
| Change in trade creditors and other liabilities | -1,360 | 2,810 | 1,953 | |
| Change in provisions for liabilities and charges | 320 | 49 | -79 | |
| Interest received | 32 | 57 | 216 | |
| Interest paid | -107 | -136 | -1,346 | |
| Other financial items | -251 | 466 | -715 | |
| Income taxes paid | -1,614 | -523 | -6,947 | |
| NET CASH FLOW FROM BUSINESS OPERATIONS (A) | -1,941 | 7,939 | 25,024 | |
| CASH FLOW FROM INVESTMENTS | ||||
| Investments in tangible and intangible assets | -2,412 | -1,730 | -9,430 | |
| CASH OUTFLOW FROM INVESTMENT ACTIVITIES (B) | -2,412 | -1,730 | -9,430 | |
| FINANCING | ||||
| Acquisition of treasury shares | 0 | 0 | 0 | |
| Interest paid, hybrid loan | -1,137 | -1,137 | -2,280 | |
| Withdrawal/Repayment of current loans | -1,105 | -3,838 | -150 | |
| Change in current interest-bearing liabilities | 34 | 34 | 25 | |
| Withdrawal/Repayment of non-current loans | 8 | -168 | 2,886 | |
| Payment of finance lease liabilities | -16 | -157 | -519 | |
| Change in non-current receivables | 16 | 67 | 208 | |
| Dividends paid | 0 | 0 | -9,725 | |
| NET CASH OUTFLOW FROM FINANCING (C) | -2,200 | -5,198 | -9,556 | |
| Change in cash and cash equivalents (A+B+C) | -6,553 | 1,010 | 6,039 | |
| Cash and cash equivalents on 1 Jan | 16,267 | 11,036 | 11,036 | |
| Impact of exchange rate changes | 48 | -2,560 | -808 | |
| Cash and cash equivalents on 31 Mar / 31 Dec | 9,762 | 9,487 | 16,267 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR 1,000)
| A = Share capital | |||||||||||
| B = Share premium and other reserves | |||||||||||
| C = Translation differences | |||||||||||
| D = Treasury shares | |||||||||||
| E = Retained earnings | |||||||||||
| F = Total shareholders’ equity | |||||||||||
| EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS | |||||||||||
| A | B | C | D | E | F | ||||||
| SHAREHOLDERS’ EQUITY 1 JAN 2012 | 7,000 | 19,030 | -1,975 | -2,228 | 56,736 | 78,563 | |||||
| Translation differences | 303 | 303 | |||||||||
| Result for the period | 2,820 | 2,820 | |||||||||
| Total comprehensive income for the period | 303 | 2,820 | 3,123 | ||||||||
| Direct entries to retained earnings* | 0 | ||||||||||
| Dividend distribution | 0 | ||||||||||
| Purchase of treasury shares | 0 | ||||||||||
| Other changes | 0 | ||||||||||
| SHAREHOLDERS' EQUITY 31 MAR 2012 | 7,000 | 19,030 | -1,672 | -2,228 | 59,556 | 81,686 | |||||
| SHAREHOLDERS’ EQUITY 1 JAN 2011 | 7,000 | 19,030 | -1,032 | -2,228 | 52,396 | 75,166 | |||||
| Translation differences | 602 | 602 | |||||||||
| Result for the period | 109 | 109 | |||||||||
| Total comprehensive income for the period | 602 | 109 | 711 | ||||||||
| Direct entries to retained earnings* | 0 | ||||||||||
| Dividend distribution | 0 | ||||||||||
| Purchase of treasury shares | 0 | ||||||||||
| Other changes | 0 | ||||||||||
| SHAREHOLDERS' EQUITY 31 MAR 2011 | 7,000 | 19,030 | -430 | -2,228 | 52,505 | 75,877 | |||||
| * Consists of the interest paid, less tax, for the hybrid loan classified as equity. | |||||||||||
|
|
31 Mar 12 | 31 Mar 11 | 31 Dec 11 | ||
| 1. LEASING COMMITMENTS (EUR 1,000) | 3,734 | 5,042 | 4,085 | ||
| 2. CONTINGENT LIABILITIES (EUR 1,000) | 31 Mar 12 | 31 Mar 11 | 31 Dec 11 | ||
| Guarantees given on behalf of others | 759 | 359 | 859 | ||
| Repurchase commitments | 1,490 | 2,591 | 1,765 | ||
| Other commitments | 3,391 | 3,422 | 3,391 | ||
| TOTAL | 5,640 | 6,372 | 6,014 | ||
| 3. PROVISIONS (EUR 1,000) | Guarantee provision | ||||
| 1 January 2012 | 4,627 | ||||
| Provisions added | 353 | ||||
| Provisions cancelled | -33 | ||||
| 31 March 2012 | 4,947 | ||||
| KEY FIGURES AND RATIOS | 31 Mar 12 | 31 Mar 11 | 31 Dec 11 | ||
| R&D expenditure, MEUR | 2.3 | 1.7 | 8.8 | ||
| Capital expenditure, MEUR | 2.4 | 1.7 | 9.4 | ||
| as % of net sales | 3.1 | 2.4 | 2.9 | ||
| Average number of employees | 981 | 892 | 948 | ||
| Order books, MEUR | 67.3 | 85.8 | 71.9 | ||
| Equity ratio, % | 47.1 | 47.3 | 45.2 | ||
| Diluted and undiluted earnings per share (EUR) | 0.09 | -0.01 | 0.47 | ||
| Equity per share (EUR) | 2.92 | 2.71 | 2.81 | ||
FORMULAE FOR FINANCIAL INDICATORS
Return on capital employed, %:
Result before tax + financial expenses
--------------------------------------------
Shareholder´s equity + interest-bearing financial liabilities (average during the year) * 100
Average number of employees:
Average of the number of personnel at the end of each month. The calculation has been adjusted for part-time employees.
Equity ratio, %:
Shareholders’ equity + Non-controlling interests
---------------------------------------------
Balance sheet total - advance payments received * 100
Earnings per share:
Net income for the period - Non-controlling interests - Interest on hybrid loan for the period less tax
----------------------------------------------
Average number of shares during the accounting period, adjusted for share issues
Equity per share:
Shareholders’ equity
----------------------------------------------
Number of shares on the balance sheet date, adjusted for share issues
| ORDER INTAKE, MEUR | 1-3/12 | 1-3/11 | 1-12/11 | ||
| Ponsse Group | 74.3 | 90.7 | 333.7 |
The interim report has been prepared observing the recognition and valuation principles of IFRS standards, but not all of the requirements of IAS 34 have been complied with. The same accounting principles were observed for the interim report as for the annual financial statements dated 31 December 2011.
The above figures have not been audited.
The above figures have been rounded and may therefore differ from those given in the official financial statements.
This communication includes future-oriented statements that are based on the assumptions currently made by the company’s management and its current decisions and plans. Although the management believes that the future expectations are well founded, there is no certainty that these expectations will prove to be correct. This is why the results may significantly deviate from the assumptions included in the future-oriented statements as a result of, among other things, changes in the economy, markets, competitive conditions, legislation or currency exchange rates.
Vieremä, 24 April 2012
PONSSE PLC
Juho Nummela
President and CEO
FURTHER INFORMATION
Juho Nummela, President and CEO, tel. +358 20 768 8914 or +358 400 495 690
Petri Härkönen, CFO, tel. +358 20 768 8608 or +358 50 409 8362
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
www.ponsse.com
Ponsse Plc is a company specialising in the sales, manufacture, servicing and technology of cut-to-length method forest machines and is driven by genuine interest in its customers and their business. Ponsse develops and manufactures sustainable and innovative harvesting solutions based on customers’ needs.
The company was established by forest machine entrepreneur Einari Vidgrén in 1970, and it has been a leader in timber harvesting solutions based on the cut-to-length method ever since. Ponsse is headquartered in Vieremä, Finland. The company’s shares are quoted on the NASDAQ OMX Nordic List.