Raute Corporation - Interim report January 1 - March 31, 2019
RAUTE CORPORATION INTERIM REPORT MAY 3, 2019 AT 9.00 A.M.
This is a summary of Raute’s Interim report January 1 - March 31, 2019. The full interim report is a PDF file attachment to this stock exchange release and is also available on the company's website at www.raute.com.
RAUTE CORPORATION – INTERIM REPORT JANUARY 1 – MARCH 31, 2019
- The Group’s first-quarter net sales, EUR 41.3 million (MEUR 35.3), increased 17% on the comparison period.
- Operating profit amounted to EUR 2.6 million (MEUR 2.8), down 6%. The result before taxes was EUR 2.7 million (MEUR 2.9).
- Earnings per share were EUR 0.50 (EUR 0.53), and diluted earnings per share were EUR 0.50 (EUR 0.53).
- Order intake, at EUR 32 million (MEUR 68), was at a reasonable level. The order book at the end of the reporting period was strong, at EUR 84 million (MEUR 142), with some orders already scheduled for 2020.
- Raute’s net sales and operating profit for 2019 are expected to be at the previous year’s level.
| 1.1. –31.3. | 1.1. –31.3. | 1.1. –31.12. | |
| KEY RATIOS | 2019 | 2018 | 2018 |
| Net sales, MEUR | 41,3 | 35,3 | 181 |
| Change in net sales, % | 17,1 | -3,6 | 22,2 |
| Exported portion of net sales, % | 88,1 | 88,9 | 84,6 |
| Operating profit, MEUR | 2,6 | 2,8 | 14,9 |
| Operating profit, % of net sales | 6,3 | 7,8 | 8,2 |
| Profit before taxes, MEUR | 2,7 | 2,9 | 14,9 |
| Profit before taxes, % of net sales | 6,6 | 8,3 | 8,2 |
| Profit for the period, MEUR | 2,1 | 2,3 | 11,8 |
| Profit for the period, % of net sales | 5,2 | 6,4 | 6,5 |
| Gross capital expenditure, MEUR | 0,6 | 1,0 | 4,4 |
| % of net sales | 1,4 | 2,7 | 2,4 |
| Research and development costs, MEUR | 1,0 | 0,8 | 3,7 |
| % of net sales | 2,4 | 2,2 | 2,1 |
| Order book, MEUR | 84 | 142 | 95 |
| Order intake, MEUR | 32 | 68 | 167 |
| Personnel, at the end of the period | 776 | 716 | 772 |
| Personnel, effective, on average | 754 | 692 | 725 |
| Personnel, on average | 774 | 711 | 748 |
TAPANI KIISKI, PRESIDENT AND CEO: STRONG DEMAND CONTINUED
We started the year with a strong order book. It helped us to achieve high net sales that reflected growth of roughly 17 percent compared to the same period last year. The number of new orders was at a reasonable level, especially considering that the new orders did not include major mill-scale orders. Despite the growth in net sales, our operating profit fell slightly short of last year’s level. This was due to some exceptional cost items during the period under review that are highlighted further by the positive items that we recorded during the comparison period.
Demand for Raute’s technology and services continued to be strong. Demand remained the strongest in the traditional industrialized markets of Europe, Russia and North America. I am particularly confident with respect to Russia where the progress in negotiations on a few projects is quite promising now. The bulk of demand is shifting to the emerging markets, to South America and Asia. Within the industrialized markets, the focal point is shifting to a new customer base, to smaller customers and some that are new to the industry.
The volume of new orders, EUR 32 million, can be considered reasonable, since the orders during the period under review mainly consisted of smaller contracts. In terms of technology services, the volume of orders for basic services, spare parts and maintenance, in particular, grew strongly. Modernization project orders, however, remained at a low level.
Our order book is still historically strong, even though the order book’s decline from the record level of last year has continued steadily for a year now. Some of the order book is already scheduled for 2020, which means our future outlook is exceptionally clear. Our current level of orders and capacity allows us to serve our customers according to normal delivery times and thus help them implement their plans.
Thanks to a strong order book and continued active demand, Raute is in a good position to continue the good development that has continued for four years now and reach its targets for this year. We estimate that both Raute’s net sales and result will be at last year’s level.
BUSINESS ENVIRONMENT
Market situation in customer industries
Raute’s customers in the plywood and LVL (Laminated Veneer Lumber) industries are engaged in the manufacture of wood products used in investment projects and are thus highly affected by fluctuations in construction, housing-related consumption, international trade and transportation.
The situation in the global economy and the financial markets in early 2019 did not change considerably with respect to Raute. The economic outlook became increasingly uncertain. A few of our customers have informed us that they are experiencing a decline in demand and prices.
Many of Raute’s established and traditional customers have invested heavily during the past few years. In addition, the shift in demand for our technology towards new, and new types of customer accounts has continued. A few of our new orders are concrete proof of this shift.
Demand for wood products technology and technology services
Thanks to the continued good economic and market situation, investment activity among Raute’s customers has remained at a good level. Enquiry activity for new capacity projects and larger projects involving replacement and efficiency-boosting investments has remained at a good level, and contracts are being actively negotiated.
Demand remains the strongest in industrialized market areas, Europe, North America and Russia. Demand in South America has somewhat picked up. In the emerging markets of Asia, China included, and South America, demand has not been as strong, but it has been brisker in recent months. There is growing interest in Raute’s offering in these markets, which presents opportunities to obtain new customers.
Demand for maintenance and spare parts services remained at a good level, which is an indication of the good capacity utilization rates of Raute’s customers’ production plants.
OUTLOOK FOR 2019
Due to the high order book and sustained brisk demand, we estimate that both Raute’s net sales and operating profit in 2019 will remain at the level of the preceding year.
RAUTE CORPORATION
Board of Directors
BRIEFING ON MAY 3, 2019, AT 2 P.M.:
A briefing will be organized for analysts, investors and the media on May 3, 2019 at 2 p.m. at Scandic Simonkenttä Hotel, Bulsa-Freda cabinet, Simonkatu 9, Helsinki. The interim report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Tarja Järvinen, CFO.
NEXT INTERIM REPORT:
Raute Corporation’s half-year report (January 1–June 30, 2019) will be published on Wednesday, July 31, 2019.
FURTHER INFORMATION:
Mr. Tapani Kiiski, President and CEO, Raute Corporation, mobile phone +358 400 814 148
Ms. Tarja Järvinen, Group Vice President, Finance, CFO, Raute Corporation, mobile phone +358 40 658 3562
DISTRIBUTION:
Nasdaq Helsinki Ltd, main media, www.raute.com
RAUTE IN BRIEF:
Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and sawn timber. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in the Nastola area of Lahti, Finland. The company’s other production plants are located in Kajaani, Finland, the Vancouver area of Canada, the Shanghai area of China and in Pullman, Washington, USA. Raute’s net sales in 2018 were EUR 181.0 million. The Group’s headcount at the end of 2018 was 772. More information about the company can be found at www.raute.com.