EXEL OYJ STOCK EXCHANGE RELEASE 2 May 2008 at 1.30 Pm 1 (13)
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EXEL OYJ STOCK EXCHANGE RELEASE 2 May 2008 at 1.30 pm 1 (13) EXEL INTERIM REPORT FOR JANUARY 1 – MARCH 31, 2008 Summary - Net sales decreased to EUR 24.1 (28.8) million or in the first quarter of 2008 or were 16% lower than for the corresponding period in 2007 - Operating profit was EUR 1.4 million compared to EUR 3.5 million in the first quarter of 2007, representing 5.6% (12.2%) of net sales - Weaker market conditions in Exel Composites resulted in a decline in operating profit to EUR 2.9 (4.3) million - Unsatisfactory performance in Exel Sports Brands continued, with an operating loss of EUR -1.4 (-0.7) million - Fully diluted earnings per share were EUR -0.01 (0.19) - Agreement signed after the reporting period to transfer of the outdoor business of Exel Sports Brands to Karhu Sports - For the full-year 2008, the profit before taxes is expected to be negative for the Group Vesa Korpimies, President and CEO: “The reduction in sales and increased price competition had a negative impact on the operating profit in Exel Composites during the first quarter. Weaker sales were mainly due to changes in procurement practices in the wind energy segment and divestment of the Plastics business in Germany. In addition, we faced some softness in the building and construction segment, where some projects were delayed.” “Sales in Exel Sports Brands were in line with our expectations, but lower than in 2007. Exel Sports Brands continued to suffer from a high cost level causing a significant operating loss. We have today signed an agreement with Karhu Sports, one of the leading Finnish sports equipment manufacturers, to transfer the outdoor business of Exel Sports Brands. The agreement secures the continued presence and distribution of Exel branded poles in the sports equipment market in a model that strengthens Exel’s profitability. Exel can now sharpen the focus on its core business, namely Exel Composites.” CONSOLIDATED KEY FIGURES, EUR million (unaudited) 1.1. – 1.1. – Change, % 1.1. - 31.3. 31.3. 31.12. 2008 2007 2007 Net sales 24.1 28.8 -16.4 113.5 Operating profit 1.3 3.5 -62.1 4.8 % of net sales 5.6 12.2 4.2 Profit for the period -0.1 2.3 -104.0 2.0 Shareholders´ equity 23.1 26.6 -13.2 23.5 Net interest-bearing 28.4 29.5 -3.5 27.9 liabilities Capital employed 55.9 61.9 -9.7 56.3 Return on equity, % -1.6 36.2 8.4 Return on capital employed, 2.6 24.3 7.3 % Equity ratio, % 30.9 31.7 31.3 Net gearing, % 123.3 110.9 118.4 Earnings per share, EUR -0.01 0.19 -104.0 0.17 Earnings per share, EUR, -0.01 0.19 -104.0 0.17 diluted Equity per share, EUR 1.98 2.23 -11.2 1.98 IFRS REPORTING Exel has applied IFRS reporting since the beginning of 2005. This interim report has been prepared in accordance with the recognition and measurement principles of IFRS, which are the same as in the 2007 financial statements. FINANCIAL PERFORMANCE Exel’s consolidated net sales for the first quarter in 2008 decreased by 16% to EUR 24.1 (28.8) million compared to the corresponding period in 2007. The weaker sales were primarily a result of a decrease in sales in the wind energy segment and the divestment of the Plastics business in Germany. Moreover, the Company is also faced with weaker market conditions in other segments, especially in building and construction. This was partly due to the delay of start-up of new building projects. Exel Sports Brands’ cross-country and alpine products sales suffered from another mild winter and stiff competition. Exel’s operating profit for the first quarter in 2008 decreased to EUR 1.4 (3.5) million, compared to the corresponding period last year. Operating profit as a percentage of net sales was 6.0% (12.2%). The reduction in sales and increasing price competition had a negative impact on the operating profit in Exel Composites. Furthermore, the operations of Exel Sports Brands continued to suffer from a high cost level and problems with logistics. The Group’s net financial expenses in the first quarter in 2008 were EUR 1.4 (0.3) million. Currency losses due to weakening USD and AUD were the main reason behind the increase. The Group’s profit before taxes was EUR -0.0 (3.2) million and profit after taxes EUR -0.1 (2.3) million. Earnings per share were EUR -0.01 (0.19). Return on capital employed was 2.6% (24.3%). BALANCE SHEET The Group’s consolidated total assets at the end of the reporting period were EUR 74.7 (84.0) million. Equity was EUR 23.1 (26.6) million and equity ratio 30.9% (31.7%). CASH FLOW AND FINANCIAL POSITION Cash flow from business operations in the first quarter was EUR -0.2 (-1.2) million. At the end of the reporting period the Group’s liquid assets stood at EUR 4.4 (5.9) million, interest-bearing liabilities at EUR 32.9 (35.4) million, of which short-term liabilities accounted for EUR 13.9 (9.9) million. Net interest-bearing liabilities were EUR 28.4 (29.5) million and the net gearing ratio was 123.3% (110.9). CAPITAL EXPENDITURE AND DEPRECIATION The capital expenditure on fixed assets during the review period amounted to EUR 0.3 (0.6) million. Total depreciation of non-current assets during the period under review amounted to EUR 0.9 (1.1) million. PERSONNEL The number of Exel Group employees on 31 March 2008 was 567 (588), of whom 230 (239) worked in Finland and 337 (349) in other countries. The average number of personnel during the reporting period was 570 (576). BUSINESS SEGMENTS The Group’s operations are divided into two primary business segments: Exel Composites and Exel Sports Brands. Exel Composites Exel Composites’ key financial figures for the reporting period were as follows: 1.1.- 1.1.- Change % 1.1. - 31.3. 31.3. 31.12. EUR million 2008 2007 2007 Net sales 21.8 26.7 -18.5 104.3 Operating profit 2.9 4.3 -32.5 15.2 % of net sales 13.3 16.0 14.6 Average number of personnel 500 506 -1.2 500 Net sales for Exel Composites in the first quarter of 2008 decreased by 18.5% to EUR 21.8 (26.6) million from the corresponding period previous year. The decrease in sales was primarily a result of lower demand in the wind energy segment and the divestment of the Plastics business in Germany. Moreover, the Company also faced weaker market conditions in other segments, especially in building and construction. This was partly due to the delay of start-up of new construction projects. The price competition toughened further. Operating profit decreased to EUR 2.9 (4.3) million. The reduction in sales and increasing price competition had a negative impact on the operating profit of Exel Composites. In March 2008, the Oudenaarde site in Belgium was assessed to meet the ISO 9001 quality standard. The Group certificate now covers units in Austria, Australia, Belgium, Finland and the UK. Exel Sports Brands Exel Sports Brands’ key financial figures for the reporting period were as follows: 1.1.- 1.1.- Change % 1.1. – 31.3. 31.3. 31.12. EUR million 2008 2007 2007 Net sales 3.2 3.7 -14.9 13.6 Operating profit -1.4 -0.7 -10.7 % of net sales -42.8 -18.9 -78.1 Average number of Personnel 50 52 -3.8 49 Exel Sports Brands’ net sales in the first quarter of 2008 decreased by 14.9% to EUR 3.2 (3.7) from the previous year’s level. This was mainly due to another mild winter. In addition, the operations of Exel Sports Brands continue to suffer from a high cost level and problems with logistics. The write-downs of winter poles inventory as well as warehousing and air freight costs had a negative effect on the result of the first quarter. Exel Sports Brands’ operating loss was EUR -1.4 (0.7) million. During the first quarter of 2008, a comprehensive turnaround program was initiated and the supply chain management was reinforced. Despite these actions, the operative result was still weak and the profit trend negative. Further measures to increase the speed of the turnaround and structural initiatives were prioritized. SHARES AND SHARE CAPITAL At the end of March, Exel’s share capital was EUR 2,141,431.74 and the number of shares was 11,896,843. There were no changes in the share capital during the review period. Based on the closing price on 31 March 2008, the market capitalization totaled EUR 124.9 (154.7) million. During the reporting period 385,328 (689,368) shares were traded, accounting for 3.2% (5.8%) of the average number of shares outstanding. The highest share quotation was EUR 12.20 (14.00) and the lowest EUR 9.50 (12.50). The share price closed at EUR 10.50 (13.00). The average share price during the review period was EUR 10.68 (13.23). DISCLOSURES OF CHANGES IN HOLDINGS No shareholders’ disclosures of changes in holdings in the Company were received by Exel. EVENTS AFTER THE REVIEW PERIOD Vesa Korpimies started as President and CEO of Exel Oyj on 10 April 2008.