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Interim Report Q3/2008 Exel Oyj Vesa Korpimies, President and CEO

Interim Report Q3/2008 Exel Oyj Vesa Korpimies, President and CEO. 30 October 2008. Q1-Q3/2008 and Q3/2008 highlights. Interim Report Q3/2008. Q1-Q3/2008 highlights.

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Interim Report Q3/2008 Exel Oyj Vesa Korpimies, President and CEO

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  1. Interim Report Q3/2008Exel OyjVesa Korpimies, President and CEO 30 October 2008

  2. Q1-Q3/2008 and Q3/2008 highlights

  3. Interim Report Q3/2008 Q1-Q3/2008 highlights • The restructuring of the Group has been completed to a large extent and we concentrate on developing our core business Exel Composites. • The effects of the restructuring can be seen in the profit and cash flow development in Q3 2008. • However, we are not satisfied with the current profitability and continue to focus on improving the operating margins and to drive more efficient use of working capital. • As disclosed in the second quarter interim report Exel expects the Group’s profit before taxes for the full year to be negative. Due to the present challenging market conditions, the fourth quarter profit before taxes could also be negative.

  4. Financial performance

  5. Interim Report Q3/2008 Q3/2008 financial performance Profit of the Group improved • Net salesEUR23.9 (27.9) million • Operating profit EUR 2.5 (-2.1) million including EUR 0.2 (-4.2) million non-recurring items • Operating profit margin improved to 10.4% (-7.4%) of net sales • Fully diluted earnings per share EUR 0.07 (-0.19) • Cash flow from business operations EUR +4.5 (-0.7) million Effects of the restructuring can be seen in the Q3 profit development

  6. Q3/2008 financial performance Return on equity 19.2% (-35.3%) Return on capital employed 12.0% (-17.0%) Equity ratio 26.8% (28.8%) Net gearing in Q3 2008 144.3% vs. 138.1% in Q3 2007, but better than in Q2 2008 (178.4%) EPS EUR 0.07 (-0.19) Equity per share EUR 1.54 (2.00) Interim Report Q3/2008

  7. Q3/2007 25.3 2.6 10.1 500 change, % -15.2 -35.1 -7.0 2007 104.3 15.2 14.6 500 Q3/2008 21.4 1.7 7.8 465 Net sales, M€ Operating profit, M€ as % of sales Average no. of personnel Interim Report Q3/2008 Key figures of Exel Composites Q1-Q3/2007 79.5 11.3 14.2 502 Q1-Q3/2008 66.1 6.3 9.6 486 change, % -16.9 -44.0 -3.2

  8. Interim Report Q3/2008 Exel Composites Net sales development • Net sales in Q3 decreased by 15.2% to EUR 21.4 (25.3) million from the corresponding period previous year • Main reasons: • Procurement model change in the wind energy segment • Divestment of Plastics business in Germany • Sales to Exel Sports Brands declined during Q1-Q3 • Weaker market conditions in transportation and building and construction • On the other hand, sales in new energy applications and telecommunication segment were strong

  9. Interim Report Q3/2008 Exel Composites Operating profit development • Operating profit in Q3 totaled EUR 1.7 million (EUR 2.6 million including EUR -0.7 million non-recurring items) • Operating profit in January-September declined to EUR 6.3 (11.3) million including EUR -1.1 (-0.7) million of non-recurring items • Major reasons behind the decrease were: • Lower sales • Increased energy and raw material costs • A credit loss provision of EUR 0.3 million was made due to a customer insolvency

  10. Q3/2007 3.8 -5.2 -135.4 48 change, % -26.5 113.6 -58.3 Q3/2008 2.8 0.7 25.1 20 2007 13.6 -10.7 -78.1 49 Net sales, M€ Operating profit, M€ as % of sales Average no. of personnel Interim Report Q3/2008 Key figures of Exel Sports Brands Q1-Q3/2008 8.4 -8.2 -98.2 38 Q1-Q3/2007 9.7 -7.6 -78.7 49 change, % -13.8 -7.6 -22.4

  11. Interim Report Q3/2008 Exel Sports Brands Net sales and operating profit development • Net sales in Q3 decreased by 26.5% to EUR 2.8 (3.8) million from the corresponding period previous year • Starting from June 1, 2008, Exel Sports Oy consist only of floorball products • Exel concentrates on reinforcing and streamlining the floorball business and improving its profitability • Operating profit in Q3 was EUR 0.7 million including EUR +0.2 million of non-recurring items (EUR -5.2 million including EUR -3.5 million non-recurring items)

  12. Interim Report Q3/2008 Exel Sports Brands Streamlining continued during Q3/2008 • Streamlining was implemented to a large extent • Divestment of the China-based Nordic Sports Products (Beijing) Co., Ltd. to ESB Sports Oy in September 2008 • Exel Sports Oy also no longer imports Björn Däehlie skiing textiles, Lars Kjus alpine skiing textiles, Tubbs snowshoes and Swany gloves • Co-determination process started to finalize the restructuring in Q4 2008

  13. Q3/2007 25.3 3.8 -1.2 27.9 change, % -15.2 -26.5 -14.3 Q3/2008 21.4 2.8 -0.3 23.9 2007 104.3 13.6 -4.4 113.5 M€ Exel Composites Exel Sports Brands Intra Group sales Total Interim Report Q3/2008 Group net sales Q1-Q3/2008 66.1 8.4 -1.6 72.8 Q1-Q3/2007 79.5 9.7 -3.8 85.4 change, % -16.9 -13.8 -14.7 The figures in the table are rounded and may not sum up.

  14. Q3/2007 2.6 -5.2 -2.1 change, % -35.1 113.6 M€ Exel Composites Exel Sports Brands Total Q3/2008 1.7 0.7 2.5 2007 15.2 -10.7 4.8 Interim Report Q3/2008 Group operating profitProfit of the Group improved in Q3/2008 compared to Q2/2008 and Q3/2007 Q1-Q3/2008 6.3 -8.2 -1.8

  15. Interim Report Q3/2008 Balance sheet, cash flow and financingInterest-bearing liabilities decreased from MEUR 37.8 to MEUR 32.5Positive cash flow • Consolidated total assets were EUR 68.1 (82.7) million at the end of reporting period • Equity was EUR 18.3 (23.8) million and equity ratio 26.8 (28.8) per cent. • Decrease in current assets due to the divestment of Exel Sports Brands’ Outdoor business and a rationalization project aiming at more efficient use of operating working capital • Interest-bearing liabilities stood at EUR 32.5 (37.8) million • Cash flow from business operations in Q1-Q3 was EUR +4.9 (-2.9) million • Liquid assets were EUR 6.1 (5.0) million

  16. Interim Report Q3/2008 Net gearing and equity ratioNet gearing decreased down compared to Q2/2008 (144.3% vs. 178.4%) Net gearing ratio Q3/2008 144.3% (Q3/2007 138.1%) Equity ratio Q3/2008 26.8% (Q3/2007 28.8%) Exel’s target is to further decrease net gearing ratio below 100%

  17. Outlook

  18. Interim Report Q3/2008 Outlook • Pultrusion market is affected by the worldwide business slow-down • Weakened demand has been observed especially in the building and construction and transportation segments • Increased price competition and higher energy and raw-material costs are all putting pressure on profitability • The Group has a sharp focus on its core business, namely Exel Composites • New applications are constantly being developed to capture growth opportunities within the advanced composites industry • A cost reduction program has been reinforced to restore profitability to satisfactory levels

  19. Interim Report Q3/2008 Outlook • As disclosed in the second quarter interim report Exel expects the Group’s profit before taxes for the full year to be negative. • Due to the present challenging market conditions, the fourth quarter profit before taxes could also be negative.

  20. Appendix: Exel share

  21. Interim Report Q3/2008 Major Shareholders (1 October 2008) Percentage of share capital 29.39 5.79 3.46 3.20 3.18 3.05 2.91 2.88 2.77 2.47 1.95 Number of shares 3,496,506 689,400 412,000 380,900 378,800 363,600 346,600 343,225 330,000 294,400 233,169 Nordstjernan AB Ilmarinen Mutual Pension Insurance Company Berling Capital Oy OP-Suomi Small Cap Inv. Fund Veikko Laine Oy Varma Mutual Pension Insurance Company Ulkomarkkinat Oy Alfred Berg Finland Inv. Fund Fondita Nordic Small Cap Inv. Fund Suutarinen Matti SEB (nominee registered) The ownerships of the major shareholders remained the same during Q3/2008

  22. Interim Report Q3/2008 Exel share 6.9% (35.5%) of shares outstanding were traded in Jan-Sep 2008 1/2007 - 10/2008 The highest share quotation was EUR 12.20 (17.45) and the lowest EUR 6.53 (12.50) The share price closed at EUR 6.93 (15.30) and the market capitalization at the end of the review period was EUR 82.4 (182.0) million

  23. Q3/2007 27.9 -2.1 -7.4 -2,9 -2.2 23.8 32.8 61.1 -35.3 -17.0 28.8 138.1 -0.19 -0.19 2.00 change, % -14.3 219.9 138.9 138.5 -23.1 -19.7 -16.9 Q1-Q3/2008 72.8 -1.8 -2.5 -4.0 -2.8 18.3 26.4 50.8 -18.0 -6.8 26.8 144.3 -0.24 -0.24 1.54 2007 113.5 4.8 4.2 2.4 2.0 23.5 27.9 56.3 8.4 7.3 31.3 118.4 0.17 0.17 1.98 • EUR million • Net sales • Operating profit • % of net sales • Profit before taxes • Profit for the period • Shareholders’ equity • Net interest-bearing liabilities • Capital employed • ROE, % • ROCE, % • Equity ratio, % • Net gearing, % • EPS, € • EPS, fully diluted, € • Equity per share, € Interim Report Q3/2008 Consolidated key figures Q3/2008 23.9 2.5 10.4 1.1 0.9 18.3 26.4 50.8 19.2 12.0 26.8 144.3 0.07 0.07 1.54 change, % -14.7 143.8 245.1 238.1 -23.1 -19.7 -16.9 Q1-Q3/2007 85.4 4.1 4.8 2.7 2.0 23.8 32.8 61.1 11.3 8.9 28.8 138.1 0.17 0.17 2.00

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