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PONSSE’S INTERIM REPORT FOR 1 JANUARY – 31 MARCH 2017

 

PONSSE’S INTERIM REPORT FOR 1 JANUARY – 31 MARCH 2017

– Net sales amounted to EUR 129.9 (115.1) million.
– Operating result totalled EUR 14.3 (12.1) million, equalling 11.0 (10.5) per cent of net sales.
– Result before taxes was EUR 14.5 (12.0) million.
– Cash flow from operating activities was EUR -5.4 (-2.3) million.
– Earnings per share were EUR 0.40 (0.34).
– Equity ratio was 52.4 (48.9) per cent.
– Order books stood at EUR 118.6 (156.2) million.


PRESIDENT AND CEO JUHO NUMMELA:

2017 started off well, and demand for PONSSE forest machines was high from the very beginning of the year. Orders for the first quarter were strong, and the order books at the end of the period under review stood at 118.6 (156.2) million euros.

Net sales grew well during the first quarter to 129.9 (115.1) million euros. The growth of net sales in relation to the comparison period was 12.9 percent. The net sales of service business grew extremely well, but the growth of net sales in used machines was moderate. The portion of international business in net sales was 72.1 (72.7) percent.

Profit for the past quarter amounted to 14.3 (12.1) million euros, with a growth of 18.3 percent. Result for the review period was 11.0 (10.5) percent. The distribution network and factory functioned as planned while operating costs remained under control, which had a positive effect on profitability. Cash flow was -5.4 (-2.3) million euros. The stock of used machines remains higher than expected.

Our investments proceeded according to plans. New service centres were finished in Uruguay and France, and our UK subsidiary's new facilities are expected to be completed by the end of the year. The investment for the factory's expansion is on schedule. Building will be completed in the autumn of 2017, after which equipment will be installed.


NET SALES

Consolidated net sales for the period under review amounted to EUR 129.9 (115.1) million, which is 12.9 per cent more than in the comparison period. International business operations accounted for 72.1 (72.7) per cent of net sales.

Net sales were regionally distributed as follows: Northern Europe 47.0 (39.5) per cent, Central and Southern Europe 19.0 (19.3) per cent, Russia and Asia 15.8 (10.6) per cent, North and South America 17.8 (29.2) per cent and other countries 0.4 (1.4) per cent.


PROFIT PERFORMANCE

The operating result amounted to EUR 14.3 (12.1) million. The operating result equalled 11.0 (10.5) per cent of net sales for the period under review. Consolidated return on capital employed (ROCE) stood at 27.6 (27.1) per cent.

Staff costs for the period totalled EUR 18.6 (17.3) million. Other operating expenses stood at EUR 11.1 (10.9) million. The net total of financial income and expenses amounted to EUR 0.1 (-0.1) million. Exchange rate gains and losses with a net effect of EUR 0.3 (0.1) million were recognised under financial items for the period. Result for the period under review totalled EUR 11.2 (9.5) million. Diluted and undiluted earnings per share (EPS) came to EUR 0.40 (0.34).


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 313.7 (264.5) million. Inventories stood at EUR 128.6 (112.2) million. Trade receivables totalled EUR 40.4 (39.2) million, while liquid assets stood at EUR 22.3 (14.4) million. Group shareholders’ equity stood at EUR 161.3 (127.8) million and parent company shareholders’ equity (FAS) at EUR 150.1 (122.8) million. The amount of interest-bearing liabilities was EUR 57.9 (57.0) million. The company has used 15 per cent of its credit facility limit. The parent company's net receivables from other Group companies stood at EUR 96.9 (71.4) million. The parent company’s receivables from subsidiaries mainly consisted of trade receivables. Consolidated net liabilities totalled EUR 35.4 (42.6) million, and the debt-equity ratio (net gearing) was 22.0 (33.3) per cent. The equity ratio stood at 52.4 (48.9) percent at the end of the period under review.

Cash flow from operating activities amounted to EUR -5.4 (-2.3) million. Cash flow from investment activities came to EUR -8.2 (-4.5) million.


ORDER INTAKE AND ORDER BOOKS

Order intake for the period totalled EUR 126.7 (116.2) million, while period-end order books were valued at EUR 118.6 (156.2) million.


DISTRIBUTION NETWORK

The parent company Ponsse Plc established a new subsidiary Ponsse Machines Ireland Ltd in Ireland on 13 January 2017.

The subsidiaries included in the Ponsse Group are Ponsse AB, Sweden; Ponsse AS, Norway; Ponssé S.A.S., France; Ponsse UK Ltd, the United Kingdom; Ponsse Machines Ireland Ltd, Ireland, Ponsse North America, Inc., the United States; Ponsse Latin America Ltda, Brazil; Ponsse Uruguay S.A., Uruguay; OOO Ponsse, Russia; Ponsse Asia-Pacific Ltd, Hong Kong; Ponsse China Ltd, China and Epec Oy, Finland. The Group includes also the property company OOO Ocean Safety Center, Russia. Sunit Oy, Finland, is an associate in which Ponsse Plc has a holding of 34 per cent.


R&D AND CAPITAL EXPENDITURE

Group’s R&D expenses during the period under review totalled EUR 3.3 (3.2) million, of which EUR 0.8 (0.5) million was capitalised.

Capital expenditure totalled EUR 8.3 (4.5) million. It consisted in addition to capitalised R&D expenses of investments in buildings and 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; Petri Härkönen, CFO; Juha Inberg, Technology and R&D Director; Tapio Mertanen, Service Director; Paula Oksman, HR Director; Tommi Väänänen, Director of Delivery Chain Process and Jarmo Vidgrén, Deputy CEO, Sales and Marketing Director. The company management has regular management liability insurance.

The area director organisation of sales is led by Jarmo Vidgrén, the Group's sales and marketing director, and Tapio Mertanen, service director. Area directors and managing directors of subsidiaries report to Jarmo Vidgrén, Ponsse Plc's sales and marketing director.


The geographical distribution and the responsible persons are presented below:
Northern Europe:
Jani Liukkonen (Finland),
Carl-Henrik Hammar (Sweden and Denmark),
Jussi Hentunen (the Baltic countries) and
Sigurd Skotte (Norway),

Central and Southern Europe:
Janne Vidgrén (Austria, Poland, Romania, Germany, Slovakia, the Czech Republic and Hungary),
Clément Puybaret (France),
Norbert Schalkx (Spain and Portugal) until 20 March 2017, Jarmo Vidgrén as of 20 March 2017 and
Gary Glendinning (the United Kingdom and Ireland).

Russia and Asia:
Jaakko Laurila (Russia and Belarus),
Norbert Schalkx (Japan, Australia and South Africa) until 20 March 2017, Jarmo Vidgrén as of 20 March 2017 and
Risto Kääriäinen (China).

North and South America:
Pekka Ruuskanen (the United States),
Eero Lukkarinen (Canada),
Jussi Hentunen (Chile),
Marko Mattila (Brazil) and
Martin Toledo (Uruguay).


PERSONNEL

The Group had an average staff of 1,459 (1,388) during the period and employed 1,463 (1,400) 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 2017 totalled 619,257, accounting for 2.2 per cent of the total number of shares. Share turnover amounted to EUR 14.0 million, with the period’s lowest and highest share prices amounting to EUR 20.85 and EUR 25.42, respectively.

At the end of the period, shares closed at EUR 21.90, and market capitalisation totalled EUR 613.2 million.

At the end of the period under review, the company held 33,092 treasury shares.


ANNUAL GENERAL MEETING

A separate release was issued on 11 April 2017 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 2015. 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 insecurity in the world economy may result in a decline in the demand for forest machines. The uncertainty may be increased by the volatility of developing countries’ foreign exchange markets. The geopolitical situation, in particular, will increase the uncertainty through financial market operations and sanctions.

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 euro-denominated operating profit is expected to be at the same level in 2017 as it was in 2016.

Ponsse's updated and competitive product range and service solutions have had a significant impact on the company's growth. Our investments are directed at development of the service level and capacity of the delivery chain and spare parts logistics and development of service business network both in Finland and abroad.

The expansion of the Vieremä factory is progressing as planned and the construction will be completed at the end of 2017. The investment in the factory is related to the development of safety, productivity, product quality and capacity of the Vieremä factory. The total investment to the factory is approximately EUR 32 million. The new PONSSE service centres in Uruguay, France and the UK will be completed during the current year.

  

PONSSE GROUP

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000)

         
    IFRS IFRS IFRS
    1-3/17 1-3/16 1-12/16
NET SALES 129,907 115,114 517,400
Increase (+)/decrease (-) in inventories of finished goods and work in progress 7,879 7,734 2,346
Other operating income   426 598 1,915
Raw materials and services   -91,002 -80,256 -336,008
Expenditure on employment-related benefits -18,649 -17,290 -73,879
Depreciation and amortisation   -3,161 -2,896 -11,905
Other operating expenses   -11,078 -10,901 -44,711
OPERATING RESULT   14,323 12,103 55,158
Share of results of associated companies 11 49 23
Financial income and expenses   144 -145 3,074
RESULT BEFORE TAXES 14,477 12,007 58,255
Income taxes   -3,265 -2,518 -12,543
NET RESULT FOR THE PERIOD   11,213 9,489 45,712
         
OTHER ITEMS INCLUDED IN TOTAL COMPREHENSIVE RESULT:      
Translation differences related to foreign units 323 434 1,554
         
TOTAL COMPREHENSIVE RESULT FOR THE PERIOD 11,536 9,923 47,266
         
Diluted and undiluted earnings per share* 0.40 0.34 1.63
         
           

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000)

       
  IFRS IFRS IFRS
ASSETS 31 Mar 17 31 Mar 16 31 Dec 16
NON-CURRENT ASSETS      
Intangible assets 20,328 18,023 19,928
Goodwill 3,828 3,841 3,827
Property, plant and equipment 78,488 60,906 73,765
Financial assets 103 105 103
Investments in associated companies 732 866 781
Non-current receivables 1,715 2,033 2,340
Deferred tax assets 2,552 3,104 2,525
TOTAL NON-CURRENT ASSETS 107,745 88,878 103,269
       
CURRENT ASSETS      
Inventories 128,561 112,175 118,283
Trade receivables 40,418 39,245 35,933
Income tax receivables 620 179 859
Other current receivables 14,025 9,570 5,915
Cash and cash equivalents 22,299 14,438 37,342
TOTAL CURRENT ASSETS 205,924 175,607 198,332
       
TOTAL ASSETS 313,669 264,844 301,600
       
         
SHAREHOLDERS’ EQUITY AND LIABILITIES      
SHAREHOLDERS’ EQUITY      
Share capital 7,000 7,000 7,000
Other reserves 2,452 2,452 2,452
Translation differences 1,081 -362 758
Treasury shares -346 -346 -346
Retained earnings 151,145 119,091 139,932
EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS 161,332 127,835 149,796
       
NON-CURRENT LIABILITIES      
Interest-bearing liabilities 46,535 39,395 46,653
Deferred tax liabilities 646 750 799
Other non-current liabilities 0 0 0
TOTAL NON-CURRENT LIABILITIES 47,247 40,144 47,452
       
CURRENT LIABILITIES      
Interest-bearing liabilities 11,407 17,606 13,462
Provisions *) 6,276 5,718 5,970
Tax liabilities for the period 1,676 1,038 2,043
Trade creditors and other current liabilities *) 85,730 72,143 82,877
TOTAL CURRENT LIABILITIES 105,089 96,505 104,353
       
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 313,669 264,484 301,600
         

*) Change in accounting principle, more information in the note 3.



CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000)

         
    IFRS IFRS IFRS
    1-3/17 1-3/16 1-12/16
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net result for the period   11,213 9,489 45,712
Adjustments:        
Financial income and expenses   -144 145 -3,074
Share of the result of associated companies -11 -49 -23
Depreciation and amortisation   3,161 2,896 11,905
Income taxes   3,265 2,518 12,543
Other adjustments   -265 -366 3,051
Cash flow before changes in working capital 17,219 14,633 70,114
         
Change in working capital:        
Change in trade receivables and other receivables -12,407 1,251 7,437
Change in inventories   -10,278 -7,591 -13,699
Change in trade creditors and other liabilities 1,933 -8,123 2,777
Change in provisions for liabilities and charges 305 240 1,216
Interest received   61 53 222
Interest paid   -114 -194 -953
Other financial items   270 -235 -468
Income taxes paid   -2,350 -2,372 -12,905
NET CASH FLOWS FROM OPERATING ACTIVITIES (A) -5,360 -2,337 53,740
         
CASH FLOWS USED IN INVESTING ACTIVITIES      
Investments in tangible and intangible assets -8,285 -4,520 -28,280
Proceeds from sale of tangible and intangible assets 67 0 198
NET CASH FLOWS USED IN INVESTMENT ACTIVITIES (B) -8,218 -4,520 -28,082
         
CASH FLOWS FROM FINANCING ACTIVITIES      
Sales of treasury shares   0 0 0
Withdrawal/Repayment of current loans -2,084 -5,240 2,220
Withdrawal of non-current loans 0 0 1,004
Repayment of non-current loans 0 -342 -5,702
Payment of finance lease liabilities 21 181 191
Change in non-current receivables 583 -27 -1,396
Dividends paid 0 0 -15,382
NET CASH FLOWS FROM FINANCING ACTIVITIES (C) -1,480 -5,428 -19,065
         
Change in cash and cash equivalents (A+B+C) -15,058 -12,285 6,593
         
Cash and cash equivalents on 1 Jan   37,342 26,495 26,495
Impact of exchange rate changes 16 228 4,254
Cash and cash equivalents on 31 Mar/31 Dec 22,299 14,438 37,342
               

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 2017 7,000 2,452 758 -346 139,932 149,796
Translation differences     323     323
Result for the period         11,213 11,213
Total comprehensive income for the period     323   11,213 11,536
Other changes           0
SHAREHOLDERS' EQUITY 31 MAR 2017 7,000 2,452 1,081 -346 151,145 161,332
             
             
SHAREHOLDERS’ EQUITY 1 JAN 2016 7,000 2,452 -796 -346 109,602 117,912
Translation differences     434     434
Result for the period         9,489 9,489
Total comprehensive income for the period     434   9,489 9,923
Other changes           0
SHAREHOLDERS' EQUITY 31 MAR 2016 7,000 2,452 -362 -346 119,091 127,835
                       

  


 
  31 Mar 17 31 Mar 16 31 Dec 16
1. LEASING COMMITMENTS (EUR 1,000) 1,032 1,017 1,020

 

  

2. CONTINGENT LIABILITIES (EUR 1,000) 31 Mar 17 31 Mar 16 31 Dec 16
Guarantees given on behalf of others 605 462 549
Repurchase commitments   2,605 4,398 3,021
Other commitments   1,035 224 1,177
TOTAL   4,245 5,084 4,747

  

3. PROVISIONS (EUR 1,000)   Guarantee provision  
Reported on 31.12.2016     7,336  
Change in accounting principle     -1,366  
1 January 2017     5,970  
Provisions added     313  
Provisions cancelled     -7  
31 March 2017     6,276  
         
The accounting principle concerning the provision has been changed as of 1 January 2017 so that the amount shown as guarantee provision equals the amount to which the Company is bound by the terms and conditions of the sales contract. The change has not had effect on the result.
         
         
         
KEY FIGURES AND RATIOS   31 Mar 17 31 Mar 16 31 Dec 16
R&D expenditure (EUR million) 3.3 3.2 12.4
Capital expenditure (EUR million) 8.3 4.5 28.3
as % of net sales   6.4 3.9 5.5
Average number of employees   1,459 1,388 1,435
Order books (EUR million)   118.6 156.2 123.9
Equity ratio, %   52.4 48.9 50.3
Diluted and undiluted earnings per share (EUR) 0.40 0.34 1.63
Equity per share (EUR)   5.76 4.57 5.35
                   

 
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.

Net gearing, %:
Interest-bearing financial liabilities – cash and cash equivalents
-----------------------------------------------------------------------------------
Shareholders’ equity * 100

Equity ratio, %:
Shareholders’ equity + Non-controlling interests
------------------------------------------------------------------------
Balance sheet total - advance payments received * 100

Earnings per share:
Net result for the period - Non-controlling interests
-------------------------------------------------------------------------------------------------------------------------
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 (EUR million)   1-3/17 1-3/16 1-12/16
Ponsse Group   126.7 116.2 493.8

The stock exchange release for 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 2016.

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, 25 April 2017

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.