Vapo Group Interim Report 1.1.-30.6.2013
April-June
- Group turnover in the April-June period was EUR 155.3 million (EUR 168.4 million in the same period in 2012).
- Operating margin (EBITDA) was EUR 21.7 million, or 14.2% of turnover (EUR 21.8 million, 13.0%).
- The operating result was EUR 10.4 million, or 6.7% of turnover (EUR 10.9 million, 6.5%). The operating result includes one-off revenues of EUR 0.6 million (EUR 5.4 million).
- Free cash flow before taxes was EUR 11.5 million (EUR 21.3 million).
- Gross investments were EUR 13.1 million (EUR 13.6 million).
- Net investments were EUR 12.2 million (EUR 3.7 million).
- 2.0 TWh of energy peat was delivered (3.0 TWh).
- Peat production volumes were around 40% (20%) of target by the end of June and around 60% by the end of July.
January-June
- Group turnover in the January- June period was EUR 344.9 million (EUR 391.3 million in the same period in 2012).
- Operating margin (EBITDA) was EUR 49.1 million, or 14.2% of turnover (EUR 52.6 million, 13.5%).
- The operating result was EUR 28.7 million, or 8.3% of turnover (EUR 32.3 million, 8.2%). The operating result includes one-off items of EUR 2.0 million (EUR 10.6 million).
- The pre-tax return on invested capital (ROIC, previous 12 months) was 0.3% (-5.9%).
- Free cash flow before taxes was EUR 29.7 million (EUR 73.3 million).
- Gross investments were EUR 24.5 million, ratio to depreciation 1.2 x (EUR 24.6 million, ratio to depreciation 1.2 x).
- Net investments were EUR 23.0 million, ratio to depreciation 1.1 x (EUR 13.9 million, ratio to depreciation 0.7 x).
- The equity ratio on 30 June 2013 was 39.8% (37.8%). The equity ratio at the end of 2012 was 37.1%.
- Interest-bearing net debt on 30 June 2013 was EUR 328.7 million (EUR 343.9 million). Interest-bearing net debt at the end of 2012 EUR 355.9 million.
- The ratio of net debt to operating margin (net debt/EBITDA) on 30 June 2013 was 7.4 x (8.5 x).
- 6.4 TWh of energy peat was delivered (8.7 TWh).
CEO Tomi Yli-Kyyny on the result for the first half: Peat shortage and warm spring cut turnover, profitability almost at forecast level
In spite of lower turnover, the profitability of the Vapo Group was almost at the forecast level. The operating profit of the parent company Vapo Oy declined due to lower peat delivery volumes. Operating profit increased in the Wood Fuels and Heat and Power business areas. The operating profit of the Kekkilä Group declined.
The drop in turnover of almost 12 per cent was to be expected following last year’s poor peat production summer. The disposal of the energy wood business in Sweden also contributed to the decline in turnover. This year Kekkilä’s sales season was shorter than normal by some weeks. The exceptionally warm May-June period also reduced sales in the Heat and Power business area. The turnover of Vapo Timber Oy grew significantly.
The last heating season demonstrated that with Finland’s present boiler stock, peat taxation and coal price, peat is being replaced primarily with coal and not wood. Early this year the energy tax on peat increased from EUR 1.90 per megawatt hour to EUR 4.90 per megawatt hour. Current decisions mean that peat taxation will rise further from early 2015. If implemented, this will further weaken the competitiveness of the domestic peat-wood combination against imported fuels. The target should be to raise Finland’s energy self-sufficiency and the only technically and economical means to that is to increase co-firing of wood and peat. Without a cut in peat taxation, increased usage of imported fuels will have a very negative impact on both employment and the trade balance. Peat and energy wood currently employ almost 17,000 person in Finland. Also, if Finland wants to maintain its 38 per cent target for renewable fuels by 2020, it is essential to change the tax treatment of peat so that more wood can be used.
We have resolutely raised environmental responsibility, and in particular minimizing the watercourse impacts of peat production, to the core of our business strategy. The enhancement of water treatment systems has advanced on schedule. At new areas we undertake that the suspended solid and humus load to watercourses is less than from the same ditched peatlands before peat production was started. In June Vapo concluded an agreement with Metso Automation for the supply of 30 automatic continuous measuring stations to monitor Vapo’s watercourse impacts.
The peat production season got off to a good start and by early June almost 20 per cent of the production target had been harvested. Since then the changeable weather has held up production in many areas. By the end of June around 40 per cent of the production target had been harvested. As of the end of July 60 per cent of the production target had been harvested. This is more than at the same time last year, but below our target. The situation is most acute in environmental peat and sod peat production in the Ostrobothnia region. Obtaining new production permits is essential for the future, since at ageing production areas we are too much at the mercy of the elements. Despite the considerable effort invested in environmental responsibility, the granting of new permits for areas that have been altered from the natural state is still extremely slow. This year new permits have only been received for 735 hectares of areas.
The turnover of Vapo Timber was around 13 per cent higher than the reference period. Sawn timber selling prices rose by 1 per cent and raw material prices dropped by 1 per cent. The efficiency-enhancement actions taken have reduced Vapo Timber’s operating loss, but the business remains heavily loss-making. The operating result of Forest Fuels and Pellets was marginally positive.
Spring was weak for the gardening trade, especially in Finland. Spring arrived late but warmed unusually quickly towards summer, therefore the sales season was exceptionally short for the consumer sector. This meant that both turnover and the result were lower than planned.
Vapo’s Swedish subsidiary Neova AB improved in almost all areas and posted a result that was much better than forecast, especially due to the pellet business. The Estonian subsidiary Tootsi Turvas AS performed as expected. In the Polish operations, however, inventory writedowns of EUR 1.6 million made the result loss-making.
Turnover and cash flow for the whole year are expected to be lower than the previous year, but operating profit is forecast to grow. The Group result may be weakened by the overall performance of peat production, how the weak European economic situation and the North African situation affect demand for sawmill products and future decisions on the progress of the biodiesel project.
Consolidated key figures
|
MEUR |
1-6/2013 |
1-6/2012 |
1-12/2012 |
|
|
|
|
|
|
Turnover |
344.9 |
391.3 |
652.9 |
|
Operating profit (EBITA) |
28.7 |
32.3 |
5.8 |
|
% of turnover |
8.3 |
8.2 |
0.9 |
|
Operating profit (EBITA) before impairments |
28.7 |
32.3 |
6.5 |
|
% of turnover |
8.3 |
8.2 |
1.0 |
|
Result for the period |
18.0 |
21.6 |
2.8 |
|
|
|
|
|
|
Operating margin (EBITDA) |
49.1 |
52.6 |
48.9 |
|
+/- Change in working capital |
3.6 |
34.6 |
42.2 |
|
– Net investments |
-23.0 |
-13.9 |
-26.9 |
|
Free cash flow before taxes |
29.7 |
73.3 |
64.2 |
|
Gross investments |
24.5 |
24.6 |
48.0 |
|
Return on invested capital % *﴿ |
0.3 |
-5.9 |
0.9 |
|
Return on invested capital % before impairments *﴿ |
0.4 |
-0.5 |
1.0 |
|
Return on equity % *﴿ |
-0.3 |
-10.8 |
0.9 |
|
|
|
|
|
|
Balance sheet total |
794.1 |
834.1 |
804.8 |
|
Shareholders’ equity |
307.7 |
310.0 |
291.6 |
|
Interest-bearing net debt |
328.7 |
343.9 |
355.9 |
|
Equity ratio % **﴿ |
39.8 |
37.8 |
37.1 |
|
Interest-bearing net debt /operating margin |
7.4 |
8.5 |
7.3 |
|
Gearing % |
106.8 |
110.9 |
122.0 |
|
|
|
|
|
|
Employees, average |
1129 |
1171 |
1154 |
*) Previous 12 months
**) In calculating the equity ratio, the convertible bond on the balance sheet was calculated as shareholders’ equity in accordance with the recommendations of the Committee for Corporate Analysis
Developments by business segment
Turnover by segment
|
MEUR |
1-6/2013 |
1-6/2012 |
Change % |
1-12/2012 |
|
Peat Products |
111.2 |
137.0 |
-18.8 |
220.5 |
|
Energy peat |
97.1 |
118.6 |
-18.2 |
183.2 |
|
Environmental peat |
14.1 |
18.4 |
-23.3 |
37.2 |
|
Wood Fuels |
75.9 |
99.0 |
-23.4 |
165.4 |
|
Forest fuels |
28.3 |
41.4 |
-31.7 |
65.2 |
|
Pellets |
47.6 |
57.6 |
-17.4 |
100.2 |
|
Heat and Power |
58.4 |
59.8 |
-2.2 |
105.5 |
|
Kekkilä Group |
59.3 |
59.7 |
-0.6 |
92.1 |
|
Vapo Timber |
68.0 |
59.9 |
13.6 |
112.5 |
|
Others |
4.9 |
4.5 |
8.2 |
9.8 |
|
Forest BtL |
0.0 |
0.0 |
0.0 |
|
|
Mustankorkea |
4.9 |
4.5 |
8.2 |
9.8 |
|
Group administration & shared by businesses |
0.0 |
0.0 |
0.0 |
|
|
Inter-segment turnover |
-32.8 |
-28.6 |
-14.7 |
-52.9 |
|
Total |
344.9 |
391.3 |
-11.9 |
652.9 |
Operating profit/loss by segment
|
MEUR |
1-6/2013 |
1-6/2012 |
Change % |
1-12/2012 |
|
Peat Products |
24.2 |
33.0 |
-26.7 |
29.0 |
|
Energy peat |
22.5 |
30.6 |
-26.4 |
25.4 |
|
Environmental peat |
1.7 |
2.4 |
-29.5 |
3.7 |
|
Wood Fuels |
0.5 |
-4.7 |
111.4 |
-8.1 |
|
Forest fuels |
0.3 |
-1.7 |
|
-2.7 |
|
Pellets |
0.2 |
-3.0 |
|
-5.4 |
|
Heat and Power |
5.4 |
5.2 |
4.2 |
-1.2 |
|
Kekkilä Group |
4.7 |
8.0 |
-41.4 |
3.8 |
|
Vapo Timber |
-3.9 |
-4.3 |
11.0 |
-10.9 |
|
Others |
-4.2 |
-3.9 |
-5.9 |
-6.7 |
|
Forest BtL |
-0.7 |
-0.3 |
-103.4 |
-0.6 |
|
Mustankorkea |
0.9 |
0.9 |
-2.9 |
2.1 |
|
Group administration & shared by businesses |
-4.4 |
-4.5 |
2.8 |
-8.2 |
|
Disposals |
1.9 |
-1.0 |
302.4 |
-0.2 |
|
Total |
28.7 |
32.3 |
-11.0 |
5.8 |
For further information please contact:
- Tomi Yli-Kyyny, CEO, tel. +358 50 1280
- Jyrki Vainionpää, CFO, tel. +358 50 486 9869
- Ahti Martikainen, Director, Communications and Public Affairs, tel. +358 40 680 4723