Vapo Group interim result 1 January-31 March 2013
January-March
-
Group turnover in the January-March period was EUR 189.6 million (EUR 222.9 million in the same period in 2012).
- Operating margin (EBITDA) was EUR 27.5 million, or 14.5% of turnover (EUR 30.8 million, 13.8%).
- The operating result was EUR 18.3 million, or 9.7% of turnover (EUR 21.4 million, 9.6%). The operating result includes one-off items of EUR 1.4 million (EUR 4.9 million).
- The pre-tax return on invested capital (ROIC, prev. 12 months) was 0.4% (-6.3%).
- Free cash flow before taxes was EUR18.2 million (EUR 52.0 million).
-
The equity ratio on 31 March 2013 was 38.7% (35.6%).
CEO Tomi Yli-Kyyny on the Q1 result: peat shortage and late spring cut turnover, profitability at forecast level
The drop in turnover was to be expected, since following a poor production summer we simply didn’t have enough peat for our customers. The situation was especially critical for the litter peat varieties needed by animal holdings. In litter peat products, delivery volumes were less than half of demand. Stock levels are exceptionally low in all peat types before the new production season and they are not optimally located for customers. Obtaining new production permits is the most critical issue since in our current production areas we are too much at the mercy of the weather.
The last heating season demonstrated that fears of increased usage of imported fuels are justified. Because of the peat shortage, energy wood usage did not increase significantly, rather the peat shortfall was replaced with coal, oil and imported electricity. Both Vapo and our customers felt the usage of imported fuels in the profitability of heat and power generation. Using imported fuels is also a concern for the economy as a whole. On the other hand, there is beginning to be a chink of light in pellet markets. Pellets will not become an export product, but locally they are a very good renewable fuel that can enable profitable business.
To facilitate the permit situation going forward, we have resolutely raised environmental responsibility and especially minimizing the watercourse impacts of peat production to the core of our business strategy. For this reason we have undertaken not to apply for permits for bogs in the natural state in classes 4 and 5 and we will improve the existing water treatment systems. Also, at new areas we undertake that new production areas will burden watercourses less than the same ditched peatlands before peat production was started. We will raise our own watercourse inspections well above official requirements at all production areas.
The economic cycle is not currently supportive for sawn timber markets, but this alone is not sufficient to explain the losses we are incurring in this business area. We have a programme in place to tackle both raw timber procurement, sawmill utilization rates and optimization of the timber grades sawn, as well as for more efficient marketing and sales. The programmes are designed to deliver several million in earnings improvements, but without a turn in the economy these will not be enough to make the business area profitable in the short term.
Despite its higher degree of value-added, the Kekkilä Group is also dependent on the weather. The production summer affects raw material availability and prices and demand is crucially affected by the timing of spring. A year ago in Scandinavia we enjoyed a warm March and April, which was immediately reflected in higher demand. In the consumer gardening business, the turnover and earnings are made between the time the snow melts and midsummer, so fluctuations of just a couple of weeks in the arrival of spring are clearly seen in volumes and profitability. Although the situation is challenging this year, in the longer term the Kekkilä Group is on a steady growth trend.
Outlook for the remainder of the year
Turnover and cash flow for 2013 are expected to be below the previous year. Vapo will continue to restrict investments in order to bring down its debt level. This restriction does not apply to environmental investments.
Forecasting the result for 2013 is difficult because this will be crucially affected by the success of peat production, the market situation in the sawmill industry and forthcoming decisions on the progress of the biodiesel project.
The 2012 Financial Statements provide a more detailed outlook for the businesses.
Consolidated key figures
|
MEUR |
1-3/2013 |
1-3/2012 |
1-12/2012 |
|
|
|
|
|
|
Turnover |
189.6 |
222.9 |
652.9 |
|
Operating profit (EBITA) |
18.3 |
21.4 |
5.8 |
|
% of turnover |
9.7 |
9.6 |
0.9 |
|
Operating profit (EBITA) before impairments |
18.3 |
21.4 |
6.5 |
|
% of turnover |
9.7 |
9.6 |
1.0 |
|
Result for the period |
13.5 |
14.5 |
2.8 |
|
|
|
|
|
|
Operating margin (EBITDA) |
27.5 |
30.8 |
48.9 |
|
+/- Change in working capital |
1.5 |
31.3 |
42.2 |
|
– Nettoinvestoinnit |
-10.8 |
-10.2 |
-26.9 |
|
Free cash flow before taxes |
18.2 |
52.0 |
64.2 |
|
Gross investments |
11.4 |
11.0 |
48.0 |
|
Return on invested capital % * |
0.4 |
-6.3 |
0.9 |
|
Return on invested capital % before impairments * |
0.5 |
-1.0 |
1.0 |
|
Return on equity % * |
0.6 |
-12.7 |
0.9 |
|
|
|
|
|
|
Balance sheet total |
811.7 |
856.8 |
804.8 |
|
Shareholders’ equity |
305.2 |
299.6 |
291.6 |
|
Interest-bearing net debt |
340.9 |
373.5 |
355.9 |
|
Equity ratio % ** |
38.7 |
35.6 |
37.1 |
|
Interest-bearing net debt / operating margin |
7.6 |
10.0 |
7.3 |
|
Gearing % |
111.8 |
124.7 |
122.0 |
|
|
|
|
|
|
Employees, average |
1095 |
1155 |
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 |
1-3/2013 |
1-3/2012 |
Change % |
1-12/2012 |
|
Peat Products |
73.0 |
85.1 |
-14.3 |
220.5 |
|
Energy peat |
66.1 |
75.4 |
-12.4 |
183.2 |
|
Environmental peat |
7.0 |
9.7 |
-28.1 |
37.2 |
|
Wood Fuels |
51.6 |
65.5 |
-21.2 |
165.4 |
|
Forest fuels |
16.7 |
27.1 |
-38.4 |
65.2 |
|
Pellets |
34.9 |
38.4 |
-9.1 |
100.2 |
|
Heat and Power |
39.0 |
38.7 |
0.6 |
105.5 |
|
Kekkilä Group |
17.8 |
20.8 |
-14.2 |
92.1 |
|
Vapo Timber |
25.2 |
27.3 |
-7.7 |
112.5 |
|
Others |
2.0 |
2.0 |
-1.8 |
9.8 |
|
Forest BtL |
0.0 |
0.0 |
0.0 |
|
|
Mustankorkea |
2.0 |
2.0 |
-1.8 |
9.8 |
|
Group Administration & shared by businesses |
0.0 |
0.0 |
0.0 |
|
|
Inter-segment turnover |
-18.9 |
-16.5 |
-14.3 |
-52.9 |
|
Total |
189.6 |
222.9 |
-14.9 |
652.9 |
Operating profit/loss by segment
|
MEUR |
1-3/2013 |
1-3/2012 |
Change % |
1-12/2012 |
|
Peat Products |
17.4 |
20.5 |
-15.0 |
29.0 |
|
Energy peat |
16.5 |
19.3 |
-14.5 |
25.4 |
|
Environmental peat |
0.8 |
1.2 |
-32.2 |
3.7 |
|
Wood Fuels |
0.2 |
-1.9 |
112.5 |
-8.1 |
|
Forest fuels |
0.2 |
-0.8 |
120.4 |
-2.7 |
|
Pellets |
0.1 |
-1.1 |
106.5 |
-5.4 |
|
Heat and Power |
5.2 |
5.5 |
-4.9 |
-1.2 |
|
Kekkilä Group |
-0.6 |
2.9 |
-119.2 |
3.8 |
|
Vapo Timber |
-2.6 |
-2.9 |
10.0 |
-10.9 |
|
Others |
-2.3 |
-2.0 |
-12.8 |
-6.7 |
|
Forest BtL |
-0.3 |
-0.1 |
-244.4 |
-0.6 |
|
Mustankorkea |
0.2 |
0.4 |
-51.8 |
2.1 |
|
Group Administration & shared by businesses |
-2.1 |
-2.3 |
7.3 |
-8.2 |
|
Eliminations |
0.9 |
-0.7 |
231.6 |
-0.2 |
|
Total |
18.3 |
21.4 |
-14.5 |
5.8 |
Interim report 1 January-31 March 2013 (pdf)
For further information please contact:
Tomi Yli-Kyyny, CEO, Vapo Oy, tel. +358 20 790 5605
Jyrki Vainionpää, CFO, Vapo Oy, tel. +358 20 790 5609
Ahti Martikainen, Director, Communications and Public Affairs, Vapo Oy, tel. +358 20 790 5608