Vapo Oy Interim Report 1.5.–31.8.2014
May–August
- Group turnover in the May–August period was EUR 132.4 million (EUR 158.3 million in the same period in 2013).
- Operating margin (EBITDA) was EUR 13.5 million, or 10.2% of turnover (EUR 14.0 million, 8.8%).
- The operating result was EUR -3.2 million, or -2.4% of turnover (EUR -3.9 million, -2.5%). The operating result includes one-off items of EUR -0.2 million.
- The pre-tax return on invested capital (ROIC, previous 12 months) was 3.9% (3.9% on 30 April 2014).
- Free cash flow before taxes was EUR -32.3 million.
- Gross investments were EUR 35.4 million, ratio to depreciation 2.2.
- Net investments were EUR 25.1 million, ratio to depreciation 1.6.
- The equity ratio on 31 August 2014 was 36.4% (39.4% on 30 April 2014).
- Interest-bearing net debt on 31 August 2014 was EUR 377.2 million (EUR 329.0 million on 30 April 2014).
- The ratio of interest-bearing net debt to operating margin (net debt / EBITDA, previous 12 months) on 31 August 2014 was 5.2 (4.4 on 30 April 2014).
- 1.98 TWh of energy peat was delivered (1.77 TWh).
On 1 May 2014, the company adopted thrice-yearly reporting instead of the previous quarterly reporting. The comparison figures for the period 1 May–31 August 2013 are only presented where available. This interim report has not been audited.
CEO Tomi Yli-Kyyny on the first four months: Relative profitability improved but fell short of the target
Vapo Oy adopted a new reporting schedule on 1 May 2014. Vapo’s financial year now starts at the beginning of May and closes at the end of May. In conjunction with this change, the company adopted thrice-yearly reporting. The change allows the peat production season and the following heating season to be allocated to the same financial year, which will make comparisons between financial years and the company’s financial performance easier in the future.
Two significant changes in the corporate structure must be taken into consideration in assessing this interim report, which is the first in Vapo’s history to cover a four-month period. The figures for the comparison period include the business operations of the Hankasalmi sawmill sold in January 2014, and the Swedish pellet operations that were merged in a business transfer with the corresponding business operations of Lantmännen Agroenergi in June 2014. The combined turnover of these businesses amounted to EUR 27.4 million in the comparison period.
The first third of the financial year and peat production volume give an indication of the supply of environmental peat in the upcoming heating season, but for other business areas, this third of the year is the slowest, and cannot be used to produce forecasts or reliable estimates of the business areas’ performance for the full financial year.
The heating season that ended in spring 2014 was warmer than average. As a result, the inventory levels of energy peat, wood energy and pellet were high at the beginning of the financial year. At the start of the production season, energy peat inventories amounted to approximately 7 TWh. Vapo produced approximately 17 million cubic metres of peat in total. The successful production season ensures that Vapo can supply all peat grades to its customers, even if the upcoming heating season were to be colder than average.
Turnover and profitability remained largely unchanged from the comparison period in the Peat Products, Wood Fuels and Heat and Power business areas. Kekkilä Group, however, saw its turnover decrease substantially while profitability declined. The most significant reason for this was the early spring, which resulted in the peak sales season for the consumer business starting in April, during the previous financial year. Vapo Timber increased the delivery volume of its two remaining operational sawmills by 10%, recording a positive result.
The key indicators for Vapo’s business operations are the operating margin, the return on invested capital, the equity ratio, and investments. In spite of the company’s turnover being EUR 25.9 million lower than in the comparison period, the operating margin was nearly at the same level, or EUR 13.5 million (EUR 14.0 million), equal to 10.2 per cent of turnover (8.8%), and the operating result was EUR -3.2 million (EUR -3.9 million). The pre-tax return on invested capital (pre-tax ROIC, previous 12 months) was 3.9 per cent (3.9% on 30 April 2014).
As a result of the successful peat production season and inventory left over from the previous year, the amount of capital tied up in inventory was higher than usual. The company paid its owners dividends for the previous financial year, totalling EUR 12 million, in August 2014. At the end of the review period, the equity ratio was 36.4 per cent (39.4% on 30 April 2014).
In line with its responsibility promise, Vapo has continued to uncompromisingly carry out its planned investments in environmental protection. All production areas will be covered by the best available water treatment technology by next summer. During the reporting period, approximately 25,000 analyses have been made, and the company has taken thousands of water samples that exceed the requirements issued by the authorities. The results of continuously operating water quality monitoring devices are available in real time on the Metso Automation website. In addition, all mires that will be used for peat production in the future are already covered by preliminary monitoring to determine their baseline load levels. This is a practice that is unique even on the international stage.
The result for the full financial year will be determined by the upcoming winter season’s heating demand, the price of electricity and the price development of competing fuels. Increasing sales is not possible due to the competitiveness of energy peat at the prevailing peat tax levels. Wood and peat are currently not competitive in energy generation. Finland’s self-sufficiency in energy will remain among the lowest in the EU in the upcoming winter.
Consolidated key figures
|
MEUR |
5-8/2014 |
5-8/2013 |
1/2013-4/2014 |
1-12/2013 |
|
|
|
|
|
|
|
Turnover |
132.4 |
158.3 |
847.4 |
616.7 |
|
Operating profit (EBITA) |
-3.2 |
-3.9 |
50.1 |
31.7 |
|
% of turnover |
-2.4 |
-2.5 |
5.9 |
5.1 |
|
Operating profit (EBITA) before impairments |
-3.3 |
-3.9 |
53.9 |
32.4 |
|
% of turnover |
-2.5 |
-2.5 |
6.4 |
5.3 |
|
Result for the period |
-7.0 |
-7.6 |
22.4 |
17.0 |
|
|
|
|
|
|
|
Operating margin (EBITDA) |
13.5 |
14.0 |
110.9 |
78.7 |
|
+/- Change in working capital |
-20.7 |
0.0 |
-27.5 |
-45.9 |
|
– Net investments |
-25.1 |
0.0 |
-21.6 |
-35.7 |
|
Free cash flow before taxes |
-32.3 |
0.0 |
61.8 |
-2.9 |
|
Gross investments |
35.4 |
0.0 |
57.5 |
54.5 |
|
Return on invested capital % * |
|
|
3.9 |
4.7 |
|
Return on invested capital % before impairments * |
|
|
4.4 |
4.8 |
|
Return on equity % * |
|
|
1.2 |
5.7 |
|
|
|
|
|
|
|
Balance sheet total |
|
|
786.9 |
840.5 |
|
Shareholders’ equity |
|
|
298.6 |
296.0 |
|
Interest-bearing net debt |
|
|
329.0 |
376.0 |
|
Equity ratio % |
|
|
39.4 |
37.1 |
|
Interest-bearing net debt/operating margin |
|
|
4.4 |
4.8 |
|
Gearing % |
|
|
110.3 |
127.0 |
|
|
|
|
|
|
|
Average number of employees |
|
|
1091 |
1118 |
*) 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.
The Group’s more comprehensive table of key figures over the period of five years and the principles for calculating these key figures can be found at the end of the Interim Report.
Developments by business segment
|
Turnover by segment |
|
|
|
|
|
|
|
|
|
|
|
MEUR |
5-8/2014 |
5-8/2013 |
Change % |
FY2014 |
|
Peat Products |
35.7 |
35.9 |
-0.6 |
264.2 |
|
Energy peat |
28.7 |
28.3 |
1.4 |
235.5 |
|
Environmental peat |
7.7 |
8.9 |
-13.4 |
34.9 |
|
Wood Fuels |
18.1 |
23.3 |
-22.2 |
182.1 |
|
Forest fuels |
8.5 |
11.0 |
-22.5 |
69.5 |
|
Pellets |
9.6 |
12.4 |
-22.3 |
113.0 |
|
Heat and Power |
18.6 |
17.8 |
4.5 |
143.9 |
|
Kekkilä Group |
32.8 |
40.5 |
-19.1 |
125.7 |
|
Vapo Timber |
31.0 |
47.0 |
-34.1 |
179.7 |
|
Others |
3.9 |
4.2 |
-6.8 |
13.4 |
|
Forest BtL |
0.0 |
0.0 |
|
0.0 |
|
Mustankorkea |
3.8 |
4.1 |
-7.7 |
13.4 |
|
Group administration & shared by businesses |
0.1 |
0.1 |
|
0.0 |
|
Inter-segment turnover |
-7.7 |
-10.4 |
26.3 |
-61.6 |
|
Total |
132.4 |
158.3 |
-16.4 |
847.4 |
|
|
|
|
|
|
|
*) the figures for the comparison period have not been audited. Intra-segment turnover has been eliminated in the figures presented |
|
|||
|
Operating profit/loss by segment |
|
|
|
|
|
|
|
|
|
|
|
MEUR |
5-8/2014 |
5-8/2013 |
Change % |
FY2014 |
|
Peat Products |
5.3 |
4.6 |
14.9 |
56.8 |
|
Energy peat |
4.5 |
3.5 |
26.6 |
52.1 |
|
Environmental peat |
0.8 |
1.2 |
-30.8 |
4.7 |
|
Wood Fuels |
-2.2 |
-2.1 |
-5.1 |
2.8 |
|
Forest fuels |
-0.3 |
-0.2 |
-27.0 |
1.2 |
|
Pellets |
-1.9 |
-1.8 |
-2.3 |
1.5 |
|
Heat and Power |
-4.2 |
-4.1 |
-1.8 |
9.3 |
|
Kekkilä Group |
0.7 |
2.2 |
-69.2 |
1.7 |
|
Vapo Timber |
0.7 |
-2.0 |
133.1 |
-5.2 |
|
Others |
-4.1 |
-3.0 |
-37.8 |
-17.0 |
|
Forest BtL |
-0.2 |
-0.5 |
55.3 |
-5.5 |
|
Mustankorkea |
0.8 |
1.1 |
-29.6 |
2.9 |
|
Group administration & shared by businesses |
-4.7 |
-3.6 |
-28.5 |
-14.4 |
|
Eliminations |
0.6 |
0.5 |
13.8 |
1.6 |
|
Total |
-3.2 |
-3.9 |
17.1 |
50.1 |
|
|
|
|
|
|
|
*) the figures for the comparison period have not been audited. |
|
|
|
|
For further information please contact;
- Tomi Yli-Kyyny, CEO, Vapo Oy, tel. +358 20 790 5605
- Suvi Kupiainen, CFO, Vapo Oy, tel. +358 20 790 5516