Vapo Oy Interim Report 1 May–31 December 2017
The second third of the year in brief:
September–December 2017:
- Group turnover in September–December 2017 was EUR 132.6 million (EUR 130.5 million in September–December 2016).
- The operating margin (EBITDA) was EUR 19.5 million (EUR 18.5 million), or 14.7% (14.2%) of turnover.
- The operating profit (EBIT) was EUR 9.4 million (EUR 8.5 million), or 7.1% (6.5%) of turnover, including EUR 2 million (EUR 0.4 million) of non-recurring income.
- Earnings/share were EUR 234 million (EUR 155 million).
- Free cash flow before taxes was EUR 11.4 million (EUR -1.5 million).
- Gross investments totalled EUR 11.3 million (EUR 13.9 million).
May–December 2017:
- Group turnover in May–December 2017 was EUR 227.9 million (EUR 218.4 million in May–December 2016).
- The operating margin (EBITDA) was EUR 24.3 million (EUR 24.3 million), or 10.7% (11.1%) of turnover.
- The operating profit (EBIT) was EUR -0.6 million (EUR -0.5 million), or -0.2% (-0.2%) of turnover. The operating profit includes one-off income in the amount of EUR 2.5 million (EUR 1.4 million).
- Earnings per share EUR -93 (-215)
- The pre-tax return on invested capital (pre-tax ROIC) was 3.1% (2.6%).
- Free cash flow before taxes was EUR 13.1 million (EUR 16.1 million).
- Gross investments were EUR 21.8 million (EUR 26.2 million).
- The equity ratio on 31 December 2017 was 47.5% (42.7%).
- Interest-bearing net debt on 31 December 2017 was EUR 266.2 million (EUR 316.8 million).
- The ratio of interest-bearing net debt to operating margin (net debt/EBITDA) on 31 December 2017 was 4.7 (7.0)
- 5.3 TWh of energy peat was delivered (5.3 TWh).
CEO Vesa Tempakka: We have made up for much of the losses incurred from the poor peat production summer.
The Group’s turnover in the second third of the financial year (September–December 2017) was EUR 132.6 million (EUR 130.5 million). Consolidated operating profit was EUR 9.4 million (EUR 8.5 million) for the second third of the financial year. Free cash flow in the period under review amounted to EUR 11.4 million (EUR -1.5 million). The strong cash flow was affected by the conscious reduction of pellet and wood chip stocks, along with the smaller than anticipated stock of energy peat as a result of the poor peat production summer.
The Group’s cumulative turnover in May–December 2017 was EUR 227.9 million (EUR 218.4 million). The growth in turnover was particularly due to an increased demand for heat and wood fuels, along with the growth of the Kekkilä Group’s professional growing business. The turnover in the comparison period includes EUR 2.6 million from Kekkilä’s operations in Norway that was sold during previous financial year. The cumulative operating result was EUR -0.6 million (EUR -0.5 million). The result was weakened by the lower than planned production volume of peat, with a cost impact of EUR 8.4 million (EUR 5.0 million).
“I’m pleased with the progress we’ve made in reducing our balance sheet and debt thanks to strong cash flow and financing arrangements. The cold May was unfavourable for the Kekkilä Group and the mildness of the winter so far has not boosted demand for heating and fuel. Regardless of these circumstances, we have been able to improve operations in various areas and are already ahead of last year, with our usually strongest third still to come. In particular, I would like to highlight the improvement of the profitability of Vapo Oy’s pellets and wood fuels, the Kekkilä Group and our subsidiaries in Sweden and Estonia”, says CEO Tempakka.
According to Tempakka, the sales of Vapo Oy’s surplus land assets, begun in late 2017, have started well. The sales offers have attracted a lot of interest, and deals have been finalized to the sum of approximately three million euros so far. The single most significant transaction was for a 1,200 hectare package of Vapo Oy’s land in different parts of Finland, sold to the State of Finland for conservation purposes. The winter is not typically a good time to sell land. The sales are expected to pick up in the spring and our sales targets to be achieved in the next few years.
The company has reviewed its energy strategy in the fall and will start planning its operations on the basis of three business areas: Energy, Growing Media and New Business. The aim is to built a management and organisational structure corresponding to these three business areas by the end of the current financial year.
Outlook for the remainder of the financial year, to 30 April 2018
Vapo Group is one of the world’s largest producers of energy peat and environmental peat. The company holds an important role in ensuring Finland’s self-sufficiency in energy and the security of supply. Political decisions have a substantial impact on the profitability of Vapo’s business operations and its capacity to make investments.
The Group’s turnover is expected to exceed the previous year’s comparable turnover. If the heating season continues as normal, operating profit is expected to improved significantly from the previous year. The new businesses will not yet generate significant turnover during the current financial year.
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Consolidated key figures |
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MEUR |
9-12/2017 |
9-12/2016 |
5-12/2017 |
5-12/2016 |
5/2016-4/2017 |
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|
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|
|
|
Turnover |
132.6 |
130.5 |
227.9 |
218.4 |
392.1 |
|
Operating profit (EBIT) |
9.4 |
8.5 |
-0.6 |
-0.5 |
20.0 |
|
% of turnover |
7.1 |
6.5 |
-0.2 |
-0.2 |
5.1 |
|
Operating profit (EBIT) before impairments |
9.4 |
8.6 |
-0.6 |
-0.3 |
22.4 |
|
% of turnover |
7.1 |
6.6 |
-0.2 |
-0.1 |
5.7 |
|
Profit/loss for the period |
7.0 |
4.6 |
-2.8 |
-6.5 |
8.1 |
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|
|
|
|
|
|
|
Operating margin (EBITDA) |
19.5 |
18.5 |
24.3 |
24.3 |
56.9 |
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+/- Change in working capital |
0.7 |
-12.8 |
7.6 |
-9.4 |
14.7 |
|
– Net investments |
-8.9 |
-7.2 |
-18.8 |
1.3 |
1.6 |
|
Free cash flow before taxes |
11.4 |
-1.5 |
13.1 |
16.1 |
73.2 |
|
Gross investments |
-11.3 |
-13.9 |
-21.8 |
-26.2 |
-39.6 |
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Return on invested capital % * |
|
|
3.1 |
3.2 |
3.7 |
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Return on invested capital % before impairments * |
|
|
3.5 |
2.3 |
4.2 |
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Return on equity % * |
|
|
3.6 |
1.2 |
2.6 |
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|
|
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Balance sheet total |
|
|
723.4 |
799.5 |
812.4 |
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Shareholders’ equity |
|
|
329.3 |
327.3 |
339.7 |
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Interest-bearing net debt |
|
|
266.2 |
316.8 |
269.6 |
|
Equity ratio % ** |
|
|
47.5 |
42.7 |
43.0 |
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Interest-bearing net debt/operating margin |
|
|
4.7 |
7.0 |
4.7 |
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Gearing % |
|
|
80.9 |
96.8 |
79.4 |
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|
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|
|
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Personnel on average |
|
|
777 |
799 |
773 |
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|
|
|
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*) Previous 12 months |
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**) In calculating the equity ratio, the capital loan on the balance sheet was calculated as shareholders’ equity |
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The information presented in this Interim Report is unaudited.
For further information, please contact:
Vesa Tempakka, Chief Executive Officer, Vapo Oy, tel. +358 20 790 5999
Antti Koivula, acting Chief Financial Officer, Vapo Oy, tel. +358 50 570 5589