Vieremä, Finland, 2014-04-23 08:00 CEST (GLOBE NEWSWIRE) -- PONSSE’S INTERIM REPORT FOR 1 JANUARY – 31 MARCH 2014 – Net sales amounted to EUR 86.9 (61.6) million. – Operating result totalled EUR 7.4 (0.1) million, equalling 8.5 (0.2) per cent of net sales. – Result before taxes was EUR 6.9 (0.7) million. – Cash flow from operating activities was EUR 2.2 (12.7) million. – Earnings per share were EUR 0.19 (0.00). – Equity ratio was 37.9 (32.3) per cent. – Order books stood at EUR 104.1 (49.1) million. PRESIDENT AND CEO JUHO NUMMELA: The good outlook in the forestry sector had a positive impact. The demand for forest machines was at a good level during the first quarter. The order volume of new machines increased, and our order book continued to increase, ending up at EUR 104.1 (49.1) million. The order book grew by 112 per cent compared with the comparable period. Russia, an important market area for us, was still at a normal level, and the unstable situation in Ukraine has not had a substantial impact on the Russian market. The positive trend in North America continues, and the market is expected to develop favourably. With regard to European markets, Central Europe has shown signs of recovery, while Sweden is still at a low level in terms of overall market development. Serial production of the PONSSE Scorpion range has began at the Vieremä factory. The demand for the PONSSE Scorpion has continued to be active, and the feedback from the demonstration tours has been extremely positive. The demand for other product models has been at a good level as well, and as a result of the active order intake, the factory operates in the normal two shifts. The service business continued to grow significantly. At the same time, our used machine sales continued its moderate growth. Sales of new machines returned to the normal level from the weak comparable period, and the net sales for the quarter were good for a first quarter, at EUR 86.9 (61.6) million. Net sales increased by 41 per cent from the corresponding period. The operating result amounted to EUR 7.4 (0.1) million during the first quarter, equalling 8.5 (0.0) per cent of net sales. Cash flow from business operations amounted to EUR 2.2 (12.7) million in the period under review. The stock of new products was at a level slightly higher than normal, while the capital tied up in raw materials and consumables increased slightly, but the stock of trade-in machines was correspondingly at a good level. The equity ratio continued to develop favourably, amounting to 37.9 per cent. NET SALES Consolidated net sales for the period under review amounted to EUR 86.9 (61.6) million, which is 40.9 per cent more than in the comparison period. International business operations accounted for 69.7 (60.1) per cent of net sales. Net sales were regionally distributed as follows: Northern Europe 42.7 (52.2) per cent, Central and Southern Europe 19.1 (15.2) per cent, Russia and Asia 13.1 (13.9) per cent, North and South America 25.2 (18.7) per cent and other countries 0.0 (0.0) per cent. PROFIT PERFORMANCE The operating result amounted to EUR 7.4 (0.1) million. The operating result equalled 8.5 (0.2) per cent of net sales for the period under review. Consolidated return on capital employed (ROCE) stood at 22.4 (3.4) per cent. Staff costs for the period totalled EUR 13.5 (12.6) million. Other operating expenses stood at EUR 8.4 (7.3) million. The net total of financial income and expenses amounted to EUR -0.5 (0.7) million. Exchange rate gains and losses with a net effect of EUR -0.2 (1.0) million were recognised under financial items for the period. Result for the period under review totalled EUR 5.3 (0.5) million. Diluted and undiluted earnings per share (EPS) came to EUR 0.19 (0.00). The interest on the subordinated loan for the period, less tax, has been taken into account in the calculation of EPS. 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 191.1 (194.4) million. Inventories stood at EUR 89.9 (87.6) million. Trade receivables totalled EUR 23.6 (19.1) million, while liquid assets stood at EUR 10.2 (23.0) million. Group shareholders’ equity stood at EUR 72.1 (62.1) million and parent company shareholders’ equity (FAS) at EUR 91.9 (81.9) million. The amount of interest-bearing liabilities was EUR 61.2 (75.3) million. The company has used 21 per cent of its credit facility limit. The parent company's net receivables from other Group companies stood at EUR 78.0 (77.2) million. The parent company’s receivables from subsidiaries mainly consisted of trade receivables. Consolidated net liabilities totalled EUR 50.9 (52.3) million, and the debt-equity ratio (net gearing) was 70.6 (84.2) per cent. The equity ratio stood at 37.9 (32.3) percent at the end of the period under review. Cash flow from operating activities amounted to EUR 2.2 (12.2) million. Cash flow from investment activities came to EUR -4.7 (-3.0) million. ORDER INTAKE AND ORDER BOOKS Order intake for the period totalled EUR 92.3 (69.0) million, while period-end order books were valued at EUR 104.1 (49.1) million. DISTRIBUTION NETWORK No changes took place in the Group structure during the period under review. The subsidiaries included in the Ponsse Group are: Epec Oy, Finland; OOO Ponsse, Russia; Ponsse AB, Sweden; Ponsse AS, Norway; Ponsse Asia-Pacific Ltd, Hong Kong; Ponsse China Ltd, China; Ponsse Latin America Ltda, Brazil; Ponsse North America, Inc., the United States; Ponssé S.A.S., France; Ponsse UK Ltd, the United Kingdom; and Ponsse Uruguay S.A., Uruguay. Sunit Oy, based in Kajaani, Finland, is an affiliated company 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 2.6 (2.4) million, of which EUR 0.4 (0.6) million was capitalised. Capital expenditure totalled EUR 4.7 (3.0) million. It consisted in addition to capitalised R&D expenses of 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; Juha Haverinen, Factory Director; Petri Härkönen, CFO; Juha Inberg, Technology and R&D Director; Tapio Mertanen, Service Director; Paula Oksman, HR Director; Tommi Väänänen, Purchasing Director and Jarmo Vidgrén, Deputy CEO, Sales and Marketing Director. The company management has regular management liability insurance. The area director organisation of sales is lead by Jarmo Vidgrén, Group’s Sales and Marketing Director and Tapio Mertanen, Service Director. The geographical distribution and the responsible persons are presented below: Northern Europe: Jarmo Vidgrén (Finland), Eero Lukkarinen (Sweden, Denmark) and Sigurd Skotte (Norway), Central and Southern Europe: Janne Vidgrén (Austria, Poland, Romania, Germany, the Czech Republic and Hungary), Clément Puybaret (France), Jussi Hentunen (Spain, Italy, Portugal and Norrbotten/Sweden) and Gary Glendinning (the United Kingdom) Russia and Asia: Jaakko Laurila (Russia, Belarus), Norbert Schalkx (Japan and the Baltic countries) and Risto Kääriäinen (China), North and South America: Pekka Ruuskanen (the United States), Marko Mattila (North American dealers), Teemu Raitis (Brazil) and Martin Toledo (Uruguay). PERSONNEL The Group had an average staff of 1,136 (975) during the period and employed 1,158 (981) 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 2014 totalled 683,426, accounting for 2.4 per cent of the total number of shares. Share turnover amounted to EUR 7.0 million, with the period’s lowest and highest share prices amounting to EUR 9.02 and EUR 10.75, respectively. At the end of the period, shares closed at EUR 10.50, and market capitalisation totalled EUR 294.0 million. At the end of the period under review, the company held 212,900 treasury shares. ANNUAL GENERAL MEETING A separate release was issued on 15 April 2014 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 2010. 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 prolonged insecurity in the world economy and weak economic situation 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 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 significantly higher than in 2013. Ponsse’s strongly renewed and competitive product portfolio and maintenance service solutions are having a positive effect on the company’s business operations. Thanks to the strong order books, the factory is able to produce forest machines at normal capacity. We estimate that the work situation of our customers will also continue to be normal. Our investments in the buildings of the Vieremä factory, product development and maintenance services, development and renewal of production technology and product development will continue. PONSSE GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000) IFRS IFRS IFRS 1-3/14 1-3/13 1-12/13 NET SALES 86,859 61,645 312,825 Increase (+)/decrease (-) in inventories of finished 4,884 12,016 5,832 goods and work in progress Other operating income 243 140 1,053 Raw materials and services -60,791 -52,152 -210,146 Expenditure on employment-related benefits -13,484 -12,594 -49,022 Depreciation and amortisation -1,849 -1,648 -6,568 Other operating expenses -8,440 -7,315 -31,472 OPERATING RESULT 7,422 93 22,501 Share of results of associated companies -38 -84 -45 Financial income and expenses -532 704 -8,208 RESULT BEFORE TAXES 6,852 713 14,248 Income taxes -1,503 -202 -5,150 NET RESULT FOR THE PERIOD 5,349 512 9,098 OTHER ITEMS INCLUDED IN TOTAL COMPREHENSIVE RESULT: Translation differences related to foreign units -759 -843 2,955 TOTAL COMPREHENSIVE RESULT FOR THE PERIOD 4,590 -331 12,053 Diluted and undiluted earnings per share* 0.19 0.00 0.31 * The interest on the subordinated loan for the period, less tax, was taken into account in this figure. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000) IFRS IFRS IFRS ASSETS 31 Mar 14 31 Mar 13 31 Dec 13 NON-CURRENT ASSETS Intangible assets 14,254 12,137 14,278 Goodwill 3,440 3,440 3,440 Property, plant and equipment 38,014 36,675 37,766 Financial assets 104 111 104 Investments in associated companies 994 992 1,031 Non-current receivables 898 1,048 914 Deferred tax assets 1,468 2,022 1,374 TOTAL NON-CURRENT ASSETS 59,171 56,426 58,908 CURRENT ASSETS Inventories 89,913 87,623 85,767 Trade receivables 23,587 19,148 23,108 Income tax receivables 259 897 207 Other current receivables 7,975 7,268 6,100 Cash and cash equivalents 10,234 23,029 11,958 TOTAL CURRENT ASSETS 131,968 137,966 127,140 TOTAL ASSETS 191,139 194,391 186,048 SHAREHOLDERS’ EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY Share capital 7,000 7,000 7,000 Other reserves 30 30 30 Translation differences 658 -2,381 1,417 Treasury shares -2,228 -2,228 -2,228 Retained earnings 66,680 59,692 61,331 EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS 72,140 62,113 67,550 NON-CURRENT LIABILITIES Interest-bearing liabilities 39,098 41,471 38,810 Deferred tax liabilities 632 1,175 657 Other non-current liabilities 0 0 0 TOTAL NON-CURRENT LIABILITIES 39,730 42,646 39,466 CURRENT LIABILITIES Interest-bearing liabilities 22,068 33,828 21,492 Provisions 4,362 4,763 4,618 Tax liabilities for the period 958 65 920 Trade creditors and other current liabilities 51,881 50,976 52,002 TOTAL CURRENT LIABILITIES 79,270 89,632 79,032 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 191,139 194,391 186,048 CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000) IFRS IFRS IFRS 1-3/14 1-3/13 1-12/13 CASH FLOWS FROM OPERATING ACTIVITIES: Net result for the period 5,349 512 9,098 Adjustments: Financial income and expenses 532 -704 8,208 Share of the result of associated companies 38 84 45 Depreciation and amortisation 1,849 1,648 6,568 Income taxes 1,503 202 5,150 Other adjustments -380 546 2,637 Cash flow before changes in working capital 8,891 2,286 31,706 Change in working capital: Change in trade receivables and other receivables -226 2,238 -81 Change in inventories -4,146 -5,987 -4,131 Change in trade creditors and other liabilities -829 13,580 15,557 Change in provisions for liabilities and charges -256 -214 -359 Interest received 42 57 227 Interest paid -152 -76 -1,143 Other financial items -196 105 -1,063 Income taxes paid -884 704 -2,260 NET CASH FLOWS FROM OPERATING ACTIVITIES (A) 2,244 12,693 38,453 CASH FLOWS USED IN INVESTING ACTIVITIES Investments in tangible and intangible assets -4,690 -3,036 -11,188 NET CASH FLOWS USED IN INVESTMENT ACTIVITIES (B) -4,690 -3,036 -11,188 CASH FLOWS FROM FINANCING ACTIVITIES Hybrid loan 0 -19,000 -19,000 Interest paid, hybrid loan 0 -1,136 -1,136 Withdrawal/Repayment of current loans 1,428 472 -14,500 Change in current interest-bearing liabilities 0 213 -136 Withdrawal of non-current loans 245 20,000 29,322 Repayment of non-current loans -760 -342 -10,668 Payment of finance lease liabilities -48 -1,650 -239 Change in non-current receivables -32 -49 172 Dividends paid 0 0 -6,947 NET CASH FLOWS FROM FINANCING ACTIVITIES (C) 833 -1,493 -23,132 Change in cash and cash equivalents (A+B+C) -1,613 8,164 4,133 Cash and cash equivalents on 1 Jan 11,958 14,083 14,083 Impact of exchange rate changes -110 781 -6,259 Cash and cash equivalents on 31 Mar/31 Dec 10,234 23,029 11,958 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 2014 7,000 30 1,417 -2,228 61,331 67,550 Translation differences -759 -759 Result for the period 5,349 5,349 Total comprehensive income for -759 5,349 4,590 the period Other changes 0 SHAREHOLDERS' EQUITY 31 MAR 7,000 30 658 -2,228 66,680 72,140 2014 SHAREHOLDERS’ EQUITY 1 JAN 2013 7,000 19,030 -1,538 -2,228 59,180 81,444 Translation differences -843 -843 Result for the period 512 512 Total comprehensive income for -843 512 -331 the period Other changes -19,000 -19,000 SHAREHOLDERS' EQUITY 31 MAR 7,000 30 -2,381 -2,228 59,692 62,113 2013 31 Mar 14 31 Mar 13 31 Dec 13 1. LEASING COMMITMENTS (EUR 1,000) 1,490 2,441 1,691 2. CONTINGENT LIABILITIES (EUR 1,000) 31 Mar 14 31 Mar 13 31 Dec 13 Guarantees given on behalf of others 463 1,570 487 Repurchase commitments 1,030 1,389 1,138 Other commitments 4,462 4,121 4,224 TOTAL 5,955 7,080 5,850 3. PROVISIONS (EUR 1,000) Guarantee provision 1 January 2014 4,618 Provisions added 126 Provisions cancelled -382 31 March 2014 4,362 KEY FIGURES AND RATIOS 31 Mar 14 31 Mar 13 31 Dec 13 R&D expenditure (EUR million) 2.6 2.4 9.7 Capital expenditure (EUR million) 4.7 3.0 11.2 as % of net sales 5.4 4.9 3.6 Average number of employees 1,136 975 1,027 Order books (EUR million) 104.1 49.1 99.8 Equity ratio, % 37.9 32.3 36.5 Diluted and undiluted earnings per share (EUR) 0.19 0.00 0.31 Equity per share (EUR) 2.58 2.22 2.41 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 - Interest on hybrid loan for the period less tax -------------------------------------------------------------------------------- ----------------------------------------- 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) 1-3/14 1-3/13 1-12/13 Ponsse Group 92.3 69.0 371.0 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 2013. 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, 23 April 2014 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.