PKC Group Plc INTERIM REPORT 7 August 2014 8.15 a.m.
PKC GROUP Q2/2014:
SECOND QUARTER REVENUE AND EBITDA SIMILAR TO FIRST QUARTER
APRIL - JUNE 2014 HIGHLIGHTS
- Revenue decreased 12.3% on the comparison period (4-6/2013), totalling EUR 206.2 million (EUR 235.1 million).
- EBITDA before non-recurring items was EUR 12.4 million (EUR 20.6 million) and 6.0% (8.8%) of revenue.
- EBITA** was EUR 7.6 million (EUR 16.1 million) and 3.7% (6.8%) of revenue. During the report period PPA depreciation and amortisation totalled EUR 2.0 million (EUR 2.8 million).
- Operating profit before non-recurring items was EUR 5.6 million (EUR 13.3 million) and 2.7% (5.6%) of revenue.
- Diluted earnings per share were EUR 0.11 (EUR 0.28).
- Cash flow after investments was EUR 7.4 million (EUR 1.1 million).
JANUARY - JUNE 2014 HIGHLIGHTS
- Revenue decreased 10.9% on the comparison period (1-6/2013), totalling EUR 410.0 million (EUR 460.3 million).
- EBITDA before non-recurring items was EUR 24.5 million (EUR 39.4 million) and 6.0% (8.6%) of revenue.
- EBITA** was EUR 15.3 million (EUR 30.3 million) and 3.7% (6.6%) of revenue. During the report period PPA depreciation and amortisation totalled EUR 4.1 million (EUR 5.7 million).
- Operating profit before non-recurring items was EUR 11.2 million (EUR 24.6 million) and 2.7% (5.3%) of revenue.
- Diluted earnings per share were EUR 0.15 (EUR 0.42).
- Cash flow after investments was EUR -11.0 million (EUR 1.3 million).
PKC GROUP’S OUTLOOK FOR 2014
- PKC Group estimates that 2014 revenue and comparable EBITDA will be lower than in 2013. In 2013, PKC’s revenue was EUR 884.0 million and comparable EBITDA before non-recurring items was EUR 70.3 million.
- Revenue estimate is based on current business structure. Revenue will be affected by light vehicle build-outs in North America and by changes in exchange rates. As a result of the above, comparable EBITDA is expected to be lower than in 2013. Comparable EBITDA in 2014 will also be affected by reorganisation and program transfers in Europe and expenditures related to the implementation of PKC’s growth strategy.
| KEY FIGURES | 4-6/14 | 4-6/13 | Change % | 1-6/14 | 1-6/13 | Change % | 1-12/13 | |
| EUR 1,000 (unless otherwise noted) | ||||||||
| Revenue | 206,222 | 235,099 | -12.3 | 410,036 | 460,261 | -10.9 | 883,986 | |
| EBITDA* | 12,437 | 20,597 | -39.6 | 24,531 | 39,365 | -37.7 | 70,341 | |
| % of revenue | 6.0 | 8.8 | 6.0 | 8.6 | 8.0 | |||
| EBITA** | 7,628 | 16,068 | -52.5 | 15,276 | 30,302 | -49.6 | 52,461 | |
| % of revenue | 3.7 | 6.8 | 3.7 | 6.6 | 5.9 | |||
| Operating profit* | 5,607 | 13,261 | -57.7 | 11,220 | 24,576 | -54.3 | 40,873 | |
| % of revenue | 2.7 | 5.6 | 2.7 | 5.3 | 4.6 | |||
| Non-recurring items | -1,465 | -1,265 | 15.8 | -4,200 | -6,654 | -36.9 | -10,409 | |
| Operating profit | 4,142 | 11,996 | -65.5 | 7,021 | 17,923 | -60.8 | 30,463 | |
| % of revenue | 2.0 | 5.1 | 1.7 | 3.9 | 3.4 | |||
| Profit before taxes | 3,871 | 9,368 | -58.7 | 5,225 | 14,078 | -62.9 | 21,562 | |
| Net profit for the report period | 2,593 | 6,042 | -57.1 | 3,501 | 9,151 | -61.7 | 13,947 | |
| Earnings per share (EPS), EUR | 0.11 | 0.28 | -61.3 | 0.15 | 0.42 | -65.5 | 0.62 | |
| Cash flow after investments | 7,390 | 1,109 | 566.3 | -10,965 | 1,313 | 24,941 | ||
| ROI,% | 10.2 | 18.0 | 14.7 | |||||
| Gearing, % | 14.0 | 45.2 | -1.1 | |||||
| Average number of personnel | 19,246 | 19,553 | -1.6 | 19,026 | 19,544 | -2.7 | 19,206 | |
| * before non-recurring items | ||||||||
| ** operating profit before PPA depreciation and amortisation and non-recurring items | ||||||||
MATTI HYYTIÄINEN, PRESIDENT & CEO:
The revenue during the second quarter remained below the comparison period, amounting to EUR 206.2 million. In Europe, truck production volumes were at the same level as in the first quarter but still below the comparison period. In North America, truck production kept growing compared to both the previous quarter and the comparison period. In Brazil, the production volumes in the second quarter topped the production in the first quarter but were significantly below the comparison period. The crisis in the Ukraine has had a negative impact on our customers’ business activities in Russia, due to which the planned production ramp-ups at PKC’s Russian factory for new customer programmes were not realised.
PKC’s operating profit before non-recurring items amounted to EUR 5.6 million. The operating profit was burdened by the low production utilisation rate and the losses in Brazil in particular. PKC has made progress with the price agreements that are the prerequisite for the future profitable business, even though price agreements covering all of the business operations have not yet been completed in full. PKC’s other geographical areas are proceeding according to plan.
The cash flow in the second quarter was at a good level, amounting to EUR 13.0 million before capital expenditure. The company has a strong balance sheet with low gearing. This enables us to implement our strategy in full e.g. through corporate acquisitions.
The market downturn continues in Europe and Brazil, and truck production (heavy-duty and medium-duty) for the full year is predicted to stay well below last year’s figures. The full-year production volumes in North America, on the other hand, are predicted to top last year’s figures. In the second half of the year, which includes the holiday seasons and Christmas shut-downs, production volumes are predicted to stay at the level of the first half in Europe and grow approximately 10% in North America. In Brazil political and economic uncertainty has increased. PKC’s customers in Brazil have indicated production volumes in second half to remain at the most on current level.
Establishing PKC in the Chinese truck market is at the core of the PKC 2018 strategy. We have further enhanced the organisation of PKC China and currently have a 70-strong competence unit in Suzhou. We are working on several projects in China.
I wish to thank all PKC personnel once more for all their good work.
MARKET OUTLOOK
Wiring Systems Business
In 2014 the production of heavy-duty trucks in Europe is expected to decline by 10% and production of medium-duty trucks by 13% compared to the level of 2013.
Production of heavy-duty trucks in North America is expected to increase by 18%, production of medium-duty trucks by 4% and production of light vehicles by 3% compared to 2013.
Production of heavy-duty trucks in Brazil is expected to decline by 14%, and production of medium-duty trucks by 18% compared to 2013. The governmental incentive program to support the purchase of new trucks continues to be valid until further notice, although the terms have been weakened somewhat.
Electronics Business
The market demand for Electronics segment’s products is expected to remain at the present level.
PKC GROUP’S OUTLOOK FOR 2014
PKC Group estimates that 2014 revenue and comparable EBITDA will be lower than in 2013. In 2013, PKC’s revenue was EUR 884.0 million and comparable EBITDA before non-recurring items was EUR 70.3 million.
Revenue estimate is based on current business structure. Revenue will be affected by light vehicle build-outs in North America and by changes in exchange rates. As a result of the above, comparable EBITDA is expected to be lower than in 2013. Comparable EBITDA in 2014 will also be affected by reorganisation and program transfers in Europe and expenditures related to the implementation of PKC’s growth strategy.
DISCLOSING PROCEDURES OF FINANCIAL REVIEWS
PKC Group Plc follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority, and discloses relevant information related to its Interim Report with this release. PKC's interim report for January - June 2014 is attached to this release and is also available on company's website at www.pkcgroup.com.
PKC GROUP PLC
Board of Directors
Matti Hyytiäinen
President & CEO
For additional information, contact:
Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968 (7 August from 8.15 am to 1.30 pm)
Juha Torniainen, CFO, PKC Group Plc, tel. +358 (0)40 570 8871
PRESS CONFERENCE
A press conference on the interim report will be arranged for analysts and investors today, 7 August 2014, at 10.00 a.m., at the address Event Arena Bank, Unioninkatu 20, Helsinki.
ATTACHMENT
PKC interim report Q2 2014
DISTRIBUTION
NASDAQ OMX
Main media
www.pkcgroup.com
PKC Group is a global partner, designing, manufacturing and integrating electrical distribution systems, electronics and related architecture components for the commercial vehicle industry and other selected segments. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in 2013 totalled EUR 884.0 million. PKC Group Plc is listed on NASDAQ OMX Helsinki Ltd.
