MARTELA CORPORATION HALF YEAR FINANCIAL REPORT 9 August 2016 at 8.30 a.m.
MARTELA CORPORATION HALF YEAR FINANCIAL REPORT 1 Jan–30 June 2016
During the first half year, revenue and operating result improved slightly on last year and the strategy was perfected
Key figures:
| 4-6 | 4-6 | 1-6 | 1-6 | 1-12 | ||
| EUR million | 2016 | 2015 | 2016 | 2015 | 2015 | |
| - Revenue | 31.9 | 30.0 | 59.7 | 56.6 | 132.8 | |
| - Change in revenue, % | 6.3 | -12.0 | 5.4 | -16.9 | -2.3 | |
| - Comparable operating result* | 1.2 | 0.2 | 1.0 | -1.1 | 4.1 | |
| - Comparable operating result, %* | 3.6 | 0.8 | 1.7 | -1.9 | 3.1 | |
| - Operating result | 0.6 | 0.2 | 0.4 | -1.1 | 4.1 | |
| - Operating result, % | 1.9 | 0.8 | 0.8 | -1.9 | 3.1 | |
| - Earnings / share | 0.03 | 0.01 | -0.05 | -0.35 | 0.61 | |
| - Return on investment, % | 7.3 | 2.5 | 2.8 | -6.1 | 12.1 | |
| - Return on equity % | 2.1 | 0.7 | -1.7 | -14.7 | 11.6 | |
| - Equity-to-assets ratio % | 41.9 | 35.7 | 40.9 | |||
| - Gearing ratio, % | -0.9 | 46.3 | 16.6 | |||
The Martela Group anticipates that the Martela Group’s revenue will slightly decline compared to previous year, however the Group’s IFRS operating result will remain at the level of 2015. Due to normal seasonal variations, the Group’s operating result accumulates mainly during the second half of the year.
* Martela applies the European Securities and Markets Authority (ESMA) guidelines on disclosing alternative performance measures. The guidelines took effect on 3 July 2016. Martela discloses alternative performance measures to illustrate the financial performance of its business operations and to improve intra-period comparability. The alternative performance measures should not be considered as substitute for the IFRS performance measures. The reconciliation of the ESMA performance measures with the most directly reconcilable IFRS-based items has been presented in the financial statements information of this half year financial report.
CEO Matti Rantaniemi:
“Martela Corporation’s first half year went according to plan. The increase in revenue and decrease in costs thanks to our cost-saving programmes have led to an improved operating result. Our customers have warmly welcomed Martela’s approach of offering tailored work environments that meet each customer’s needs. During the review period we continued to perfect our Lifecycle strategy and as a result will in the future focus our business operations more strongly on the Nordic countries and pull out of sales operations in Poland and Russia. Putting these changes into practice is likely to slightly depress the result for the rest of the year. I am confident, however, that implementing these changes will sharpen the company’s focus and accelerate the implementation of the Lifecycle strategy. This will improve our ability to further enhance the group’s profitability.
We are happy with the company’s financial performance in the first half year:
- Second quarter revenue increased by 6.3 per cent on the previous year.
- Revenue for January–June increased by 5.4 per cent, with especially strong growth recorded by the Business Unit Finland & Sweden, the overall revenue of which increased 12.1 per cent on last year.
- The Group’s comparable second quarter operating result was EUR 1.2 million (0.2) in the second quarter and EUR 1.0 million (-1.1) in the first half year.
- The cash flow from operating activities in January–June was EUR 5.7 million (-1.2). The cash flow was strengthened by a decline in working capital during the review period.
Our revenue increased in the first half of the year but we estimate that the second-half revenue will be lower than in the previous year due to the discontinuation of sales operations in Poland and Russia and the timing of larger projects. In the future we will continue to focus on implementing the Lifecycle strategy in the Nordic countries and improving our profitability."
Market
The market situation in the second quarter was similar to that of the first quarter. The Finnish economic situation continued to be challenging although small signs of recovery could be seen in late 2015 and early 2016. Britain’s exit from the European Union may also have a negative impact on the budding growth of the Finnish economy. In Sweden the economy continued to develop favourably.
On the Finnish market, the need for many companies to adjust their operations to new business realities has generated an often-substantial need to effectively develop working environments. The Martela Lifecycle model responds well to such needs, even when companies are faced with significant changes in their business. As a result, the Finnish market has still performed moderately well from Martela’s perspective, despite being challenging.
The positive performance of the Swedish economy offers Martela an opportunity to increase its business there. In addition, in Sweden the Martela Lifecycle model is seen as a good fit with market needs since as in Finland, Swedish companies also see the importance of shaping and developing working environments to meet new business needs and challenges.
The demand for Martela’s products and services has been fundamentally affected by the general economic situation and by the extent to which companies need to use their office space more efficiently and make their working environments more functional. The annual change in a country’s gross domestic product (GDP) can be regarded as an indicator of general economic development. Finland’s 2016 GDP is forecast to slightly increase. However, recent developments in Europe also add uncertainty to the outlook of the Finnish economy.
Consolidated revenue and result
Consolidated revenue for the second quarter was EUR 31.9 million (30.0). In January–June, consolidated revenue was EUR 59.7 million (56.6), an increase of 5.4 per cent on the comparison period. Revenue was at the previous year’s level in Finland in the second quarter, but for the January–June period it was slightly down on the previous year. In Finland, the revenue was generated mainly by small and medium-sized deliveries. In Sweden the second-quarter revenue increased substantially, as it did in the first quarter. A few major customer deliveries were made in Sweden in the review period and, as a result, good growth was attained in this market area. Similarly large individual customer deliveries are not expected to take place during the remaining part of the year in Sweden. Thanks to the success in Sweden, the overall revenue of the Business Unit Finland & Sweden increased 12.1 per cent on last year in January–June. In contrast, under the Business Unit International, Poland’s revenue declined clearly and Norway’s slightly during the review period. Russia’s revenue continued to decline and was rather minor. Conversely, other international revenue increased significantly. As a whole, the revenue of the Business Unit International decreased in January–June by 28.2 per cent on the previous year. As a consequence of the discontinuation of sales operations in Poland and Russia, revenue from these market areas will decrease substantially in the latter half of the year and sales will in practical terms cease. Nevertheless, the positive performance of Business Unit Finland & Sweden means that the consolidated revenue grew slightly in the review period.
The Group’s comparable second quarter operating result was EUR 1.2 million (0.2) in the second quarter and EUR 1.0 million (-1.1) in the first half year. EUR 0.6 million was recorded in costs affecting comparability from the discontinuation of the Polish and Russian sales operations. As a result, the consolidated second-quarter IFRS operating result was EUR 0.6 million (0.2) and the half-year IFRS operating result was EUR 0.4 million (-1.1).The operating result was boosted by the increase in revenue and the significant reduction in the Group’s fixed costs as a result of the implemented savings programmes. At the same time, the sales margin of the Group’s products was slightly lower than a year earlier, due to the composition of the revenue in the review period.
Measures to improve supply chain efficiency continued to in the review period. The operations of Martela’s logistics centre in Bodafors, Sweden, is being improved and as a result of co-determination negotiations a decision was made to reduce the staff at the Bodafors logistics centre by 16 persons. The purpose of the measure is to create a more flexible supply chain in response to a changed and more varied customer demand and to implement the Martela Lifecycle strategy more effectively. In addition to improving the supply chain, the planned measures target a EUR 0.5 million reduction in annual costs. The savings are part of the EUR 4.0 million savings programme Martela announced in April 2015. With the measures to be implemented in Sweden, the entire programme has now been completed. About one third of the savings were achieved in 2015 and about half will be achieved in 2016, with the remainder being realised during 2017.
A decision was also made in June to further perfect the Group’s Lifecycle strategy, as a result of which the Nordic countries will in the future be the company’s main market area. As a result, Martela’s brand and market focus will in the future be more clearly Nordic since the Nordic countries have a shared cultural background and needs and are in the forefront in adopting activity-based offices. Consequently Martela will pull out of its own sales operations in the Polish and Russian markets. The Warsaw production and purchasing unit will nevertheless continue operations and as an integral part of Martela’s Customer Supply Management organisation. The planned changes will sharpen the Group’s focus and accelerate the implementation of the Lifecycle strategy and improve the company’s future profitability. The changes are estimated to cause a maximum of EUR 0.7 million in non-recurring expenses, of which EUR 0.6 million was incurred in the review period.
User-oriented activity-based offices are an increasingly popular solution for corporate offices in the Nordic countries. Martela has introduced many new solutions for activity-based office environments and continues to focus on developing modern solutions and services. The Group has also invested heavily in competence in the specification, design and maintenance of working environments. This helps it to offer even more carefully specified working environments that are a good fit for customer needs. With proper specification and design customer companies can create cost-efficient working environments that increase job satisfaction.
Martela’s full half year financial report for January - June 2016 is included in PDF format as an attachment to this release.
Martela Oyj Board of Directors Matti Rantaniemi CEO ATTACHEMENT: Martela’s half year financial report January – June 2016 For more information, please contact Matti Rantaniemi , CEO, tel. +358 50 465 8194
Distribution Nasdaq Helsinki Main News Media
