CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 17 AUGUST 2016, at 9.00 a.m.
Consti Group Plc Half-Year Financial Report for January - June 2016
Order backlog reached a record high
4-6/2016 highlights (comparison figures in parenthesis 4-6/2015): · Net sales EUR 64.8 (63.4) million; growth 2.3% · EBITDA EUR 3.1 (2.8) million and EBITDA margin 4.7% (4.5%) · Adjusted EBITDA EUR 3.1 (2.9) million and adjusted EBITDA margin 4.7% (4.5%) · Operating profit (EBIT) EUR 2.6 (2.3) million and operating profit (EBIT) margin 4.0% (3.7%) · Adjusted EBIT EUR 2.6 (2.4) million and adjusted EBIT margin 4.0% (3.7%) · Order backlog EUR 212.6 (199.8) million · Free cash flow EUR 0.4 (4.9) million · Earnings per share EUR 0.25 (0.18)
1-6/2016 highlights (comparison figures in parenthesis 1-6/2015): · Net sales EUR 116.2 (110.9) million; growth 4.8% · EBITDA EUR 3.7 (3.4) million and EBITDA margin 3.2% (3.1%) · Adjusted EBITDA EUR 3.7 (3.8) million and adjusted EBITDA margin 3.2% (3.4%) · Operating profit (EBIT) EUR 2.8 (2.4) million and operating profit (EBIT) margin 2.4% (2.2%) · Adjusted EBIT EUR 2.8 (2.7) million and adjusted EBIT margin 2.4% (2.5%) · Free cash flow EUR 3.7 (7.1) million · Earnings per share EUR 0.24 (-0.04) Consti specifies its guidance on the Group outlook for 2016: The company estimates that its total annual net sales for 2016 will grow approximately 5-10 percent compared to 2015. Consti's previous guidance was: "The company estimates that its total annual sales for 2016 will grow compared to 2015."
| KEY FIGURES (EUR 1,000) | 4-6/ 2016 | 4-6/ 2015 | Change % | 1-6/ 2016 | 1-6/ 2015 | Change % | 1-12/ 2015 | |
| Net sales | 64,813 | 63,357 | 2.3 % | 116,181 | 110,851 | 4.8 % | 256,151 | |
| Adjusted EBITDA* | 3,069 | 2,870 | 6.9 % | 3,729 | 3,751 | -0.6 % | 12,613 | |
| Adjusted EBITDA margin, % | 4.7 % | 4.5 % | 3.2 % | 3.4 % | 4.9 % | |||
| EBITDA | 3,069 | 2,830 | 8.4 % | 3,706 | 3,416 | 8.5 % | 10,507 | |
| EBITDA margin, % | 4.7 % | 4.5 % | 3.2 % | 3.1 % | 4.1 % | |||
| Adjusted EBIT* | 2,614 | 2,364 | 10.6 % | 2,829 | 2,730 | 3.6 % | 10,520 | |
| Adjusted EBIT margin, % | 4.0 % | 3.7 % | 2.4 % | 2.5 % | 4.1 % | |||
| Operating profit (EBIT) | 2,614 | 2,324 | 12.5 % | 2,806 | 2,395 | 17.1 % | 8,414 | |
| Operating profit (EBIT) margin, % | 4.0 % | 3.7 % | 2.4 % | 2.2 % | 3.3 % | |||
| Profit for the period | 1,878 | 846 | 121.9 % | 1,801 | -190 | 1049.9 % | 3,260 | |
| Order backlog | 212,590 | 199,833 | 6.4 % | 181,301 | ||||
| Free cash flow | 353 | 4,886 | -92.8 % | 3,747 | 7,070 | -47.0 % | 8,910 | |
| Cash conversion, % | 11.5 % | 172.7 % | 101.1 % | 207.0 % | 84.8 % | |||
| Net interest-bearing debt | 17,780 | 38,514 | -53.8 % | 17,407 | ||||
| Gearing, % | 76.1 % | 2811.2 % | 70.9 % | |||||
| Number of personnel at period end | 990 | 981 | 0.9 % | 890 | ||||
| Earnings per share, undil. (EUR) | 0.25 | 0.18 | 35.6 % | 0.24 | -0.04 | 643.6 % | 0.61 | |
| * New ESMA (European Securities and Markets Authority) guidelines on Alternative Performance Measures (APMs) are effective for the financial year 2016. Consti presents APMs to reflect the underlying business performance and to enhance comparability between financial periods. APMs should not be considered as a substitute for measures of performance in accordance with the IFRS. As of Q1 2016, Consti relabels the previously referenced "before non-recurring items" with "before items affecting comparability" (IAC). For a more detailed description of items affecting comparability, see section "Sales, result and order backlog". | ||||||||
CEO Marko Holopainen's comment
Order backlog reached a record high
"Growth in demand of renovation construction and technical building services continued good during the second quarter of the year. Overall we achieved the best Q2 in our company's history. Despite the strong comparison period, we were able to increase order intake and our order backlog reached a record high. Our order backlog in euros at the end of the reporting period was at 212.6 (199.8) million euro, which provides a good foundation for our business during the rest of the year. Our net sales for the second quarter of the year grew 2.3 percent and was 64.8 million euro. Net sales growth was good in Technical Building Services and Renovation Contracting. In Building Facades net sales decreased from the comparison period, but we believe that the strong order inflow of the beginning of the year will be positively seen in Building Façade's sales for the rest of the year. Our profitability also developed positively during the quarter. Our adjusted EBIT was 2.6 million euro, which is 4.0 percent of the net sales, while corresponding figures from the second quarter of 2015 were 2.4 million euro and 3.7 percent of the net sales.
The good market situation continued
The market situation during the first half of the year in general was good. The number of tender requests developed positively during the first half of the year and order intake increased towards the end of the reporting period. We received several significant orders during the spring. The largest ventures are the extensive renovation of Espoonlahti church, renovations at Lahti's future courthouse, technical building services at Hämeenlinna swimming hall and a comprehensive façade renovation venture in Ruoholahti, Helsinki. During the spring Consti also made several significant deals on housing association pipeline and façade renovations.
Strategy implementation progressing
Our strategic ventures are progressing as planned. At the acquisitions front we have continued active mapping and held negotiations with several interesting companies. In our internal development ventures, we have invested in for example personnel training and in developing our IT-strategy. Our strategic goal is to continue profitable growth by strengthening our position in Finland's growth centres.
Outlook for the rest of the year
Based on our current market and business outlook, we believe that the demand for renovation construction and technical building services will remain at a good level during the rest of the year as well. Consequently, we are specifying our guidance on the Group outlook on net sales growth. We estimate that net sales for 2016 will grow by approximately 5-10 percent compared to 2015."
Operating environment
The relative portion of renovations in the Finnish building market has grown during the past decade, and it is now already larger than the new building market. The Confederation of Finnish Construction Industries RT (CFCI) estimates that renovation amounted to approximately 54 percent of the building market's total value in 2015. The general economic situation has a significantly smaller impact on renovation construction and technical building services than it does on the new building market.
The ageing building stock particularly increases the demand for renovation construction. As buildings age, they require more technical renovations such as pipeline and façade renovations. At the moment mainly buildings from the 1960s and an increasing number of buildings from the considerably larger building stock of the 1970s are being renovated in Finland. In renovation construction the largest growth during the next decade is expected to come from residential buildings in large cities. In housing association renovations approximately one third of the renovations are pipelines, one third façades and the rest other structures.
In addition to ageing, buildings require more renovation, technical building services and building technology maintenance services due to heightened energy efficiency requirements, urbanisation, modification of the use of buildings, the development of housing automatisation and the ageing populations' need for barrier-free buildings.
There are currently a great number of buildings in Finland which would benefit from renovations modifying their use to match current needs. Such renovations would improve both the buildings' usability and profitability. Typical modifications of buildings include the altering of old office buildings and industrial buildings in growth centres into hotels, apartments and assisted living facilities. Modifications of the use of buildings are a central part of Consti's services.
Renovation construction markets are concentrating on growth areas, akin to new building. Necessary technical repairs in declining suburbs and less populated areas are often economically unviable.
The European construction business research institute Euroconstruct estimated in its June 2016 forecast that total building in 2016 will increase approximately 6.5 percent from the previous year. Renovation construction is estimated to grow 1.5 percent and new building will see an increase of 12.2 percent from the previous year. In renovation construction demand growth is estimated to continue progressing steadily during upcoming years and the growth is estimated to be faster than new building growth on average.
The boost in new building should have a positive impact on Consti's competitive environment and create new growth opportunities for Technical Building Services. New building growth has a delayed impact on technical building services. The Finnish Association of HPAC Technical Contractors estimated in their June review that business conditions have improved compared to March. HPAC projects are expected to materialise more notably during the autumn when building technology work will begin in ongoing construction projects.
The renovation market is very fragmented in Finland. Large construction companies focus on new building and the field of renovation has typically consisted of several small companies that usually focus on only one segment of renovation.
Measured in net sales, Consti is one of Finland's leading companies in renovation and technical building services.
Outlook for 2016
Renovation construction is expected to continue steady growth in 2016. The European construction business research group Euroconstruct estimated in its June 2016 forecast that total building in 2016 will increase approximately 6.5 percent from the previous year, renovation construction will grow about 1.5 percent, and new building 12.2 percent from 2015. In renovation construction demand growth is estimated to continue progressing steadily during upcoming years and the growth is estimated to be faster than new building growth on average.
The boost in new building should have a positive impact on Consti's competitive environment and create new growth opportunities for Technical Building Services. New building growth has a delayed impact on technical building services. The Finnish Association of HPAC Technical Contractors estimated in their June review that business conditions have improved compared to March. HPAC projects are expected to materialise more notably during the autumn when building technology work will begin in ongoing construction projects.
The general economic conditions have a considerably smaller impact on renovation construction and technical building services than on new building.
Consti has specified its guidance on the Group outlook for 2016. The company estimates that its total annual net sales for 2016 will grow approximately 5-10 percent compared to 2015. Consti's previous guidance was: "The company estimates that its total annual sales for 2016 will grow compared to 2015."
Press conference
A press conference for analysts, portfolio managers and media will be arranged on Wednesday August 17th 2016 at 10:00 at Scandic Hotel Simonkenttä's Tapiola-cabinet at Simonkatu 9, Helsinki. The conference is hosted by CEO Marko Holopainen and CFO Esa Korkeela.
Financial communication in 2016
Consti Group Plc shall publish one more interim report during 2016:
- Interim report 1-9/2016 published 10 November 2016
CONSTI GROUP PLC
Further information:
Marko Holopainen, CEO, Consti Group Plc, Tel. +358 400 458 158 Esa Korkeela, CFO, Consti Group Plc, Tel. +358 40 730 8568
Distribution:
Nasdaq Helsinki Ltd. Major media www.consti.fi
Consti is a leading Finnish company concentrating on renovation and technical services. Consti offers comprehensive building technology, pipeline renovation, renovation contracting, façade renovation and other demanding construction and maintenance services for residential and commercial buildings. In 2015, Consti Group's net sales amounted to 256 million euro. It employs about 900 professionals in renovation construction and building technology.
Consti Group Plc is listed on Nasdaq Helsinki. The trading code is CONSTI. www.consti.fi
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