Raute Corporation - Half-year report January 1 - June 30, 2019

RAUTE CORPORATION HALF-YEAR REPORT JULY 31, 2019 AT 9:00 a.m.

This is a summary of Raute’s Half-year financial report January 1 – June 30, 2019. The complete report is attached to this release as a pdf file and is also available on the company’s’ website at www.raute.com. 

RAUTE CORPORATION – HALF-YEAR REPORT JANUARY 1–JUNE 30, 2019 

- The Group’s net sales, EUR 78.3 million (MEUR 78.9), decreased 0.8% from the comparison period. Order intake was EUR 58 million (MEUR 96).
- Operating profit was EUR 4.9 million (MEUR 5.9), down 16% from the comparison period. The result before taxes was EUR 5.1 million (MEUR 6.0).
- Earnings per share were EUR 0.94 (EUR 1.09), and diluted earnings per share were EUR 0.94 (EUR 1.08).
- Net sales for the second quarter were EUR 37.0 million and operating profit was EUR 2.3 million. Order intake was EUR 26 million. The order book at the end of the reporting period came to EUR 72 million (MEUR 127), a significant proportion of which is scheduled for 2020 and a smaller amount for 2021.
- On June 25, 2019, Raute changed its guidance for 2019. Raute’s net sales for 2019 are expected to decrease and operating profit is expected to weaken from the comparison period.

 

KEY FIGURES	1.4.- 30.6. 2019	1.4.- 30.6. 2018	1.1.- 30.6. 2019	1.1.- 30.6. 2018	1.1.- 31.12. 2018
Net sales, MEUR	37.0	43.7	78.3	78.9	181.0
Change in net sales, %	-15.3	24.6	-0.8	10.2	22.2
Exported portion of net sales, %	82.4	88.8	85.4	88.8	84.6
Operating profit, MEUR	2.3	3.2	4.9	5.9	14.9
Operating profit, % of net sales	6.3	7.2	6.3	7.5	8.2
Profit before taxes, MEUR	2.3	3.1	5.1	6.0	14.9
Profit before taxes, % of net sales	6.3	7.1	6.5	7.6	8.2
Profit for the period, MEUR	1.9	2.4	4.0	4.6	11.8
Profit for the period, % of net sales	5.1	5.4	5.1	5.9	6.5
Gross capital expenditure, MEUR	0.7	1.2	1.3	2.2	4.4
% of net sales	2.0	2.7	1.7	2.7	2.4
Research and development costs, MEUR	0.8	0.9	1.8	1.7	3.7
% of net sales	2.3	2.1	2.4	2.2	2.1
Order book, MEUR			72	127	95
Order intake, MEUR	26	28	58	96	167
Personnel, at the end of the period			810	778	772
Personnel, effective, on average			758	705	725
Personnel, on average			781	732	748

 

TAPANI KIISKI, PRESIDENT AND CEO: UNCERTAINTY IN THE MARKETS

 

In the first six months of the year, we kept pace with last year in terms of net sales. We fell short of our targets, however, which was caused by the scheduling of orders and the postponement of a few expected new orders.

 

Uncertainty in our customers’ markets has increased, causing delays in the start-up of some projects that are in the negotiating phase. Many of our traditional customers are still paying off the investments they made in previous years. Demand right now is focused on major new capacity projects, but also on services and minor improvements. Mid-sized projects account for an exceptionally low share of offers and orders. The low number of these projects is causing fluctuations in our order intake. I consider the volume of our new orders in the second quarter, EUR 26 million, to be a reasonable achievement considering the market situation, and I am pleased with the stable growth in the number of technology service orders and net sales.

 

In terms of our operating profit, we are roughly a million euros behind last year’s corresponding figure. Some of this development has been a planned effort in order to enable our future success. Some of the poor development of the result in relation to net sales is explained by the extra costs of a few delayed projects.

 

Our order book at the end of June, EUR 72 million, was still at a historically strong level, despite having decreased consistently for over a year now. The scheduling of our order book now spans an exceptionally long period, giving us the opportunity to plan our operations well into the future. At the same time, we will also be able to respond to the needs of our customers who demand quick deliveries and help them to seize the opportunities offered by their own markets.

 

Uncertainty in the markets caused delays in order intake and in the delivery of a few of our projects, as a result of which we had to downgrade the projections of our net sales and result for this year. We are nevertheless moving forward with determination and seeking new opportunities to help our customers in their business in order to get as close as we can to last year’s record performance.

 

BUSINESS ENVIRONMENT

Market situation in customer industries

Raute’s customers in the plywood and LVL (Laminated Veneer Lumber) industries are engaged in the manufacture of wood products used in investment projects and are thus highly affected by fluctuations in construction, housing-related consumption, international trade and transportation. We estimate that the growth trend in wood construction will create demand for our customers and indirectly for Raute, and will also strengthen growth opportunities in the long term.

 

The situation in the global economy and the financial markets in early 2019 did not change considerably with respect to Raute. The economic outlook became increasingly uncertain. A few of our customers have informed us that they are experiencing a decline in demand and prices.

 

Many of Raute’s established and traditional customers have invested heavily during the past few years. As demand among this traditional customer base dwindles, the demand for our technology continues to shift towards new and different types of customer accounts. A few of the orders we have received are concrete proof of this shift.

 

Demand for wood products technology and technology services

Although investment activity among Raute’s customers has decreased from what it was in recent years, it remains at least at a reasonable level. Enquiry activity for new capacity projects and larger projects involving replacement and efficiency-boosting investments has remained at a good level, and contracts are being actively negotiated.

 

Demand remains the strongest in industrialized market areas, especially Russia. In the emerging markets of Asia, China included, and South America, demand has not been as strong, but it has been brisker in recent months. There is growing interest in Raute’s offering in these markets, which presents opportunities to obtain new customers.

 

Demand for maintenance and spare parts services remained at a good level, which is an indication of the good capacity utilization rates of Raute’s customers’ production plants.

 

OUTLOOK FOR 2019

 

On June 25, 2019, Raute changed its guidance for 2019 concerning net sales and operating profit, estimating that the company’s net sales will decrease and operating profit will weaken in 2019 compared to the record figures of the previous year. The revised guidance was based on scheduling delays concerning a few projects that were in the implementation phase, as well as the related costs, and to the postponement from previous estimates of a few major new orders that are in the negotiation phase.

 

The company’s current situation and outlook for the rest of the year give no cause to change the guidance issued on June 25, 2019. Raute’s net sales will decrease and operating profit will weaken in 2019 compared to 2018.

 
RAUTE CORPORATION

Board of Directors

BRIEFING ON JULY 31, 2019 AT 2 P.M.:

A briefing will be organized for analysts, investors and the media on July 31, 2019 at 2 p.m. at Scandic Simonkenttä Hotel, Bulsa-Freda cabinet, Simonkatu 9, Helsinki. The half-year report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Tarja Järvinen, CFO.

NEXT INTERIM REPORT:

Raute Corporation’s interim report January 1–September 30, 2019 will be published on Wednesday, October 30, 2019.

 

FURTHER INFORMATION:
Mr. Tapani Kiiski, President and CEO, Raute Corporation, mobile phone [phone]
Ms. Tarja Järvinen, Group Vice President, Finance, CFO, Raute Corporation, mobile phone [phone]

DISTRIBUTION:
Nasdaq Helsinki Ltd, main media, www.raute.com

RAUTE IN BRIEF:

Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and sawn timber. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in the Nastola area of Lahti, Finland. The company’s other production plants are located in Kajaani, Finland, the Vancouver area of Canada, the Shanghai area of China and in Pullman, Washington, USA. Raute’s net sales in 2018 were EUR 181.0 million. The Group’s headcount at the end of 2018 was 772. More information about the company can be found at www.raute.com.

Attachment

• Raute Corporation_Half-year report January 1 - June 30, 2019