EXEL OYJ STOCK EXCHANGE RELEASE 12.5.2003 11 a.m. 1 (7)
EXEL OYJS INTERIM REPORT, JANUARY 1 - MARCH 31, 2003
Summary:
- In the difficult market conditions, net sales decreased by 4% to EUR
12.3 million (12.8)
- Operating profit was EUR 0.4 million (0.9)
- The Industry divisions profits remained at the previous years
level, while the Sport division invested in the marketing and launch
of new products which declined profitability
Operating environment
Uncertainty concerning the future continued among Exels customers,
and is expected to last through 2003. The Industry divisions
customers have postponed new product launches, which is reflected in
net sales at the present time. New product applications are still
being developed, most of them utilising carbon fibre. In both the
sports equipment markets and the various industrial segments, there is
continued demand for new products and product innovations.
The raw material markets have remained stable despite momentary price
hikes affecting oil, and raw material prices are not expected to rise
in 2003.
Industry division
The Industry division produces and markets customised composite
profiles for several industrial sectors. The primary reinforcing
materials are carbon fibre and glass fibre. Exels main production
methods are continuous pultrusion and Exels proprietary Pull-Winding
technology. Exel is the leading European company in these fields.
The net sales of the Industry division totalled EUR 6.4 million (6.6).
Both net sales and profitability remained good, with operating profit
totalling EUR 0.9 million (0.8). Internal efficiency improved on the
previous year and, despite tight price competition, profitability was
maintained at the level of 2002.
The antenna profile market is still waiting for major 3G investments
to begin. However, the fact that antenna profile sales were maintained
at the previous years level indicates that composite products are
continuing to strengthen their market position in this segment. The
network construction companies continue to forecast a decrease in
volumes this year, and Exel is not expecting significant growth in
antenna profile sales in 2003.
In the paper industry, machine capacity utilisation rates remained
low, which was reflected in the sales volumes of doctor blades. The
sales of the first quarter did not quite reach the levels of last
year. In the latter half of 2002 and the beginning of 2003, the
Industry division developed many new applications for doctor blades,
intended especially for the North American market. Other new profile
2 (7)
applications for the paper machine environment are also under
development. As the capacity utilisation rates of new products and
machinery continue to rise in the paper industry, Exel expects the
product group to increase its sales significantly towards the end of
the year.
The quotation situation with lattice masts continues to be strong, and
product group sales are expected to remain good in 2003.
Long-term profile development projects, concentrated mostly in the
automobile industry, the offshore sector, infrastructure construction
and wind energy, have proceeded according to plan. At the end of the
review period the company received its first major order for profiles,
to be used as a structural solution for windmill blades.
Sport division
The Sport division produces and markets high quality sports equipment
based on Exels composite technology. Exel is a leading supplier of
poles, floorball sticks under its own brand name, windsurfing masts
and laminates for the sports industry.
The net sales of the Sport division during the period totalled EUR 5.9
million (6.2). Profitability continued to be burdened by sales and
marketing costs related to the launch of the NFSTM (Nordic Fitness
SportsTM) concept, and by the deviations in the delivery schedules of
laminate and water sport products. The operating profit was EUR -0.4
million (0.1). Due to seasonality, the profit for the Sport division
will materialize in the third and fourth quarters. In the future, the
sales growth derived from the NFSTM concept will strengthen
seasonality.
Exels sales of Nordic Walking and Nordic Blading poles increased
significantly at the beginning of the year, nearly trebling in the
German speaking countries of Europe, and the market is still growing
rapidly in these countries. It is now safe to say that Nordic Walking
has made a breakthrough in the densely populated Central European
market. Exel will be the undisputed market leader in these product
categories in Central Europe in 2003. The company has also maintained
its market share in pre-season sales of conventional cross-country
skipoles, thanks to new product innovations and a new pricing
strategy.
In Finland, pre-season sales of new products that fall under the NFSTM
concept, e.g. Exel skis, Odlo and Bjorn Daehlie sports gear and Tubbs
snowshoes, have been moderate. The new products will reach consumers
in the autumn.
In water sports, the market for windsurfing masts continued to
decrease slightly. Sales in the first quarter declined compared to the
corresponding figures for 2002, mainly due to timing of some
deliveries at year-end 2002.
3 (7)
In laminates, January and February were quiet months in terms of
deliveries. Deliveries have been on the increase since March, and
sales for the whole year are expected to increase slightly. Sales to
new markets outside the sports industry developed according to plan
and yielded expected results. The operations of Exel GmbH will be
refocused in 2003.
The new floorball product range has been received well in terms of pre-
season sales. The first quarters sales have little effect on the
Groups sales. Deliveries to the main market area, Sweden, will be
improved in 2003. In connection to this, the company has decided to
close down the storage and dispatch operations of International
Gateway AB, and move them to the Mäntyharju logistics centre in
Finland. The Mäntyharju centre will be handling all deliveries to
customers also in Sweden, beginning this summer.
Sales and profits
Net sales have decreased slightly on the previous year. The
distribution of net sales by division was as follows:
Net sales
(EUR million) 1-3/2003 1-3/2002 Change
Industry 6.4 6.6 -2.1%
Sport 5.9 6.2 -6.2%
Total 12.3 12.8 -4.1%
The Groups operating profit was EUR 0.4 million (0.9). The decrease
was due to the Sport divisions lower sales volumes (mainly laminates
and water sports), the investments made to promote the NFSTM concept,
and the tight competition in some of the companys main markets.
However, profitability improved due to projects aimed at sharpening
production efficiency. The distribution of operating profit by
division, and change on the previous year, were as follows:
Operating profit
(EUR million) 1-3/2003 1-3/2002 Change
Industry 0.9 0.8 1.6%
Sport -0.4 0.1 -661.3%
Total 0.4 0.9 -54.0%
Net financial expenses
Net financial expenses totalled EUR 129,000 (112,000). There were no
significant changes or arrangements made in the Groups financing
during the review period.
Balance sheet, financing and liabilities
The balance sheet total decreased to EUR 32.0 million (35.0) due to a
slight decrease in business operations, and due to working capital
management and lower investments. Group depreciation exceeded
4 (7)
investments by EUR 0.4 million. Interest-bearing net liabilities
totalled EUR 9.2 million (11.1).
Investment
Group investments totalled EUR 0.4 million (0.7). Investments were
mainly concentrated on moulds and tools related to the development of
new products.
Personnel
Group personnel totalled 357 employees (373) on 31 March 2003.
Personnel numbers have decreased in the production operations of the
Sport division, and increased slightly in the sales department of Exel
GmbH Sport.
Shares and ownership
Exel Oyjs share capital is EUR 1,854,755, comprising 5,299,300 shares
each with a nominal value of EUR 0.35. The members of the Board of
Directors and the President hold a total of 98,100 shares, i.e. 1.8%
of all shares.
The number of shares traded on the Helsinki Exchanges during the
period under review amounted to 6.9% of all Exel shares. The highest
share price quoted during the period was EUR 7.14 and the lowest EUR
5.50. The closing price for the review period was EUR 5.90. Market
capitalisation totalled EUR 31.3 million on 31 March 2003.
Decisions of the Annual General Meeting
The Annual General Meeting held on 10 April 2003 re-elected Kari
Haavisto, Peter Hofvenstam, Vesa Kainu and Mika Sulin as members of
the Board. Ove Mattsson was elected as a new member. Ove Mattsson was
also elected as Chairman of the Board.
The Board of Directors of the company is authorised up until 10 April
2004 to decide to raise the company's share capital through one or
more share issues, to a maximum total of EUR 325,500. The
authorisation enables the Board to decide on who is entitled to
subscribe to the new shares, the subscription price, the principles of
determining the price, and on other terms and conditions of the share
issue. An exception to the shareholders pre-emptive subscription
rights can be made if there are pressing financial reasons from the
companys viewpoint. Such reasons may include financing, effecting or
enabling a corporate acquisition or some other form of co-operation;
consolidation or expansion of the company's financial or capital
structure; or the implementation of any other arrangement related to
corporate operations. Such a decision must not be made to benefit
company insiders. The Board is authorised to make decisions concerning
a new share issue, so that the shares may be subscribed against a
contribution in kind, or under other specified terms and conditions.
5 (7)
Prospects for the rest of 2003
The markets are expected to be tough during the remainder of the year.
Ongoing efficiency improvement programmes in the Finnish and German
factories are proceeding as planned and will result in cost
reductions. Exel estimates that the overall market conditions in the
second quarter of 2003 will be essentially the same as in the first
quarter of 2003.
Mäntyharju, May 12, 2003
Exel Oyj Ari Jokelainen
Board of Directors President
EXEL GROUP
CONSOLIDATED INCOME STATEMENT
EUR 1,000 1-3/03 1-3/02 change % 1-12/02
NET SALES 12,303 12,826 -4 51,203
Increase(+)/decrease(-) of finished
goods and work in progress 420 199 111 422
Production for own use 54 71 -24 251
Other operating income 94 223 -58 770
Materials and services -4,747 -5,005 -5 -20,175
Personnel expenses -3,491 -3,219 8 -13,198
Depreciation -815 -780 5 -3,318
Other operating expenses -3,397 -3,401 0 -12,153
OPERATING PROFIT 420 914 -54 3,802
Financial income and expenses (net) -129 -112 15 -655
PROFIT BEFORE EXTRAORDINARY ITEMS,
INCOME TAXES AND VOLUNTARY RESERVES 291 802 -64 3,147
Extraordinary items
PROFIT BEFORE VOLUNTARY RESERVES
AND INCOME TAXES 291 802 -64 3,147
Income taxes -98 -265 -63 -921
PROFIT FOR THE PERIOD 194 537 -64 2,225
The taxes taken into account are based on the profit for the period.
6 (7)
CONSOLIDATED BALANCE SHEET
EUR 1,000 31.3.03 31.3.02 change% 31.12.02
ASSETS
Non-current assets
Intangible assets 3,349 3,813 -12 3,521
Consolidation goodwill 384 455 -16 402
Tangible assets 10,403 11,531 -10 10,636
Investment 127 127 0 127
Current assets
Inventories 8,435 8,131 4 7,962
Receivables 8,342 8,900 -6 6,635
Cash in hand and at bank 1,030 1,994 -48 2,525
Total 32,069 34,951 -8 31,807
LIABILITIES AND SHAREHOLDERS EQUITY
Equity
Share capital 1,855 1,840 1 1,853
Other equity 13,280 13,098 1 13,086
Liabilities
Deferred tax liability 106 169 -37 106
Non-current 5,517 7,638 -28 6,223
Current 11,311 12,206 -7 10,538
Total 32,069 34,951 -8 31,807
FUNDS STATEMENT (EUR 1,000) 1-3/03 1-3/02 change% 1-12/02
Cash flow from business operations -511 165 -410 5,348
Investment in tangible and
intangible assets -395 -732 -46 -1,682
Income from surrender of tangible
and intangible assets 17 -100 57
Rights issue 147
Withdrawals of non-current loans 27 -100 71
Repayments of non-current loans -705 -725 -3 -2,205
Withdrawals of/repayments of
current loans 112 1,313 -91 679
Dividend paid -1,840
Other 4 -5 180
Change in liquid funds -1,495 60 -2,592 575
INDICATORS (EUR 1,000) 31.3.03 31.3.02 change% 31.12.02
Gross investment 395 715 -45 2 014
% of net sales 3% 6% 4%
R&D expenses 431 357 21 1,113
% of net sales 4% 3% 2%
Average personnel 356 382 -7 374
Personnel at end of period 357 373 -4 359
Order book 7,571 7,178 5 7,564
7 (7)
Solvency ratio, % 47% 43% 47%
Return on investment, % 6% 14% 14%
Net gearing, % 61% 74% 55%
Earnings per share, EUR 0.04 0.10 -64 0.42
Equity per share, EUR 2.86 2.82 1 2.82
Consolidated contingent liabilities on March 31, 2003
Corporate mortgages 12,500 12,500 12,500
Mortgages on land and buildings 2,954 2,954 2,954
Other contingent liabilities 2,569 2,806 2,694
Columns 1-3/03 and 1-3/02 are unaudited.