Consti Oyj — Interim / Quarterly Report 2018

Apr 27, 2018

Consti Group Plc Interim Report for January - March 2018

Consti Group Plc Interim Report for January - March 2018

CONSTI GROUP PLC FINANCIAL STATEMENTS BULLETIN 27 APRIL 2018, at 8.30 a.m.

Consti Group Plc Interim Report for January - March 2018

Net sales and order backlog grew

1-3/2018 highlights (comparison figures in parenthesis 1-3/2017):
* Net sales EUR 62.3 (57.3) million; growth 8.7%
* EBITDA EUR 0.2 (0.8) million and EBITDA margin 0.4% (1.3%)
* Operating profit/loss (EBIT) EUR -0.2 (0.3) million and EBIT margin -0.3%
(0.5%)
* Order backlog EUR 250.2 (212.9) million; growth 17.5%
* Free cash flow EUR -7.8 (-0.5) million
* Earnings per share EUR -0.04 (0.00)

Guidance on the Group outlook for 2018:
The Company estimates that its operating result for 2018 will grow compared to
2017.

+--------------------------------------+-------+-------+--------+-------+
|KEY FIGURES (EUR 1,000) | 1-3/ | 1-3/ |Change %| 1-12/ |
| | 2018 | 2017 | | 2017 |
+--------------------------------------+-------+-------+--------+-------+
|Net sales | 62,267| 57,268| 8.7 %|300,203|
+--------------------------------------+-------+-------+--------+-------+
|EBITDA | 231| 772| -70.1 %| 1,714|
+--------------------------------------+-------+-------+--------+-------+
|EBITDA margin, % | 0.4 %| 1.3 %|  | 0.6 %|
+--------------------------------------+-------+-------+--------+-------+
|Operating profit/loss (EBIT) | -201| 278|  | -375|
+--------------------------------------+-------+-------+--------+-------+
|Operating profit/loss (EBIT) margin, %| -0.3 %| 0.5 %|  | -0.1 %|
+--------------------------------------+-------+-------+--------+-------+
|Profit/loss for the period | -286| 17|  | -1,074|
+--------------------------------------+-------+-------+--------+-------+
|Order backlog |250,177|212,910| 17.5 %|225,721|
+--------------------------------------+-------+-------+--------+-------+
|Free cash flow | -7,801| -477|  | 8,936|
+--------------------------------------+-------+-------+--------+-------+
|Cash conversion, % | n/a|-61.8 %|  |521.4 %|
+--------------------------------------+-------+-------+--------+-------+
|Net interest-bearing debt | 20,295| 15,036| 35.0 %| 12,070|
+--------------------------------------+-------+-------+--------+-------+
|Gearing, % | 80.5 %| 49.7 %|  | 47.7 %|
+--------------------------------------+-------+-------+--------+-------+
|Return on investment, ROI % | -1.7 %| 22.8 %|  | -0.7 %|
+--------------------------------------+-------+-------+--------+-------+
|Number of personnel at period end | 1,053| 1,029| 2.3 %| 1,079|
+--------------------------------------+-------+-------+--------+-------+
|Earnings per share, undiluted (EUR) | -0.04| 0.00|  | -0.14|
+--------------------------------------+-------+-------+--------+-------+

CEO Esa Korkeela's comment

"Our net sales for the first quarter grew 8.7 percent and amounted to MEUR
62.3. Net sales growth continued especially good in Building Facades. Yet
despite net sales growth, our result did not yet rise to a satisfactory level,
though it improved significantly compared to the previous quarter. During the
reporting period we continued activities to improve productivity and
profitability. We completed the reorganising of our Technical Building Services
business area, and took several operating models into practise to improve
project steering and follow-up. Nevertheless, our result was still weakened by
the execution of the remaining performance obligations from certain already
identified projects that generate low gross margin on sales.

The share of low-margin projects in our order backlog has steadily decreased
during the beginning of the year. In addition, we received new orders amounting
to MEUR 72.7 during January-March, which is a 22.2 percent increase to the
comparative period. Consequently, our order backlog at the end of March, MEUR
250.2, was 17.5 percent larger than in the comparative period, which puts us in
a good position to return to a profitable growth path. Simultaneously, however,
we note that a project in our Renovation Contracting business area still has
open risks, which we have taken into account in the result for the first quarter
to the best of our ability.

We are continuing implementation of our updated strategy, placing emphasis on
activities aimed at improving profitability. In our profitability improving
activities we will continue highlighting the implementation of practises
relating to project steering and reporting, and clarifying profit and reporting
responsibilities.

The market environment for renovation and technical building services remained
good during the first quarter. I believe that our strong order backlog and the
positive demand for renovations and building technology form a solid foundation
for us to achieve profitability turnaround assuming that potentially expanding
labour dispute doesn't significantly affect the execution of our projects."

Operating environment

In Finland, nearly six percent of the GDP is spent on renovations, which is
significantly more than the European average. The Confederation of Finnish
Construction Industries RT estimated in its March review of market conditions
that the construction boom will continue, but growth will halt in 2019, mainly
due to the decrease in the amount of predicted new residential construction. RT
estimates positive growth prospects for renovation construction and expects its
steady growth to continue.

The Finnish Association of HPAC Technical Contractors' March survey of the
current economic situation also implies that new construction is levelling off.
The survey also showed that while the current market conditions remain
favourable, the pace is expected to slow down toward the end of the year. At the
time of the survey 82% of HVAC contractors felt the current market situation in
new construction was at least satisfactory. Approximately 89% of the respondents
said the current market situation was at least satisfactory in renovations and
85% felt it was at least satisfactory in maintenance.

The Confederation of Finnish Construction Industries RT's review of market
conditions estimated renovations to amount to approximately 13.1 billion euro in
2017, and predicts a two-percent growth for both this and the following year.
Availability of skilled workforce, however, remains a challenge hindering
renovation construction growth. Small apartment buildings have comprised a large
portion of new construction and thus RT mentions that there has been more
competition between new construction and renovation construction for the same
workforce.

The general economic climate has a significantly smaller impact on renovations
and technical building services than it does on new construction. Prerequisites
for office building renovations also improve with economic growth. In upcoming
years as well, renovation construction activity will be maintained by the aging
building stock, renovation debt built up throughout the years, changes in
building use purpose and energy efficiency requirements.

Outlook for 2018

Growth is expected to continue in renovation construction in 2018. The
Confederation of Finnish Construction Industries RT estimated in its March
review of market conditions that renovation construction in Finland will grow
2.0 percent from the previous year. Construction market forecasting network
Euroconstruct published a growth estimate in November 2017, in which it
estimated growth at 1.5 percent. The Finnish Association of HPAC Technical
Contractors' March survey of the current economic situation estimated that the
market conditions for building technology remain good, but predicted that the
market will slow down especially in new construction toward the end of the year.
This survey also mentioned that already ongoing and soon to be started projects
will, however, create work for building technology contractors well into next
year.

The Company estimates that its operating result for 2018 will grow compared to
2017.

Press conference

A press conference for analysts, portfolio managers and media will be arranged
on Friday 27 April 2018 at 10:00 a.m. (EET) at conference room Play of Hotel
Scandic Park Helsinki, address Mannerheimintie 46, Helsinki. The conference is
hosted by CEO Esa Korkeela and CFO Joni Sorsanen.

Financial communication in 2018

Half-year report 1-6/2018 will be published 26 July 2018
Interim report 1-9/2018 will be published 26 October 2018

CONSTI GROUP PLC

Further information:

Esa Korkeela, CEO, Consti Group Plc, Tel. +358 40 730 8568
Joni Sorsanen, CFO, Consti Group Plc, Tel. +358 50 443 3045

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 2017, Consti
Group's net sales amounted to 300 million euro. It employs over 1000
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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