Interim / Quarterly Report • Feb 21, 2023
Interim / Quarterly Report
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Ponsse's Financial Statements for 1 January - 31 December 2022
PONSSE PLC, STOCK EXCHANGE RELEASE, 21 FEBRUARY 2023, 9:00 a.m.
PONSSE'S FINANCIAL STATEMENTS FOR 1 JANUARY - 31 DECEMBER 2022
October-December (continuing operations):
- Net sales amounted to EUR 224.6 (173.2) million
- Operating profit totalled EUR 11.7 (9.1) million, equalling 5.2 (5.3) per cent
of net sales
January-December (continuing operations):
- Net sales amounted to EUR 755.1 (608.3) million
- Operating profit totalled EUR 46.6 (50.0) million, equalling 6.2 (8.2) per
cent of net sales
- Net result was EUR 34.2 (35.2) million
- Earnings per share were EUR 1.22 (1.26)
- Order books stood at EUR 353,7 (312.6) million at the end of period under
review
- Cash flow from business operations was EUR -17.9 (102.4) million (continuing
and discontinued operations)
- Equity ratio was 55.0 (60.7) per cent at the end of period under review
(continuing and discontinued operations)
- Ponsse has classified the sold functions as assets for sale and reported them
as discontinued operations. Unless otherwise specified, the figures presented in
this financial statements refer to continuing operations. The balance sheet has
not been adjusted for the comparison period. The cash flow statement has not
been adjusted.
- The Board of Directors´ dividend proposal is EUR 0.60 (0.60) per share
- The company's euro-denominated operating profit in 2023 is expected to be
slightly higher than the operating profit of its continuing operations in 2022
(EUR 46.6 million).
PRESIDENT AND CEO JUHO NUMMELA:
For Ponsse, 2022 started driven by strong order books, and the market situation
looked good. In the previous year, Russia had grown into the world's largest
market for cut-to-length forest machines, also being the largest export market
for Ponsse. The situation changed dramatically when Russia invaded Ukraine in
February. The sanctions imposed by the EU and the withdrawal of western
companies quickly froze Russia's forest machine market. The war had an extensive
impact on Ponsse's business operations
All exports of forest machines and their spare parts to Russia and Belarus were
stopped immediately at the beginning of March. The company's Board of Directors
decided to suspend the operations of Ponsse's Russian subsidiary OOO Ponsse and
start the divestment of operations in Russia. Deed of sale regarding the sale of
Ponsse's largest and most profitable subsidiary was signed in June. While the
decision was correct and the only possible course of action, it was still
painful in many ways. Operations in Russia accounted for a fifth of Ponsse
Group's net sales and a third of its operating profit. In the end, the company's
order flow was relatively good during the year at roughly EUR 796 million.
During the final quarter of the year, the forest machine market calmed down
slightly, while our order flow was roughly EUR 213 million despite the
situation. As the availability of parts improved, the factory caught up with its
schedules, and we were able to effectively deliver machines to our customers.
Our net sales were EUR 224.6 million, driven by the delivery of new machines and
the good situation in maintenance. Our customers were very well employed
throughout the year.
During the final quarter, the difficulties experienced by Ponsse's subsidiary
Ponsse Latin America Ltda in Brazil escalated quickly. Ponsse Latin America Ltda
is responsible for extensive full service agreements. Regarding one full service
agreement, the operational challenges resulted in a situation where the company
was forced to recognise write-downs and prepare for the current year's
challenges. As a result, Ponsse's net sales for the final quarter remained at
EUR 11.7 million.
Ponsse's performance was relatively good given the extremely difficult global
situation, and we were able to offset the loss of the Russian subsidiary in our
net sales. During the year, our net sales were roughly EUR 755 million, and our
maintenance services and technology company Epec showed excellent growth.
However, we were unable to adjust our profitability as quickly. The suspended
operations in Russia, the problems with the availability of parts and
components, dramatic inflation rates, and the challenges experienced by our
subsidiary Ponsse Latin America Ltda in Brazil reduced the company's
profitability and cash flows.
During the year, the problems with the availability of parts and components
often escalated unexpectedly which was reflected in an increase in the Vieremä
factory's inventory values and in stocks of nearly finished forest machines. In
contrast, our used machine stocks made relatively good progress throughout the
year. Our cash flow from business operations was EUR -17.9 million.
In 2022, we launched new products and services at a quick pace. The most
significant launches were PONSSE Mammoth, the latest addition to our forwarder
range with its 25-tonne capacity, PONSSE Scorpion Giant, our new harvester
model, the PONSSE H8 harvester head, and a large number of new maintenance
service solutions. Our new product features seek to make operators' work easier
and improve ergonomics. These included the cabin suspension system PONSSE Active
Cabin, the rotating PONSSE Active Seat, and the PONSSE Manager Satellite, which
enables satellite connections in forest machines. We also took our first step
towards electric forest machines. The fully electric powertrain of PONSSE EV1, a
technological forwarder concept, has been developed with our technology company
Epec. The solution is a strong indication of our direction and role as part of
fossil-free forestry.
NET SALES
Consolidated net sales for the period under review amounted to EUR 755.1 (608.3)
million, which is 24.1 per cent more than in the comparison period.
International business operations accounted for 79.1 (75.9) per cent of net
sales.
Net sales were regionally distributed as follows: Northern Europe 38.0 (41.0)
per cent, Central and Southern Europe 21.4 (22.4) per cent, North and South
America 36.5 (31.9) per cent and other countries 4.0 (4.6) per cent.
1-12/22 1-12/21
Net sales from continuing operations 755,123 608,271
Net sales from discontinued operations 32,561 141,727
Net sales total 787,684 749,998
PROFIT PERFORMANCE
The operating profit amounted to EUR 46.6 (50.0) million. The operating profit
equalled 6.2 (8.2) per cent of net sales for the period under review.
1-12/22 1-12/21
Operating profit from continuing operations 46,577 49,998
Operating profit from discontinued operations 5,844 25,023
Operating profit total 52,421 75,021
Consolidated return on capital employed (ROCE) stood at 13.0 (20.7) per cent.
Staff costs for the period totalled EUR 107.9 (87.7) million. Other operating
expenses stood at EUR 85.3 (55.1) million. Our operating profit includes EUR 8.5
million in write-downs and provisions related to a loss-producing full service
agreement of Ponsse Latin America Ltda.
The net total of financial income and expenses amounted to EUR -3.5 (-1.9)
million. Exchange rate gains and losses due to currency rate fluctuations and
interest swap appreciation were recognised under financial items, the former
having a net impact of EUR -4.3 (-1.1) million and the latter bringing in EUR
3.1 million over the period under review. The parent company's receivables from
subsidiaries stood at EUR 77.9 (37.3) million net. Receivables from subsidiaries
mainly consist of trade receivables, with unregistered tax receivables from
unrealised exchange rate losses from unhedged items related to the measurement
of trade receivables having an impact on the Group's effective tax rate. The
parent company has measured a net investment in Ponsse Latin America Ltda at
fair value by recognising a credit loss provision of EUR 19.0 million in trade
receivables, as the subsidiary's operational performance and liquidity has
decreased. Result for the period under review totalled EUR 34.2 (35.2) million.
Diluted and undiluted earnings per share (EPS) came to EUR 1.22 (1.26).
STATEMENT OF FINANCIAL POSITION AND FINANCING ACTIVITIES
At the end of the period under review, the total consolidated statements of
financial position amounted to EUR 593.7 (512.6) million. Inventories stood at
EUR 229.6 (167.4) million. Trade receivables totalled EUR 62.3 (43.5) million,
while cash and cash equivalents stood at EUR 73.5 (120.9) million. Group
shareholders' equity stood at EUR 321.8 (297.3) million and parent company
shareholders' equity (FAS) at EUR 233.5 (226.8) million. The amount of interest
-bearing liabilities was EUR 96.3 (54.8) million. The company has ensured its
liquidity by credit facility limits and commercial paper programs, of which 21
per cent are used at the end of the period under review. Group's loans from
financial institutions are non-collaretal bank loans without financial
covenants. Consolidated net liabilities totalled EUR 19.8 (-66.1) million, and
the debt-equity ratio (net gearing) was 6.0 (-22.2) per cent. The equity ratio
stood at 55.0 (60.7) per cent at the end of the period under review.
Cash flow from operating activities amounted to EUR -17.9 (102.4) million. Cash
flow from investment activities came to EUR -46.8 (-24.1) million.
IMPACTS OF THE WAR IN UKRAINE
Ponsse condemns the Russian military attack on Ukraine.
Our operating environment has changed drastically and it is affecting Ponsse's
operations. Russia's invasion of Ukraine has forced the European Union and
United States to respond and impose rigid sanctions against Russia. In
compliance with export sanctions and the company's policy, Ponsse suspended all
sales and export operations to Russia and Belarus effective 2 March 2022. At the
same time, the operations of the local Russian subsidiary OOO Ponsse were
discontinued.
In its release issued on 28 June 2022, Ponsse announced that it has signed a
deed of sale regarding the sale of all shares in OOO Ponsse to the Russian
company OOO Bison. The company has previously announced that it will complete
the sale of its Russian subsidiary by the end of the third quarter of this
financial period. While the process to complete the transaction is continuing,
it has not yet been approved by the Russian authorities. The delay is caused by
a regulation entered into force in Russia on 8 September 2022, relating to the
approval of sales of companies owned by foreign parties. Ponsse aims to complete
the sale as soon as possible, depending on the approval process of the Russian
authorities.
The war in Ukraine is hampering to a great extent the operation of the
manufacturing networks. Russia, Belarus and Ukraine have played a significant
role in the supply chains of the European steel industry, while Russia has
played a critical role as an energy supplier to Europe. As a result of the war,
the availability of raw materials used in steel production has declined
significantly and rising energy prices have pushed up the costs of steel
processing. In addition, Ukraine has supplied, inter alia, gases used in the
semiconductor manufacturing process, which has been reflected in the shortage of
semiconductors. The delivery capacity of the manufacturing networks has
decreased and inflation has significantly risen as a result of the crisis.
In the challenging situation, Ponsse's strong financial position is important.
The company's financial position has remained strong due to good liquidity and
binding credit limit facilities agreed with financial institutions. In terms of
financing, Ponsse has carried out all measures necessary to ensure business
continuity and financial situation is regularly evaluated.
In order to strengthen cybersecurity, Ponsse has clarified software update
policy and user manual.
IMPACT OF THE COVID-19 PANDEMIC
The covid-19 pandemic has caused changes in the company's operating environment
and operating practices. The company has avoided large-scale infections and has
not had to interrupt operations at any point. The company has complied with all
recommendations of the health authorities and the premise for decision-making
has been the health and safety of the customers and Ponsse's employees.
ORDER INTAKE AND ORDER BOOKS
Order intake for the period totalled EUR 796.2 (770.7) million, while period-end
order books were valued at EUR 353.7 (312.6) million.
DISTRIBUTION NETWORK AND GROUP STRUCTURE
The subsidiaries included in the Ponsse Group are Ponsse AB, Sweden; Ponsse AS,
Norway; Ponssé S.A.S., France; Ponsse UK Ltd, the United Kingdom; Ponsse
Machines Ireland Ltd, Ireland, Ponsse North America, Inc., the United States;
Ponsse Latin America Ltda, Brazil; Ponsse Uruguay S.A., Uruguay; OOO Ponsse,
Russia; Ponsse Asia-Pacific Ltd, Hong Kong; Ponsse China Ltd, China; Ponsse
Chile SpA, Chile; Ponsse Czech s.r.o., Czech Republic and Epec Oy, Finland.
The Group includes also the OOO Ponsse wholly owned property company Ponsse
Centre in Russia, EAI PON1V Holding Oy in Finland and Sunit Oy in Finland, which
is Ponsse Plc's associate with a holding of 34 per cent.
Ponsse has completed on 17 March 2022 the acquisition of the asset items related
to its business activities in Chile and on 1 April 2022 the share acquisition
related to its business activities in the Czech Republic.
In its release issued on 28 June 2022, Ponsse announced that it has signed a
deed of sale regarding the sale of all shares in OOO Ponsse to the Russian
company OOO Bison. While the process to complete the transaction is continuing,
it has not yet been approved by the Russian authorities.
R&D AND CAPITAL EXPENDITURE
Group's R&D expenses during the period under review totalled EUR 27.7 (23.8)
million, of which EUR 12.7 (9.2) million was capitalised.
Investments during the period under review totalled EUR 41.9 (24.9) million. It
consisted in addition to capitalised R&D expenses of investments in buildings
and ordinary maintenance and replacement investments for machinery and
equipment.
ANNUAL GENERAL MEETING
Annual General Meeting was held in Vieremä, Finland 7 April 2022. The AGM
approved the parent company financial statements and the consolidated financial
statements, and members of the Board of Directors and the President and CEO were
discharged from liability for the 2021 financial period.
The AGM decided to pay a dividend of EUR 0.60 per share for 2021 (dividends
totaling EUR 16,800,000). The dividend payment record date was 11 April 2022,
and the dividends were paid on 20 April 2022. The AGM also decided to authorise
the Board to decide on paying a dividend of at most EUR 0.25 per share at a
later date. The shareholders did not demand minority dividends to be
distributed. Ponsse's Board of Directors resolved on 15 November 2022 not to use
authorization given to it, and no additional dividend was paid for the financial
year 2021.
Annual General Meeting authorised the Board of Directors to decide on the
acquisition of treasury shares so that a maximum of 250,000 shares can be
acquired in one or several instalments. The maximum amount corresponds to
approximately 0.89 per cent of the company's total shares and votes.
The shares will be acquired through public trading, for which reason the shares
will be acquired otherwise than in proportion to the share ownership of the
shareholders, and the consideration to be paid for the shares will be the market
price of the company's share in public trading at Nasdaq Helsinki Ltd at the
time of the acquisition. Shares may also be acquired outside public trading at a
price which at most corresponds to the market price in public trading at the
time of the acquisition. The Board of Directors will be authorised to resolve
upon how the shares are acquired. The Board may, pursuant to the authorisation,
only decide upon the acquisition of treasury shares using the company's
unrestricted shareholders' equity.
The Board of Directors will resolve upon how the shares are acquired. The
company's treasury shares may be repurchased otherwise than in proportion to the
shares held by the shareholders (directed repurchase), if there is a weighty
financial reason for the company to do so as provided for in chapter 15, section
6 of the Finnish Limited Liability Companies Act. The company's treasury shares
may be acquired to develop the company's capital structure, to be used to
finance or execute possible acquisitions or investments supporting the company's
growth strategy or other arrangements related to the company's business, to be
used in the company's incentive schemes or otherwise to be transferred, held, or
cancelled.
The decision to repurchase or redeem the company's treasury shares cannot be
made so that the shares of the company in the possession of the company and its
subsidiaries would exceed 10% of all shares.
The authorisation is valid until the end of the next Annual General Meeting;
however, no later than 30 June 2023. The authorisation cancels the authorisation
given to the Board of Directors at the AGM of 7 April 2021.
The Annual General Meeting authorised the Board of Directors to decide on the
issuance of shares as well as the issuance of options and other special rights
entitling to shares in one of more tranches as laid down in chapter 10, section
1 of the Limited Liability Companies Act as follows:
The number of shares to be issued based on the authorisation may in total amount
to a maximum of 250,000 shares (including shares issued based on options or
special rights), corresponding to approximately 0.89 per cent of all shares in
the company.
The Board of Directors will decide on the terms and conditions of the issuance
of shares, options and other special rights entitling to shares. The
authorisation concerns both the issuance of new shares as well as the transfer
of treasury shares either against payment or without consideration. The issuance
and transfer of shares, options and other special rights entitling to shares may
be carried out in deviation from the shareholders' pre-emptive right (directed
issue) for a weighty financial reason for the company, such as using the shares
to develop the company's capital structure, to execute possible acquisitions or
investments supporting the company's growth strategy or in other arrangements
related to the company's business, or to be used in the company's incentive
schemes. The Board of Directors may also decide on a free share issue to the
company itself.
The authorisation is valid until the end of the next Annual General Meeting;
however, no later than 30 June 2023. The authorisation cancels the authorisation
given to the Board of Directors to decide on the transfer of treasury shares and
the issuance of new shares at the AGM of 7 April 2021.
BOARD OF DIRECTORS AND THE COMPANY'S AUDITORS
Jarmo Vidgrén acted as Chairman of the Board and Mammu Kaario as Vice Chairman
of the Board. Members of the Board were Matti Kylävainio, Ilpo Marjamaa, Juha
Vanhainen, Janne Vidgrén, Juha Vidgrén and Jukka Vidgrén.
The Board of Directors did not establish any committees or commissions from
among its members.
The Board of Directors convened fourteen times during the period under review.
The attendance rate was 94.4 percent.
During the period under review, KPMG Oy Ab acted as the company auditor with Ari
Eskelinen, Authorised Public Accountant, as the principal auditor.
MANAGEMENT
The following persons were members of the Management Team: Juho Nummela,
President and CEO, acting as the chairman; Petri Härkönen, Deputy CEO, CFO; Juha
Inberg, Technology and R&D Director; Marko Mattila, Sales, Service and Marketing
Director; Tapio Mertanen, Service Director; Paula Oksman, HR Director; Miika
Soininen, Director of IT and Digital Services and Tommi Väänänen, Director of
Delivery Chain Process. The company management has regular management liability
insurance.
Tiina Kautonen has been appointed Ponsse Plc's new CHRO and a member of the
Management Team starting from 1 January 2023. She will replace Paula Oksman who
will retire after working as the company's HR Director since 2005.
The international PONSSE service network is led by Marko Mattila, the Group's
Sales, Service and Marketing Director, and Tapio Mertanen, Service Director.
Managing directors of Ponsse's subsidiaries and Jussi Hentunen report to Marko
Mattila, Ponsse Plc's sales and marketing director. Group area directors report
to Jussi Hentunen, Director, Dealer Development.
The geographical distribution and the responsible persons are presented below.
Northern Europe:
Jani Liukkonen (Finland),
Carl-Henrik Hammar (Sweden, Denmark and Norway) and
Tarmo Saks (the Baltic countries).
Central and Southern Europe:
Tuomo Moilanen (Germany and Austria),
Jean Sionneau (France),
Janne Tarvainen (Spain and Portugal),
Gary Glendinning (United Kingdom and Ireland),
Antti Räsänen (Hungary, Italy, Romania, Slovenia, Croatia, Serbia and Bulgaria),
Tarmo Saks (Poland and Slovakia) and
Jakub Hacura (Czech Republic).
Russia and Asia:
Mihail Menshikov (Russia and Belarus),
Janne Tarvainen (Australia and South Africa) and
Risto Kääriäinen (China and Japan).
North and South America:
Pekka Ruuskanen (the United States),
Eero Lukkarinen (Canada),
Fernando Campos (Brazil) and
Martin Toledo (Uruguay, Chile and Argentina).
PERSONNEL
The Group had an average staff of 2,016 (1,825) during the period and employed
1,988 (1,933) people at period-end.
SHARE PERFORMANCE
The company's registered share capital consists of 28,000,000 shares. The
trading volume of Ponsse Plc shares for 1 January - 31 December 2022 totalled
1,219,318, accounting for 4.4 per cent of the total number of shares. Share
turnover amounted to EUR 36.6 million, with the period's lowest and highest
share prices amounting to EUR 22.80 and EUR 44.40, respectively.
At the end of the period, shares closed at EUR 25.30, and market capitalisation
totalled EUR 708.4 million.
At the end of the period under review, the company held 10 227 treasury shares.
CERTIFIED MANAGEMENT SYSTEMS
Ponsse Plc is committed to observing the following standards: ISO 9001 for
quality management systems, ISO 14001 for environmental management systems, and
ISO 45001 for occupational health and safety management systems. The purpose of
management systems is to standardise our group's operations and ensure our
company's continuous development.
In 2022, LRQA re-certified the company's management systems. According to the
regular audit programme, the group conducted internal audits and audited the
supplier and distribution network based on Ponsse's operating processes.
Ponsse Uruguay S.A, part of Ponsse Group, has been ISO 9001 and ISO 45001
certified since 2020. Ponsse Latin America Ltda, our Brazilian subsidiary, was
ISO 9001 certified in 2021. Ponsse's Finnish subsidiary Epec Oy was awarded ISO
27001 certification for its information security management system in 2021. Epec
develops and produces Ponsse data system solutions. Epec Oy also has the
following certifications: ISO 9001 for quality management systems, ISO 14001 for
environmental management systems, and ISO 45001 for occupational health and
safety management systems.
SUSTAINABLE DEVELOPMENT
Our management systems steer the implementation of Ponsse's sustainable
development principles and responsible leadership. At Ponsse, sustainable
development means taking the economic, social and ecological points of view and
the principles related to them equally into account in the company's operations.
According to the point of view of ecological sustainability we want to avoid and
minimise the negative impacts of our products, services, operations and
decisions on biodiversity, the ecosystem and sufficiency of natural resources.
We evaluate the lifetime environmental impacts of our products according to the
life cycle assessment specified in ISO 14040. Our investments in minimising the
fuel consumption and emissions of our products, as well as the damage they can
cause to trees and the soil, and the continuous development of our service
processes also influence the sustainability of our customers' operations.
To maintain social sustainability, we ensure people's occupational health and
safety, exercise equal and fair treatment, and support employment and the
development of a skilled workforce.
In economical sustainability, we focus on profitability, cash flow from business
operations, and growth to ensure our company's financial performance in the long
term. This brings stability and continuity to local communities and society all
across our global field of operations.
GOVERNANCE
In its decision-making and administration, the company observes the Finnish
Limited Liability Companies Act, other regulations governing publicly listed
companies and the company's Articles of Association. The company's Board of
Directors has adopted the Code of Governance that complies with the Finnish
Corporate Governance Code approved by the Board of the Securities Market
Association. The purpose of the code is to ensure that the company is
professionally managed and that its business principles and practices are of a
high ethical and professional standard.
The Code of Governance is available on Ponsse's website in the Investors
section.
NON-FINANCIAL INFORMATION REPORTING
Each year, Ponsse publishes its responsibility report in conjunction with its
annual report. The report is also available on the company's website under
responsibility and investors.
RISK MANAGEMENT
Risk management is based on the company's values, as well as strategic and
financial objectives. Risk management aims to support the achievement of the
objectives specified in the company's strategy, as well as to ensure the
financial development of the company and the continuity of its business.
Furthermore, risk management aims to identify, assess and monitor business
-related risks which may influence the achievement of the company's strategic
and financial goals or the continuity of its business. Decisions on the
necessary measures to anticipate risks and react to observed risks are made on
the basis of this information.
Risk management is a part of regular daily business, and it is also included in
the management system. Risk management is controlled by the risk management
policy approved by the Board.
A risk is any event that may prevent the company from reaching its objectives or
that threatens the continuity of business. On the other hand, a risk may also be
a positive event, in which case the risk is treated as an opportunity. Each risk
is assessed on the basis of its impact and probability. Methods of risk
management include avoiding, mitigating and transferring risks. Risks can also
be managed by controlling and minimising their impact.
SHORT-TERM RISK MANAGEMENT
Our major short-term risks are caused by Russia's invasion of Ukraine. The
invasion has shaken the global economy and increased the price of energy and raw
materials. In combination with the economic effects of the covid-19 pandemic,
the situation has limited the availability of components and increased
manufacturing costs. The delivery risks related to semiconductors have also
increased due to tensions between China and Taiwan.
General delivery problems in our supply chain have made it more difficult to
manage PONSSE forest machine production schedules, tied up more capital in the
supply chain, and increased the risks related to working capital management.
Sudden economic fluctuations and the continuing rise of inflation may pose
further risks to the availability of parts, delay machine deliveries, and
increase costs, weakening our profitability. The instability of the world
economy and increasing financing costs may also reduce demand for forest
machines.
The impacts of the war in Ukraine on Ponsse's operations are described in more
detail in section “IMPACTS OF THE WAR IN UKRAINE”.
The effects of the covid-19 pandemic are described in section “IMPACT OF THE
COVID-19 PANDEMIC” of this release.
The uncertainty may also be increased by the volatility of developing countries'
foreign exchange markets. The geopolitical situation will increase the
uncertainty through financial market operations and sanctions. Changes taking
place in the fiscal and customs legislation in countries to which Ponsse exports
may hamper the company's export trade or its profitability.
The parent company monitors the changes in the Group's internal and external
trade receivables and the associated risk of impairment. The company has long
-term and extensive service contracts, which may involve operational and
financial risks.
The reorganisation in Russia may be associated with uncertainty regarding the
approval process for the sale of foreign-owned companies and compliting the
transaction. While the process to complete the transaction is continuing, it has
not yet been approved by the Russian authorities. The delay is caused by a
regulation entered into force in Russia on 8 September 2022, relating to the
approval of sales of companies owned by foreign parties. Ponsse aims to complete
the sale as soon as possible, depending on the approval process of the Russian
authorities.
The key objective of the company's financial risk management policy is to manage
liquidity, interest and currency risks. The company ensures its liquidity
through credit limit facilities agreed with a number of financial institutions.
The effect of adverse changes in interest rates is minimised by utilising credit
linked to different reference rates and by concluding interest rate swaps. The
effects of currency rate fluctuations are partly mitigated through derivative
contracts.
Accounting policies requiring consideration by management and crucial factors of
uncertainty associated with estimates
Estimates and assumptions regarding the future have to be made during the
preparation of the financial statements, and the outcome may differ from the
estimates and assumptions. Group management utilises their best judgement when
making decisions regarding accounting policies and their adoption. Estimates
made when compiling the financial statements are based on the management's best
views on the closing date of the reporting period. The estimates are based on
previous experience and assumptions about the future that are deemed the most
likely on the balance sheet date.
Trade receivables
On the date of the financial statements, the Group recognises a credit loss on
receivables for which no payment will probably be received according to its best
judgement. The general model specified in IFRS 9 is applied when recognising
provision for expected credit losses.
Inventories
On the date of the financial statements, the Group recognises impairment losses
according to its best judgement. The assessment takes into account the age
structure of the inventory and the likely selling price.
Change in guarantee provision
The guarantee provision is based on realised guarantee expenses and on failure
history recorded in the previous years. In addition, company may prepare
provision for possible individual warranty obligations, if needed.
Change in other provisions
The group has recognised a provision in the item of other provisions based on an
agreement entered into by Ponsse Latin America Ltda, as the fulfilment of the
contractual obligations is estimated to generate expenses that exceed the
expected economic benefits obtained from the agreement. The provision has been
measured based on the best possible estimate of the expenses arising from the
fulfilment of the obligations on the closing date.
Capitalisation of R&D expenditure
On the date of the financial statements, the Group assesses whether the new
product is technically feasible, whether it can be commercially utilised and
whether future economic benefits will be received from the product, which makes
it possible to capitalise development expenditure arising from the design of new
or advanced products on the balance sheet as intangible assets.
Accounting of configuration or customisation costs in a cloud computing
arrangement
In April 2021, the IFRS Interpretations Committee published its final agenda
decision on the accounting of configuration or customisation costs in a cloud
computing arrangement (IAS 38 Intangible Assets). In this agenda decision, the
Interpretations Committee determined when an intangible asset in relation to the
configuration or customisation of application software can be recognized. IFRIC
agenda decisions have no date when they enter into force, and they are expected
to be applied as soon as possible.
Because the Group uses cloud computing arrangements, it has analysed the impact
on the accounting principles applied to the deployment costs of cloud services.
Based on this analysis, it was concluded that the IFRIC agenda decision has an
impact on the earlier accounting treatment related to costs in cloud computing
arrangements. As a result of the analysis, Group has expensed cloud computing
related costs which clearly do not give rise to an intangible asset.
EVENTS AFTER THE PERIOD
Katja Paananen, M.A., has been appointed the Chief Responsibility Officer of
Ponsse Plc and a member of the Management Team starting from 16 January 2023.
Paananen will report to Petri Härkönen, CFO and Deputy CEO, and her workplace
will be in Vieremä.
OUTLOOK FOR THE FUTURE
The company's euro-denominated operating profit in 2023 is expected to be
slightly higher than the operating profit of its continuing operations in 2022
(EUR 46.6 million).
The crisis in Ukraine increases risks due to reduced availability of parts and
components and rising costs. In cooperation with the supplier network,
sustainable solutions are being sought to manage the risk. Ponsse is rigorously
prioritizing its investments and the enhanced cost control will be continued.
We monitor Ponsse Latin America Ltda -subsidiary's situation in an enhanced
manner and together with the customer, Ponsse takes measures to improve the
situation. The company has made reservations for the current year based on the
best estimate.
ANNUAL GENERAL MEETING
Ponsse Plc's Annual General Meeting will be held on 12 April 2023, starting at
11:00 a.m. at the place and in a way to be announced later.
BOARD OF DIRECTORS' PROPOSAL FOR THE DISPOSAL OF PROFIT
The parent company Ponsse Plc had 187,606,472.17 euros of distributable funds on
31 December 2022.
The company's Board of Directors proposes to the Annual General Meeting that a
dividend of EUR 0.60 per share shall be paid for the year 2022. The company's
Board of Directors proposes to the Annual General Meeting that a profit bonus of
at most EUR 100 per person per working month be paid for 2022 to the personnel
employed by the Group.
PONSSE GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1,000)
1-12/22 1-12/21
NET SALES 755,123 608,271
Increase 33,633 12,696
(+)/decrease (-) in
inventories of
finished goods and
work in progress
Other operating 3,677 2,924
income
Raw materials and -525,040 -411,049
services
Expenditure on -107,873 -87,655
employment-related
benefits
Depreciation and -27,671 -20,140
amortisation
Other operating -85,270 -55,050
expenses
OPERATING PROFIT 46,577 49,998
Share of results of 147 19
associated companies
Financial income and -3,504 -1,911
expenses
RESULT BEFORE TAXES 43,219 48,107
Income taxes -9,037 -12,936
NET RESULT FROM THE 34,182 35,171
CONTINUING
OPERATIONS
Net result from the 2,930 19,903
discontinued
operations
NET RESULT FOR THE 37,113 55,073
PERIOD
OTHER ITEMS INCLUDED
IN TOTAL
COMPREHENSIVE
RESULT:
Translation 4,354 3,915
differences related
to foreign units
TOTAL COMPREHENSIVE 41,467 58,989
RESULT FOR THE
PERIOD
Diluted and 1.22 1.26
undiluted earnings
per share from
continuing
operations
Diluted and 0,10 0.71
undiluted earnings
per share from
discontinued
operations
Diluted and 1,33 1.97
undiluted earnings
per share
10-12/22 10-12/21
NET SALES 224,607 173,210
Increase -3,367 -6,074
(+)/decrease (-) in
inventories of
finished goods and
work in progress
Other operating 1,335 1,066
income
Raw materials and -145,225 -111,065
services
Expenditure on -28,744 -24,907
employment-related
benefits
Depreciation and -7,323 -5,065
amortisation
Other operating -29,594 -18,052
expenses
OPERATING PROFIT 11,689 9,112
Share of results of 38 -20
associated companies
Financial income and -1,267 -224
expenses
RESULT BEFORE TAXES 10,460 8,868
Income taxes -448 -646
NET RESULT FROM THE 10,012 8,222
CONTINUING
OPERATIONS
Net result from the 2,170 7,639
discontinued
operations
NET RESULT FOR THE 12,182 15,861
PERIOD
OTHER ITEMS INCLUDED
IN TOTAL
COMPREHENSIVE
RESULT:
Translation -11,079 489
differences related
to foreign units
TOTAL COMPREHENSIVE 1,103 16,350
RESULT FOR THE
PERIOD
Diluted and 0.36 0.29
undiluted earnings
per share from
continuing
operations
Diluted and 0.08 0.28
undiluted earnings
per share from
discontinued
operations
Diluted and 0.44 0.57
undiluted earnings
per share
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000)
ASSETS 31 Dec 22 31 Dec 21
NON-CURRENT ASSETS
Intangible assets 49,583 42,087
Goodwill 5,707 3,801
Property, plant and equipment 114,732 112,127
Financial assets 375 373
Investments in associated companies 881 785
Non-current receivables 63 173
Deferred tax assets 4,422 3,360
TOTAL NON-CURRENT ASSETS 175,763 162,706
CURRENT ASSETS
Inventories 229,648 167,414
Trade receivables 62,305 43,394
Income tax receivables 1,013 938
Other current receivables 24,817 17,270
Cash and cash equivalents 73,451 120,900
TOTAL CURRENT ASSETS 391,234 349,916
Assets held for sale 21,651
TOTAL ASSETS 588,648 512,622
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 7,000 7,000
Other reserves 3,460 3,460
Translation differences 12,701 8,347
Treasury shares -274 -2
Retained earnings 298,926 278,462
EQUITY OWNED BY PARENT COMPANY SHAREHOLDERS 321,813 297,267
NON-CURRENT LIABILITIES
Interest-bearing liabilities 42,484 49,851
Deferred tax liabilities 942 967
Other non-current liabilities 81 87
TOTAL NON-CURRENT LIABILITIES 43,507 50,905
CURRENT LIABILITIES
Interest-bearing liabilities 53,804 4,945
Provisions 10,647 4,550
Tax liabilities for the period 4,664 901
Trade creditors and other current liabilities 153,476 154,054
TOTAL CURRENT LIABILITIES 214,591 164,450
Liabilities related to assets held for sale 738
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 588,648 512,622
CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000)
Continuing and discontinued operations
1-12/22 1-12/21
CASH FLOWS FROM OPERATING ACTIVITIES:
Net result for the period 37,113 55,073
Adjustments:
Financial income and expenses 5,893 1,836
Change in provisions 6,291 -429
Share of the result of associated companies -147 -19
Depreciation and amortisation 28,853 25,251
Income taxes 9,562 18,131
Other adjustments -3,753 -1,016
Cash flow before changes in working capital 83,812 98,827
Change in working capital:
Change in trade receivables and other receivables -21,858 -12,835
Change in inventories -67,087 -22,371
Change in trade creditors and other liabilities -4,173 57,525
Interest received 309 190
Interest paid -1,627 -1,062
Other financial items 600 279
Income taxes paid -7,921 -18,126
NET CASH FLOWS FROM OPERATING ACTIVITIES (A) -17,945 102,429
CASH FLOWS USED IN INVESTING ACTIVITIES
Investments in tangible and intangible assets -41,917 -24,856
Proceeds from sale of tangible and intangible assets 612 776
Acquisition of subsidiaries* -5,516 0
NET CASH FLOWS USED IN INVESTMENT ACTIVITIES (B) -46,821 -24,080
CASH FLOWS FROM FINANCING ACTIVITIES
Withdrawal/Repayment of current loans 29,575 -61,031
Withdrawal of non-current loans 11,170 0
Withdrawal/Repayment of finance lease liabilities -3,755 -3,113
Dividends paid -16,800 -16,800
NET CASH FLOWS FROM FINANCING ACTIVITIES (C) 20,191 -80,943
Change in cash and cash equivalents (A+B+C) -44,575 -2,594
Cash and cash equivalents on 1 Jan 120,900 123,611
Impact of exchange rate changes 220 -116
Cash and cash equivalents on 31 Dec 76,545 120,900
*) Acquisition of subsidiaries Ponsse Chile SpA, Chile and Ponsse Czech s.r.o.,
Czech Republic decreased by cash and cash equivalents at the time of acquisition
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR 1,000)
A = Share
capital
B = Share
premium and
other reserves
C = Translation
differences
D = Treasury
shares
E = Retained
earnings
F = Total
shareholders'
equity
EQUITY OWNED
BY PARENT
COMPANY
SHAREHOLDERS
A B C D E F
SHAREHOLDERS' 7,000 3,460 8,347 -2 278,462 297,267
EQUITY 1
JAN 2022
Comprehensive
result:
Net result 37,113 37,113
for the period
Other items
included in
total
comprehensive
result:
Translation 4,353 4,353
differences
Total 4,353 37,113 41,466
comprehensive
result for the
period
Direct entries 89 89
to retained
earnings
Transactions
with
shareholders
Share Plan 63 63
Dividend -16,800 -16,800
distribution
Acquisition -272 -272
of treasury
shares
Transactions -272 -16,737 -17,009
with
shareholders in
total
Other changes
SHAREHOLDERS' 7,000 3,460 12,701 -274 298,927 321,813
EQUITY 31 DEC
2022
SHAREHOLDERS' 7,000 3,460 4,431 -2 240,149 255,038
EQUITY 1
JAN 2021
Comprehensive
result:
Net result 55,073 55,073
for the period
Other items
included in
total
comprehensive
result:
Translation 3,916 3,916
differences
Total 3,916 55,073 58,989
comprehensive
result for the
period
Direct entries 7 7
to retained
earnings
Transactions
with
shareholders
Share Plan 33 33
Dividend -16,800 -16,800
distribution
Acquisition
of treasury
shares
Transactions -16,767 -16,767
with
shareholders in
total
Other changes
SHAREHOLDERS' 7,000 3,460 8,347 -2 278,462 297,267
EQUITY 31 DEC
2021
*) Treasury
shares procured
for incentive
schemes;
further details
are included in
the financial
statements
NOTES TO THE
RELEASE FOR THE
ANNUAL
FINANCIAL
STATEMENTS
The stock
exchange
release
for the annual
financial
statements has
been prepared
observing the
recognition and
valuation
principles of
IFRS, and the
requirements of
IAS 34 have
been
complied with.
The same
accounting
principles were
observed for
the
closing of the
books as for
the
annual
financial
statements
dated
31 December
2021.
The above
figures have
not
been audited.
The above
figures have
been rounded
and
may therefore
differ from
those given in
the official
financial
statements.
This
communication
includes future
-oriented
statements that
are based on
the
assumptions
currently made
by the
company's
management and
its current
decisions and
plans. Although
the management
believes that
the future
expectations
are
well founded,
there is no
certainty that
these
expectations
will prove to
be
correct. This
is
why the results
may
significantly
deviate from
the
assumptions
included in the
future-oriented
statements as a
result of,
among
other things,
changes in the
economy,
markets,
competitive
conditions,
legislation or
currency
exchange rates.
The company
founded EAI
PON1V Holding
Oy
on 5 July 2022
for the purpose
of managing
incentive
schemes, buying
and selling the
related Ponsse
Plc securities,
and acting as a
party to
financial
agreements.
Ponsse has
completed on 17
March 2022 the
acquisition of
the asset items
related to its
business
activities in
Chile and on 1
April 2022 the
share
acquisition
related to its
business
activities in
the Czech
Republic.
1. SEGMENT
INFORMATION
(EUR
1,000)
The Group has
operating
segments based
on a
geographical
division of
regions. The
operating
segments are
based on
reporting used
by the Group
Management Team
in operational
decision
-making.
The group has
changed its
segmentation,
when the
operations in
Russia have
been
classified as
discontinued
operations and
assets held for
sale in
accordance with
the IFRS 5
standard and
are
not included in
the report of
continuing
operations.
OPERATING
SEGMENTS
1-12/2022
Northern
Central and
North and
Other
Total
Europe
Southern
South
countries
Europe
America
Net sales of
the 466,889
166,662
279,138
30,877
943,565
segments
Revenues
between
-179,838
-4,856
-3,422 -327
-188,443
segments
NET SALES FROM
287,052
161,806
275,715
30,549
755,123
EXTERNAL
CUSTOMERS
Operating
result -1,399
18,284
22,740
4,777
44,403
of the segment
Unallocated
2,174
items
OPERATING
RESULT -1,399
18,284
22,740
4,777
46,577
DEPRECIATION
AND 23,180
927
3,357 207
27,671
AMORTISATION
OPERATING
SEGMENTS
1-12/2021
Northern
Central and
North and
Other
Total
Europe
Southern
South
countries
Europe
America
Net sales of
the 479,306
140,391
213,970
28,177
861,845
segments
Revenues
between
-229,725
-3,918
-19,787 -144
-253,574
segments
NET SALES FROM
249,580
136,473
194,184
28,033
608,271
EXTERNAL
CUSTOMERS
Operating
result 3,294
17,730
26,915
4,167
52,106
of the segment
Unallocated
-2,108
items
OPERATING
RESULT 3,294
17,730
26,915
4,167
49,998
DEPRECIATION
AND 17,104
736
2,072 228
20,140
AMORTISATION
31 31
Dec Dec
22 21
2. LEASING 1,047 775
COMMITMENTS
(EUR 1,000)
3. CONTINGENT 31 31
LIABILITIES Dec Dec
(EUR 1,000) 22 21
Guarantees 0 20
given on behalf
of others
Responsibility 6,100 7,272
of checking the
VAT deductions
made on real
property
investments
Other 200 112
commitments
TOTAL 6,300 7,404
To item other provisions the Group has recognised a provision in the item of
other provisions based on an agreement entered into by Ponsse Latin America
Ltda, as the fulfilment of the contractual obligations is estimated to generate
expenses that exceed the expected economic benefits obtained from the agreement.
The provision has been measured based on the best possible estimate of the
expenses arising from the fulfilment of the obligations on the closing date.
5. BUSINESS COMBINATIONS
Ponsse Group will be independently responsible for its sales, spare parts and
maintenance services in the Czech Republic. On 4 February 2022, Ponsse signed a
deed of sale and has completed the share transaction related to its business
activities in the Czech Republic on 1 April 2022. Ponsse purchased all shares in
Křenek Forest Service s.r.o., its PONSSE forest machine and service dealer in
the Czech Republic. Ponsse Czech s.r.o., a subsidiary wholly owned by Ponsse, is
responsible for Ponsse's sales, spare parts and maintenance activities in the
Czech Republic.
The transaction price was not made public by the parties' mutual agreement, and
the price has no impact on the measurement of Ponsse's value. Ponsse's local
market share is approximately 20 per cent in cut-to-length harvesting.
The operations of Ponsse Czech s.r.o are included in the figures for Central and
Southern Europe in segment reporting. Their impact on the group's figures is
minor.
The goodwill generated through business combinations is EUR 1.9 million. The
accounting of business combinations can be adjusted during the period under
review, which however is not longer than one year starting from the acquisition
date.
6. DISCONTINUED OPERATIONS
On 28 June 2022, Ponsse has signed a deed of sale regarding the sale of all
shares in OOO Ponsse to the Russian company OOO Bison. While the process to
complete the transaction is continuing, it has not yet been approved by the
Russian authorities. Ponsse aims to complete the sale as soon as possible.
Ponsse has classified the sold functions as assets for sale and reported them as
discontinued operations.
The reorganisation has no material impact on profit, and no significant
impairment or sales profit due to the sale has been recorded in the income
statement for the period under review. The cumulative RUB/EUR translation
difference was EUR 5.1 million at the end of year 2022. The cumulative
translation difference will be recognised as income on the income statement once
the sale has been concluded. RUB/EUR average rate of 74.26313 and closing rate
of 79.14900 is used in financial statements.
PROFIT AND LOSS STATEMENT FROM DISCONTINUED OPERATIONS (EUR 1,000)
1-12/22 1-12/21
NET SALES 32,561 141,727
Increase -1,992 -195
(+)/decrease (
-) in
inventories of
finished goods
and work in
progress
Other 497 648
operating
income
Raw materials -17,320 -88,301
and services
Expenditure on -4,246 -15,180
employment
-related
benefits
Depreciation -1,182 -5,111
and
amortisation
Other -2,472 -8,566
operating
expenses
OPERATING 5,844 25,023
PROFIT
Financial -2,389 75
income and
expenses
RESULT BEFORE 3,456 25,098
TAXES
Income taxes -526 -5,195
NET RESULT FOR 2,930 19,903
THE PERIOD
THE EFFECT OF DISCONTINUED OPERATIONS ON THE STATEMENT OF FINANCIAL POSITION
(EUR 1,000)
31 Dec 22
ASSETS RELATED TO ASSETS HELD FOR SALE
Intangible assets 18
Property, plant and equipment 8,183
Deferred tax assets 582
Inventories 6,846
Trade receivables 2,305
Income tax receivables 368
Other current receivables 255
Cash and cash equivalents 3,094
ASSETS RELATED TO ASSETS HELD FOR SALE TOTAL 21,651
LIABILITIES RELATED TO ASSETS HELD FOR SALE
Interest-bearing liabilities 12
Deferred tax liabilities 26
Tax liabilities for the period 3
Trade creditors and other current liabilities 697
LIABILITIES RELATED TO ASSETS HELD FOR SALE TOTAL 738
STATEMENT OF CASH FLOWS FROM DISCONTINUED OPERATIONS (EUR 1,000)
1-12/22 1-12/21
Cash flows -10,712 19,881
from
operating
activities
Cash flows 4,235 -989
used in
investing
activities
Cash flows -21 -72
from
financing
activities
Cash flows -6,499 18,821
for the
period under
review
KEY FIGURES 31 Dec 22 31 Dec 21
AND RATIOS
R&D 27.7 23.8
expenditure,
MEUR
Capital 41.9 24.9
expenditure,
MEUR
as % of net 5.6 4.1
sales
Average 2,016 1,825
number of
employees
Order books, 353.7 312.6
MEUR
Equity ratio, 55.0 60.7
%
Diluted and 1.22 1.26
undiluted
earnings per
share (EUR),
continuing
operations
Diluted and 0.10 0.71
undiluted
earnings per
share (EUR),
discontinued
operations
Diluted and 1.33 1.97
undiluted
earnings per
share (EUR)
Equity per 11.49 10.62
share (EUR)
Order intake, 796.2 770.7
MEUR
FORMULAE FOR FINANCIAL INDICATORS
Return on capital employed, % (including discontinued operations):
Result before taxes + financial expenses
Shareholder´s equity + interest-bearing financial liabilities (average during
the year) * 100
Average number of employees:
Average of the number of personnel at the end of each month from continuing
operations. The calculation has been adjusted for part-time employees.
Net gearing, % (including discontinued operations):
Interest-bearing financial liabilities - cash and cash equivalents
Shareholders' equity * 100
Equity ratio, % (including discontinued operations):
Shareholders' equity + Non-controlling interests
Balance sheet total - advance payments received * 100
Earnings per share, continuing operations:
Net result from continuing operations for the period - Non-controlling interests
Average number of shares during the accounting period, adjusted for share issues
Earnings per share, discontinued operations:
Net result from discontinued operations for the period - Non-controlling
interests
Average number of shares during the accounting period, adjusted for share issues
Earnings per share (including discontinued operations):
Net result for the period - Non-controlling interests
Average number of shares during the accounting period, adjusted for share issues
Equity per share (including discontinued operations):
Shareholders' equity
Number of shares on the balance sheet date, adjusted for share issues
Order intake:
Net sales from continuing operations for the period + Change in order books from
continuing operations during the period
Vieremä, 21 February 2023
PONSSE PLC
Juho Nummela
President and CEO
FURTHER INFORMATION
Juho Nummela, President and CEO, tel. +358 400 495 690
Petri Härkönen, CFO, tel. +358 50 409 8362
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
www.ponsse.com
Ponsse Plc is a company specialising in the sales, manufacture, servicing and
technology of cut-to-length method forest machines and is driven by genuine
interest in its customers and their business. Ponsse develops and manufactures
sustainable and innovative harvesting solutions based on customers' needs.
The company was established by forest machine entrepreneur Einari Vidgrén in
1970, and it has been a leader in timber harvesting solutions based on the cut
-to-length method ever since. Ponsse is headquartered in Vieremä, Finland. The
company's shares are quoted on the NASDAQ OMX Nordic List.
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