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Uponor Oyj Interim / Quarterly Report 2013
3245_rns_2013-07-26_a3b8f270-d5a3-4343-b734-3d8d386cfdf8.pdf
Interim / Quarterly Report
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uponor
INTERIM REPORT 2013
26 July 2013
uponor
Uponor's performance stays on track, thanks to a strong U.S. offsetting weakness in Europe
- U.S. building demand remained strong while demand in Europe continued lacklustre
- Net sales reported for April–June totalled €211.4 (218.1) million, a downward change of 3.0%
- Operating profit for April–June came to €19.7 (16.1) million, up by 22.0%
- Net sales in January–June totalled €389.1 (410.6) million, down 5.2%
- Operating profit for January–June came to €25.8 (25.4) million, a change of 1.6%
- January–June earnings per share amounted to €0.21 (0.18)
- January–June return on investment was 14.7% (15.4%), and gearing was 74.5 (74.8)
- January–June cash flow from business operations improved to -€9.3 (-28.2) million
- Uponor does not offer financial guidance for the second half of 2013
(This interim report has been compiled in accordance with the IAS 34 reporting standard, and it is unaudited. The figures in the report are for continuing operations unless otherwise stated. 'Reporting period' refers to January–June.)
President and CEO Jyri Luomakoski comments:
- I am happy to be able to report a strong second-quarter performance improvement supported mainly by the strong residential market in the USA and the stable input cost environment that helped our Infrastructure Solutions business, in particular.
- We are very pleased with the news we can now report regarding Uponor's Infrastructure Solutions segment. The merger with KWH Pipe is now completed, and we are progressing at good speed in integration of the two companies' businesses into one strong entity, Uponor Infra Oy.
- The new build market outlook in Europe looks grim. Similarly, regardless of a massive and growing need for building and municipal infrastructure renovation across the continent, there is very little confidence for investment.
Webcast and presentation material
Upon the release of this report, the presentation material for the interim report will be available at www.uponor.com > Investors > News & downloads.
A webcast on interim results will be broadcast in English on Friday, 26 July 2013, at 14:00 EET. Connection details are available at www.uponor.com > Investors. Questions for the webcast can be submitted in advance to [email protected]. Once completed, the webcast will be available for viewing at www.uponor.com > Investors > News & downloads shortly after the financial information is published.
Uponor Corporation will release its interim report for January–September 2013 on Friday, 25 October 2013. For a silent period from 1 to 25 October, Uponor will not comment on market prospects or factors affecting business and performance, nor will the company engage in discussion of events or trends related to the reporting period or the current fiscal period.
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INTERIM REPORT JANUARY – JUNE 2013
Markets
The business environment in Europe, Uponor's key region in terms of business volume, remained difficult and much as it has been in recent quarters, with few positive signals emerging that could help turn the tide. Public expenditure, especially building- and construction-related investment, continued to be scarce. Also, businesses and consumers were cautious in their building- and living-related spending, curbed by limited access to financing and a general lack of confidence in the economy. In contrast to Europe's, the U.S. building industry's indicators continued their recovery, thus giving promise of wider recovery of the country's economy and increasing confidence amongst consumers and businesses.
Reflecting the subdued general economic environment, building and construction markets in Europe remained weak or weakened even further throughout most of the region. Exceptions to this trend included some Eastern European countries, such as Russia and the Baltic countries. The decline in demand for building solutions was strongest in Southern Europe and the UK. In Germany, regardless of good construction-industry indicators, the expected pick-up after the weak first quarter did not materialise. The development was a touch better in the Nordic countries than for most parts of the continent. Demand did remain weak in Denmark and Finland, and also in Sweden, where some weak signals of stabilisation were, however, noted. The Norwegian building market stayed resilient but relaxed slowly from the lively levels witnessed in previous quarters.
All European markets were characterised by very tight competition amongst suppliers of products, with a tendency to cut margins in favour of maintaining employment and securing capacity utilisation. The period also saw a number of exits from the market throughout the value chain.
In North America, building-market demand continued to grow briskly in the USA – in the single-family market, in particular – while the Canadian market continued to stabilise to a more sustainable level from the peak volumes witnessed in 2012.
Infrastructure Solutions demand in Northern Europe remained relatively stable but low, largely because of the long winter that extended until April, in clear contrast to the previous year.
Net sales
Uponor's net sales for continuing operations in the second quarter came to €211.4 (€218.1) million, down 3.0 per cent year on year, also in organic terms, reflecting the weak European building markets. Amongst the 10 biggest countries, only net sales in the USA grew from the comparison period.
The caution that prevailed in Europe kept overall demand weak and hindered the expected recovery after the wintry first quarter, influencing the infrastructure solutions markets in the Nordic countries and building solutions sales in Central Europe, in particular. Net sales' development in Building Solutions – Europe was most resilient in the commercial project business, which is less sensitive to shorter-term variations.
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In Building Solutions - North America, net sales continued to show strong growth in the USA, where plumbing sales for the non-residential market in particular picked up. With a strong market presence in the single-family sector, Uponor also benefited from the continued strength of the housing market. In Canada, net sales declined slightly as a result of the building market normalising since the peak period in 2012.
Net sales by segment (April–June):
| M€ | 4–6/2013 | 4–6/2012 | Change |
|---|---|---|---|
| Building Solutions – Europe | 124.3 | 133.2 | -6.7% |
| Building Solutions – North America | 43.8 | 38.9 | 12.6% |
| (Building Solutions – North America, USD | 57.2 | 49.7 | 14.9%) |
| Infrastructure Solutions | 45.0 | 47.6 | -5.4% |
| Eliminations | -1.7 | -1.6 | |
| Total | 211.4 | 218.1 | -3.0% |
January–June net sales came to €389.1 (410.6) million, down 5.2 per cent from the comparison period. Organic net sales saw negative growth and were down 3.3 per cent, excluding the impact of Hewing GmbH, the German subsidiary that was divested at the end of the first quarter of 2012.
Currency translations in January–June 2013 had no net influence on net sales, thanks to the strong SEK compensating for the weakening of other major currencies.
Net sales by segment (January–June):
| M€ | 1–6/2013 | 1–6/2012 | Change |
|---|---|---|---|
| Building Solutions – Europe | 238.2 | 266.2 | -10.5% |
| Building Solutions – North America | 81.0 | 69.9 | 15.8% |
| (Building Solutions – North America, USD | 106.2 | 91.1 | 16.5%) |
| Infrastructure Solutions | 72.6 | 77.3 | -6.1% |
| Eliminations | -2.7 | -2.8 | |
| Total | 389.1 | 410.6 | -5.2% |
Results and profitability
Uponor’s consolidated gross margin for continuing operations in the second quarter was 39.1%, showing a year-on-year rise of 1.8 percentage points that mainly reflects the positive developments in North America and the stable input cost environment in the Infrastructure Solutions business, both of which helped to offset the negative leverage effect in Building Solutions – Europe.
Operating profit for continuing operations in the second quarter totalled €19.7 (16.1) million, up 22.0 per cent in year-on-year terms. Profitability measured by the operating profit margin improved to 9.3 per cent from the 7.4 per cent reported a year ago.
Operating profit margin development was largely driven by stable resin-price trends in Infrastructure Solutions, top-line growth in Building Solutions – North America, and improvements in production efficiency and careful management of overhead spending in all operations.
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Operating profit by segment (April–June):
| M€ | 4–6/2013 | 4–6/2012 | Change |
|---|---|---|---|
| Building Solutions – Europe | 11.1 | 12.2 | -8.7% |
| Building Solutions – North America | 6.6 | 4.1 | 58.6% |
| (Building Solutions – North America, USD | 8.6 | 5.3 | 61.4%) |
| Infrastructure Solutions | 4.3 | 2.2 | 92.4% |
| Others | -1.9 | -2.6 | |
| Eliminations | -0.4 | 0.2 | |
| Total | 19.7 | 16.1 | 22.0% |
Profit before taxes for April–June totalled €17.6 (13.9) million. The influence of taxes on profits was €5.8 million, while the amount of taxes in the comparison period was €5.1 million. Profit for the second quarter came to €11.8 (8.8) million.
January–June operating profit came to €25.8 (25.4) million, up 1.6 per cent from the comparison period being largely due to the weak first quarter of 2013. Profitability, or the operating profit margin, was 6.6 per cent, with the year-on-year figure being 6.2 per cent.
Thanks to consistent cost and efficiency management, overheads in the first half-year were below those of the comparison period, mainly driven by savings in Building Solutions – Europe and in Infrastructure Solutions and the divestment of Hewing GmbH in the first quarter.
Earnings per share for January–June totalled €0.21 (0.18), both basic and diluted. Equity per share was €2.68 (2.63), basic and diluted.
Operating profit by segment (January–June):
| M€ | 1–6/2013 | 1–6/2012 | Change |
|---|---|---|---|
| Building Solutions – Europe | 17.8 | 23.9 | -25.2% |
| Building Solutions – North America | 11.2 | 6.8 | 64.9% |
| (Building Solutions – North America, USD | 14.7 | 8.8 | 65.8%) |
| Infrastructure Solutions | 0.6 | 0.3 | 92.9% |
| Others | -3.1 | -5.0 | 36.8% |
| Eliminations | -0.7 | -0.6 | |
| Total | 25.8 | 25.4 | 1.6% |
Investments and financing
The period's largest ongoing investment is the manufacturing expansion in the USA's Apple Valley, Minnesota facility, which was initiated in May. Adding some 1,600 square metres of mostly manufacturing space in connection with the existing premises, the extension is expected to be completed by year end, with production commencing in early 2014. The investment will increase Uponor's capital expenditure by some €12 million in 2013. Other ongoing investments were related mainly to maintenance and development.
In January–June, gross investments in fixed assets came to €10.4 (7.8) million. This was clearly below depreciation, which came to €14.4 (14.2) million. The cash flow from business operations improved to -€9.3 million, from -€28.2 million.
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Uponor continues to pay attention to keeping its liquidity at a good level. There remains a risk of bad debts in Europe, in particular; therefore, Uponor is active in following up on trade receivables, among other elements, in order to manage risk.
The main existing funding programmes on 30 June 2013 included an €80 million bond maturing in 2018 and a €20 million bond maturing in 2016. Uponor's available committed bilateral credit facilities come to €190 million, with none of this amount in use at the end of the reporting period. At end of period, there was €41.0 million in commercial papers issued under the €150 million domestic commercial-paper programme.
The Group's solvency ratio improved slightly to 35.5 per cent (34.4 per cent) due to better performance and a reduction in net working capital. Net interest-bearing liabilities amounted to € 146.2 (143.9) million. The period-end cash balance was €7.3 (7.7) million. Gearing was 74.5 (74.8) per cent.
Key events
With effect from 1 April 2013, Uponor introduced a new organisation aimed at increasing the speed, agility, and simplicity of its European operations. The changes mainly pertained to the segment Building Solutions – Europe. The new set-up employs a structure organised by function, in contrast to the earlier, partly geographical distribution of responsibilities.
In April 2013, the Board of Adjustment of the Finnish Tax Authority rejected Uponor's appeal for rectification of an earlier decision of the Tax Authority requiring Uponor Business Solutions Oy to pay €14.4 million in back taxes and penalties in the case concerning the market-based transfer pricing of Uponor's internal service charges. Uponor has placed the issue before the administrative court and will apply for rectification of the Board of Adjustment's ruling, while seeking a counter-rectification associated with taxable income in countries where the company should, according to the Board of Adjustment, have charged service fees.
In June, the Board of Adjustment of the Finnish Tax Authority rejected, for the most part, Uponor's appeal on a €0.5 million transfer price issue concerning the parent company Uponor Corporation. Uponor will seek a rectification of the ruling.
On 24 May, the Finnish Market Court approved the plan arranged between Uponor Corporation and the KWH Group to merge their infrastructure solutions businesses into a jointly owned enterprise, Uponor Infra Oy. The Market Court's approval was subject to two conditions: that Uponor Infra Oy agree to offer contract manufacturing of selected product ranges up to agreed volumes to other pipe manufacturers operating in the Finnish market and that Uponor Infra Oy agree to sell off seven specified extrusion lines. Uponor and the KWH Group accepted the above conditions, which were included in their joint reply to the Market Court in the spring, and, since there were no appeals against the court's decision, the companies finalised the contracts at the end of June. New subsidiary company Uponor Infra Oy commenced operations on 1 July 2013. In connection with this transaction, Uponor acquired KWH Pipe Oy's domestic PEX pipe business in late June for a sales price of €4.1 million. The thirteen people employed by this business were transferred to the payroll of Uponor Suomi Oy, honouring their service contracts.
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In North America, Uponor celebrated two third-party recognitions of the company's operations. The Minnesota Manufacturers' Alliance named Uponor 'Manufacturer of the Year', largely because of the company's emphasis and commitment to continuous improvement and lean manufacturing, while the Minneapolis-based Star Tribune newspaper ranked Uponor amongst the region's top 100 workplaces, on the basis of employee feedback.
The second quarter saw a number of new product launches. From Indoor Climate, a new system for energy-efficient renovation of residential buildings, called Renovis, was launched in Germany and the UK, with good customer feedback. In Plumbing, a new-generation composite pipe was launched in Iberia, based on a totally new seamless manufacturing technology, as a first in the industry. Demand for the new product exceeded expectations, and more than one million metres of pipe were produced in the first few months. Further, the existing Quick & Easy system offering was strengthened by a new development of the Q&E ring for fitting the pipe. As far as Infrastructure Solutions is concerned, Uponor launched, in all relevant markets, a new Ultra Double sewer system whose integrated socket can reduce the number of joints needed during installation by up to one half.
In addition, during the first quarter, Uponor's new Nordic distribution centre commenced operations in Sweden.
Human resources and administration
The number of Group employees (full-time equivalent) in continuing operations averaged 3,067 (3,128) during the period under review, showing a decrease of 61 employees from the equivalent period in 2012. At the end of the period, the Group had 3,156 (3,126) employees, up by 30 from the end of the comparison period, reflecting an increase in the employee numbers in North America, a contrast to the reduction in personnel in the European operations.
In connection with the organisation change of 1 April, the following changes in responsibility were implemented within the Executive Committee: Heiko Folgmann was appointed Executive Vice President, Sales and Marketing, for Building Solutions – Europe, also assuming responsibility for Group brand management. Fernando Roses was appointed as Executive Vice President for Offering and Supply Chain for Building Solutions – Europe, while also assuming Group-wide responsibility for research and technology and for sustainability. Sebastian Bondestam was appointed Executive Vice President, Infrastructure Solutions, while also continuing to be responsible for the Group's supply-chain management and development. In connection with the changes Robin Carlsson, until then responsible for Infrastructure Solutions, left the company.
Share capital and shares
Uponor Corporation's share capital amounts to €146,446,888, and the number of shares is 73,206,944. There were no changes in the share capital or shares during the reporting period.
The number of Uponor shares traded on the NASDAQ OMX Exchange in Helsinki in the second quarter was 3.3 (4.3) million, with the value of the trading totalling €41.6 (36.7)
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million. The market value of the share capital at the end of the period was €0.8 (0.5) billion, and the number of shareholders was 16,766 (18,588).
At period end, the company held 140,378 of its own shares, acquired in the final quarter of 2008 for use in the company's share-based incentive programmes.
In the AGM held on 18 March 2013, the Board of Directors was authorised to buy back, at maximum, 3.5 million of the company's own shares, amounting to 4.8 per cent of the full number of shares of the company. These shares may be bought back by means of distributable earnings from unrestricted equity. The authorisation is valid until the end of the next annual general meeting and for no longer than 18 months.
The AGM approved the proposed dividend of €0.38 per share for 2012, and it was paid out in March 2013.
Events after the reporting period
1 July 2013 saw the launch of the new subsidiary, Uponor Infra Oy, owned jointly by Uponor Corporation and the KWH Group, with holdings of 55.3 per cent and 44.7 per cent, respectively. The company combines all of the infrastructure pipe solutions businesses of the owners. Uponor Infra Oy is consolidated in Uponor Corporation as the Infrastructure Solutions segment, from 1 July. The new organisation thus is to be included in the financial reporting for the first time in the January–September 2013 interim report.
Uponor Infra Oy has a board of directors consisting of four persons: Jyri Luomakoski, President and CEO (chair), and Riitta Palomäki, CFO, both from Uponor, and Peter Höglund, President and CEO, and Kjell Antus, CFO, both representing the KWH Group. This board of directors appointed Sebastian Bondestam as the managing director of Uponor Infra Oy. Bondestam has been a member of the Uponor Executive Committee since 1 April 2007, and he continues in that role. In April 2013, he assumed the role of EVP for Infrastructure Solutions at Uponor, having served for several years as Supply Chain EVP prior to that.
On 1 July, Uponor announced the cancellation of its financial guidance for the 2013 financial year, issued on 12 February 2013. The guidance stated that the company expects its net sales and operating profit to show modest organic growth from 2012. The guidance was based on the company's then current business portfolio and organisational setup. The reason for the cancellation was that it had become void as a result of the start-up of the new joint venture, Uponor Infra Oy. Uponor stated that it plans to issue new guidance in connection with the presentation of the 2013 financial statements in February 2014.
Short-term outlook
Developments in Uponor's two key geographic areas, Europe and North America, are clearly diverging in several ways. Trying to recover from the economic crisis that has already continued for several years, Europe has not been able to find a political way out and is likely to suffer from a lengthy zero-growth period going forward. Regardless of the reasonably healthy building market, the late start to the building season in Germany –
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Europe's largest economy – will have an impact on full-year volumes, and the outcome is also shadowed by concerns about the strength of the German economy.
The North American economy is also weak and to a great extent dependent on the economic drivers in the rest of the world, but strong drivers of domestic demand there are offering a great deal of help in getting the economy back on track.
For the reasons stated above, building and construction demand in Europe is expected to remain weak while in North America demand is expected to gain momentum, although there are risks in that scenario as well.
Uponor continues to be prepared for lengthy protraction of the current low activity levels, with limited expectations of market growth. The main factors supporting business growth are lively renovation activity, longer-term trends of sustainability and low-energy building, and increased preparation for extreme weather conditions, all of which favour Uponor's indoor climate, plumbing, and infrastructure solutions.
With the new European organisation introduced in April and the new joint-venture company for infrastructure solutions established on 1 July 2013, Uponor is actively utilising the momentum to develop its operations targeting increased agility, improved efficiency, and higher customer satisfaction. The management are keeping a special eye on the company's focus, cost-efficiency, and cash flow. Further actions to reduce overheads and other costs may become necessary in selected markets, if the economic outlook stays weak.
At the same time, Uponor maintains support for its various growth initiatives, to benefit from its strong range of new product and system innovation and to utilise the tailwind its sustainable product portfolio is enjoying in the markets.
Uponor's 1 July cancellation of its guidance for 2013 was, as mentioned above, due to structural changes arising from the launch of the new joint venture (Uponor Infra). New guidance is to be expected in February 2014, in connection with the publishing of the 2013 Financial Statements.
As always, Uponor's financial performance may be affected by a range of strategic, operational, financial, and hazard risks. A more detailed risk analysis is provided in the 'Key risks associated with business' section of the 2012 Financial Statements.
Uponor Corporation
Board of Directors
For further information, please contact:
Jyri Luomakoski, President and CEO, tel. +358 20 129 2824
Riitta Palomäki, CFO, tel. +358 20 129 2822
Tarmo Anttila
Vice President, Communications
Tel. +358 20 129 2852
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DISTRIBUTION:
NASDAQ OMX Helsinki
Media
www.uponor.com
Uponor is a leading international provider of plumbing and indoor climate solutions for residential and commercial building markets across Europe and North America. In Northern Europe, Uponor is also a prominent supplier of infrastructure pipe systems. The Group employs approx. 3,000 persons, in 30 countries. In 2012, Uponor's net sales exceeded €810 million. Uponor Corporation is listed on NASDAQ OMX Helsinki in Finland. http://www.uponor.com.
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INTERIM REPORT JANUARY – JUNE 2013
Table part
This interim report has been compiled in accordance with the IAS 34 reporting standard and it is unaudited. The figures in brackets are the reference figures for the equivalent period in 2012. The change percentages reported have been calculated from the exact figures and not from the rounded figures published in the interim report.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| M€ | 1-6/2013 | 1-6/2012 | 4-6/2013 | 4-6/2012 | 1-12/2012 |
|---|---|---|---|---|---|
| Continuing operations | |||||
| Net sales | 389.1 | 410.6 | 211.4 | 218.1 | 811.5 |
| Cost of goods sold | 237.3 | 254.6 | 128.8 | 136.7 | 500.7 |
| Gross profit | 151.8 | 156.0 | 82.6 | 81.4 | 310.8 |
| Other operating income | 0.2 | 0.7 | 0.1 | 0.4 | 0.9 |
| Dispatching and warehousing expenses | 16.2 | 15.9 | 8.0 | 8.1 | 31.8 |
| Sales and marketing expenses | 80.2 | 82.5 | 40.2 | 41.3 | 161.3 |
| Administration expenses | 21.3 | 24.7 | 10.2 | 12.5 | 44.6 |
| Other operating expenses | 8.5 | 8.2 | 4.6 | 3.8 | 16.3 |
| Operating profit | 25.8 | 25.4 | 19.7 | 16.1 | 57.7 |
| Financial expenses, net | 3.2 | 4.5 | 2.1 | 2.2 | 8.6 |
| Share of results in associated companies | 0.0 | 0.1 | 0.0 | 0.0 | 0.3 |
| Profit before taxes | 22.6 | 21.0 | 17.6 | 13.9 | 49.4 |
| Income taxes | 7.5 | 7.7 | 5.8 | 5.1 | 16.5 |
| Profit for the period from continuing operations | 15.1 | 13.3 | 11.8 | 8.8 | 32.9 |
| Discontinued operations | |||||
| Profit for the period from discontinued operations | 0.0 | 0.0 | 0.0 | 0.0 | -0.1 |
| Profit for the period | 15.1 | 13.3 | 11.8 | 8.8 | 32.8 |
| Other comprehensive income | |||||
| Items that will not be reclassified subsequently to profit or loss | |||||
| Re-measurements on defined benefit pensions, net of taxes | - | - | - | - | -1.1 |
| Items that may be reclassified subsequently to profit or loss | |||||
| Translation differences | 2.6 | 3.2 | -0.4 | 4.5 | 0.6 |
| Cash flow hedges, net of taxes | 0.4 | -0.5 | 0.2 | -0.3 | -0.7 |
| Net investment hedges | -1.7 | -2.5 | 1.1 | -2.7 | -3.5 |
| Other comprehensive income for the period, net of taxes | 1.3 | 0.2 | 0.9 | 1.5 | -4.7 |
| Total comprehensive income for the period | 16.4 | 13.5 | 12.7 | 10.3 | 28.1 |
| Profit/loss for the period attributable to | |||||
| - Equity holders of parent company | 15.1 | 13.3 | 11.8 | 8.8 | 32.8 |
| Comprehensive income for the period attributable to | |||||
| - Equity holders of parent company | 16.4 | 13.5 | 12.7 | 10.3 | 28.1 |
| Earnings per share, € | 0.21 | 0.18 | 0.16 | 0.12 | 0.45 |
| - Continuing operations | 0.21 | 0.18 | 0.16 | 0.12 | 0.45 |
| - Discontinued operations | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Diluted earnings per share, € | 0.21 | 0.18 | 0.16 | 0.12 | 0.45 |
| - Continuing operations | 0.21 | 0.18 | 0.16 | 0.12 | 0.45 |
| - Discontinued operations | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| M€ | 30.6.2013 | 30.6.2012 | 31.12.2012 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 151.4 | 154.5 | 152.4 |
| Intangible assets | 92.4 | 95.4 | 93.7 |
| Securities and non-current receivables | 10.3 | 1.1 | 0.8 |
| Deferred tax assets | 14.7 | 13.4 | 14.5 |
| Total non-current assets | 268.8 | 264.4 | 261.4 |
| Current assets | |||
| Inventories | 96.8 | 90.3 | 78.7 |
| Accounts receivable | 152.3 | 165.2 | 107.3 |
| Other receivables | 27.5 | 32.1 | 34.3 |
| Cash and cash equivalents | 7.3 | 7.7 | 17.7 |
| Total current assets | 283.9 | 295.3 | 238.0 |
| Total assets | 552.7 | 559.7 | 499.4 |
| Equity and liabilities | |||
| Equity | |||
| Equity attributable to the owners of the parent company | 196.1 | 192.5 | 207.3 |
| Total equity | 196.1 | 192.5 | 207.3 |
| Non-current liabilities | |||
| Interest-bearing liabilities | 107.6 | 110.6 | 107.6 |
| Deferred tax liability | 14.5 | 11.8 | 14.8 |
| Provisions | 5.0 | 5.2 | 5.1 |
| Employee benefits and other liabilities | 22.6 | 21.6 | 22.7 |
| Total non-current liabilities | 149.7 | 149.2 | 150.2 |
| Current liabilities | |||
| Interest-bearing liabilities | 45.9 | 41.0 | 4.2 |
| Provisions | 13.5 | 15.1 | 15.5 |
| Accounts payable | 58.3 | 58.0 | 43.3 |
| Other liabilities | 89.2 | 103.9 | 78.9 |
| Total current liabilities | 206.9 | 218.0 | 141.9 |
| Total equity and liabilities | 552.7 | 559.7 | 499.4 |
Figures for 30.6.2012 and 31.12.2012 have been adjusted with the effect of retrospective application of IAS19R Employee Benefits.
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
| M€ | 1-6/2013 | 1-6/2012 | 1-12/2012 |
|---|---|---|---|
| Cash flow from operations | |||
| Net cash from operations | 41.8 | 39.8 | 77.4 |
| Change in net working capital | -42.7 | -39.3 | -7.6 |
| Income taxes paid | -7.0 | -22.4 | -30.2 |
| Interest paid | -1.6 | -6.5 | -7.4 |
| Interest received | 0.2 | 0.2 | 0.5 |
| Cash flow from operations | -9.3 | -28.2 | 32.7 |
| Cash flow from investments | |||
| Acquisition of businesses | -4.1 | - | - |
| Proceeds from disposal of subsidiaries and businesses* | - | 8.0 | 7.6 |
| Proceeds from disposal of shares | - | 0.0 | 0.0 |
| Purchase of fixed assets | -10.4 | -7.8 | -19.2 |
| Proceeds from sale of fixed assets | 0.2 | 0.9 | 1.2 |
| Dividends received | 0.0 | 0.0 | 0.2 |
| Loan repayments | - | - | 0.0 |
| Cash flow from investments | -14.3 | 1.1 | -10.2 |
| Cash flow from financing | |||
| Borrowings of debt | 40.9 | 46.0 | 46.3 |
| Repayment of debt | -11.0 | -25.8 | -47.3 |
| Change in other short-term loan | 12.2 | 18.3 | 0.5 |
| Dividends paid | -27.8 | -25.6 | -25.6 |
| Acquisition of non-controlling interest | - | -6.2 | -6.2 |
| Payment of finance lease liabilities | -0.9 | -0.9 | -1.5 |
| Cash flow from financing | 13.4 | 5.8 | -33.8 |
| Conversion differences for cash and cash equivalents | -0.2 | -0.1 | -0.1 |
| Change in cash and cash equivalents | -10.4 | -21.4 | -11.4 |
| Cash and cash equivalents at 1 January | 17.7 | 29.1 | 29.1 |
| Cash and cash equivalents at end of period | 7.3 | 7.7 | 17.7 |
| Changes according to balance sheet | -10.4 | -21.4 | -11.4 |
*) Proceeds from disposal of subsidiaries and businesses equals to the cash received from the sale and the cash and cash equivalents disposed of.
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STATEMENT OF CHANGES IN EQUITY
| M€ | A | B | C | D* | E | F | G | H | I |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 Jan 2013 | 146.4 | 50.2 | -0.5 | -15.4 | -1.0 | 27.6 | 207.3 | - | 207.3 |
| Total comprehensive income for the period | 0.4 | 0.9 | 15.1 | 16.4 | 16.4 | ||||
| Dividend paid (€0.38 per share) | -27.8 | -27.8 | -27.8 | ||||||
| Share-based incentive plan | 0.2 | 0.2 | 0.2 | ||||||
| Other adjustments | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Balance at 30 June 2013 | 146.4 | 50.2 | -0.1 | -14.5 | -1.0 | 15.1 | 196.1 | - | 196.1 |
| Balance at 1 Jan 2012 | 146.4 | 50.2 | 0.2 | -12.5 | -1.2 | 24.6 | 207.7 | 2.9 | 210.6 |
| Total comprehensive income for the period | -0.5 | 0.7 | 13.3 | 13.5 | 0.0 | 13.5 | |||
| Dividend paid (€0.35 per share) | -25.6 | -25.6 | -25.6 | ||||||
| Share-based incentive plan | 0.2 | 0.2 | 0.2 | ||||||
| Acquisition of non-controlling interest | -3.3 | -3.3 | -2.9 | -6.2 | |||||
| Other adjustments | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Balance at 30 June 2012 | 146.4 | 50.2 | -0.3 | -11.8 | -1.2 | 9.2 | 192.5 | - | 192.5 |
*) Includes a -€15.2 (-15.5) million effective part of net investment hedging at the end of period.
Figures for 1.1.2012, 30.6.2012 and 1.1.2013 have been adjusted with the effect of retrospective application of IAS19R Employee Benefits.
A – Share capital
B – Share premium
C – Other reserves
D* – Translation reserve
E – Treasury shares
F – Retained earnings
G – Equity attributable to owners of the parent company
H – Non-controlling interest
I – Total equity
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INTERIM REPORT 2013
26 July 2013
uponor
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
The interim report has been prepared in compliance with International Financial Reporting Standards (IFRS) as adopted by the EU and IAS 34 Interim Financial Reporting. In its interim reports, Uponor Group follows the same principles as in the annual financial statements for 2012, excluding impacts of Amendments to IAS 1 Presentation of Financial Statements and IAS19R Employee Benefits followed in the interim financial statements.
Notes required by the standard IFRS 13 Fair Value Measurement have been included in the interim report.
Presentation of Financial Statements
As of January 2013, the Group adopted the Amendments to IAS 1 Presentation of Financial Statements. Main change is the requirement for grouping items in 'other comprehensive income' based on whether they can be reclassified to profit or loss as certain conditions are fulfilled. Uponor has grouped items in other comprehensive income as required.
Employee Benefits
As of 1 January 2013, the Group adopted the revised IAS 19 Employee Benefits. The revised standard requires that all actuarial gains and losses are immediately recognised through other comprehensive income and such balances are permanently excluded from the consolidated income statement. Previously actuarial gains and losses were deferred in accordance with the corridor approach.
Main changes relate to the fully recognised actuarial gains and losses which impact other comprehensive income and increase the Group's employee benefit liability. This change does not have material impact on the consolidated income statements.
Revised IAS 19 Employee Benefits requires retrospective application, the adjustments resulting from the implementation of the standard have been disclosed below.
| M€ | 1-12/2012 | 10-12/2012 | 7-9/2012 | 4-6/2012 | 1-3/2012 |
|---|---|---|---|---|---|
| Impact on statement of comprehensive income | |||||
| Other comprehensive income, reported | -3.6 | -0.8 | -3.0 | 1.5 | -1.3 |
| Adjustments | -1.1 | -1.1 | - | - | - |
| Other comprehensive income, adjusted | -4.7 | -1.9 | -3.0 | 1.5 | -1.3 |
| M€ | 31.12.2012 | 30.9.2012 | 30.6.2012 | 31.3.2012 | |
| Impact on statement of financial position | |||||
| Deferred tax assets, reported | 13.6 | 12.1 | 12.8 | 12.9 | |
| Adjustments | 0.9 | 0.6 | 0.6 | 0.6 | |
| Deferred tax assets, adjusted | 14.5 | 12.7 | 13.4 | 13.5 | |
| Equity attributable to the owners of the parent company, reported | 209.9 | 203.4 | 194.0 | 183.5 | |
| Adjustments | -2.6 | -1.5 | -1.5 | -1.5 | |
| Equity attributable to the owners of the parent company, adjusted | 207.3 | 201.9 | 192.5 | 182.0 | |
| Employee benefits and other liabilities, reported | 19.2 | 20.0 | 19.5 | 16.7 | |
| Adjustments | 3.5 | 2.1 | 2.1 | 2.1 | |
| Employee benefits and other liabilities, adjusted | 22.7 | 22.1 | 21.6 | 18.8 |
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INTERIM REPORT 2013
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| M€ | 1-12/2012 | 1-9/2012 | 1-6/2012 | 1-3/2012 |
|---|---|---|---|---|
| Impact on key figures | ||||
| Reported | ||||
| Return on equity, % (p.a.) | 15.5 | 16.5 | 13.2 | 9.0 |
| Return on investment, % (p.a.) | 16.7 | 18.1 | 15.3 | 11.1 |
| Solvency ratio, % | 42.1 | 37.8 | 34.7 | 33.9 |
| Gearing, % | 44.8 | 57.9 | 74.2 | 79.2 |
| Equity per share, € | 2.87 | 2.78 | 2.65 | 2.51 |
| Adjusted | ||||
| Return on equity, % (p.a.) | 15.7 | 16.6 | 13.2 | 9.5 |
| Return on investment, % (p.a.) | 16.5 | 18.2 | 15.4 | 11.2 |
| Solvency ratio, % | 41.5 | 37.5 | 34.4 | 33.6 |
| Gearing, % | 45.4 | 58.3 | 74.8 | 79.8 |
| Equity per share, € | 2.84 | 2.76 | 2.63 | 2.49 |
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
| M€ | 30.6.2013 | 30.6.2012 | 31.12.2012 |
|---|---|---|---|
| Gross investment | 10.4 | 7.8 | 19.2 |
| - % of net sales | 2.7 | 1.9 | 2.4 |
| Depreciation | 14.4 | 14.2 | 28.2 |
| Book value of disposed fixed assets | 0.2 | 0.8 | 1.1 |
PERSONNEL
| Converted to full time employees | 1-6/2013 | 1-6/2012 | 1-12/2012 |
|---|---|---|---|
| Average | 3,067 | 3,128 | 3,098 |
| At the end of the period | 3,156 | 3,126 | 3,052 |
OWN SHARES
| Own shares held by the company, pcs | 140,378 | 140,378 | 140,378 |
|---|---|---|---|
| - of share capital, % | 0.2 | 0.2 | 0.2 |
| - of voting rights, % | 0.2 | 0.2 | 0.2 |
| Accounted par value of own shares held by the company, M€ | 0.3 | 0.3 | 0.3 |
SEGMENT INFORMATION
| M€ | 1-6/2013 | 1-6/2012 | ||||
|---|---|---|---|---|---|---|
| External | Internal | Total | External | Internal | Total | |
| Net sales by segment, continuing operations | ||||||
| Building Solutions – Europe | 238.1 | 0.1 | 238.2 | 266.0 | 0.2 | 266.2 |
| Building Solutions - North America | 81.0 | - | 81.0 | 69.9 | - | 69.9 |
| Infrastructure Solutions | 70.0 | 2.6 | 72.6 | 74.7 | 2.6 | 77.3 |
| Eliminations | - | -2.7 | -2.7 | - | -2.8 | -2.8 |
| Total | 389.1 | - | 389.1 | 410.6 | - | 410.6 |
| 4-6/2013 | 4-6/2012 | |||||
| M€ | External | Internal | Total | External | Internal | Total |
| Net sales by segment, continuing operations | ||||||
| Building Solutions – Europe | 124.3 | 0.0 | 124.3 | 133.2 | 0.0 | 133.2 |
| Building Solutions - North America | 43.8 | - | 43.8 | 38.9 | - | 38.9 |
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INTERIM REPORT 2013
26 July 2013
uponor
| Infrastructure Solutions | 43.3 | 1.7 | 45.0 | 46.0 | 1.6 | 47.6 |
|---|---|---|---|---|---|---|
| Eliminations | - | -1.7 | -1.7 | 0.0 | -1.6 | -1.6 |
| Total | 211.4 | - | 211.4 | 218.1 | - | 218.1 |
| M€ | 1-12/2012 | |||||
| --- | --- | --- | --- | --- | ||
| External | Internal | Total | ||||
| Net sales by segment, continuing operations | ||||||
| Building Solutions – Europe | 517.3 | 0.4 | 517.7 | |||
| Building Solutions - North America | 151.1 | - | 151.1 | |||
| Infrastructure Solutions | 143.1 | 5.9 | 149.0 | |||
| Eliminations | - | -6.3 | -6.3 | |||
| Total | 811.5 | - | 811.5 | |||
| M€ | 1-6/2013 | 1-6/2012 | 4-6/2013 | 4-6/2012 | 1-12/2012 | |
| --- | --- | --- | --- | --- | --- | |
| Operating result by segment, continuing operations | ||||||
| Building Solutions - Europe | 17.8 | 23.9 | 11.1 | 12.2 | 47.2 | |
| Building Solutions - North America | 11.2 | 6.8 | 6.6 | 4.1 | 17.8 | |
| Infrastructure Solutions | 0.6 | 0.3 | 4.3 | 2.2 | 0.0 | |
| Others | -3.1 | -5.0 | -1.9 | -2.6 | -6.1 | |
| Eliminations | -0.7 | -0.6 | -0.4 | 0.2 | -1.2 | |
| Total | 25.8 | 25.4 | 19.7 | 16.1 | 57.7 | |
| M€ | 1-6/2013 | 1-6/2012 | 1-12/2012 | |||
| --- | --- | --- | --- | |||
| Segment depreciation and impairments, continuing operations | ||||||
| Building Solutions - Europe | 5.5 | 6.0 | 11.4 | |||
| Building Solutions - North America | 3.3 | 2.9 | 6.0 | |||
| Infrastructure Solutions | 3.1 | 2.9 | 5.9 | |||
| Others | 2.3 | 2.2 | 4.4 | |||
| Eliminations | 0.2 | 0.2 | 0.5 | |||
| Total | 14.4 | 14.2 | 28.2 | |||
| Segment investments, continuing operations | ||||||
| --- | --- | --- | --- | |||
| Building Solutions – Europe | 2.6 | 4.1 | 13.6 | |||
| Building Solutions - North America | 5.6 | 1.7 | 3.6 | |||
| Infrastructure Solutions | 1.7 | 1.4 | 5.4 | |||
| Others | 0.5 | 0.6 | 1.4 | |||
| Total | 10.4 | 7.8 | 24.0 | |||
| M€ | 30.6.2013 | 30.6.2012 | 31.12.2012 | |||
| --- | --- | --- | --- | |||
| Segment assets | ||||||
| Building Solutions - Europe | 345.9 | 426.1 | 364.9 | |||
| Building Solutions - North America | 128.6 | 132.3 | 119.6 | |||
| Infrastructure Solutions | 113.4 | 109.6 | 84.4 | |||
| Others | 224.5 | 260.9 | 249.8 | |||
| Eliminations | -259.7 | -369.2 | -319.3 | |||
| Total | 552.7 | 559.7 | 499.4 | |||
| Segment liabilities | ||||||
| --- | --- | --- | --- | |||
| Building Solutions - Europe | 256.0 | 303.4 | 290.3 | |||
| Building Solutions - North America | 71.1 | 87.0 | 69.2 | |||
| Infrastructure Solutions | 93.9 | 82.9 | 66.5 | |||
| Others | 220.0 | 287.0 | 210.3 | |||
| Eliminations | -284.4 | -393.1 | -344.2 | |||
| Total | 356.6 | 367.2 | 292.1 |
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INTERIM REPORT 2013
26 July 2013
uponor
Segment assets and liabilities 30.6.2012 and 31.12.2012 have been adjusted with the effect of retrospective application of IAS19R Employee Benefits. The change mainly affected the segment Building Solutions – Europe.
| 1-6/2013 | 1-6/2012 | 1-12/2012 | |
|---|---|---|---|
| Segment personnel, continuing operations, average | |||
| Building Solutions – Europe | 2,058 | 2,173 | 2,132 |
| Building Solutions - North America | 489 | 410 | 427 |
| Infrastructure Solutions | 460 | 487 | 480 |
| Others | 60 | 59 | 59 |
| Total | 3,067 | 3,128 | 3,098 |
| Reconciliation | |||
| M€ | 1-6/2013 | 1-6/2012 | 1-12/2012 |
| Operating result by segment, continuing operations | |||
| Total result for reportable segments | 29.7 | 31.0 | 65.0 |
| Others | -3.1 | -5.0 | -6.1 |
| Eliminations | -0.8 | -0.6 | -1.2 |
| Operating profit | 25.8 | 25.4 | 57.7 |
| Financial expenses, net | 3.2 | 4.5 | 8.6 |
| Share of results in associated companies | 0.0 | 0.1 | 0.3 |
| Profit before taxes | 22.6 | 21.0 | 49.4 |
CONTINGENT LIABILITIES AND ASSETS
| M€ | 30.6.2013 | 30.6.2012 | 31.12.2012 |
|---|---|---|---|
| Group: | |||
| Commitments of purchase of property, plant and equipment | 12.3 | 0.6 | 0.6 |
| Pledges | |||
| - on own behalf | - | - | 0.0 |
| Mortgages | |||
| - on own behalf | 0.1 | 0.1 | 0.1 |
| Guarantees | |||
| - on behalf of others | 7.2 | 6.2 | 7.0 |
| Parent company: | |||
| Guarantees | |||
| - on behalf of a subsidiary | 16.4 | 16.6 | 16.1 |
Uponor Corporation's subsidiary in Spain, Uponor Hispania, SA, had a tax audit in December 2011 – May 2012, covering financial years 2006 and 2007. As a result of the audit, the tax authority claims €3.9 million in taxes, delay interest and penalties from Uponor Hispania. The claim mainly relates to the tax deductibility of certain costs such as services rendered by Uponor Group and advertising. Uponor Hispania disagrees with the assessment of the tax authority and has appealed the case. While the appeal is being handled, Uponor Hispania, SA has provided a bank guarantee of €2.9 million covering the tax amount and delay interests due to the Spanish tax authority. The bank guarantee given is included in Guarantees on behalf of a subsidiary given by the parent company above.
INTERIM REPORT 2013
26 July 2013
uponor
In the beginning of 2012, Uponor Corporation and its subsidiary Uponor Business Solutions Oy paid €15.0 million in taxes, surtaxes and penalties based on the taxation adjustment decisions made by the Finnish tax authority for the years 2005-2009. Uponor appealed against the decisions and filed a request for rectification to the Board of Adjustment. During the reporting period, the Board of Adjustment rejected Uponor Business Solutions Oy's appeal and, for the most part, also Uponor Corporation's appeal. Uponor placed the issue before the administrative court and applied for rectification of the Board of Adjustment's ruling. Uponor will also start a process to avoid possible double taxation. The surtaxes (€1.9 million) and the interest on delayed payments (€3.3 million) were recorded as expenses in 2011. The paid taxes (€9.8 million) relating to an increase in taxable income were booked as receivables from the tax authority in 2012. Tax authority returned €0.3 million to Uponor Corporation in June 2013; thus the tax receivable decreased to €9.6 million. The tax receivable is transferred to non-current receivables, as the process can last years. If Uponor, against expectations, should fail to get the appeal approved, the surtaxes and interests would remain as the company's loss. If the appeal would be approved, the surtaxes and interests would be returned to the company.
| M€ | 30.6.2013 | 30.6.2012 | 31.12.2012 |
|---|---|---|---|
| OPERATING LEASE COMMITMENTS | 36.7 | 33.2 | 40.2 |
DERIVATIVE CONTRACTS
| M€ | Nominal value 30.6.2013 | Fair value 30.6.2013 | Nominal value 30.6.2012 | Fair value 30.6.2012 | Nominal value 31.12.2012 | Fair value 31.12.2012 |
|---|---|---|---|---|---|---|
| Currency derivatives | ||||||
| - Forward agreements | 183.8 | 3.2 | 270.0 | -2.6 | 243.2 | 0.7 |
| - Currency options, bought | 10.1 | 0.3 | 14.6 | 0.1 | 10.8 | 0.1 |
| - Currency options, sold | 10.1 | -0,0 | 14.6 | -0.1 | 10.8 | 0.0 |
| Interest derivatives | ||||||
| - Interest rate swaps | 150.0 | -1.5 | 50.0 | -2.3 | 50.0 | -2.5 |
| Commodity derivatives | ||||||
| - Forward agreements | 6.7 | -1.1 | 6.2 | -0.7 | 6.5 | -0.7 |
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INTERIM REPORT 2013
28 July 2013
uponor
FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT CATEGORY
| 30.6.2013 | |||||||
|---|---|---|---|---|---|---|---|
| M€ | Derivative contracts, under hedge accounting | Financial assets/liabilities at fair value through profit and loss | Loans and receivables | Available for sales financial assets | Financial liabilities measured at amortized cost | Carrying amount by balance sheet item | IFRS 7 Fair value hierarchy level |
| Non-current financial assets | |||||||
| Other shares and holdings | 0.2 | 0.2 | |||||
| Electricity derivatives | - | 1 | |||||
| Non-current receivables | 0.5 | 0.5 | |||||
| Current financial assets | |||||||
| Accounts receivable and other receivables | 167.3 | 167.3 | |||||
| Electricity derivatives | 0.0 | 0.0 | 1 | ||||
| Other derivative contracts | 2.5 | 1.5 | 4.0 | 2, 3 | |||
| Cash and cash equivalents | 7.3 | 7.3 | |||||
| Carrying amount | 2.5 | 1.5 | 175.1 | 0.2 | 179.3 | ||
| Non-current financial liabilities | |||||||
| Interest bearing liabilities | 107.6 | 107.6 | |||||
| Electricity derivatives | 0.7 | 0.7 | 1 | ||||
| Current financial liabilities | |||||||
| Interest bearing liabilities | 45.9 | 45.9 | |||||
| Electricity derivatives | 0.4 | 0.4 | 1 | ||||
| Other derivative contracts | 1.6 | 0.5 | 2.1 | 2, 3 | |||
| Accounts payable and other liabilities | 99.2 | 99.2 | |||||
| Carrying amount | 2.7 | 0.5 | 252.7 | 255.9 |
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INTERIM REPORT 2013
26 July 2013
uponor
31.12.2012
| M€ | Derivative contracts, under hedge accounting | Financial assets/liabilities at fair value through profit and loss | Loans and receivables | Available for sales financial assets | Financial liabilities measured at amortized cost | Carrying amount by balance sheet item | IFRS 7 Fair value hierarchy level |
|---|---|---|---|---|---|---|---|
| Non-current financial assets | |||||||
| Other shares and holdings | 0.2 | 0.2 | |||||
| Non-current receivables | 0.5 | 0.5 | |||||
| Current financial assets | |||||||
| Accounts receivable and other receivables | 120.1 | 120.1 | |||||
| Electricity derivatives | 0.0 | 0.0 | 1 | ||||
| Other derivative contracts | 1.0 | 0.8 | 1.8 | 2, 3 | |||
| Cash and cash equivalents | 17.7 | 17.7 | |||||
| Carrying amount | 1.0 | 0.8 | 138.3 | 0.2 | 140.3 | ||
| Non-current financial liabilities | |||||||
| Interest bearing liabilities | 107.6 | 107.6 | |||||
| Electricity derivatives | 0.4 | 0.4 | 1 | ||||
| Current financial liabilities | |||||||
| Interest bearing liabilities | 4.2 | 4.2 | |||||
| Electricity derivatives | 0.3 | 0.3 | 1 | ||||
| Other derivative contracts | 2.9 | 0.6 | 3.5 | 2, 3 | |||
| Accounts payable and other liabilities | 57.6 | 57.6 | |||||
| Carrying amount | 3.6 | 0.6 | 169.4 | 173.6 |
The carrying value of financial assets and liabilities is considered to correspond to their fair value. The Group's financial instruments are classified according to IFRS 7 fair value hierarchies.
Uponor applies the hierarchy as follows:
The fair value of electricity derivatives is measured based on stock exchange prices. (Hierarchy 1)
The fair value of currency forward agreements is measured based on price information from common markets and commonly used valuation methods. (Hierarchy 2)
The fair value of currency options is measured according to fair value calculations made by financial institutions (Hierarchy 3). The fair value of currency options at the valuation day is immaterial.
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INTERIM REPORT 2013
26 July 2013
uponor
BUSINESS COMBINATIONS
The merger plan announced in September 2012, by Uponor Corporation and the KWH Group, to combine their infrastructure solutions businesses into a jointly owned company, was completed after the reporting period. The new company, Uponor Infra Oy started operations on 1 July 2013 and it is jointly owned by Uponor (55.3%) and KWH Group (44.7%). Uponor Infra Oy will focus on providing infrastructure pipe systems in northern Europe and elsewhere. With the merger, Uponor and the KWH Group aim to create efficiencies and strengthen the profitability. Uponor Infra Oy is consolidated in Uponor Corporation as the Infrastructure Solutions segment from 1 July. The new setup will be included in the January-September 2013 interim report for the first time and IFRS 3 related notes will be disclosed in the next interim report, as the required information is not yet available.
In connection with this transaction, Uponor acquired KWH Pipe Ltd's domestic PEX pipe business in late June for a sales price of €3.8 million. Acquisition price paid was €4.1 million, when €0.2 million was recorded as receivables based on the expected acquisition price adjustment. Acquired net assets were €3.0 million leading to goodwill of €0.8 million. The acquisition calculation is preliminary.
DISPOSAL OF SUBSIDIARIES
Uponor closed the divestment of Hewing GmbH at the end of the first quarter 2012. The sales price of €11.9 million was received on 2 April 2012. This was later adjusted on the basis of the closing statement, ending up at €11.5 million. The net impact on the result was immaterial.
| M€ | 2013 | 2012 |
|---|---|---|
| Book value of disposed assets | ||
| Tangible assets | - | 3.4 |
| Intangible assets | - | 0.1 |
| Other non-current assets | - | 0.3 |
| Inventory | - | 5.6 |
| Accounts receivable and other receivables | - | 6.9 |
| Cash and cash equivalents | - | 3.9 |
| Total assets | - | 20.2 |
| Employee benefits and other liabilities | - | 2.3 |
| Provisions | - | 0.5 |
| Accounts payable and other current liabilities | - | 5.9 |
| Total liabilities | - | 8.7 |
| Net assets | - | 11.5 |
| Cash received from sales | - | 11.5 |
| Cash and cash equivalents disposed of | - | 3.9 |
| Cash flow effect | - | 7.6 |
DISCONTINUED OPERATIONS
In 2013 and 2012, the discontinued operations include costs related to the administration and maintenance of the real estate vacated by the Irish infrastructure business sold in 2008.
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INTERIM REPORT 2013
26 July 2013
uponor
| M€ | 1-6/2013 | 1-6/2012 | 1-12/2012 |
|---|---|---|---|
| Expenses | 0.0 | 0.0 | 0.1 |
| Profit before taxes | 0.0 | 0.0 | -0.1 |
| Income taxes | - | - | - |
| Profit after taxes | 0.0 | 0.0 | -0.1 |
| Profit for the period from discontinued operations | 0.0 | 0.0 | -0.1 |
| Cash flow from discontinued operations | |||
| Cash flow from operations | -0.3 | -0.4 | -0.5 |
RELATED-PARTY TRANSACTIONS
| M€ | 1-6/2013 | 1-6/2012 | 1-12/2012 |
|---|---|---|---|
| Continuing operations | |||
| Purchases from associated companies | 0.8 | 0.9 | 2.4 |
| Balances at the end of the period | |||
| Accounts receivable and other receivables | 0.0 | 0.0 | 0.0 |
| Accounts payables and other liabilities | 0.1 | 0.1 | 0.0 |
KEY FIGURES
| 1-6/2013 | 1-6/2012 | 1-12/2012 | |
|---|---|---|---|
| Earnings per share, € | 0.21 | 0.18 | 0.45 |
| - continuing operations | 0.21 | 0.18 | 0.45 |
| - discontinued operations | 0.00 | 0.00 | 0.00 |
| Operating profit (continuing operations), % | 6.6 | 6.2 | 7.1 |
| Return on equity, % (p.a.) | 15.0 | 13.2 | 15.7 |
| Return on investment, % (p.a.) | 14.7 | 15.4 | 16.5 |
| Solvency ratio, % | 35.5 | 34.4 | 41.5 |
| Gearing, % | 74.5 | 74.8 | 45.4 |
| Net interest-bearing liabilities | 146.2 | 143.9 | 94.1 |
| Equity per share, € | 2.68 | 2.63 | 2.84 |
| - diluted | 2.68 | 2.63 | 2.84 |
| Trading price of shares | |||
| - low, € | 9.65 | 6.77 | 6.77 |
| - high, € | 12.60 | 10.00 | 10.00 |
| - average, € | 11.06 | 8.48 | 8.47 |
| Shares traded | |||
| - 1,000 pcs | 7,648 | 12,155 | 21,963 |
| - M€ | 84 | 103 | 186 |
Figures for 1-6/2012 and 1-12/2012 have been adjusted with the effect of retrospective application of IAS19R Employee Benefits.
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INTERIM REPORT 2013
26 July 2013
uponor
QUARTERLY DATA
| 4-6/2013 | 1-3/2013 | 10-12/2012 | 7-9/2012 | 4-6/2012 | 1-3/2012 | |
|---|---|---|---|---|---|---|
| Continuing operations | ||||||
| Net sales, M€ | 211.4 | 177.7 | 189.6 | 211.3 | 218.1 | 192.5 |
| - Building Solutions – Europe | 124.3 | 113.9 | 121.6 | 129.9 | 133.2 | 133.0 |
| - Building Solutions – North America | 43.8 | 37.2 | 38.1 | 43.1 | 38.9 | 31.0 |
| - Building Solutions – North America, $ | 57.2 | 49.0 | 49.8 | 54.5 | 49.7 | 41.4 |
| - Infrastructure Solutions | 45.0 | 27.6 | 31.4 | 40.3 | 47.6 | 29.7 |
| Gross profit, M€ | 82.6 | 69.2 | 72.2 | 82.6 | 81.4 | 74.6 |
| - Gross profit, % | 39.1 | 39.0 | 38.1 | 39.1 | 37.3 | 38.7 |
| Operating profit, M€ | 19.7 | 6.1 | 10.2 | 22.1 | 16.1 | 9.3 |
| - Building Solutions – Europe | 11.1 | 6.7 | 9.4 | 13.9 | 12.2 | 11.7 |
| - Building Solutions – North America | 6.6 | 4.6 | 3.5 | 7.5 | 4.1 | 2.7 |
| - Building Solutions – North America, $ | 8.6 | 6.1 | 4.6 | 9.6 | 5.3 | 3.5 |
| - Infrastructure Solutions | 4.3 | -3.7 | -2.7 | 2.4 | 2.2 | -1.9 |
| - Others | -1.9 | -1.2 | 0.3 | -1.4 | -2.6 | -2.4 |
| Operating profit, % of net sales | 9.3 | 3.4 | 5.4 | 10.4 | 7.4 | 4.8 |
| - Building Solutions – Europe | 8.9 | 5.9 | 7.7 | 10.7 | 9.1 | 8.8 |
| - Building Solutions – North America | 15.0 | 12.4 | 9.1 | 17.4 | 10.6 | 8.5 |
| - Infrastructure Solutions | 9.6 | -13.6 | -8.6 | 5.8 | 4.7 | -6.5 |
| Profit for the period, M€ | 11.8 | 3.3 | 7.1 | 12.4 | 8.8 | 4.5 |
| Balance sheet total, M€* | 552.7 | 532.8 | 499.4 | 539.5 | 559.7 | 542.6 |
| Earnings per share, € | 0.16 | 0.05 | 0.10 | 0.17 | 0.12 | 0.06 |
| Equity per share, €* | 2.68 | 2.51 | 2.84 | 2.76 | 2.63 | 2.49 |
| Market value of share capital, M€ | 841.9 | 776.0 | 702.8 | 600.3 | 517.2 | 632.5 |
| Return on investment, % (p.a)* | 14.7 | 7.0 | 16.5 | 18.2 | 15.4 | 11.2 |
| Interest-bearing net debt | ||||||
| at the end of the period, M€ | 146.2 | 142.1 | 94.1 | 117.7 | 143.9 | 145.3 |
| Gearing, %* | 74.5 | 77.6 | 45.4 | 58.3 | 74.8 | 79.8 |
| Gearing, % rolling 4 quarters* | 63.9 | 64.0 | 64.6 | 63.1 | 62.0 | 60.2 |
| Gross investment, M€ | 5.8 | 4.6 | 6.8 | 4.6 | 4.0 | 3.8 |
| - % of net sales | 2.7 | 2.6 | 3.2 | 2.3 | 1.8 | 2.0 |
*) Figures for 2012 have been adjusted with the effect of retrospective application of IAS19R Employee Benefits.
INTERIM REPORT 2013
26 July 2013
uponor
DEFINITIONS OF KEY RATIOS
Return on Equity (ROE). %
$$
= \frac{\text{Profit before taxes} - \text{taxes}}{\text{Shareholder's equity} + \text{non-controlling interest, average}} \times 100
$$
Return on Investment (ROI). %
$$
= \frac{\text{Profit before taxes} + \text{interest and other financing costs}}{\text{Balance sheet total} - \text{non-interest-bearing liabilities. average}} \times 100
$$
Solvency. %
$$
= \frac{\text{Shareholder's equity} + \text{non-controlling interest}}{\text{Balance sheet total} - \text{advance payments received}} \times 100
$$
Gearing. %
$$
= \frac{\text{Net interest-bearing liabilities}}{\text{Shareholder's equity} + \text{non-controlling interest}} \times 100
$$
Net interest-bearing liabilities
$$
= \text{Interest-bearing liabilities} - \text{cash. bank receivables and financial assets}
$$
Earnings per share (EPS)
$$
= \frac{\text{Profit for the period}}{\text{Number of shares adjusted for share issue in financial period excluding treasury shares}}
$$
Equity per share ratio
$$
= \frac{\text{Equity attributable to the owners of the parent company}}{\text{Average number of shares adjusted for share issue at end of year}}
$$
Average share price
$$
= \frac{\text{Total value of shares traded (€)}}{\text{Total number of shares traded}}
$$
INTERIM REPORT 2013
26 July 2013