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Uponor Oyj — Interim / Quarterly Report 2017
Jul 25, 2017
3245_ir_2017-07-25_139385cf-ffcf-4e34-9335-339972d2f3e5.pdf
Interim / Quarterly Report
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Half year financial report January – June 2017
25 July 2017
HALF YEAR FINANCIAL REPORT JANUARY – JUNE 2017
Uponor grew modestly in Europe; U.S. business impacted by a temporary production issue
- Net sales in April June totalled €308.4 (299.5) million, with growth at 3.0%
- The building solutions business grew modestly in Europe. A temporary production issue impacted net sales in Building Solutions – North America. Uponor Infra increased sales in a strong tail wind.
- Operating profit for April June came to €22.9 (26.5) million, down 13.6%, burdened by a temporary production issue and higher input costs; the comparable operating profit in April – June came to €23.8 (30.7) million, a change of -22.6%
- Net sales in January June totalled €573.5 (546.4) million, with growth at 5.0%
- Operating profit for January June came to €37.5 (38.4) million, a change of -2.3%; the comparable operating profit in January – June came to €38.8 (45.6) million, a change of -15.0%
- January June earnings per share were €0.29 (0.28)
- The January June return on investment was 13.6% (15.3%), and gearing on 30 June 67.6% (58.5%)
- The January June cash flow from business operations came to €1.5 (-3.4) million
- Uponor repeats its full-year guidance announced on 13 February 2017: the Group's net sales and comparable operating profit are expected to improve from 2016, assuming that economic development in Uponor's key geographies continues undisturbed
President and CEO Jyri Luomakoski comments on developments during the reporting period:
- While the overall market demand remains healthy, the second quarter performance did not meet our ambitions due to a combination of unrelated factors. On a positive note, we have successfully completed the transformation programmes in Europe giving us a solid platform for improving profitably as we keep on building on our partnerships with key customers.
- We have managed to stabilise our performance in Building Solutions Europe in the second quarter, and we are now well positioned to benefit from solid demographic demand in key European countries as the economy continues to revive. We are happy to notice increasing interest among customers towards our new offerings, such as hygienic and prefabricated solutions.
- In spring, Building Solutions North America reached a record of 25 consecutive quarters of growth, in local currency, and despite capacity constraints and a temporary production issue in April, managed to keep its sales levels on prior year level in the second quarter. After 10 expansions in Apple Valley, we recently announced the purchase of new premises and real estate not far from our current facilities, which is targeted to guarantee future capacity to serve customer needs in 2019 and beyond.
- Uponor Infra has successfully completed a series of streamlining and transformation measures, meeting the targets set for them. The segment reported positive comparable operating profit figures in the second quarter, driven by a solid growth of business.
Group key financial figures
| Consolidated income statement (continuing operations), M€ |
1-6 2017 |
1-6 2016 |
2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|
| Net sales | 573.5 | 546.4 | 1,099.4 | 1,050.8 | 1,023.9 | 906.0 |
| Operating expenses | 519.0 | 490.5 | 991.0 | 942.7 | 926.4 | 823.6 |
| Depreciation and impairments | 19.6 | 19.5 | 41.6 | 39.1 | 36.5 | 33.0 |
| Other operating income | 2.6 | 2.0 | 4.2 | 2.4 | 2.4 | 0.8 |
| Operating profit | 37.5 | 38.4 | 71.0 | 71.4 | 63.4 | 50.2 |
| Comparable operating profit Financial income and |
38.8 | 45.6 | 90.7 | 75.8 | 67.7 | 55.2 |
| expenses | -4.0 | -5.5 | -10.0 | -8.9 | -7.4 | -7.1 |
| Profit before taxes Result from continuing |
32.4 | 33.0 | 60.4 | 62.8 | 56.3 | 43.2 |
| operations | 21.7 | 20.8 | 41.5 | 37.1 | 36.3 | 27.1 |
| Profit for the period | 21.7 | 21.2 | 41.9 | 36.9 | 36.0 | 26.8 |
| Earnings per share | 0.29 | 0.28 | 0.58 | 0.51 | 0.50 | 0.38 |
Information on the January – June 2017 half year financial report
This report has been compiled in accordance with the IAS 34 reporting standards and is unaudited. The figures in brackets are the reference figures for the equivalent period in the previous year. Any change percentages are calculated from the exact figures and not the rounded figures published here.
Webcast of the results briefing and the presentation
A webcast in English will be broadcast on 25 July at 10.00 EET. Connection details are available at http://investors.uponor.com. The recorded webcast can be viewed at http://investors.uponor.com shortly after publication. The presentation document will be available at http://investors.uponor.com > News & downloads.
Next interim results
Uponor Corporation will publish its January – September interim report on 27 October 2017. During the silent period from 1 to 27 October, Uponor will not comment on market prospects or factors affecting business and performance.
Markets
Building and construction trends in Uponor's international markets largely remained unchanged from the end of the first quarter. The construction markets in Europe generally remained solid during the quarter, with builders continuing to report improvements in their order books and the level of building activity. In North America, growth continued in Uponor's key market segments, but at a reduced rate from previous years.
In Uponor's largest Central European market, Germany, a strong labour market and pronounced immigration continued to boost the construction of new, multi-family homes. Meanwhile, growth in the single-family home segment was more constrained and the significantly larger renovation segment remained flat. On the nonresidential side, some growth was visible compared to 2016 levels. In the Netherlands, construction activity has moderated from earlier periods, but remains healthy overall.
Despite some variations between countries and building segments, the construction markets in Southern Europe continued to develop positively compared to last year. Both Spain and France improved notably, while activity in the UK remained sound in general, despite widespread political uncertainty.
The markets in the Nordic region continued to improve. In Sweden, notable growth was sustained in both the residential and non-residential segments, with significant year-over-year growth. Construction markets in Denmark, Finland and Norway are also growing, but at a lower rate. There, the residential segments are driving most growth, while non-residential construction has to a great extent been in line with 2016.
Demand in China continued to be robust, although market growth has slowed as a result of governmentdriven cooling measures in the real estate market; demand for renovation has compensated for this effect.
Construction activity in North America remained largely healthy. In Uponor's largest market, the USA, home builder confidence is high and building activity continued to improve in the residential segment. Nonresidential spending has been flat overall compared to 2016, but has grown in the office and commercial segments. In Canada, home construction is being fuelled by significant increases in home prices.
With regard to Uponor's infrastructure solutions, civil engineering expenditure in the Nordic countries remained modest, but steady, with lively demand witnessed in Sweden and also in Norway, where government spending has grown. In Poland, the markets remained soft. In Canada, the significant fall in industrial investments witnessed during 2015-2016 has bottomed out and demand has picked up in key Uponor product segments.
Net sales
Uponor's consolidated net sales for the second quarter 2017 reached €308.4 (299.5) million, up 3.0%. There was a positive currency impact of €1.7 million in consolidated net sales, mainly originating in the USD and CAD. In constant currency terms, i.e. using Q2/2017 exchange rates, net sales growth was 2.4%.
Building Solutions – Europe reported net sales of €135.6 (134.8) million, up 0.6%. Net sales growth in the second quarter came primarily from Austria, Russia and a combination of other smaller markets, while several key European markets reported stable or modestly declining net sales figures. Net sales in the segment's largest market, Germany, were flat, reflecting the tight competitive situation within the distribution chain. Net sales declined in the UK in particular, largely as a result of the currency impact and the renewed organisational setup, but also in the Nordics where second quarter net sales in Sweden, in particular, were influenced by the buying patterns of key customers and weaker OEM business than in 2016. Following the startup of our own production in China, net sales grew in Asia, which is reported as part of the Building Solutions – Europe segment.
Net sales in Building Solutions – North America declined slightly in the second quarter. The segment's net sales came to €79.3 (80.2) million, down 1.2% in euro terms or 1.4% in USD. The main reason for this drop, despite healthy customer demand, was a temporary production issue in April, caused by resin, which temporarily curbed production and thus affected the company's ability to deliver pipe orders during the quarter. Combined with that, the segment's existing capacity was not enough to meet demand, due to
longer-term continued sales growth, and the segment has been unable to deliver all customer orders in a satisfactory manner.
Uponor Infra reported growth for the second quarter and posted quarterly net sales of €94.3 (85.8) million, up 9.9% year-on-year. Growth was particularly robust in Canada and the U.S. and in Sweden, partly compensating for the decline in Denmark and Norway. Development in the segment's largest market, Finland, was flat.
Net sales by segment (April – June):
| M€ | 4-6/2017 | 4-6/2016 | Change |
|---|---|---|---|
| Building Solutions – Europe | 135.6 | 134.8 | 0.6% |
| Building Solutions – North America | 79.3 | 80.2 | -1.2% |
| (Building Solutions – North America (M\$) | 88.7 | 90.0 | -1.4%) |
| Uponor Infra | 94.3 | 85.8 | 9.9% |
| Eliminations | -0.8 | -1.3 | |
| Total | 308.4 | 299.5 | 3.0% |
Uponor's January–June net sales reached €573.5 (546.4) million, growth of 5.0%, or 4.5% in constant currency. This was driven by the brisk growth of net sales in Uponor Infra during both the first and second quarter, as well as Building Solutions – North America, which posted healthy growth in the first quarter. In constant currency terms, net sales would have been €2.5 million lower than reported net sales. The main factor in this respect originated in USD, which strengthened against the euro during the comparison period.
Net sales by segment (January – June):
| M€ | 1–6/2017 | 1–6/2016 | Change |
|---|---|---|---|
| Building Solutions – Europe | 259.9 | 257.8 | 0.8% |
| Building Solutions – North America | 157.5 | 150.9 | 4.3% |
| (Building Solutions – North America (M\$) | 172.2 | 168.2 | 2.4%) |
| Uponor Infra | 157.4 | 139.9 | 12.5% |
| Eliminations | -1.3 | -2.2 | |
| Total | 573.5 | 546.4 | 5.0% |
Results and profitability
Uponor's consolidated gross profit in the second quarter came to €98.4 (105.5) million, a change of €-7.1 million. The gross profit margin was 31.9% (35.2%), mainly due to increased raw material prices and a temporary production issue in Building Solutions – North America. Comparable gross profit came to €99.2 (106.3) million, or 32.1% (35.5%).
Operating profit in the second quarter of 2017 came to €22.9 (26.5) million, down by 13.6% year-on-year. Profitability, as measured by the operating profit margin, came to 7.4% (8.8%). Comparable operating profit, i.e. excluding items affecting comparability, reached €23.8 (30.7) million, a drop of 22.6%. Operating profit was burdened by a variety of factors, including a temporary production issue in Building Solutions – North America, higher raw material costs not fully compensated for by price increases, and the startup costs in China.
Items affecting comparability, or IAC, in the second quarter, amounted to €0.9 (€4.2) million. Of this, Building Solutions – Europe accounted for costs of €2.4 million and Uponor Infra for a net income totalling €1.5 million, including a €1.9 million gain from the sale of unused office and manufacturing space in Uponor Infra's premises in Vaasa, Finland. The above items were related to the European transformation programmes launched in November 2015, the final initiative of which was launched in the second quarter of 2017 when Building Solutions – Europe began employee consultations in Italy regarding office consolidation.
The programmes had a combined target of achieving annual operational savings of €25 million against a total cost of €32 million in items affecting comparability. The savings targets were largely met. The IAC-costs during the entire programme amounted to €24.5 million in total.
Building Solutions – Europe's operating profit in the second quarter came to €9.1 (8.2) million, up 12.6%. The segment's comparable operating profit amounted to €11.5 (11.5) million. Reflecting the savings in overheads and expenses, the improvement in operating profit was burdened by higher input costs of aluminium and brass in particular, as well as increases in project support and promotional activities in a highly competitive market. Costs were also increased by starting up production and operations in Asia.
Building Solutions – North America reported an operating profit of €10.5 (14.6) million for the quarter, representing a decline of 28.4% from the strong comparison period. The decline in operating profit was mainly a result of the temporary production issue experienced in April, which impacted on the ability to meet customer's demand for pipe and increased inefficiencies in production. The issue was solved in the second quarter. In addition, more expensive resin used in engineered polymer (EP) fittings since June 2016 and extra costs from managing the supply-demand situation, particularly in connection with the above-mentioned production issue, burdened profitability in the second quarter.
Uponor Infra's operating profit came to €4.7 (5.1) million, a decline of 7.9%. The segment's comparable operating profit came to €3.2 (5.7) million, representing a change of -43.2%. This decline was mainly caused by higher resin costs and temporary inefficiencies related to production transfers due to higher demand than anticipated. Moreover, the increase in net sales mainly came from lower profitability markets, thus affecting Uponor Infra's overall profitability.
| M€ | 4-6/2017 | 4-6/2016 | Change |
|---|---|---|---|
| Building Solutions – Europe | 9.1 | 8.2 | 12.6% |
| Building Solutions – North America | 10.5 | 14.6 | -28.4% |
| (Building Solutions – North America (M\$) | 11.7 | 16.3 | -28.5%) |
| Uponor Infra | 4.7 | 5.1 | -7.9% |
| Others | -1.0 | -0.9 | |
| Eliminations | -0.4 | -0.5 | |
| Total | 22.9 | 26.5 | -13.6% |
Operating profit by segment (April – June):
Comparable operating profit by segment (April – June):
| M€ | 4-6/2017 | 4-6/2016 | Change |
|---|---|---|---|
| Building Solutions – Europe | 11.5 | 11.5 | 0.9% |
| Building Solutions – North America | 10.5 | 14.6 | -28.4% |
| (Building Solutions – North America (M\$) | 11.7 | 16.3 | -28.5%) |
| Uponor Infra | 3.2 | 5.7 | -43.2% |
| Others | -1.0 | -0.6 | |
| Eliminations | -0.4 | -0.5 | |
| Total | 23.8 | 30.7 | -22.6% |
Profit before taxes for April – June totalled €21.1 (24.4) million. Taxes had a €6.8 million effect on profits, while the amount of taxes in the comparison period was €9.0 million. Profit for the period in the second quarter came to €14.3 (15.4) million.
The January – June gross profit came to €189.8 million (33.1%) against €193.3 million (35.4%) in 2016. Comparable gross profit amounted to €190.8 million (33.3%) against €194.8 million (35.6%) in 2016, mainly burdened by competitive price pressure, particularly in the European building solutions business.
The January – June operating profit came to €37.5 (38.4) million, or €38.8 (45.6) million in comparable operating profit, down 2.3% or 15.0% respectively from the first half year in 2016.
Items affecting comparability in January – June totalled €1.3 (7.2) million. Building Solutions – Europe's transformation programme related costs were €2.8 (5.9) million. Uponor Infra's transformation programme costs of €0.4 (1.0) million were offset by a gain of €1.9 (0.0) million on sale of premises in Vaasa.
Profitability, or the operating profit margin, for the first half-year was 6.5%, against 7.0% in the first half of 2016. The comparable operating profit margin came to 6.8% (8.3%).
Operating profit by segment (January – June):
| M€ | 1-6/2017 | 1-6/2016 | Change |
|---|---|---|---|
| Building Solutions – Europe | 15.4 | 13.1 | 18.3% |
| Building Solutions – North America | 21.1 | 25.7 | -17.9% |
| (Building Solutions – North America (M\$) | 23.1 | 28.6 | -19.4%) |
| Uponor Infra | 2.8 | 1.5 | 86.8% |
| Others | -1.9 | -1.6 | |
| Eliminations | 0.1 | -0.3 | |
| Total | 37.5 | 38.4 | -2.3% |
Comparable operating profit by segment (January – June):
| M€ | 1-6/2017 | 1-6/2016 | Change |
|---|---|---|---|
| Building Solutions – Europe | 18.2 | 19.0 | -3.9% |
| Building Solutions – North America | 21.1 | 25.7 | -17.9% |
| (Building Solutions – North America (M\$) | 23.1 | 28.6 | -19.4%) |
| Uponor Infra | 1.3 | 2.5 | -46.9% |
| Others | -1.9 | -1.3 | |
| Eliminations | 0.1 | -0.3 | |
| Total | 38.8 | 45.6 | -15.0% |
Financial expenses at €4.0 million were €1.5 million less than in the comparison period.
The share of the result in associated companies at €-1.1 million is related to the minority share in the joint venture company Phyn, whose offering is in the development and pilot phase and does not yet generate returns. Phyn was established on 1 July 2016. The activities of the joint venture are progressing according to the plan.
Profit before taxes for January – June totalled €32.4 (33.0) million. Taxes had a €10.7 (12.2) million effect on profits. The estimated tax rate for the full year was lowered from 35%, issued in the first quarter, to 33%.
Profit for the period in the period came to €21.7 (20.8) million. Earnings per share, both basic and diluted, for January – June totalled €0.29 (0.28). Equity per share, both basic and diluted, was €3.35 (3.22).
Investment and financing
Uponor's gross investments in January - June came to €19.3 (15.7) million. Depreciation and impairments amounted €19.6 (19.5) million. Investments in the second quarter mainly concerned capacity expansion and efficiency improvement.
Cash flow from business operations came to €1.5 (-3.4) million.
Maintaining adequate liquidity is, by default, a priority at Uponor. A basic tool for ensuring liquidity is the consistent implementation of a cautious policy with regard to credit risk. This includes actions such as actively following up on accounts receivable.
Volatility in the commodity markets in recent years has underlined the risk of possible disruptions in the continuous availability of Uponor's critical raw materials. Uponor is therefore continuing to focus on groupwide business continuity management and risk management within the supply chain, in particular. An updated internal Business Continuity Guideline was introduced in the spring of 2017.
The main, existing long-term funding source on 30 June 2017 was an €80 million bond maturing in June 2018. Since this bond matures in less than 12 months, Uponor arranged for its refinancing during the second quarter of 2017. Uponor has signed a committed 5-year bilateral loan agreement of €100 million, which will mature in full in the summer of 2022. None of the loan was withdrawn on 30 June 2017.
In addition to the above-mentioned funding arrangements, Uponor has outstanding, bilateral long-term loans of €50 million maturing in June 2021 and €20 million maturing in July 2021. As back-up funding arrangements, Uponor has four committed bilateral revolving credit facilities in force, totalling €200 million. These back-up facilities will mature in 2019-2021; none of them were used during the reporting period.
For short-term funding needs, Uponor's main source of funding is its domestic commercial paper programme, totalling €150 million, of which €58.9 million was in use and outstanding on the balance sheet date.
At 37.6% (37.9%), the Group's solvency has remained at a good level. Net interest-bearing liabilities were €208.9 (175.1) million, the increase mainly being driven by the acquisition of the minority holding in the joint venture, Phyn, in the summer of 2016, as well as an increase in net working capital. The period-end cash balance totalled €24.3 (24.8) million. Gearing came to 67.6% (58.5%), with the four-quarter rolling gearing being at 61.9% (47.1%).
Key events
On 4 May 2017, Uponor announced that its U.S. subsidiary, Uponor, Inc., part of the Building Solutions – North America segment, plans to begin expanding its manufacturing facility in Apple Valley, Minnesota with a €16.3 million (\$17.4 million) investment. This, the tenth expansion since operations began in Apple Valley in 1990, is expected to be completed by January 2018, adding 5,440 square metres (58,000 square feet) in manufacturing operations space related to crosslinked polyethylene (PEX) pipe production.
On 25 May 2017, Uponor officially opened its first manufacturing facility in China, thereby strengthening its foothold in the Asian building markets. Being the company's 14th manufacturing facility globally, the new facility in Taicang began operating at the end of 2016.
In the first quarter report, Uponor further referred to the following:
Uponor's Annual General Meeting on 20 March 2017 adopted the financial statements for 2016 and released the Board members and the managing director from liability. The AGM approved the proposed dividend of €0.46 per share for 2016.
Existing Board members Jorma Eloranta (chair), Markus Lengauer, Eva Nygren, Annika Paasikivi (deputy chair) and Jari Rosendal were re-elected, and Pia Aaltonen-Forsell was elected as a new member. Audit firm Deloitte & Touche Oy was elected as the auditor of the corporation.
The Board of Directors was authorised to buy back a maximum of 3.5 million of the company's own shares, and to resolve on issuing a maximum of 7.2 million new shares or transferring the company's own shares, amounting to approximately 9.8 per cent of the total number of shares. Further details regarding the AGM are available at http://investors.uponor.com/governance/general-meeting/agm-2017.
Human resources and administration
The number of Group full-time-equivalent employees averaged 3,915 (3,857) in January – June 2017, an increase of 58 persons from the same period in 2016. At the end of the period, the Group had 4,077 (3,964) employees, showing an increase of 113 employees. This growth mainly comes from Building Solutions – North America and from Asia, which is reported as part of Building Solutions – Europe, whose total personnel otherwise declined slightly due to reductions in European operations. The number of employees in Uponor Infra also decreased.
On 15 June 2017, the Board of Directors appointed Ms Minna Blomqvist (48), M.Sc. (Eng), as Executive Vice President, HR and as a member of Executive Committee at Uponor Corporation, succeeding Minna Schrey-Hyppänen who resigned from the company.
Share capital and shares
Uponor Corporation's share capital amounts to €146,446,888 and the number of shares totals 73,206,944. There were no changes in the share capital and number of shares during the reporting period.
The number of Uponor shares traded on Nasdaq Helsinki during the January – June reporting period was 13.3 (9.3) million shares, totalling €216.8 (123.5) million. The market value of share capital at the end of the period was €1.2 (1.0) billion and the number of shareholders was 17,900 (14,451). Trading of Uponor shares in Nasdaq Helsinki began with the new trading symbol, UPONOR, on Monday, 3 April 2017.
On 13 February 2017, the Board decided on a directed issue of 11,141 own shares to the management as part of a long-term share-based incentive plan. On 15 May, 1,303 of those shares were returned to the company on account of a participant's term of employment ending, making the total number of own shares in the company's possession 59,121 at the end of the second quarter.
Events after the reporting period
On 20 July 2017, Uponor announced that its U.S. business, Uponor North America, part of the Building Solutions – North America segment, has signed an agreement to acquire a 22,000 square metre manufacturing facility and real estate in the town of Hutchinson, Minnesota. The deal, which is worth €5.6 million (\$6.3 million), is expected to close by the end of August 2017. Uponor forecasts continued long-term growth in commercial and residential construction, and plans to use the facility to expand its PEX pipe manufacturing operations.
Short-term outlook
In the first half of 2017, building and construction trends in Uponor's international markets largely remained unchanged, driven by demographic demand. At the same time, concerns about the resilience of the global economy have mounted, mainly being driven by heightened political uncertainties and, in Europe, in particular, by those related to Brexit. So far, however, they have not fuelled business or consumer caution to any notable degree.
The encouraging improvement in demand noted in Europe since 2016, both in building solutions and infrastructure solutions, is therefore expected to continue. Likewise, in North America, despite short-term fluctuations, building solutions demand is expected to remain healthy, offering room for growth in both the shorter and longer term. Similar trends are expected to continue in infrastructure solution demand. The fundamental drivers behind this development are improved confidence, attractive credit terms, immigration, and longer-term pent up demand affecting the residential sectors of the market in particular.
Assuming that economic development in Uponor's key geographies otherwise continues undisturbed, Uponor repeats its earlier, full-year guidance for 2017:
The Group's net sales and comparable operating profit are expected to improve from 2016.
In its January – March interim report, Uponor estimated that the Group's capital expenditure, excluding any investment in shares, would be close to €60 million in 2017. If the acquisition of the U.S. manufacturing facility and real estate, announced on 20 July 2017, materialises as planned, capital expenditure is therefore estimated to exceed €60 million in 2017.
Uponor's financial performance may be affected by a range of strategic, operational, financial, legal, political and hazard risks. A more detailed risk analysis is provided in the section 'Key risks associated with business' in the Annual Report 2016.
Uponor Corporation Board of Directors
For further information, please contact: Jyri Luomakoski, President and CEO, tel. +358 20 129 2824 Maija Strandberg, CFO, tel. +358 20 129 2830
Tarmo Anttila Vice President, Communications Tel. +358 20 129 2852
DISTRIBUTION: Nasdaq Helsinki Media www.uponor.com
Uponor is a leading international systems and solutions provider for safe drinking water delivery, energyefficient radiant heating and cooling and reliable infrastructure. The company serves a variety of building markets including residential, commercial, industrial and civil engineering. Uponor employs about 3,900 employees in 30 countries, mainly in Europe and North America. In 2016, Uponor's net sales totalled €1.1 billion. Uponor is based in Finland and listed on Nasdaq Helsinki. www.uponor.com
Table part
This half year 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 2016. The change percentages reported have been calculated from the exact figures and not from the rounded figures published in the half year report.
Uponor provides comparable operating profit and comparable gross profit in order to provide useful and comparable information of its operative business performance. Comparable operating or gross profit excludes items affecting comparability (IAC). Items affecting comparability are exceptional transactions that are unrelated to normal business operations. Such items often include issues such as capital gains and losses, additional costs arising from site closures and other restructuring, additional write-downs, or reversals of writedowns, expenses due to accidents and disasters, environmental matters, legal proceedings and changes in regulation.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| M€ | 1-6/2017 | 1-6/2016 | 4-6/2017 | 4-6/2016 | 1-12/2016 |
|---|---|---|---|---|---|
| Continuing operations | |||||
| Net sales | 573.5 | 546.4 | 308.4 | 299.5 | 1,099.4 |
| Cost of goods sold | 383.7 | 353.1 | 210.0 | 194.0 | 723.4 |
| Gross profit | 189.8 | 193.3 | 98.4 | 105.5 | 376.0 |
| Other operating income | 2.6 | 2.0 | 2.3 | 1.4 | 4.2 |
| Dispatching and warehousing expenses | 17.1 | 17.9 | 8.4 | 9.1 | 34.6 |
| Sales and marketing expenses | 98.4 | 99.2 | 49.0 | 50.5 | 190.1 |
| Administration expenses | 27.1 | 29.4 | 13.8 | 15.3 | 58.9 |
| Other operating expenses | 12.3 | 10.4 | 6.6 | 5.5 | 25.6 |
| Operating profit | 37.5 | 38.4 | 22.9 | 26.5 | 71.0 |
| Financial expenses, net | 4.0 | 5.5 | 1.2 | 2.1 | 10.0 |
| Share of results in associated companies | -1.1 | 0.1 | -0.6 | 0.0 | -0.6 |
| Profit before taxes | 32.4 | 33.0 | 21.1 | 24.4 | 60.4 |
| Income taxes | 10.7 | 12.2 | 6.8 | 9.0 | 18.9 |
| Profit for period from continuing operations | 21.7 | 20.8 | 14.3 | 15.4 | 41.5 |
| Discontinued operations | |||||
| Profit for the period from discontinued operations | 0.0 | 0.4 | 0.0 | -0.1 | 0.4 |
| Profit for the period | 21.7 | 21.2 | 14.3 | 15.3 | 41.9 |
| Other comprehensive income | |||||
| Items that will not be reclassified subsequently to profit or loss | |||||
| Re-measurements on defined benefit pensions, | |||||
| net of taxes | - | - | - | - | 1.4 |
| Items that may be reclassified subsequently to profit or loss Translation differences |
-7.5 | -2.9 | -7.4 | 0.3 | 2.1 |
| Cash flow hedges, net of taxes | 0.3 | 0.3 | 0.4 | 0.5 | 1.4 |
| Net investment hedges | 1.1 | 0.7 | 0.9 | 0.0 | 0.2 |
| Other comprehensive income for the period, net of | |||||
| taxes | -6.1 | -1.9 | -6.1 | 0.8 | 5.1 |
| Total comprehensive income for the period | 15.6 | 19.3 | 8.2 | 16.1 | 47.0 |
| Profit/loss for the period attributable to | |||||
| - Equity holders of parent company | 21.0 | 20.7 | 12.7 | 13.5 | 42.2 |
| - Non-controlling interest | 0.7 | 0.5 | 1.6 | 1.8 | -0.3 |
| Comprehensive income for the period attributable to | |||||
| - Equity holders of parent company | 14.9 | 19.2 | 6.8 | 14.7 | 47.1 |
| - Non-controlling interest | 0.7 | 0.1 | 1.4 | 1.4 | -0.1 |
| Earnings per share, € | 0.29 | 0.28 | 0.18 | 0.18 | 0.58 |
| - Continuing operations | 0.29 | 0.28 | 0.18 | 0.19 | 0.57 |
| - Discontinued operations | - | 0.01 | - | 0.00 | 0.01 |
| Diluted earnings per share, € | 0.29 | 0.28 | 0.18 | 0.18 | 0.58 |
| - Continuing operations | 0.29 | 0.28 | 0.18 | 0.19 | 0.57 |
| - Discontinued operations | - | 0.01 | - | 0.00 | 0.01 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| M€ | 30.6.2017 | 30.6.2016 | 31.12.2016 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 233.8 | 221.7 | 240.9 |
| Intangible assets | 117.3 | 121.4 | 119.0 |
| Investments in associates and joint ventures | 11.4 | 0.3 | 13.3 |
| Other securities and non-current receivables | 20.5 | 21.3 | 21.4 |
| Deferred tax assets | 11.5 | 20.7 | 11.6 |
| Total non-current assets | 394.5 | 385.4 | 406.2 |
| Current assets | |||
| Inventories | 146.7 | 133.6 | 139.3 |
| Accounts receivable | 223.5 | 218.2 | 165.8 |
| Other receivables | 36.9 | 30.5 | 39.9 |
| Cash and cash equivalents | 24.3 | 24.8 | 16.3 |
| Total current assets | 431.4 | 407.1 | 361.3 |
| Total assets | 825.9 | 792.5 | 767.5 |
| Equity and liabilities | |||
| Equity | |||
| Equity attributable to the owners of the parent company | 244.7 | 235.4 | 263.3 |
| Non-controlling interest | 64.3 | 63.8 | 63.6 |
| Total equity | 309.0 | 299.2 | 326.9 |
| Non-current liabilities | |||
| Interest-bearing liabilities | 77.5 | 139.1 | 158.2 |
| Deferred tax liability | 11.3 | 25.1 | 11.8 |
| Provisions | 8.6 | 10.9 | 8.9 |
| Employee benefits and other liabilities | 24.8 | 28.0 | 25.2 |
| Total non-current liabilities | 122.2 | 203.1 | 204.1 |
| Current liabilities | |||
| Interest-bearing liabilities | 155.7 | 60.8 | 17.6 |
| Provisions | 19.4 | 15.6 | 19.9 |
| Accounts payable | 91.3 | 76.5 | 76.2 |
| Other liabilities | 128.3 | 137.3 | 122.8 |
| Total current liabilities | 394.7 | 290.2 | 236.5 |
| Total equity and liabilities | 825.9 | 792.5 | 767.5 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
| M€ | 1-6/2017 | 1-6/2016 | 1-12/2016 |
|---|---|---|---|
| Cash flow from operations | |||
| Net cash from operations | 59.2 | 55.1 | 105.3 |
| Change in net working capital | -45.9 | -41.9 | -16.6 |
| Income taxes paid | -9.7 | -14.6 | -24.9 |
| Interest paid | -2.2 | -2.1 | -4.1 |
| Interest received | 0.1 | 0.1 | 0.2 |
| Cash flow from operations | 1.5 | -3.4 | 59.9 |
| Cash flow from investments | |||
| Acquisition of subsidiaries and businesses | - | -31.3 | -31.4 |
| Acquisition of joint venture | - | - | -13.5 |
| Purchase of fixed assets | -19.3 | -15.7 | -50.7 |
| Proceeds from sale of fixed assets | 2.5 | 2.6 | 3.4 |
| Dividends received | 0.0 | - | 0.4 |
| Cash flow from investments | -16.8 | -44.4 | -91.8 |
| Cash flow from financing | |||
| Borrowings of debt | 58.9 | 75.3 | 97.3 |
| Repayment of debt | -20.6 | -41.6 | -58.8 |
| Change in other short-term loan | 19.5 | 23.3 | -5.4 |
| Dividends paid | -33.6 | -32.2 | -32.2 |
| Payment of finance lease liabilities | -0.5 | -0.5 | -1.1 |
| Cash flow from financing | 23.7 | 24.3 | -0.2 |
| Conversion differences for cash and cash equivalents | -0.4 | 0.1 | 0.2 |
| Change in cash and cash equivalents | 8.0 | -23.4 | -31.9 |
| Cash and cash equivalents at 1 January | 16.3 | 48.2 | 48.2 |
| Cash and cash equivalents at end of period | 24.3 | 24.8 | 16.3 |
| Changes according to balance sheet | 8.0 | -23.4 | -31.9 |
STATEMENT OF CHANGES IN EQUITY
| M€ | A | B | C | D* | E | F | G | H | I |
|---|---|---|---|---|---|---|---|---|---|
| Balance at | |||||||||
| 1 Jan 2017 | 146.4 | 50.2 | 0.4 | 0.9 | -0.5 | 65.9 | 263.3 | 63.6 | 326.9 |
| Total | |||||||||
| comprehensive | |||||||||
| income for the | |||||||||
| period | 0.3 | -6.4 | 21.0 | 14.9 | 0.7 | 15.6 | |||
| Dividend paid (€0.46 | |||||||||
| per share) | -33.6 | -33.6 | -33.6 | ||||||
| Share-based | |||||||||
| incentive plan | 0.1 | 0.0 | 0.1 | 0.1 | |||||
| Balance at | |||||||||
| 30 June 2017 | 146.4 | 50.2 | 0.7 | -5.5 | -0.4 | 53.3 | 244.7 | 64.3 | 309.0 |
| Balance at | |||||||||
| 1 Jan 2016 | 146.4 | 50.2 | -1.0 | -1.8 | -0.7 | 54.9 | 248.0 | 63.7 | 311.7 |
| Total | |||||||||
| comprehensive | |||||||||
| income for the | |||||||||
| period | 0.3 | -1.8 | 20.7 | 19.2 | 0.1 | 19.3 | |||
| Dividend paid (€0.44 | |||||||||
| per share) | -32.2 | -32.2 | -32.2 | ||||||
| Share-based | |||||||||
| incentive plan | 0.2 | 0.1 | 0.3 | 0.3 | |||||
| Other adjustments | 0.1 | 0.1 | 0.1 | ||||||
| Balance at | |||||||||
| 30 June 2016 | 146.4 | 50.2 | -0.7 | -3.6 | -0.5 | 43.6 | 235.4 | 63.8 | 299.2 |
*) Includes a €-14.1 (-14.8) million effective part of net investment hedging at the end of period.
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
NOTES TO THE CONSOLIDATED HALF YEAR FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
The half year 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 2016.
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
| M€ | 30.6.2017 | 30.6.2016 | 31.12.2016 |
|---|---|---|---|
| Gross investment | 19.3 | 15.7 | 50.7 |
| - % of net sales | 3.4 | 2.9 | 4.6 |
| Depreciation and impairments | 19.6 | 19.5 | 41.6 |
| Book value of disposed fixed assets | 0.4 | 1.6 | 2.3 |
| PERSONNEL | |||
| Converted to full time employees | 1-6/2017 | 1-6/2016 | 1-12/2016 |
| Average | 3,915 | 3,857 | 3,869 |
| At the end of the period | 4,077 | 3,964 | 3,868 |
| OWN SHARES | 30.6.2017 | 30.6.2016 | 31.12.2016 |
| Own shares held by the company, pcs | 59,121 | 68,959 | 68,959 |
| - of share capital, % | 0.1 | 0.1 | 0.1 |
| - of voting rights, % | 0.1 | 0.1 | 0.1 |
SEGMENT INFORMATION
| 1-6/2017 | 1-6/2016 | |||||
|---|---|---|---|---|---|---|
| M€ | External | Internal | Total | External | Internal | Total |
| Net sales by segment, continuing operations | ||||||
| Building Solutions - Europe | 259.3 | 0.6 | 259.9 | 257.6 | 0.2 | 257.8 |
| Building Solutions - North America | 157.5 | 0.0 | 157.5 | 150.9 | 0.0 | 150.9 |
| Uponor Infra | 156.7 | 0.7 | 157.4 | 137.9 | 2.0 | 139.9 |
| Eliminations | - | -1.3 | -1.3 | - | -2.2 | -2.2 |
| Total | 573.5 | - | 573.5 | 546.4 | - | 546.4 |
| 4-6/2017 | 4-6/2016 | |||||
| M€ | External | Internal | Total | External | Internal | Total |
| Net sales by segment, continuing operations | ||||||
| Building Solutions - Europe | 135.2 | 0.4 | 135.6 | 134.7 | 0.1 | 134.8 |
| Building Solutions - North America | 79.3 | 0.0 | 79.3 | 80.2 | 0.0 | 80.2 |
| Uponor Infra | 93.9 | 0.4 | 94.3 | 84.6 | 1.2 | 85.8 |
| Eliminations | - | -0.8 | -0.8 | - | -1.3 | -1.3 |
| Total | 308.4 | - | 308.4 | 299.5 | - | 299.5 |
| 1-12/2016 |
| M€ | External | Internal | Total |
|---|---|---|---|
| Net sales by segment, continuing operations | |||
| Building Solutions - Europe | 510.2 | 0.8 | 511.0 |
| Building Solutions - North America | 305.6 | 0.0 | 305.6 |
| Uponor Infra | 283.6 | 4.3 | 287.9 |
| Eliminations | - | -5.1 | -5.1 |
| Total | 1,099.4 | - | 1,099.4 |
| M€ | 1-6/2017 | 1-6/2016 | 4-6/2017 | 4-6/2016 | 1-12/2016 |
|---|---|---|---|---|---|
| Operating result by segment, continuing operations | |||||
| Building Solutions - Europe | 15.4 | 13.1 | 9.1 | 8.2 | 25.4 |
| Building Solutions - North America | 21.1 | 25.7 | 10.5 | 14.6 | 50.0 |
| Uponor Infra | 2.8 | 1.5 | 4.7 | 5.1 | -0.8 |
| Others | -1.9 | -1.6 | -1.0 | -0.9 | -2.0 |
| Eliminations | 0.1 | -0.3 | -0.4 | -0.5 | -1.6 |
| Total | 37.5 | 38.4 | 22.9 | 26.5 | 71.0 |
| M€ | 1-6/2017 | 1-6/2016 | 1-12/2016 | ||
| Segment depreciation and impairments, continuing operations | |||||
| Building Solutions - Europe | 7.3 | 6.8 | 14.2 | ||
| Building Solutions - North America | 6.0 | 5.1 | 10.7 | ||
| Uponor Infra | 5.3 | 5.3 | 13.1 | ||
| Others | 1.0 | 2.3 | 3.6 | ||
| Eliminations | 0.0 | 0.0 | 0.0 | ||
| Total | 19.6 | 19.5 | 41.6 | ||
| Segment investments, continuing operations | |||||
| Building Solutions - Europe | 3.6 | 4.9 | 14.4 | ||
| Building Solutions - North America | 11.4 | 4.8 | 20.8 | ||
| Uponor Infra | 4.1 | 5.6 | 14.3 | ||
| Others | 0.2 | 0.4 | 1.2 | ||
| Total | 19.3 | 15.7 | 50.7 | ||
| M€ | 30.6.2017 | 30.6.2016 | 31.12.2016 | ||
| Segment assets | |||||
| Building Solutions - Europe | 415.0 | 401.1 | 397.2 | ||
| Building Solutions - North America | 219.4 | 205.2 | 222.5 | ||
| Uponor Infra | 218.4 | 218.0 | 196.8 | ||
| Others | 306.1 | 287.8 | 301.4 | ||
| Eliminations | -333.0 | -319.6 | -350.4 | ||
| Total | 825.9 | 792.5 | 767.5 | ||
| Segment liabilities | |||||
| Building Solutions - Europe | 337.8 | 346.3 | 325.5 | ||
| Building Solutions - North America | 147.0 | 137.9 | 156.0 | ||
| Uponor Infra | 85.6 | 85.4 | 65.1 | ||
| Others | 303.9 | 268.9 | 269.5 | ||
| Eliminations | -357.4 | -345.2 | -375.5 | ||
| Total | 516.9 | 493.3 | 440.6 |
The presentation of segment assets and liabilities has changed as of the beginning of 2017 due to a transfer of non-operative companies from the segment Others to the segments Building Solutions - Europe and Building Solutions - North America, causing a change in elimination of internal receivables and liabilities. The comparable data have been adjusted accordingly.
| 1-6/2017 | 1-6/2016 | 1-12/2016 | |
|---|---|---|---|
| Segment personnel, continuing operations, average | |||
| Building Solutions - Europe | 2,040 | 2,049 | 2,037 |
| Building Solutions - North America | 775 | 656 | 682 |
| Uponor Infra | 1,024 | 1,087 | 1,081 |
| Others | 77 | 67 | 69 |
| Total | 3,915 | 3,857 | 3,869 |
16 I 25 July 2017 I Half year financial report 1-6/2017
Reconciliation
| M€ | 1-6/2017 | 1-6/2016 | 1-12/2016 |
|---|---|---|---|
| Operating result by segment, continuing operations | |||
| Total result for reportable segments | 39.3 | 40.3 | 74.6 |
| Others | -1.9 | -1.6 | -2.0 |
| Eliminations | 0.1 | -0.3 | -1.6 |
| Operating profit | 37.5 | 38.4 | 71.0 |
| Financial expenses, net | 4.0 | 5.5 | 10.0 |
| Share of results in associated companies | -1.1 | 0.1 | -0.6 |
| Profit before taxes | 32.4 | 33.0 | 60.4 |
CONTINGENT LIABILITIES AND ASSETS
| M€ | 30.6.2017 | 30.6.2016 | 31.12.2016 |
|---|---|---|---|
| Commitments of purchase PPE (Property, plant, equipment) | 20.3 | 14.9 | 9.7 |
| Other commitments | 0.6 | 0.8 | 0.6 |
| - on own behalf | |||
| Pledges at book value | 0.1 | 0.1 | 0.1 |
| Mortgages issued | 2.1 | 3.8 | 2.5 |
| Guarantees issued | 5.4 | 4.7 | 5.0 |
| - on behalf of a subsidiary | |||
| Guarantees issued | 30.7 | 39.4 | 34.1 |
Letter of Comfort commitments undertaken on behalf of subsidiaries
are not included in the above figures
| Pledges at book value | 0.1 | 0.1 | 0.1 |
|---|---|---|---|
| Mortgages issued | 2.1 | 3.8 | 2.5 |
| Guarantees issued | 36.1 | 44.1 | 39.1 |
| Total | 38.3 | 48.0 | 41.7 |
Uponor Corporation's subsidiary in Spain, Uponor Hispania, S.A.U, had tax audits covering financial years 2006-2007 and 2011-2012. As a result of the audits, the tax authority rejected the tax deductibility of costs related to certain Group services and to advertising and promotion. As a result of this, Uponor Hispania has paid €0.7 million in taxes and in interest on delayed payments and booked a provision of €0.4 million to cover further delayed interest payments. The company has started a process to avoid double taxation.
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 has sought leave to appeal to the supreme administrative court. Uponor has also started a process to avoid possible double taxation. The surtaxes and the interest on delayed payments has been recorded as expenses in 2011. The paid taxes at €9.6 million have been booked as receivables. The tax receivable is reported in 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€ | 30.6.2017 | 30.6.2016 | 31.12.2016 |
|---|---|---|---|
| OPERATING LEASE COMMITMENTS | 45.0 | 44.4 | 47.7 |
DERIVATIVE CONTRACTS AND FAIR VALUE HIERARCIES
| M€ | Nominal value |
Fair value |
Nominal value |
Fair value |
Nominal value |
Fair value |
|---|---|---|---|---|---|---|
| 30.6.2017 | 30.6.2017 | 30.6.2016 | 30.6.2016 | 31.12.2016 | 31.12.2016 | |
| Currency derivatives | ||||||
| - Forward agreements | 180.1 | 2.5 | 202.3 | -0.7 | 187.7 | -0.6 |
| Interest derivatives | ||||||
| - Interest rate swaps | 50.0 | -1.0 | 55.0 | -2.1 | 50.0 | -1.5 |
| - Interest rate options | 20.0 | 0.0 | 20.0 | 0.1 | 20.0 | 0.1 |
| Commodity derivatives | ||||||
| - Forward agreements | 5.3 | -0.3 | 4.7 | -1.3 | 5.8 | -0.2 |
FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT CATEGORY
| 30.6.2017 | Financial | Carrying | |||||
|---|---|---|---|---|---|---|---|
| M€ | Derivative | Financial | liabilities | amount | |||
| contracts, | assets/liabilities | Available | measured | by | IFRS 7 | ||
| under | at fair value | for sales | at | balance | Fair value | ||
| hedge | through profit and | Loans and | financial | amortised | sheet | hierarchy | |
| accounting | loss | receivables | assets | cost | item | level | |
| Non-current financial | |||||||
| assets | |||||||
| Other shares and | |||||||
| holdings | 0.2 | 0.2 | |||||
| Electricity derivatives | 0.1 | 0.1 | 1 | ||||
| Non-current | |||||||
| receivables | 20.2 | 20.2 | |||||
| Current financial | |||||||
| assets | |||||||
| Accounts receivable | |||||||
| and other receivables | 247.8 | 247.8 | |||||
| Electricity derivatives | 0.0 | 0.0 | 1 | ||||
| Other derivative | |||||||
| contracts | 0.2 | 3.0 | 3.2 | 2 | |||
| Cash and cash | |||||||
| equivalents | 24.3 | 24.3 | |||||
| Carrying amount | 0.3 | 3.0 | 292.3 | 0.2 | 295.8 | ||
| Non-current financial | |||||||
| liabilities | |||||||
| Interest bearing | |||||||
| liabilities | 77.5 | 77.5 | |||||
| Electricity derivatives | 0.1 | 0.1 | 1 | ||||
| Current financial | |||||||
| liabilities | |||||||
| Interest bearing | |||||||
| liabilities | 155.7 | 155.7 | |||||
| Electricity derivatives | 0.3 | 0.3 | 1 | ||||
| Other derivative | |||||||
| contracts | 1.0 | 0.6 | 1.6 | 2 | |||
| Accounts payable and | |||||||
| other liabilities | 144.3 | 144.3 |
| Carrying amount | 1.4 | 0.6 | 377.5 | 379.5 | |||
|---|---|---|---|---|---|---|---|
| 30.6.2016 | Financial | Carrying | |||||
| M€ | Derivative | Financial | liabilities | amount | |||
| contracts, | assets/liabilities | Available | measured | by | IFRS 7 | ||
| under | at fair value | for sales | at | balance | Fair value | ||
| hedge | through profit and | Loans and | financial | amortised | sheet | hierarchy | |
| accounting | loss | receivables | assets | cost | item | level | |
| Non-current financial assets |
|||||||
| Other shares and | |||||||
| holdings | 0.3 | 0.3 | |||||
| Non-current | |||||||
| receivables | 21.1 | 21.1 | |||||
| Current financial | |||||||
| assets | |||||||
| Accounts receivable | |||||||
| and other receivables | 238.7 | 238.7 | |||||
| Other derivative | |||||||
| contracts | 0.1 | 1.4 | 1.5 | 2 | |||
| Cash and cash | |||||||
| equivalents | 24.8 | 24.8 | |||||
| Carrying amount | 0.1 | 1.4 | 284.6 | 0.3 | 286.4 | ||
| Non-current financial | |||||||
| liabilities | |||||||
| Interest bearing | |||||||
| liabilities | 139.1 | 139.1 | |||||
| Electricity derivatives | |||||||
| 0.6 | 0.6 | 1 | |||||
| Current financial | |||||||
| liabilities Interest bearing |
|||||||
| liabilities | 60.8 | 60.8 | |||||
| Electricity derivatives | |||||||
| 0.7 | 0.7 | 1 | |||||
| Other derivative | |||||||
| contracts | 2.3 | 1.9 | 4.2 | 2 | |||
| Accounts payable and | |||||||
| other liabilities Carrying amount |
127.7 | 127.7 | |||||
| 3.6 | 1.9 | 327.6 | 333.1 | ||||
| 31.12.2016 | Financial | Carrying | |||||
| M€ | Derivative | Financial | liabilities | amount | |||
| contracts, | assets/liabilities | Available | measured | by | IFRS 7 | ||
| under | at fair value | for sales | at | balance | Fair value | ||
| hedge | through profit and | Loans and | financial | amortised | sheet | hierarchy | |
| accounting | loss | receivables | assets | cost | item | level | |
| Non-current financial | |||||||
| assets | |||||||
| Other shares and | |||||||
| holdings | 0.3 | 0.3 | |||||
| Electricity derivatives | 0.1 | 0.1 | 1 | ||||
| Other derivative | |||||||
| contracts | 0.1 | 0.1 | 2 | ||||
| Non-current | |||||||
| receivables | 20.9 | 20.9 |
19 I 25 July 2017 I Half year financial report 1-6/2017
| Current financial | |||||||
|---|---|---|---|---|---|---|---|
| assets | |||||||
| Accounts receivable | |||||||
| and other receivables | 193.5 | 193.5 | |||||
| Electricity derivatives | 0.1 | 0.1 | 1 | ||||
| Other derivative | |||||||
| contracts | 1.6 | 1.6 | 2 | ||||
| Cash and cash | |||||||
| equivalents | 16.3 | 16.3 | |||||
| Carrying amount | 0.2 | 1.7 | 230.7 | 0.3 | 232.9 | ||
| Non-current financial | |||||||
| liabilities | |||||||
| Interest bearing | |||||||
| liabilities | 158.2 | 158.2 | |||||
| Electricity derivatives | 0.2 | 0.2 | 1 | ||||
| Current financial | |||||||
| liabilities | |||||||
| Interest bearing | |||||||
| liabilities | 17.6 | 17.6 | |||||
| Electricity derivatives | 0.3 | 0.3 | 1 | ||||
| Other derivative | |||||||
| contracts | 1.6 | 2.1 | 3.7 | 2 | |||
| Accounts payable and | |||||||
| other liabilities | 102.6 | 102.6 | |||||
| Carrying amount | 2.1 | 2.1 | 278.4 | 282.6 |
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)
RELATED-PARTY TRANSACTIONS
| M€ | 1-6/2017 | 1-6/2016 | 1-12/2016 |
|---|---|---|---|
| Continuing operations | |||
| Purchases from associated companies | 1.1 | 0.9 | 1.9 |
| Balances at the end of the period | |||
| Accounts payables and other liabilities | 0.1 | 0.1 | 0.1 |
KEY FIGURES
| 1-6/2017 | 1-6/2016 | 1-12/2016 | |
|---|---|---|---|
| Earnings per share, € | 0.29 | 0.28 | 0.58 |
| - continuing operations | 0.29 | 0.28 | 0.57 |
| - discontinued operations | - | 0.01 | 0.01 |
| Operating profit (continuing operations), % | 6.5 | 7.0 | 6.5 |
| Return on equity, % (p.a.) | 13.6 | 13.9 | 13.1 |
| Return on investment, % (p.a.) | 13.6 | 15.3 | 14.1 |
| Solvency ratio, % | 37.6 | 37.9 | 42.8 |
| Gearing, % | 67.6 | 58.5 | 48.8 |
| Gearing, % rolling 4 quarters | 61.9 | 47.1 | 56.7 |
| Net interest-bearing liabilities | 208.9 | 175.1 | 159.5 |
| Equity per share, € | 3.35 | 3.22 | 3.60 |
| - diluted | 3.35 | 3.22 | 3.60 |
| Trading price of shares | |||
| - low, € | 14.93 | 11.13 | 11.13 |
| - high, € | 17.49 | 15.80 | 17.35 |
| - average, € | 16.29 | 13.27 | 14.64 |
| Shares traded | |||
| - 1,000 pcs | 13,311 | 9,309 | 20,339 |
| - M€ | 217 | 123 | 298 |
QUARTERLY DATA
| 4-6/ | 1-3/ | 10-12/ | 7-9/ | 4-6/ | 1-3/ | |
|---|---|---|---|---|---|---|
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | |
| Continuing operations | ||||||
| Net sales, M€ | 308.4 | 265.1 | 268.9 | 284.1 | 299.5 | 246.9 |
| - Building Solutions – Europe | 135.6 | 124.3 | 125.8 | 127.3 | 134.8 | 123.0 |
| - Building Solutions – North America | 79.3 | 78.2 | 77.2 | 77.5 | 80.2 | 70.7 |
| Building Solutions – North America, \$ | 88.7 | 83.5 | 82.7 | 86.3 | 90.0 | 78.2 |
| - Uponor Infra | 94.3 | 63.1 | 67.2 | 80.9 | 85.8 | 54.1 |
| Gross profit, M€ | 98.4 | 91.4 | 85.9 | 96.8 | 105.5 | 87.8 |
| - Gross profit, % | 31.9 | 34.5 | 32.0 | 34.1 | 35.2 | 35.5 |
| Operating profit, M€ | 22.9 | 14.6 | 7.5 | 25.1 | 26.5 | 11.9 |
| - Building Solutions – Europe | 9.1 | 6.3 | 1.6 | 10.7 | 8.2 | 4.9 |
| - Building Solutions – North America | 10.5 | 10.6 | 11.9 | 12.4 | 14.6 | 11.1 |
| Building Solutions – North America, \$ | 11.7 | 11.4 | 12.7 | 13.8 | 16.3 | 12.3 |
| - Uponor Infra | 4.7 | -1.9 | -5.0 | 2.7 | 5.1 | -3.6 |
| - Others | -1.0 | -0.9 | -0.7 | -0.1 | -0.9 | -0.7 |
| Operating profit, % of net sales | 7.4 | 5.5 | 2.8 | 8.8 | 8.8 | 4.8 |
| - Building Solutions – Europe | 6.8 | 5.0 | 1.2 | 8.5 | 6.0 | 4.0 |
| - Building Solutions – North America | 13.2 | 13.6 | 15.4 | 16.0 | 18.2 | 15.7 |
| - Uponor Infra | 5.0 | -3.0 | -7.4 | 3.3 | 6.0 | -6.7 |
| Profit for the period, M€ | 14.3 | 7.4 | 5.9 | 14.8 | 15.4 | 5.9 |
| Balance sheet total, M€ | 825.9 | 812.9 | 767.5 | 803.7 | 792.5 | 748.7 |
| Earnings per share, € | 0.18 | 0.11 | 0.11 | 0.19 | 0.19 | 0.09 |
| Equity per share, € | 3.35 | 3.25 | 3.60 | 3.41 | 3.22 | 3.01 |
| Market value of share capital, M€ | 1,164.7 | 1,216,0 | 1,208.6 | 1,206.5 | 1,038.1 | 934.1 |
| Return on investment, % (p.a.) Net interest-bearing liabilities |
13.6 | 9.9 | 14.1 | 16.9 | 15.3 | 8.9 |
| at the end of the period, M€ | 208.9 | 224.0 | 159.5 | 177.5 | 175.1 | 176.5 |
| Gearing, % | 67.6 | 74.5 | 48.8 | 56.6 | 58.5 | 62.4 |
| Gearing, % rolling 4 quarters | 61.9 | 59.6 | 56.7 | 51.8 | 47.1 | 44.3 |
| Gross investment, M€ | 11.5 | 7.8 | 21.0 | 14.0 | 10.4 | 5.3 |
| - % of net sales | 3.7 | 2.9 | 7.8 | 4.9 | 3.5 | 2.1 |
ITEMS AFFECTING COMPARABILITY AND RECONCILIATIONS TO IFRS
| 4-6/ | 1-3/ | 10-12/ | 7-9/ | 4-6/ | 1-3/ | |
|---|---|---|---|---|---|---|
| 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | |
| Items affecting comparability | ||||||
| Restructuring charges | -2.8 | -0.6 | -8.6 | -3.9 | -4.2 | -3.0 |
| Capital gains and losses on sale of non | ||||||
| current assets | 1.9 | 0.2 | - | - | - | |
| Total items affecting comparability in | ||||||
| operating profit | -0.9 | -0.4 | -8.6 | -3.9 | -4.2 | -3.0 |
| Items affecting comparability, total | -0.9 | -0.4 | -8.6 | -3.9 | -4.2 | -3.0 |
| Comparable gross profit | ||||||
| Gross profit | 98.4 | 91.4 | 85.9 | 96.8 | 105.5 | 87.8 |
| Less: Items affecting comparability in gross | ||||||
| profit | -0.8 | -0.2 | -5.6 | -0.8 | -0.8 | -0.7 |
| Comparable gross profit | 99.2 | 91.6 | 91.5 | 97.6 | 106.3 | 88.5 |
| % of sales | 32.1 | 34.6 | 34.1 | 34.4 | 35.5 | 35.8 |
| Comparable operating profit | ||||||
| Operating profit | 22.9 | 14.6 | 7.5 | 25.1 | 26.5 | 11.9 |
| Less: Items affecting comparability in | ||||||
| operating profit | -0.9 | -0.4 | -8.6 | -3.9 | -4.2 | -3.0 |
| Comparable operating profit | 23.8 | 15.0 | 16.1 | 29.0 | 30.7 | 14.9 |
| % of sales | 7.7 | 5.7 | 6.0 | 10.2 | 10.2 | 6.0 |
| Comparable operating profit by segment | ||||||
| Building Solutions - Europe | ||||||
| Operating profit | 9.1 | 6.3 | 1.6 | 10.7 | 8.2 | 4.9 |
| Less: Items affecting comparability in | ||||||
| operating profit | -2.4 | -0.4 | -5.6 | -0.9 | -3.3 | -2.6 |
| Comparable operating profit | 11.5 | 6.7 | 7.2 | 11.6 | 11.5 | 7.5 |
| % of sales | 8.5 | 5.4 | 5.7 | 9.2 | 8.5 | 6.1 |
| Building Solutions - North America | ||||||
| Operating profit | 10.5 | 10.6 | 11.9 | 12.4 | 14.6 | 11.1 |
| Comparable operating profit | 10.5 | 10.6 | 11.9 | 12.4 | 14.6 | 11.1 |
| % of sales | 13.2 | 13.6 | 15.4 | 16.0 | 18.2 | 15.7 |
| Uponor Infra | ||||||
| Operating profit Less: Items affecting comparability in |
4.7 | -1.9 | -5.0 | 2.7 | 5.1 | -3.6 |
| operating profit | 1.5 | 0.0 | -3.0 | -3.2 | -0.6 | -0.4 |
| Comparable operating profit | 3.2 | -1.9 | -2.0 | 5.9 | 5.7 | -3.2 |
| % of sales | 3.5 | -3.1 | -2.9 | 7.2 | 6.7 | -6.0 |
| Others | ||||||
| Operating profit | -1.0 | -0.9 | -0.3 | -0.1 | -0.9 | -0.7 |
| Less: Items affecting comparability in | ||||||
| operating profit Comparable operating profit |
- -1.0 |
- -0.9 |
0.0 -0.3 |
0.2 -0.3 |
-0.3 -0.6 |
- -0.7 |
| % of sales | na | na | na | na | na | na |
23 I 25 July 2017 I Half year financial report 1-6/2017
DEFINITIONS OF KEY RATIOS
| Return on Equity (ROE), % | |
|---|---|
| = | Profit before taxes – taxes |
| –––––––––––––––––––––––––––––––––––––––– x 100 Total equity, average |
|
| Return on Investment (ROI), % | |
| = | Profit before taxes + interest and other financing costs |
| ––––––––––––––––––––––––––––––––––––-----------–––– x 100 Balance sheet total – non-interest-bearing liabilities, average |
|
| Solvency, % | |
| = | Total equity |
| ––––––––––––––––––––––––––––––––––––----- x 100 Balance sheet total – advance payments received |
|
| Gearing, % | |
| = | Net interest-bearing liabilities |
| –––––––––––––––––––––––––––––––––--------- x 100 Total equity |
|
| Net interest-bearing liabilities | |
| = | Interest-bearing liabilities – cash and cash equivalents excluding restricted cash |
| Earnings per share (EPS) | |
| = | Profit for the period attributable to equity holders of the parent company |
| –––––––––––––––––––––––––––––––––––––––––––––––––-------------- Average number of shares adjusted for share issue in financial period excluding treasury shares |
|
| Equity per share ratio | |
| = | Equity attributable to the owners of the parent company |
| ––––––––––––––––––––––––––––––––––––––––––––----------– Number of shares adjusted for share issue at end of year |
|
| Average share price | |
| = | Total value of shares traded (€) |
| ––––––––––––––––––––––––––– Total number of shares traded |
|
| Gross profit margin | |
| = | Gross profit |
| ––––––––––––––––––––––––––– x 100 Net sales |
|
| Operating profit margin | |
| Operating profit | |
| = | ––––––––––––––––––––––––––– x 100 Net sales |
| Comparable gross profit margin | |
| = | Gross profit – items affecting comparability ––––––––––––––––––––––––––––––––––––––––––––----------– x 100 |
| Net sales | |
| Comparable operating profit margin | |
| = | Operating profit – items affecting comparability ––––––––––––––––––––––––––––––––––––––––––––----------– x 100 |
| Net sales |
24 I 25 July 2017 I Half year financial report 1-6/2017