Uponor Corporation Interim report January-March 2010 28 April 2010
Severe winter affected building activity
- Construction markets recovering from the economic crisis were affected by the
severe winter in Q1 - especially felt in the infrastructure business
- As a result of adjustments and streamlining, Uponor's profitability improved
- Net sales in January-March totalled EUR 157.4 (171.0) million; a change of
-8.0%
- Operating profit for January-March totalled EUR 1.5 (-1.0) million; up +2.5
million
- Earnings per share were EUR -0.03 (-0.05)
- Return on investment was -1.1% (-3.0%), and gearing 60.4% (58.6%)
- Cash flow from business operations fell to EUR -28.0 (-14.0) million
- Full-year guidance remains unchanged
(Figures for continuing operations unless otherwise stated.)
President and CEO Jyri Luomakoski comments on the reporting period:
- Despite the additional challenges caused by the severe winter, Uponor's
financial performance in the first quarter shows that last year's savings and
streamlining measures have been successful. Despite the fall in net sales, we
have been able to achieve a positive operating profit after last year's
operating loss.
- We have strengthened our competitiveness in various ways, and are well
positioned to respond to future challenges. The importance of building
technology is becoming increasingly pronounced in green building and green
living, and Uponor can offer ecological solutions which create cost savings over
their life cycle.
- We are confident that a large part of the business lost during January and
February will be recovered by the end of the year, provided the weather
conditions are normal. This year, we expect the construction markets to develop
steadily, although growth will remain slow.
Webcast and presentation material:
Following the release of this report, the presentation material for the interim
report will be available at www.uponor.com > Investors > News & downloads.
The webcast from the release briefing will be broadcast in English today at
10:00 am. Access the webcast at www.uponor.com > Investors.
Questions for the webcast can be sent in advance to ir@uponor.com.
Markets
Construction markets slowly recovering from the international economic crisis
have been hit hard by the severe winter in most of the northern hemisphere. As a
result, development in housing construction and infrastructure solutions, in
particular, has been weaker than expected. During January and February,
construction site shutdowns and project delays caused industry demand to trail 3
to 6 weeks behind schedule, depending on the market. The onrush of spring in
March clearly stimulated the markets, but it is unlikely that all of the missed
demand will be recovered by the end of the year.
A gradual recovery from the recession in the construction industry, which began
in the latter half of 2007, is finally underway. Excluding southwest Europe and
some markets in Eastern Europe, the decline in overall demand in construction
has mostly come to a halt and signs of upward trends are visible. In the Nordic
countries, demand has increased rapidly, which is at least partly due to the
timely public recovery measures. In North America, the budding growth seen in
the latter half of last year levelled out during the reporting period.
With respect to our various market segments, renovation and modernisation
projects together with 1&2 family housing starts have developed strongly whereas
fewer commercial and public buildings are being designed and built than in 2009.
In some markets, the limited availability of financing continues to slow down
the launch of major construction projects.
Net sales
Uponor's net sales in the first quarter of 2010 were EUR 157.4 (2009: 171.0)
million, down by 8.0 per cent on a year earlier. Traditionally, fluctuations in
the first quarter are large, primarily due to the impact of weather conditions
on winter construction. This year the cold winter, with its generous snowfall,
particularly hampered infrastructure projects in the Nordic countries, and
housing construction in Germany as well as other parts of Central and Eastern
Europe.
In Uponor's product segments, a slight increase due to the favourable
development in the Nordic countries, in particular, was manifest in sales of
indoor climate solutions. Demand was further stimulated by customers' desire to
use energy-efficient heating and cooling solutions based on renewable energy
sources - Uponor's new solutions provide the perfect answer to this need.
Uponor's plumbing solutions progressed well in the Nordic countries, in new
housing projects and especially in renovation and modernisation projects. In
Central Europe, their performance was weaker.
Competition in the markets remains keen. The combined effect of over capacity
and a reduced number of projects has resulted in an emphasis on price when
bidding for smaller projects. Uponor has systematically invested in R&D in new
products and solutions. One result is the automatically adjusting heating and
cooling control system introduced in 2009, which has been well received by
installers and end users. The new composite riser system, together with its
range of fittings and fixtures facilitating easy installation, was launched in
Europe and has been a success, especially in the Spanish market. The new
customer segmentation project initiated last year has also had a positive impact
on sales development.
In North America, Uponor's building solution sales in local currency increased
slightly from a year ago, mainly thanks to the pull of the Canadian market.
The sharp decline in infrastructure sales witnessed in the Nordic and Baltic
countries was due to the severe winter. Net sales were further suppressed by the
increase in competition caused by the reduction in the number of projects.
There was a positive impact of 2.8 million euros from currency fluctuations on
net sales year-on-year.
Net sales by segment (January-March):
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | Change |
| | 2010 | 2009 | |
--------------------------------------------------------------------------------
| Building Solutions, Europe | 112.0 | 115.6 | -3.1% |
--------------------------------------------------------------------------------
| Building Solutions, North America | 24.5 | 25.0 | -1.7% |
--------------------------------------------------------------------------------
| (Building Solutions, North America, USD | 33.6 | 32.3 | 4.0%) |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 21.9 | 31.4 | -30.4% |
--------------------------------------------------------------------------------
| Eliminations | -1.0 | -1.0 | |
--------------------------------------------------------------------------------
| Total | 157.4 | 171.0 | -8.0% |
--------------------------------------------------------------------------------
Results and profitability
Uponor's operating profit from continuing operations totalled EUR 1.5 (-1.0)
million, which is up from the first quarter in 2009. Operating profit margin
improved to 1.0 per cent from the -0.6 per cent reported a year ago.
The unsatisfactory level of operating profit is primarily due to the decrease in
net sales resulting from the combined effect of the economic low and the severe
winter weather, which caused a decline in construction in January and February.
Factors contributing to the strengthening of the operating profit included
savings measures initiated last year and the resulting lower level of costs than
a year ago.
The improved performance of Uponor's supply chain together with the increase in
profitability in all geographic areas resulted in a clear improvement in the
operating profit of building solutions in Europe. In North America, operating
loss decreased in euros as well as in U.S. dollars. Infrastructure solutions
posted an operating loss due to severe winter conditions causing building sites
to shut down, and the operating profit of the first quarter was further eroded
by maintenance operations scheduled to be carried our during the low season.
The impact of currency fluctuations on operating profit was +0.2 million euros.
Operating profit by segment (January-March):
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | Change |
| | 2010 | 2009 | |
--------------------------------------------------------------------------------
| Building solutions, Europe | 9.0 | 3.3 | 176.8% |
--------------------------------------------------------------------------------
| Building solutions, North America | -1.8 | -3.2 | 42.5% |
--------------------------------------------------------------------------------
| (Building solutions, North America, USD | -2.5 | -4.1 | 39.3%) |
--------------------------------------------------------------------------------
| Infrastructure solutions | -4.0 | 0.5 | -893.3% |
--------------------------------------------------------------------------------
| Other | -1.9 | -2.4 | |
--------------------------------------------------------------------------------
| Eliminations | 0.2 | 0.8 | |
--------------------------------------------------------------------------------
| Total | 1.5 | -1.0 | 255.9% |
--------------------------------------------------------------------------------
The Group's expenses of EUR 0.4 million from discontinued operations are caused
by the environmental decontamination measures associated with the factory
property for sale.
Profit before taxes for January-March totalled EUR -2.6 (-5.2) million. Capital
gains due to taxes were positive, at EUR +0.8 (+1.5) million. The tax rate rose
to 30.0 (28.0) per cent. The reporting period's losses totalled EUR -1.8 (EUR
-3.7) million. Earnings per share were EUR -0.03 (-0.05), both basic and
diluted. Equity per share was EUR 3.07 (EUR 3.31), basic and diluted.
Investment and financing
Investments related to the transfer of Denmark's infrastructure production in
the Nordic countries were completed during the reporting period. No significant
new investment projects were initiated.
Gross investments in the first quarter came to EUR 1.8 (4.0) million, clearly
less than depreciation which amounted to EUR 7.5 (7.8) million. Cash flow from
business operations decreased to EUR -28.0 (-14.0) million.
Despite the fact that the markets have clearly started to stabilise in recent
months, the safeguarding of liquidity remains one of the main goals of corporate
financing. Follow-up of accounts receivable and actions to avoid possible credit
risk realisations are being actively continued.
Since the end of last year, no major changes have occurred in the Group's
financial position. At the end of the reporting period, EUR 64 million was left
of the EUR 80 million of the company's pension contribution borrowed back from a
Finnish pension insurance company. Available bilateral credit limits amounted to
EUR 190 million, none of which was in use at the end of the reporting period. At
period end, EUR 53.9 million was in use of the EUR 150 million from the domestic
commercial paper programme.
Despite the dividend of EUR 36.5 million paid on 30 March, the company's gearing
is at a healthy level. Interest-bearing liabilities amounted to EUR 135.4
(141.7) million, due to, among others, the smaller dividends paid out than a
year earlier. The period-end cash balance totalled EUR 6.3 million (1 January
2010: EUR 13.2 million; 31 March 2009: EUR 33.7 million). Gearing increased to
60.4 per cent (58.6 per cent), and remains aligned with the set goals.
Key events
In the construction industry, events in the first quarter primarily involve
presentations at trade fairs and exhibitions and the launch of new products. In
addition to local events, Uponor participated in the biannually organised, major
international trade fair, Expocomfort Mostra Convegno, held in Milan, Italy.
Uponor's message emphasised comfortable living, energy-efficiency and
sustainable building. Uponor also organised its 32nd Uponor Conference in
Austria. Primarily intended for designers and architects, the conference
programme focused on the developing building technology and energy issues. An
important customer event was organised in Spain, with approximately 300
important partners participating.
Launched last year, the automatically adjusting heating and cooling control
system was actively marketed to professionals and consumers. Other key focus
areas include the introduction of the new composite riser system with its
innovative fittings range, and the launch of sales of large diameter insulated
PEX pipes.
To consolidate its market position in all key market areas, Uponor concluded new
partnership agreements with leading enterprises in the construction industry. In
co-operation with a prominent manufacturer of concrete elements, the Underfloor
Heating Company acquired last year introduced a new thermo active precast slab
on the UK market. This prefabricated cooling and heating element utilises
Uponor's technology. In January, a renovated and extended Uponor Academy was
opened in North America.
Expansion into new markets progressed according to the adopted growth strategy.
During the reporting period, Uponor received the necessary approvals from the
relevant authorities for conducting business under the name of its own
subsidiaries in China and Switzerland.
Preparations to roll out the Oracle ERP system in the infrastructure solution
business progressed, and the system installation was initiated in March. Once
completed, the system will enable closer co-operation with the building
solutions units. The integration of the sales units of smaller European
countries into the system was continued.
The Baltic infrastructure business was operatively integrated into the
infrastructure segment. The closure of the Hadsund infrastructure factory in
Denmark and the transfer of its production to other factories were completed.
In February, the Board of Directors of Uponor decided to donate EUR 400,000 to
the capital of Finland's new Aalto University foundation to contribute to the
development of Finnish know-how and competitiveness. The strategic focus areas
of Aalto University, including service business, energy and the sustainable use
of natural resources, and a people-oriented living environment, are firmly in
line with Uponor's operating principles and objectives.
Human resources and administration
The number of Group full-time-equivalent employees in continuing operations
averaged 3,173 (3,572) during the period under review, showing a reduction of
399 employees from the same period in 2009. At the end of the period, the Group
had 3,181 (3,526) employees, a reduction of 345 from the end of the comparison
period and 135 from the end of 2009.
After significant restructuring measures and reductions in the number of
personnel in 2009, some projects have been carried further still in 2010. In
some units, the number of personnel has been further reduced, but new employees
have been hired elsewhere. Personnel reductions are greatest in Germany, where
the closure of warehouses has been completed and OEM business operations have
been adjusted to accommodate reduced demand.
In March, Uponor's Board nominated Sebastian Bondestam, Executive Vice
President, Supply Chain, as deputy to the CEO of the parent company.
The company's corporate governance statement was published on the company's
website in February.
Annual general meeting
Uponor's annual general meeting was held in Helsinki on 17 March. The AGM
adopted Uponor's parent-company and consolidated financial statements for 2009
and discharged Board members and the CEO from liability. The AGM approved the
proposed dividend of EUR 0.50 per share for 2009, and the dividend was paid out
on 30 March 2010. Amendments to the provisions of the Articles of Association
resolved by the AGM were registered with the Trade Register on 24 March 2010.
Jorma Eloranta, Jari Paasikivi, Aimo Rajahalme, Anne-Christine Silfverstolpe
Nordin and Rainer S. Simon were re-elected to the Board.
In agreement with the Board's proposal, the AGM appointed Deloitte & Touche Oy,
Authorised Public Accountants, as the company's new auditor, with Mikael Paul,
Authorised Public Accountant, acting as the principal auditor.
The Board's annual remuneration and remuneration paid to members of the Board
committees per committee meeting remained unchanged.
The Board was authorised to resolve, within one year from the date of the
meeting, to buy back a maximum of 3.5 million of the company's own shares using
distributable earnings from unrestricted equity, amounting in total to 4.8 per
cent of the total number of company shares.
The Board of Directors did not exercise this authorisation during the reporting
period and reported in the AGM that it had no immediate plans to do so. The
Board of Directors has no other authorisations from the AGM.
Share capital and shares
Uponor Corporation's share capital amounts to EUR 146,446,888 and the number of
shares totals 73,206,944. There were no changes in the share capital and shares
in the first quarter.
The number of Uponor shares traded on the NASDAQ OMX Exchange in Helsinki fell
in the first quarter to 10.2 (13.0) million shares, totalling EUR 141.8 (102.1)
million. The market value of the share capital at the end of the period was EUR
1.0 (0.5) billion, and the number of shareholders was 21,579 (19,844).
The company held 160,000 of its own shares, acquired in the final quarter of
2008 for use in the company's share-based incentive programme.
Events after the period under review
In its meeting of 27 April 2010, the Board discussed its own charter and the
charters of the Board Committees. As a result, the tasks of the Board and the
Audit Committee were reviewed. The updated charters of the Board and its
committees can be accessed online on the company's website.
In April, Uponor organised the traditional Uponor Convention and Engineering
Conference in Las Vegas, Nevada. The event attracted a record audience - more
than 700 building industry professionals. An important new partnership agreement
with a tool manufacturer and new loyalty programme services for customers were
announced at the event.
Short-term outlook
An increased confidence in the steady development of housing construction has
emerged, compared to the attitudes prevailing at the end of 2009. A favourable
development of key indicators of market trends, such as the number of building
permits granted, together with the brisk increase in demand in some markets have
contributed to this change. In Spain and other countries in southwest Europe,
some signs of renewed confidence in the recovery of markets have become evident
and are supported by the most recent housing data, for example. In North
America, the recovery in demand witnessed in Canada is expected to continue and
the development of U.S. demand is, in the minimum, expected to remain at its
current level.
The demand in the public and commercial building sector is expected to remain
weak, especially if the financing opportunities continue tight. Various
stimulation packages designed to encourage private consumption and accelerate
and move forward public projects are providing some light in the tunnel. These
measures are expected to have a positive impact on housing renovation and
infrastructure projects, in particular. The overall business environment is,
nevertheless, expected to remain challenging this year.
During the last two years, Uponor has implemented an extensive efficiency
programme, which has streamlined the company's cost structure on a good level.
Product and service offerings have been updated and given a better focus, and
customer segmentation has been enhanced to gain a competitive edge in customer
relationships. The company's objective now is to focus on generating growth
through various methods, and no plans exist to launch new restructuring
programmes this year, provided there are no major changes in demand from current
levels. However, Uponor's financial performance may be affected by several
strategic, operational, financial and hazard risks. A more detailed risk
analysis is provided in the company's Annual Report.
Although demand in the first quarter of the current year was weaker than
expected due to the severe winter, some of this loss may be compensated by the
end of the year provided that weather conditions remain normal. National
economies are expected to advance steadily, supporting the slow recovery of the
economic situation.
Under these circumstances, Uponor maintains its full-year guidance:
- Uponor's net sales in 2010 are expected to remain level with 2009, and
operating profit is expected to improve from last year's reported operating
profit. The Group's fixed-asset investments are not expected to exceed
depreciation, and efficient net working capital management measures will help
retain the Group's cash flow at a reasonable level.
Uponor Corporation
Board of Directors
For further information, please contact:
Jyri Luomakoski, President and CEO, tel. 020 129 2824
Riitta Palomäki, CFO, tel. 020 129 2822
Uponor Corporation
Tarmo Anttila
Vice President, Communications
Tel. 020 129 2852
DISTRIBUTION:
NASDAQ OMX - Helsinki
Media
www.uponor.com
Information on the interim report
The figures in brackets in this interim report are the refer figures for the
equivalent period in 2009. The change percentages reported in the interim report
have been calculated from exact figures not from rounded figures published in
the interim report.
INTERIM REPORT JANUARY-MARCH 2010
The figures in this interim report are unaudited.
CONDENCED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Continuing operations |
--------------------------------------------------------------------------------
| Net sales | 157.4 | 171.0 | 734.1 |
--------------------------------------------------------------------------------
| Cost of goods sold | 98.6 | 111.1 | 463.0 |
--------------------------------------------------------------------------------
| Gross profit | 58.8 | 59.9 | 271.1 |
--------------------------------------------------------------------------------
| Other operating income | 0.6 | 0.0 | 4.2 |
--------------------------------------------------------------------------------
| Dispatching and warehousing expenses | 7.5 | 7.8 | 32.4 |
--------------------------------------------------------------------------------
| Sales and marketing expenses | 35.5 | 37.8 | 140.1 |
--------------------------------------------------------------------------------
| Administration expenses | 11.3 | 11.3 | 45.0 |
--------------------------------------------------------------------------------
| Other operating expenses | 3.6 | 4.0 | 16.6 |
--------------------------------------------------------------------------------
| Operating profit | 1.5 | -1.0 | 41.2 |
--------------------------------------------------------------------------------
| Financial expenses, net | 4.1 | 4.2 | 12.7 |
--------------------------------------------------------------------------------
| Profit before taxes | -2.6 | -5.2 | 28.5 |
--------------------------------------------------------------------------------
| Income taxes | -0.8 | -1.5 | 11.3 |
--------------------------------------------------------------------------------
| Profit for the period from continuing | -1.8 | -3.7 | 17.2 |
| operations | | | |
--------------------------------------------------------------------------------
| |
--------------------------------------------------------------------------------
| Discontinued operations |
--------------------------------------------------------------------------------
| Profit for the period from discontinued | -0.4 | - | -5.7 |
| operations | | | |
--------------------------------------------------------------------------------
| Profit for the period | -2.2 | -3.7 | 11.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income |
--------------------------------------------------------------------------------
| Translation differences | 8.4 | 2.6 | 2.4 |
--------------------------------------------------------------------------------
| Cash flow hedges | -0.4 | -0.4 | 0.5 |
--------------------------------------------------------------------------------
| Net investment hedges | -3.2 | - | - |
--------------------------------------------------------------------------------
| Other comprehensive income for the period | 4.8 | 2.2 | 2.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total comprehensive income for the period | 2.6 | -1.5 | 14.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, EUR | -0.03 | -0.05 | 0.16 |
--------------------------------------------------------------------------------
| - Continuing operations | -0.03 | -0.05 | 0.24 |
--------------------------------------------------------------------------------
| - Discontinued operations | 0.00 | - | -0.08 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | -0.03 | -0.05 | 0.16 |
--------------------------------------------------------------------------------
| - Continuing operations | -0.03 | -0.05 | 0.24 |
--------------------------------------------------------------------------------
| - Discontinued operations | 0.00 | - | -0.08 |
--------------------------------------------------------------------------------
CONDENCED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
--------------------------------------------------------------------------------
| MEUR | 31.3. | 31.3. | 31.12. |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Assets |
--------------------------------------------------------------------------------
| Non-current assets |
--------------------------------------------------------------------------------
| Property, plant and equipment | 173.5 | 182.4 | 175.1 |
--------------------------------------------------------------------------------
| Intangible assets | 100.4 | 100.5 | 101.5 |
--------------------------------------------------------------------------------
| Securities and long-term investments | 7.3 | 6.6 | 7.5 |
--------------------------------------------------------------------------------
| Deferred tax assets | 13.6 | 17.5 | 12.0 |
--------------------------------------------------------------------------------
| Total non-current assets | 294.8 | 307.0 | 296.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets |
--------------------------------------------------------------------------------
| Inventories | 83.4 | 100.7 | 74.3 |
--------------------------------------------------------------------------------
| Accounts receivable | 116.7 | 122.6 | 88.2 |
--------------------------------------------------------------------------------
| Other receivables | 23.5 | 26.0 | 26.8 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 6.3 | 33.7 | 13.2 |
--------------------------------------------------------------------------------
| Total current assets | 229.9 | 283.0 | 202.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 524.7 | 590.0 | 498.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' equity and liabilities |
--------------------------------------------------------------------------------
| Shareholders' equity | 224.1 | 242.0 | 258.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 67.3 | 80.0 | 60.2 |
--------------------------------------------------------------------------------
| Deferred tax liability | 9.8 | 9.4 | 9.7 |
--------------------------------------------------------------------------------
| Provisions | 5.7 | 6.9 | 5.7 |
--------------------------------------------------------------------------------
| Employee benefits and other liabilities | 15.4 | 19.6 | 22.1 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 98.2 | 115.9 | 97.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 74.4 | 95.4 | 17.6 |
--------------------------------------------------------------------------------
| Provisions | 9.0 | 20.9 | 12.7 |
--------------------------------------------------------------------------------
| Accounts payable | 45.6 | 45.0 | 45.0 |
--------------------------------------------------------------------------------
| Other liabilities | 73.4 | 70.8 | 67.6 |
--------------------------------------------------------------------------------
| Total current liabilities | 202.4 | 232.1 | 142.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders' equity and liabilities | 524.7 | 590.0 | 498.6 |
--------------------------------------------------------------------------------
CONDENCED CONSOLIDATED STATEMENT OF CASH FLOW
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Cash flow from operations |
--------------------------------------------------------------------------------
| Net cash from operations | 4.9 | 3.7 | 65.7 |
--------------------------------------------------------------------------------
| Change in net working capital | -28.8 | -7.7 | 25.9 |
--------------------------------------------------------------------------------
| Income taxes paid | -3.7 | -9.4 | -8.5 |
--------------------------------------------------------------------------------
| Interest paid | -0.4 | -0.9 | -5.2 |
--------------------------------------------------------------------------------
| Interest received | 0.0 | 0.3 | 0.9 |
--------------------------------------------------------------------------------
| Cash flow from operations | -28.0 | -14.0 | 78.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investments |
--------------------------------------------------------------------------------
| Acquisition of subsidiary shares | - | - | -1.9 |
--------------------------------------------------------------------------------
| Purchase of fixed assets | -1.8 | -4.0 | -24.0 |
--------------------------------------------------------------------------------
| Proceeds from sales of fixed assets | 2.7 | 1.1 | 7.3 |
--------------------------------------------------------------------------------
| Received dividends | - | - | 0.2 |
--------------------------------------------------------------------------------
| Loan repayments | 0.0 | 0.0 | 0.2 |
--------------------------------------------------------------------------------
| Cash flow from investments | 0.9 | -2.9 | -18.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing |
--------------------------------------------------------------------------------
| Borrowings and repayments of debt | 57.2 | 59.9 | -36.4 |
--------------------------------------------------------------------------------
| Dividends paid | -36.5 | -62.1 | -62.1 |
--------------------------------------------------------------------------------
| Payment of finance lease liabilities | -0.5 | -0.5 | -2.0 |
--------------------------------------------------------------------------------
| Cash flow from financing | 20.2 | -2.7 | -100.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Conversion differences for cash and cash | 0.0 | 0.1 | -0.1 |
| equivalents | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | -6.9 | -19.5 | -40.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents at 1 January | 13.2 | 53.2 | 53.2 |
--------------------------------------------------------------------------------
| Cash and cash equivalents at end of period | 6.3 | 33.7 | 13.2 |
--------------------------------------------------------------------------------
| Changes according to balance sheet | -6.9 | -19.5 | -40.0 |
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN EQUITY
--------------------------------------------------------------------------------
| MEUR | Share | Share | Other | Trans- | Treasury| Retained| Total |
| | capital| premium|reserves*| lation | shares| earnings| |
| | | | | reserve | | | |
--------------------------------------------------------------------------------
| Balance at | 146.4 | 50.2 | 1.3 | -14.0 | -1.2 | 75.3 | 258.0 |
| 31 Dec 2009| | | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | -3.6 | 8.4 | | -2.2 | 2.6 |
| income for the | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | | | | | -36.5 | -36.5 |
| (EUR 0.50 per share)| | | | | |
|
--------------------------------------------------------------------------------
| Other adjustments | | 0.0 | | | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Balance at | 146.4 | 50.2 | -2.3 | -5.6 | -1.2 | 36.6 | 224.1 |
| 31 Mar 2010| | | | | | |
|
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance at | 146.4 | 50.2 | 0.8 | -16.4 | -1.2 | 125.8 | 305.6 |
| 31 Dec 2008| | | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | -0.4 | 2.6 | | -3.7 | -1.5 |
| income for the | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | | | | | -62.1 | -62.1 |
| (EUR 0.85 per share)| | | | | | |
--------------------------------------------------------------------------------
| Other adjustments | | 0.0 | | | 0.0 | 0.0 |
| adjustments| | | | | | | |
--------------------------------------------------------------------------------
| Balance at | 146.4 | 50.2 | 0.4 | -13.8 | -1.2 | 60.0 | 242.0 |
| 31 Mar 2009| | | | | | | |
--------------------------------------------------------------------------------
*) Includes -3.2 MEUR effective portion of net investment hedge.
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 EU and IAS 34 Interim Financial
Reporting. In interim reports Uponor Group follows the same principles as in the
annual financial statements for 2009, with the exception of the changes listed
below.
Hedge accounting
Hedges of net investments in foreign operations are accounted for from the
beginning of 2010 for certain designated internal loans as defined by Group
Treasury Committee. Any gain or loss on the hedging instrument relating to the
effective portion of the hedge is recognised in other comprehensive income and
accumulated in other reserves. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss. The application of net
investment hedges did not result in any one-time effects.
Operating segments
Since 1 January 2009, Uponor has applied three segments in its financial
reporting. These have been defined based on geographic regions and businesses,
in accordance with the Group organisation structure effective from 1 October
2008, as follows:
Building Solutions - Europe
Building Solutions - North America
Infrastructure Solutions - Nordic.
The structure will, for the most part, remain as it is today, but as of 1 Jan
2010 the following redefinitions have been implemented: the reporting of the
Estonian and Latvian businesses will be split between Building Solutions and
Infrastructure Solutions, in contrast to the earlier practice of including
everything within Building Solutions - Europe. In addition, the ventilation and
ground energy product groups that formed part of Infrastructure Solutions are
now classified as belonging to Building Solutions - Europe.
The impact of these redefinitions on segment sizes will be small.
The new names of the reporting segments are thus:
Building Solutions - Europe
Building Solutions - North America
Infrastructure Solutions.
In the future, small sales volumes related to infrastructure products in
north-eastern Europe will also be included in the segment Building Solutions -
Europe. The size of this business is marginal.
Comparative data for 2009 has been changed to comply with the new structure.
--------------------------------------------------------------------------------
| PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS |
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Gross investment | 1.8 | 4.0 | 27.4 |
--------------------------------------------------------------------------------
| - % of net sales | 1.1 | 2.3 | 3.7 |
--------------------------------------------------------------------------------
| Depreciation | 7.5 | 7.8 | 32.0 |
--------------------------------------------------------------------------------
| Write downs | - | - | 0.5 |
--------------------------------------------------------------------------------
| Book value of disposed fixed assets | 2.1 | 1.1 | 4.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PERSONNEL |
--------------------------------------------------------------------------------
| Converted to full time employees | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Average | 3,173 | 3,572 | 3,426 |
--------------------------------------------------------------------------------
| At the end of the period | 3,181 | 3,526 | 3,316 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OWN SHARES |
--------------------------------------------------------------------------------
| | 31.3. | 31.3. | 31.12. |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Own shares held by the company, pcs | 160,000 | 160,000 | 160,000 |
--------------------------------------------------------------------------------
| - 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 | 0.3 | 0.3 | 0.3 |
| the company, MEUR | | | |
--------------------------------------------------------------------------------
SEGMENT INFORMATION
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 |
--------------------------------------------------------------------------------
| MEUR | Exter-| Inter- | Total | External| Internal| Total |
| | nal | nal| | | | |
--------------------------------------------------------------------------------
| Segment revenue, continuing operations |
--------------------------------------------------------------------------------
| Building Solutions | 111.9 | 0.1 | 112.0 | 115.3 | 0.3 | 115.6 |
| - Europe | | | | | | |
--------------------------------------------------------------------------------
| Building Solutions | 24.5 | - | 24.5 | 25.0 | - | 25.0 |
| - North America | | | | | | |
--------------------------------------------------------------------------------
| Infrastructure | 21.0 | 0.9 | 21.9 | 30.7 | 0.7 | 31.4 |
| Solutions | | | | | | |
--------------------------------------------------------------------------------
| Eliminations | - | -1.0 | -1.0 | - | -1.0 | -1.0 |
--------------------------------------------------------------------------------
| Total | 157.4 | - | 157.4 | 171.0 | - | 171.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1-12/2009 |
--------------------------------------------------------------------------------
| MEUR | External| Internal| Total |
--------------------------------------------------------------------------------
| Segment revenue, continuing operations |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 481.1 | 1.1 | 482.2 |
--------------------------------------------------------------------------------
| Building Solutions - North America | 109.0 | - | 109.0 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 144.0 | 4.1 | 148.1 |
--------------------------------------------------------------------------------
| Eliminations | - | -5.2 | -5.2 |
--------------------------------------------------------------------------------
| Total | 734.1 | - | 734.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Segment result, continuing operations |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 9.0 | 3.3 | 32.6 |
--------------------------------------------------------------------------------
| Building Solutions - North America | -1.8 | -3.2 | 3.9 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | -4.0 | 0.5 | 14.2 |
--------------------------------------------------------------------------------
| Others | -1.9 | -2.4 | -9.3 |
--------------------------------------------------------------------------------
| Eliminations | 0.2 | 0.8 | -0.2 |
--------------------------------------------------------------------------------
| Total | 1.5 | -1.0 | 41.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Segment depreciation and impairments, continuing operations |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 3.3 | 3.7 | 16.2 |
--------------------------------------------------------------------------------
| Building Solutions - North America | 1.6 | 1.6 | 6.1 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 1.4 | 1.4 | 5.5 |
--------------------------------------------------------------------------------
| Others | 1.1 | 1.0 | 4.1 |
--------------------------------------------------------------------------------
| Eliminations | 0.1 | 0.1 | 0.6 |
--------------------------------------------------------------------------------
| Total | 7.5 | 7.8 | 32.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Segment investments, continuing operations |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 0.7 | 1.9 | 0.5 |
--------------------------------------------------------------------------------
| Building Solutions - North America | 0.7 | 1.7 | 5.1 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 0.4 | 0.1 | 20.1 |
--------------------------------------------------------------------------------
| Others | 0.0 | 0.3 | 1.7 |
--------------------------------------------------------------------------------
| Total | 1.8 | 4.0 | 27.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | 31.3. | 31.3. | 31.12. |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Segment assets |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 391.9 | 410.1 | 393.0 |
--------------------------------------------------------------------------------
| Building Solutions - North America | 127.6 | 133.5 | 118.1 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 79.5 | 75.3 | 80.4 |
--------------------------------------------------------------------------------
| Others | 486.0 | 558.2 | 509.9 |
--------------------------------------------------------------------------------
| Eliminations | -560.3 | -587.1 | -602.8 |
--------------------------------------------------------------------------------
| Total | 524.7 | 590.0 | 498.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Segment liabilities |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 279.7 | 284.4 | 281.3 |
--------------------------------------------------------------------------------
| Building Solutions - North America | 76.7 | 87.1 | 69.7 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 58.2 | 65.6 | 60.0 |
--------------------------------------------------------------------------------
| Others | 467.5 | 520.3 | 451.2 |
--------------------------------------------------------------------------------
| Eliminations | -581.5 | -609.4 | -621.6 |
--------------------------------------------------------------------------------
| Total | 300.6 | 348.0 | 240.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Segment personnel, continuing operations, average |
--------------------------------------------------------------------------------
| Building Solutions - Europe | 2,220 | 2,536 | 2,416 |
--------------------------------------------------------------------------------
| Building Solutions - North America | 423 | 442 | 422 |
--------------------------------------------------------------------------------
| Infrastructure Solutions | 471 | 533 | 527 |
--------------------------------------------------------------------------------
| Others | 59 | 61 | 61 |
--------------------------------------------------------------------------------
| Total | 3,173 | 3,572 | 3,426 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Reconciliation |
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Segment result, continuing operations |
--------------------------------------------------------------------------------
| Segment results total | 1.5 | -1.0 | 41.2 |
--------------------------------------------------------------------------------
| Financial expenses, net | -4.1 | 4.2 | 12.7 |
--------------------------------------------------------------------------------
| Group's profit before taxes | -2.6 | -5.2 | 28.5 |
--------------------------------------------------------------------------------
CONTINGENT LIABILITIES
--------------------------------------------------------------------------------
| MEUR | 31.3. | 31.3. | 31.12. |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Group: |
--------------------------------------------------------------------------------
| Pledges |
--------------------------------------------------------------------------------
| - on own behalf | 0.0 | - | 0.0 |
--------------------------------------------------------------------------------
| Mortgages |
--------------------------------------------------------------------------------
| - on own behalf | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Guarantees |
--------------------------------------------------------------------------------
| - on own behalf | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
| - on behalf of others | 7.1 | 7.4 | 7.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Parent company: |
--------------------------------------------------------------------------------
| Guarantees |
--------------------------------------------------------------------------------
| - on behalf of a subsidiary | 10.6 | 8.5 | 10.0 |
--------------------------------------------------------------------------------
| - on behalf of others | 6.9 | 6.9 | 6.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING LEASE COMMITMENTS | 30.4 | 36.0 | 30.1 |
--------------------------------------------------------------------------------
DERIVATIVE CONTRACTS
--------------------------------------------------------------------------------
| MEUR | Nominal | Fair | Nominal | Fair | Nominal | Fair |
| | value | value | value | value | value | value |
| | 31.3. | 31.3.| 31.3. | 31.3. | 31.12. | 31.12. |
| | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Currency | 132.6 | -4.4 | 112.0 | 0.9 | 115.1 | -0.6 |
| derivatives | | | | | | |
| - Forward | | | | | | |
| agreements | | | | | | |
--------------------------------------------------------------------------------
| Commodity | 7.2 | -0.8 | 7.0 | -2.1 | 7.2 | -0.7 |
| derivatives | | | | | | |
| - Forward | | | | | | |
| agreements | | | | | | |
--------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
In 2010 and 2009, the discontinued operations include costs related to the Irish
infrastructure business sold in 2008. These costs stem from soil cleaning
operations started in 2008.
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Expenses | 0.4 | - | 5.7 |
--------------------------------------------------------------------------------
| Profit before taxes | -0.4 | - | -5.7 |
--------------------------------------------------------------------------------
| Income taxes | - | - | 0.0 |
--------------------------------------------------------------------------------
| Profit after taxes | -0.4 | - | -5.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period from discontinued | -0.4 | - | -5.7 |
| operations | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from discontinued operations |
--------------------------------------------------------------------------------
| Cash flow from operations | -0.2 | - | -5.2 |
--------------------------------------------------------------------------------
RELATED-PARTY TRANSACTIONS
--------------------------------------------------------------------------------
| MEUR | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Continuing operations |
--------------------------------------------------------------------------------
| Purchases from associated companies | 0.3 | 0.4 | 1.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balances at the end of the period |
--------------------------------------------------------------------------------
| Accounts payables and other liabilities | 0.1 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
KEY FIGURES
--------------------------------------------------------------------------------
| | 1-3/ | 1-3/ | 1-12/ |
| | 2010 | 2009 | 2009 |
--------------------------------------------------------------------------------
| Earnings per share, EUR | -0.03 | -0.05 | 0.16 |
--------------------------------------------------------------------------------
| - continuing operations | -0.03 | -0.05 | 0.24 |
--------------------------------------------------------------------------------
| - discontinued operations | 0.00 | - | -0.08 |
--------------------------------------------------------------------------------
| Operating profit (continuing operations),% | 1.0 | -0.6 | 5.6 |
--------------------------------------------------------------------------------
| Return on equity, % (p.a.) | -3.7 | -5.5 | 4.1 |
--------------------------------------------------------------------------------
| Return on investment, % (p.a.) | -1.1 | -3.0 | 8.1 |
--------------------------------------------------------------------------------
| Solvency ratio, % | 42.7 | 41.0 | 51.8 |
--------------------------------------------------------------------------------
| Gearing, % | 60.4 | 58.6 | 25.0 |
--------------------------------------------------------------------------------
| Net interest-bearing liabilities | 135.4 | 141.7 | 64.6 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 3.07 | 3.31 | 3.53 |
--------------------------------------------------------------------------------
| - diluted | 3.07 | 3.31 | 3.53 |
--------------------------------------------------------------------------------
| Trading price of shares |
--------------------------------------------------------------------------------
| - low, EUR | 12.40 | 6.80 | 6.80 |
--------------------------------------------------------------------------------
| - high, EUR | 15.66 | 9.20 | 15.10 |
--------------------------------------------------------------------------------
| - average, EUR | 13.95 | 7.88 | 9.95 |
--------------------------------------------------------------------------------
| Shares traded |
--------------------------------------------------------------------------------
| - 1,000 pcs | 10,165 | 12,960 | 45,815 |
--------------------------------------------------------------------------------
| - MEUR | 142 | 102 | 456 |
--------------------------------------------------------------------------------
DEFINITIONS OF KEY RATIOS
Return on Equity (ROE), %
Profit before taxes - taxes
= ---------------------------------------- x 100
Shareholders' equity + minority interest, average
Return on Investment (ROI), %
Profit before taxes + interest and other financing costs
= ---------------------------------------- x 100
Balance sheet total - non-interest-bearing liabilities, average
Solvency, %
Shareholders' equity + minority interest
= ---------------------------------------- x 100
Balance sheet total - advance payments received
Gearing, %
Net interest-bearing liabilities
= ----------------------------------------- x 100
Shareholders' equity + minority interest
Net interest-bearing liabilities
= Interest-bearing liabilities - cash, bank receivables and financial assets
Earnings per share (EPS)
Profit for the period
= -------------------------------------------------
Number of shares adjusted for share issue in financial period excluding
treasury
shares
Equity per share ratio
Shareholders' equity
= --------------------------------------------------
Average number of shares adjusted for share issue at end of year
Average share price
Total value of shares traded (EUR)
= ---------------------------
Total number of shares traded