Financial statements bulletin 2012: Uponor achieves solid performance improvement in 2012, despite weak markets in Europe

Uponor Corporation    Financial statements bulletin Jan-Dec 2012     12 February 2013 8.00 EET

Uponor achieves solid performance improvement in 2012, despite weak markets in Europe 

  • Net sales grows in North America in October-December, operating profit improves in Building Solutions – Europe and in North America
  • Net sales 1-12: €811.5m (2011: 806.4m), up 0.6%; organic growth at 3.2%
  • Operating profit 1-12: €57.7m (€35.4m), up 63.0%; operating profit improvement excluding the 2011 non-recurring items was +25.8%
  • Earnings per share at €0.45 (€0.03), earnings per share excluding non-recurring items at €0.45 (€0.32)
  • Guidance for the year 2013: Uponor expects its net sales and operating profit to show a modest organic growth from 2012
  • The Board’s dividend proposal is €0.38 (€0.35) per share


President and CEO Jyri Luomakoski comments on the reporting period: 

  • I am happy to report that we are witnessing a steady, long-term pick-up in demand in North America, which has resulted in Uponor achieving double-digit growth there for the last six quarters. This has resulted in an improved performance, despite the fact that we are simultaneously rebuilding our capacity to the levels we had before the crisis back in 2007.
  • In Europe, the building markets mostly continue to be weak – with the notable exception of Europe’s largest economy, Germany – and to some extent they are likely to weaken further in 2013. Despite that, I believe that we are close to touching bottom and signs of stabilisation are visible. We forecast the year 2013 to mirror 2012 to a great extent, although 2013 is likely to begin with a clearly slower first quarter.
  • Our biggest news last year was the joint plan with the KWH Group to merge our infrastructure businesses. The business environment has changed rapidly over the last few years, with the Nordic markets becoming truly international in terms of products and services offered. Both companies view this merger as a key step in developing the business further and offering our customers systems that will continue to meet their needs. This plan is currently awaiting the approval of the Finnish Competition Authority.


The Board’s dividend proposal

The Board proposes to the Annual General Meeting a dividend of €0.38 (€0.35) per share. This corresponds to a payout ratio of 84.4%. When making the proposal, the Board considered the solvency of the company, the company’s dividend policy and the outlook.


Information on the financial statements bulletin

This document is a condensed version of Uponor’s 2012 financial statements bulletin, which is attached to this release. It is also available on the company website. The figures in brackets are the reference figures for the equivalent period in the previous year. Unless otherwise stated, figures refer to continuing operations. Any change percentages were calculated from the exact figures and not from the rounded figures published here.


Webcast and presentation

A webcast of the results briefing in English will be broadcast on 12 February at 10:00 am EET. Connection details are available at > Investors. Questions can be sent in advance to The recorded webcast can be viewed at > Investors shortly after publishing. The presentation document will be available at > Investors > News & downloads.


Next interim results

Uponor Corporation will publish its Q1 interim results on 29 April 2013. During the silent period from 1 April to 28 April, Uponor will not comment on market prospects or factors affecting business and performance.       


Interim results October – December 2012

General market trends in Q4/2012 closely reflected the patterns already prevalent in the previous quarter. Highly promising development was recorded in North America, where the U.S. housing markets continued their brisk pick-up, a trend that had already begun in the second half of 2011. In Europe, the markets remained weak – even declining further – in many of the southwest European markets, while in Central Europe the trend ranged from slightly negative to stable. In Germany, signs of stalling became evident in the general economy but did not yet impact on demand in the building market. In Northern Europe, construction activity mainly remained flat or weakened, but with somewhat diverging trends from one country to another. This was true for both infrastructure solutions and building solutions markets. In Eastern Europe and the Far East, demand either remained flat or achieved a modest growth. As an exception to the general trend, the Russian building market continued to post growth figures in the final quarter of 2012.


Net sales

Uponor’s consolidated net sales came to €189.6m (€197.0m), down 3.8% from the final quarter of 2011. Growth was nearly flat at -0.2% in comparable terms, i.e. adjusted for the divestment of Hewing in the first quarter of 2012, driven by the weak development of the largest segment, Building Solutions – Europe, which continued to suffer from the slow economy in most of its key markets. The fourth quarter was also characterised by caution exercised by customers, which led them to target low year-end inventory levels, as well as by the fact that the number of business days in December 2012 was particularly low.

Continued strong progress was recorded in Building Solutions – North America, reflecting the recovery of the building and construction markets in the USA and the sustained high level of activity in Canada.

The early onset of winter had an influence on demand for the Infrastructure Solutions’ products in Northern Europe.

Breakdown of net sales, October – December:

Reported change
Building Solutions – Europe 121.6 132.9 -8.6%
Building Solutions – North-America 38.1 32.1 19.0%
(Building Solutions – North-America, M$ 49.8 43.2 15.2%)
Infrastructure Solutions 31.4 34.3 -8.4%
Eliminations -1.5 -2.3  
Total 189.6 197.0 -3.8%


Profits and profitability

In line with developments throughout 2012, Uponor also recorded a rather satisfactory performance improvement towards the end of the year, with gross profit improving by 2.6 percentage points in the final quarter of 2012, and ending up at €72.2 (€70.0) million or 38.1% (35.5%). This favourable performance in gross profit was mainly driven by good volume development in North America and efficient price management throughout the Group.

Group operating profit ended up at €10.2 (€-3.0) million. In comparable terms this represents an improvement of €2.7m, considering that the 2011 figure included a €10.5m impairment related to the divestment of Hewing GmbH as a non-recurring item.

Despite the tough market situation in most markets, Uponor was able to achieve a clear improvement in profitability in Building Solutions - Europe, supported, among other things, by successful sales price management and a more beneficial sales mix than in 2011. In North America, the profitability improvement was very much driven by higher volumes, as well as careful cost management. Infrastructure Solutions profitability deteriorated due to falling volumes, especially towards the end of the year, and some additional costs related to personnel reductions. 

Breakdown of operating profit, October – December:  

M€ 10-12
Reported change
Building Solutions – Europe 9.4 7.8 19.6%
Building Solutions – North-America 3.5 1.8 90.5%
(Building Solutions – North-America, M$ 4.6 2.4 89.5%)
Infrastructure Solutions -2.6 -1.5 -81.7%
Others 0.3 -10.4  
Eliminations -0.4 -0.7  
Total 10.2 -3.0 438.4%

Events during the period

In October, Uponor joined forces with other actors in the Nordic building sector and established a set of principles aimed at delivering sustainable solutions. These principles are listed in the Nordic Built Charter, signed by leading companies in the industry, in order to lead the way to delivering competitive solutions for sustainable construction. The objectives of the Nordic Built Charter are in line with principles to which Uponor is already committed, having signed up to the ENCORD sustainability charter in 2011, for instance.

A new distribution centre for Uponor’s building solutions business in the Nordic countries was completed in Sweden and subsequently taken into use already in December 2012.

On 20 December, the Finnish Market Court granted the Finnish Competition Authority an extension, until 25 Feb 2013, of the time taken to decide on the plan between Uponor and KWH Group to merge their infrastructure businesses as published on 21 September 2012. This request for an extension was primarily justified by the complexity of the case, which requires preparations such as a deeper analysis of various markets, such as the industrial segment. Neither Uponor nor KWH opposed the request.


Financial statements January – December 2012


After a lengthy period of global uncertainty, both financial and political, the year 2012 began in a rather optimistic manner but, as the year progressed, became more static, and ended resembling 2011. Lack of visibility and a general caution among investors, whether they represented public, private consumer or business target groups, remained, hindering growth in building and construction markets. As the year drew to a close, general sentiments seemed to begin levelling out, in anticipation of a more stable future.

Apart from the brisk pick-up in residential building in North America and the resilient German residential market, building and construction markets elsewhere in Europe echoed the general economic trends and remained subdued. Overall, new-build investments were at a low level, while increasing renovation activity only partially compensated for lost volumes. The Nordic markets maintained a nearly satisfactory level of demand, while the large southwest European markets continued to decline further.

As far as the municipal infrastructure markets are concerned, overall demand remained more or less flat, with the Baltic countries showing some growth and most of the Nordic countries facing a trend characterised by flat demand.

Despite the low-growth market environment, some trends had a favourable impact on Uponor’s business. Increasing concern about sustainability, and the drive towards conserving energy and utilising renewable energy, benefited Uponor’s radiant heating and cooling systems, thus offsetting the slowdown in new build activity. Within plumbing, increased renovation activity and the trend away from traditional metallic pipes and components continued, favouring Uponor’s PEX and composite pipe offering.

In all product and geographical markets, the tight competitive situation continued to put pressure on margins.


Net sales

Uponor's 2012 net sales from continuing operations amounted to €811.5 (2011: €806.4) million, up 0.6% year on year. In comparable terms, i.e. excluding the effects of the divested business of Hewing GmbH and the acquired Zent-Frenger business for the first quarter of 2012, Uponor’s organic net sales growth reached 3.2%, or 0.8% if adjusted for the currency impact.

Building Solutions – Europe, whose growth in comparable terms, i.e. adjusting for the divestment and acquisition, was -1.2%, and Infrastructure Solutions both reported a modest drop in net sales for the full year, mainly due to weakening market demand in key markets. In Building Solutions – Europe, the emerging project business partly offset the decline in the Benelux markets, while the development of Central Europe’s largest market, Germany, was flat in organic terms. In Southwest Europe, the Iberian and Italian markets contracted further from the already very low levels they reached during several years of decline, affecting net sales, while promising development was recorded in France and, to a lesser extent, the UK. The Nordic countries – with the exception of Norway – witnessed an overall decline in net sales, with Sweden and Denmark seeing the worst decline. Further to the above, sales rapidly picked up in Russia and the Baltic markets.

Strong positive progress was recorded in Building Solutions – North America, where steady relative growth has been reported for six consecutive quarters, reflecting improving market conditions in the USA in particular.

In terms of business groups, Plumbing Solutions’ development was supported by reasonably healthy demand in the renovation and refurbishment segments of the market. The introduction of new products and technologies in 2011 and 2012, such as the unique RTM press fitting, the new generation of expansion tools for the Quick&Easy range of fittings, the new Q&E ring as well as modifications in the multilayer composite pipe range, pushed sales up. Uponor significantly increased its plumbing sales in several focus countries, thus offsetting the effects of the weak overall economy. In Indoor Climate Solutions, good progress was made in starting up commercial projects in some countries, thus supporting the ambition of rolling out the TABS heating and cooling technology, which utilises the energy stored in the building mass, in new European markets. However, growth in net sales was somewhat repressed by the low number of housing starts and the intense price competition that followed. Infrastructure Solutions strengthened its market position throughout the Nordic region, greatly aided by the introduction of new products and technologies in 2012.

In 2012, the share of Plumbing Solutions of Group net sales grew to 47% (46%), Indoor Climate Solutions was at 35% (37%) and Infrastructure Solutions at 18% (17%).

Net sales by segment for 1 January – 31 December 2012:  

M€ 1–12
change, %
Building Solutions – Europe 517.7 543.9 -4.8%
Building Solutions - North America 151.1 121.5 24.4%
(Building Solutions - North America (M$) 195.4 170.1 14.9%)
Infrastructure Solutions 149.0 149.7 -0.5%
Eliminations -6.3 -8.7  
Total 811.5 806.4 0.6%

The largest 10 countries, in terms of reported net sales, and their respective share of consolidated net sales, were as follows (2011 figures in brackets): Germany 17.9% (18.7%), USA 14.1% (11.0%), Finland 11.6% (11.5%), Sweden 9.8% (10.5%), Norway 4.8% (4.6%), Canada 4.5% (4.1%), Denmark 4.1% (4.6%), the Netherlands 4.0% (4.4%), the United Kingdom 3.8% (3.5%) and Spain 3.8% (4.8%).



Uponor’s quarterly gross profit in 2012 consistently outperformed the equivalent figures for 2011. The consolidated full-year gross profit ended up at €310.8 (€292.9) million, an improvement of €17.9 million or 2.0 percentage points. This favourable development in gross profit was mainly driven by healthy volume development in North America and efficient price management throughout the Group, with the divestment of Hewing GmbH also contributing to the gross profit margin.

The other operating expenses reported in 2011 included an impairment of €10.5 million as a non-recurring item, related to the divestment of Hewing GmbH. In 2012, expenses remained slightly below the previous year’s figure, excluding the above-mentioned non-recurring item, despite increased expenses related to mergers and acquisitions activity and a considerable growth from currency impact.

Consolidated operating profit was €57.7 (35.4) million, up 63.0% from the previous year. Operating profit margin came to 7.1% (4.4%) of net sales. The 2011 operating profit was burdened by the January 2012 decision to divest the German subsidiary Hewing GmbH, reported in the segment Other. Consolidated operating profit improvement, excluding the 2011 non-recurring items, was +25.8%.

All segments recorded favourable development in operating profit, and with the exception of Infrastructure Solutions, they all contributed positively to consolidated operating profit.


Operating profit by segment for 1 January – 31 December 2012:

M€ 1–12
change, %
Building Solutions – Europe 47.2 41.7 13.0%
Building Solutions – North-America 17.8 10.1 75.5%
(Building Solutions – North-America (M$) 23.0 14.2 62.1%)
Infrastructure Solutions 0.0 -2.4 98.6%
Other -6.1 -14.0  
Eliminations -1.2 0.0  
Total 57.7 35.4 63.0%

Uponor’s financial expenses at €8.6 million came back to more normal levels from the exceptionally high 2011 figure of €17.7 million. In 2011, the financial expenses included interest on delayed payments, totalling €3.2 million due to decisions made by the Finnish tax authority at the end of December 2011, as well as an impairment of €6.0 million due to a vendor note published in February 2012, related to the divestment of a municipal business in the UK and Ireland. In comparable terms, the 2011 financial expenses were €8.5 million. Net currency exchange differences in 2012 were €-1.9 (-1.3) million.

Profit before taxes increased by 177.9%, to €49.4 (17.7) million. At a tax rate of 33.4% (88.8%), income taxes totalled €16.5 (15.8) million. All three non-recurring items in 2011, described in the next paragraph, were non-deductible expenses for taxation purposes.

Profit for the period totalled €32.8 (1.6) million, of which continuing operations accounted for €32.9 (1.9) million. In 2011, profit for the period included impairments related to the divestment of Hewing GmbH and the above mentioned vendor note as well as the surtaxes and interest related to the Finnish tax decisions, booked as non-recurring items.

Return on equity increased to 15.5% (0.7%). Return on investment reached 16.7% (11.0%).

Earnings per share were €0.45 (0.03), and €0.45 (0.03) for continuing operations. Equity per share was €2.87 (2.86). For other share-specific information, please see the Tables section.

Consolidated cash flow from operations was €32.7 (58.4) million, while cash flow before financing came to €22.5 (29.3) million. Cash flow from operations remained satisfactory, thanks to improved profitability and despite the surtaxes paid in the first quarter 2012. Cash flow from investments decreased as a result of a low investment level and net cash received from the Hewing divestment.


Events during the period

On 17 February, with reference to the December 2011 taxation adjustment decisions by the Finnish tax authorities, Uponor notified that it had filed an appeal against the decisions and a request for rectification to the Board of Adjustment. This case is still in progress. Uponor made the payment of €15.0 million in taxes, surtaxes and interest in the first quarter of 2012. A total of €9.8 million in taxes relating to the increase in taxable income was booked as receivables and they are included in income tax receivables in the 2012 consolidated balance sheet.

On 12 March, Uponor reported that it had acquired the remaining 49.7% of shares in the German company Zent-Frenger Gesellschaft für Gebäudetechnik mbH, and now holds 100% of its share capital.

At the end of the first quarter, Uponor completed the divestment of its German OEM component manufacturing unit, Hewing GmbH, as first announced in January 2012.

On 21 September, Uponor Corporation and KWH Group Ltd, also a Finnish company, announced a plan which involves the merger of both companies’ infrastructure pipe businesses into a new company. The new company would be jointly owned by Uponor (55.3%) and KWH Group (44.7%) and would focus on providing infrastructure pipe systems in northern Europe and elsewhere. The case is currently pending approval by the Finnish Competition Authorities, with a decision expected during the first quarter of 2013.

Considerable effort was put into developing the structure and performance of the supply chain in 2012, with a focus on warehousing and distribution. Since spring, the logistics centre in Wettringen, north-western Germany began to serve all central European countries and is being developed into a logistics hub for the entire region, delivering the complete Uponor building solutions product range. A new distribution centre for Uponor’s building solutions business in the Nordic countries was completed in Sweden and subsequently taken into use in December 2012.

Uponor continued the active marketing of its indoor climate systems to project customers, achieving good progress in some European countries, such as Switzerland. Among several other projects in new markets, it also agreed its first major cooling project in India and a new partnership in Korea.


Short-term outlook

The global economic environment continues to be fragile and uncertain, but in the shorter term the previous volatility seems to have subsided to some extent. In Europe, much work has been done to lay the foundations for stable development of the euro-zone, in particular. So far, the economies involved have been able to sustain a fixed course. In North America, the economic environment has begun to improve slowly from a low level, a development which is likely to continue in 2013. In Asia too, the macroeconomic environment has remained rather solid, but at a lower level of activity than in recent years.

As far as Uponor’s key building and construction markets are concerned, general development in 2013 is expected to mirror the year 2012. Europe is expected to face continued weak market development in the southwest parts of the continent, while central and northern Europe should continue at a more stable pace or, at worst, decline modestly. In North America, it is anticipated that the markets will grow further.

Even in subdued markets, there are factors supporting business growth, such as the need for renovation and refurbishment, sustainability and low-energy building as growing trends, and preparation for extreme weather conditions. All of these may support demand for Uponor’s indoor climate, plumbing and infrastructure solutions.

In recent years, Uponor has done much to fine-tune the company’s operative structure, organisational setup and offering. Uponor is thus well positioned to take advantage of growth opportunities, or to scale up its operations should the need arise.

The management is keeping a sharp eye on the company’s focus, cost-efficiency, and cash flow, in order to secure a solid financial position in the longer term, while simultaneously being alert for new business opportunities. If the outlook remains weak, further action to cut overheads and other costs may become necessary in selected markets.

Uponor issues the following guidance for 2013:
Uponor expects its net sales and operating profit to show modest organic growth from 2012. This guidance is based on the current business portfolio and organisational setup and on the company’s anticipation that the external environment faces no major, unexpected changes.

Uponor’s financial performance may be affected by a range of strategic, operational, financial and hazard risks. A more detailed risk analysis is provided in the ‘Key risks associated with business’ section of the Financial Statements 2012.


Uponor Corporation
Board of Directors



For further information, please contact:
Jyri Luomakoski, President and CEO, tel. +358 20 129 2824
Riitta Palomäki, CFO, tel. +358 20 129 2822



Tarmo Anttila
Vice President, Communications
Tel. +358 20 129 2852


NASDAQ OMX - Helsinki


Uponor is a leading international provider of plumbing and indoor climate solutions for residential and commercial building markets across Europe and North America. In Northern Europe, Uponor is also a prominent supplier of infrastructure pipe systems. The Group employs approx. 3,000 persons, in 30 countries. In 2012, Uponor's net sales exceeded €810 million. Uponor Corporation is listed on NASDAQ OMX Helsinki in Finland.