Financial statements bulletin 2014: Uponor’s performance continues on track, supported by strong U.S. growth

Uponor Corporation   Financial statements bulletin January-December 2014  12 February 2015 8.00 EET

Uponor’s performance continues on track, supported by strong U.S. growth

• All segments improve in October-December year-over-year, the strongest performance was reported in Building Solutions – North America
• Net sales 1-12: €1,023.9m (2013: 906.0m), up 13.0%; growth at 2.0% from combined historic figures
• Operating profit 1-12: €63.4m (€50.2m), up 26.3%
• Operating profit excluding non-recurring items at €67.7m (€55.2m), up 22.6%
• Earnings per share at €0.50 (€0.38); earnings per share excluding non-recurring items at €0.54 (€0.43)
• Guidance for the year 2015: the Group’s net sales and operating profit (excluding any non-recurring items) are expected to improve from 2014
• The Board’s dividend proposal is €0.42 (€0.38) per share

President and CEO Jyri Luomakoski comments on the reporting period:

• Our largest segment, Building Solutions – Europe was affected by volatile markets but we achieved a solid performance thanks to our follow-through of internal measures.
• The good tailwind lingered in Building Solutions – North America and our traditional core market, residential new construction, continued to be buoyant. We also pursued efforts to further penetrate the commercial segment, in both plumbing and indoor climate, with good results. Strong sales growth was enabled by diligently executed manufacturing capacity increases that were timed to meet growing demand.
• Uponor Infra faced adverse developments in several markets, but measures executed during the first wave of integration and thereafter are already showing benefits in our cost base and helping to improve performance in the last quarter.
• For 2015, we are issuing similar guidance to last year. Volatility in the external environment is not helping us in forecasting, but the significant technology investments, new product launches and the organisational streamlining carried through all drive our confidence in continued steady progress. There are, however, especially many risks that may materialise and affect actual results.

The Board’s dividend proposal

The Board proposes to the Annual General Meeting a dividend of €0.42 (€0.38) per share. When making the proposal, the Board considered the solvency of the company, the company’s dividend policy, and the business outlook.

Key financial figures
Consolidated income statement
(continuing operations), M€ 
    2014 2013 2012 2011 2010
Net sales     1,023.9 906.0 811.5 806.4 749.2
Operating expenses     926.9 823.6 726.5 743.0 669.9
Depreciation     36.0 33.0 28.2 29.4 29.1
Other operating income     2.4 0.8 0.9 1.4 2.2
Operating profit     63.4 50.2 57.7 35.4 52.4
Financial income and expenses     -7.4 -7.1 -8.6 -17.7 -10.7
Profit before taxes     56.3 43.2 49.4 17.7 41.7
Result from continuing operations     36.3 27.1 32.9 1.9 27.0
Profit for the period     36.0 26.8 32.8 1.6 24.7
Earnings per share     0.50 0.38 0.45 0.03 0.34


Information on the financial statements bulletin
This document is a condensed version of Uponor’s 2014 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 of the previous year. Unless otherwise stated, figures refer to continuing operations. Any change percentages were calculated from the exact figures and not the rounded figures published here.

Webcast and presentation
A webcast of the results briefing in English will be broadcast on 12 February at 12:30pm EET. Connection details are available at Questions can be sent in advance to The recorded webcast can be viewed at shortly after its publication. The presentation document will be available at > News & downloads.

Next interim results
Uponor Corporation will publish its Q1 interim results on 28 April 2015. During the silent period from 1 April to 27 April, Uponor will not comment on market prospects or factors affecting business and performance.



Interim results October–December 2014


In the building and construction market in Europe, demand in the fourth quarter remained subdued, continuing the trend of the two preceding quarters. The European markets continued to be characterised by volatility, probably due to the prolonged recovery of the European business environment. The situation was further worsened by geopolitical issues related to the Ukraine crisis.

In Building Solutions – Europe, demand in Germany, the segment’s single largest market, was weak, as anticipated, while most other markets continued to be flat. In the Nordic countries, demand for renovation partly offset the soft new build markets. The market in Russia experienced a temporary boost, as customers pre-stocked in anticipation of price increases due to changes in exchange rates.

In the U.S., the building markets continued to grow, both in terms of residential and commercial demand. Canada also remained resilient.

In terms of infrastructure solutions, demand picked up from the previous quarters, the main improvement occurring in North America, Asia and Poland.

Net sales

Uponor’s consolidated net sales came to €251.5m (€237.6m), showing an increase of 5.9% from the final quarter of 2013, driven mainly by the strong growth reported in North America. All segments reported growth. In local currency, consolidated net sales grew by 5.7%.

Building Solutions – Europe’s net sales improved from the corresponding period, partly due to the temporary product approval cancellation that curbed sales in France in 2013. Uponor Infra suffered from declining net sales in Finland, but successfully offset this through positive net sales trend in North America, technology sales and increased project business in Asia.

Breakdown of net sales, October – December:

Reported change
Building Solutions – Europe 112.7 112.0 0.6%
Building Solutions – North-America 56.1 43.6 28.4%
(Building Solutions – North-America, M$ 70.0 59.6 17.4%)
Uponor Infra 84.9 83.7 1.5%
Eliminations -2.2 -1.7  
Total 251.5 237.6 5.9%

Profits and profitability

Uponor’s consolidated gross profit in the final quarter of 2014 totalled €83.2 (€72.0) million or 33.1% (30.3%). In 2013, the temporary cancellation of a product approval in France negatively affected gross profit.
Consolidated operating profit for the fourth quarter came to €11.8 (€-3.8) million. The operating profit margin came to 4.7% (-1.6%). Without non-recurring items, the operating profit was 12.7 (0.1) million.

All segments improved in terms of profitability, against the comparison period. In 2013, Building Solutions – Europe’s operating profit was burdened by a cost of ca €5 million related to the temporary cancellation of a product approval in France. Uponor Infra’s operating profit for the current quarter was supported by the cost savings measures implemented. In the case of Building Solutions – North America, Uponor was able to benefit from the successful measures implemented to capture growth in the market’s improving residential and commercial segments.

Uponor Infra’s performance improved due to operational leverage, as a result of increased sales in international markets, projects and the technology business. The segment continued to be burdened by restructuring costs from the programme launched in Finland in 2014, amounting to €0.3 (€3.9) million in the fourth quarter. These integration and efficiency programmes are proceeding according to plan.

Breakdown of operating profit, October – December:  

M€ 10-12
Reported change
Building Solutions – Europe 4.7 0.3 n/m
Building Solutions – North-America 9.3 5.8 59.9%
(Building Solutions – North-America, M$ 11.7 8.0 46.3%)
Uponor Infra -0.9 -9.0 n/m
Others -1.6 -0.5  
Eliminations 0.3 -0.4  
Total 11.8 -3.8 n/m

Events during the period

In Central Europe, the relocation of distribution operations to the new distribution centre presently being built in Hassfurt, Germany, proceeded ahead of schedule, with the relocation of some operations already being finalised. The centre, which will include a central warehouse and the small-scale production of local heat distribution systems, will function as the main Central European distribution hub. It will be taken into full commercial use early in the second quarter of 2015.

In Finland, Uponor continued its determined efforts to develop its offering and find new niche routes into the market. Together with leading professional partners, Uponor established a business alliance to develop a pre-fabricated wall solution for the renovation of existing buildings. The ‘Uponor technic wall’ concept includes the design, project management and installation of new bathrooms and kitchens. This concept is specifically designed for renovating the large number of buildings erected in Finland during the 1970s and 80s, and the first pilot projects have been agreed on.  



Financial statements January–December 2014


In 2014, the construction markets in Europe and North America developed as mirror images of one another. An exceptionally cold winter in North America slowed activity in the early months of the year but, as the snow melted, activity gained strength. Meanwhile, in Europe, the mild winter provided a jump-start for the industry, but this early momentum was largely lost by mid-summer.

The Nordic countries saw new residential construction rise from 2013 levels in Sweden and Denmark, but fall in Norway and Finland, while new non-residential construction stabilised in the area following a number of years of contraction. Meanwhile, renovation activity in the residential and non-residential markets expanded in all countries. Civil engineering was flat in Sweden, contracted in Finland and Denmark and, thanks to investments in transport and energy, grew in Norway.

In Central Europe, an especially mild winter coupled with strong demand spurred the area’s largest country, Germany, to begin the year with accelerated construction output levels across the residential and non-residential markets, in both new builds and renovation. At the same time, the Netherlands began to show the first signs of recovery after an extended period of contraction in most building segments. The slowdown that began in the summer within the euro area dampened sentiment in the region’s construction industry. The year ended with relatively high levels of building activity, but growth had clearly decelerated.

The Southwest European markets were characterised by marked variation in developments. In the UK, the non-residential segment returned to growth, and the new residential segment exhibited a second year of improved activity. The first signs of recovery were witnessed in Spain, where construction activity and industry sentiment improved throughout the year, albeit from extremely low levels. In France and Italy, on the other hand, slight growth in the renovation segments fell well short of offsetting the significant reduction in new non-residential and residential building.

In terms of Eastern Europe, the Russian market started the year well and, despite an increasingly challenging business environment, residential construction activity remained largely on a par with the previous year. Meanwhile, businesses in Russia began scaling back investments in the non-residential segment. Events related to the Ukraine crisis had a clearly negative impact on the entire region, consumers and businesses became cautious and a slowdown in activity was apparent. In the Baltics, residential and non-residential construction grew during the year, but civil engineering contracted slightly.

In general, the export markets outside Europe, in which Uponor does a significant amount of business, continued to exhibit year-over-year growth in the residential and non-residential new build segments.

Many parts of the U.S. and Canada were seriously affected by adverse weather in the first months of the year, dampening both construction activity and builder sentiment. As the summer approached, a slow but broad-based recovery took shape in the U.S., leading to growth across nearly all residential and non-residential segments. In Canada, both housing construction and non-residential building activity slowed. The civil engineering segment development in the U.S. and Canada was the same as for the other building segments: steady growth in the U.S., but contraction in Canada.


Net sales

Uponor's 2014 net sales from continuing operations amounted to €1,023.9 (2013: €906.0) million, up 13.0% year on year. In comparable terms, i.e. adjusting for historic 2013 figures of the new Uponor Infra businesses, consolidated as of 1 July 2013, net sales grew by 2.0%. In local currency, this growth amounted to 3.9%.

Building Solutions – Europe’s net sales declined by -0.1% but showed modest growth of 1.7% in local currency. A key reason for this flattish development was the weaker-than-anticipated market conditions in Germany in the latter part of the year, which slowed growth.

Building Solutions – North America reported continued strong growth, both in the local currency and in euro. Uponor was successful in growing net sales in both the residential and commercial markets, and in expanding its geographical presence in the U.S.

For the first time, Uponor Infra’s net sales for 2014 included a full 12 months of figures for the businesses that have been combined since the establishment of the joint-venture with KWH Pipe on 1 July 2013. Reported growth from 2013 was therefore considerable, rising by 34.4%. Compared to the historic 2013 net sales levels achieved by the combined businesses, there was a decline of 2.2%, mainly driven by the impact of currency changes, but also due to plummeting demand in some key markets, such as Finland and Denmark, and a negative development in market share in Finland in particular.

In terms of business groups, as a result of the full-year consolidation of Uponor Infra, the share of Infrastructure Solutions in 2014 grew to 34% (28%) while Plumbing Solutions represented 39% (42%) and Indoor Climate Solutions 27% (30%) of Group net sales.

Net sales by segment for 1 January – 31 December 2014: 

M€ 1–12
Reported change
Building Solutions – Europe 479.1 479.5 -0.1%
Building Solutions – North America 200.8 171.5 17.1%
(Building Solutions – North America (M$) 265.2 228.2 16.2%)
Uponor Infra 351.3 261.4 34.4%
Eliminations -7.3 -6.4  
Total 1,023.9 906.0 13.0%


Measured by reported net sales, and their respective share of Group net sales, the 10 largest countries were as follows (2013 figures in brackets): the USA 17.6% (15.8%), Germany 13.9% (15.9%), Finland 13.2% (13.8%), Sweden 9.2% (9.5%), Canada 8.2 % (6.1%), Denmark 4.7% (4.9%), Norway 3.6% (3.9%), the United Kingdom 3.5% (3.3%), the Netherlands 3.1% (3.2%), and Russia 3.0% (3.1%).


The consolidated full-year gross profit ended at €340.1 (€320.1) million, a change of €20.0 million or 6.2%. The gross profit margin came to 33.2% (35.3%). The main influencer for this trend was an increased share of infrastructure solutions business after the establishment of Uponor Infra.

Consolidated operating profit came to €63.4 (50.2) million, up 26.3% from the previous year. The operating profit margin improved to 6.2% (5.5%) of net sales. Operating profit included €4.3 (5.0) million in non-recurring items, of which €3.7m was reported in Building Solutions – Europe and €0.6m (net) in Uponor Infra. The non-recurring items in 2013 were related to the integration programme in Uponor Infra, while the items in 2014 comprised the relocation of Building Solutions – Europe’s Central European distribution centre, relocation and assembly of fixed assets in Uponor Infra related to the integration programme, including the sale of former manufacturing facilities, as well as costs incurred by Uponor Infra’s streamlining in Finland in 2014.

Operating profit improved in all segments, although it remained slightly negative in Uponor Infra. The biggest contributor was Building Solutions – North America, with a 27.4% improvement in euro terms from last year.

Building Solutions – Europe’s operating profit improved, especially in the spring season, against the rather soft 2013 performance. In the fourth quarter of 2013, the operating profit was burdened by a cost of €5 million related to the temporary cancellation of a product approval in France, while in 2014 there was a non-recurring cost of €3.7 million related to the relocation of the distribution centre in Germany.

Building Solutions – North America’s performance continued strong, in a favourable market environment, and Uponor was able to capture more volume as a result of capacity expansions.

Uponor Infra’s performance improved, largely due to the synergic savings generated by the merger between the Uponor and KWH Pipe infrastructure businesses on 1 July 2013, the results of the streamlining actions implemented in the Finnish market, as well as higher profitability in the foreign businesses. Profitability was burdened by the declining volume development in the Finnish market and the action begun to adjust operations to low demand. In 2014, Uponor Infra’s operating profit was burdened by a non-recurring cost of €0.6 million (net) due to merger-related integration initiatives, as well as the streamlining of the Finnish operations in 2014.

Operating profit by segment for 1 January – 31 December 2014: 

M€ 1–12
Reported change
Building Solutions – Europe 35.0 32.7 7.0%
Building Solutions – North-America 31.5 24.7 27.4%
(Building Solutions – North-America (M$) 41.6 32.9 26.4%)
Uponor Infra -0.5 -2.3 77.9%
Others -2.6 -3.4  
Eliminations 0.0 -1.5  
Total 63.4 50.2 26.3%


Uponor’s financial expenses came to €7.4 (€7.1) million. Net currency exchange differences in 2014 totalled €-1.2 (-0.6) million.

Profit before taxes was €56.3 (43.2) million. At a tax rate of 35.5% (37.3%), income taxes totalled €20.0 (16.1) million.

Profit for the period totalled €36.0 (26.8) million, of which continuing operations accounted for €36.3 (27.1) million.

Return on equity grew to 12.3% (10.8%). Return on investment reached 14.2% (12.5%).

Earnings per share were €0.50 (0.38), and €0.50 (0.38) for continuing operations. Equity per share was €3.16 (3.00). For other share-specific information, please see the Tables section.

Consolidated cash flow from operations was €75.7 (92.1) million, while cash flow before financing came to €45.1 (67.2) million. Comparison with the 2013 cash flow is impacted by significant positive one-time effects from the first time consolidation of the former KWH Pipe business in the middle of 2013, i.e. at the peak of the seasonal net working capital cycle. In line with the profit improvement, net cash from operations in 2014 improved from €87.9 million to €99.0 million.

Key figures are reported for a five-year period in the financial section.

Short-term outlook

The economic outlook in Uponor’s key markets is likely to remain twofold in 2015: demand in North America, representing one fourth of Group net sales, is expected to remain lively and offer room for continued construction industry growth. The European markets, on the other hand, are expected to remain flat, although supported by growing confidence in a gradual revival of the European economy. However, this scenario is subject to certain risks, some of which are geopolitical.

Uponor has focussed considerable effort in recent years on strengthening its foothold in key markets. This has been achieved through measures such as intensifying partnerships in the value chain and enhancing the product and services offering in order to fulfil the diversified needs of customers and partners on the road towards a more sustainable building industry. Internally, the company has consistently executed a programme involving the further development and harmonisation of operations, such as the supply and distribution of products, the streamlining of operations, and reducing the environmental footprint, while better serving the company’s customers.

A key target for the future is continued investment in Uponor’s platforms for growth. This will mean securing supply and customer service capacity in growing markets, such as North America, and ensuring the optimal allocation of resources in areas that enable short and long term growth. At the same time, the management continues to keep a sharp eye on the company’s focus, cost-efficiency and cash flow, in order to secure a solid financial position for future growth initiatives.

Assuming that none of the major risks described materialise, Uponor issues the following guidance for 2015: the Group’s net sales and operating profit (excluding any non-recurring items) are expected to improve from 2014.

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 ‘Key risks associated with business’ section of the Financial Statements.

Uponor Corporation
Board of Directors


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


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


NASDAQ 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. 4,000 persons, in 30 countries. In 2014, Uponor's net sales exceeded €1 billion. Uponor Corporation is listed on NASDAQ Helsinki in Finland.