Interim report Jan–Sept 2017: Uponor’s good progress in the third quarter offsets the shortfall in the second quarter

Uponor Corporation       Interim report 1-9/2017               27 October 2017            08:00 EET

Uponor’s good progress in the third quarter offsets the shortfall in the second quarter

·   Net sales in July – September totalled €317.5 (284.1) million, with growth at 11.8%

·   All segments grew their business, the strongest growth being reported in Building Solutions – North America

·   Operating profit for July – September came to €40.4 (25.1) million, up 60.9%, mainly driven by higher net sales and cost savings from the transformation programmes completed in the second quarter of 2017; the comparable operating profit in July – September came to €40.4 (29.0) million, with growth at 38.9%

·   The Supreme Administrative Court ruling on 13 September 2017, concerning Uponor’s 2016 tax appeals, had a €5.2 million positive impact on net profit during the quarter, of which €3.6 million is recognised as financial income and €1.6 million as tax income

·   Net sales in January – September totalled €891.0 (830.5) million, with growth at 7.3%

·   Operating profit for January – September came to €77.9 (63.5) million, a change of 22.7%; the comparable operating profit in January – September came to €79.2 (74.6) million, a change of 6.0%

·   January – September earnings per share were €0.64 (0.47)

·   The January – September return on investment was 19.4% (16.9%), and gearing on 30 September was 48.2% (56.6%)

·   The January – September cash flow from business operations came to €65.4 (22.0) million

·   Uponor repeats its full-year guidance announced on 13 February 2017: the Group’s net sales and comparable operating profit are expected to improve from 2016, assuming that economic development continues undisturbed in Uponor's key geographies

President and CEO Jyri Luomakoski comments on developments
during the reporting period:

·   I am pleased to report that, as anticipated, Building Solutions – North America has recovered from the temporary production issue experienced in the second quarter, and deliveries to customers, which are still partly on allocation, are running reliably. As we enter a slower season, with new production lines and operations running at full speed, deliveries should improve further. We have broken several monthly production records lately and target new records as the two manufacturing expansions announced in 2017 take effect in 2018.

·   Building Solutions – Europe reports positive net sales development in several national markets and the benefits from the transformation programme initiated in the fourth quarter of 2015 are kicking in fully, supporting profitability development. To achieve stronger growth throughout the geographies, the segment has redirected its resources to improving Uponor’s value proposition in strategic focus areas and in key customer segments.

·   Earlier in 2017, Uponor Infra announced price increases to compensate for raw material price increases occurring in the first two quarters. After successful execution, the segment is now reporting favourable net sales development and the year-to-date comparable operating profit exceeds that of the prior year.

·   Looking beyond just one quarter’s figures, and combining the second and third quarter together, our year-over-year net sales growth slightly exceeded 7%, following the trend witnessed in the first quarter, and is well in line with our long-term targets.


Group key financial figures  
Consolidated income statement
(continuing operations), M€
2016 2015 2014 2013
Net sales     891.0 830.5 1,099.4 1,050.8 1,023.9 906.0
Operating expenses     786.8 737.8 991.0 942.7 926.4 823.6
Depreciation and impairments     29.1 31.6 41.6 39.1 36.5 33.0
Other operating income     2.8 2.4 4.2 2.4 2.4 0.8
Operating profit     77.9 63.5 71.0 71.4 63.4 50.2
Comparable operating profit     79.2 74.6 90.7 75.8 67.7 55.2
Financial income and expenses     -2.9 -7.2 -10.0 -8.9 -7.4 -7.1
Profit before taxes     73.4 56.5 60.4 62.8 56.3 43.2
Result from continuing operations     50.3 35.6 41.5 37.1 36.3 27.1
Profit for the period     50.3 36.0 41.9 36.9 36.0 26.8
Earnings per share     0.64 0.47 0.58 0.51 0.50 0.38



 Information on the January – September 2017 interim report

This report has been compiled in accordance with the IAS 34 reporting standards and is unaudited. The figures in brackets are the reference figures for the equivalent period in the previous year. Any change percentages are calculated from the exact figures and not the rounded figures published here. This document is a condensed version of Uponor’s January–September 2017 interim report, which is attached to this release. It is also available on the company website.

Webcast of the results briefing and the presentation

A webcast in English will be broadcast on 27 October at 10:00 EET. It can be viewed via our website at or via the Uponor IR mobile app. The recorded webcast can be viewed via the website or the Uponor IR mobile app shortly after the live presentation. All presentation materials will be available at > News & downloads.

Next interim results

Uponor Corporation will publish its financial statements 2017 bulletin on Thursday 15 February 2018. During the silent period from 1 January to 15 February 2018, Uponor will not comment on market prospects or factors affecting business and performance, nor will the company engage in any discussion of events or trends related to the reporting period or the current fiscal period.




Construction activity in Uponor’s key building markets remained at a healthy level during the quarter. Markets in Europe remained solid on the whole, with builders continuing to report improvements in their order books and the level of building activity. In North America, growth continued in Uponor’s key market segments, but at a reduced rate compared to recent years.

In Uponor’s largest Central European market, Germany, the strong economy continued to drive demand, while shortages of skilled labour in the industry continued to constrain building activity. Residential construction activity was robust, especially in new multi-family homes, while growth in the single-family home segment remained softer. The significantly larger renovation segment continued mostly flat. On the non-residential side, some growth was visible compared to 2016 levels. In the Netherlands, the growth rate has slightly moderated from earlier periods, but the industry remains healthy.

Despite variations between countries and building segments, the construction markets in Southern Europe continued to develop positively overall compared to the third quarter of last year. The Spanish market continued to grow, although from a low base, and activity in France gained additional momentum. The UK market remained generally sound despite widespread political uncertainties.

The markets in the Nordic region continued to expand. In Sweden, notable growth in both the residential and non-residential segments was sustained, year-over-year. Construction markets in Denmark, Finland and Norway continued to grow as well, but at a lower rate. In particular, the residential segments are driving growth there, while non-residential construction remains largely in line with 2016. However, reports of labour shortages across the region have increased in step with building volume growth, which is likely to delay or prolong some projects.

Construction activity in North America remained largely healthy. In Uponor’s largest national market, the USA, home builder confidence is high and building activity continued to improve in the residential segment, albeit at a reduced rate from that witnessed earlier in the decade. Non-residential spending has largely been on a par with 2016, but growth has been reported in the office and commercial segments. In Canada, home construction is being fuelled by significant increases in home prices.

With regard to Uponor’s infrastructure solutions, civil engineering expenditures in the Nordic countries remained modest, but steady, with Sweden reporting good growth. In Canada, the significant fall in industrial investments witnessed during 2015-2016 has bottomed out and demand has picked up in Uponor’s core market segments.

The third quarter 2017 saw several abnormal weather and storm patterns and hazards developing in the regions where Uponor operates, especially in North America. Such developments may influence the operations at Uponor and among key stakeholders, such as demand/supply challenges, both in the short and in the longer term. To date, the impact on Uponor’s operations has been marginal, but Uponor is monitoring developments.

Net sales 

Uponor’s consolidated net sales for the third quarter 2017 reached €317.5 (284.1) million, up 11.8%. There was a small impact from the USD, RUB and SEK on consolidated net sales, but the total net currency impact was marginal.

Building Solutions – Europe reported net sales of €136.3 (127.4) million, up 7.1%. With the exception of Finland, net sales growth was reported in all key countries, particularly Austria, the Netherlands, Norway, Sweden and Spain. The segment’s largest market, Germany, reported small year-over-year growth in net sales in a market where lower-value proposition private label brands are playing an active role. A pick-up was also noted in export markets, in several Eastern European countries as well as in Russia, where the business benefited from the lively autumn season supported by an increased sales force and new client acquisitions. Throughout the segment, both plumbing and indoor climate offerings had a solid performance, and a recovery was noted in the local heat distribution business. Net sales also developed well with regard to pre-fabricated products, such as the family of Uponor Port solutions mainly originating from the acquired Delta and KaMo businesses, which are helping to solve capacity issues in installation and planning.

Reported as part of the Building Solutions – Europe segment, net sales in Asia continued to grow despite government-driven cooling measures influencing the real estate market in China. Uponor’s latest factory, in Taicang, China, has been operational for three full quarters of the year and is running at close to planned capacity.

Net sales in Building Solutions – North America came to €91.2 (77.5) million, up by 17.8% in euro terms or 23.9% in USD. In addition to continued healthy market demand in both plumbing and indoor climate, the strong growth in the third quarter net sales was particularly related to delivery difficulties experienced in the second quarter, which, once overcome, resulted in a higher amount of orders shipped in the third quarter. The delivery difficulties have mainly been related to Uponor’s inability, over the longer term, to increase manufacturing output in step with growth in demand. In the second quarter 2017, a temporary production issue, caused by resin, briefly curbed production and affected the company’s ability to deliver pipe orders. As announced earlier, this issue was fully corrected by the end of the second quarter.

Reporting growth of 12.1% for the third quarter, Uponor Infra posted net sales of €90.6 (80.8) million. Growth was particularly robust in Canada and the U.S., where the core markets were recovering after a lengthy slowdown. In Europe, the Swedish market continued to show strength, compensating for continued softness in the other Nordic markets.

Net sales by segment (July – September):

M€ 7-9/2017 7-9/2016 Change
Building Solutions – Europe 136.3 127.4 7.1%
Building Solutions – North America 91.2 77.5 17.8%
(Building Solutions – North America (M$) 106.8 86.2 23.9%)
Uponor Infra 90.6 80.8 12.1%
Eliminations -0.6 -1.6  
Total 317.5 284.1 11.8%


Uponor’s January–September net sales reached €891.0 (830.5) million, or growth of 7.3%. This was driven by the brisk growth of net sales in Uponor Infra during all three quarters of the current year, as well as in Building Solutions – North America, which has sustained healthy growth despite temporary challenges affecting net sales in the second quarter. In constant currency terms, net sales would have been €1.3 million higher than reported net sales. The main currencies contributing were the RUB, SEK, and USD.

Net sales by segment (January – September):

M€ 1–9/2017 1–6/2016 Change
Building Solutions – Europe 396.2 385.2 2.9%
Building Solutions – North America 248.7 228.4 8.9%
(Building Solutions – North America (M$) 279.0 254.4 9.7%)
Uponor Infra 248.0 220.7 12.4%
Eliminations -1.9 -3.8  
Total 891.0 830.5 7.3%


Results and profitability

Uponor’s consolidated gross profit in the third quarter was €109.3 (96.8) million, a change of €12.5 million from the comparison period, driven by higher net sales. At 34.4% (34.1%), the gross profit margin slightly exceeded the previous year’s level. Comparable gross profit grew slightly more than net sales and ended up at €109.3 (97.6) million, with a gross profit margin of 34.4% (34.3%).

Operating profit in the third quarter of 2017 came to €40.4 (25.1) million, up by 60.9% year-on-year. Comparable operating profit, i.e. excluding items affecting comparability, reached €40.4 (29.0) million, an increase of 38.9%. Profitability, as measured by the comparable operating profit margin, came to 12.7% (10.2%). Operating profit improved in all three segments, largely driven by operational leverage as a result of business growth in an environment largely characterised by lively demand. Further reasons supporting improved profits were cost savings achieved through structural and efficiency enhancements implemented as part of the transformation programmes in Europe, which were launched in November 2015. Overheads and costs were carefully managed in all segments. Raw material price increases that occurred during the first half of 2017, in particular, were largely compensated for by sales price increases, especially in Uponor Infra.

Building Solutions – Europe’s operating profit in the third quarter came to €14.4 (10.8) million, up by 33.2%. The segment’s comparable operating profit amounted to €14.4 (11.7) million. The improvement is a result of net sales growth together with a more efficient production network, offsetting the negative influence of higher raw material prices, particularly in aluminium and brass. Profits were also burdened by a greater emphasis on project support and promotional activities in a highly competitive European market, as well as planned start-up losses in Asia.

Building Solutions – North America reported an operating profit of €19.0 (12.4) million for the quarter, representing a year-over-year increase of 53.0% in euro terms, or 58.5% in USD. Offsetting the adverse impact of higher shipment costs due to back orders, the improvement is mainly a result of increased net sales and efficient management of the still constrained pipe supply to customers.

Uponor Infra’s operating profit came to €7.4 (2.7) million, an increase of 178.8%. The segment’s comparable operating profit came to €7.4 (5.9) million, representing a change of 23.9%. In addition to an increase in net sales, the improvement was mainly a result of sales price increases implemented to compensate for the raw material price increases in the first half of 2017. The main negative impact was due to persistent production yield challenges related to machine relocations in Finland.

Operating profit by segment (July – September):

M€ 7-9/2017 7-9/2016 Change
Building Solutions – Europe 14.4 10.8 33.2%
Building Solutions – North America 19.0 12.4 53.0%
(Building Solutions – North America (M$) 21.9 13.8 58.5%)
Uponor Infra 7.4 2.7 178.8%
Others 0.2 -0.2  
Eliminations -0.6 -0.6  
Total 40.4 25.1 60.9%


Comparable operating profit by segment (July – September):

M€ 7-9/2017 7-9/2016 Change
Building Solutions – Europe 14.4 11.7 22.9%
Building Solutions – North America 19.0 12.4 53.0%
(Building Solutions – North America (M$) 21.9 13.8 58.5%)
Uponor Infra 7.4 5.9 23.9%
Others 0.2 -0.2  
Eliminations -0.6 -0.6  
Total 40.4 29.0 38.9%

At €-1.1 million, third quarter 2017 net financial expenses were €2.8 million less than in the comparison period mainly due to a €3.6 million reduction in net interest expenses after the decision taken by the Supreme Administrative Court in Finland.

Profit before taxes for July – September totalled €41.0 (23.5) million, which increased taxes which came to €12.4 (8.7) million. The impact of the Supreme Administrative Court ruling on taxes was a gain of €1.6 million, with a total profit impact of €5.2 million. Profit for the third quarter came to €28.6 (14.8) million.

The January – September gross profit came to €299.1 million (33.6%) against €290.1 million (34.9%) in 2016. Comparable gross profit amounted to €300.1 million (33.7%) against €292.5 million (35.2%) in 2016, mainly burdened by competitive price pressure, particularly in the European building solutions business.

The January – September operating profit came to €77.9 (63.5) million, or €79.2 (74.6) million in comparable operating profit, up 22.7% or 6.0% respectively from January – September 2016.

As announced in the January – June 2017 half year financial report, because the final measures related to the European transformation programmes had been initiated during the second quarter of 2017, there were no new items affecting comparability, or IAC, in the third quarter. IAC for the January – September period amounted to €1.3 (11.1) million. The current year’s costs are mainly related to ongoing office consolidation in Building Solutions – Europe’s Italian operations. In 2016, IAC was related to the transformation programmes in both the Building Solutions – Europe and in Uponor Infra segments. As announced in connection with the January – June 2017 half year financial report, the transformation programmes had a combined target of achieving annual operational savings of €25 million against a total cost of €32 million in items affecting comparability. The savings targets were largely met. The IAC costs during the entire programme amounted to €24.5 million in total. These numbers include the consolidation initiative in Italy.

Profitability, or the operating profit margin, for the January – September period was 8.7%, against 7.6% in the comparison period. The comparable operating profit margin at 8.9% (9.0%) almost reached the prior year’s level.

Operating profit by segment (January – September): 

M€ 1-9/2017 1-9/2016 Change
Building Solutions – Europe 29.8 23.8 25.1%
Building Solutions – North America 40.1 38.1 5.2%
(Building Solutions – North America (M$) 45.0 42.4 6.0%)
Uponor Infra 10.2 4.2 145.4%
Others -1.7 -1.7  
Eliminations -0.5 -0.9  
Total 77.9 63.5 22.7%


Comparable operating profit by segment (January – September):

M€ 1-9/2017 1-9/2016 Change
Building Solutions – Europe 32.6 30.6 6.3%
Building Solutions – North America 40.1 38.1 5.2%
(Building Solutions – North America (M$) 45.0 42.4 6.0%)
Uponor Infra 8.7 8.5 3.0%
Others -1.7 -1.7  
Eliminations -0.5 -0.9  
Total 79.2 74.6 6.0%

At €2.9 million, financial expenses were €4.3 million less than in the comparison period mainly due to a €3.6 million adjustment in interest expenses after the decision by the Supreme Administrative Court in Finland.

At €-1.6 million, the share of the result in associated companies is related to the minority share in the joint venture company Phyn, whose offering is in the development and pilot phase and does not yet generate returns. Phyn was established in July 2016. The activities of the joint venture are progressing according to plan.

Profit before taxes for January – September totalled €73.4 (56.5) million. Taxes had a €23.1 (20.9) million effect on profits. Due to the September decision of the Supreme Administrative Court, the taxes imposed on the company in 2011 will be lowered, resulting in an estimated effective tax rate of 31.5% for the full year. The one-time impact of the court’s decision equals a 1.5 percentage point positive change in the tax rate.

Profit for the period came to €50.3 (35.6) million. Earnings per share, both basic and diluted, for January – September totalled €0.64 (0.47). Equity per share, both basic and diluted, was €3.68 (3.41).

Key events

To meet continued growth in demand for its pipe systems, Building Solutions - North America is expanding its manufacturing facility in Apple Valley, Minnesota with a €16.3 million ($17.4 million) investment, announced in May 2017. This expansion, the 10th of its kind since operations began in Apple Valley in 1990, is expected to be fully functional by January 2018, adding 5,440 square metres (58,000 square feet) in manufacturing operations space related to crosslinked polyethylene (PEX) pipe production.

In order to safeguard future pipe manufacturing capacity and meet expected longer-term growth in North America, on 20 July 2017 Uponor further announced that Building Solutions – North America would purchase a manufacturing facility and real estate in the U.S. town of Hutchinson, Minnesota. The deal, which is worth €5.6 million ($6.3 million), was closed on 3 August 2017. Production of PEX pipe in Hutchinson is expected to start during the second half of 2018, slightly earlier than originally planned, after regulatory approvals have been obtained.

On 17 July, Building Solutions – Europe organised a large promotional installer event in Spain. The event was held in five large Spanish cities simultaneously. A total of 1,600 installers attended the event via a webcast.

On 13 September, the Supreme Administrative Court in Finland resolved the taxation adjustment decisions, based on the appeals submitted in January 2016, concerning Uponor Corporation and its subsidiary Uponor Business Solutions Oy. The matter concerns taxation adjustment decisions made by the Large Taxpayers’ Office in 2011. The Supreme Administrative Court’s decision lowers Uponor Corporation’s uncharged mark-up of service fees, which was added to the company’s taxable income, from seven to three per cent for the tax years 2005 – 2007. The taxes, late fees and tax increases imposed on the company have also been decreased. The taxation adjustment decisions concerning the parent company’s subsidiary, Uponor Business Solutions Oy, for the 2005 tax year have also been overruled. The Finnish Tax Administration has reassessed the changes in taxation caused by this decision and will adjust the payment for both companies. With regard to the tax years 2006 – 2009, the clarification of arm’s length amounts of service fees charged by Uponor Business Solutions Oy will be returned to the Finnish Tax Administration for review.

In September, Uponor Infra announced a licensee agreement, whereby it granted an African company, Plasco Ltd., a licence for the manufacture and marketing of the Weholite® pipe in the United Republic of Tanzania. Uponor’s revolutionary Weholite® technology consists of high density polyethylene (HDPE) pipe, fittings and fabricated assemblies, and is used worldwide in low-pressure service applications for potable water, storm water, sewage and various other liquids. In addition to Uponor Infra’s own production of Weholite, there are licensees in the UK, Iceland, Oman, South Africa, Malaysia, Thailand, Japan, Chile, Brazil, France, Turkey, and now also in Tanzania.

Short-term outlook

After reporting favourable market trends for the third quarter 2017, Uponor expects demand in the near term to grow in a satisfactory manner. Market trends for the total second half of 2017 should match those of the first half year.

The main factor supporting this view is the fact that demographic demand supported by healthy economic development and the improving labour market in key countries is likely to continue. In addition, housing starts have remained below the long-term historic averages in Uponor’s key markets in Europe and in North America. The main risks in this regard relate to the unlikely event of a sudden derailing of the global economy or an acute political crisis in the northern hemisphere.

Uponor has strengthened its operations in several respects in the last couple of years. The operations of both Building Solutions – Europe and Uponor Infra have been streamlined, resulting in a more efficient and competitive supply chain and manufacturing network. Simultaneously with this initiative, sales and marketing functions have been reorganised to align with strategic targets. In North America, the building solutions segment has addressed determined efforts and investment in enhancing its ability to meet growing customer demand both in the short and the longer term, while building on its brand perception and superior customer experience, both of which are key strategic focus areas for the segment.

Uponor has focused strongly on meeting the digitalisation and sustainability megatrends, and has introduced and will launch new offerings to meet customer and societal demand for smart water management solutions, for example. Uponor remains committed to addressing the key issues of our time through innovations that help to reduce environmental impact. Through partnerships, Uponor strives to provide leadership in sustainable solutions for the mutual well-being of both people and the planet, while ensuring the long-term viability of its operations.

Assuming that economic development in Uponor's key geographies otherwise continues undisturbed, Uponor repeats its earlier, full-year guidance for 2017:

The Group’s net sales and comparable operating profit are expected to improve from 2016.

Uponor repeats its estimate, announced in connection with the January – June 2017 half year financial report, that the Group's capital expenditure, excluding any investment in shares, is expected to exceed €60 million in 2017, including the acquisition of the U.S. manufacturing facility and real estate in August 2017. 

Uponor’s financial performance may be affected by a range of strategic, operational, financial, legal, political and hazard risks. A more detailed risk analysis is provided in the section ‘Key risks associated with business’ in the Annual Report 2016.


Uponor Corporation
Board of Directors


For further information, please contact:

Jyri Luomakoski, President and CEO, tel. +358 20 129 2824
Maija Strandberg, CFO, tel. +358 20 129 2830


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



Nasdaq Helsinki


Uponor is a leading international systems and solutions provider for safe drinking water delivery, energy-efficient radiant heating and cooling and reliable infrastructure. The company serves a variety of building markets including residential, commercial, industrial and civil engineering. Uponor employs about 3,900 employees in 30 countries, mainly in Europe and North America. In 2016, Uponor's net sales totalled €1.1 billion. Uponor is based in Finland and listed on Nasdaq Helsinki.