Interim report January - March 2017: Uponor’s net sales grows in all segments

Interim report January - March 2017: Uponor’s net sales grows in all segments

Uponor Corporation    Interim report 1-3/2017   3 May 2017    14.00 EET


  • A pick-up in demand fuelled net sales growth in key markets in all segments, with the clear exception of Germany and the UK
  • Net sales in January – March totalled €265.1 (246.9) million, with an organic growth at 7.4%
  • Operating profit came to €14.6 (11.9) million, a change of 22.8%
  • Comparable operating profit came to €15.0 (14.9) million, a change of 0.8%
  • Earnings per share were €0.11 (0.09)
  • Return on investment was 9.9% (8.9%), and gearing 74.5% (62.4%)
  • Cash flow from business operations came to €-23.0 (-14.5) million
  • Uponor repeats its full-year guidance announced on 13 February 2017: the Group’s net sales and comparable operating profit are expected to improve from 2016, assuming that economic development in Uponor's key geographies continues undisturbed

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

  • We made broad-based progress in several key markets across all segments in the first quarter, which had more business days this year than in 2016. The first quarter is an off-season quarter and performance trends may change further in the year. One such factor that may impact business going forward is an upward trend in the prices of key raw materials which we have seen in recent months. We have issued and are prepared to issue further price increases to compensate for higher input costs.
  • Building Solutions – Europe’s net sales growth was strong in several of its key markets, but business operations experienced headwinds in the largest national market, Germany, in particular. Performance was negatively affected mainly as a result of intensifying competition in plumbing solutions, along with higher marketing costs related to the biennial ISH trade show.
  • The building solutions business in North America is progressing in a satisfactory manner and demand in the key market segments remains healthy, although not quite as lively as in the very strong comparison period.
  • Uponor Infra reported an improvement both in its top line and bottom line development, but reported an operating loss which is typical for the season. Faced with margin pressures due to emerging input cost risks, the segment continues to implement its strategy of focussing on designed solutions sales that is less dependent on raw material price movements.

Information on the January – March 2017 interim report bulletin

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

Webcast of the results briefing and the presentation

A webcast in English will be broadcast on 3 May at 15.00 EET. Connection details are available at The recorded webcast can be viewed at shortly after publication. The presentation document will be available at > News & downloads.

Next interim results

Uponor Corporation will publish its half year financial report on 25 July 2017. During the silent period from 1 to 25 July, Uponor will not comment on market prospects or factors affecting business and performance.




With confidence among builders at levels not seen since before the financial crisis, European construction markets entered the year with continued, positive momentum. In North America, broad-based growth continued in Uponor’s key building segments, but at a reduced rate.

In Uponor’s largest Central European market, Germany, private consumption and public expenditure, combined with buoyant business confidence, have continued to boost the economy. Within the construction industry, the commercial construction market has been particularly strong, while other building segments have experienced lower growth. Some of the growth has been in the prefabricated house market, which has not been a core market for Uponor. The construction sentiment in Germany stumbled in the last months of 2016, but rebounded somewhat during the first months of 2017 and remains favourable compared to previous years. In the Netherlands, growth has moderated, but builders report significant improvements in their order books. In several European markets, the HVAC industry continues to be hampered by bottlenecks in planning and in professional installation services, which is slowing business.

In Southern Europe, construction activity is primarily trending upward, with considerable improvements in the Spanish and French markets. Despite political uncertainties, no significant headwinds have been prevalent in UK demand.

Supported by improving macroeconomic fundamentals, construction activity has grown across the Nordic countries. In Finland, non-residential projects have slowly begun to contribute to the recovery, which has thus far been driven by residential construction in growth centres. The Swedish market continues to outperform its neighbours, with housing starts growing significantly. The construction markets in Norway and Denmark are also both benefiting from strengthening economies.

In North America, residential and non-residential construction remain largely healthy in the face of labour shortages in some industries and rising interest rates. In the USA, lacklustre business investments have slowed the pace of growth in non-residential construction projects, but construction spending has nevertheless grown from the same period last year. On the residential side, housing starts have sustained their steady, upward trend. In Canada, a recent - and probably temporary - surge in multi-family starts in urban areas has lent support to the residential market.

With regard to Uponor’s infrastructure solutions, civil engineering expenditures in the Nordic countries remain modest, but steady, while an increase in non-residential building construction projects has improved demand. In Canada, the significant fall in industrial investments witnessed during 2015-2016 has bottomed out and demand in Uponor’s core market segments is returning.


Net sales

Uponor’s consolidated net sales reached €265.1 (246.9) million, up 7.4%. A positive currency impact of €3.7 million increased consolidated net sales, mainly originating in the USD and CAD. In constant currency terms, i.e. using Q1/2016 exchange rates, net sales growth was 5.8%.

Growth of net sales was robust both in Uponor Infra and in Building Solutions – North America, but also in several key national markets in Building Solutions – Europe, reflecting a clearly improved business environment in both continents. In addition, a small, positive effect is likely to have arisen from customers pre-buying ahead of announced price increases.

Building Solutions – Europe reported net sales of €124.3 (123.0) million, up by a modest 1.1%. Net sales grew strongly in several key markets, supported by sales initiatives that bore fruit in pre-fabricated installation unit sales, in particular. A clear exception to the trend was Germany and the UK, both of which saw net sales decline. In the UK, net sales were influenced by the weakening British pound, which made imported products less attractive and, in part, by earlier transformation-related internal measures that caused short term challenges, especially in supply. The unsatisfactory net sales development in Germany was mainly related to overcapacity in the supply of plumbing products that influenced Uponor’s routes to market, in particular, as well as competitive pressures, both in plumbing and in radiant heating systems, from OEM and other low price-performance suppliers.

Net sales continued to grow favourably in Building Solutions – North America. The segment’s net sales came to €78.2 (70.7) million, up 10.5%, or 6.7% in USD. In the first quarter of 2016, net sales was very strong as a result of lively sales in Canada and the pre-buying of EP (enhanced polymer) fittings in the U.S. as a result of announced availability constraints. In 2017, irregular order and sales patterns as a result of the EP fittings availability issue in 2016, were still experienced and had a negative impact on net sales growth. Further, sales was curbed by the fact that some business opportunities did not materialise as expected in the first quarter due to external issues, such as weather.

Breaking a multi-year negative trend, Uponor Infra reported growth for the first quarter and posted quarterly net sales of €63.1 (54.1) million, up 16.7% year-on-year. Growth was particularly robust in North America, Sweden and Denmark. 


Breakdown of net sales by segment (January – March):

M€ 1–3/
Building Solutions – Europe 124.3 123.0 1.1%
Building Solutions – North America 78.2 70.7 10.5%
(Building Solutions – North America (M$) 83.5 78.2 6.7%)
Uponor Infra 63.1 54.1 16.7%
Eliminations -0.5 -0.9  
Total 265.1 246.9 7.4%


Results and profitability

Uponor’s consolidated gross profit came to €91.4 (87.8) million, a change of €3.6 million. The gross profit margin was 34.5% (35.5%). Comparable gross profit came to €91.6 (88.5) million, or 34.6% (35.8%). The change in gross profit margin was mainly driven by factors related to the EP fittings shortage in the U.S. in 2016, including an increase in freight costs and higher EP resin material cost. Further, partner promotions in the building solutions segments increased from the comparison period in 2016.

Operating profit in the first quarter of 2017 came to €14.6 (11.9) million, representing a change of 22.8% year-over-year. Profitability, as measured by the operating profit margin, ticked up to 5.5% (4.8%). Comparable operating profit, i.e. excluding items affecting comparability, came to €15.0 (14.9) million, up 0.8%. Operating profit was burdened by a variety of factors, such as sales mix shifting towards lower margin product groups during the period, increases in overheads and expenses due to initiatives to expand business in the U.S., in particular, as well as continued high level of R&D investment. In line with the transformation programmes reaching towards their end, items affecting comparability amounted to just €-0.4 (€-3.0) million.

Building Solutions – Europe’s operating profit came to €6.3 (4.9) million, up 27.9%. The segment’s comparable operating profit amounted to €6.7 (7.5) million, a change of -11.2%. Offsetting the beneficial impact of higher net sales in several markets, the segment’s comparable operating profit declined as a result of lower sales in Germany and marketing costs related to the biennial ISH trade fair in March. The ramp-up of operations in Asia, including the new factory in China, also burdened operating profit to some extent.  

Building Solutions – North America reported an operating profit of €10.6 (11.1) million, showing a decline of 3.9% from the comparison period but still remaining at a healthy level. The decline in operating profit was partly caused by the repercussions of the shortage in EP resin in 2016, as mentioned above, as well as lower margins due to regional sales mix.

Uponor Infra improved its operating profit markedly, by 47.1%, but remained in negative territory at €-1.9 (-3.6) million which, for seasonal reasons, is not unusual for the first quarter. The segment’s comparable operating profit came to €-1.9 (-3.2) million, representing a change of 40.5%. The improvement in profitability was mainly caused by operational leverage due to higher sales volumes, as well as savings from the transformation programme. The largest share of the improvement came from the North American operations, supported by the timely cost saving actions implemented during the fourth quarter of 2016. Uponor Infra’s transformation programme in Europe has, been completed. 

Operating profit by segment (January – March):

Building Solutions – Europe 6.3 4.9 27.9%
Building Solutions – North America 10.6 11.1 -3.9%
(Building Solutions – North America (M$) 11.4 12.3 -7.2%)
Uponor Infra -1.9 -3.6 47.1%
Others -0.9 -0.7  
Eliminations 0.5 0.2  
Total 14.6 11.9 22.8%


Comparable operating profit by segment (January – March):

Building Solutions – Europe 6.7 7.5 -11.2%
Building Solutions – North America 10.6 11.1 -3.9%
(Building Solutions – North America (M$) 11.4 12.3 -7.2%)
Uponor Infra -1.9 -3.2 40.5%
Others -0.9 -0.7  
Eliminations 0.5 0.2  
Total 15.0 14.9 0.8%


Financial expenses at €2.8 (3.4) million were slightly less than in the comparison period.

The share of the result in associated companies at -0.5 million is related to the minority share in the joint venture company Phyn, which is still in a development and pilot phase and does not yet generate returns.

Profit before taxes for January – March totalled €11.3 (8.6) million. The effect of taxes on profits was €3.9 million, compared to €3.2 million in the first quarter of 2016. The estimated tax rate for the full year is 35%, compared to 31.3% at the year-end of 2016.

The profit for the first quarter of 2017 amounted to €7.4 (5.4) million.


Short-term outlook

The rather stable market outlook that prevailed in February 2017, when Uponor announced its 2016 results, has remained materially unchanged. Despite the obvious risks that may materialise, the recent investment behaviour of businesses and consumers indicates that confidence in near-term economic development remains undisturbed.

An encouraging improvement in demand has been noted in the European markets, influencing demand for both building solutions and infrastructure solutions, in comparison to sentiment in early 2016. The North American building solutions markets have sustained their healthy levels, despite occasional month-to-month fluctuations in demand. Likewise, demand for infrastructure solutions has picked up in North America. As stated earlier, the recovery thus seems broad-based and is supported by improving confidence, attractive credit terms, immigration and, naturally, pent up demand over the longer term.

Plastic resin prices have been on a gradual rising trend in recent months, and Uponor has announced its first price increases to compensate for higher input costs. Further price increases are likely to be announced during the quarter at hand.

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

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

On 13 February 2017, Uponor estimated that the Group's capital expenditure, excluding any investment in shares, would be in the range of €50-60 million. With the new, planned additions included, the capital expenditure is expected to be close to €60 million in 2017. Funds will be directed towards the development of new products and offering, such as strategically significant hygiene solutions, and the expansion of business in Asia among other activities.

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.