26.07.2013
Stock exchange release
Caverion Corporation's Interim Report for January 1–June 30, 2013: Caverion Corporation established – Focus on operational efficiency
INTERIM REPORT FOR JANUARY 1 – JUNE 30, 2013: Caverion Corporation established – Focus on operational efficiency
April 1 – June 30, 2013
- The revenue for April - June decreased by 9 percent compared to the previous year, amounting to EUR 652.8 million (4-6/2012: EUR 717.6 million). The revenue decreased in Northern Europe due to further postponements of additional service and maintenance work as well as due to increased selectiveness in project business in Norway. The decrease in revenue in Central Europe was mainly influenced by weaker order intake in the end of 2012 and postponed projects in Germany.
- The EBITDA decreased clearly in April - June compared to the previous year, amounting to EUR 12.9 million (4–6/2012: EUR 25.6 million) or EUR 16.0 million excluding one-off items (4–6/2012: EUR 28.4 million). In Northern Europe, the weak profitability of the project business, tight price competition and low business volume contributed to the decrease in EBITDA. The development of EBITDA has also been weaker due to low capacity utility rate in service and maintenance. In Central Europe the EBITDA decreased due to lower volume of German operations and postponements in project start-ups. EBITDA for April - June is burdened by M&A related project costs amounting to EUR 1.4 million, as well as other one-off items relating to restructuring amounting to EUR 1.4 million. Demerger related costs amounted to EUR 0.3 million in April - June.
- The order backlog was on a par with the end of March, amounting to EUR 1,274.2 million (3/2013: EUR 1,315.2 million). The order backlog grew by 6 percent from the end of the previous year.
- Operative cash flow after investments decreased from the previous year, amounting to EUR -35.3 million (4-6/2012: EUR -18.4 million).
- Net debt amounted to EUR 194.0 million as a result of the partial demerger.
January 1 – June 30, 2013
- The revenue decreased compared to previous year to EUR 1,260.6 million (1–6/2012: EUR 1,390.1 million).
- The EBITDA decreased by 55 percent in January - June compared to the previous year, amounting to EUR 22.3 million (1–6/2012: EUR 49.2 million). EBITDA for January - June is burdened by M&A related project costs amounting to EUR 1.4 million, as well as other one-off items relating to restructuring amounting to EUR 4.2 million. Demerger related costs amounted to EUR 0.3 million in January - June.
KEY FIGURES
Caverion has not formed a separate legal group before June 30, 2013. The carve-out financial information presented in this interim report reflects the financial performance of the entities that have historically formed the Building Services business within YIT Group. The balance sheet and the related key figures as per June 30, 2013 are based on actual figures, whereas the income statement, cash flow and comparative figures are based on carve-out financial information.
| EUR million | 4-6/13 | 4-6/121) | Change | 1-6/13 | 1-6/121) | Change | 1-12/121) |
| Revenue | 652.8 | 717.6 | -9% | 1,260.6 | 1,390.1 | -9% | 2,803.2 |
| EBITDA | 12.9 | 25.6 | -50% | 22.3 | 49.2 | -55% | 85.3 |
| EBITDA margin, % | 2.0 | 3.6 | 1.8 | 3.5 | 3.0 | ||
| Operating profit | 7.8 | 20.1 | -61% | 12.1 | 37.9 | -68% | 61.1 |
| Operating profit margin, % | 1.2 | 2.8 | 1.0 | 2.7 | 2.2 | ||
| Financial income and expenses, net2) | -2.1 | -1.7 | -2.4 | -2.7 | -3.6 | ||
| Net profit for the period | 4.2 | 12.4 | -66% | 7.0 | 24.1 | -71% | 40.8 |
| Operative cash flow after investments | -35.3 | -18.4 | -37.5 | -13.3 | 40.5 | ||
| Interest-bearing net debt, end of period3) | 194.0 | -11.1 | 194.0 | -11.1 | -9.8 | ||
| Gearing, end of period, %3) | 85.5 | -2.6 | 85.5 | -2.6 | -2.5 | ||
| Earnings per share, EUR2) | 0.03 | 0.10 | -66% | 0.06 | 0.19 | -71% | 0.32 |
| Personnel, average for the period | 18,106 | 19,185 | -6% | 18,229 | 19,258 | -5% | 18,592 |
| Revenue, EUR million | 4-6/13 | 4-6/12 | Change | 1-6/13 | 1-6/12 | Change | 1-12/12 |
| Building Services Northern Europe | 501.0 | 538.1 | -7% | 969.6 | 1,051.2 | -8% | 2,089.2 |
| Building Services Central Europe | 152.1 | 179.5 | -15% | 291.4 | 339.0 | -14% | 714.2 |
| Eliminations | -0.3 | 0.0 | -0.3 | -0.1 | -0.2 | ||
| Group, total | 652.8 | 717.6 | -9% | 1,260.6 | 1,390.1 | -9% | 2,803.2 |
| EBITDA, EUR million | 4-6/13 | 4-6/121) | Change | 1-6/13 | 1-6/121) | Change | 1-12/121) |
| Building Services Northern Europe | 10.0 | 19.5 | -49% | 16.2 | 38.5 | -58% | 59.5 |
| Building Services Central Europe | 4.4 | 7.9 | -44% | 8.9 | 14.3 | -38% | 33.2 |
| Group services and other items | -1.5 | -1.7 | -2.8 | -3.6 | -7.4 | ||
| Group, total | 12.9 | 25.6 | -50% | 22.3 | 49.2 | -55% | 85.3 |
| EBITDA margin, % | 4-6/13 | 4-6/121) | 1-6/13 | 1-6/121) | 1-12/121) | ||
| Building Services Northern Europe | 2.0 | 3.6 | 1.7 | 3.7 | 2.8 | ||
| Building Services Central Europe | 2.9 | 4.4 | 3.0 | 4.2 | 4.7 | ||
| Group, total | 2.0 | 3.6 | 1.8 | 3.5 | 3.0 |
| Operating profit, EUR million | 4-6/13 | 4-6/121) | Change | 1-6/13 | 1-6/121) | Change | 1-12/121) |
| Building Services Northern Europe | 6.1 | 15.2 | -60% | 8.3 | 29.7 | -72% | 41.1 |
| Building Services Central Europe | 3.2 | 6.6 | -52% | 6.6 | 11.8 | -44% | 27.4 |
| Group services and other items | -1.5 | -1.7 | -2.8 | -3.6 | -7.4 | ||
| Group, total | 7.8 | 20.1 | -61% | 12.1 | 37.9 | -68% | 61.1 |
| Operating profit margin, % | 4-6/13 | 4-6/121) | 1-6/13 | 1-6/121) | 1-12/121) | ||
| Building Services Northern Europe | 1.2 | 2.8 | 0.9 | 2.8 | 2.0 | ||
| Building Services Central Europe | 2.1 | 3.7 | 2.3 | 3.5 | 3.8 | ||
| Group, total | 1.2 | 2.8 | 1.0 | 2.7 | 2.2 |
| Order backlog, EUR million | 6/13 | 3/13 | Change | 6/13 | 12/12 | Change | |
| Building Services Northern Europe | 829.2 | 844.7 | -2% | 829.2 | 819.0 | 1% | |
| Building Services Central Europe | 444.9 | 470.5 | -5% | 444.9 | 380.1 | 17% | |
| Group, total | 1,274.2 | 1,315.2 | -3% | 1,274.2 | 1,199.1 | 6% |
1) The revised IAS 19 standard has had the following effects on the consolidated income statement for 1-12/2012: personnel expenses increased by EUR 0.1 million and EBITDA and operating profit and profit before taxes decreased correspondingly by EUR 0.1 million. The revised IAS 19 standard has had the following effects on the consolidated income statement for 1-6/2012: personnel expenses increased by EUR 0.3 million and EBITDA and operating profit and profit before taxes decreased correspondingly by EUR 0.3 million. The revised IAS 19 standard has had the following effects on the consolidated income statement for 4-6/2012: personnel expenses increased by EUR 0.2 million and EBITDA and operating profit and profit before taxes decreased correspondingly by EUR 0.2 million.
2) Excluding the financial cost effect of the new financing arrangements transferred to Caverion Corporation as a result of the partial demerger. If the refinancing under new loan agreement would have been drawn down in the beginning of the financial year, the net financing expenses in January-June would have amounted to approximately EUR 3.6 million.
3) Interest-bearing net debt and gearing for 2012 are not comparable to the figures in 2013 due to the new credit facility transferred to Caverion Corporation as a result of the partial demerger as per June 30, 2013.
GUIDANCE FOR THE SECOND HALF OF 2013: Caverion repeats the estimate announced on 4 June 2013, according to which the Group’s revenue for the second half of 2013 is more than EUR 1.3 billion and EBITDA more than EUR 50 million.
The guidance does not take into account the non-recurring expenses related to the demerger, nor the expenses related to any potential mergers or acquisitions.
Juhani Pitkäkoski, President and CEO: Trading in Caverion Corporation’s shares began at Helsinki Stock Exchange on July 1, 2013
Caverion Corporation was established through the partial demerger of YIT Corporation on June 30, 2013 when YIT’s Building Services and Industrial Services operations were transferred to an independent company. Trading in Caverion Corporation’s shares at Helsinki Stock Exchange began on July 1, 2013. In connection with YIT’s demerger, YIT Corporation’s shareholders received as demerger consideration one Caverion share for each YIT share owned. Consequently, Caverion had approximately 39,000 shareholders at the beginning of trading. I would like to warmly welcome all of our new shareholders!
We aim to be the leading and the most efficient building systems company in Europe. Our strategy has three main objectives:
Firstly, we will continue to focus on improving the profitability of Building Services Northern Europe. There are extensive efficiency improvement measures under way in the segment, and we expect their impact to be visible during the second half of 2013. As a result of the Demerger we now have a tighter grip on managing the business. The previously announced measures to carry out cost savings of EUR 40 million have been executed and personnel cuts of 800 employees were carried out by the end of the 2012. As a result, the pursued cost savings have been reached. Nonetheless the cost savings measures have turned out to be inadequate. The aim is to decrease the number of personnel by further 600 employees in 2013; of these, personnel cuts amounting to approximately 400 employees were carried out in January - June. In Sweden unprofitable units have been closed down and the restructuring of the organization in northern Sweden and the Stockholm area is at the final stage. These measures have begun to have a positive impact on the profitability of the Swedish operations in the second quarter. We are also focusing on improving the profitability of the project business in Norway, especially in the capital region. Our service efficiency program is ongoing in all countries where we operate. As a result of the ongoing actions, we estimate the profitability of Building Services Northern Europe to improve during the rest of the year.
Secondly, we will also continue to seek strong growth, especially in Germany and German-speaking countries, both organically and through acquisitions. Caverion's market shares in Central European countries are smaller than in Northern Europe, which offers good opportunities for growth in these fragmented markets.
Finally, we pursue growth and profitability by putting an emphasis on long-term service agreements in the service and maintenance business, Design & Build projects and deliveries related to energy savings.
Market outlook for Caverion’s services
Caverion’s operating environment varies by business and country. Caverion operates in Sweden, Finland, Norway, Germany, Austria, Denmark, Russia, Estonia, Latvia, Lithuania, Poland, the Czech Republic and Romania. The extensive geographical area of operations and comprehensive portfolio balance the effect of economic fluctuations, with the changes impacting business operations at different times and force.
The market situation for building systems is expected to vary by country also in 2013, especially in the project business. In 2013, the service and maintenance market is estimated to remain stable or even grow slightly in all major countries where Caverion operates. The increased technology in buildings increases the need for new services, and the demand for energy efficiency services is expected to remain stable. The opportunities for growth in service and maintenance are still favorable in all Caverion’s operational areas. In Poland, the building systems market will continue to grow but suffer from oversupply, which has a negative impact on prices. The building services market in the rest of Central Eastern Europe (the Czech Republic and Romania) is developing slowly with a low level of activity.
Decision-making on new investments is still slow, but positive signs can be seen. After the stagnation in 2012, new investments in building systems are expected to increase slightly in Norway and Germany. Increasing public investments and an increasing need for renovation and repair work are expected to be the key factors behind the growth. However, there are still signs of postponed new investments in the market, particularly in Sweden and Finland. In these countries the customers are only expected to carry out the necessary services related to maintaining the core business and operational safety in the near term. Demand in the project market is expected to weaken further in 2013 in Finland and Sweden and decrease slightly or remain unchanged in Central Eastern Europe. The size of the Swedish project market as a whole is expected to decrease by approximately 7 percent during 2013, mainly due to weakening demand. The Norwegian project market has developed well during the first half of the year, and the favourable development is expected to continue during 2013. Also the Danish project market is expected to turn to slight growth in 2013. In the Baltic countries, both the project and service market demand is estimated to remain at a low level. In Russia the services market is expected to improve further.
There is potential for energy efficiency services over the next few years with the tightening of environmental legislation. Environmental certifications and energy efficiency will be increasingly significant factors in the future, allowing property owners to increase the value of their properties, which will continue to support growth opportunities. Services and projects related to the maintenance of traffic infrastructure are also estimated to develop favorably.
INFORMATION SESSION, WEBCAST AND CONFERENCE CALL
Caverion will hold a news conference on the interim report on Friday, July 26, 2013, at 10:00 a.m. (Finnish Time, EEST) together with YIT. The news conference will be held in English at Caverion's head office at Panuntie 11, 00620 Helsinki, Finland. The event is targeted for analysts, portfolio managers and the media.
The news conference is organised jointly by Caverion Corporation and YIT Corporation. It starts with the presentation by President and CEO of YIT Kari Kauniskangas, after which President and CEO of Caverion Juhani Pitkäkoski will give his presentation on Caverion’s Interim Report.
The news conference and both presentations can be viewed live on Caverion’s website at www.caverion.com/investors. The live webcast held will start at 10:00 a.m. (Finnish time, EEST). A recording of Caverion’s part of the webcast will be available at the same address starting at approximately 14:00 (Finnish time, EEST).
It is also possible to participate in the event through a conference call. Participants are requested to call the assigned number +44 (0)207 1620 177 at least five minutes before the conference call begins, at 9:55 a.m. (Finnish time, EEST) at the latest. The participants will be asked to provide the following conference ID: 934550. During the webcast and conference call, all questions should be presented in English. At the end of the event, there will also be an opportunity for the media to ask questions in Finnish.
Schedule in different time zones:
| Interim Report published | News conference, conference call and live webcast | Recorded webcast available | |
| EEST (Helsinki) | 8:00 | 10:00 | 14:00 |
| CEST (Paris, Stockholm) | 7:00 | 9:00 | 13:00 |
| BST (London) | 6:00 | 8:00 | 12:00 |
| US EDT (New York) | 1:00 | 3:00 | 7:00 |
Financial reports and other investor information are available at Caverion's website, www.caverion.com/investors. The materials may also be ordered by sending an e-mail to IR@caverion.com.
Invitation to the Capital Markets Day of Caverion
Caverion will arrange a Capital Markets Day for investors, analysts and capital markets representatives in Frankfurt, Germany on Tuesday, November 19, 2013. The purpose of the event is to give information on Caverion’s strategy and business. The day’s programme will consist of top management presentations. More detailed programme will be announced closer to the date. To register for Caverion’s Capital Markets Day, participants are kindly asked to contact Tarja Albrecht by e-mail, address tarja.albrecht@caverion.fi. The registration should be done by October 15, 2013.
Caverion Corporation
Juhani Pitkäkoski
President and CEO
For further information, please contact:
Antti Heinola, Chief Financial Officer, Caverion Corporation, tel. +358 40 352 1033, antti.heinola@caverion.fi
Milena Hæggström, Head of Investor Relations, Caverion Corporation, tel. +358 40 5581 328, milena.haeggstrom@caverion.fi
Distribution: NASDAQ OMX Helsinki, principal media, www.caverion.com
