23.10.2015
Stock exchange release
Caverion Corporation Interim Report for January 1 - September 30, 2015
INTERIM REPORT FOR JANUARY 1 – SEPTEMBER 30, 2015
July 1 – September 30, 2015
· Order backlog: EUR 1,477.2 (Q3/2014: 1,379.5) million.
· Revenue: EUR 573.7 (566.7) million.
· EBITDA: EUR 21.3 (21.5) million, or 3.7 (3.8) percent of revenue.
· Working capital: EUR 36.1 (Q3/2014: 49.4) million.
· Operating cash flow before financial and tax items: EUR -8.9 (20.5) million.
January 1 – September 30, 2015
· Revenue: EUR 1,775.3 (1,746.4) million.
· EBITDA: EUR 57.5 (33.2) million, or 3.2 (1.9) percent of revenue.
· Operating cash flow before financial and tax items: EUR 2.7 (13.4) million.
Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.
KEY FIGURES
| EUR million | 7-9/15 | 7-9/14 | Change | 1-9/15 | 1-9/14 | Change | 1-12/14 |
| Order backlog | 1,477.2 | 1,379.5 | 7% | 1,477.2 | 1,379.5 | 7% | 1,323.6 |
| Revenue | 573.7 | 566.7 | 1% | 1,775.3 | 1,746.4 | 2% | 2,406.6 |
| EBITDA | 21.3 | 21.5 | -1% | 57.5 | 33.2 | 73% | 67.5 |
| EBITDA margin, % | 3.7 | 3.8 | 3.2 | 1.9 | 2.8 | ||
| Operating profit | 14.7 | 15.7 | -6% | 38.1 | 16.0 | 137% | 44.2 |
| Operating profit margin, % | 2.6 | 2.8 | 2.1 | 0.9 | 1.8 | ||
| Net profit for the period | 9.9 | 9.9 | 0% | 25.7 | 7.6 | 238% | 27.6 |
| Earnings per share, basic, EUR | 0.08 | 0.08 | 0% | 0.21 | 0.06 | 240% | 0.22 |
| Working capital | 36.1 | 49.4 | -27% | 36.1 | 49.4 | -27% | -19.3 |
| Operating cash flow before financial and tax items | -8.9 | 20.5 | 2.7 | 13.4 | -80% | 113.5 | |
| Interest-bearing net debt | 101.9 | 131.6 | -23% | 101.9 | 131.6 | -23% | 50.2 |
| Gearing, % | 43.4 | 57.8 | 43.4 | 57.8 | 21.1 | ||
| Personnel, average for the period | 17,369 | 17,329 | 0% | 17,286 | 17,346 | 0% | 17,300 |
Word from the President and CEO Fredrik Strand
“In the third quarter we have been affected by changes in our operating environment. In Norway the general economy is impacted by the slowdown in the oil industry, which has affected business activities, with cancelled or delayed investments in large projects. Also the technical installation and maintenance business in Norway is partly affected by this.
Our investments into our operational model, processes and enterprise architecture are still being deployed. Caverion is now actively preparing for the next phase of its strategy, with a strengthened focus on customers, growth and developing the group business mix. Caverion has continued investments in common processes, which has also been reflected in operational expenses during the period. This includes training, restructuring and exiting operations and local businesses, which are not in line with the group strategy. In Germany a couple of projects in handover stage had a negative impact on EBITDA for July–September. The EBITDA performance during the rest of the year is expected to be in line with last year.
At the end of the third quarter our working capital increased due to seasonal fluctuation. Towards the end of the year we expect to reach our targeted level of negative working capital.
To drive growth, we introduced a unified market offering with innovative solutions at the Capital Markets Day in September. We are targeting further growth especially in Large Projects and Managed Services, in its widest form offered as Life Cycle Solutions. During the year, we have received a number of demanding contracts in this area, which are visible in the growth of our order backlog.”
OUTLOOK FOR 2015
Market outlook for Caverion’s services and solutions
The mega trends in the industry, such as the increase of technology in buildings, energy efficiency requirements, increasing digitalisation and automation as well as urbanisation continue to promote demand for Caverion’s services and solutions over the coming years.
The technical installation and maintenance business has been stable throughout the period and is expected to remain stable by the end of the year. Requirements for increased energy efficiency, better indoor conditions and tightening environmental legislation will be significant factors supporting the positive market development. In Norway, the general economy has been impacted by the slowdown in the oil industry, which has also had an effect on the technical installation and maintenance business in the third quarter.
Large new tenders for buildings and industry are expected to increase during the year. Positive signs have been seen in tendering activity, especially in the public and industrial sectors and we expect the positive trend to continue towards the end of the year. Low interest rates and availability of financing are expected to support investments. The demand for design & build of total technical solutions is expected to develop favourably in the large and technically demanding projects. In certain industries however there have been less investments made during the third quarter, such as the nuclear industry in Germany, the mining industry in Sweden and the oil industry in Norway, resulting in project postponements or cancellations.
Caverion has actively responded to the recent market changes through careful selection of new projects and service contracts as well as by proving long-term intent with its key clients but also by restructuring its operations in Norway.
Demand for managed services has increased over the year and this is expected to continue towards the end of the year. As technology in buildings is increasing the need for new services and the demand for life cycle solutions are expected to increase. Customers’ tendency towards focusing on their core operations continues to open opportunities for Caverion in terms of outsourced operation and maintenance mainly for public authorities, industries and utilities.
Overall changes in the operating environment due to growing uncertainty over the general macroeconomic development and mounting geopolitical tensions may lead to some cautiousness in project start-ups and service demand.
Guidance for 2015 (unchanged)
Caverion reiterates its guidance announced on January 29, 2015, according to which Caverion estimates that the Group’s revenue will remain at the previous year's level and EBITDA margin for 2015 will grow significantly.
INFORMATION SESSION, WEBCAST AND CONFERENCE CALL
Caverion will hold a news conference and webcast on the Interim Report on Friday, October 23, 2015, at 11:00 a.m. (Finnish Time, EEST) at the Kämp Hotel (Gallen-Kallela meeting room), Kluuvikatu 2, Helsinki, Finland. The news conference can also be viewed live on Caverion’s website at www.caverion.com/investors. It is also possible to participate in the event through a conference call by calling the assigned number +44 (0)20 7162 0077 at 10:55 a.m. (Finnish time, EEST) at the latest. The participants will be asked to provide the conference ID 955379. More practical information on the news conference can be found on Caverion's website, www.caverion.com/investors.
Financial information in 2015
Financial Statements Bulletin for January - December 2015 will be published on January 27, 2016 at 9:00 a.m. (Finnish Time, EET).
Financial reports and other investor information are available on Caverion's website, www.caverion.com/investors, and IR App. The materials may also be ordered by sending an e-mail to IR@caverion.com.
CAVERION CORPORATION
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 Helsinki, principal media, www.caverion.com
