Partek´s Interim Report January-September 2001
11.11.2001Growth continued, growth trend in order intake broken
- Net sales increased 12 % to EUR 2,004 (1-9/2000: 1,783) million.
- Orders received amounted to EUR 1,726 (1,790) million. The order book was EUR 491 (September 30, 2000: 563) million.
- Operating profit was EUR 66.9 (105.8) million. The profit of the business areas before goodwill depreciation was EUR 88.7 (111.4) million.
- Profit after financial items was EUR 30.1 (84.8) million.
- The equity to total assets ratio was 38.6 (Dec. 31, 2000: 37.9) percent
- Earnings per share were EUR 0.37 (1.11).
Structural changes
Dutch NHC Holding BV, which includes container crane and straddle carrier producer Nelcon BV and the service company Groot-Hensen BV, is consolidated in Container handling as of year 2001, as is the German sales and service company Klaus Eger GmbH, which was acquired at the end of 2000.
Of the companies acquired in 2000 in Load handling, Zeteco is included in the comparison period´s figures as of March. The truck-mounted forklift production is not included in the comparison period, while the refuse-vehicle business Norba, sold in November 2000, is.
The forest-machine company Timbco is included in the comparison period as of July 2000.
At end-2000 the rest of the shares, 50 percent, in the sales company RS Hansa Auto Oy were acquired.
Market development, orders received and order book
The continued slowing of world economic growth in the third quarter of the year was reflected in lower demand in Partek´s areas of business. Especially towards the end of the period, the prevailing uncertainty led to cautiousness among customers regarding new orders.
The estimate for container growth in 2001 has been lowered from five percent to below four percent after the events in September. The number of heavy truck registrations, which in part indicates the demand in Load handling, is expected to drop in 2001 between five and 40 percent on the various markets. Tractor demand is estimated to have fallen by about five percent on the main European markets in January-September, while demand in Brazil has increased by approximately 11 percent. Forest machines continued to suffer from weak demand.
Orders received in January-September amounted to EUR 1,726 (1,790) million and in the third quarter EUR 491 (610) million.
Orders received per business area
Orders received in the third quarter in Container handling decreased especially on the part of straddle carriers and ship-to-shore cranes. In the third quarter of last year Container handling received an extraordinarily large number of extensive orders.
Orders received in Load handling were negatively affected by the decrease in truck registrations in Europe and the U.S. Orders received in Forest machines decreased compared to the third quarter 2000, but remained at the level of the previous quarter. Tractors showed increased orders, contrary to the general situation.
The order book at end-September was EUR 491 (563) million.
Order book per business area
The order book in Container handling, which has the longest delivery times, is at a satisfactory level, and guarantees the current capacity utilisation in practically all product lines for the rest of the year. In Load handling, the order book decreased mainly due to weak order intake in loader cranes and demountables. The order book in Forest machines improved slightly during the quarter. The larger order book in Tractors was a result of the improved order book of the operations in Suolahti, Finland. Sales of the new environment-friendly tractor model, which was launched in August, has started favourably. Also diesel machine orders increased, especially external orders.
Net sales
Net sales in January-September increased 12 percent to EUR 2,004 (1-9/2000: 1,783) million. Organic growth was approximately three percent. Service and spare parts amounted to 15 percent of total sales in the business areas.
In the third quarter net sales increased to EUR 644 (7-9/2000: 593) million.
In Container handling, the third quarter increase in sales was attributable to both organic growth and to the new business derived from Nelcon. Net sales in both Load handling and Tractors were at year-ago levels. Net sales in Forest machines continued to decrease in the third quarter.
Profitability
The operating profit in January-September was EUR 66.9 (105.8) million and the operating margin was 3.3 percent. The profit includes non-recurring costs of EUR 4 million for personnel reduction and other adjustment measures. The operating profit in the comparison period includes EUR 7.1 million in non-recurring income.
Third quarter operating profit was EUR 19.9 (30.4) million, which is 3.1 (5.1) percent of net sales. The combined operating profit of the business areas was EUR 22.7 (33.2) million, which is 4.0 (6.3) percent of net sales.
Operating profit per business area
In Container handling and Load handling, the third quarter operating profit remained at the year-ago levels. In Tractors, investments in strengthening and broadening the sales network continued to weigh on profitability. Forest machines was slightly at a loss.
The third quarter profit of associated companies fell compared with the year-ago period, partly due to lower ownership and partly to non-recurring costs.
Balance sheet
Focus on reducing the balance sheet total led to an increase in the equity to total assets ratio in the third quarter. The balance sheet total decreased, especially compared with the end-June situation, and amounted to EUR 2,171 (Dec 31, 2000: 2,259) million. Net interest-bearing debt excluding capital loans decreased to EUR 748 (Dec. 31, 2000: 750) million. Gearing was 91 (Dec. 31, 2000: 88) percent and the equity to total assets ratio was 38.6 (Dec. 31, 2000: 37.9) percent. Gross investment in January-September was EUR 73 (344) million.
Personnel
The number of employees decreased by 370 in the third quarter. The number of employees at end-September was 13,040 (Dec 31, 2000: 12,893), of which 4,641 (4,659) in Finland and 8,399 (8,234) in other countries.
The average number of employees in January-September was 13,213 (1-9/2000: 11,294), of which 4,755 (4,311) in Finland and 8,458 (6,983) in other countries.
Other significant events during and after the third quarter
The negotiations concerning the sale of the shares in Addtek International Oy Ab between the owners of Addtek and Irish CRH plc ended inconclusive in September. The aim of the negotiations that started during summer 2001 was to reach a solution, which satisfies the European Commission and the involved parties. Partek owns 25.1 percent of Addtek.
Partek Forest and Federal Equipment Inc, a subsidiary of Komatsu Canada Inc, have signed a co-operation agreement comprising the dealership of all Valmet forest machines in Canada. The agreement presently covers the Provinces of Ontario, Quebec, Labrador, New Brunswick and Nova Scotia. The agreement considerably strengthens Partek´s position in eastern Canada, where the cut-to-length harvesting method, which Valmet represents, dominates.
In the beginning of October, Partek agreed to sell the vehicle alignment businesses Car-O-Liner AB and Josam Holding AB to a holding company, which is to be formed by the venture capital companies 3i and Euroventures. The combined net sales of the two companies to be sold amounted to approximately EUR 42 million in 2000 and they have some 300 employees. The transaction is subject to approval of the competition authorities. The deal will not have an affect on Partek´s profit in year 2001, but will strengthen the balance sheet.
The Valtra Recycled Parts service was launched in the end of September. The operations significantly lower the maintenance costs of older Valtra Valmet tractors. The suitability of the recycled parts is assured and they have a three-month guarantee.
Shares
In January-September the HEX portfolio index dropped 37 percent and the HEX general index 53 percent. The industry index for metal and engineering fell approximately six percent. The Partek share fell 27 percent.
The average share price on the last trading day in September was EUR 9.15 (12.47 at end-2000). The lowest quotation of Partek´s share during the period was EUR 8.00 and the highest was EUR 13.65. Partek´s market capitalisation was EUR 448 million at end-September.
During the period 2.7 million Partek shares were traded, which amounts to a turnover of EUR 30 million. The average daily trade was about 14,300 shares and EUR 157,000.
At end-September Partek had 11,262 shareholders. Foreign holdings accounted for just over four percent of shares.
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