Vacon Plc Financial Statement Bulletin 1 January - 31 December 2014

Vacon Plc, Stock Exchange Release, 12 February 2015 at 9.30 a.m. (EET)

In this stock exchange release Vacon is publishing information that has a significant impact on securities included in the financial statements. The full financial statements are in the appendix to this release and can be downloaded from the company's website in English at www.vacon.com and in Finnish at www.vacon.fi.

October-December highlights: 

• Order intake totalled MEUR 108.6 (MEUR 87.7 in October-December 2013), an increase of 23.9% from the corresponding period in the previous year.
• Revenues totalled MEUR 109.4 (MEUR 97.8), an increase of 11.8% from the corresponding period in the previous year.
• Operating profit excluding one-time items was MEUR 13.2, or 12.1% of revenues (MEUR 9.7 and 9.9%).
• Operating profit was MEUR 6.7, or 6.1% of revenues (MEUR 9.7 and 9.9%).
• Net cash flow from operating activities was MEUR 7.3 (MEUR 14.7).
• Earnings per share were EUR 0.21 (EUR 0.22*).

January-December highlights: 

• Order intake totalled MEUR 424.7 (MEUR 399.8 in January-December 2013), an increase of 6.2% from the corresponding period in the previous year.
• Revenues totalled MEUR 409.4 (MEUR 403.0), an increase of 1.6% from the corresponding period in the previous year.
• Operating profit excluding one-time items was MEUR 47.2, or 11.5 % of revenues (MEUR 40.6 and 10.1%).
• Operating profit was MEUR 39.7, or 9.7% of revenues (MEUR 40.6 and 10.1%).
• Net cash flow from operating activities was MEUR 35.4 (MEUR 46.7).
• Earnings per share were EUR 1.00 (EUR 0.92 *).

January-December key indicators:

* The figures have been adjusted to take into account the increase in the number of shares after the share split.

President and CEO Vesa Laisi: Vacon's order intake, revenues and operating profit increased in final quarter of 2014

"According to preliminary estimates from AC drive market surveys, the AC drive market did not grow significantly in 2014, but the market showed signs of picking up towards the end of the year.

I am pleased with the way our personnel have managed to focus on meeting customer needs despite the change in ownership taking place in our company. Our volume of orders recorded a solid increase in the final quarter of 2014. This places us in a strong position as we move into 2015. Revenues also increased in the fourth quarter compared to the previous year.

The company's operating profit excluding one-time items improved both in the final quarter and for the whole of 2014. Efficient material sourcing and the cost benefits from transferring material sourcing to lower cost countries have been key factors in improving the company's profitability.

Vacon has been part of the Danfoss Group since 1 December 2014. Danfoss announced in September 2014 that it was making a voluntary public tender offer to purchase all Vacon shares. By the end of November Danfoss had obtained all necessary approvals from the authorities and had acquired more than 90% of the shares and voting rights in Vacon. At present Danfoss holds some 98% of the total Vacon share stock.

Combining the AC drive operations of Vacon and Danfoss creates one of the leading players in the global drives market that can take advantage of the best features of both companies. Bringing together two strong and innovative AC drive manufacturers offers customers an even more competitive, innovative and attractive range of AC drives. Joining forces also means that the new business can invest more in R&D and in the sales force, which is an important factor in the success of our business. A dedicated focus on AC drives is a common feature for Vacon and Danfoss Power Electronics, and distinguishes these two companies from their competitors."

Prospects for 2015

Global megatrends, such as urbanization, increasing industrial automation, energy efficiency, developing markets and renewable energy, all support growth in the AC drive market in the long term.

In the assessment of market research institutions, the AC drive market has hardly grown at all during the past three years. A major factor in this has been the overall economic uncertainty, which has caused industrial investment to slow down.

During 2015 Vacon and Danfoss will merge their AC drive business operations. Combining Vacon and Danfoss creates one of the leading players in the global AC drive sector, which can take advantage of the best features of both companies.

Market guidelines for 2015

Vacon estimates that its revenues will increase and its operating profit percentage excluding one-time items will improve from 2014.

Vacon's revenues in 2014 totalled EUR 409.4 million and the operating profit percentage excluding one-time items was 11.5%.

Vacon's financial targets until 2020

Vacon published new long-term financial targets and a revised strategy for the period 2014-2020 in November 2013.

Growth: The target is to achieve an average annual revenue growth of over 10%. The growth target is based on growing the business organically in a market environment where the AC drives market grows clearly faster than the average Gross Domestic Product (GDP). Selective acquisitions can be used to further accelerate the growth.

Profitability: The long-term profitability target is to achieve a sustainable EBIT margin level of 14%. Vacon focuses on growth and on measures that improve the company's efficiency in the long term and thus deliver a higher absolute EBIT and shareholder value.

Vacon does not consider the long term financial targets as market guidance for any given year during the period 2014-2020. It will issue separate market guidance annually.

Formal statement

This release contains certain forward-looking statements that reflect the current views of the company's management. Due to the nature of these statements, they contain risks and uncertainties and are subject to changes in the general economic situation and in the company's business sector.

Vacon in brief

Vacon is driven by a passion to develop, manufacture and sell the best AC drives and inverters in the world - and provide customers with efficient product lifecycle services. Our AC drives offer optimum process control and energy efficiency for electric motors. Vacon inverters play a key role when energy is produced from renewable sources. Vacon has production and R&D facilities in Europe, Asia and North America, and sales offices in 31 countries. Further, Vacon has sales representatives and service partners in nearly 90 countries. In 2014, Vacon's revenues amounted to EUR 409.4 million, and the company employed globally approximately 1,600 people. The shares of Vacon Plc (VAC1V) are quoted on the main list of the Helsinki stock exchange (NASDAQ OMX Helsinki). Vacon is part of Danfoss Group.

Driven by Drives, www.vacon.com

Vantaa, 12 February 2015

VACON PLC

Board of Directors

For more information please contact:

• Vesa Laisi, President and CEO, Vacon Plc, phone +358 (0)40 8371 510, vesa.laisi(at)vacon.com
•  Pia Aaltonen-Forsell, CFO, Vacon Plc, phone +358 40 8371 910, pia.aaltonen-forsell(at)vacon.com
• Sebastian Linko, Director, Corporate Communications and Investor Relations, Vacon Plc, phone +358 (0)40 8371 634, sebastian.linko(at)vacon.com

Distribution:

NASDAQ OMX Helsinki
Financial Supervisory Authority
Main media

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