Vacon Plc Interim report 1 January - 30 September 2014

Vacon Plc, Stock Exchange Release, 22 October 2014 at 9.30 a.m. (EET)

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

July-September highlights: 

Order intake totalled MEUR 105.8 (MEUR 97.9 in July-September 2013), growth of 8.1% from the corresponding period in the previous year.Revenues totalled MEUR 107.5 (MEUR 110.4), a decline of 2.6% from the corresponding period in the previous year.Operating profit excluding one-time items was MEUR 15.7, or 14.6% of revenues (MEUR 14.8 and 13.4%).Operating profit was MEUR 14.7, or 13.7% of revenues (MEUR 14.8 and 13.4%).Net cash flow from operating activities was MEUR 19.0 (MEUR 9.5).Earnings per share were EUR 0.36 (EUR 0.32*).

January-September highlights: 

Order intake totalled MEUR 316.1 (MEUR 312.1 in January-September 2013), growth of 1.3 % from the corresponding period in the previous year.Revenues totalled MEUR 300.0 (MEUR 305.1), a decline of 1.7% from the corresponding period in the previous year.Operating profit excluding one-time items was MEUR 34.0, or 11.3 % of revenues (MEUR 31.0 and 10.2%).Operating profit was MEUR 33.0 or 11.0% of revenues (MEUR 31.0 and 10.2%).Net cash flow from operating activities was MEUR 28.2 (MEUR 32.0).Earnings per share were EUR 0.80 (EUR 0.70*).

January-September key indicators:

MEUR7-9/
20147-9/
2013Change, %1-9/
20141-9/
2013Change, %1-12/
2013 Order intake 105.8 97.9 8.1% 316.1 312.1 1.3% 399.8 Revenues 107.5 110.4 -2.6% 300.0 305.1 -1.7% 403.0 Operating profit excluding one-time items
15.7
14.8
6.0%
34.0
31.0
9.8%
40.6 % of revenues 14.6% 13.4%   11.3% 10.2%   10.1% Operating profit 14.7 14.8 -0.8% 33.0 31.0 6.5% 40.6 % of revenues 13.7% 13.4%   11.0% 10.2%   10.1% Profit before taxes 14.9 14.2 5.1% 32.9 30.5 8.0% 39.7 Net cash flow from operating activities 19.0 9.5 99.5% 28.2 32.0 -12.0% 46.7 Earnings per share. EUR 0.36 0.32* 12.6% 0.80 0.70* 13.3% 0.92*

 

MEUR   30.9.
201430.9.
2013Change, %31.12.
2013 Order book       62.9 57.0 10.4% 46.8 Interest-bearing net liabilities       -9.7 -8.8 10.5% -17.2 Gearing, %       -8.1% -7.8%   -14.7% Gross capital expenditure       16.5 14.1 17.4 % 19.7

* 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: Order intake increased and profitability improved clearly in the third quarter

"The AC drive market has not shown signs of picking up this year. It looks as if the market growth that early in the year was forecast to take place towards the end of the year will not take place until later. This year, Vacon's business operations have not achieved the targets for growth that the company set itself. In this difficult market situation we have however succeeded in improving our profitability and have invested in future growth both in our product development and in our sales.

In the third quarter of 2014 we were able to increase order intake and improve profitability. It was particularly encouraging that orders increased strongly in the Europe, Middle East and Africa (EMEA) region, where the volume of orders in the previous two quarters had declined from the corresponding periods in the previous year.

Revenues declined slightly in the third quarter from the corresponding period in the previous year. Revenues in the quarter in the previous year were the highest to date for any quarter in the history of Vacon. Revenues rose from the previous quarter. Our strongest growth region in the July-September period was North and South America, where revenues clearly increased.

The company's comparable operating profit improved significantly, even though revenues were down from the period for comparison. Efficient material sourcing and especially the cost benefits from transferring material sourcing to lower cost countries have been key factors in improving the company's profitability. The market has given the VACON® NXP System Drive product launched in January a good reception and orders have exceeded our expectations. Growth prospects for this product are good. 

This is a time of change for us. Danfoss has made a voluntary public tender offer to purchase all issued and outstanding shares in Vacon, and Vacon's Board of Directors have recommended acceptance of the offer. Combining Danfoss and Vacon will create a Nordic based, global player - a new AC drives business with the clear ambition of building a leading position in the AC drives market.

I believe that the customers of both companies will derive significant benefits from these two companies joining forces. Together they can bring to market ever more competitive, innovative and attractive AC drives. I am also proud of how Vacon personnel have reacted to this news. In an admirable way they have concentrated on doing their own work to the best of their ability - just as they always have."

Prospects for 2014

Global megatrends, such as urbanisation, increasing industrial automation, energy efficiency, developing markets and renewable energy, all support growth in the AC drive market in the long term. Growth in the AC drive market varies however from year to year, and even from one quarter to another, but as a general rule it is estimated that the AC drive market grows much faster than global average growth in gross national product.

In the assessment of market research institutions, the AC drive market has hardly grown at all during the past three years, or in the first half of 2014 either. A major factor in this has been the overall economic uncertainty, which has caused industrial investment to slow down. In Vacon's assessment the market has also not grown significantly or growth has been slow in the July-September period.

During the past few years the Company has expanded and renewed its product offering, which places the Company in a strong position to grow faster than the AC drive market in 2014. Vacon's goal is to improve profitability in 2014. Key factors contributing to an improvement in profitability are the cost benefits from transferring material sourcing to lower cost countries and raising overall efficiency in operations.

Market guidelines for 2014

In September 2014 Vacon announced that it was reducing its market guidance for 2014 and estimated that its revenues would increase and the operating profit percentage excluding one-time items would improve from 2013. The main reason for revising the guidance is the increasing risks related to revenue growth. The company's expectations regarding order intake for the rest of the year have weakened.

Revenues in 2013 totalled EUR 403.0 million and the operating profit percentage excluding one-time items was 10.1 %.

Vacon's financial targets for the period 2014-2020

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 30 countries. Further, Vacon has sales representatives and service partners in nearly 90 countries. In 2013, Vacon's revenues amounted to EUR 403.0 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).

Driven by Drives, www.vacon.com

Vantaa, 22 October 2014

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.comPia Aaltonen-Forsell, CFO, Vacon Plc, phone +358 40 8371 910, pia.aaltonen-forsell(at)vacon.comSebastian Linko, Director, Corporate Communications and Investor Relations, Vacon Plc, phone +358 (0)40 8371 634, sebastian.linko(at)vacon.com

Dial-in conference for investors and investment analysts

A dial-in conference for investors and investment analysts will be held at 10.30 a.m. (EET) on 22 October 2014. President and CEO Vesa Laisi, CFO Pia Aaltonen-Forsell and Director, Corporate Communications and Investor Relations Sebastian Linko will participate in the conference. Please call Finland Toll +358(0)9 6937 9543 or UK Toll +44(0)20 3427 1909 and request to be connected to the Vacon call (Confirmation code 9957959). A recording of the conference will be available for seven days at Finland Toll +358(0)9 2310 1650 or UK Toll +44(0)20 3427 0598 and access code 9957959#.

Webcast URL: http://www.media-server.com/m/p/4kku4pn9

The presentation material will be available before the start of the briefing at the Vacon's website www.vacon.com > Investors > Reports and presentations.

Distribution:

NASDAQ OMX Helsinki
Financial Supervisory Authority
Main media

ATTACHMENTS

Vacon Plc Interim Report January-September 2014
Vacon Interim Report Q3/2014 Results Presentation


This announcement is distributed by Nasdaq OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Vacon Oyj via Globenewswire
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