The development of Jaakko Pöyry Group's earnings was good during the period under review.
- Net sales were EUR 113.1 million (EUR 114.7 million in the same
period 2000).
- Operating profit was EUR 7.5 (7.1) million.
- Profit after financial items was EUR 6.9 (6.4) million.
- The Group's profit for the period under review was EUR 4.5 (3.7)
million.
- Earnings per share were EUR 0.33 (0.27).
- The return on investment was 21.6 (22.0) per cent.
Net sales increased in the Forest Industry, Forest Industry Consulting and in the Infrastructure & Environment business groups. Operating profit increased in the Forest Industry business group.
The Group's earnings per share improved by 22.2 per cent during the period under review. In the figures for the corresponding period last year, allowance has not been made for the decision by the Tax Office for Major Corporations dated November 23, 2000, according to which the Group's taxes for the period 2000-2002 will decrease by about EUR 1.5 million per year. The comparable earnings per share for the first quarter of the year 2000 are EUR 0.29, so the comparable earnings per share have improved by 13.8 per cent during the period under review.
The Group's liquidity remained good during the period under review. At the end of March, cash in hand and at banks amounted to EUR 41.1 million, and interest-bearing debts to EUR 43.5 million, so interest-bearing net debts amounted to EUR 2.4 million (at the end of the year 2000 cash in hand and at banks exceeded interest-bearing net debts by EUR 2.6 million). The net debt/equity ratio (gearing) was 2.4 per cent.
A decision to close down the alcohol plant contracting business, which is a part of the Energy business group, has been made and hence a EUR 6 million expense burdens the result of the Energy business group.
The surplus refunded by the Swedish Staff Pension Society, SPP, which was confirmed during the year 2000 but not taken into account in the operating profit for last year, was booked during the period under review. The refund, totalling EUR 4.9 million, is included on the line "other" in the key figure specification by business group.
Business Groups
Forest Industry
Net sales for the period under review were EUR 40.0 (36.2) million. Operating profit amounted to EUR 5.1 (3.7) million. Profitability was good. The order stock amounted to EUR 93.5 (71.8 at the end of 2000) million.
Forest Industry Consulting
Net sales for the period under review were EUR 12.1 (11.8) million. Operating profit was EUR 0.2 (0.5) million. The order stock amounted to EUR 22.8 (25.6) million.
The weakening economic growth in North America has resulted in reduced demand for consulting services in this region, affecting the business group's result. No major consultancy fees from mergers & acquisition advice were booked during the period under review. The business group's earnings for the period under review fell short of set targets. A program to improve the business group's internal processes and efficiency has been started in the beginning of the year 2001.
Energy
Net sales for the period under review were EUR 34.1 (40.4) million. Operating profit was EUR -4.4 (2.4) million. The order stock amounted to EUR 90.3 (111.6) million.
The decrease in net sales was primarily due to the reduced volume of the turn-key projects business. A decision to discontinue the loss-making alcohol plant contracting business has been made. This business generated net sales of about EUR 31 million in the year 2000. The Group's aim is to improve its relative profitability and to raise its operating profit to more than eight per cent of net sales. Because of the nature of the contracting business its profitability is lower than that of consulting and engineering projects. To cover the expenses of discontinuing the alcohol plant contracting business, the business group has booked an expense of EUR 6 million. Disregarding this the business group's earnings for the period under review were satisfactory.
Infrastructure & Environment
Net sales for the period under review were EUR 26.9 (25.9) million. Operating profit was EUR 2.1 (2.1) million. The profitability was in accordance with set targets. The order stock was EUR 95.5 (96.5) million.
The target set for the telecommunications business, which is part of the Infrastructure & Environment business group, is to double the sales volume to EUR 20 million. Investments in third-generation telecommunications networks in Europe have been postponed by 6 to 12 months. For this reason, the planned doubling of the sales volume will not be achieved in 2001. Because the volume growth target is primarily based on realignment and training of the Group's current project implementation resources, the failure to reach the planned growth target will not weaken the business group's result for 2001.
Group Structure
Efforts to further develop the Group's structure and business operations will continue during the current year. In response to the globalisation of the forest products industry, the local office network of the Forest Industry business group will be expanded in North America and Western Europe. There are also plans to expand the operations of the Energy and the Infrastructure & Environment business groups.
Order Stock
The Group's order stock has remained good, totalling EUR 302.1 million at the end of March, compared with EUR 305.5 million at the end of the year 2000. The order stock for consulting and engineering work equals the levels achieved by the end of the year 2000. The order stock for turn-key projects declined by EUR 3.3 million during the period under review.
Capital Expenditure
The Group's capital expenditure for the period under review totalled EUR 2.1 (3.6) million. The capital expenditure consisted mostly of costs related to computer software, systems and hardware.
Share Capital and Shares
The total number of shares at the end of the year 2000 was 13 724 136. A total of 20 250 new shares were subscribed during the review period based on A warrants pursuant to the bond loan with warrants of 1998. In addition, 132 150 new shares were subscribed in April 2001. Following these subscriptions, the number of shares totals 13 876 536.
The bond loan with warrants totalling EUR 2.2 million, issued by the Jaakko Pöyry Group in 1998 to all Group employees, has been fully subscribed. The warrants carry subscription rights for a total of 1.3 million of the company's shares, with the subscription period beginning partly (390 000 shares) on April 1, 2000, partly (390 000 shares) on April 1, 2001, and partly on April 1, 2002 (520 000 shares). The subscription period ends for all warrants on April 30, 2005. A total of 206 250 shares have been subscribed based on the warrants.
The Annual General Meeting on March 8, 2001 authorised the Board of Directors to decide on an increase of share capital by a new issue and/or by taking a convertible loan or by issuing option rights, so that based on the new issue, the convertible bonds and option rights, the share capital can be increased by a maximum of EUR 1.0 million by issuing for subscription a maximum of 1.0 million new shares. The authorisation is in force until March 8, 2002.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 5.0 per cent of the company's share capital. The Board of Directors decided on March 8, 2001 to exercise the authorisations. The authorisations are in force until March 8, 2002.
The company's shares are quoted on the Helsinki Exchanges. The average trading price during the period under review was EUR 19.81, with a high of EUR 21.00 and a low of EUR 17.00. A total of 0.8 million of the company's shares (equalling 6.0 per cent of the total number of shares) were traded, corresponding to a turnover of EUR 16.4 million.
The Annual General Meeting approved the Board of Directors' proposal that a dividend of EUR 0.60 be paid per share for the year 2000 (EUR 0.45 for the year 1999), totalling EUR 8.2 million. The dividends were paid on March 20, 2001.
Prospects
The Jaakko Pöyry Group's order stock has remained firm during the first quarter, creating a good basis for the Group's operations in the remaining three quarters. However, if economic conditions continue to weaken in North America and if the weakening spreads to the Group's main market in Europe, it will have an effect on operations toward the end of the current year.
The Forest Industry business group's earnings and order stock for the first quarter are good and the full-year result will improve compared with last year. The Forest Industry Consulting business group's earnings will depend on the market confidence and activity within the forest products industry during 2001. The business group's earnings will also depend on investment banking success fees and their timing. The Energy business group's earnings for the rest of the current year will depend on investment decisions of some potential projects. The Infrastructure & Environment business group's order stock creates a good basis for stable earnings development during the rest of the year.
The Jaakko Pöyry Group's main economic objectives are to improve earnings per share by an average of 15.0 per cent per year and to achieve a return of investment (ROI) of at least 20.0 per cent. Taking into account the Group's earnings, order stock, market position and prospects presented above, the Group's possibilities of achieving these objectives have remained good.
Vantaa, May 2, 2001
JAAKKO PÖYRY GROUP OYJ
Board of Directors
JAAKKO PÖYRY GROUP OYJ
Erkki Pehu-Lehtonen
Teuvo Salminen
The full report including tables can be downloaded from the enclosed link.
