The Jaakko Pöyry Group's net sales for the period under review were EUR 102.0 (100.4 in the same period 2002) million. Profit before extraordinary items was EUR 16.4 (5.2) million, including a gain of EUR 11.0 million from the sale of Jaakko Pöyry Group Oyj's headquarter property.
The Group's consolidated balance sheet is healthy. The equity ratio was 51.6 (46.2) per cent and the net debt/equity ratio (gearing) -20.8 (1.8) per cent.
The Jaakko Pöyry Group's earnings per share were EUR 0.81 (0.24) and the return on investment 51.3 (15.7) per cent.
The Group's order stock was EUR 341.9 million. It increased by EUR 33.5 million during the period under review.
The Group's earnings are expected to improve in 2003 and most of the improvement will mainly take place during the second half of the year. In addition, the earnings will be improved by the EUR 11 million gain from the sale of the headquarter property.
Business groups
Forest Industry
Net sales for the period under review were EUR 35.2 (39.6) million. Operating profit amounted to EUR 4.0 (5.6) million. The order stock was EUR 91.8 (at the end of 2002 77.7) million.
Forest Industry Consulting
Net sales for the period under review were EUR 8.0 (10.1) million. Operating profit was EUR -0.3 (0.4) million. The order stock amounted to EUR 9.2 (7.5) million.
Energy
Net sales for the period under review were EUR 24.3 (24.1) million. Operating profit was EUR 0.8 (-1.4) million. The order stock amounted to EUR 122.0 (123.8) million.
Infrastructure & Environment
Net sales for the period under review were EUR 34.4 (27.0) million. Operating profit was EUR 2.0 (1.8) million. The order stock was EUR 118.9 (99.4) million.
Other operations
Nordisk Renting Oy, a subsidiary of Nordea Bank, on February 5, 2003 bought Jaakko Pöyry Group Oyj's headquarter property in Vantaa, Finland.
At the same time, Jaakko Pöyry Group Oyj and Nordisk Renting Oy signed a rental agreement for the property, extending over the next 20 years.
Before the present deal, the Jaakko Pöyry Group rented its headquarter office building from Nordea Finance Ltd, with the option to buy back the property. Following the deal, the entire office property, including the Jaakko Pöyry Group's headquarter office building, the site and half of the Martinparkki Oy car park, will be taken over by Nordisk Renting Oy. Jaakko Pöyry Group Oyj has an option to buy back these at a later date.
The deal is a continuation of Jaakko Pöyry Group Oyj's effort to focus its financial resources on the company's core business, consulting and engineering. The deal improves the Jaakko Pöyry Group's profit before extraordinary items by EUR 11 million for the period under review.
Group structure
Efforts to further develop the Group's structure and business operations continued during the period under review.
JP Management Consulting (Europe) Oy, which is a company in the Forest Industry Consulting business group, acquired the business of Redbeard Consulting B.V., which operates in the European market. Redbeard Consulting offers strategic and IT consulting services to the European paper industry. Redbeard Consulting employs 4 people.
JP-Terasto Oy, a company in the Infrastructure & Environment business group, acquired HT-Rakennuttajat Oy based in Turku, Finland, thereby expanding its operations in the southwestern parts of the country. HT-Rakennuttajat specialises in project and construction management work. HT-Rakennuttajat Oy employs 10 people.
Efforts to further develop the Group's structure and business operations will continue during the current year.
Order stock
The Group's order stock is good and it has increased by EUR 33.5 million during the period under review, totalling EUR 341.9 million at the end of March, compared with EUR 288.3 million at the end of March 2002. At the end of December 2002 the order stock was EUR 308.4 million.
The A.T. Biopower Company Ltd power plant project, which was published in September 2002, is not included in the order stock, as financing arrangements for the project have not progressed as expected.
Capital expenditure
The Group's capital expenditure for the period under review totalled EUR 3.3 (2.2) million, of which EUR 2.2 (2.2) million consisted of computer software, systems and hardware and EUR 1.1 (0.0) million were capital expenditure due to business acquisitions.
Share capital and shares
The total number of shares at the end of 2002 was 13 791 601. After the period under review, in April, 8650 new shares were subscribed based on warrants pursuant to the Bond Loan with Warrants of 1998. Following these subscriptions, the number of shares totals 13 800 251.
The warrants related to the Bond Loan with Warrants issued by Jaakko Pöyry Group Oyj in 1998 to the Group personnel and the parent company's Board of Directors 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 439 265 shares have been subscribed based on the warrants.
The Annual General Meeting on March 5, 2003 authorised the Board of Directors to decide on an increase in the share capital by a new issue and/or by taking a convertible loan and/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 5, 2004.
The Annual General Meeting authorised the Board of Directors to acquire and convey the company's own shares to a maximum of 689 500, which is less than 5 per cent of the company's share capital. The Board of Directors decided on March 5, 2003 to exercise the authorisations. The authorisations are in force until March 5, 2004. The company has acquired a total of 69 200 shares during the period February 18 - April 4, 2003. The average acquisition price was EUR 14.38. During 2002 a total of 10 000 shares were acquired.
The company's shares are quoted on the Helsinki Exchanges. The average trading price during the period under review was EUR 14.26, with a high of EUR 15.20 and a low of EUR 13.00. A total of 0.7 million of the company's shares (equalling 5.0 per cent of the total number of shares) were traded, corresponding to a turnover of EUR 9.7 million.
The Annual General Meeting approved the Board of Directors' proposal that a dividend of EUR 0.60 be paid per share for 2002 (EUR 0.60 for 2001), totalling EUR 8.3 million. The dividend was paid on March 17, 2003.
Prospects
World economic prospects for 2003 are still uncertain. Economic growth is expected to be modest in 2003, and normal growth is not expected to resume until 2004.
The Jaakko Pöyry Group's balance sheet structure, liquidity and order stock are good, having improved further during the period under review. The order stock represents a normal price level.
The forest industry's investment activity has remained relatively flat and the depressed earnings of forest industry companies do not support a quick recovery. However, investments in emerging markets, such as China, are showing a growing trend. The Forest Industry business group's earnings development has improved and its order stock has grown. The business group's operating profit will improve in 2003 compared with the previous year.
The business environment in the consulting sector is still difficult and no immediate improvement is in sight. The Forest Industry Consulting business group's earnings for the period under review were unsatisfactory, so measures to improve profitability will continue. The business group's operating profit for 2003 will remain at the previous year's level or improve slightly.
Demand for services related to renewable energy resources, plant modernisations and consulting expertise is growing in the energy sector. There are also signs of renewed investment activity in the production of primary energy. The Energy business group streamlined its activities in 2001-2002 in line with the reduced demand. As a result, its earnings have improved and its operating profit for 2003 will improve clearly compared with 2002.
The Infrastructure & Environment business group has continued to grow steadily. Its order stock has grown and its operating profit for 2003 will improve slightly compared with the previous year.
The general market situation and economic prospects for the current year are challenging. The Jaakko Pöyry Group's order stock, market position and balance sheet structure have continued to strengthen. In view of the business group prospects outlined above, the Group's earnings are expected to improve in 2003. A number of major projects included in the order stock will start to improve the work load during the second quarter, so the earnings improvement will mainly take place in the second half of the year. In addition, the Group's earnings will be improved by the EUR 11 million gain from the sale of the headquarter property.
Vantaa, April 25, 2003
JAAKKO PÖYRY GROUP OYJ
Board of Directors
JAAKKO PÖYRY GROUP OYJ
Erkki Pehu-Lehtonen
President and CEO
Teuvo Salminen
Deputy to President and CEO
Additional information by:
Erkki Pehu-Lehtonen, President and CEO, Jaakko Pöyry Group Oyj
tel. +358 9 8947 2999, +358 400 468 084
Teuvo Salminen, Deputy to President and CEO, Jaakko Pöyry Group Oyj
tel. +358 9 8947 2872, +358 400 420 285
Satu Perälampi, Investor Relations, Jaakko Pöyry Group Oyj
tel. +358 9 8947 3002, +358 40 526 3388
The full Interim Report (including tables) can be downloaded from the following link:
