Market situation
Demand was good during July-September, which shows in the amount of orders received. Vaisala Solutions division experienced the greatest relative growth in orders received.
The sustained maintenance and development of competitiveness has enabled Vaisala to retain its market share, and the company's market position is still strong.
Net sales and order book
The Vaisala Group's net sales for the review period were EUR 130.9 million (1-9/2004: EUR 120.7 million). Operations outside Finland accounted for 96% (97%) of net sales. The Group received new orders worth EUR 148.9 (121.4) million during the review period. The order book at the end of the review period was EUR 72.6 (63.4) million.
Vaisala Measurement Systems
The Vaisala Measurement Systems division generated net sales of EUR 57.1 (50.0) million.
The positive developments of the second quarter continued during July-September, and the flow of orders received continued to be strong. Increased net sales and cost-effectiveness improved profitability, which is clearly better than that of the corresponding period in 2004. Compared to 2004, the greatest improvement in profitability has been achieved in the thunderstorm and soundings business units.
Vaisala Instruments
The Vaisala Instruments division generated net sales of EUR 41.0 (38.0) million.
Demand grew during July-September, producing net sales higher than those of the corresponding period in 2004. Price competition continues to be intensive. Profitability remains high thanks to cost-effective operations.
In July, the Vaisala Instruments division received a substantial order from the U.S. Department of Commerce, National Oceanic and Atmospheric Administration, National Weather Service (NWS), which selected Vaisala's Enhanced Precipitation Identification sensor for a system that serves as the primary surface weather observation network in the United States. The estimated value of the order is over 6 MEUR. Deliveries are expected to take place in 2006-2007.
Vaisala Solutions
The Vaisala Solutions division generated net sales of EUR 32.8 (32.7) million.
Market activity intensified during recent months both in form of calls for tenders and orders received. Order book development was positive. Although the operating profit for the review period remained negative, the division will achieve a positive result for 2005 as sales recognizion concentrates on the October-December period.
Vaisala Solutions division invested in its aviation weather systems knowhow by acquiring CLH Inc., specialized in automated weather observing systems.
In August, the division received a substantial order from the US Federal Aviation Administration, which selected Vaisala's runway visual range systems for use at airports throughout the US. The three-year base contract includes the deliveries of 21 systems and is valued at 4.3 million US dollars. The contract contains options for delivery of up to 77 similar systems within
the next five years.
Performance
Operating profit for the review period was EUR 15.6 (12.5) million. Profit before extraordinary items was 14.4% of net sales, or EUR 18.8 (12.7) million. Net profit for the review period was EUR 13.7 (9.0) million.
Financial income is mainly due to exchange rate changes.
Balance sheet
The Vaisala Group's solvency and liquidity remained strong. On September 30, 2005, the balance sheet total was EUR 167.1 (161.8) million. The Group's solvency ratio at the end of the review period was 82% (83%).
Research and development
Expenditure on research and development in the review period totaled EUR 15.4 (16.3) million, representing 11.8% of the Group's net sales.
Capital expenditure
Gross capital expenditure in non-current assets totaled EUR 7.7 million (EUR 3.1 million).
The total for the review period includes the cost incurred from the acquisition of CLH Inc.
Vaisala's share
The price of Vaisala's A share on the Helsinki Exchanges was EUR 18.20, December 31, 2004, and EUR 24.60 at the end of the review period. The highest share price quoted during the review period was EUR 24.74 and the lowest EUR 18.48.
Vaisala's share capital at the end of the review period was EUR 7,349,905.88 and the total number of shares was 17,479,000.
A total of 1 023,648 Vaisala shares were traded during the review period.
Personnel
The total number of employees in the Vaisala Group at the end of the review period was 1 047 compared with 1 068 at the end of the corresponding period in 2004.
Some 17% (22%) of the personnel worked in research and development. Approximately 37% (36%) of the Group's personnel worked outside Finland.
Vaisala Oyj's adoption of IFRS reporting
Vaisala Oyj has adopted the International Financial Reporting Standards (IFRS) in its Group reporting from the beginning of 2005. Interim figures for the year 2005 are reported according IAS/IFRS standards.
The effect, with tax adjustments, of the change in the treatment of defined-benefit disability pensions included in the balance sheet produced a one-off improvement in result of approximately EUR 2.5 million in the last quarter of 2004. The comparable profit for the accounting period in 2004 is EUR 18.5 million.
A stock exchange release dated 8.4.2005 contains further information on this.
Outlook
The market outlook has improved somewhat. We expect slight growth in net sales in 2005. IFRS compliant profit for the accounting period is expected to be slightly better than in 2004.
Vaisala aims to be the global market leader in its selected business areas also in the future. Therefore investments in product development and competitiveness will continue to be substantial.
Vantaa, Finland, October 31, 2005
Vaisala Oyj
Board of Directors
The full report including tables can be downloaded from the following link.
