ASPO Plc STOCK EXCHANGE BULLETIN May 5, 2008, at 8:30 a.m.
Aspo has reorganized its operational group structure. The new Aspo will include three more independent leading corporate brands as well as a new Aspo Ventures unit.
Aspo's structural change and new strategy is a consequence of the acquisition of Kauko-Telko Oy. After the reorganization Aspo will give up the segment reporting divided into Chemicals, Shipping and Systems divisions.
The new Aspo owns three leading corporate brands in their sectors: ESL Shipping handles marine raw material transport and related services for the energy and heavy industry sectors; Leipurin serves the bakery industry by supplying raw materials, machinery, production lines and bakery-related know-how; Telko markets plastics and chemicals for industrial customers and assists its customers in product development and product processing.
In 2007, ESL Shipping generated net sales of EUR 85.1 million and the operating profit totaled EUR 25.1 million (including capital gain of EUR 10.2 million). The net sales of Leipurin amounted to EUR 92.6 million (pro forma) and the operating profit was EUR 4.2 million (pro forma). Telko's net sales totaled EUR 198.4 million (pro forma) and the operating profit EUR 6.3 million (pro forma). Markus Karjalainen will continue as president of ESL Shipping, and Matti Väänänen will continue as president of Leipurin. Jari Ranne, the current president of Aspokem Ltd, has been appointed president of Telko.
Aspo Ventures comprises developing businesses. These are typically at the stage of development where their size and structure may undergo major changes. Aspo Ventures provides maintenance services and automation systems for service stations under the Autotank name and engages in other operating activities, such as industrial machinery and technical trade, under the name of Kaukomarkkinat. In 2007, Autotank generated net sales of EUR 57.7 million and operating profit of EUR -1.5 million. Kaukomarkkinat generated net sales of EUR 61.5 million (pro forma) and operating profit of EUR 3.6 million (pro forma).
In 2007, the new Aspo generated net sales of EUR 495.3 million (pro forma) and operating profit of EUR 22.4 million (pro forma) after Group administration costs of EUR 5.1 million (pro forma).
Gustav Nyberg, CEO of Aspo:
"All our businesses have a long and successful history; they are the leading and well known brands in their sectors. According to our new strategy all these brands will be developed more independently, which also holds more potential for developing the Group structure further."
"All Aspo Group companies share certain common characteristics; they focus on sectors where extensive, specialist knowledge is required and they have a central role in their customers' value chain. All of Aspo's business areas serve demanding business-to-business customers and they have strong presence in the growing Eastern markets."
"Aspo will develop its business operations by utilizing the Group's strong financial standing and intangible capital. The Group provides added value to the businesses through long-term investments, strategic vision and expertise on the Eastern market. As a conglomerate Aspo is able to efficiently adopt best practices and proven operating concepts from one business area and put this expertise to efficient use in other sectors and new markets. This is very valuable when we are expanding operations to the CIS countries."
The new Aspo was created when Aspo acquired the entire stock of Kauko-Telko Oy from Kesko Corporation. The acquisition was closed on April 30, 2008. The transaction value based on the estimated April 2008 balance sheet was EUR 79 million. The acquisition is expected to have a positive impact on earnings per share during the current fiscal year.
Kauko-Telko's key business areas prior to the transaction were industrial raw materials as well as raw materials, ingredients and equipment for food industry. As a result of the transaction, the current President of Kauko-Telko Oy, Mikko Teittinen, will resign from the service of Kauko-Telko. Arto Meitsalo, the current CFO of Kauko-Telko, has been appointed new acting president.
The new Aspo will employ approximately 1,200 people, almost half of them abroad. All Aspo's business operations are strongly present in the growing Russian and other Eastern markets. Through the acquisition, Aspo gained also a strong presence in Poland.
Leipurin operates in Finland, Russia, Poland, Estonia, Latvia and Lithuania. In Russia, besides St. Petersburg, Moscow, it has operations in Tselyabinsk and Yekaterinburg. Leipurin will continue its international expansion by serving the baking industry at all stages of the production process. In addition to raw materials and ingredients as well as machinery and equipment it provides its customers, both international and regional bakeries, with the latest know-how in the field and assistance e.g. in product development with own test bakeries.
Aspokem and the industrial raw materials business of Kauko-Telko were integrated into Telko. Telko has two business areas: Plastics and Chemicals. Besides Finland, Telko has operations in Russia, Ukraine, Belarus, Poland, Estonia, Latvia, Lithuania, Sweden, Denmark and Norway. Wide geographical coverage and strong market presence in the Eastern markets make Telko a more interesting partner for large international suppliers. Large size enables also more efficient global sourcing.
Aspo's financial reporting will follow the new segment reporting as of May 1, 2008. ESL Shipping, Leipurin, Telko as well as Aspo Ventures comprising Autotank and Kaukomarkkinat, will be reported as separate segments.
Aspo's financial objectives are as follows: Operating profit as percentage of net sales on average 5-10; approximately 10-15% annual net sales growth; return on investment and on equity more than 20% on average; to distribute approximately half of the year's profit in dividends.
KEY FIGURES BY SEGMENT (pro forma)
ESL Shipping |
|
|
|
1-3/2008 |
1-12/2007 |
|
|
|
Net sales, MEUR |
21.0 |
85.1 |
Operating profit, MEUR |
3.2 |
14.9 |
Personnel |
222 |
239 |
Leipurin |
|
|
|
1-3/2008 |
1-12/2007 |
|
|
|
Net sales, MEUR |
25.4 |
92.6 |
Operating profit, MEUR |
1.6 |
4.2 |
Personnel |
155 |
154 |
Telko |
|
|
|
1-3/2008 |
1-12/2007 |
|
|
|
Net sales, MEUR |
50.2 |
198.4 |
Operating profit, MEUR |
1.8 |
6.3 |
Personnel |
221 |
224 |
Aspo Ventures |
|
|
|
1-3/2008 |
1-12/2007 |
|
|
|
Net sales, MEUR |
27.4 |
119.2 |
Operating profit, MEUR |
0.9 |
2.1 |
Personnel |
470 |
471 |
|
|
|
Autotank |
1-3/2008 |
1-12/2007 |
|
|
|
Net sales, MEUR |
12.7 |
57.7 |
Operating profit, MEUR |
-0.4 |
-1.5 |
Personnel |
309 |
309 |
|
|
|
Kaukomarkkinat |
1-3/2008 |
1-12/2007 |
|
|
|
Net sales, MEUR |
14.7 |
61.5 |
Operating profit, MEUR |
1.3 |
3.6 |
Personnel |
161 |
162 |
Net Sales by Market area, MEUR (pro forma) |
| |||||
|
|
|
|
|
| |
|
|
|
1-3/2008 |
1-12/2007 |
| |
|
|
|
|
|
| |
|
Finland |
|
68.6 |
256.1 |
| |
|
Nordic countries |
|
21.5 |
100.8 |
| |
|
Baltic countries |
|
9.4 |
43.3 |
| |
|
Russia and others |
|
24.7 |
95.1 |
| |
|
Total |
|
124.2 |
495.3 |
|
OUTLOOK
Aspo estimates that the acquisition will create a substantial amount of synergies in the long term. Synergies will be created from more efficient administration, e.g. personnel costs and rents, as well as more efficient sourcing.
ESL Shipping
ESL Shipping's prospects for the current financial year have been described in a stock exchange release on April 29, 2008.
ESL Shipping operates in the Baltic Sea area, one of the world's fastest growing transport markets. ESL Shipping derives its competitive advantage from its geographical location and expertise in the Baltic Sea. The future potential for ESL Shipping lies in related services, such as loading and unloading, also at sea, as well as salvage operation.
Leipurin
Leipurin will invest in the current fiscal year in Russia especially in logistics and capable personnel, which is estimated to have a positive impact on net sales. The order backlog of machinery and equipment has remained strong. Leipurin is estimated to generate net sales and earnings at approximately last year's level.
In the long term, Leipurin holds ample opportunities in the CIS markets. For instance in Russia, the proportion of consumption of Western-style bread is increasing rapidly along with general changes in consumption behavior.
In Finland, Leipurin has the objective to maintain its strong market position, in the Baltic countries the objective is continued growth.
Telko
In 2008, Telko is estimated to generate consolidated net sales and earnings at least on the same level as Aspokem and Kauko-Telko's industrial raw materials business generated in 2007. The organic growth in the net sales is estimated to continue. Modest growth is estimated to continue in the Nordic countries, while strong growth appears to be continuing in the CIS countries.
In the Nordic countries the financial performance for 2008 is estimated to remain at last year's level. In Europe, the slowdown of demand will put pressure on prices but no significant price drop is expected. In Russia, the growth trend is expected to continue and the operational performance is expected to improve. The wider product portfolio provides new growth opportunities in Russia. For instance, lubricants enable the broadening of customer base to heavy industries, such as the mining industry.
In the long term, Telko's size will enable more efficient global sourcing and it will strengthen Telko's position towards suppliers. Telko has also an opportunity to increase the size of its operations through new combinations of principals, products and customers. Potential changes in the principal base will be identified along the integration process. Telko will start to build a new organization and efficient operational structure by combining best practices of Aspokem's and Kauko-Telko's industrial raw materials business organizations.
Aspo Ventures
Aspo Ventures comprises businesses under Autotank and Kaukomarkkinat brands. Autotank's prospects for the current financial year have bee described in a stock exchange release on April 29, 2008.
For Autotank, the consolidation trend in the industry will continue creating a need for renewal of station networks. The share of automated and unmanned petrol stations is also expected to continue to increase. In Russia, the motor vehicle population is growing rapidly and growth is particularly strong in initial registrations of foreign cars. This gives rise to need for new petrol station investments.
Industrial machinery under Kaukomarkkinat brand is estimated to maintain its net sales and operational performance level. Investments in the growth markets are expected to lead to positive development especially in 2009. Project deliveries to pulp & paper industry have developed favorably and the share of Chinese sales is increasing. Kaukomarkkinat will also invest in Russia by recruiting more sales personnel. The net sales and earnings of other technical trade businesses are expected to increase. The growth is accelerated by the increased demand on high efficient heat pumps for heating buildings.
ASPO Plc
Gustav Nyberg
CEO
More detailed information on Aspo's new Group structure and objectives will be presented at a press conference to be held today, on May 5, 2008, at 11:00 at Palace Gourmet, Eteläranta 10, 00130 Helsinki.
For more information, please contact
CEO Gustav Nyberg at +358 40 503 6420; gustav.nyberg@aspo.fi or
COO Aki Ojanen at + 358 400 106 592; aki.ojanen@aspo.fi
Aspo is a conglomerate focusing on sectors that require extensive, specialist knowledge. Aspo is the owner and developer of market leading niche companies like ESL Shipping, Leipurin and Telko. Additionally, Aspo Ventures includes developing businesses such as Autotank and Kaukomarkkinat. Aspo serves demanding business-to-business customers. Aspo's net sales (pro forma) amounted to EUR 495.3 million in 2007.
Distribution:
Nordic Exchange Helsinki
The Media
www.aspo.com