NEO INDUSTRIAL PLC HALF YEAR FINANCIAL REPORT 7 August 2019 at 3.00 PM
Neo Industrial Plc´s turnover for January-June 2019 was lower than year ago, operating result positive
January-June 2019
- Neo Industrial group’s turnover was EUR 49.4 million (54.6 million)
-The operating result was EUR 0.2 (1.0) million.
-The operating result of the Cable Segment was EUR 0.8 (1.4) million
-The Group's result for the period was EUR -0.6 (0.1) million
Figures in brackets refer to the same period a year earlier, unless otherwise stated. The half year financial report is unaudited.
MANAGING DIRECTOR RALF SOHLSTRÖM:
Due to seasonal fluctuations, January and February turnover was lower than in the comparison period. Also the turnover in June was lower than expected. The reorganization of domestic sales was successfully implemented during the early part of the year, and we believe that the new area sales organization will have a positive impact on sales. In addition, we launched new products and services in the beginning of the year, of which the piloting of the smart drum management system is currently underway. Export has developed favourable, and the company delivers cables to several wind power projects in Sweden and Norway.
IFRS 16 Leases, which entered into force on 1 January 2019, is tempting to acquire assets for yourself instead of leases. As a first step Neo Industrial´s cable segment bought end June one of the premises that is used in Keuruu plant. As tangible assets are partly handled via IFRS 16 and partly as bought assets, only IAS 19 effects are eliminated from alternative indicators.
The nature of Neo Industrial's business involves major fluctuations between quarters and may differ from year to year.
KEY FIGURES
| 1-6/2019 | 1-6/2018 | 1-12/2018 | |
| Turnover, EUR million | 49,4 | 54,6 | 103,8 |
| Operating result, EUR million | 0,2 | 1,0 | 1,0 |
| Operating result before change in the value of open customer derivatives | 0,2 | 1,1 | 1,1 |
| Result for the period, EUR million | -0,6 | 0,1 | -0,5 |
| Earnings per share, EUR | -0,10 | 0,02 | -0,09 |
| ROI, % | 2,1 | 22,2 | 8,4 |
| IAS 19 corrected Equity ratio, % | 19,1 | 26,0 | 25,5 |
Year 2019 IAS 19 adjusted Equity ratio and ROI are affected by EUR 7.0 million increase in the Balance Sheet due IFRS 16. IAS 19 adjusted Equity ratio without IFRS 16 effect would have been 21.8 %. ROI without IFRS 16 effect would have been 1.2 %.
RISKS AND UNCERTAINTY FACTORS
Neo Industrial’s financial risks include currency, interest rate, commodity, liquidity, credit and investment risks. Financial risks and the related protection measures are described in more detail in notes to the financial statements. The company’s future risk factors are related to the business development of its portfolio companies. The uncertainty of the international economy and financial markets poses a risk to the Group’s financial arrangements.
In the Cable segment, the most significant risks are related to market development, fluctuations of raw material prices and currencies as well as working capital management in various situations. During considerable seasonal changes, suppliers’ terms of payment effect significantly on the ability to ensure competitive delivery times through sufficient inventories. Also, operation models are being developed in order to balance out the effects of seasonal changes on the load rates of factories.
In the Cable Segment the key raw materials are metals (copper and aluminium) and plastics. In the metals purchases partial price hedging is used with the aid of commodity derivatives. Important with metals are the development of both the dollar-denominated price and the USD / EUR exchange rate. Partial price fixing is used with electricity.
The Group has carried out and is carrying out the simplifications of the Group structure with mergers. Tax authority has questioned the tax neutrality of the subsidiary merge carried out in 2015. Neo Industrial has filed for changes in its tax assessment notice. Neo Industrial has the opinion that the merge is universal succession and therefore tax neutral. The difference of opinion of the Neo Industrial and tax authority is EUR 1.2 million.
MAJOR EVENTS AFTER THE REVIEW PERIOD
After the review period the Group has made financial arrangements and paid the purhcase price of the real estate bought in June.
Neo Industrial Plc’s subsidiary Reka Cables Ltd is one of two companies to win the public acquisition of substantial contract for underground power cables. Total value of Reka Cables's share is approximately EUR 20 million. The deliveries will be made during 2020-2021. The decision is currently under appeal and contract will be signed after the appeal period has expired, latest in the end of August.
Underground power cables are used when building grids that are not vulnerable to weather conditions.
NEAR-TERM OUTLOOK
For the financial year 2019, Neo Industrial's operating result without items affecting comparability is expected to increase from the year 2018.
DISCLOSURE POLICY OF HALF YEAR FINANCIAL REPORT
Neo Industrial discloses relevant information related to its Half Year Financial Report with this Stock Exchange Release. The entire Half Year Report for January–June 2019 is attached to this release and is also available on company's website at www.neoindustrial.fi.
Hyvinkää, 7 August 2019
Neo Industrial Plc
Board of Directors
Further information:
Markku E.Rentto, chairman of the Board, tel. +358 40 500 1858
All comments in this report that do not refer to actual facts are future estimates. Such estimates include expectations concerning market trends, growth and profitability as well as statements including the words "believe", "assume" or "will be" or a similar expression. Since thses estimates are based on current plans and estimates, they involve risks and uncertainty factors that may cause the actual results to differ substantially from current statements.
Among other things, such factors include 1) operating conditions, such as continued success in production and the ensuing efficiency benefits, availability and cost of production inputs, demand for new products and changes in circumstances affecting the acquisition of capital under acceptable conditions; 2) sector-specific circumstances, such as the intensity of demand for products, the competition, current and future market prices for the Group’s products and related pricing pressures, the financial situation of the Group’s customers and competitors and competitors’ possible new products; and 3) the general economic situation, such as economic growth in the Group’s main market areas and change in exchange rates and interest rates.
Attachment
