PKC Group Plc INTERIM REPORT 7 August 2014 8.15 a.m. PKC GROUP Q2/2014: SECOND QUARTER REVENUE AND EBITDA SIMILAR TO FIRST QUARTER APRIL -
JUNE 2014HIGHLIGHTS -- Revenue decreased 12.3% on the comparison period (4-6/2013), totalling EUR 206.2 million( EUR 235.1 million). -- EBITDA before non-recurring items was EUR 12.4 million( EUR 20.6 million) and 6.0% (8.8%) of revenue. -- EBITA** was EUR 7.6 million( EUR 16.1 million) and 3.7% (6.8%) of revenue. During the report period PPA depreciation and amortisation totalled EUR 2.0 million( EUR 2.8 million). -- Operating profit before non-recurring items was EUR 5.6 million( EUR 13.3 million) and 2.7% (5.6%) of revenue. -- Diluted earnings per share were EUR 0.11( EUR 0.28). -- Cash flow after investments was EUR 7.4 million( EUR 1.1 million). JANUARY - JUNE 2014HIGHLIGHTS -- Revenue decreased 10.9% on the comparison period (1-6/2013), totalling EUR 410.0 million( EUR 460.3 million). -- EBITDA before non-recurring items was EUR 24.5 million( EUR 39.4 million) and 6.0% (8.6%) of revenue. -- EBITA** was EUR 15.3 million( EUR 30.3 million) and 3.7% (6.6%) of revenue. During the report period PPA depreciation and amortisation totalled EUR 4.1 million( EUR 5.7 million). -- Operating profit before non-recurring items was EUR 11.2 million( EUR 24.6 million) and 2.7% (5.3%) of revenue. -- Diluted earnings per share were EUR 0.15( EUR 0.42). -- Cash flow after investments was EUR -11.0 million( EUR 1.3 million). PKC GROUPíS OUTLOOK FOR 2014 -- PKC Groupestimates that 2014 revenue and comparable EBITDA will be lower than in 2013. In 2013, PKCís revenue was EUR 884.0 millionand comparable EBITDA before non-recurring items was EUR 70.3 million. -- Revenue estimate is based on current business structure. Revenue will be affected by light vehicle build-outs in North Americaand by changes in exchange rates. As a result of the above, comparable EBITDA is expected to be lower than in 2013. Comparable EBITDA in 2014 will also be affected by reorganisation and program transfers in Europeand expenditures related to the implementation of PKCís growth strategy. KEY FIGURES 4-6/14 4-6/13 Change 1-6/14 1-6/13 Change 1-12/13 % % EUR 1,000(unless otherwise noted) Revenue 206,222 235,099 -12.3 410,036 460,261 -10.9 883,986 EBITDA* 12,437 20,597 -39.6 24,531 39,365 -37.7 70,341 % of revenue 6.0 8.8 6.0 8.6 8.0 EBITA** 7,628 16,068 -52.5 15,276 30,302 -49.6 52,461 % of revenue 3.7 6.8 3.7 6.6 5.9 Operating profit* 5,607 13,261 -57.7 11,220 24,576 -54.3 40,873 % of revenue 2.7 5.6 2.7 5.3 4.6 Non-recurring items -1,465 -1,265 15.8 -4,200 -6,654 -36.9 -10,409 Operating profit 4,142 11,996 -65.5 7,021 17,923 -60.8 30,463 % of revenue 2.0 5.1 1.7 3.9 3.4 Profit before taxes 3,871 9,368 -58.7 5,225 14,078 -62.9 21,562 Net profit for the 2,593 6,042 -57.1 3,501 9,151 -61.7 13,947 report period Earnings per share 0.11 0.28 -61.3 0.15 0.42 -65.5 0.62 (EPS), EUR Cash flow after 7,390 1,109 566.3 -10,965 1,313 24,941 investments ROI,% 10.2 18.0 14.7 Gearing, % 14.0 45.2 -1.1 Average number of 19,246 19,553 -1.6 19,026 19,544 -2.7 19,206 personnel * before non-recurring items ** operating profit before PPA depreciation and amortisation and non-recurring items MATTI HYYTIÄINEN, PRESIDENT & CEO: The revenue during the second quarter remained below the comparison period, amounting to EUR 206.2 million. In Europe, truck production volumes were at the same level as in the first quarter but still below the comparison period. In North America, truck production kept growing compared to both the previous quarter and the comparison period. In Brazil, the production volumes in the second quarter topped the production in the first quarter but were significantly below the comparison period. The crisis in the Ukrainehas had a negative impact on our customersí business activities in Russia, due to which the planned production ramp-ups at PKCís Russian factory for new customer programmes were not realised. PKCís operating profit before non-recurring items amounted to EUR 5.6 million. The operating profit was burdened by the low production utilisation rate and the losses in Brazilin particular. PKC has made progress with the price agreements that are the prerequisite for the future profitable business, even though price agreements covering all of the business operations have not yet been completed in full. PKCís other geographical areas are proceeding according to plan. The cash flow in the second quarter was at a good level, amounting to EUR 13.0 millionbefore capital expenditure. The company has a strong balance sheet with low gearing. This enables us to implement our strategy in full e.g. through corporate acquisitions. The market downturn continues in Europeand Brazil, and truck production (heavy-duty and medium-duty) for the full year is predicted to stay well below last yearís figures. The full-year production volumes in North America, on the other hand, are predicted to top last yearís figures. In the second half of the year, which includes the holiday seasons and Christmas shut-downs, production volumes are predicted to stay at the level of the first half in Europeand grow approximately 10% in North America. In Brazilpolitical and economic uncertainty has increased. PKCís customers in Brazilhave indicated production volumes in second half to remain at the most on current level. Establishing PKC in the Chinese truck market is at the core of the PKC 2018 strategy. We have further enhanced the organisation of PKC China and currently have a 70-strong competence unit in Suzhou. We are working on several projects in China. I wish to thank all PKC personnel once more for all their good work. MARKET OUTLOOK Wiring Systems Business In 2014 the production of heavy-duty trucks in Europeis expected to decline by 10% and production of medium-duty trucks by 13% compared to the level of 2013. Production of heavy-duty trucks in North Americais expected to increase by 18%, production of medium-duty trucks by 4% and production of light vehicles by 3% compared to 2013. Production of heavy-duty trucks in Brazilis expected to decline by 14%, and production of medium-duty trucks by 18% compared to 2013. The governmental incentive program to support the purchase of new trucks continues to be valid until further notice, although the terms have been weakened somewhat. Electronics Business The market demand for Electronics segmentís products is expected to remain at the present level. PKC GROUPíS OUTLOOK FOR 2014 PKC Groupestimates that 2014 revenue and comparable EBITDA will be lower than in 2013. In 2013, PKCís revenue was EUR 884.0 millionand comparable EBITDA before non-recurring items was EUR 70.3 million. Revenue estimate is based on current business structure. Revenue will be affected by light vehicle build-outs in North Americaand by changes in exchange rates. As a result of the above, comparable EBITDA is expected to be lower than in 2013. Comparable EBITDA in 2014 will also be affected by reorganisation and program transfers in Europeand expenditures related to the implementation of PKCís growth strategy. DISCLOSING PROCEDURES OF FINANCIAL REVIEWS PKC Group Plcfollows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority, and discloses relevant information related to its Interim Report with this release. PKC's interim report for January - June 2014is attached to this release and is also available on company's website at www.pkcgroup.com. PKC GROUP PLCBoard of Directors Matti HyytiÄinen President & CEO For additional information, contact: Matti HyytiÄinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968 (7 August from 8.15 am to 1.30 pm) Juha Torniainen, CFO, PKC Group Plc, tel. +358 (0)40 570 8871 PRESS CONFERENCE A press conference on the interim report will be arranged for analysts and investors today, 7 August 2014, at 10.00 a.m., at the address Event Arena Bank, Unioninkatu 20, Helsinki. ATTACHMENT PKC interim report Q2 2014 DISTRIBUTION NASDAQ OMX Main media www.pkcgroup.com PKC Groupis a global partner, designing, manufacturing and integrating electrical distribution systems, electronics and related architecture components for the commercial vehicle industry and other selected segments. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Lithuania, Mexico, Poland, Russia, Serbiaand the USA. The Group's revenue in 2013 totalled EUR 884.0 million. PKC Group Plcis listed on NASDAQ OMX Helsinki Ltd.Copyright © 2014 OMX AB (publ).