General Information

General Information

Raute Group is a globally operating technology and service company with core competence in selected wood products manufacturing processes. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL and sawn timber.

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News Article | August 1, 2017
Site: globenewswire.com

- The Group’s net sales, EUR 71.8 million (MEUR 53.7), increased 34% on the comparison period. Order intake was EUR 52 million (MEUR 28). - Operating profit was EUR 4.1 million (MEUR 2.9), showing growth of 41% on the comparison period. The result before taxes was EUR 4.2 million (MEUR 2.8). - Earnings per share were EUR 0.71 (EUR 0.51). - Net sales for the second quarter were EUR 35.2 million and operating profit was EUR 1.4 million positive. Order intake was EUR 29 million. The order book at the end of the reporting period stood at EUR 86 million (MEUR 32). - Raute revised its guidance for the full year 2017 on July 27, 2017. Raute’s 2017 net sales are expected to clearly grow and operating profit is forecast to clearly improve from 2016. TAPANI KIISKI, PRESIDENT AND CEO: ORDER BACKLOG REMAINS STRONG THANKS TO NEW ORDERS We can continue to be pleased with our performance throughout the first half of the year, in terms of both net sales growth and improving our operating profit. Both were in line with our expectations. Our order intake, at EUR 29 million in the second quarter, was at a good level, bearing in mind that it did not include any major individual projects. Following a quieter period, demand for modernizations also picked up. In terms of new orders, the European market is still exceptionally strong, but projects are also being actively negotiated in North America, Asia and Russia, to name a few. I estimate that in the near future, other market areas will complement the demand in Europe. Our deliveries proceeded according to plan in the second quarter. Our relative profitability was influenced by the start-up of the Metriguard business that was acquired in early April, additional investments aimed at the Chinese market, and investments in sales and marketing. Our focus on product development and digital services, in particular, also continued. Our order book has remained strong, which means we will retain our good momentum and our resources will be used at a high capacity also in the second half of the year. Our aim is to deliver the high number of orders scheduled for the latter half of the year on time, successfully and in keeping with the budgeted costs, which will, in turn, improve our relative profitability for the second half of the year. Our recent past serves as proof of our success in such situations. Success also partly comes down to our customers, and we need them to be successful as well. Thanks to a good start to the year, a strong order book and continued active demand, I am confident that our net sales will clearly grow and our operating profit will clearly improve from the previous year. The total order intake in the second quarter, EUR 29 million (MEUR 16), was at a good level, bearing in mind that it did not include major individual projects. The biggest single new orders were for peeling lines in France and Italy. Technology services accounted for more than half of new orders and amounted to EUR 15 million (MEUR 9). Growth compared to the first quarter of the year was mainly due to orders resulting from lengthy negotiations on modernization deals.   The order book declined during the second quarter by EUR 7 million, but nevertheless ended the period at a strong EUR 86 million (MEUR 32). Second-quarter net sales amounted to EUR 35.2 million (MEUR 27.3). Technology services accounted for 33 percent (37%) of the total net sales and amounted to EUR 12 million (MEUR 10). Operating profit in the second quarter was EUR 1.4 million positive (MEUR 1.5 positive) and accounted for 4,0 percent (5.6%) of net sales. The result was EUR 0.9 million positive (MEUR 1.2 positive), and earnings per share were EUR +0.21 (EUR +0.29). Second-quarter profitability was influenced by investments in the start-up of the new Metriguard business, additional investments aimed at the Chinese market, and investments in sales and marketing. The situation in the global economy and the financial markets in the first half of 2017 did not change considerably with respect to Raute or Raute’s customer base. Although construction activity has increased in many market areas, it is still at a fairly low level in all market areas, including North America. Thanks to a brighter market situation, investment activity among Raute’s customers has gradually improved, and projects that were in the negotiating phase have materialized into orders. Demand remained brisk throughout the first half of the year. Invitations to tender for both creating new capacity and even smaller project-type undertakings were at a good level, and trade negotiations took place at a brisk pace. Projects encompassing individual machine lines were started up to a greater extent than in the recent past. Demand for modernizations also picked up in the second quarter following a quieter period. Demand for maintenance and spare parts services remained good. This indicates that the utilization rates of Raute’s customers’ production facilities continued to remain, for the most part, at a good level. Raute serves the wood products industry with a full-service concept based on service that encompasses the entire life cycle of the delivered equipment. Raute’s business consists of project deliveries and technology services. Project deliveries encompass projects from individual machine or production line deliveries to deliveries of all the machines and equipment belonging to a mill’s production process. Additionally, Raute’s full-service concept includes comprehensive technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations, as well as consulting, training and reconditioned machinery. The order intake during the review period was at a good level and amounted to EUR 52 million (MEUR 28). A significant proportion of new orders was again received from European customers. Of new orders, 56 percent came from Europe (39%), 17 percent from North America (21%), 17 percent from Russia (29%), 9 percent from South America (7%) and 1 percent from Asia-Pacific (4%). The second quarter accounted for EUR 29 million of the order intake. Sometimes even strong fluctuations in the distribution of new orders between the various market areas and over time are typical for project-focused business. Order intake in technology services amounted to EUR 25 million (MEUR 19), increasing 33 percent on the comparison period. Growth came equally from all areas of technology services.   The order book declined during the second quarter by EUR 7 million. The order book at the end of the reporting period amounted to a strong EUR 86 million (MEUR 32). Part of the order book is scheduled for 2018. Raute’s competitive position has remained unchanged and is good. Raute’s solutions help customers in securing their delivery and service capabilities throughout the life cycle of the production process or a part thereof. In such investments, the supplier’s overall expertise and extensive and diverse technology offering play a key role. The competitive edge provided by Raute plays a major role when customers select their cooperation partners. Raute’s strong financial position and long-term dedication to serving selected customer industries also enhance its credibility and improve its competitive position as a company that carries out long-term investment projects. The Metriguard products acquired in April complement Raute’s product range. Metriguard’s equipment has been integrated into dozens of Raute’s deliveries over the years. The active installed equipment base extends from North and South America to Europe, Asia, Africa, Australia and New Zealand. Net sales for the reporting period, EUR 71.8 million (MEUR 53.7), were up 34 percent on the comparison period. Of the total net sales for the reporting period, Europe accounted for 49 percent (63%), Russia for 33 percent (15%), North America for 12 percent (15%), South America for 4 percent (3%), and Asia-Pacific for 2 percent (5%). Net sales for technology services grew during the reporting period by 19 per cent and amounted to EUR 22 million (MEUR 19). Technology services’ share of the Group’s total net sales declined to 31 per cent (35%) due to the strong 41 per cent growth in project deliveries. During the period under review, operating profit was EUR 4.1 million positive (MEUR 2.9 positive) and accounted for 5.7 percent of net sales (5.4%). Operating profit grew 41 percent on the comparison period. The result before taxes for the reporting period was EUR 4.2 million positive (MEUR 2.8 positive). The result for the reporting period was EUR 3.0 million positive (MEUR 2.1 positive). Earnings per share (undiluted) were EUR 0.71 (EUR 0.51). The Group’s financial position remained good, despite the growing need for working capital in the second quarter. At the end of the reporting period, gearing was 9 percent (17%) and the equity ratio was 58 percent (59%). Fluctuations in balance sheet working capital items and the key figures based on them are due to differences in the timing of customer payments and the cost accumulation from project deliveries, which is typical of the project business. The Group’s cash and cash equivalents amounted to EUR 3.1 million (MEUR 1.6) at the end of the reporting period. Operating cash flow was EUR 15.1 million negative (MEUR 5.4 negative). Cash flow from investment activities was EUR 4.5 million negative (MEUR 1.6 negative), including the cash consideration of EUR 2.9 million on the purchase price and costs of EUR 0.5 million related to the acquisition of the Metriguard business. Cash flow from financing activities was EUR 1.1 million negative (MEUR 2.1 positive), including a dividend payment of EUR 4.2 million and a short-term drawdown of EUR 3.0 million. Interest-bearing liabilities amounted to EUR 6.0 million (MEUR 6.4) at the end of the reporting period. The parent company Raute Corporation has a EUR 10 million commercial paper program, which allows the company to issue commercial papers maturing in less than one year. The parent company Raute Corporation is prepared for future working capital needs and has long-term credit facility agreements with three Nordic banks totaling EUR 23.0 million. The main covenants for the credit facility are an equity ratio of >30% and gearing of <100%. Of the credit facilities, EUR 18.6 million remained unused at the end of the reporting period. Raute Corporation published stock exchange releases on the following events: January 2, 2017  Market-making for Raute Corporation transferred to Nordea Bank AB (publ) January 11, 2017  Raute Corporation's trading and issuer codes to change as from January 16, 2017   February 15, 2017 A new performance- and share-value-based long-term incentive program established for Raute’s top management March 6, 2017  Disposal of Raute Corporation’s own shares March 28, 2017 Decisions of Raute’s Annual General Meeting March 31, 2017 Raute Corporation strengthens its offering in veneer and lumber grading technology by acquiring the business of Metriguard Inc. Raute is a leading technology supplier for the plywood and LVL industries and focuses strongly on the development of increasingly efficient, productive and environmentally friendly manufacturing technology and supporting measurement and machine vision applications. Opportunities provided by digitalization are also an essential part of R&D activities. Research and development costs in the reporting period amounted to EUR 1.8 million (MEUR 1.6), representing 2.4 percent of net sales (2.9%). Capital expenditure during the period came to EUR 4.8 million (MEUR 1.7) and accounted for 6.6 percent (3.1%) of net sales. The acquisition of the Metriguard business accounted for EUR 3.4 million of the Group’s capital expenditure, including an estimate of the earn-out share to be paid in 2018. During the reporting period, the Group’s personnel grew by 62 people, numbering 705 (650) at the end of the reporting period. The higher number of personnel includes the transfer of 24 employees to Raute in connection with the acquisition of Metriguard Inc. Group companies outside Finland accounted for 29 percent (29%) of employees. Converted to full-time employees (“effective headcount”), the average number of employees was 652 (632) during the reporting period. Raute Corporation established a new subsidiary, Metriguard Technologies, Inc., in the United States. The new subsidiary was a party to the acquisition agreement realized with Metriguard Inc. and has continued Metriguard Inc.’s business as of April 3, 2017.   Metriguard is a market leader in grading technology for lumber and veneer manufactured in an industrial production process. Metriguard sells and maintains measuring equipment for the veneer and plywood industry and for sawmills on a global scale. The subsidiary is located in Pullman, Washington. The Metriguard business’s financial information will be reported as part of Raute’s wood products technology segment. The full consideration for the business was EUR 4.0 million, of which EUR 2.9 million was paid in the form of a cash consideration. The value of the acquired net assets amounted to EUR 3.0 million and goodwill generated was EUR 1.0 million. Expenses of EUR 0.5 million related to the acquisition were entered as a cost item. The number of Raute Corporation’s shares at the end of the reporting period totaled 4,225,311, of which 991,161 were series K shares (ordinary share, 20 votes/share) and 3,234,150 were series A shares (1 vote/share). Series K and A shares confer equal rights to dividends and company assets. Series K shares can be converted to series A shares under the terms set out in section 3 of the Articles of Association. If an ordinary share is transferred to a new owner who has not previously held series K shares, the new owner must notify the Board of Directors of this in writing and without delay. Other holders of series K shares have the right to redeem the share under the terms specified in Article 4 of the Articles of Association. Raute Corporation’s series A shares are listed on Nasdaq Helsinki Ltd. The trading code is RAUTE. Raute Corporation has signed a market making agreement with Nordea Bank Ab in compliance with the Liquidity Providing (LP) requirements issued by Nasdaq Helsinki Ltd. The company’s market capitalization at the end of the reporting period was EUR 96.8 million (MEUR 54.5), with series K shares valued at the closing price of series A shares on June 30, 2017, i.e. EUR 22.92 (EUR 13.10). At the end of the reporting period, altogether 28,845 of the company’s series C 2010 stock options were unexercised. The subscription period for Raute Corporation’s series B stock options ended on March 31, 2017. Raute Corporation’s series C 2010 stock options are listed on Nasdaq Helsinki Ltd under the trading code RAUTEEW310. The subscription period for series C stock options is March 1, 2015–March 31, 2018. The subscription price at the end of the reporting period was EUR 5.00 and the closing price was EUR 15.00. The Group has remuneration systems in place that cover the entire personnel. The Group has valid long-term share-based incentive plans based on performance. The company presented its latest performance- and share-based long-term incentive plan to the top management on February 15, 2017. The terms and conditions of the incentive plans are available on the company’s website. The number of shareholders stood at 3,625 at the beginning of the year and at 4,093 at the end of the reporting period. Series K shares were held by 55 private individuals (50) at the end of the reporting period. Nominee-registered shares accounted for 2.7 percent (2.7%) of shares. The company did not receive any flagging notifications during the reporting period. The Board of Directors, the President and CEO as well as the Executive Board held altogether 249,973 company shares, equaling 5.9 percent (5.7%) of the company shares and 11.2 percent (11.2%) of the votes at the end of the reporting period. Raute Corporation complies with the Finnish Corporate Governance Code 2015 for listed companies issued by the Securities Market Association on October 1, 2015. Raute Group’s Executive Board and the members’ areas of responsibility: Tapani Kiiski, President and CEO, Chairman – Sales Arja Hakala, Group Vice President, Finance, CFO – Finance and administration Marko Hjelt, Group Vice President, Human Resources – Human resources and competence development Mika Hyysti, Group Vice President, Technology – Technology, products and R&D Timo Kangas, Group Vice President, EMEA – Market area EMEA Antti Laulainen, Group Vice President, Technology Services and Sales Management – Technology services and sales management Petri Strengell, Group Vice President, Supply Chain – Sourcing and production. Raute Corporation’s Annual General Meeting was held on March 28, 2017. More detailed information on the decisions of the Annual General Meeting can be found in the stock exchange release issued on March 28, 2017. DISTRIBUTION OF PROFIT FOR THE 2016 FINANCIAL YEAR The Annual General Meeting held on March 28, 2017 decided to pay a dividend of EUR 1.00 per share for the financial year 2016. The total amount of dividends is EUR 4.2 million, with series A shares accounting for EUR 3,228,550.00 and series K shares for EUR 991,161.00. The dividend payment date was April 6, 2017. At the General Meeting on March 28, 2017, Mr. Erkki Pehu-Lehtonen was elected Chairman of the Board, Mr. Mika Mustakallio was elected Vice-Chair, and Mr. Joni Bask, Ms. Laura Raitio, Mr. Pekka Suominen, and Mr. Patrick von Essen were elected as Board members. The Board of Directors’ term of office will continue until the 2018 Annual General Meeting. Based on the evaluation of independence, Chairman Mr. Erkki Pehu-Lehtonen and members Mr. Joni Bask, Mr. Patrick von Essen, Ms. Laura Raitio, and Mr. Pekka Suominen are independent of the company. The Chairman of the Board (Mr. Erkki Pehu-Lehtonen) and two Board members (Mr. Patrick von Essen and Ms. Laura Raitio) are independent of major shareholders. Raute Corporation’s Board of Directors has an Appointments Committee. The Appointments Committee is chaired by Mr. Erkki Pehu-Lehtonen and its members are Mr. Mika Mustakallio and Mr. Pekka Suominen. The Audit and Working Committees’ tasks are handled by the Board of Directors. Raute Corporation published stock exchange releases on the following events after the reporting period: July 27, 2017 Raute revises its guidance for 2017 net sales and operating profit: Net sales will   grow clearly and operating profit will improve clearly July 31, 2017 Raute receives an order worth over EUR 11 million to USA Risks in the near term continue to be driven by the uncertainty relating to the global economic situation and the development of the financial markets, as well as by international political instability. During the reporting period, there were no essential changes in the business risks described in the 2016 Board of Directors’ Report and Financial Statements. The most significant risks for Raute in the near term are related to the implementation of major mill-scale projects included in the order book in accordance with the contract terms. On July 27, 2017, Raute revised its guidance for the full year 2017 concerning net sales and operating profit. Based on a strong order book, order intake and continued active demand, Raute’s net sales in 2017 are expected to clearly grow and operating profit to clearly improve from 2016. Raute Corporation's Board of Directors has on August 1, 2017 reviewed the Half-year report for January 1 - June 30, 2017 and approved it to be published in compliance with this release. The figures for the financial year 2016 presented in the figures section of the Half-year report have been audited. The presented interim financial report figures have not been audited. Raute Group is a globally operating technology and service company with core competence in selected wood products manufacturing processes. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL and sawn timber. Raute’s full-service concept is based on product life-cycle management and includes project deliveries and technology services. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. In addition to a broad range of machines and equipment, Raute’s solutions cover technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute Group's Parent company, Raute Corporation, is a Finnish public limited liability company established in accordance with Finnish law (Business ID FI01490726). Its series A shares are quoted on Nasdaq Helsinki Ltd, under Industrials. Raute Corporation is domiciled in Lahti. The address of its registered office is Rautetie 2, FI-15550 Nastola, and its postal address is P.O. Box 69, FI-15551 Nastola. Raute Corporation's Half-year report for January 1 - June 30, 2017 has been prepared in accordance with standard IAS 34 Interim Financial Reporting, and with the principles of presentation presented in the consolidated financial statement 2016. The half-year financial report does not contain full notes or other information presented in the financial statements, and therefore the Half-year report should be read in conjunction with the Financial statements published for 2016. Preparations of the Half-year report have complied with the IAS and IFRS standards, as well as SIC and IFRIC interpretations, effective on June 30, 2017. Preparation work for the adoption of the IFRS 15 standard in Raute Group is ongoing. The Group continues to analyze the customer contract types and reporting process and presents additional information during the latter part of the year 2017 and numerical data of the impact at the beginning of the financial year 2018. All of the figures presented in the Half-year report are in thousand euro, unless otherwise stated. Due to the rounding of the figures in the tables, the sums of figures may deviate from the sum total presented in the table. Figures in parentheses refer to the corresponding figures in the comparison period. When preparing the Half-year report in compliance with International Financial Reporting Standards, the company management has made estimates and assumptions. The estimates and assumptions have been based on management’s best knowledge at the reporting date, therefore actual results may differ from these estimates. Raute Corporation's consolidated financial statement information is available online at www.raute.com or at the head office of the Parent company, Rautetie 2, FI-15550 Nastola, Finland. The main part of the net sales is comprised of project deliveries and modernizations, which have been treated as long-term projects. The rest of the net sales is comprised of technology services provided to the wood products industry such as spare parts and maintenance services as well as services provided to the development of customers’ business. Project deliveries and modernizations related to technology services include both product and service sales, making it impossible to give a reliable presentation of the breakdown of the Group’s net sales into purely product and service sales. Large delivery projects can temporarily increase the shares of various customers of the Group’s net sales to more than ten percent. At the end of the period, the Group had two customers (3), whose customized share of the Group’s net sales temporarily exceeded ten percent. The sales share of the customers was 37 percent. On April 3, 2017, Raute Corporation acquired the business of Metriguard Inc. in the USA. Metriguard sells and maintains measuring equipment for the veneer and plywood industry and for sawmills on a global scale. The production of the company has been centralized in Pullman, Washington. Metriguard’s business will be continued under Raute’s new US subsidiary, Metriguard Technologies, Inc., whose financial information will be reported as part of Raute’s wood products technology segment. The acquisition has been implemented as an asset purchase, including Metriguard Inc.’s intangible assets, working capital and fixed assets, except real estate. Metriguard Inc.’s personnel transferred in the business transaction. The purchase price is paid in two installments. A base purchase price of USD 3.1 million has been paid at closing. The additional earn-out payment based on net sales for a 12-month period following closing of the transaction, will be paid in the summer 2018. The balance sheet items recognized from the acquisition are preliminary. The Group has recognized acquisition related expenses in the amount of EUR 0.5 million. The expenses are included in Other operating expenses of the consolidated statement of income. At the end of the reporting period June 30, 2017,  the fair value of the financial assets categorized at fair value on hierarchy level 3 was EUR 471 thousand. The methods of fair value determination correspond the valuation principles presented in the Annual financial statements for 2016. There were no transfers between the hierarchy levels 1 and 2 during the reporting period. A total of 18 849  Raute's series A shares have been subscribed for with Raute's stock options 2010 B and 2010 C during the reporting period. The new shares have been registered in the Trade Register on February 23, 2017 and May 9, 2017. On June 30, 2017 the company's share capital is EUR 8 256 316 and the number of company's shares 4 225 311 pieces. An expense of EUR 230 thousand was recognized for the share rewards to the income statement during the reporting period. During the reporting period, no share rewards were delivered based on the long-term share-based incentive program 2014-2018 directed to the top management. Distribution of the profit for the financial year 2016 Raute Corporation's Annual General Meeting held on March 28, 2017, decided, according to the Board of Directors' proposal, to distribute a dividend of EUR 1.00 per share to be paid for series A and K shares, a total of EUR 4 220 thousand. The dividend payment date was April 6, 2017. Continuing operations of Raute Group belong to the wood products technology segment. Raute Corporation's Board of Directors is the chief operating decision maker that is responsible for assigning resources to the operating segment and assessing its result. Due to Raute's business model, operational nature and administrative structure, the operational segment to be reported as wood products technology segment is comprised of the whole Group and the information on the segment is consistent with that of the Group. Segment reporting follows the principles of presentation of the consolidated financial statements. RAUTE CORPORATION Board of Directors BRIEFING ON AUGUST 1, 2017, AT 2 P.M.: A briefing will be organized for analysts, investors and the media on August 1, 2017 at 2 p.m. at Scandic Simonkenttä Hotel, Mansku cabinet, Simonkatu 9, Helsinki. The half-year report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Arja Hakala, CFO. NEXT INTERIM REPORT: Raute Corporation’s interim report January 1–September 30, 2017 will be published on Tuesday, October 31, 2017. FURTHER INFORMATION: Mr. Tapani Kiiski, President and CEO, Raute Corporation, tel. +358 3 829 3500, mobile phone +358 400 814 148 Ms. Arja Hakala, CFO, Raute Corporation, tel. +358 3 829 3293, mobile phone +358 400 710 387 DISTRIBUTION: Nasdaq Helsinki Ltd, main media, www.raute.com RAUTE IN BRIEF: Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and sawn timber. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in the Nastola area of Lahti, Finland. The company’s other production plants are located in Kajaani, Finland, the Vancouver area of Canada, the Shanghai area of China and in Pullman, Washington, USA. Raute’s net sales in 2016 were EUR 113.1 million. The Group’s headcount at the end of 2016 was 643. More information about the company can be found at www.raute.com.

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