MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY – 31 DECEMBER 2016
3rd February, 2017 08:30 am
The January–December 2016 revenue was on the previous year’s level and the operating result improved slightly.
October–December 2016
- Revenue EUR 34.3 million (10–12/2015: 37.5), change -8.6%
- Comparable operating result improved by 7.0 % and was EUR 2.2 million (2.1)
- Comparable operating profit ratio was 6.5 % (5.6 %)
- Operating result improved by 0.4 % and was EUR 2.1 million (2.1)
- Result declined by 48.9 % and was EUR 0.8 million (1.5)
- Earnings per share amounted to EUR 0.18 (0.37)
January–December 2016
- Revenue was on the previous year’s level at EUR 129.1 million (132.8), change -2.8 %
- Comparable operating result improved by 68.7 % and was EUR 6.9 million (4.1)
- Comparable operating profit ratio was 5.3 % (3.1 %)
- Operating result improved by 51.1 % and was EUR 6.2 million (4.1)
- Result for the period improved by 33.5 % and was EUR 3.3 million (2.5)
- Earnings per share were EUR 0.81 (0.61)
Outlook for 2017
The Martela Group anticipates that its 2017 revenue and IFRS operating result will remain on the 2016 level.
Due to normal seasonal variations, the Group’s operating result accumulates mainly during the second half of the year.
Key figures, EUR million
| 2016 | 2015 | Change | 2016 | 2015 | Change | |
| 10-12 | 10-12 | % | 1-12 | 1-12 | % | |
| Revenue | 34,3 | 37,5 | -8,6 | 129,1 | 132,8 | -2,8 |
| Comparable operating result* | 2,2 | 2,1 | 7,0 | 6,9 | 4,1 | 68,7 |
| Comparable operating result %* | 6,5 | 5,6 | 5,3 | 3,1 | ||
| Operating result | 2,1 | 2,1 | 0,4 | 6,2 | 4,1 | 51,1 |
| Operating result % | 6,1 | 5,6 | 4,8 | 3,1 | ||
| Result before taxes | 2,0 | 1,9 | 2,3 | 5,6 | 3,4 | 65,9 |
| Result for the period | 0,8 | 1,5 | -48,9 | 3,3 | 2,5 | 33,5 |
| Earnings/share, eur | 0,18 | 0,37 | -49,1 | 0,81 | 0,61 | 32,3 |
| Return on investment % | 25,0 | 24,8 | 18,2 | 12,1 | ||
| Return on equity % | 12,7 | 27,6 | 13,9 | 11,6 | ||
| Equity ratio % | 45,3 | 40,9 | ||||
| Gearing % | -18,9 | 16,6 |
*Martela applies the European Securities and Markets Authority (ESMA) guidelines on disclosing alternative performance measures. The guidelines took effect on 3 July 2016. Martela discloses alternative performance measures to illustrate the financial performance of its business operations and to improve intra-period comparability. The alternative performance measures should not be considered a substitute for the IFRS performance measures. The reconciliation of the ESMA performance measures with the most directly reconcilable IFRS-based items has been presented in the financial statements information of this financial statements report.
Matti Rantaniemi, CEO:
“In the fourth quarter, our business operations developed as anticipated and we are satisfied with the company’s overall financial performance in 2016. Revenue was at a good level, profitability improved and the cash flow from operating activities was also good.
Revenue for January–December was EUR 129.1 million, which is at the previous year’s level (132.8). The comparable consolidated operating result was EUR 6.9 million (4.1), which is 68.7% higher than in the comparison period. The comparable operating result for the October–December period was EUR 2.2 million (2.1), and growth was 7%. The cash flow from operating activities in January–December was EUR 11.7 million (3.9).
With the positive performance of the Business Unit Finland & Sweden, the consolidated revenue for the review period was on the 2016 level. For the Business Unit International, revenue declined in Poland and Norway while it grew in Russia and other international operations.
The discontinuation of Martela’s own sales operations in Poland and Russia, announced in June, has been completed according to plan. EUR 0.7 million in non-recurring expenses have been recorded on the discontinuation and this is not included in the company’s comparable operating result. The Warsaw production and purchasing unit will continue operations and is an integral part of Martela’s Customer Supply Management organisation. The closure of the Swedish Bodafors unit, which was announced earlier, has also been completed. The assembly work carried out at Bodafors has been concentrated in our Nummela production unit and the distribution to our logistics partners.
The EUR 4 million savings programme for variable and fixed costs launched in 2015 has been completed in full and it will have full effect in 2017. At the same time, however, the Group will continue to invest in implementing and further developing its Martela Lifecycle strategy, which will increase fixed costs somewhat, preventing the Group’s cost level from falling by the full amount of the savings referred to above.
In 2016 we refocused our Martela Lifecycle strategy to match the ongoing change in the way people work. The key aspects of our updated strategy are: Martela offers people-centric workplaces, provides all workplace services through a single point of contact, and focuses on the Nordic countries, and its goal is to achieve an EBIT level of 8% by the end of 2018 (excluding non-recurring items).
The responsibilities of the Management Team’s members have been reassigned and Martela’s organisation changed to match the refocused strategy. All business units were concentrated in the Customers and Workplace Services unit and removal services and IT functions were added into the Customer Support Management unit, in addition to sourcing, production, delivery and quality which were already part of the unit.
The principal investment in the financial year was the New Business Platform (NBP), worth EUR 2.2 million, which mainly concerned the IT system reforms required to implement the Martela Lifecycle strategy. The launch of these reforms in the first half of 2017 will be a demanding period for everyone at Martela but the reforms will provide us with an agile foundation for developing our business as a comprehensive service in accordance with the Lifecycle strategy.
The year 2017 will largely be a continuation of 2016. We will focus on improving profitability, implementing the Martela Lifecycle strategy, deploying the New Business Platform (NBP), developing Martela’s offering and improving operations and improving job satisfaction among our employees.”
Market
No material changes took place in the market during the fourth quarter. The demand for Martela’s products and services is fundamentally affected by the general economic situation and by the extent to which companies and the public sector need to use their space more efficiently and make their workplaces more effective management tools.
The annual change in a country’s gross domestic product (GDP) can be regarded as an indicator of general economic development. GDP is estimated to have grown at least somewhat in all of Martela’s main markets in 2016 and this development will continue in 2017.
The need to boost efficiency often leads to office alteration projects, which in turn generate demand for Martela. What is more, an increasing number of workplaces and learning environments have understood that the environment itself plays an important role in improving productivity. The Martela Lifecycle model responds well to such needs to develop workplaces in businesses and the public sector, and to this end, we have focused on our competence in workplace specification, planning and maintenance services.
The estimated size of the Nordic workplace market is approximately one billion euros. In Sweden the market relevant to Martela is more than twice the size of what it is in Finland, and the Norwegian market is close in size to its Finnish counterpart.
Revenue and operating result
Revenue and result for October–December 2016
Revenue declined in October–December by 8.6 % and was EUR 34.3 million (37.5). The revenue of the Business Unit Finland & Sweden declined by 4.0 % on the previous year. Due to the timing of projects, revenue fell in Finland and increased in Sweden. The revenue of the Business Unit International declined by 42.1 % on the previous year. Revenue declined in Poland and remained on the 2015 level in Norway. Revenue from Russian and other international operations increased on the previous year. Fourth quarter revenue from operations in Russia was significantly lower than that of the preceding quarter.
The consolidated operating result for the fourth quarter grew by 0.4 % and was EUR 2.1 million (2.1).
EUR 0.1 million was recorded in the second quarter in costs affecting comparability, which arose from the discontinuation of the own Polish and Russian sales operations. Consolidated revenue grew as a result of improved operating efficiency.
The October–December result before taxes was EUR 2.0 million (1.9), an increase of 2.3 %. The October–December result was EUR 0.8 (1.5), a decline of 48.9 %.
Revenue and result for January–December 2016
Revenue for January-December was EUR 129.1 million, which is at the previous year’s level (132.8). The revenue of the Business Unit Finland & Sweden grew by 2.5 % on the previous year. Finnish revenue for the four quarters was on last year’s level while in Sweden the corresponding figure improved year-on-year. The revenue of the Business Unit International declined by 32.7 % on the previous year. In Poland and Norway, revenue declined while in Russia and other international operations it grew.
The discontinuation of Martela’s own sales operations in Poland and Russia, announced in June, has been completed. The Warsaw production and purchasing unit will continue operations and is an integral part of Martela’s Customer Supply Management organisation. The closure of the Bodafors plant and logistics centre, which was announced earlier, has also been completed.
The EUR 4 million savings programme for variable and fixed costs launched in 2015 has been completed in full and it will have full effect in 2017. At the same time, however, the Group will continue to invest in implementing and further developing its Martela Lifecycle strategy, which will increase fixed costs somewhat, preventing the Group’s cost level from being reduced by the full amount of the savings referred to above.
The comparable consolidated operating result for the January–December period was EUR 6.9 million (4.1), which is 68.7 % higher than in the comparison period. EUR 0.7 million was recorded in the period in costs affecting comparability, which arose from the discontinuation of the own Polish and Russian sales operations. As a result, the January–December IFRS operating result was EUR 6.2 million (4.1), which is 51.1 % better than in the comparison period.
The January–December result before taxes was EUR 5.6 million (3.4), an increase of 65.9 %. The increase in taxes recorded for the period was due to the improved result at the mother company.
Profit for the January–December period was EUR 3.3 million (2.5), and growth was 33.5 %.
EVENTS AFTER THE END OF THE FINANCIAL YEAR
No significant events requiring reporting have taken place since the January–December period, and operations have continued according to plan.
SHORT-TERM RISKS
The principal risk regarding profit performance relates to the general economic uncertainty and the consequent effects on the overall demand in Martela’s operating environment. Due to the project-based nature of the sector, forecasting short-term developments is challenging.
The New Business Platform IT reform that will take place in the first half of 2017 may pose operating challenges that may impact business operations in the short term. Risks are being minimised by conducting sufficient testing, ensuring sufficient resources and by implementing standard features of the systems.
OUTLOOK FOR 2017
The Martela Group anticipates that its 2017 revenue and IFRS operating result will remain on the 2016 level. Due to normal seasonal variations, the Group’s operating result accumulates mainly during the second half of the year.
PROPOSAL OF THE BOARD OF DIRECTORS FOR DISTRIBUTION OF PROFIT
The Board of Directors will propose to the AGM that a dividend of EUR 0.37 per share be distributed for 2016.
ANNUAL GENERAL MEETING
Martela Corporation’s AGM will be held on 14 March 2017 at 3 p.m. in Martela House, Helsinki. The notice of Annual General Meeting will be published in a separate stock exchange release.
The Martela 2016 Annual Report will be published on the company’s website during the week 8/2017.
The whole financial statements release is attached as pdf.
Martela Corporation
Board of Directors
Matti Rantaniemi
CEO
Further information
Matti Rantaniemi, CEO, tel 050 465 8194
Riitta Järnstedt, CFO, tel 040 508 4993
Distribution
NASDAQ OMX Helsinki
Main news media
www.martela.com
Martela carries user-centric workplaces and learning environments. We offer our customers a single point of contact for the entire lifecycle of the workplace, from specifying need to optimising maintenance. The company was founded in 1945 and it is one of the biggest in its field in the Nordic countries.
