Half year financial report January – June 2019: Positive development in North America, temporary challenges in building solutions in Europe

Uponor Corporation     Half year financial report     26 July 2019      08:00 EET

Half year financial report January – June 2019: Positive development in North America, temporary challenges in building solutions in Europe

Uponor divested Uponor Infra’s North American business in August 2018 and Zent-Frenger (reported in Building Solutions – Europe segment) in October 2018. The financial information from the comparison period includes their figures.

April–June 2019

  • Net sales were €292.6 (324.9) million, a decline of 9.9%. Organic growth was -0.5% in constant currency terms. Net sales for the comparison period without divested Uponor Infra’s North American business and Zent-Frenger would have been €291.7 million.
  • Operating profit was €25.3 (28.0) million, a decline of 9.6%. Operating profit improved 12.4% from the comparison period without the divested Uponor Infra’s North American business and Zent-Frenger
    (2018: €22.5 million). There were no significant items affecting comparability in the second quarter of 2019 or 2018.
  • Earnings per share were €0.18 (0.19).

January–June 2019

  • Net sales were €541.5 (601.8) million, a decline of 10.0%. Organic growth was -1.1% in constant currency terms. Net sales for the comparison period without divested Uponor Infra’s North American business and Zent-Frenger would have been €542.0 million.
  • Operating profit was €39.5 (45.0) million, a decline of 12.0%. Operating profit improved 10.9% from the comparison period without the divested Uponor Infra’s North American business and Zent-Frenger
    (2018: €35.7 million).
  • Earnings per share were €0.29 (0.30).
  • Cash flow from business operations was €-15.9 (-16.5) million.
  • Return on investment was 12.2% (13.5%), and gearing 66.7 (64.2). Without the adoption of IFRS 16, gearing would have been 54.2.

Organic growth refers to Uponor’s operations without any divested businesses.

 

Guidance statement for 2019:

Uponor repeats its full-year guidance announced on 13 February 2019: Excluding the impact of currencies, Uponor expects its net sales to reach the level of the year 2018 net sales excluding the divested Uponor Infra’s North American business and Zent-Frenger (€1,107.7 million), and comparable operating profit to improve from the year 2018 comparable operating profit excluding the divested Uponor Infra’s North American business and Zent-Frenger (€83.5 million).  

Jyri Luomakoski, President and CEO, comments:

“On a positive note, during the first half of the year the profitability of our current business portfolio improved, supported by the restructuring decisions concerning Australia, Switzerland and China. The strategic divestitures from 2018 supported the margin improvement as well. However, the second quarter was twofold for Uponor. On the one hand, North America came back on track after a slow start for the year. But Building Solutions – Europe had some temporary production challenges in the second quarter.

In Building Solutions – Europe, net sales decreased and we could not maintain the positive profitability development from the first quarter of the year. The scaling up of the production of the new S-Press PLUS fitting also burdened profitability together with continued operational challenges with Virsbo manufacturing facility in Sweden. We are positive that we will be able to stabilise the production of S-Press PLUS during the third quarter, while the results from corrective measures in Virsbo will materialise slower.  

In Building Solutions – North America, both net sales and profitability improved year-over-year. The capacity issues in the freight industry are also showing signs of improvement, which supported the positive profitability development.

Uponor Infra continues to execute its profitability improvement programme and the strategic shift towards designed solutions sales. As part of these initiatives, Uponor Infra divested its Czech subsidiary in April.  

During the second half of the year, we will continue to focus on profitability improvement initiatives.”

Key figures

M€  4-6/ 
 2019
4-6/
2018
Change 1-6/
2019
1-6/
2018
Change 1-6/
2018*)
1-12/2018
Net sales 292.6 324.9 -9.9% 541.5 601.8 -10.0% 542.0 1,196.3
Building Solutions – Europe 125.7 138.7 -9.3% 249.3 263.9 -5.5% 251.9 524.4
Building Solutions –
North America
96.3 83.5 +15.3% 171.0 161.1 +6.1% 161.1 340.5
Uponor Infra 72.4 104.1 -30.4% 124.8 179.4 -30.4% 131.7 337.3
Operating expenses 254.7 287.5 -11.4% 477.4 537.9 -11.3%   1,063.6
Depreciation and impairments 13.3 9.7 37.3% 25.8 19.2 34.1%   42.4
Other operating income 0.6 0.2 177.8% 1.2 0.3 306.3%   16.4
Operating profit 25.3 28.0 -9.6% 39.5 45.0 -12.0% 35.7 106.7
Building Solutions – Europe 8.2 11.0 -25.3% 15.4 17.0 -9.1% 16.9 31.1
Building Solutions –
North America
13.8 8.8 +56.7% 21.3 19.0 +12.3% 19.0 46.6
Uponor Infra 5.4 10.2 -47.3% 6.0 13.4 -55.8% 4.2 35.1
Comparable operating profit 25.3 28.0 -9.6% 39.5 45.0 -12.0% 35.7 99.3
Building Solutions – Europe 8.2 11.0 -25.3% 15.4 17.0 -9.1% 16.9 35.4
Building Solutions –
North America
13.8 8.8 +56.7% 21.3 19.0 +12.3% 19.0 46.6
Uponor Infra 5.4 10.2 -47.3% 6.0 13.4 -55.8% 4.2 23.4
Financial income and expenses -3.2 -2.6 23.0% -6.6 -4.3 54.1%   -8.5
Profit before taxes 21.1 24.5 -13.8% 31.0 37.7 -17.8%   93.5
Profit for the period 15.3 17.3 -11.6% 22.4 26.5 -15.5%   63.2
Earnings per share 0.18 0.19 -0.7% 0.29 0.30 -4.8%   0.72

*) Illustrative figures without divested Uponor Infra’s North American business and Zent-Frenger.

M€  30 June 
 2019
30 June 2018 Change 31 Dec 2018
Net working capital 163.1 169.0 -3.5% 119.3
Net-interest bearing debt 224.9 218.3 3.0% 139.2
Solvency 39.2 37.8 3.5% 45.1
Gearing 66.7 64.2 3.8% 39.4
Return on investment 12.2 13.5 -9.7% 17.2

Uponor divested Uponor Infra’s North American business in August 2018 and Zent-Frenger (reported in Building Solutions – Europe segment) in October 2018. The financial information from the comparison period includes their figures.

The impact of IFRS 16 adoption on Uponor's liabilities as of 1 January 2019 was €44.3 million, increasing the amount of lease liabilities, more detailed information on the impacts of IFRS 16 can found on page 15.

Webcast of the results briefing and the presentation
A webcast in English will be broadcast on 26 July at 10:00 EET. It can be viewed via the Uponor IR mobile app or here https://platform.goodmood.fi/goodmood/uponor/half-year-results-briefing-1-6-2019. The recorded webcast can be viewed via the same link or via the app shortly after the live presentation. All presentation materials will be available at investors.uponor.com > News & downloads.

Uponor Corporation’s financial reporting in 2019
25 Oct 2019    Interim report

For further information, please contact:
Jyri Luomakoski, President and CEO, tel. +358 20 129 2824

Susanna Inkinen, Vice President, Communications and Corporate Responsibility, tel. +358 20 129 2081

DISTRIBUTION:
Nasdaq Helsinki
Media
www.uponor.com
www.investors.uponor.com   

Uponor in brief
Uponor is a leading international systems and solutions provider for safe drinking water delivery, energy-efficient radiant heating and cooling and reliable infrastructure. The company serves a variety of building markets including residential, commercial, industrial and civil engineering. Uponor employs about 4,100 employees in 30 countries, mainly in Europe and North America. In 2018, Uponor's net sales totalled nearly €1.2 billion. Uponor is based in Finland and listed on Nasdaq Helsinki. Uponor builds on you - www.uponor.com


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