Financial results briefing – Q2/2011...Financial results briefing – Q2/2011 Jyri Luomakoski...

Financial results briefing Q2/2011briefing – Q2/2011Jyri LuomakoskiPresident and CEOPresident and CEOUponor Corporation

Leading indicators in major markets

Indicator % change YTD

Data through

Trend since Q1 update

Germany Housing permits +32% May 2011

Finland Housing permits -3% April 2011Finland Housing permits 3% April 2011

USA Housing starts +17%* June 2011

Sweden Housing starts +39% Q1 2011

Spain Housing permits -12% April 2011

Norway Housing starts +42% May 2011

Italy Construction index 0% April 2011

Denmark Housing starts +4% March 2011

Netherlands Housing permits +31% March 2011

Canada Housing starts +3%* June 2011

10 August 2011Interim report 2011 2

*Seasonally adjusted, annualised rate vs. same month in 2010

Increase in net sales despite continued h ll k kchallenges in key markets

Net sales, M€ 4-6/2011 4-6/2010 Change, %

Uponor 222.6 204.6 8.8

Building Solutions – Europe 147.8 130.9 13.0

Building Solutions – North America 29 5 33 5 -11 8Building Solutions – North America 29.5 33.5 -11.8

(Building Solutions – North America, US$ 42.8 42.5 0.8)

Infrastructure Solutions 47.3 42.6 11.0

• BLD - Europe: Satisfactory growth, mostly driven by good German and Benelux demand; other markets remaining more or less stable

• BLD - North America: Modest growth against general market current

• Infrastructure: Net sales revitalised by seasonality and new product launches

• Group organic growth at 5.7%• Net sales growth includes effects from cost inflation and currency fluctuations


Net sales growth includes effects from cost inflation and currency fluctuations

Operating profit burdened by higher d kinput costs and marketing expenses

Operating profit, M€ 4-6/2011 4-6/2010 Change, %

Uponor 15.5 18.8 -17.4

Building Solutions – Europe 13.9 16.4 -14.7

Building Solutions – North America 2.7 2.0 30.0

(Building Solutions – North America, US$ 3.8 2.7 40.7

Infrastructure Solutions 1 7 3 1 -45 2Infrastructure Solutions 1.7 3.1 45.2

BLD – Europe:• Increase in marketing costs from a range of new product innovations• Increased one-time costs in Q2Increased one time costs in Q2

BLD - North America: • Low overhead costs together with targeted sales focus bore results

Infrastructure: • Impact of increasing input costs offset the benefits of net sales

growth


growth

Highlights of Q2

+ Uponor’s recent product innovations (launched in Q1) well received in the market place strengthening brand leadership in key marketsmarket-place, strengthening brand leadership in key markets

+ In Building Solutions – Europe, product harmonisation has driven down the number of items by one third in the past two yearsnumber of items by one third in the past two years

− Overall market sentiments weakening apart from the sustained positive Overall, market sentiments weakening apart from the sustained positive development in the German-speaking Europe

− Challenging environment of rising input costs continued, affecting especially g g g p , g p ythe Infrastructure business (resins) but also Building Solutions (components, energy…)

k dl h b l− Marketing costs rising more rapidly than business volume


Financial t t t statements

Riitta PalomäkiCFOCFOUponor Corporation

Interim January – June 2011

Key figuresMEUR 1-6 1-6 1-12

2011 2010 2010

Change

Y/Y

Key figures

Net sales, continuing operations 395.8 362.0 749.2

Operating profit, continuing operations 18.7 20.3 52.4

/

+9.4%

-7.8%

Operating profit margin, continuing operations 4.7% 5.6% -0.9% pts 7.0%

Earnings per share (diluted), EUR 0.15 0.12 0.34

Return on equity % (p a ) 8 8% 6 5% 2 3% pts 9 7%

+25.0%

Return on equity, % (p.a.) 8.8% 6.5% 2.3% pts 9.7%

Return on investment, % (p.a.) 10.6% 9.0% 1.6% pts 14.4%

Net interest bearing liabilities 150.9 130.8 66.8+15.4%

Gearing, % 67.7% 54.3% 13.4%pts 25.0%

Net Working capital of Net Sales, % (p.a.) 16.4% 14.3% 8.6%

Average number of employees continuing

+14.4%

Average number of employees, continuing operations 3,281 3,203 3,219

Number of employees, end of period, continuing operations 3,400 3,272 3,197

+2.4%

+3.9%


April – June 2011

Income statement Income statement MEUR 4-6 4-6 Change

2011 2010 Y/Y2011 2010 Y/Y

Continuing operations

Net sales 222.6 204.6 +8.8%

Cost of goods sold 142 1 123 9 +14 7%Cost of goods sold 142.1 123.9 +14.7%

Gross profit 80.5 80.8 -0.2% - % of net sales 36.2 % 39.5 % -3.3% pts

O h 0 0 00 2Other operating income 0.1 0.5 -100.2%Expenses 65.1 62.5 +4.2%

Operating profit 15.5 18.8 -17.4% % f t l 7 0 % 9 2 % 2 2% t - % of net sales 7.0 % 9.2 % -2.2% pts

Financial expenses, net 2.0 3.3 -38.1%

Profit before taxes 13.5 15.5 -13.1%

Profit for the period 9.3 10.9 -14.8%

EBITDA 22.5 26.3 -14.2%


January – June 2011

Income statement Income statement

• All segments continued to increaseMEUR 1-6 1-6 Change

2011 2010 Y/YAll segments continued to increasetheir net sales vs LY, BLD - North America in dollars.Sales price increases +5M€.

Continuing operations

Net sales 395.8 362.0 +9.4%

Cost of goods sold 250.8 222.5 +12.7%

Gross profit 145.0 139.5 +4.0%• After stable Q1, gross margin went

down in Q2, due to increasing raw material prices having full effect.

E b 6 1M€

p - % of net sales 36.6 % 38.5 % -1.9% pts

Other operating income 0.1 1.1 -91.2%Expenses 126.4 120.3 +5.1%

Operating profit 18.7 20.3 -7.8% % of net sales 4 7 % 5 6 % 0 9% pts• Expenses up by 6.1M€

―Sales and marketing exp +6.0M€―Slight increase in D&W exp―Admin exp down,

incl 0 9M€ M&A costs

- % of net sales 4.7 % 5.6 % -0.9% pts

Financial expenses, net 3.1 7.4 -58.2%

Profit before taxes 15.6 12.9 +21.3%

Profit for the period 10.8 9.0 +19.2%incl 0.9M€ M&A costs

―FX -1.5M€

• Financial expenses, netFi i l 4 1M€

EBITDA 32.7 35.2 -7.3%

―Financial expenses 4.1M€―Financial income 1.2M€―Exchange differences, net -0.2M€


Net sales development by key national markets(10 largest by net sales)(10 largest by net sales)

M€

60657075

M€Change Y/Y

+26.1%

+5.9%

+18 1%

-5.4% in EUR, +3.2% in USD

40455055

+18.1%

4.3%

+2.7%

10.6%

-10.1%

63.6

43.7

40.334 0

56.4

43.6 43.336.6

71.2

46.2

41.0

43.2

20253035

10.6%

+18.5% +3.7% in EUR,

+4.6% in CAD

34.024.7

16.0 21.319.8

20.6

11.9

21.317.4 20.3

15.715.9 14.7

21.818.2

18.317.3

18.9 15.2

05

1015

Jan-Jun 2009 Jan-Jun 2010 Jan-Jun 2011


Note: Countries are sorted by FY2010 net sales


Balance sheetBalance sheetMEUR 30 Jun 30 Jun Change 31 Dec

2011 2010 Y/Y 2010

Property, plant and equipment 166.4 175.3 -8.9 171.3

Intangible assets 99.0 99.7 -0.7 96.9

Securities and long-term investments 8 6 8 4 +0 2 8 4Securities and long-term investments 8.6 8.4 +0.2 8.4

Inventories 97.4 90.4 +7.0 84.4

Cash and cash equivalents 36.2 6.8 +29.4 11.9

Other current and non-current assets 188 5 177 5 +11 0 124 3Other current and non-current assets 188.5 177.5 +11.0 124.3

Shareholders´ equity 222.9 240.8 -17.9 252.1

Non-current interest-bearing liabilities 112.4 59.6 +52.8 43.5

Provisions 10.7 12.8 -2.1 12.0

Non-interest-bearing liabilities 175.4 166.9 +8.5 154.4

Current interest-bearing liabilities 74.7 78.0 -3.3 35.2

•Bonds issued in June increasing the cash and total balance sheet

• I t i d t i bl ti t i i l d t hi h

Balance sheet total 596.1 558.1 +38.0 497.2


• Inventories and accounts receivable continue to increase, mainly due to higher raw material prices


Cash flowCash flowMEUR 1-6/ 1-6/ Change 1-12/

2011 2010 Y/Y 20102011 2010 Y/Y 2010

Net cash from operations 32.6 28.2 +4.4 74.9

Change in NWC -55.0 -44.3 -10.7 -22.6

Net payment of income tax and interest -10.0 -2.9 -7.1 -3.1

Cash flow from operations -32.4 -19.0 -13.4 49.2

Cash flow from investments -15.0 -2.6 -12.4 -13.6

Cash flow before financing -47.4 -21.6 -25.8 35.6g

Dividends and buy backs -40.2 -36.5 -3.7 -36.5

Other financing +111.9 +51.7 +60.2 -0.5

Cash flow from financing 71 7 15 2 +56 5 -37 0

• G C E t 9 2M€ l l l th d i ti t 14 0M€

Cash flow from financing 71.7 15.2 +56.5 -37.0

Change in cash and cash equivalents 24.3 -6.4 +30.7 -1.3

• Gross CapEx at 9.2M€, clearly less than depreciation at 14.0M€

• 2011 cash flow from investments include acquisition of subsidiary shares (6.4M€)• 2010 cash flow from investments include proceeds from sales of fixed assets (2.8M€)


• Other financing includes bonds totalling 100M€ issued in June 2011

Outlook for the f tfutureJyri LuomakoskiPresident and CEOPresident and CEOUponor Corporation

European building permits

• Residential building permits have improved slightly from the same time last year while non residential permits are essentially flatyear, while non-residential permits are essentially flat.

160 Building permits index

120

140

g p(Euro Area 17, seasonally adjusted)

80

100

60

80

40

Jan-0

6

Mar

-06

May

-06

Jul-

06

Sep

-06

Nov

-06

Jan-0

7

Mar

-07

May

-07

Jul-

07

Sep

-07

Nov

-07

Jan-0

8

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-0

9

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

Jan-1

1

Mar

-11

Residential Non-residential

Source: Eurostat


European construction output

• Residential construction output is down slightly from the same time last year while the civil engineering segment has returned to the same levelyear, while the civil engineering segment has returned to the same level.

115

Construction production index (Euro Area 17, seasonally adjusted)

100

105

110

90

95

100

75

80

85

70

Jan-0

6

Mar

-06

May

-06

Jul-

06

Sep

-06

Nov

-06

Jan-0

7

Mar

-07

May

-07

Jul-

07

Sep

-07

Nov

-07

Jan-0

8

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-0

9

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

Jan-1

1

Mar

-11

May

-11

Buildings Civil engineeringSource: Eurostat


Construction sentiment in select European countries• Construction confidence in Northern and Central Europe remains high,

although sentiment in Sweden has fallen from earlier in the yearalthough sentiment in Sweden has fallen from earlier in the year.

40 Construction confidence indicator

10

20

30Construction confidence indicator

(seasonally adjusted)

-20

-10

0

60

-50

-40

-30

-70

-60

Jan-0

8Fe

b-0

8M

ar-0

8Apr-

08

May

-08

Jun-0

8Ju

l-08

Aug-0

8Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-0

9Fe

b-0

9M

ar-0

9Apr-

09

May

-09

Jun-0

9Ju

l-09

Aug-0

9Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-1

0Fe

b-1

0M

ar-1

0Apr-

10

May

-10

Jun-1

0Ju

l-10

Aug-1

0Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-1

1Fe

b-1

1M

ar-1

1Apr-

11

May

-11

Jun-1

1

M M A S N D M M A S N D M M A S N D M M

Germany Spain Finland Sweden Source: Eurostat


USA

• Housing starts in June were at a seasonally adjusted annual rate of 629,000, up 17% from June 2010up 17% from June 2010.

• Housing completions in June were at a seasonally adjusted annual rate of 535,000, down 39% from June 2010.

2 500 U S h i t t d l ti

2 000

2 500 U.S. housing starts and completions(Seasonally adjusted, annual rate)

1 000

1 500

tho

usa

nd

s

500

t

0

Jan-0

6

Mar

-06

May

-06

Jul-

06

Sep

-06

Nov

-06

Jan-0

7

Mar

-07

May

-07

Jul-

07

Sep

-07

Nov

-07

Jan-0

8

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-0

9

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

Jan-1

1

Mar

-11

May

-11

Source: U.S. Census BureauStarts Completions


Sustainability as a business driver

U.S. Department of Energy’s National Renewable Energy Laboratory in Colorado gy y- The super-energy-efficient office structure represents the largest net-zero energy building in the U.S. - Uponor radiant heating and cooling

Hässleholm, Sweden- A combination of sheltered housing and private apartments catering for the needs of the elderly Active collaboration by catering for the needs of the elderly. Active collaboration by the parties helped find a solution for individual living and shared services. - Uponor sprinkler and tap water systems

Proconsi headquarters, SpainThe target of the customer was energy efficiency and to - The target of the customer was energy efficiency and to

incorporate the most advanced solutions in indoor climate and energy production, while giving a high added-value to the building. Another point was to find a balance between initial and operational costs in the next years


and operational costs in the next years.- The building features Uponor radiant heating and cooling.

Topical sustainability events

• Sustainability is becoming a key driver in the building i d t U b i I d Cli t i industry. Uponor business groups, Indoor Climate in particular, are benefiting from this trend globally

d h CO bl d l h• Uponor signed the ENCORD sustainable development charter in June as part of a pan-European move of leading companies to commit to developing their businesses and

ti f th f toperations for the future― ENCORD - the European Network of Construction Companies

for Research and Development is a forum for industry-led research development and innovation in the construction research, development and innovation in the construction sector

• Uponor reported Carbon Disclosure Project data in Investor CDP 2011 for the second timeCDP 2011 for the second time

• A cross-functional team set up in 2010 to move forward in sustainability thinking, planning and implementation

Global longer term sustainability targets are being prepared


― Global longer term sustainability targets are being prepared

Management issues for 2011

• Short-term:― Review the focus to make sure that the efforts to generate profitable

growth match with current realistic opportunities― Critically review the company’s organisational and cost structures to

adjust to realistic market demand outlookadjust to realistic market demand outlook― Manage the prices to secure that the selling prices compensate for the

increases in input costs

• Longer-term strategic focus:― Continue to support the trend towards a more sustainable building and

construction industry by means of innovations and own/joint initiativesconstruction industry by means of innovations and own/joint initiatives― Actively continue the promotion and marketing of recent product

innovations to add value to professional partners


Guidance for 2011 unchanged

• Significant regional variations in market demand and sentiment• Y th t h l d (N di ) d ti i t d t • Year-over-year growth rates have slowed (Nordics) and are anticipated to

slow (Germany)• The international financial crisis may expand and affect Uponor’s business

environment and the preconditions of business environment and the preconditions of business.

Based on the present situation in the main market areas, the company maintains its full year guidance maintains its full-year guidance.

Uponor repeats the guidance issued on 10 Feb. 2011:• Organic growth in net sales is expected to accelerate from the 2010 level• Organic growth in net sales is expected to accelerate from the 2010 level• Operating profit is expected to improve on last year's

reported operating profit• The Group’s fixed asset investments are not expected to exceed • The Group s fixed-asset investments are not expected to exceed

depreciation, and efficient net working capital management measures will help to retain a good cash flow level for the Group


The text may contain forward-looking statements, which are based on the present business scope and the management’s present expectationsand beliefs about the future. The actual result may differ materially from such statements.

Appendix 1: Germany

Residential building permits in Germany

200 000

220 000

18 000

20 000YTD May 2011: 79,827YTD May 2010: 60,080Change: +32%

180 00016 000

on

th t

ota

l

am

ou

nt

140 000

160 000

12 000

14 000

roll

ing

12

-mo

mo

nth

ly a

120 00010 000

r

100 0008 000

Jan-0

7

Mar

-07

May

-07

Jul-

07

Sep

-07

Nov

-07

Jan-0

8

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-0

9

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

Jan-1

1

Mar

-11

May

-11

Dwellings (lhs) Rolling 12-month total (rhs)Source: Statistisches Bundesamt


Appendix 2: Finland

Residential building permits in Finland

36 000

38 000

40 000

5 000

6 000

YTD April 2011: 10,298YTD April 2010: 10,583Change: -3%

32 000

34 0004 000

on

th t

ota

l

am

ou

nt

26 000

28 000

30 000

2 000

3 000

roll

ing

12

-m

mo

nth

ly a

22 000

24 0001 000

r

20 0000

Jan-0

6

Mar

-06

May

-06

Jul-

06

Sep

-06

Nov

-06

Jan-0

7

Mar

-07

May

-07

Jul-

07

Sep

-07

Nov

-07

Jan-0

8

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-0

9

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

Jan-1

1

Mar

-11

Source: Statistics Finland

Month (lhs) Rolling 12-month total (rhs)


Appendix 3: Sweden

Housing starts in Sweden

40 000

45 000

50 000

7 000

8 000

9 000

Q1 2011: 7,300Q1 2010: 5,250Change: +39%

30 000

35 000

5 000

6 000

7 000

rter

to

tal

am

ou

nt

15 000

20 000

25 000

3 000

4 000

oll

ing

4-q

ua

qu

art

erl

y a

5 000

10 000

15 000

1 000

2 000

ro

00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010 2011

Quarter (lhs) Rolling 4-quarter total (rhs)Source: Statistics Sweden


Appendix 4: Spain

Residential building permits in Spain

800 000

900 000

1 000 000

120 000

140 000

YTD April 2011: 27,875YTD April 2010: 31,595Change: -12%

600 000

700 000

80 000

100 000

on

th t

ota

l

am

ou

nt

300 000

400 000

500 000

40 000

60 000

roll

ing

12

-mo

mo

nth

ly a

100 000

200 000

20 000

40 000 r

00

Jan-0

6

Mar

-06

May

-06

Jul-

06

Sep

-06

Nov

-06

Jan-0

7

Mar

-07

May

-07

Jul-

07

Sep

-07

Nov

-07

Jan-0

8

Mar

-08

May

-08

Jul-

08

Sep

-08

Nov

-08

Jan-0

9

Mar

-09

May

-09

Jul-

09

Sep

-09

Nov

-09

Jan-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

Nov

-10

Jan-1

1

Mar

-11

Month (lhs) Rolling 12-month total (rhs)Source: INE


Financial results briefing – Q2/2011...Financial results briefing – Q2/2011 Jyri Luomakoski...

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