2016 for the Harju Elekter Group was similar to the previous financial year. Thanks to new agreements and internal transformations, sales revenue increased by 9.2% in Q4, and operating profit multiplied, creating good prospects for a successful 2017.
In 2016, the Group’s consolidated revenue was 61.2 (2015: 60.7) million euros and operating profit 3.2 (2015: 3.3) million euros. The consolidated net profit of the year was 3.22 (2015: 3.18) million euros. Consolidated revenue for the reporting quarter was 16.4 (Q4 2015: 15.0) million euros, increasing during the reporting quarter by 9.2% or 1.4 million euros in relation to the comparable period. In the reporting quarter the sale of electric equipment had increased by 1.2 million euros up to 14.2, which was the main reason for the sales growth in the reporting quarter.
|
October-December |
Change |
January-December |
Change |
|||
| (thousand euros) |
2016 |
2015 |
% |
2016 |
2015 |
% |
| Sales revenue |
16,408 |
15,030 |
9.2 |
61,167 |
60,656 |
0.8 |
| Gross profit |
2,496 |
2,079 |
20.1 |
10,348 |
10,299 |
0.5 |
| EBITDA |
895 |
498 |
79.7 |
4,777 |
4,819 |
-0.9 |
| EBIT |
487 |
79 |
517.8 |
3,181 |
3,276 |
-2.9 |
| Profit for the period |
375 |
-16 |
2,443.7 |
3,224 |
3,186 |
1.2 |
| incl attributable to Owners of the Company |
369 |
-8 |
4,712.5 |
3,219 |
3,190 |
0.9 |
During the reporting quarter 91% (Q4 2015: 91%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 9% (Q4 2015: 9%) of the consolidated sales volume. The sale of electrical equipment provides a major part (94%-95%) of the sales volume of the Manufacturing segment.
The Group’s sales revenue earned outside Estonia accounted for 78.1% in 2016 (2015: 76.6%) and in the reporting quarter 75.4% (Q4 2015: 76.8%).
Sales on the Estonian market grew by 15.4%, i.e. 0.5 million euros, to 4.0 million euros in the reporting quarter, accounting for 24.6% of the consolidated sales revenues of the reporting quarter. In 2016, the Group sold 21.9% (2015: 23.4%) of its products and services to the Estonian market. Year on year, supply to the Estonian market decreased by 0.8 million euros or 5.8%. The downturn is the result of the continued decline in investments in Estonia’s energy distribution sector.
At the same time, deliveries in the direction of Finland have grown 5.5% or 2.1 million euros in the reporting year; in the reporting quarter, however, the sales volume remained mostly on the level of the comparable period. Most of the Group’s enterprises have managed to grow their sales volumes on the Finnish market, as a result of which the share of the Finnish market in the Group’s sales revenue grew to 67% (2015: 64.1%).
In 2016, the Group continued active work in the direction of Sweden, both, in terms of sales as well as product development. Sales revenue earned from the Swedish market increased by 24.2% in Q4 and 47.3% in a year.
Due to low oil prices and a change in ownership in the main customer of our Lithuanian company, deliveries towards Norway decreased by 1 million euros or 26.1% in 12 months. The order volumes recovered somewhat in Q4, having increased by 0.5 million euros in the reporting quarter to 1.1 million euros, contributing 6.8% of the Group’s sales revenue in the last quarter.
Operating expenses decreased 6.7% or 1 million euros in the reporting quarter and 1.1% or 0.6 million euros in the 12 months compared to the reference periods. The main reason for the upsurge in costs was the increase in the cost of sales. Cost of sales increased by 1 million euros, i.e. 7.4% compared to Q4 of 2015 and in a year-on-year comparison, 0.5 million euros, i.e. 0.9%, lagging in the reporting quarter behind the 9.2% growth rate for sales revenue in the same period. In a year-on-year comparison, the cost of sales increased in an equivalent pace with sales revenue: 0.8%.
The continued focus of the Group towards increasing exports has led to a rise in distribution costs, growing by 18% in the reporting quarter and 14% during the year in respect to the comparable periods. In terms of distribution costs, labour costs have increased the most, both due to structural changes in the companies as well as due to payment of additional remuneration. The majority of the increase of distribution costs was contributed by the Group’s Finnish companies. The rate of distribution costs accounted for 5% of the sales revenue (2015: 4.4%). Administrative expenses decreased by 6.8% in the reporting quarter and 4.6% in 12m in relation to the comparison periods, and the rate of administrative expenses to revenue accounted for 6.8%, having decreased by 0.3 percentage points.
As at the balance day on 31 December, there were 480 people working in the Group, (31.12.2015: 470). In 2016, an average of 455 employees worked in the Group, which is 17 people less than in the comparable period. In the reporting quarter, the average number of employees increased by 4, to 467. Until Q3 2016, the process of optimising production in the Group’s Estonian undertakings caused a decrease in the number of employees; however, after the conclusion of several large-scale sales contracts, the company has once again started to create new jobs. Recruitment of new employees on the labour market is complicated due to prevailing fierce competition and increasing salary pressure. To hire employees and retain the existing ones, a review of salary levels was commenced in Q4. Besides, the sound financial results of the Group’s companies in Finland in 2016 have resulted in the payment of additional remuneration and an increase in reserves, which also led to higher labour costs for the Group. In the reporting quarter, the employees were paid as salaries and fees 3,167 (Q4 2015: 2,439) thousand euros and during the year 10,597 (2015: 9,697) thousand euros. The average monthly salary for an employee of the Group was 1,940 (2016: 1,711) euros.
In the reporting quarter the gross profit of the Group was 2,496 (Q4 2014: 2,079) thousand euros. The gross profit margin was 15.2% (Q4 2015: 13.8%). In the 12-months period, the gross profit of the Group was 10,348 (2015: 10,299) thousand euros and the gross profit margin was 16.9% (Q4 2014: 17.0%). The Group’s gross profit margin was influenced by an increase in the global metal price in the last half-year.
The Group’s operating profit in the reporting quarter was 487 (Q4 2015: 79) thousand euros and EBITDA 895 (Q4 2015: 498) thousand euros. Return of sales for the accounting quarter was 3.0% (Q4 2015: 0.5%) and return of sales before depreciation 5.5% (Q4 2015: 3.3%). The Group’s operating profit in was 3,181 (2015: 3,276) thousand euros and EBITDA 4,777 (2015: 4,819) thousand euros. One of the reasons for the decline in operating profit was direct additional costs resulting from the merger of metal factories, totalling at 134,000 euros. In Q4, the merger of metal factories was completed, failures in production, caused by the moving and readjustment of machinery and equipment, have been eliminated and problems with adhering to delivery dates have been minimised. Return of sales was 5.2% (2015: 5.4%) and return of sales before depreciation was 7.8% (2015: 7.9%).
In the reporting quarter, the consolidated net profit was 375 (Q4 2015: -16) thousand euros, of which the share of the owners of the Company was 369 (Q4 2015: -8) thousand euros. EPS in the Q4 2016 was 0.02 euros and in Q4 2015 was 0.00 euros. The net margin was 2.3% (Q4 2015: -0.1%).
All in all, the consolidated net profit of the year 2016 was 3,224 (2015: 3,186) thousand euros. The share of the owners of the Company was 3,219 (2015: 3,190) thousand euros. EPS was 0.18 (2015: 0.18) euros.
In twelve months period, the Group has made a total of 4.6 (2015: 2.3) million euros worth of invest-ments to property, plant and equipment and investment properties, of which 3 million euros the Group invested to the production facilities at Allika Industrial Park.
Andres Allikmäe
Chairman of the Management Board / CEO
+372 674 7400
For more information:
Tiit Atso, CFO, +372 674 7400 or Interim report 1-12/2016
| AS HARJU ELEKTER | ||||
| CONSOLIDATED BALANCE SHEET, 31.12.2016 | ||||
| Unaudited | ||||
| EUR’000 | ||||
| ASSETS | 31.12.2016 | 31.12.2015 | ||
| Cash and cash equivalents | 3 278 | 5 711 | ||
| Trade receivables and other receivables | 8 480 | 6 678 | ||
| Prepayments | 771 | 278 | ||
| Prepaid income tax | 24 | 28 | ||
| Inventories | 9 712 | 7 148 | ||
| TOTAL CURRENT ASSETS | 22 265 | 19 843 | ||
| Deferred income tax asset | 37 | 57 | ||
| Other long-term financial investments | 21 990 | 20 188 | ||
| Investment property | 13 273 | 12 990 | ||
| Property, plant and equipment | 10 972 | 8 010 | ||
| Intangible assets | 5 431 | 5 491 | ||
| TOTAL NON-CURRENT ASSETS | 51 703 | 46 736 | ||
| TOTAL ASSETS | 73 968 | 66 579 | ||
| LIABILITIES AND OWNERS’ EQUITY | ||||
| Interest-bearing loans and borrowings | 804 | 296 | ||
| Trade payables and other payables | 9 140 | 6 043 | ||
| Payables to shareholders | 1 242 | 0 | ||
| Tax liabilities | 1 075 | 944 | ||
| Income tax liabilities | 133 | 146 | ||
| Short-term provision | 15 | 34 | ||
| TOTAL CURRENT LIABILITIES | 12 409 | 7 463 | ||
| NON-CURRENT LIABILITIES | 1 167 | 912 | ||
| TOTAL LIABILITIES | 13 576 | 8 375 | ||
| Share capital | 12 418 | 12 418 | ||
| Unregistered share capital | -1 242 | 0 | ||
| Share premium | 804 | 804 | ||
| Restricted reserves | 19 214 | 18 047 | ||
| Retained earnings | 29 113 | 26 817 | ||
| TOTAL OWNERS’ EQUITY | 60 307 | 58 086 | ||
| Non-controlling interests | 85 | 118 | ||
| TOTAL EQUITY | 60 392 | 58 204 | ||
| TOTAL LIABILITIES AND OWNERS’ EQUITY | 73 968 | 66 579 | ||
| CONSOLIDATED INCOME STATEMENT, 1-12/2016 | ||||
| Unaudited | ||||
| EUR’000 | Q4 2016 | Q4 2015 | 2016 | 2015 |
| Revenue | 16 408 | 15 030 | 61 167 | 60 656 |
| Cost of goods sold | -13 912 | -12 951 | -50 819 | -50 357 |
| Gross profit | 2 496 | 2 079 | 10 348 | 10 299 |
| Distribution costs | -818 | -696 | -3 034 | -2 657 |
| Administrative expenses | -1 165 | -1 249 | -4 138 | -4 337 |
| Other income | 10 | 4 | 93 | 70 |
| Other expenses | -36 | -59 | -88 | -99 |
| Operating profit | 487 | 79 | 3 181 | 3 276 |
| Finance income | 6 | 48 | 775 | 835 |
| Finance costs | -7 | -9 | -24 | -49 |
| Profit from normal operations | 486 | 118 | 3 932 | 4 062 |
| Corporate income tax | -111 | -134 | -708 | -876 |
| Profit for the period, attributable to | 375 | -16 | 3 224 | 3 186 |
| owners of the Company | 369 | -8 | 3 219 | 3 190 |
| non-controlling interests | 6 | -8 | 5 | -4 |
| Basic earnings per share (EUR) | 0,02 | 0,00 | 0,18 | 0,18 |
| Diluted earnings per share (EUR) | 0,02 | 0,00 | 0,18 | 0,18 |
Tiit Atso
CFO
+372 674 7400
