The first half of the year was successful for the Harju Elekter Group. The large agreements and purchase orders concluded at the end of the year increased the sales revenues as well as the operating profit of the Group. Extraordinary revenue from the realisation of PKC Group Oyj shares resulted in a considerable increase in net profit and provided strong cash flow for prospective investments.
|
Change |
January – June |
Change |
April – June |
Year |
|||
| (thousand euros) |
% |
2017 |
2016 |
% |
2017 |
2016 |
2016 |
| Sales revenue |
47.2 |
42,622 |
28,965 |
45.9 |
25,102 |
17,208 |
61,167 |
| Gross profit |
24.0 |
6,476 |
5,222 |
20.7 |
3,805 |
3,153 |
10,348 |
| EBITDA |
16.3 |
2,894 |
2,486 |
8.1 |
1,844 |
1,706 |
4,777 |
| EBIT |
26.9 |
2,123 |
1,671 |
13.6 |
1,455 |
1,281 |
3,181 |
| Profit for the period |
1 233.5 |
26,389 |
1,979 |
-38.7 |
1,023 |
1,668 |
3,224 |
| incl attributed to Owners of the Company |
1 225.9 |
26,356 |
1,988 |
-40.9 |
982 |
1,664 |
3,219 |
Consolidated revenue for the reporting quarter was 25.1 (Q2 2016: 17.2) million euros, increasing 45.9% in relation to the comparable period. The Group’s revenue for six months was 42.6 (H1 2016: 29.0) million euros, increasing 47.2% in relation to the comparable period. The main reason for the high growth were the contracts concluded at the end of 2016.
During the reporting quarter 89% (Q2 2016: 93%) of revenue was earned from the Manufacturing segment, Real Estate and Unallocated activities contributed 11% (Q2 2016: 7%) of the consolidated sales volume. The sale of electrical equipment provides more than 96% of the sales volume of the Manufacturing segment. In the reporting quarter the sale of electrical equipment has increased by 6.5 million euros up to 21.6 million euros and in six months’ period by 12.0 up to 37.0 million euros.
The Group’s sales revenue earned outside Estonia accounted for 80.8% in Q2 2017 (Q2 2016: 80.9%) and 79.4% in H1 2017 (H1 2016: 78.0%).
Finland continues as the largest market of the Group. In the reporting quarter, 68.3% of the Group’s products and services (Q2 2016: 71.8%) were sold on the Finnish market, growing over the year by 4.8 million euros, i.e. 38.9%. Comparing the reporting half years, the increase was 45.8%, i.e. 9.1 million euros up to 28.8 million euros, accounting for 67.6% (H1 2016: 68.2%) of the consolidated sales revenue. The main reason for the growth were the contracts concluded with Finnish network companies at the end of 2016, whose orders already began in Q1 of 2017.
The Group has also increased the sales on the Norwegian market. The growth of sales to the Norwegian market in the reporting quarter was 1.5 million euros and in H1 1.8 million euros, compared to reference periods.
Growing the sales volume on the Swedish market is a continuous priority of the Group and AS Harju Elekter Elektrotehnika. The growth of sales to the Swedish market in the reporting quarter was 0.4 million euros and in H1 0.6 million euros, compared to the same periods last year.
Also sales on the Estonian market grew by 46.6%, i.e. 1.5 million euros, to 4.8 million euros in the reporting quarter, accounting for 19.2% of the consolidated sales revenue of the reporting quarter. In H1 2017, sales on the Estonian market grew by 37.9%, i.e. 2.4 million euros, up to 8.8 million euros, accounting for 20.6% of the consolidated sales revenue.
Operating expenses increased by 48.3% or 7.7 million euros in the second quarter and 48.2% or 13.2 million euros in a half-year compared to the reference period. The main part of operating expenses comprised the cost of sales, which grew faster than the sales revenue. The main reason was the global price appreciation of raw materials, but hiring an additional workforce as well. Increased export has also led to a rise in distribution costs, growing by 30.3% in the reporting quarter and 20.6% in the half-year in respect to the comparable period. Still, the rate of distribution costs dropped, accounting for 4.1% of the sales revenue of the reporting quarter (Q2 2016: 4.6%) and 4.3% in 6 months (H1 2016: 5.2%). Due to large orders and the development of new products in relation to this, new employees were hired, leading to an increase in the development costs and hence also in administrative expenses. Altogether, the rate of administrative expenses to revenue dropped and made 5.3% in the reporting quarter and 5.9% in the half-year, having decreased by 1.1 and 1.2 pp, respectively, compared to the reference periods.
In Q2 2017, an average of 542 employees worked in the Group, which was 88 people more than in the comparable period. In H1 2017, an average of 516 employees worked in the Group, which was 62 people more than in the reference period. At the end of the reporting period, there were 585 people working in the Group, which was 112 persons more than a year earlier. From the beginning of the year, the number of employees increased by 102 people. In the reporting quarter, the employees were paid as salaries and fees 3,308 (Q2 2016: 2,781) thousand euros, which was 19.0% higher than in the reference period. The H1 2017, the employees were paid 5,925 (H1 2016: 5,155) thousand euros, being 14.9% more than in the reference period. The growth of wages was due to hiring new employees related to the significant increase in production volumes. The average monthly salary for an employee of the Group was 1,914 (H1 2016: 1,894) euros, having increased by 1.1%.
In the reporting quarter the gross profit of the Group was 3,805 (Q2 2016: 3,153) thousand euros. The gross profit margin was 15.2% (Q2 2016: 18.3%). In H1 the gross profit of the Group was 6,476 (H1 2016: 5,222) thousand euros. The gross profit margin was 15.2% (H1 2016: 18.0%).
The Group’s operating profit in the reporting quarter was 1,455 (Q2 2016: 1,281) thousand euros and EBITDA 1,844 (Q2 2016: 1,706) thousand euros. Return of sales for the reporting quarter was 5.8% (Q2 2016: 7.4%) and return of sales before depreciation 7.3% (Q2 2016: 9.9%).
The operating profit of the Group in the first half year was 2,123 (H1 2016: 1,671) thousand euros and the EBITDA was 2,894 (H1 2016: 2,486) thousand euros. Return of sales for the reporting period was 5.0% (H1 2016: 5.8%) and return of sales before depreciation was 6.8% (H1 2016: 8.6%). Return of sales has decreased due to less rental income as PKC Group Oyj moved out from the Group’s rental premises in the beginning of 2017. Also, the non-recurrent expenses occurred in AS Harju Elekter Elektrotehnika, resulting from moving to new production facilities, has effect on return of sales.
In the reporting quarter, the consolidated net profit was 1,023 (Q2 2016: 1,668) thousand euros, of which the share of the owners of the Company was 982 (Q2 2016: 1,664) thousand euros. EPS in the Q2 2017 was 0.06 euros (Q2 2016: 0.09 euros). The decrease in net profit is related to PKC Group Oyj dividends of 766 thousand euros received in Q2 2016.
Overall, the consolidated net profit of the H1 2017 was 26,389 (H1 2016: 1,979) thousand euros. The share of the owners of the Company was 26,356 (H1 2016: 1,988) thousand euros. In H1, EPS was 1,49 (H1 2016: 0.11) euros. Large net profit was the result of Motherson Sumi Systems Limited acquiring the shares of PKC Group Oyj at the price of EUR 23.55 per share. AS Harju Elekter owned 1,094,641 shares of PKC Group Oyj. Financial income from the sale of shares was 24,839 thousand euros.
In three months’ period, the Group has made a total of 4.5 (H1 2016: 0.5) million euros worth of investments to property, plant and equipment and investment properties. Investment growth is related to the ongoing developments of Allika Industrial Park.
During the 6m period, Harju Elekter’s share in Nasdaq Tallinn increased by 46.6% from 2.83 euros up to 4.15 euros.
Andres Allikmäe
Chairman of the Management Board
+372 674 7400
For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-6/2017
| AS HARJU ELEKTER | ||||
| CONSOLIDATED BALANCE SHEET,30.06.2017 | ||||
| Unaudited | ||||
| EUR’000 | ||||
| ASSETS | 30.06.17 | 31.12.16 | ||
| Cash and cash equivalents | 17 598 | 3 278 | ||
| Trade receivables and other receivables | 16 113 | 8 480 | ||
| Prepayments | 1 372 | 771 | ||
| Prepaid income tax | 73 | 24 | ||
| Inventories | 14 771 | 9 712 | ||
| TOTAL CURRENT ASSETS | 49 927 | 22 265 | ||
| Deferred income tax asset | 37 | 37 | ||
| Other long-term financial investments | 4 684 | 21 990 | ||
| Investment property | 15 934 | 13 273 | ||
| Property, plant and equipment | 11 301 | 10 972 | ||
| Intangible assets | 6 119 | 5 431 | ||
| TOTAL NON-CURRENT ASSETS | 38 075 | 51 703 | ||
| TOTAL ASSETS | 88 002 | 73 968 | ||
| LIABILITIES AND OWNERS’ EQUITY | ||||
| Interest-bearing loans and borrowings | 178 | 804 | ||
| Advances from customers | 1 402 | 9 140 | ||
| Trade payables and other payables | 13 379 | 1 242 | ||
| Payables to shareholders | 0 | 1 075 | ||
| Tax liabilities | 2 567 | 133 | ||
| Income tax liabilities | 193 | 15 | ||
| Short-term provision | 81 | 12 409 | ||
| TOTAL CURRENT LIABILITIES | 17 800 | 1 167 | ||
| NON-CURRENT LIABILITIES | 3 014 | 13 576 | ||
| TOTAL LIABILITIES | 20 814 | 12 418 | ||
| Share capital | 11 176 | -1 242 | ||
| Share premium | 804 | 804 | ||
| Restricted reserves | 2 847 | 19 214 | ||
| Retained earnings | 52 272 | 29 113 | ||
| TOTAL OWNERS’ EQUITY | 67 099 | 60 307 | ||
| Non-controlling interests | 89 | 85 | ||
| TOTAL EQUITY | 67 188 | 60 392 | ||
| TOTAL LIABILITIES AND OWNERS’ EQUITY | 88 002 | 73 968 | ||
| CONSOLIDATED INCOME STATEMENT, 1-6/2017 | ||||
| Unaudited | ||||
| EUR’000 | Q2 2017 | Q2 2016 | 6m 2017 | 6m 2016 |
| Revenue | 25 102 | 17 208 | 42 622 | 28 965 |
| Cost of goods sold | -21 297 | -14 055 | -36 146 | -23 743 |
| Gross profit | 3 805 | 3 153 | 6 476 | 5 222 |
| Distribution costs | -1 028 | -789 | -1 824 | -1 512 |
| Administrative expenses | -1 322 | -1 104 | -2 504 | -2 051 |
| Other income | 28 | 42 | 30 | 52 |
| Other expenses | -28 | -21 | -55 | -40 |
| Operating profit | 1 455 | 1 281 | 2 123 | 1 671 |
| Finance income | 0 | 766 | 24 846 | 767 |
| Finance costs | -7 | -5 | -16 | -11 |
| Profit from normal operations | 1 448 | 2 042 | 26 953 | 2 427 |
| Corporate income tax | -425 | -374 | -564 | -448 |
| Profit for the period, attributable to | 1 023 | 1 668 | 26 389 | 1 979 |
| owners of the Company | 982 | 1 664 | 26 356 | 1 988 |
| non-controlling interests | 41 | 4 | 33 | -9 |
| Basic earnings per share (EUR) | 0,06 | 0,09 | 1,49 | 0,11 |
| Diluted earnings per share (EUR) | 0,06 | 0,09 | 1,49 | 0,11 |
Tiit Atso
CFO
+372 674 7400
