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2017-02-07

Caverion: Caverion Corporation's Financial Statement Release for January 1 - December 31, 2016

Caverion Corporation Financial Statement Release February 7, 2017 at
9.00 a.m. EET

Caverion Corporation's Financial Statement Release for January 1 -
December 31, 2016

A year of restructuring

October 1 - December 31, 2016

· Revenue: EUR 606.0 (667.8) million.
· EBITDA excluding restructuring costs: EUR -10.5 million, or -1.7
percent of revenue.

· EBITDA: EUR -22.2 (34.0) million, or -3.7 (5.1) percent of
revenue.

· Free cash flow: EUR 28.0 (73.6) million.
· Earnings per share, undiluted: EUR -0.17 (0.17) per share.
January 1 - December 31, 2016

· Order backlog: EUR 1,408.1 (1,461.4) million.
· Revenue: EUR 2,364.1 (2,443.0) million.
· EBITDA excluding restructuring costs: EUR 15.6 million, or 0.7
percent of revenue.

· EBITDA: EUR -11.4 (91.5) million, or -0.5 (3.7) percent of
revenue.

· Working capital: EUR -2.6 (-15.4) million.
· Free cash flow: EUR -72.1 (53.9) million.
· Earnings per share, undiluted: EUR -0.25 (0.37) per share.
Unless otherwise noted, the figures in brackets refer to the
corresponding period in the previous year.

KEY FIGURES

+-----------------------+---------+---------+------+--------+--------+------+
|EUR million |10-12/16 |10-12/15 |Change|1-12/16 |1-12/15 |Change|
+-----------------------+---------+---------+------+--------+--------+------+
|Order backlog | | | | 1,408.1| 1,461.4| -3.6%|
+-----------------------+---------+---------+------+--------+--------+------+
|Revenue | 606.0 | 667.8 | -9.2%| 2,364.1| 2,443.0| -3.2%|
+-----------------------+---------+---------+------+--------+--------+------+
|EBITDA excluding | -10.5| - | | 15.6| - | |
|restructuring costs | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|EBITDA margin excluding| -1.7| - | | 0.7| - | |
|restructuring costs, % | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|EBITDA | -22.2| 34.0| | -11.4| 91.5| |
+-----------------------+---------+---------+------+--------+--------+------+
|EBITDA margin, % | -3.7| 5.1| | -0.5| 3.7| |
+-----------------------+---------+---------+------+--------+--------+------+
|Operating profit | -29.2| 26.9| | -40.8| 65.0| |
+-----------------------+---------+---------+------+--------+--------+------+
|Operating profit | -4.8| 4.0| | -1.7| 2.7| |
|margin, % | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|Net profit for the | -21.7| 20.9| | -31.7| 46.6| |
|period | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|Earnings per share, | -0.17| 0.17| | -0.25| 0.37| |
|undiluted, EUR | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
| | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|Working capital | | | | -2.6| -15.4|-83.4%|
+-----------------------+---------+---------+------+--------+--------+------+
|Free cash flow | 28.0| 73.6 |-62.0%| -72.1| 53.9| |
+-----------------------+---------+---------+------+--------+--------+------+
| | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|Interest-bearing net | | | | 145.5| 29.8| |
|debt | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|Gearing, % | | | | 78.7| 11.7| |
+-----------------------+---------+---------+------+--------+--------+------+
| | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+
|Personnel, end of | | | | 16,913 | 17,399| -2.8%|
|period | | | | | | |
+-----------------------+---------+---------+------+--------+--------+------+

DIVIDEND PROPOSAL

The Board of Directors proposes to the Annual General Meeting that no
dividend be paid for 2016.

Word from the President and CEO Ari Lehtoranta

"For Caverion, year 2016 was a very special and unfortunately a
disappointing one. We found out during the year that our performance
was clearly lower than estimated and further studies brought up
issues which were dramatic and fundamental. This led to the change of
the CEO, CFO and several other key members of the Group and
divisional leadership teams especially in divisions having larger
problems i.e. Sweden, Germany and Denmark-Norway.

The year was overall a year of restructuring. The total amount of jobs
impacted by the restructuring actions in 2016 was 1,060. These
actions were unfortunate but necessary to improve our utilisation
rate going forward. The total restructuring costs amounted to about
EUR 27 million in 2016. We estimate that the restructuring actions
improved our performance in 2016 by about EUR 18 million. The
estimated total savings impact of the restructuring actions is
approximately EUR 40 million in 2017, the additional savings for 2017
vs. 2016 being thus approximately EUR 22 million. In addition, we
also cut back on discretionary fixed costs, related for example to
development projects, consultancy and travelling.

Caverion completed some 3,000 projects in its Projects business in
2016. We have now reviewed all completed and ongoing projects where
we have work in progress, overdue receivables or disputes with
customers. As a result of the reviews, we made the necessary cost
estimate adjustments, write-downs and provision increases in our
project portfolio, totalling EUR 59 million for 2016. We have had too
optimistic revenue estimates for add-on sales in projects, too
optimistic cost and receivable forecasts and different kinds of
project execution challenges. We lost several percentage points in
our project margin in 2016 not only in Large Projects, but also in
Technical Installation in smaller projects. Our project performance
has been poor in Sweden, Germany and Industrial Solutions. Earlier in
the year, we also faced problems in division Denmark-Norway.

We believe that our risk level is lower going forward, despite certain
risks in some of our ongoing projects especially in divisions
mentioned above. We estimate our remaining identified performance
risks in projects to amount to approximately EUR 20 million for 2017.
We have implemented several actions that will help us improve our
project business performance to the right level. For example, we have
reorganised our project business and centralised all Large Project
activities to dedicated, professional project management teams, we
have increased our tender margin requirements and set up proper
tender go/no go analyses and steering processes for Large Projects.
We also continue to strengthen the steering of our project business
and to improve our mandatory project manager trainings.

The completion of the restructuring, implementation of a stricter
project tendering process and focus on higher project margins
affected our order backlog also in the fourth quarter. This creates
us a potential further risk of up to EUR 10 million related to our
utilisation rate during 2017. In addition, we estimate that there are
risks related to old overdue trade receivables of up to EUR 10
million in 2017.

Our Technical Maintenance and Managed Services business areas, which
represent our Services business, continued to perform well in 2016.
We clearly see now that our division Denmark-Norway is making a
turnaround. Finland and Austria performed well throughout 2016. Clear
improvements were also seen in our cash flow and working capital
towards the year-end.

We have started the creation of a stronger Caverion for the future.
With the completed and ongoing actions, together with the
organisational and management changes announced earlier, we are
laying a better foundation going forward. Year 2017 will be a year of
stabilisation and a way forward for us - not yet reflecting the
company's full profit potential. Our focus is to further implement
all our corrective actions and to improve our performance management
in our divisions and business units. We have also started to prepare
our strategy towards 2020. The market environment remains favourable.
Caverion's service portfolio and industry knowledge are great assets
to create a winning company."

OUTLOOK FOR 2017

Market outlook for Caverion's services and solutions

The megatrends in the industry, such as the increase of technology in
buildings, energy efficiency requirements, increasing digitalisation
and automation as well as urbanisation continue to promote demand for
Caverion's services and solutions over the coming years.

Projects

The Technical Installation and Large Projects markets are expected to
remain on a good and stable level, however price competition is
expected to remain tight in Technical Installation projects. In the
Large Projects market, new tenders for buildings and industry are
expected to remain on a good level and even to somewhat increase. Low
interest rates and availability of financing are expected to support
investments. The demand for Design & Build of Total Technical
Solutions is expected to develop favourably in large and technically
demanding projects. Good demand from both the public and private
sector is expected to continue. Requirements for increased energy
efficiency, better indoor conditions and tightening environmental
legislation will be significant factors supporting the positive
market development.

Services

The underlying demand for Technical Maintenance and Managed Services
is expected to remain strong. As technology in buildings increases,
the need for new services and the demand for Life Cycle Solutions are
expected to increase. Clients' tendency towards focusing on their
core operations continues to open opportunities for Caverion in terms
of outsourced operations and maintenance especially for public
authorities, industries and utilities.

Guidance for 2017

C...

Författare WKR

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