WULFF GROUP PLC’S INTERIM REPORT FOR JANUARY 1 – September 30, 2014: Net sales decreased but operating loss decreased due to cost saving measures

STOCK EXCHANGE RELEASE                            November 6, 2014 at 9:00 A.M.

WULFF GROUP PLC’S INTERIM REPORT FOR JANUARY 1 – September 30, 2014: Net sales decreased but operating loss decreased due to cost saving measures

This is a summary of Wulff Group Plc’s interim report for January-September 2014.

Wulff Group is adopting a new disclosure procedure in accordance with Regulations and Guidelines 7/2013 (Disclosure obligation on issuers) of the Financial Supervisory Authority and is publishing the interim report for January-September 2014 as an attachment to this stock exchange release. Wulff Group’s interim report for January-September 2014 is a PDF file attachment to this stock exchange release and is available on the company’s website at the address http://www.wulff.fi/en/wulff+group+plc/home/.

KEY POINTS JANUARY – SEPTEMBER 2014

  • In January-September 2014, net sales totalled EUR 53.8 million (EUR 61.0 million) and EUR 16.5 million (EUR 17.5 million) in the third quarter. Net sales decreased by 11.8 percentages in January-September and 5.6 percentages in the third quarter.
  • In January-September, EBITDA was EUR 0.03 million (EUR -0.33 million) being 0.1 percentages (-0.5 %) of net sales. In the third quarter, EBITDA was EUR -0.09 million (EUR -0.25 million) being -0.6 percentages (-1.4 %) of net sales.
  • In January-September, the operating result (EBIT) amounted to EUR -0.72 (EUR -1.79 million). In the third quarter, the operating result (EBIT) was EUR -0.36 million (EUR -1.14 million).
  • Earnings per share (EPS) was EUR -0.11 (EUR -0.27) in January-September and EUR -0.05 (EUR -0.16) in the third quarter.
  • After the third interim period, Wulff Group Plc’s Board of Directors agreed to a property deal that will generate 1.3 million in profit.
  • The Group’s outlook for the 2014 operating result remains unchanged.

WULFF GROUP’S CEO HEIKKI VIENOLA

Wulff Group’s CEO Heikki Vienola:

“We believe that the market situation will remain difficult and that is why cost saving measures are constantly being implemented in the Group. The most important thing, even in financially difficult times, is to invest in the quality of customer service and sales development. I am happy that during the interim period we have succeeded in acquiring significant new customerships. It is a sign that we have made good decisions and that we are doing the right things with our customers. I feel as proud as the founder of Wulff, Thomas Wulff, did over 120-years ago about every new customer and existing customer relations. Few Finnish companies can say that they have survived two world wars, a great depression, and numerous recessions. Wulff can. Our customers not only choose us because of our excellent products and customer service, but because they know that we will continuously work together with our clients to improve our cooperation and operation.” 

GROUP’S NET SALES AND RESULT PERFORMANCE

In January-September 2014 net sales totalled EUR 53.8 million (EUR 61.0 million) and EUR 16.5 million (17.5 million) in the third quarter. In January-September EBITDA was EUR 0.03 million (EUR -0.33 million) being 0.1 percentages (-0.5 %) of net sales. In the third quarter, EBITDA was EUR -0.09 million (EUR -0.25 million) being -0.6 percentages (-1.4 %) of net sales. In January-September operating profit (EBIT) amounted to EUR -0.72 (EUR -1.79 million). In the third quarter the operating profit (EBIT) was EUR -0.36 million (EUR -1.14 million).

In January-September 2014 employee benefit expenses amounted to EUR 11.7 million (EUR 13.0 million) and EUR 3.3 million (EUR 3.6 million) in the third quarter. Other operating expenses amounted to EUR 7.0 million (EUR 8.1 million) in January-September and EUR 2.2 million (EUR 2.4 million) in the third quarter. Employee benefit and other operating expenses were affected by the cost-saving program performed in the end of 2013. The cost-saving program is expected to achieve annual savings of 2.0 million. To improve its profitability, The Wulff Group continues to examine its cost structure as a part of ongoing reforms.

In January-September the financial income and expenses totalled (net) EUR -0.32 million (EUR -0.36 million) including interest expenses of EUR 0.18 million (EUR 0.15 million) and mainly currency-related other financial items (net) EUR -0.13 million (EUR -0.22 million). In the third quarter the financial income and expenses totalled (net) EUR -0.77 million (EUR -0.07 million).

In January-September the result before taxes was EUR -1.04 million (EUR -2.15 million) and EUR -0.41 million (EUR -1.21 million) in the third quarter. In January-September the net profit after taxes was EUR -0.93 million (EUR -1.80 million) and EUR -0.41 million (EUR -1.09 million) in the third quarter. Earnings per share (EPS) was EUR -0.11 (EUR -0.27) in January-September and EUR -0.05 (EUR -0.16) in the third quarter.

KEY FIGURES

  III III I-III I-III I-IV
EUR 1000 2014 2013 2014 2013 2013
Net sales 16 502 17 474 53 792 60 958 83 543
Change in net sales, % -5,6 % -11,6 % -11,8 % -6,4 % -7,4 %
EBITDA -92 -246 29 -325 3
EBITDA margin, % -0,6 % -1,4 % 0,1 % -0,5 % 0,0 %
Operating profit/loss -335 -1 141 -722 -1 790 -2 721
Operating profit/loss margin, % -2,0 % -6,5 % -1,3 % -2,9 % -3,3 %
Profit/Loss before taxes -412 -1 212 -1 039 -2 153 -3 395
Profit/Loss before taxes margin, % -2,5 % -6,9 % -1,9 % -3,5 % -4,1 %
Net profit/loss for the period attributable to equity holders of the parent company -312 -1 030 -724 -1 761 -3 874
Net profit/loss for the period, % -1,9 % -5,9 % -1,3 % -2,9 % -4,6 %
Earnings per share, EUR (diluted = non-diluted) -0,05 -0,16 -0,11 -0,27 -0,59
Return on equity (ROE), % -3,3 % -7,0 % -7,5 % -11,0 % -25,6 %
Return on investment (ROI), % -1,6 % -4,6 % -4,1 % -7,9 -13,9 %
Equity-to-assets ratio at the end of period, % 36,5 % 40,2 % 36,5 % 40,2 % 38,3 %
Debt-to-equity ratio at the end of period 77,1 % 60,4 % 77,1 % 60,4 % 45,4 %
Equity per share at the end of period, EUR * 1,75 2,14 1,75 2,14 1,80
Net cash flow from operating activities -485 -1 216 -2 668 -2 833 567
Investments in non-current assets 74 160 320 695 778
Investments in non-current assets, % of net sales 0,5 % 0,9 % 0,6 % 1,1 % 0,9 %
Treasury shares held by the Group at the end of period 79 000 79 000 79 000 79 000 79 000
Treasury shares, % of total share capital and votes 1,2 % 1,2 % 1,2 % 1,2 % 1,2 %
Number of total issued shares at the end of period 6 607 628 6 607 628 6 607 628 6 607 628 6 607 628
Personnel on average during the period 289 313 289 319 311
Personnel at the end of period 283 311 283 311 295

  * Equity attributable to the equity holders of the parent company / Number of shares excluding the acquired own shares

RISKS AND UNCERTAINTIES IN THE NEAR FUTURE

The demand for office supplies is still affected by the organizations’ personnel lay-offs and cost-saving initiatives made during the economic downturn. The ongoing economic uncertainties impact especially the demand for business and promotional gifts. During the uncertain economic periods, the corporations may also minimize attending fairs. As the ongoing economic uncertainty continues, the cost saving measures will have an effect on the ordering behaviour of corporate customers. The share of slow moving inventory has increased during financial period. Failure in realising slow moving inventory may lead to write downs. In addition, weak development may lead to goodwill impairment and write down of deferred tax asset. 

Half of the Group’s net sales come from other than euro-currency countries. Fluctuation of the currencies affect the Group’s net result, however the effect of the fluctuation is expected to be moderate.

EVENTS AFTER THE REPORTING PERIOD

The Wulff Group Plc’s Board of Directors agreed to sell its industrial property located in Manttaalitie, Vantaa to Reserve Capital Finland Oy, a related party of Wulff Group Plc. The Board of Directors of Wulff Group Plc agreed to the sale in a meeting held on November 5th 2014. The property and possessory rights will transfer to the buyer at the conclusion of the sale. No overriding or deferrable clauses are included in the deal.

The value of the industrial property is 228 thousand euros in the Group’s balance sheet. The sale will add up to 1.3 million in sales profit that will be recorded in other operating income and it will increase EBITDA.

The terms concerning related party transactions correspond to the stipulations that are adhered to in independent party transactions.

MARKET SITUATION AND FUTURE OUTLOOK

Wulff is the most significant Nordic player in its industry. Wulff’s mission is to help its corporate customers to succeed in their own business by providing them with leading-edge products and services in a way best suitable to them. The markets have been consolidating in the past few years and the Nordic markets are expected to consolidate in the future as well. Wulff is prepared to carry out new strategic acquisitions, and as a listed company Wulff intends to be an active player.

Despite the challenging situation operating result is believed to improve in 2014 due to cost savings and the property deal. Typically in the industry, the annual profit and cash flow are made in the last quarter of the year.

The group continues to improve the efficiency of its operations along with the continuous renewal in order to increase the Group’s profitability and to reach its long-term financial targets. The cost-saving program performed in the end of 2013 had an expected impact to the first half year period, and it is expected to gain annual savings of EUR 2.0 million mainly in 2014.

The Group focuses strongly on sales activities, the development of its sales operations and new solutions offered to customers. Examples of new products and services, which have already received good customer feedback, are LED lights and lighting solutions as well as acoustic panels improving work environment, personnel well-being and ecological objectives.

In Vantaa on November 5, 2014

WULFF GROUP PLC

BOARD OF DIRECTORS

Further information:

CEO Heikki Vienola

tel. +358 9 5259 0050 or mobile: +358 50 65 110

e-mail: heikki.vienola@wulff.fi 

DISTRIBUTION

NASDAQ OMX Helsinki Oy

Key media

www.wulff-group.com