PRESIDENT AND CEO of PONSSE JUHO NUMMELA:
The second quarter was highly challenging for Ponsse due to the coronavirus pandemic. Challenges that started from problems in the availability of components escalated rapidly into a demand crisis as a result of increased uncertainties in the markets. After the market situation deteriorated, the value of orders received during the second quarter was EUR 110.6 (168.8) million, and our order book decreased to EUR 179 million.
As a result of our fast responses, we were, however, able to adapt effectively to the unexpected situation. At the beginning of the coronavirus pandemic, problems in the availability of components were associated with our European suppliers when their factories especially in Northern Italy and Germany were forced to close their doors. Our preparations enabled us to run our production uninterrupted in one shift. Later in June, we raised the factory capacity back to its normal level. Apart from our production and maintenance personnel, our employees started to work remotely from the middle of March onwards. Despite these changes, Ponsse employees maintained their excellent level of performance, and we continued to develop our company strongly in all our functions.
The uninterrupted factory operations allowed us to maintain our net sales at a satisfactory level in the difficult situation. Ponsse net sales during the second quarter were EUR 131.9 (172.7) million. The coronavirus pandemic had a broad impact on the operations of our customers, and the net sales of service businesses and used machine operations decreased alongside the sale of new machines. Our sales of used machines were low, especially at the beginning of the second quarter, and our stocks of used machines increased considerably during the period under review. Towards the end of the quarter, all our business areas started to clearly recover.
When business activities decreased, all our employees were subject to fixed-term layoffs and effective cost cuts during the quarter. These measures had a significant impact on our financial performance. Ponsse’s operating profit for the quarter was EUR 8.4 (17.5) million, with the operating profit rate being 6.4 (10.2) per cent. We cut our operating costs by roughly 20 per cent during the second quarter. Cumulative cash flow at the end of the second quarter was EUR -14.6 (2.7) million. There was no need to recognize through profit and loss any significant one-time items effecting operating result for the period under review and company has strong consolidated statement of financial position.
In this challenging operating environment, we will continue to normally invest in sales, maintenance and the availability of spare parts, and we will serve our customers to the best of our ability. We will focus on matters that are within our scope of influence. In particular, our investments in the development of our products continue to produce good results. Our factory in Vieremä is right on schedule and in excellent shape. Our satisfactory order book allows our factory to run in two shifts at a full capacity.
The uncertainties arising from the coronavirus pandemic have rapidly changed our operating environment and reduced demand for forest machines. Next autumn will be a challenge for us. It is important to increase our order book during the autumn to ensure normal operations, also next year.
Our priority is to protect the health of our employees, customers and other stakeholders in all conditions.
NET SALES
Consolidated net sales for the period under review amounted to EUR 276.4 (315.8) million, which is 12.5 per cent less than in the comparison period. International business operations accounted for 76.0 (79.7) per cent of net sales.
Net sales were regionally distributed as follows: Northern Europe 42.9 (37.7) per cent, Central and Southern Europe 22.8 (21.1) per cent, Russia and Asia 11.5 (16.3) per cent, North and South America 22.1 (24.5) per cent and other countries 0.7 (0.4) per cent.
PROFIT PERFORMANCE
The operating result amounted to EUR 21.8 (30.4) million. The operating result equalled 7.9 (9.6) per cent of net sales for the period under review.Consolidated return on capital employed (ROCE) stood at 4.8 (22.6) per cent.
Staff costs for the period totalled EUR 42.9 (48.0) million. Other operating expenses stood at EUR 24.0 (29.1) million. The net total of financial income and expenses amounted to EUR -14.8 (-0.3) million. Exchange rate gains and losses with a net effect of EUR -13.5 (0.6) million were recognised under financial items for the period. The parent company’s net receivables from other Group companies stood at EUR 111.1 (106.4) million. Receivables from subsidiaries mainly consisted of trade receivables, with unregistered tax receivables from unrealised exchange rate losses from unhedged items related to the valuation of trade receivables having an impact on the Group’s effective tax rate. Result for the period under review totalled EUR 2.9 (23.2) million. Diluted and undiluted earnings per share (EPS) came to EUR 0.11 (0.83).
PONSSE STATEMENT OF FINANCIAL POSITION AND FINANCING ACTIVITIES
At the end of the period under review, the total consolidated statements of financial position amounted to EUR 484.8 (403.0) million. Inventories stood at EUR 174.8 (157.1) million. Trade receivables totalled EUR 38.5 (53.0) million, while liquid assets stood at EUR 103.3 (24.2) million. Group shareholders’ equity stood at EUR 229.5 (202.2) million and parent company shareholders’ equity (FAS) at EUR 215.7 (187.8) million. The amount of interest-bearing liabilities was EUR 165.0 (77.6) million. The company has ensured its liquidity by withdrawal of current loan from credit facility limit and commercial paper programme. The company has used 41 per cent of its credit facility limit. Group’s loans from financial institutions are non-collaretal bank loans without financial covenants. Consolidated net liabilities totalled EUR 61.7 (53.3) million, and the debt-equity ratio (net gearing) was 26.9 (26.3) per cent. The equity ratio stood at 47.9 (51.3) per cent at the end of the period under review.
Cash flow from operating activities amounted to EUR -14.6 (2.7) million. Cash flow from investment activities came to EUR -7.2 (-11.5) million.
PONSSE ORDER INTAKE AND ORDER BOOKS
Order intake for the period totalled EUR 217.4 (391.6) million, while period-end order books were valued at EUR 179.3 (361.1) million.
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