Glaston has released its financial statement for the year ended 31 December 2016, with Full-year net sales totalling EUR 107.1 million.
Outlook for 2017
A higher order book than the previous year, positive market development and the cost-saving measures undertaken create good conditions for the development of operations in 2017. For the first quarter, a relatively small number of deliveries are scheduled, as a result of which the comparable operating result for the period is expected to be lower than the corresponding period a year earlier.
Glaston expects the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)
President & CEI Arto Metsänen commented on the results. “In the fourth quarter, the glass processing machine market picked up and, advancing cautiously, the year ended strongly. The best development was seen in the EMEA region, where new machine orders grew by 53% compared with the previous quarter.
Due to a large number of machine deliveries, October–December net sales grew by 8% from the previous year and totalled EUR 35.1 million. The comparable operating profit improved to EUR 2.7 (0.6) million, i.e. 7.8% of net sales. Earnings development was particularly influenced by increased net sales and cost-saving measures.
Full-year net sales totalled EUR 107.1 million and the comparable operating result was EUR 2.8 (6.1) million. Lower net sales than the previous year and cost overruns associated with customer projects reduced earnings. Cost-saving measures implemented during the year had a positive effect on earnings.
In spring we renewed our strategy. Our core expertise is flat tempering technology. In addition to our core business, we also see growth in other safety glass categories, such as bending, tempering-bending and laminating.
We are also actively seeking new business opportunities in emerging glass technologies. In January 2017, we established the Glaston Emerging Technologies unit, which offers consulting and planning services for smart glass and energy glass windows production as well as solar energy applications. The intention is also for the unit to act as a supplier of the said production lines in future. The nanotechnology project in which we have been participating since late 2015 is proceeding on schedule. Progress of the project as planned would bring to Glaston equipment orders in the next few years.
We start 2017 on a better footing than a year ago. A stronger order backlog, positive market development and the savings measures undertaken create a good foundation for profitable growth.”
OPERATING ENVIRONMENT
As we entered 2016, broad uncertainty was evident in the glass processing market. A significant change for the better was seen only in the last quarter of the year, when a pick-up was perceptible, particularly in the EMEA area. In the North American market, customers’ decision-making slowed in the latter part of the year in both the USA and Mexico. The market situation remained reasonably good, however. In South America, the market continued to be quiet. In the Asian market area, development varied from country to country. The market in China is still on a downward trend, but in many other countries development has been positive.
MACHINES
October–December
In the final quarter of the year, a clear pick-up took place in the Machines business market environment. The most positive development was in the EMEA area, where the number of new orders grew by 53% compared with the previous quarter. In North America, demand for customers’ products is good, but customers’ decision-making remains slow. In South America, the Brazilian market continued to be quiet, while in Chile, Peru and Colombia, the first signs of positive development were perceptible. In Asia, the market environment varied significantly from area to area. In Australia and New Zealand, good development continued. The Chinese market remained challenging, but emerging demand for more technologically advanced machines is evident.
In the final quarter of the year, Glaston strengthened its market position due to its new FC™ and RC™ flat tempering lines. The FC™ product series, launched at the Glasstec Fair in September, quickly achieved a solid market position. In the latter part of the year, the first deals for the new products were sealed.
January–December
North America and the EMEA area remained the largest markets for Glaston’s Machines business. A change took place in the North American market in the second half of the year, when customers’ decision-making times lengthened. Competition intensified as Chinese operators strengthened their presence in the market. The South American market continued to be quiet, but outside Brazil a slight pick-up was seen towards the end of the year. In the EMEA area, particularly in Eastern Europe and in Italy, the market developed positively. In some countries, customers’ investments were boosted by tax breaks on investments.
In the Asian market, Glaston’s success varied from area to area. Due to its competitive product offering and increased presence, Glaston achieved a leading position in the Australian and New Zealand tempering machine markets following a number of quieter years. Overall, the Southeast Asia machine market was quiet, with the exception of Vietnam. In China, customers’ activity increased in the second part of the year.
SERVICES
October–December
After a subdued start to the year, the Services business market picked up in the final quarter. After a weak third quarter, the EMEA area returned to a satisfactory level. In Asia and South America, customers’ activity increased towards the end of the year. The North American market remained challenging.
Right at the end of the year, a substantial improvement took place in the market for modernisation products, and of the whole year’s upgrade and modernisation orders, some 35% were received during the final quarter. Glaston agreed, among others, significant lamination machine modernisation deals for Malaysia, Norway and the United Kingdom as well as flat tempering line upgrades for the United Arab Emirates, Sweden and the USA. In automotive products, deals were closed for Turkey and Poland. In the final quarter, two significant spare parts agreements were also signed for Europe. In these, Glaston will act as the sole spare parts supplier for the customer’s heat treatment machines. Sales of heat treatment machine spare parts remained at a high level, particularly in North America. Sales of tools turned to growth.
January–December
In 2016 broad uncertainty was evident in the Services business market, with demand remaining subdued with the exception of the final quarter. The strongest areas for business continued to be North America and the EMEA area. The South American market remained quiet, although indications of a recovery were perceptible in automotive business. In the Asia market area, there was positive development in Australia, New Zealand and Southeast Asia. The service market in China remained quiet.
There were fewer large modernisation and upgrade projects than the previous year. In Australia and New Zealand, active new machine business slowed sales of upgrade products. Excluding the final quarter, demand for modernisation products remained subdued in the EMEA area. In North America, the machine investments of earlier years impacted sales of upgrade products, and modernisation of the machine stock will become due only after a few years.
Service and spare parts sales for heat treatment machines remained at a high level. In terms of numbers, there were more deals than the previous year, but the average size of single orders fell slightly. The strongest sales areas continued to be North America and the EMEA area.
In the tools product group, competition remained aggressive. Despite the difficult market situation, sales of tools began to grow tentatively towards the end of the year. New types of tools were introduced into the product group during the year and the distribution network was expanded.
OUTLOOK
The development of the glass processing market was positive at the end of 2016. There are currently no signs of a weakening of the market, and positive development is expected to continue. Despite good demand, customers are often taking longer to make their investment decisions due to the uncertain global economy and political developments.
A higher order book than the previous year, positive market development and the cost-saving measures undertaken create good conditions for the development of operations in 2017. For the first quarter, a relatively small number of deliveries are scheduled, as a result of which the comparable operating result for the period is expected to be lower than the corresponding period a year earlier.
Glaston expects the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)
BOARD OF DIRECTORS’ PROPOSAL ON THE DISTRIBUTION OF PROFITS
The distributable funds of Glaston Corporation are EUR 16,241,163, of which EUR -5,664,105 represents the net loss for the financial year.
The comparable earnings per share for 2016 were EUR 0.01. According to the dividend policy, the objective is to distribute annually a dividend or return of capital amounting to 30–50% of the company’s comparable earnings per share. As the company is investing strongly in the development of new technology and as comparable earnings per share are only EUR 0.01, the Board of Directors proposes that no dividend or return of capital be distributed for 2016.
The stock exchange release is available on the company’s website at the address www.glaston.net.