Report finds positive profitability developments continued and new machine sales picking up.
Glaston Corporation issued an interim report for January-September 2014, and the company expects that 2014 net sales and operating profit, excluding non-recurring items, will grow.
Key points from the report: orders received in January-September totalled 89.6 (90.0) million EUR; orders received in the third quarter were 34.1 (34.2) million EUR; the order book on 30 September 2014 was 43.1 (42.0) million EUR; consolidated net sales in January-September totalled 83.8 (86.4) million EUR; third-quarter net sales were 25.5 (26.3) million EUR; EBITDA was 5.1 (7.5) million EUR, i.e. 6.1 (8.6) percent of net sales; the operating result, excluding non-recurring items, in January-September was a profit of 2.4 (0.3) million EUR, i.e. 2.9 (0.3) percent of net sales; the third-quarter operating result, excluding non-recurring items, was a profit of 1.1 (0.4 loss) million EUR, i.e. 4.3 (-1.6) percent of net sales; the operating result in January-September was a profit of 1.8 (4.0) million EUR, i.e. 2.1 (4.7) percent of net sales; the third-quarter operating result was a profit of 1.1 (0.4 loss) EUR, i.e. 4.3 (-1.7) percent; continuing operations’ return on capital employed (ROCE) was 4.9 (10.5) percent; continuing operations’ January-September earnings per share were 0.00 (0.02) EUR; continuing and discontinued operations’ earnings per share totalled 0.00 (0.02) EUR; and Glaston’s interest-bearing net debt totalled 9.5 (11.4) million EUR.
President & CEO Arto Metsänen said, “The third quarter was good in terms of profitability and was another step in the right direction. Our systematic measures to improve profitability are therefore yielding results. After the first quarter of 2013, the operating result excluding non-recurring items has improved in every quarter compared with the corresponding period the previous year, except for the first quarter of 2014. The third-quarter operating profit of 1.1 million EUR was significantly better than the comparison period, and was 4.3 percent of net sales. The result does not yet correspond with our financial targets, but we are approaching that level.
“We still expect our net sales to grow compared with last year, even though the early part of the year was challenging. A recovery is perceptible in the market, however, and our order book is at a slightly higher level than last year.
“In the review period, we made an acquisition in line with our strategy by purchasing the industrial property rights of Glassrobots. This acquisition opens up for us a number of new opportunities. Firstly, we can take advantage of the company’s installed machine base by providing maintenance and spare parts services for it, and we have already received significant spare parts orders. In addition, the tempering technology of the acquired company is well respected in the particularly demanding customer segment. We continuously monitor the situation of operators in our industry, and other opportunities for specific acquisitions to support our strategy may arise.”
The new machines market continued to develop positively in the third quarter of 2014. In North America and Europe, machine business picked up significantly compared with the previous quarter. The stable development of the service market continued, with profitability remaining good.
In the Machines segment, the positive development that began in the second quarter strengthened in the third quarter. In North America, the market continued to be active, and in the EMEA area a pick-up was perceptible on a broad front. The USA’s share of new heat treatment machine orders was significant. Orders intake and profitability development were promoted by a weakening of the euro against the US dollar. The positive development of Central European countries continued, with demand strongly directed at heat treatment machines. In South America, the market continued to be challenging for both pre-processing and heat treatment machines. In Asia, the market development was more subdued than expected. Demand for pre-processing and heat treatment machines was unsatisfactory in both China and in the Pacific area.
In the service market, Glaston’s position remained strong in the third quarter despite a rather weak market situation. Inertia was evident in sales of heat treatment machine spare parts and upgrade products. In North America, development of sales of pre-processing machine spare parts was unsatisfactory, while sales of heat treatment machine spare parts continue to be strong. In the EMEA area, sales of heat treatment machine spare parts developed according to plan, with the exception of Turkey and Russia. In Asia, demand for spare parts continued to be weak in the third quarter. In North America, revived sales of new machines were strongly reflected in sales of upgrade products. In other areas, too, there was a perceptible slowing of demand for upgrade products. Sales of maintenance work advanced according to plan.
Glaston still expects the market overall to grow moderately in 2014. In North America and the EMEA area, the positive market development is expected to continue during the latter part of the year. In Asia, and particularly in China, overcapacity and slowing office construction is weakening demand for glass processing machines. In South America, we anticipate that the market will continue to be relatively subdued during the latter part of the year, with demand remaining at a low level.
The safety glass market, which is Glaston’s main field of business, is expected to grow by nearly 7 percent per year up to 2017. In addition, the company is seeking to grow particularly in tools and in services covering the entire lifecycle of products. Drivers of Glaston’s profitability development and growth include a pick-up of demand in the construction industry, growing demand for safety glass as well as energy-efficient and high quality glass solutions, and growth of solar energy production.
Glaston Corporation 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.