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The January–December 2018 revenue and operating result decreased compared to pevious year due to postponement of frame agreement negotiations in the Finnish public sector and tightened market situation. Cash flow from operating activities increased significantly compared to previous year.
October–December 2018 Revenue was EUR 27.8 million (29.6), representing a change of -5.9 % Operating result was EUR -0.2 million (0.1) Operating profit per revenue was -0.8 % (0,3 %) The result was EUR -0.1 million (-0.3) Earnings per share amounted to EUR -0.02 (-0.07)
January–December 2018 Revenue was EUR 103.1 million (109.5), representing a change of -5.9 % Operating result was EUR -2.1 million (0.3) Operating profit per revenue was -2.0 % (0.2 %) The result for the period declined and was EUR -2.4 million (-0.6) Earnings per share amounted to EUR -0.57 (-0.15)
Outlook for 2019
The Martela Group anticipates that its revenue and operating result in 2019 will improve slightly compared to the previous year. Traditionally Group's operating result accumulates during the second half of the year.
Matti Rantaniemi, CEO:
'The January–December 2018 revenue was EUR 103.1 million representing a decrease of 5.9% compared to previous year. Our revenue increased only in Norway and decreased in all other countries compared to previous year. Even though full year revenue in Finland decreased approximately EUR 1 million, revenue in the last quarter was almost at the same level when compared to last year. Full year revenue was impacted by postponement of frame agreement negotiations in the public sector. The impact was significant especially in the last quarter of the year. Excluding the public sector, we were able to grow in all other customer segments in Finland. Due to the postponement of frame agreement negotiations in the public sector also new orders in Finland decreased compared to last year.
Revenue in Sweden decreased compared to last year due to the change in the sales channel. The change in the sales channel is progressing according to plan and new orders increased in the last quarter compared to same period last year. The change in the sales channel in Norway has already progressed further, and this has impacted in higher revenue and new orders compared to last year. Revenue in Other countries decreased compared to last year. This is due to lack of larger projects in 2018.
Operating result decreased compared to last year and was EUR -2.1 million (0.3). This was mainly influenced by decreased sales volume and toughened competition which resulted to a lower sales margin. Actions done earlier this year to streamline internal processes and further centralize support functions to Finland will have postive impact to company's operating result starting from beginning of 2019. Delivery accuracy has remained on an excellent level and is considerably better than in year 2016 or 2017. Other expenses continued to decline compared to previous year.
Operating cash flow improved significantly and was EUR 7.4 million (-7.6). Improvement was strongly driven by enhanced invoicing process and improved turnover of receivables and on these we have returned to normal operating level.
Despite the challenges in market conditions have decreased our revenue and operating result in the short term, we strongly belive that basis for our strategy remains. Transformation in working and learning environments will continue, get stronger and expand. Working and learning environments will have to be able to adapt faster as needs and circumstances keep constantly changeing. This will require capabilites to follow and understand the use of space, and needs of the users and to be able to renew and optimize the space according to those needs. Martela has expanded the strategically important Pod family by introducing several new products into it. These are specifically planned to meet the requirements of constantly growing need of flexible spaces.
We believe that market conditions will remain challenging. In addition to this, postponement of frame agreement negotiations in the Finnish public sector will cause uncertainty in the first half of 2019. Positive development in other customer segments is supported by several new Nordic wide frame agreemewnts. In 2019 we will be focusing on increasing the sales volumes and to improve our profitability.'
There has not been any major changes in the private sector market conditions. However demand for finnish public sector will temporaly be affected negatively by postponement of frame agreement negotiations. The demand for Martela's products and services is fundamentally affected also by the general economic situation and by the extent to which companies and the public sector need to stregthen the utilisation of their spaces and make their workplaces more effective as management tools.
Revenue and operating result
Revenue and result for October–December 2018
Revenue for October–December declined 5.9 % from the previous year and was EUR 27.8 million (29.6). Revenue declined in Finland by 2.0 %, Sweden by 43,9 % and in Norway by 13.1 %, revenue increased in Other countries by 31.3 %.
The Group's fourth-quarter operating result was EUR -0.2 million (0.1). The October–December result before taxes was EUR -0.2 million (0.1). The October–December result was EUR -0.1 million (-0.3).
Revenue and result for January–December 2018
Revenue for January–December was EUR 103.1 million (109.5) and decreased 5.9 % from the previous year. Compared to the previous year, revenue incresed in Norway by 26,2 % and declined in other areas. In Finland revenue declined by 1.2 %, in Sweden by 40.0% and in Other countries by 27.9 %.
Operating result for January–December was EUR -2.1 million (0.3). Decreased revenue and tightened competion and it's effect in decreasing margins had a significant impact on the operating result. Operating result was positively impacted by the sale of a land area in Finland and negatively impacted by expenses related to the IT system, large recycling projects and personnel expenses related to changes in the Group Management Team. In total these extraordinary expenses did not have an impact to Group's operating result.
The January–December result before taxes was EUR -2.5 million (0.0). The January–December net result was EUR -2.4 million (-0.6).
EVENTS AFTER THE END OF THE FINANCIAL YEAR
Martela Group lowered its revenue and operating result guidance for 2018 with the stock exchange release on the 9th of January 2019.
No other significant events requiring reporting have taken place since the January–December period, and operations have continued according to plan.
The principal risk regarding profit performance relates to the general economic uncertainty and the consequent effects on the overall demand in Martela's operating environment. Due to the project-based nature of the sector, forecasting short-term developments is challenging. Also postponement of frame agreement negotiations in the Finnish public sector will cause uncertainty in the first half of 2019.
PROPOSAL OF THE BOARD OF DIRECTORS FOR DISTRIBUTION OF PROFIT
The Board of Directors will propose to the AGM that a dividend of EUR 0.10 per share be distributed for 2018.
ANNUAL GENERAL MEETING
Martela Corporation's AGM will be held on 14 March 2019 at 3 p.m. in Martela House, Helsinki. The notice of the Annual General Meeting will be published in a separate release.
A briefing for analysts, portfolio managers and the media will take place on February 5, 2019 from 11.30 a.m. to 12.30 p.m. EET at Martela House at Takkatie 1, Helsinki. The results will be presented by Matti Rantaniemi, CEO.
The Martela Annual Report will be published on the company's website during the week 9/2019.
Board of Directors
Matti Rantaniemi, CEO, tel. +358 50 465 8194
Kalle Lehtonen, CFO, tel. +358 400 539 968
Nasdaq OMX Helsinki
Key news media
Our strategic direction is defined by our mission 'Better working' and our vision 'People-centric workplaces'. Martela supplies user-centric workplaces where the users and their wellbeing are what matter most. We focus on the Nordic countries because, based on our common open work culture and needs, the Nordic countries are leaders in hybrid workplaces.
Attachment Financial Statements 2018