OREANDA-NEWS. August 07, 2009. The management assessed the economic results of Harju Elekter Group in the second quarter and first half-year to be good and regardless of reduction in sales volume the commercial activity of the Group was making profit. EBIT of the second quarter was 5.7% that was only 0.3 per cent points lower than the same from previous year and EBITDA was even by 0.6 per cent points better, thus 8.6%, reported the press-centre of Harju Elekter.

The consolidated sales revenue of the Group in the second quarter was 171.9 million kroons (11.0 million euros), which was 27.2% less than the result of the comparable quarter. The consolidated sales revenue of the H1 2009 was 353.7 million kroons (22.6 million euros), which was 20% less than the result of the comparable period.

The core business of the Group is the production and sales of electrical distribution systems and control panels as well as other supportive side-activities (hereinafter „Production“), which was traditionally the largest share of sales revenues - 90.1% (88.4%), real estate amounted to 5.4% (4.2%) and income from other commercial activities formed 4.5% (7.4%) of the consolidated sales revenue. When comparing the same periods from last year production capacity in the second quarter decreased by one fourth, but in six months by 18%, sales revenue from other commercial activities formed a half of the income of the comparable periods.

Last year 95% of the return on sales of the group came from internal markets. This year the situation has changed. In the accounting quarter, already 15% of the Group's products were sold in other markets where the amount of sales has increased 2.4 times to 25.3 million kroons (1.7 million euros). Deepest decline has taken place in Lithuania where the volume of sales in the accounting quarter reduced by a half and by 36% by six months.

At the same time positive notes can be found in the fact that sales volume of Lithuanian segment decreased by only 14% in the quarter and by more than a tenth in six months. Decline of the Lithuanian market has been compensated by other markets, such as Norway and Denmark. In six months Lithuanian companies sold outside of the domestic market 41% (19%) of the production and in the second quarter a total of 54% (20%). In addition to customary markets, the companies of Estonian segment have sold their products in the accounting period also in Russia and Portugal. In the first half-year the companies sold 32% (28%) of products in foreign markets and in the second quarter 35% (28%).

Expenditures on sold products decreased by 19.8% during the first six months of 2009, constituting 84.6% of turnover (H12008: 84.8%) and during the Q2 2009 28.4% up to 142.3 million kroons (9.1 million euros), which was 82.8% of turnover ((Q2 2008: 84.2%). Due to termination and redundancy payments general management expenses retained on the same level as last year, marketing costs decreased by one fourth in the second quarter and by 16% in six months.

In the second quarter, there was an average of 456 people working in the Group (Q2 2008: 502), included 298 (333) employees in Estonia, 75 (80) employees in Lithuania and 83 (89) employees in Finland. In H1 2009 the average number of employees was 459 (H1 2008: 486). As at the balance day on 30 June, there were 486 people working in the group, which are 29 employees less than in the beginning of the year and 73 employees less than a year ago.

All labour cost in Q2 2009 were 36.1 million kroons (2.3 million euros), which was 1/5 less than in the comparable period. Spending on wages and salaries decreased by more than 18% to 28.4 million kroons (1.8 million euros) in the Q2 2009. Employment costs decreased in the half-year by 10% to 76.5 million kroons (4.9 million euros), salaries, bonuses and termination payments of the six months amounted to 62.1 million kroons (4.0 million euros) that is 7.7% less than the costs of the compared period. There were reserves formed in 2008 for the bonuses for good work results of the last accounting year paid in the first quarter and for certain share of the termination and redundancy payments and these were reflected already in the employment costs of the previous accounting year.

Regardless of the world economic situation the economic results of the Group were normal and the Group was profitable. The business activity of the Group was making profit in the second quarter - operating profit was 9.8 million kroons (0.63 million euros), by decreasing 31.2% compared to the second quarter of last year, but EBIT (5.7%) was below last year's indicator only by 0.3 per cent points, EBITDA (8.6%) was even 0.6 per cent points better than the compared period.

The consolidated net profit of the period was 8.4 million kroons or 0.54 million euros (in Q2 2008: 18.6 million kroons or 1.19 million euros), of which the share of the owners of the parent company was 7.1 million kroons or 0.45 million euros (in Q2 2008: 17.4 million kroons or 1.11 million euros).  The consolidated net profit for the first six months was 16.2 million kroons or 1.03 million euros (25.6 million kroons or 1.64 million euros). EBITDA was 7.4% (7.9%) and EBIT was 4.6% (5.8%).

Net profit of the Group was 11.1 million kroons or 0.71 million euros (28.3 million kroons or 1.81 million euros) of which the share of the parent company's owners amounted to 9.7 million kroons or 0.62 million euros (27.2 million kroons or 1.74 million euros).

Net profit of the Group in the accounting quarter and half-year was influenced by the consolidated loss from related company and three times smaller dividend profit. This year the consolidated loss from related company is 8.1 million kroons (0.52 million euros), that in 2008 was profit of 3.5 million kroons (0.22 million euros). In 2009, PKC Group Oyj paid dividends 0.15 euros (2.35 kroons) per share, in 2008 they paid 0.45 euros (7.04. kroons) per share.

The cash flow from operations amounted to 38.1 million kroons, i.e. 2.4 million euros in the H1 of 2009 and 23.3 million kroons, i.e. 1.5 million euros in the comparable period.

In the first six months the Group invested 0.6 million kroons or 39,000 euros in real estate (H1 2008: 0.3 million kroons or 20,000 euros), 4.2 million kroons (268,000 euros) in tangible fixed assets and 12.4 million kroons (794,000 euros) in the compared period and 1.8 million kroons or 113,000 euros in intangible fixed assets (H1 2008: 76,000 kroons or 5,000 euros).

In the second quarter approximately 2,000 sq m of production space with the total cost of 9.7 million kroons (0.6 million euros) was put into operation in Estonia, 7.3 million kroons (0.5 million euros) of this formed unfinished construction works. The cash flow from investments was a positive 3.4 million kroons, i.e. 216,000 euros in the accounting period, the cash flow spent during the comparable period was 0.7 million kroons (44,000 euros).

During the first six months, the Group companies repaid a total of 11.2 million kroons (0.72 million euros) of the long-term loan and the short-term loan in the amount of 16.0 million kroons (1.02 million euros) along with the capital lease in the amount of 1.1 million kroons, i.e. 71,000 euros. In the second quarter dividends were paid to the owners of the parent company in the amount of 16.8 million kroons (1.07. million euros), in the compared period it was 33.6 million kroons (2.15 million euros) and to minority shareholders 555,000 kroons (35,000 euros), which in compared period was 400,000 kroons (27,000 euros). Totally, the cash flow from financial investments was a negative 45.7 million kroons (2.9 million euros) and 35.7 million kroons (2.3 million euros) in the comparable period.

Cash and cash equivalents increased by 4.2 million kroons (0.27 million euros) in the H1 2009 and decreased by 13.1 million kroons (0.84 million euros) during the comparable period.