OREANDA-NEWS. November 11, 2009. Management assessed the economic results of Harju Elekter Group in Q3 and the first nine months to be good. Due to a decline in demand, production and sales volumes, the Group has actively engaged in optimising and reducing both operating and fixed expenses, achieving equivalent savings and ensuring the profitability of the Group. The Q3 EBITDA was 9.1% (7.7%), and the first 9 months figure remained at the same level as the year before, reported the press-centre Harju Elekter.

The consolidated sales revenue of the Group in the third quarter was 120.6 million kroons (7.7 million euros), which was 46.9% less than the result of the comparable quarter. The consolidated sales revenue of the 9m 2009 was 474.3 million kroons (30.3 million euros), which was 28.9% 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, which was traditionally the largest share of sales revenues - approx. 90.1%. Real estate and income from other commercial activities together formed 10% of the consolidated sales revenue.

Of the Group's products and services, 35% (37%) were sold on the Estonian, 45% (44%) on the Finnish and 10% (12%) on the Lithuanian markets; to the other European markets (Latvia, Sweden, Denmark and Portugal) a total of 4% (6%) were sold. The drop in demand on domestic markets has forced a search for new markets. Outside the European Union - in Russia, Belarus and Norway - a total of 6% (1%) of products were sold. Sales by the Group outside the European Union increased by 20 million kroons (1.3 million euros), compensating for the drop in the volumes of sales into other EU countries.

The sales volume of the Estonian segment this year has declined by a quarter, primarily due to a decline in both the Estonian and Finnish markets. In H1, several large purchase orders came through for the Lithuanian segment. Q3 remained modest for them. The sales volume of the Lithuanian segment declined nearly 45% in Q3 and by a quarter over the period of 9 months. Recession reached Finland somewhat later than the Baltic States. 

While the Q1 sales volume in the Finnish segment remained at the level of Q1 2008, in Q2 a decline began in export orders in the metals and engineering industry, compounded in Q3 by a decrease in demand on the domestic market in Finland. Such kind of development affected significantly the business performance of Satmatic Oy during the accounting period.

As a result of the drop in demand, production and sales volumes, the Group has been engaging in saving on and optimising both operational and fixed expenses. The business expenses of the Group declined at the same rate as the sales revenue - by -46.3% in Q3 and -28% in the first 9 months. Compared to the sales revenue, the expenses of products and services sold dropped even more: by -48.9% in the first 9 months and by -29.7% in the accounting quarter. The marketing and general administration expenses for the accounting quarter is, on average, 23% less than the indicators for the comparable period. Due to the severance and redundancy compensations paid out, general administrative expenses in H1 remained at the level of the previous year; however, in Q3, operating expenses were saved on, as a result of which there arose savings on general administrative expenses for the accounting quarter. Marketing expenses in the first 9 months have declined nearly 19%.

As at the balance day on 30 September, there were 471 people working in the Group, whish is 50 people less than a year before. There were 44 people who, during the accounting period, left of their own accord, due to retirement or as a result of redundancy. In the third quarter, there was an average of 448 people working in the Group (Q3 2008: 523), included 293 (343) employees in Estonia, 77 (94) employees in Lithuania and 78 (86) employees in Finland.

During the first 9 months the average number of employees was 454 (501). All labour cost in Q3 2009 were 22.9 million kroons (1.5 million euros), which was 44.5% less than in the comparable period. Labour expenses in the first 9 months dropped by over 14% to 108.5 million kroons (6.9 million euros).

Business activity of the Group in Q3 was profitable.  Depreciation of fixed assets in Q3 was 4.9 million kroons or 0.31 million euros (during the comparable period, 4.6 million kroons or 0.3 million euros), EBITDA was 11.0 million kroons (0.7 million euros), which is 37.4% less than in the comparable period. EBITDA was 9.1%, which is 1.4 percentage points better than the figure for the comparable period. The operating profit was 6.0 million kroons (0.39 million euros), decreased more than 50% compared to the Q3 2008. The operating margin was 5.0% (5.7%). The operating profit for the first 9 months was 22.2 million kroons or 1.4 million euros (38.4 million kroons or 2.5 million euros during the comparable period), with the operating profit margin for the account period at 4.7% (5.8%). Depreciation of fixed assets amounted to 14.8 million kroons (0.95 million euros) and 14.0 million kroons (0.89 million euros) during the comparable period. EBITDA was 7.8% (7.9%).

The consolidated net profit of the Q3 2009 was 6.1 million kroons or 0.39 million euros (in Q3 2008: 11.2 million kroons or 0.71 million euros), of which the share of the owners of the parent company was 5.7 million kroons or 0.37 million euros (in Q3 2008: 10.3 million kroons or 0.66 million euros).

The net profit margin on the turnover was 5.1%, which is 0.2 percentage points better than the figure for the comparable period. EPS of the reporting period was 0.34 kroons or 0.02 euros (in Q3 2008: 0.61 kroons or 0.04 euros).

The consolidated net profit of the 9m 2009 was 17.2 million kroons or 1.1 million euros (in 9m 2008: 39.5 million kroons or 2.52 million euros), of which the share of the owners of the parent company was 15.4 million kroons or 1.0 million euros (in 9m 2008: 37.4 million kroons or 2.39 million euros).

The net profit margin on the turnover came out at 3.6% (5.9%).  EPS of the reporting period was 0.92 kroons or 0.06 euros (in 9m 2008: 2.23 kroons or 0.14 euros). Consolidated net profit in 2008 was impacted most by the consolidated loss of the affiliated company and dividend revenue that was three times lower.

In the first nine months the Group invested 0.6 million kroons or 39,000 euros in real estate (9m 2008: 0.6 million kroons or 37,000 euros), 12.9 million kroons (0.8 million euros) in tangible fixed assets and 20.0 million kroons (1.3 million euros) in the compared period and 3.3 million kroons or 210,000 euros in intangible fixed assets (9m 2008: 195,000 kroons or 12,000 euros).

During the first nine months the liability of the Group decreased by 55.9 million kroons (3.6 million euros) to 127.3 million kroons (8.1 million euros). During the nine months, the Group companies repaid a total of 13.8 million kroons (0.88 million euros) of the long-term loan and the short-term loan in the amount of 25.4 million kroons (1.62 million euros) along with the capital lease in the amount of 1.6 million kroons, i.e. 104,000 euros.

Interest-bearing debt obligations declined on the balance sheet by a total of 40.5 million kroons (2.59 million euros) to 17.8 million kroons (1.14 million euros).

The cash flow from operations amounted to 78.7 million kroons, i.e. 5.0 million euros (51.3 million kroons, i.e. 3.3 million euros in the comparable period). The cash flow from investments was a negative 5.2 million kroons, i.e. 330,000 euros (in the accounting period 7.9 million kroons i.e. 505,000 euros). In financing activity, 58.1 million kroons or 3.7 million euros in cash was disbursed (46.4 million kroons or 3.0 million euros during the comparable period). Cash and cash equivalents increased by 15.4 million kroons (1.0 million euros) in the first nine months and decreased by 3.0 million kroons (0.2 million euros) during the comparable period.