OREANDA-NEWS. May 11, 2010. Regardless of the present economic situation the financial results of the Group were reasonable and the Group was profitable. Long and snowy winter season had also some negative affect for the sales orders of energy distribution sector products, which probably made some influences to the results, reported the press-centre of Harju Elekter.

The consolidated sales revenue of the Group was 134.1 million kroons (8.6 million euros), which was 26.2% less than the result of the comparable quarter.  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, 87.8% (89.9%) of sales revenues. The sales revenue on production received from customers outside of the Group decreased by 28% to 117.7 million kroons (7.5 million euros).

Of the markets, the domestic markets (Estonia, Lithuania and Finland) of the Group's companies prevailed, where 78.3% (93.7%) of the Group's products and services were sold. 66% (69%) of Group products were sold outside of Estonia. The sales revenue of the Q1 decreased the most in Finland as the economic recession reached Finland slightly later than Baltic States. When the sales volume of the Finnish segment in the Q1 remained at the Q1 2008 level, in Q2, a decline in sales volume began due to a decrease in the volumes of metal and engineering industry exports, which even deepened further on the ending of last and beginning of this year due to a decline in domestic demand in the Finnish market. The decrease in sales revenue was lower on the Estonian market.

The sales to other states of the European Union have increased more than 19 million kroons (1.2 million euros). That includes sales to the market of Sweden which exceeded 21 million kroons (1.3 million euros). France and the Czech Republic have been added as new markets. The Group has also sold its products to Latvia, Portugal and Poland and outside of the European Union to the markets of Belarus, Ukraine, Russia and Norway.

The expenses regarding sold products and services decreased at the same pace as the sales revenue - 26.2% during the first three months of 2010, which accounted for 86.5% of turnover (Q1 2009: 86.4%). Distribution costs and administration expenses shrank by 1.4 million kroons (86,000 euros) which is more than 7% lower in respect to the compared period. The administration expenses have been affected the most by the increase in expenditures on the new software AX2009. The software was taken into use on 1 October 2009. In conclusion, business expenses have decreased by 24.2% compared to the same period of the previous year.

In the first quarter, there was an average of 432 people working in the Group (Q1 2009:461), included 280 (301) employees in Estonia, 71 (77) employees in Lithuania and 81 (83) employees in Finland. As at the balance day on 31 March, there were 452 people working in the Group, whish is 12 employees less than on the beginning of the year and 40 employees less than a year before. Expenses on staff in Q1 2010 were 35.9 million kroons (2.3 million euros) which is 11% less than during the compared period.

The Group has stock-based compensation plans which may be settled by way of own equity instruments upon recognition of which in consolidated financial reports IFRS 2 principles have been applied. The value of services (labour input) in the amount of 0.4 million kroons (26,000 euros) received for stock is recognised as labour costs in Q1 2010. At the same time, the wage costs were decreased by a fifth in the accounting quarter and the average wage per employee was decreased by 15% to 20,509 kroons (1,311 euros).

The gross profit of the Group was 18.2 million kroons or 1.2 million euros (Q1 2009: 24.8 million kroons or 1.6 million euros). Due to decrease in demand, production and sales volumes, the Group has reduced and optimized fixed and operational costs which caused the costs of sold products to decrease at the same pace as the sales revenue.

The gross profit margin of the accounting quarter remained practically at the same level as during the compared period - 13.6% (Q1 2009: 13.6%). Consolidated operating profit in Q1 2010 was 1.1 million kroons or 72 thousand euros (Q1 2009: 6.4 million kroons or 408 thousand euros). Operating profit margin for the period was 0.8% (3.5%). EBITDA was 6.6 million kroons or 0.4 million euros (Q1 2009: 11.3 million kroons or 0.7 million euros) and EBIT was 4.9% (6.2%).

The consolidated net profit of the firs quarter was 8.2 million kroons or 532 thousand euros (Q1 2009: 2.7 million kroons or 172 thousand euros), of which the share of the owners of the parent was 9.0 million kroons or 572 thousand euros. EPS of the reporting period was 0.53 kroons or 0.03 euros (Q1 2009: 0.16 kroons or 0.01 euros).

In Q1 2010 the Group invested 3.1 million kroons (0.2 million euros) in real estate, 31.5 million kroons (2.0 million euros) in tangible fixed assets and 227 thousand kroons (15 thousand euros) in intangible fixed assets, totally 34.9 million kroons (2.2 million euros). During the compared period 2.5 million kroons (160,000 euros) was invested, and only in tangible assets. At the end of 2009, the addition of a production building for the Finnish affiliated company was completed. Satmatic Oy rented the former administrative and production spaces from the Town of Ulvila.

The Group decided to buy the complex of buildings on the basis of financial lease. The contract value of the buildings was 1.9 million euros (29.8 million kroons). The leasing payments are paid on a monthly basis in equal shares as of January 2010. The contract expires in January 2020. The interest rate in respect to the addition is 1.6%, which shall be adjusted once a year. In respect to the older part of the building (300,000 euros or 4.7 million kroons) the annual interest remains fixed at 2%.

During Q1 short-term liabilities were decreased by 1.8 million kroons or 116,000 euros (Q1 2009: 24.1 million kroons or 1.54 million euros). Within the first three months, 2.6 million kroons or 163,000 euros (Q1 2009: 8.7 million kroons or 555,000 euros) worth of a long-term loan and 1.2 million kroons or 75,000 euros (Q1 2009: 0.5 million kroons or 34,000 euros) worth of principal amounts of the financial lease were repaid. In total, interest-bearing debt obligations in the statement of financial position increased by 24.3 million kroons (1.55 million euros).

In Q1 2010 cash and cash equivalents decreased by 8.6 million kroons (0.6 million euros) up to 27.1 million kroons (1.7 million euros) and increased by 4.8 million kroons (310,000 euros) during the comparable period.