OREANDA-NEWS. November 13, 2010. The economic results of AS Harju Elekter have exceeded expectations in Q3 2010. We hope for the continuation of positive trends. The consolidated sales revenue of the Group in the third quarter was 173.7 million kroons (11.1 million euros), which was 44% more than the result of the comparable period and the operating profit of Q3 2010 14.3 million kroons (920,000 euros), which was 2.4 times more compared to the Q3 2009, reported the press-centre of Harju Elekter.

The sales volume for the nine months dropped in comparison with the reference period by 7.6% to 438.2 million kroons (28.0 million euros).

The core business of the Group is the production and sales of electrical distribution systems and control panels, which was the largest share of sales revenues, almost 90%. The sales revenue on production received from customers outside of the Group increased by 51% to 156.0 million kroons (10.0 million euros) in third quarter and were 386.4 million kroons (24.7 million euros) in
9M 2010. This is 8.4% less than in comparable period.

Of the markets, the domestic markets (Estonia, Lithuania and Finland) of the Group's companies prevailed, where 84.6% (93.6%) of the Group's products and services were sold. 65% (65%) of Group products were sold outside of Estonia.

In the current year, a sale to other countries has grown up to 67.3 million kroons (4.3 million euros) in the 9 month period, growing by 22.9 million kroons (1.5 million euros) year-over-year. France, Czech Republic and Malaysia have been added as new markets and the Group has sold during the 9M 2010 its products to those markets totally in amount 26.7 million kroons (1.7 million euros). 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.

Sales to the Estonian market increased by 8% within the reporting quarter. At the same time, the sales revenue from the other geographic segments amounted to 13.2 million kroons (840,000 euros), which was almost twice as much as in the reference period.

The total operating income of the Estonian segment increased by 13.1% up to 90.2 million kroons (5.77 million euros) in the reporting quarter. The main growth resulted from sales to foreign markets, where 32% (Q3 2009: 28%) of the products were sold. The growth was mainly achieved owing to an increase in the sales of medium voltage distribution and outdoor substation units in Finland. The sales revenue of the Estonian segment within the 9 month period was 196.5 million kroons (12.6 million euros), decreasing by 9.4% compared to the reference period.

Signs of recovery may be noticed in the Finnish economy, mainly in export. The domestic investments of Finland during the accounting period were slight as well as Finnish metallurgical and engineering industry enterprises are still struggling. Vehicle heating panels for car parks have become a very good sales article for the Finnish company. In the reporting quarter the market share of the company increased and the sale of products also demonstrates a continuing growing trend.

In Q3, the sales volume of the Finnish segment increased by 2.8 times and the 9M 2009 level was outperformed by 0.9% within the 9 month period. While 99% of the sales revenue was received from the Finnish market in 2009, it has dropped to 75% in the current year. The domestic decrease is compensated by the increase in export to Sweden. As a new market was added Malaysia.

In the reporting quarter, the sales volume of the Lithuanian segment accounted for 87% and the sales volume within the 9 month period comprised 77% of the results in 9M 2009. In Q3, sales to the Lithuanian market dropped by one-third compared to the reference period; at the same time, sales to foreign markets increased by 88%, accounting for 43% of the sales revenue in Q3 (Q3 2009: 25%). At the same time, in 9 month period, the decline occurred mainly in foreign markets.

In 2009 the Lithuanian company had the large-scale agreements with Norwegian and Danish clients, what gave 27% from the sales volumes of the period, this year supplies to those markets have been modest. Finland, France and the Czech Republic were added as new markets. Almost 80% of the sales revenue for the 9M 2010 was obtained from Lithuanian customers; major part here is on several large-scale projects were carried out in local market in June.

In the third quarter, there was an average of 421 (448) people working in the Group, included 270 (293) employees in Estonia, 69 (77) employees in Lithuania and 82 (78) employees in Finland. In 9M 2010, the average number of employees was 425 (454). As at the balance day on 30 September, there were 440 people working in the Group, whish is 24 employees less than on the beginning of the year and 31 employees less than a year before.

During the third quarter, labour costs increased by more than 9% compared to the previous year, reaching 26.5 million kroons (1.69 million euros). During the nine months period, expenses on staff decreased by more than 7% reaching 101.0 million kroons (6.45 million euros); employees were paid 79.1 million kroons (5.05 million euros) in salaries, bonuses and compensation, which was 8.4% lower than during the comparable period. The average wage per employee was 20,650 kroons (1,320 euros) and 21,140 kroons (1,350 euros) in the compared period.

The gross profit of the Group was 30.3 million kroons (1.94 million euros) in Q3 2010 and 68.2 million kroons (4.36 million euros) in 9M 2010, increasing by 36.6% and decreasing 10.9% respectively compared to the same periods last year. The gross profit margin was 17.5% in Q3 and 15.6% in 9M 2010, which is 1 and 0.9 per cent points lower compared respectively to the same periods last year.

Operating profit of Q3 2010 was 14.3 million kroons (920,000 euros), which was 2.4 times more compared to the Q3 2009. Return of sales for the period was 8.3% (5.0%). In Q3 2010 EBITDA was 19.6 million kroons or 1.25 million euros, which is 8.7 million kroons (550,000 euros) more than in comparable quarter; return of sales before depreciation was 11.3% being 2.2 per cent points better. In 9M 2010 EBIT was 18.2 million kroons (1.17 million euros) and EBITDA was 34.4 million kroons (2.20 million euros); 22.2 million kroons (1.42 million euros) and 37.1 million kroons (2.41 million euros) respectively compared to the same periods last year. Return of sales of 9M 2010 was 4.2% (4.7%) and return of sales before depreciation 7.9% (7.8%).

The consolidated net profit of the Q3 2010 was 13.3 million kroons or 850,000 euros (Q3 2009: 6.1 million kroons or 390,000 euros), of which the share of the owners of the parent company was 13.2 million kroons or 840,000 euros.

EPS of the Q3 was 0.78 kroons or 0.05 euros (Q3 2009: 0.34 kroons or 0.02 euros). The consolidated net profit of the 9M 2010 was 31.5 million kroons (2.01 million euros), which is 83.6% more than in compared period. The share of the owners of the parent company was 31.3 million kroons (2.0 million euros), increasing twice comparing to the 9M 2009. EPS of the reporting period was 1.86 kroons or 0.12 euros (9M 2009: 0.92 kroons or 0.06 euros).

In 9M 2010 the Group invested in real estate, in tangible fixed assets and in intangible fixed assets, totally 37.9 million kroons or 2.42 million euros (9M 2009: 16.8 million kroons or 1.07 million euros).

During 9M 2010 short-term liabilities were increased by 5.8 million kroons (370,000 euros) up to 18.8 million kroons (1.20 million euros); in the comparable period short-term liabilities were decreased by 25.4 million kroons (1.62 million euros) up to 2.5 million kroons (0.16 million euros).

3.3 million kroons or 210,000 euros (9M 2009: 13.8 million kroons or 880,000 euros) worth of a long-term loan and 3.4 million kroons or 220,000 euros (9M 2009: 1.6 million kroons or 100,000 euros) worth of principal amounts of the financial lease were repaid during the reporting period.

As at September 30 2010 the current assets constituted 29% (34%) and the non-current assets 71% (66%); and the other side external finance 20% (22%) and equity 80% (78%) of the balance sheet total.