Comments from Alexis Fries, President and CEO, Full year 2014 Financial Statement release, 4 February 2015

“In 2014, Pöyry’s comparable net sales excluding the divested business in Finland was EUR 552.4 (601.8) million and reported net sales EUR 571.2 (650.8) million. The figure declined mainly due to developments in the Regional Operations. However, it remained stable in Northern Europe. It contracted in all other regions, especially in Latin America, which was impacted by economic slowdown and delayed project awards. In addition, the figure decreased in Central Europe mostly due to project revenue adjustments.

Consolidated operating profit decreased to EUR -23.1 (13.9) million. The figure includes a write-off of the receivables from Venezuela amounting to EUR -14 million and a gain of EUR +19 million from the divestment in Finland. Both items were recognised in June 2014. The comparable figure includes a gain of EUR +14 million from the divestment of the office real estate in Vantaa in December 2013.

Operating profit was burdened by lower net sales, as well as several one-time items totalling EUR -23 (-15) million. Most one-time items were recorded in the Regional Operations and were related to project losses originating from the former Urban Business Group, as well as restructuring expenses. Operating profit was positive and increased in the Management Consulting Business Group. The figure was also positive in the Energy Business Group, the Industry Business Group and in Northern Europe, but negative in all other Regional Operations Business Lines.
 
The Group’s order prospects were solid. However, the number of identified larger project opportunities was stagnating. The comparable order intake remained stable. The figure decreased year-on-year in the Energy Business Group, but increased from the previous quarter and the fourth quarter last year. It increased in the Management Consulting Business Group both from the previous quarter and comparable quarter last year, in the Industry Business Group on both a yearly and a quarterly basis and was stable in the Regional Operations. Several mid-sized projects were secured during the year. The comparable order stock at year-end improved slightly from EUR 461.9 million to EUR 472.5 million. The figure increased in the Industry Business Group and remained stable in other Business Lines. The reported order stock at the end of 2013 was EUR 499.7 million.

The Group’s unallocated costs increased in line with expectations due to the progressing centralisation of the global support functions, related outsourcing costs, restructuring of the Group Executive Committee in August, as well as office rent following the sale of the head office building in Finland in 2013.

During the last two years, the majority of our internal and external challenges have been identified and addressed. We have streamlined the company structure, strengthened project management and administrative processes, outsourced parts of IT and finance functions, adjusted our capacity and divested real-estate related businesses in Finland. In addition, we have contained the loss-making projects originating from the former Urban Business Group.  Their execution continues to comply with contractual schedules and, accordingly, will require some time to complete.

There are currently challenges in the global economy and consequently, in several Pöyry’s key markets. However, the healthy foundation that we have created enables us to focus on improving our sales efforts: processes, resources, structure and activity rate. We have established an organisation dedicated to driving global sales and project management processes with a strong focus on improving performance.

As our sales pick up and the projects from the former Urban Business Group are being addressed, we expect the result to improve accordingly. Investing in the future takes time and I firmly believe we are on the right track.”

 

Comments from Alexis Fries, President and CEO, Interim Report 1 January - 30 September 2014, 29 October 2014

“Pöyry’s net sales declined during the reporting period to EUR 434.8 (490.2) million. Sales weakened mostly in the Regional Operations. It decreased particularly in Finland due to the divestment in June, in Brazil amidst the economic slowdown and in Central Europe mostly caused by project revenue adjustments. Net sales increased slightly in the Management Consulting Business Group.

Operating profit declined to EUR -10.9 (5.6) million. Operating profit was burdened by lower than expected net sales as well as one-time items of EUR -10 (-7) million recorded mostly in the Regional Operations, consisting mainly of project losses  originating from the former Urban Business Group, as well as the EUR -14 million write-off of the receivables from Venezuela recognised in June. Operating profit includes a one-time gain of EUR 19 million from the divestment in Finland in June. Operating profit increased in the Management Consulting Business Group, however it declined in all other Business Lines.

The Group’s order prospects were solid. However, the number of identified larger project opportunities was stagnating. The Group’s overall order intake decreased due to lower volumes in the Energy Business Group and Regional Operations Latin America, where exceptionally large orders were recorded in 2013. Nevertheless, several mid-sized projects were secured and the other Business Lines maintained a stable order intake. The Group’s comparable order stock, excluding the divestment in Finland, increased from EUR 461.9 million at the end of 2013 to EUR 475.3 million on 30 September 2014. At the end of September 2013, comparable order stock was EUR 515.6 million and reported order stock was EUR 557.4 million. Reported order stock declined in all Business Lines except for the Industry Business Group where it remained stable.

The Group’s unallocated costs increased in line with expectations due to the progressing centralisation of the global support functions, related outsourcing costs, restructuring of the Group Executive Committee in August as well as office rents following the sale of the head office building in Finland in 2013.

After a difficult start in a weakening market at the beginning of this year, the recovery of Regional Operations Northern Europe progressed satisfactorily. In other regions, however, sales were lower and losses were recorded in projects originating from the former Urban Business Group. Operations in Latin America were impacted by litigation costs related to an arbitration process and a delayed start-up of a major client project.

We continue to progress with Pöyry’s organisational evolution, introduced in February 2013. It is based on Management Consulting, Global Business Lines focusing on Energy and Industry as well as development of strong Regional Operations around key countries where we offer engineering services to industry and infrastructure clients locally through our office network. The related adjustments have proceeded according to plan, from re-shaping administrative processes and outsourcing elements of the support functions to streamlining the organisation and business.

Accordingly, Pöyry established a Global Sales and Project Management function and streamlined the Regional Operations as well as the Industry and Energy Business Groups with a view to improving efficiency, as announced in August. The Group Executive Committee structure was adjusted accordingly.

Improvements in terms of sales focus, project management and capacity management are being implemented across all units and are closely monitored as part of our regular management process.”

 

Comments from Alexis Fries, President and CEO, Interim Report 1 January - 30 June 2014, 31 July 2014

“Pöyry’s net sales declined in the first half of the year to EUR 303.5 (336.5) million. Sales weakened mostly in the Regional Operations which were impacted by clients’ lower investment activity and project delays in Europe and Latin America. Operating profit declined to EUR -4.7 (5.0) million. The figure includes EUR -5.4 million of project losses and other one-time items as well as profit of EUR 19 million originating from the divestment in Finland. Operating profit was additionally impacted by the write-off of overdue receivables related to projects from the former Urban Business Group in Venezuela, amounting to EUR 14 million. Pöyry continues to pursue the collection process. Operating profit improved in the Management Consulting Business Group. While Northern Europe developed satisfactorily, the overall performance of the Regional Operations was disappointing and had a negative impact on the figure. 

The Group’s order prospects were solid, however the progression of larger project opportunities was taking clearly longer. The Group’s overall order intake decreased in the Energy Business Group, Central Europe and Latin America. Nevertheless, orders increased in all other Business Lines. The Group’s order stock improved in most Business Lines, amounting to EUR 482.4 million and improving from EUR 461.4 million at the end of 2013. However, the year-on-year figure decreased from EUR 555.7 million (or EUR 512.5 million excluding the divestment in Finland). The decrease affected all Business Lines with the exception of the Industry Business Group.

The Group’s unallocated costs increased in line with expectations due to advancing centralisation of the global support functions, a process where considerable cost savings have been achieved.

As communicated earlier, Pöyry strengthened its regional focus in January 2014 by integrating its local activities in Latin and North America, as well as in Asia Pacific, into the Regional Operations. This is in line with Pöyry’s strategy to grow its services in key domestic markets. 

After a difficult start in a weakening market at the beginning of this year, the Regional Operations in Northern Europe recovered well and showed positive development. In other regions, however, where lower sales resulted in unsold engineering hours and losses were recorded in projects originating from the former Urban Business Group, performance was not satisfactory. Latin America was impacted by litigation costs related to an arbitration process and a delayed start-up of a major client project.

Improvements in terms of sales focus, project management and capacity management have been initiated across all units and are closely monitored as part of our regular management process. 

We continue to progress with Pöyry’s organisational evolution, introduced in February 2013. It is based on Management Consulting, Global Business Lines focusing on Energy and Industry as well as development of strong Regional Operations around key countries where we offer engineering services to industry and infrastructure clients locally through our office network. The related organisational adjustments have proceeded according to plan. 

The divestment in Finland was closed on 2 June 2014, allowing us now to sharpen our focus on the industry and local infrastructure markets in Northern Europe.”

 

Comments from Alexis Fries, President and CEO, Interim Report 1 January - 31 March 2014, 29 April 2014

"Pöyry's net sales and operating profit declined during the first quarter. Net sales amounted to EUR 151.3 million (166.3) and operating profit was EUR -1.8 million (3.1). The Group's order intake developed as expected and was affected by the currently weak economic environment in Northern Europe in particular. However, year-to-date order stock increased, as a large order was recorded under the Regional Operations in Latin America. The order prospects pipeline is solid albeit client decisions may take longer than expected.

Pöyry further strengthened its regional focus in January 2014 by integrating its local activities in Latin and North America as well as in Asia Pacific to the Regional Operations. This enables Pöyry to grow its services in key domestic markets as well as to develop its global competences in energy, industry and management consulting.

After the end of the reporting period Pöyry announced on 22 April 2014 that it is divesting significant parts of its real estate design and consulting business, and its construction management business for the real estate and infrastructure sectors in Finland. This transaction is in line with our continued efforts to strengthen and develop our consulting and engineering expertise within our traditional areas of expertise.

Pöyry continues to implement its structural and administrative process improvement program announced at the end of 2012. As these measures are progressing, Pöyry is introducing further improvements in terms of sales focus, project management and capacity management."

 

Comments from Alexis Fries, President and CEO, Full year 2013 financial statement release, 5 February 2014

"The operating profit improved. Project losses originating from detailed reviews and adjustments to several projects from the former Urban Business Group were compensated by the positive contribution gained from the divestment of office real estate in Vantaa during the fourth quarter.

The net sales declined, amid uncertain economic environments in Pöyry's industrial and energy sectors and in Northern Europe as a whole. In spite of promising order prospects, client investments have generally taken longer to materialise. Thus, net sales declined relative to comparable levels in 2012 in the Industry Business Group and the Energy Business Group. However, as announced earlier, order prospects remain attractive and important orders were recorded in both business groups, indicating that Pöyry has successfully defended its market position in its relevant areas of competence.

Enhanced organisational focus on key domestic markets have sustained a steady inflow of small and medium sized orders, albeit increasing competitive pressures were noticed during the last quarter in particular. These have negatively impacted sales performance in Northern Europe. In view of these developments, in December 2013 Pöyry concluded statutory employee negotiations in Finland.

New project investments progressed at a slower pace and hence the Group's order stock declined and totalled EUR 500.0 million at the end of the year.

Net sales amounted to EUR 650.8 million (775.0). Operating profit was EUR 13.9 million (-18.8), which is 2.1 per cent of net sales (-2.4). In 2012 the operating profit excluding restructuring expenses was EUR 6.2 million. The Group's operating profit was burdened in 2013 by project losses of approximately EUR 15 million mainly originated from detailed reviews and adjustments to several projects from the former Urban Business Group. As a consequence organisational measures were implemented, leading to an enhanced control over project management processes across the whole Group.

Pöyry progressed according to plan with its structural and administrative process improvement programme as announced at the end of 2012. The programme aims at achieving annualised cost savings of EUR 40-50 million by the end of 2014. In this context Pöyry introduced centrally managed global support functions and outsourced certain IT and financial processes in several of Pöyry's main locations.

Through its enhanced regional focus Pöyry is establishing a solid foundation in key domestic markets. In parallel, it is accessing growth potentials in conjunction with its global competences and special opportunities with selected large projects.

Although current revenue development has fallen short of expectations, the order prospects pipeline continues to be solid and healthy. We remain committed to our strategic evolution. The Group's operating profit in 2014 is expected to increase."

 

© 2015 Pöyry PLC