Consti Plc Interim Report for January – March 2021
CONSTI PLC INTERIM REPORT 30 APRIL 2021, at 8.30 a.m.
Consti Plc Interim Report for January – March 2021
NET SALES AT PAR WITH PREVIOUS YEAR, ORDER INTAKE INCREASED
1–3/2021 highlights (comparison figures in parenthesis 1–3/2020):
- Net sales EUR 59.3 (59.0) million; growth 0.4%
- EBITDA EUR 0.9 (1.3) million and EBITDA margin 1.5% (2.2%)
- Operating result (EBIT) EUR 0.1 (0.5) million and EBIT margin 0.2% (0.8%)
- Order backlog EUR 196.5 (202.2) million; change -2.8%
- Order intake EUR 69.8 (62.1) million; growth 12.4%
- Free cash flow EUR -2.9 (2.0) million
- Earnings per share EUR -0.02 (0.01)
Guidance on the Group outlook for 2021:
The Company estimates that its operating result for 2021 will be in the range of EUR 7-11 million. The range for 2021 profit guidance is wide due to the uncertainties related to the Covid-19 pandemic.
| KEY FIGURES (EUR 1,000) | 1-3/ 2021 | 1-3/ 2020 | Change % | 1-12/ 2020 |
| Net sales | 59,283 | 59,039 | 0,4 % | 274,646 |
| EBITDA | 878 | 1,281 | -31,4 % | 11,440 |
| EBITDA margin, % | 1.5 % | 2.2 % | 4.2 % | |
| Operating result (EBIT) | 101 | 462 | -78,1 % | 8,237 |
| Operating result (EBIT) margin, % | 0.2 % | 0.8 % | 3.0 % | |
| Profit/loss for the period | -85 | 128 | 5,675 | |
| Order backlog | 196,489 | 202,220 | -2,8 % | 177,857 |
| Free cash flow | -2,929 | 1,986 | 18,334 | |
| Cash conversion, % | n/a | 155.1 % | 160.3 % | |
| Net interest-bearing debt | 11,714 | 17,760 | -34,0 % | 4,737 |
| Gearing, % | 38.6 % | 60.8 % | 14.1 % | |
| Return on investment, ROI % | 13.1 % | 9.5 % | 13.6 % | |
| Number of personnel at period end | 946 | 973 | -2,8 % | 927 |
| Earnings per share, undiluted (EUR) | -0.02 | 0.01 | 0.70 | |
CEO Esa Korkeela’s comment
“During the first quarter of 2021, our net sales were 59.3 (59.0) million euro, ending up slightly above last year’s level. Our net sales for January-March, which are typically low due to the season, grew 0.4 percent to the comparison period.
Our operating result for the reporting period was profitable, but it was somewhat lower than in the comparison period. Our operating result for January-March was 0.1 (0.5) million euro, which is 0.2 (0.8) percent of our net sales. Our business volumes are usually at their lowest levels during the first quarter of each year, so our profitability for the reporting period was mainly in line with our expectations.
In January-March our order intake was 69.8 (62.1) million euro, which is a 12.4 percent increase to the comparison period. Our order backlog at the end of the reporting period was 196.5 (202.2) million euro. Despite the good order intake during the first quarter, our order backlog at the end of March was 2.8 percent lower than the order backlog for the comparison period. However, our order backlog grew 10.5 percent compared to the order backlog at the end of the previous financial year.
We announced our new strategy during this reporting period in February. We are now implementing our strategy and the feedback we have received from stakeholders has been positive. In particular, our decision to base our strategy on utilising the full potential of our customer focused organisation and the fact that we have emphasised corporate social responsibility and sustainable development in our strategy have been well received by our customers. Our work on implementing the new strategy at business area level is advancing according to our plans.
The coronavirus pandemic (COVID-19) hindered our ability to advance projects according to plans during the reporting period. While we have been able to keep the number of confirmed coronavirus cases and exposures to COVID-19 at a low level, the pandemic caused more interruptions at our worksites than in the comparison period. Despite the pandemic, demand for renovations remained at an adequate level. In the greater Helsinki area, housing company activities are increasing towards a more normal level from the previous year. Demand for renovation and modification work in commercial premises, however, has further declined especially in those industries that have suffered most from the coronavirus pandemic.
The coronavirus pandemic continues to cause uncertainty to construction and building technology short-term outlook. During the year 2021, we will concentrate on ensuring our business performance and implementing our new strategy.”
Operating environment
Construction market 2021
The Confederation of Finnish Construction Industries, RT, estimated in its March review of market conditions that the construction market as a whole will decrease approximately two percent in 2021. RT predicts that the renovation market will grow approximately one percent in 2021. However, the coronavirus pandemic continues to cause uncertainty to near-future renovation outlook. In housing companies, the corona crisis delayed decision making and renovation project plans during 2020, but if the corona situation allows it, the pent-up renovation needs are expected to boost demand in apartment renovations. On the other hand, the uncertainty caused by the corona crisis is estimated to slow down business premises renovations in particular. The poor demand for business premises renovations is due to for instance decreased ability to pay rent, an oversupply of business premises, and uncertainty regarding the coronavirus pandemic’s effects on consumer behaviour and business premises demand.
The renovation market in general
The value of professional renovations in total was nearly 14 billion euro in 2020, with residential building renovations’ share amounting to 8.0 billion euro. Most renovations are conducted in apartment buildings and row houses.
Professional renovation has grown nearly continuously in Finland for the past 20 years. Renovations’ share of all construction was approximately 47 percent in 2020.
Public service construction, especially schools and hospitals, has grown rapidly in recent years. New construction of schools is estimated to continue active, but on the whole public construction is expected to decline in upcoming years. This will have a considerable impact on the volume development of construction.
The need for facade renovations is growing, mainly due to the age of the building stock in Finland. Residential construction was at its heights in the 1970s and the building technology, facades and structures from that time now require major renovations. However, housing companies from the 1960s have still been renovated most when looking at the value of the renovations in proportion to the net floor area. Housing companies from the 1960s are clearly the largest group especially in building technology renovations.
Building technology renovations are the fastest growing area of renovations, including for example pipeline renovations, heating, ventilation, cooling and electrical renovations. They have made up nearly half of all housing company renovations in recent years. About 70 percent of building technology renovations are pipeline renovations.
Structures and facades are the second largest group, making up nearly 40 percent of all renovations. For financial reasons, facade renovations have had to be postponed in many housing companies to make room for pipeline renovations. According to the Finnish Real Estate Federation’s renovation barometer, there is currently almost the same number of facade and pipeline renovations ongoing in housing companies. The barometer estimates that in upcoming years renovation needs will focus increasingly on facades.
Approximately one fifth of renovations are repair and maintenance renovations.
The demand for renovation is maintained by the large building stock of residential buildings from the 1970s and also renovation needs in commercial and office buildings. In the 1980s commercial and office building construction was especially large-scale in Finland, and in the 1990s and early 2000s more commercial and office buildings were built than residential buildings. Premises from that era do not necessarily meet present-day needs. In addition, the growing amount of remote work and online shopping due to the corona pandemic add new challenges to the efficient use of premises.
Megatrends such as aging population, urbanisation and climate change also add to renovation needs. Like new construction, renovation is also estimated to continue concentrating to growth centres.
Climate change mitigation requires for instance improved energy efficiency in buildings, as stipulated in the EU’s energy efficiency directive. This is fostered for example with building technology and facade renovations. Adaption to weather variations caused by climate change necessitates meticulous maintenance of facades in particular.
Outlook for 2021
The coronavirus pandemic continues to cause uncertainty to Consti’s operating environment. Although market research institutes expect the renovation market to grow in 2021, new waves of the pandemic and lockdowns remain possible. The most significant short-term impacts of the corona crisis have to do with both the company’s ability to carry out existing projects and also short-term demand outlook. Uncertainty pertaining to handling existing projects relate to workforce availability, possible illnesses, material availability and official regulations. The short-term demand outlook is still uncertain due to some projects currently in the negotiation stage that may possibly be postponed, as well as delayed decision making. In 2021 Consti will concentrate on ensuring the performance of its business and implementing its new strategy.
The Company estimates that its operating result for 2021 will be in the range of EUR 7-11 million. The range for 2021 profit guidance is wide due to the uncertainties related to the Covid-19 pandemic.
Press conference
Microsoft Teams meeting for analysts, portfolio managers and media representatives, will take place 30 April 2021, at 10:00 a.m. (EET). The meeting will be hosted by CEO Esa Korkeela and CFO Joni Sorsanen.
Analysts, portfolio managers and media representatives are kindly requested to register for the meeting no later than Thursday 29 April 2021 at 12.00 p.m. by sending an email to [email protected]. A link to the meeting will be sent to registered participants during the afternoon of Thursday 29 April 2021.
Financial communication in 2021
Half-year report 1-6/2021 will be published 23 July 2021
Interim report 1-9/2021 will be published 27 October 2021
CONSTI PLC
Further information:
Esa Korkeela, CEO, Consti Plc, Tel. +358 40 730 8568
Joni Sorsanen, CFO, Consti Plc, Tel. +358 50 443 3045
Distribution:
Nasdaq Helsinki Ltd.
Major media
www.consti.fi
Consti is a leading Finnish company concentrating on renovation and technical services. Consti offers comprehensive renovation and building technology services and selected new construction services to housing companies, corporations, investors and the public sector in Finland’s growth centres. Company has four business areas: Housing Companies, Corporations, Public Sector and Building Technology. In 2020, Consti Group’s net sales amounted to 275 million euro. It employs approximately 1000 professionals in renovation construction and building technology.
Consti Plc is listed on Nasdaq Helsinki. The trading code is CONSTI. www.consti.fi
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