Aug 09, 2007

VTI Group's Interim Report January - June 2007


H1/2007

  • In January - June the net sales developed favorably and were €37,7 million (H1/06: €37,7 million). Net sales grew by 8% compared to previous year's comparable sales. The net sales in 2006 included the net sales of the sold automotive sensor module business.

  • Cumulatively operating profit was slightly lower than previous year at €2,8 million (3,2) representing 7% (8%) of net sales.

  • Outlook for the whole year remains unchanged. The net sales are expected to grow and operating profit (excluding non-recurring items) is to improve compared to 2006.    

Q2/2007

  • Net sales were €19,0 million (Q2/2006: €18,7 million). Net sales grew by 10% compared to previous year's comparable sales.

  • Operating profit was €0,9 million (1,2) representing 5% of net sales (6%).

  • Profit before taxes was €0,6 million (0,9).

  • Cash flow from operating activities improved year on year and was €4,2 million (3,1).

  • Investments were €2,9 million (3,8).


This interim report has been prepared in accordance with the IFRS, following the principles for recognition and measurement set out in IAS34, as well as the accounting principles described in the Annual Report 2006. The report has not been audited.

KEY FIGURES


 € million

Reported
Q2/2007 

 Reported
1-6/2007

Reported
Q2/2006

 Reported
1-6/2006

Reported
2006

Comparable
2006 *)

Net sales

Automotive

Sensing Solutions

19.0

16.4

2.6

37.7

32.3

5.3

18.7

16.6

2.1

 37.7

33.4

4.3

72.4

63.1

9.3

72.4

63.1

9.3

Cost of sales

-13.3

 -25.9

 -12.8

 -24.3

-47.2

-47.0

Gross profit

 5.7

 11.8

 6.0

 13.4

25.2

25.4

 

       

 

 

R&D expenses

 -2.4

-4.5

-2.4

 -5.4

-9.5

-9.3

Sales and marketing expenses

-1.1 

-2.1

  -1.2

  -2.3

-4.2

-4.2

Administrative expenses

-1.3 

-2.4

  -1.2

  -2.5

-4.7

-4.6

Other income

        0.0

         0.0

        0.0

         0.0

5.5

0.0

Other expenses

        0.0

         0.0

        0.0

         0.0

-1.8

0.0

 

       

 

 

Operating profit/loss

        0.9

        2.8

        1.2

         3.2

10.5

7.2

 

       

 

 

*) Excluding non-recurring items, e.g. the sale of the non-core automotive sensor module business. Ongoing business of the sold automotive sensor module business (annual sales ca. €7 million, with net effect of €4,9 million on net sales) until November is not excluded. 

REMARKS BY CEO MARKKU HIRVONEN

"In the second quarter, the development of VTI's net sales was in accordance with our expectations. Profitability was somewhat lower than expected but it is to improve towards the end of the year. Over the past years, VTI has systematically prepared for growth and now the growth enablers are in place. Our automotive business has strengthened its product portfolio with new digital product platform. It is anticipated to generate further growth opportunities as the penetration of active safety systems increases. Also, the mega trends in our society i.e. individuals' activity and healthy lifestyle are creating demand for technological solutions in medical, instruments and sports & wellness applications. A good example of this is the activity monitor called ikcal, which is equipped with VTI's sensors. In the medical area VTI's market position in cardiac rhythm management applications is already strong and is to strengthen further. In addition to these, the aging of population creates new needs also for the sensor technology. In consumer electronics increasing use of handheld navigation terminals has opened an interesting market segment for VTI."

VTI IN JANUARY – JUNE 2007

Net sales

In January - June the net sales developed favorably and were €37,7 million. Sales grew by 8% compared to previous year's comparable figures as 2006 reported sales (€37,7) includes the net sales (2,8) of the divested automotive sensor module business. In the second quarter the Group's net sales were €19,0 million (Q2/2006: €18,7 million), an increase of 10% compared to the previous year. The net sales increased also slightly, by 2%, in comparison to the first quarter.

 

 € million

Reported
Q2/2007 

 Reported
1-6/2007

Comparable
Q2/2006 *)

Comparable 1-6/2006 *)

Reported
2006

Comparable
2006 *)

Net sales

Automotive

Sensing Solutions

19.0

16.4

2.6

37.7

32.3

5.3

17.3

15.2

2.1

  34.9

30.6

4.3

72.4

63.1

9.3

67.5

58.2

9.3

 *) 2006 net sales excluding the net sales of the sold automotive sensor module business.


The net sales of Automotive Business Unit (ABU) in January – June were €32,3 million increasing by 6 % in relation to the comparable figures of the previous year. In the second quarter the net sales were €16,4 million. Comparable net sales without the divested automotive sensor module business in Q2/2006 were €15,2 million. Thus, the comparable net sales increased with 8% compared to the previous year. The market position of ABU remained strong in the second quarter and the market situation has developed favorably. Also, the North American sales have normalized after the slow down in the previous year.

The net sales of Sensing Solutions Business Unit (SES) in January – June increased by 23%, being €5,3 million (4,3). In the second quarter, the net sales of SES grew by 24% to €2,6 million (2,1). The increase in sales was due to growth in sensors used in new application areas as well as increased penetration in the current application areas. For example, VTI's sensors are now used by Crane Aerospace & Electronics in their SmartStem ™ tire pressure monitoring system. This is a good example of VTI's capability to operate also in extremely demanding environments.

Profitability

Cumulative operating profit was slightly lower than in previous year at €2,8 million (3,2) representing 7% (8%) of net sales. Gross profit was weaker than previous year at 31% (36%) mainly due to weaker than expected second quarter performance. Overhead costs have developed positively and were €9,0 million (10,2).

In the second quarter, the operating profit was €0,9 million (1,2), despite of the second quarter's positive sales development. This was mainly due to slower than expected ramping up of new production capacity in the second quarter. The gross profit for the second quarter weakened slightly and was €5,7 million (6,0). Gross profit was 30% (32%). Operating margin was 5% (6%) and profit before taxes was €0,6 million (0,9).

Cash flow and financing

In January – June, cash flow from operating activities was strong at €7,1 million (5,4). Cash used in investments amounted to €6,7million (8,0). Gross capital expenditure was €5,0 million (8,4). In the second quarter, cash flow from operating activities remained strong at €4,2 million (3,1). Active investments continued and cash used in investments was €2,9 million (3,8).

At the end of the reporting period gearing was 23% (34%) and equity ratio was 70% (65%). Net interest bearing liabilities were €17,3 million (23,5). Liquidity remained good throughout the review period.

Research and development

In January – June the research and development expenses were €4,5 million (5,4). During the second quarter, the research and development expenses were €2,4 million (2,4). During the second quarter €0,2 million (0,7) of development costs were capitalized.

Personnel

VTI employed 674 (760) full time employees at the end of the review period, of which 420 people worked in Finland, 222 in Mexico, 23 in China, 3 in the US, 5 in Germany and 1 in Japan. The average number of personnel during the review period was 677 (781).

SHARES AND SHAREHOLDERS

VTI's largest shareholder is the EQT III Private Equity Fund (former EQT Northern Europe).

OUTLOOK FOR 2007

Net sales of both Automotive Business Unit and Sensing Solutions Business Unit are expected to grow in 2007. Operating profit (excluding non-recurring items) is expected to improve compared to 2006.


Vantaa, 9 August 2007

VTI Technologies Oy


Board of Directors


APPENDICES:

  1. CONSOLIDATED INCOME STATEMENT
  2. CONSOLIDATED BALANCE SHEET
  3. CONSOLIDATED CASH FLOW STATEMENT
  4. CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY
  5. KEY PERFORMANCE INDICATORS


Further information:

Ilkka Virtanen, CFO, VTI Technologies Oy, ilkka.virtanen@vti.fi , tel. +358 40 545 0151

Tiina Olkkonen, Vice President, Corporate Communications, VTI Technologies Oy, tiina.olkkonen@vti.fi , tel. +358 40 827 8844


VTI in Brief

VTI Technologies is a global market leader of low-g acceleration sensors for automotive industry applications and Cardiac Rhythm Management (CRM). Application areas for the company's motion and pressure sensors include the automotive industry, sports & wellness, medical & instruments as well as handheld terminals.

VTI develops and produces silicon-based capacitive sensors using its proprietary 3D MEMS (MicroElectroMechanicalSystem) technology, with application areas in acceleration, inclination, shock, vibration, angular rate and pressure measurement.

VTI is owned by EQT III private equity fund. VTI's net sales in 2006 totaled €72,4 million and the company has approx. 700 employees. Along with the head office in Finland and the global partner network, VTI's international sales and marketing network includes offices in Germany, USA, Japan and China. Besides Finland, VTI also has manufacturing operations in Mexico. More than 99% of the company's products are sold on international markets.

 

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