UPONOR
Building Solutions business helps lift first half 2010 operating profit by 77% / Restructuring begins to pay off / Infrastructure Solutions unit sees no rise in demand
A higher growth rate in its building solutions business – which provides plastic pipes for plumbing and climate control in homes and offices – helped Uponor (Vantaa / Finland; www.uponor.com) increase its first half 2010 operating profit by 77% year-on-year to EUR 20.3m. Despite improvements during the second quarter, a weak performance in the first three months due to the recession and the harsh winter weakened the first half’s operating profit. Measures implemented in recent years, including restructuring programmes and initiatives to develop supply chain efficiency, improved Uponor’s profitability as fixed costs remained mainly unchanged. Thanks to the increased demand in building solutions, first half sales almost reached the level of 2009 with a year-on-year fall of less than 1% to EUR 362m.
Poor operating performance in the Infrastructure Solutions business, which produces pipes for utilities and infrastructure projects, was attributed to lower sales and a delay in passing on increases in raw material prices to customers. In Europe, Building Solutions’ profitability was pressured by costs arising from the closure of two warehouses and in North America higher sales and favourable cost developments produced a small operating profit, compared with an operating loss of EUR 3.5m in the first half of 2009.
Jyri Luomakoski, Uponor president and CEO, said: “Overall, demand in the second quarter did not meet the expectations generated by market sentiment that had improved after the winter. The modest number of infrastructure projects was disappointing. Although many countries have seen numerous signs of recovery in residential construction, we are not yet expecting a sustained steady growth in demand. Staying alert and prepared for a wide range of challenges continues to be justified.”
There was a year-on-year improvement in sales in the second quarter of 2010 in all of Uponor’s largest markets. The greatest growth was reported by the US, Canada, Norway and Sweden. In Europe, sales in Building Solutions saw substantial growth in the Nordic countries, whereas sales in central Europe declined, mainly due to weakened demand in the Netherlands and lower OEM sales, in particular, in Germany. In other markets, Housing Solutions’ sales were broadly at the previous year’s levels. In addition to market recovery, net sales in Building Solutions were boosted by the pickup in demand attributable to new products introduced over the last two years, Uponor said.
The company said that confidence in the building sector's recovery which was already visible in the first quarter, further strengthened in the second quarter of 2010. However, this improvement was subject to major fluctuations and differences between countries. In North America, where the abolition of the tax deduction for homebuyers in April spurred housing sales before the deadline, the distribution channel began to downsize inventories in anticipation of weakening demand. The pick-up of the building sector was further delayed by the US economy’s slower than expected recovery from recession, Uponor said. In Canada, demand continued to be relatively strong throughout the first half of the year.
In central Europe and in Uponor’s largest market, Germany, demand for residential construction improved in the second quarter of 2010, offsetting most of the sales lost early in the year due to the severe winter. However, orders from the public and commercial building sector developed only modestly. The Nordic countries saw continued recovery in demand for building, reflecting strong growth in Finland and Sweden. In some eastern European countries, including Russia and Poland, market sentiment was significantly improved compared to 2009, whereas in the Baltic countries and south east Europe, the construction sector has not yet revived. Elsewhere in Europe, demand remained relatively unchanged year-on-year other than in Spain, where demand continued to fall in most sectors, the company said.
Uponor expects the construction markets to continue growing during the second half of 2010, but believes that the growth will not be steady or rapid. The company maintained its full-year guidance of 2010 sales remaining level with 2009 while operating profit is expected to improve year-on-year.
e-Service:
Uponor’s interim report 2010 as a PDF document
Poor operating performance in the Infrastructure Solutions business, which produces pipes for utilities and infrastructure projects, was attributed to lower sales and a delay in passing on increases in raw material prices to customers. In Europe, Building Solutions’ profitability was pressured by costs arising from the closure of two warehouses and in North America higher sales and favourable cost developments produced a small operating profit, compared with an operating loss of EUR 3.5m in the first half of 2009.
Jyri Luomakoski, Uponor president and CEO, said: “Overall, demand in the second quarter did not meet the expectations generated by market sentiment that had improved after the winter. The modest number of infrastructure projects was disappointing. Although many countries have seen numerous signs of recovery in residential construction, we are not yet expecting a sustained steady growth in demand. Staying alert and prepared for a wide range of challenges continues to be justified.”
There was a year-on-year improvement in sales in the second quarter of 2010 in all of Uponor’s largest markets. The greatest growth was reported by the US, Canada, Norway and Sweden. In Europe, sales in Building Solutions saw substantial growth in the Nordic countries, whereas sales in central Europe declined, mainly due to weakened demand in the Netherlands and lower OEM sales, in particular, in Germany. In other markets, Housing Solutions’ sales were broadly at the previous year’s levels. In addition to market recovery, net sales in Building Solutions were boosted by the pickup in demand attributable to new products introduced over the last two years, Uponor said.
The company said that confidence in the building sector's recovery which was already visible in the first quarter, further strengthened in the second quarter of 2010. However, this improvement was subject to major fluctuations and differences between countries. In North America, where the abolition of the tax deduction for homebuyers in April spurred housing sales before the deadline, the distribution channel began to downsize inventories in anticipation of weakening demand. The pick-up of the building sector was further delayed by the US economy’s slower than expected recovery from recession, Uponor said. In Canada, demand continued to be relatively strong throughout the first half of the year.
In central Europe and in Uponor’s largest market, Germany, demand for residential construction improved in the second quarter of 2010, offsetting most of the sales lost early in the year due to the severe winter. However, orders from the public and commercial building sector developed only modestly. The Nordic countries saw continued recovery in demand for building, reflecting strong growth in Finland and Sweden. In some eastern European countries, including Russia and Poland, market sentiment was significantly improved compared to 2009, whereas in the Baltic countries and south east Europe, the construction sector has not yet revived. Elsewhere in Europe, demand remained relatively unchanged year-on-year other than in Spain, where demand continued to fall in most sectors, the company said.
Uponor expects the construction markets to continue growing during the second half of 2010, but believes that the growth will not be steady or rapid. The company maintained its full-year guidance of 2010 sales remaining level with 2009 while operating profit is expected to improve year-on-year.
e-Service:
Uponor’s interim report 2010 as a PDF document
20.08.2010 Plasteurope.com [217054]
Published on 20.08.2010
German version of this article...