Guidance follow-up for 2014
Group’s revenue with comparable exchange rates and EBITDA excluding non-recurring items for 2014 amounted to EUR 2,475.4 (2,543.6) million and EUR 80.7 (81.7) million, respectively, in line with the previous year.
January 1 – December 31, 2014
- Order backlog: EUR 1,323.6 (1,240.7) million on December 31, an increase of 7% from the end of last year.
- Revenue: EUR 2,475.4 (2,543.6) million with comparable exchange rates and EUR 2,406.6 (2,543.6) million with exchange rates for the period.
- Revenue decreased by 3 percent at previous year’s exchange rates for corresponding period.
- EBITDA: excluding non-recurring items EBITDA was EUR 80.7 (81.7) million, or 3.4 (3.2) percent of revenue.
- EBITDA including non-recurring items was EUR 67.5 (70.9) million, or 2.8 (2.8) percent of revenue.
- The non-recurring items totalled EUR 13.2 million, consisting of non-recurring costs of EUR 26.4 million offset by a non-recurring income of EUR 13.2 million in Norway.
- Projects, mainly in Norway and Denmark, diluted the profitability during the first half of the year 2014. The turnaround of the project operations progressed well during the second half of the year.
- Working capital: Working capital amounted to EUR -19.3 million (Q4/2013: 46.0).
- Operating cash flow before financial and tax items: EUR 113.5 (108.5) million.
October 1 – December 31, 2014
- Revenue: EUR 660.2 (688.1) million.
- Revenue decreased by 2 percent at previous year’s exchange rates for corresponding period.
- EBITDA: Profitability improved from the previous year and EBITDA excluding non-recurring items was EUR 39.3 (26.7) million, or 6.0 (3.9) percent of revenue.
- EBITDA including non-recurring items was EUR 34.3 (25.3) million, or 5.2 (3.7) percent of revenue.
- Operating cash flow before financial and tax items: EUR 100.0 (101.3) million.
Dividend proposal: The Board of Directors proposes a dividend of EUR 0.22 per share
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.22 per share be paid.
Guidance for 2015
Caverion estimates that the Group’s revenue will remain at the previous year's level and EBITDA margin for 2015 will grow significantly.
Watch the webcast
Caverion will hold a news conference and webcast on the Financial Statements Bulletin on Thursday, January 29, 2015, at 11:00 a.m. (Finnish Time, EET). The news conference can also be viewed live on Caverion’s website at www.caverion.com/investors. A recording of the webcast will be available at the same address during this afternoon.
Word from the President and CEO Fredrik Strand
“In 2014 we have focused on building Caverion into one, coherent company. The key to our profitability improvement lies in improving our own internal efficiency. We have now built the basis for our future by defining a common operating model. Our processes, organisational structures, skills, and offering are being designed so that they support us in providing services and solutions throughout the life cycle of our clients’ properties and processes. We have vast experience and expertise across the company, which we are turning into best practices by developing our commercial view for the whole group.
We have also improved our project risk management, by introducing transparent rules for delegation of authority as well as by implementing new steering committee and project review practices. In each division, we are also setting up shared project and managed operations offices, which encompass expertise in delivering demanding contracts to support our 250 local offices. The project management related to project controls has already been improved and the ability to run projects according to set targets has improved. As a result, the turnaround of the project operations has progressed well also during the fourth quarter.
Furthermore, we have invested in systems, tools and further harmonisation to shorten the invoicing process. Our improved working capital management can be seen in our improved operating cash flow for January–December. Implementation of our common ERP system in our main countries is progressing well. New mobile devices and systems have also been rolled out. These investments into building for our future have affected our short-term profitability.
During the second half of the year we have successfully managed to develop our business mix with several new contracts, for large projects including design and build of total technical solutions, as well as several new managed services agreements.
As we start the new year 2015 our strategic focus is gradually shifting more towards generating profitable growth. We aim to reach our targeted EBITDA margin of above 6 percent by the end of 2016 firstly by benefiting from our recent investments into operational efficiency, as described above. Secondly, we now have the foundation in place for bidding for more demanding contracts with higher margin potential. In line with this we continue to develop our business mix with initial focus on Technical Installation & Maintenance, Design & Build of Total Technical Solutions and Managed Services.”
OUTLOOK FOR 2015
Market outlook for Caverion’s services and solutions
The mega trends in the industry, such as increase of technology in buildings, energy efficiency requirements, increasing digitalisation and automation continue to promote demand for Caverion’s services and solutions over the coming years.
Technical installation and maintenance business is expected to be stable. Requirements for increased energy efficiency and better indoor conditions and tightening environmental legislation will be significant factors to support positive market development.
Large new tenders for buildings and industry are expected to increase during the year. Positive signs can be seen in tendering activity, especially in the public and industrial sectors. Low interest rates and availability of financing are expected to support investments. The demand for design & build of total technical solutions is expected to develop favourably in the large and technically demanding projects.
Demand for managed services is expected to increase. As technology in buildings is increasing the need for new services and the demand for life cycle solutions are expected to increase. Customers’ tendency towards focusing on their core operations continues to open opportunities for Caverion in terms of outsourced operation and maintenance mainly for public authorities, industries and utilities.
Overall changes in the operating environment due to growing uncertainty over the general macroeconomic development and mounting geopolitical tensions may lead to some cautiousness in project start-ups and service demand.
See the full Interim Report material on Caverion.com