Destia Group’s Interim Report for January-June 2011: Turnover declined, individual loss-yielding projects had a negative impact on the result
- Turnover declined as forecast in comparison with the previous year, as a result of measures to improve profitability
- The operating result was burdened by MEUR 16.1 of individual loss-making projects and goodwill write-downs
- Cash flow was better than the previous year
- Destia estimates that turnover for the full year will decrease and that the operating result will remain negativ
- In the request for bids for the Koskenkylä-Kotka section of the E18 motorway, the consortium formed by Destia, YIT and Meridiam Infrastructure Finance II S.á.r.l was selected as the primary bidder for this contract worth some MEUR 650 in August.
|Profit/loss for the period||Me||-15.3||-6.5||-8.3||-1.9||8.3|
|Profit/loss for the period||%||-7.7||-3.1||-7.7||-1.6||1.5|
President & CEO Hannu Leinonen comments on the report period:
“Improvement in profitability, the strengthening of our core businesses and the development of work with customers continue to be our key objectives based on the strategy for 2011-2013. The development programme launched at the beginning of the year to improve project activity is proceeding as planned. The aim is to improve project risk management, project supervision and management and the harmonisation of operating methods.
Our forecast on the infrastructure construction market is slightly more positive than previously forecast, with the market picking up towards the end of the report period, particularly in growth centres. In large projects, the main focus of demand has, however, continued to be in subterranean rock construction, where our share of business is still minor. The market also contains many small civil engineering contracts. Considering the prevailing market situation, our turnover was at a satisfactory level. Our operating result was a big disappointment.
The result was burdened by MEUR 16.1 in extraordinary items. The reasons for our weaker profitability than last year were significant project impairments in our Norwegian operations and the failures of one rail maintenance contract and one rock construction project. Due to these facts, the Norwegian operations are closely monitored by the management.
In other respects, our business has developed as planned. We have invested in risk management and profitability, which, in a situation of intense competition, has had an adverse effect on our success in competitive bidding. Our existing order book and previously initiated measures aimed at improving profitability will positively affect our prospects for this year. The profitability of our core business projects has also improved on average. We expect our turnover to fall in comparison with the previous year and the Group’s operating result to remain negative in 2011 on account of the individual loss-yielding projects."
Further information: President & CEO Hannu Leinonen, tel. +358 (0)20 444 4000 and CFO Pirkko Salminen, tel. +358 (0)50 3022 485
The 2011 third quarter interim report of the Destia Group will be published on 1 November 2011.