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Electronics Production | October 19, 2007

PKC sales up 28,9% in Jan-Sep

The PKC Group's net sales in the first nine months increased by 28.9% on the previous year to EUR 210.6 million (163.3 million). Operating profit was EUR 21.4 million (20.3 million) and profit before taxes was EUR 20.0 million (19.7 million).
”Consolidated net sales continued to grow strongly in both business segments and profitability remained at a good level.

In Wiring Harnesses business we were able to meet increased demand and to achieve a good level of operating profitability. During the rest of the year we will put the extension to the production facilities in Pskov, Russia into
service, effectively doubling the factory's available capacity. Thanks to the extension, we will be able to respond to growing demand on the European markets in the future as well.

Growth in Electronics business exceeded earlier forecasts. We were able to meet increased volumes thanks to investments made earlier. The phasing of project delivery sales to the current quartile was also a factor in enabling us to post an excellent operating profit. Competition for new customer relationships remains stiff, which requires us to continue investing in new customer acquisition and in boosting our capacity in China.

We are looking to become more competitive in both business segments by developing sourcing operations in Asia in order to meet the challenges of thefuture.

Maintaining good competitiveness and a good level of profitability stipulates that we continue to improve cost-efficiency in both business segments.”

The commercial vehicle market showed growth compared with the same period a year ago. Deliveries by the Wiring Harnesses business to the commercial vehicle industry in Europe and South America were at a high level. Deliveries for other types of vehicles were likewise at a good level. Sales of wiring harnesses and cabling to the telecommunications and electronics industries continued at a lower level than last year.

The growth in electronics contract manufacturing and design exceeded previous forecasts. Investments by telecommunications customers have increased the volume of design deliveries and demand for industrial electronics remained strong. Competition for new supply contracts and customer relationships remains tough, which requires the adoption of cost-efficient operating models and the ability to rapidly respond to customers' global needs.

Consolidated net sales in July-September amounted to EUR 66.9 million (54.0 million), up 24.0% on the same period a year earlier. Consolidated operating profit totalled EUR 7.6 million (5.3 million), amounting to 11.3% of net sales
(9.8%). Depreciation amounted to EUR 1.9 million (1.6 million). Financial income and expenses were EUR 0.1 million negative (0.1 million negative). Profit before taxes was EUR 6.8 million (5.2 million). Profit for the report period totalled
EUR 4.4 million (3.7 million).

Net sales generated by the Wiring Harnesses business segment during the report period were EUR 50.2 million (42.2 million), up 19.0% on the comparison period. Its share of consolidated net sales was 74.9% (78.1%). Operating profit was EUR 3.3 million (3.3 million), or 6.6% of the segment's net sales (7.9%).

Net sales generated by the Electronics business segment rose by 41.7% to EUR 16.8 million (11.8 million), representing 25.1% of consolidated net sales (21.9%). Operating profit was EUR 4.2 million (2.0 million), or 25.3% (16.0%) of
the segment's net sales.

Consolidated net sales during the report period totalled EUR 210.6 million (163.3 million), a growth of 28.9% on the previous year. Consolidated operating profit totalled EUR 21.4 million (20.3 million), amounting to 10.1% of net sales
(12.5%). Depreciation amounted to EUR 5.6 million (4.5 million). Financial income and expenses were EUR 1.4 million negative (0.6 million negative). Profit before taxes was EUR 20.0 million (19.7 million). Profit for the report period
was EUR 14.2 million (13.5 million). Diluted earnings per share were EUR 0.79 (0.76).

Net sales generated by the Wiring Harnesses business segment during the report period rose by 30.9% to EUR 168.0 million (128.4 million). Its share of consolidated net sales was 79.8% (78.6%). The operating profit of the Wiring
Harnesses business totalled EUR 13.8 million (15.1 million), amounting to 8.2% of the segment's net sales (11.8%).

The Electronics business segment saw a rise in net sales of 21.6% to EUR 42.5 million (35.0 million), accounting for 20.2% of consolidated net sales (21.4%). The Electronics business segment reported an operating profit of EUR 7.5 million (5.2 million), amounting to 17.8% of the segment's net sales (14.5%).

The Group's full-year net sales grew in both business segments, and a good level of profitability was maintained. World market prices of raw materials have remained at a high level. We have hedged a part of our future consumption of copper with derivative instruments. The earnings trend of the company's North American operations has fallen below expectations. Preparations for the start-up of electronics business operations in China have proceeded according to plan. Production volumes at the new factory in Pskov, Russia, were increased as planned.

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