HONKARAKENNE OYJ'S FINANCIAL STATEMENTS BULLETIN 1 JANUARY - 31
DECEMBER 2023
HONKARAKENNE OYJ'S FINANCIAL STATEMENTS BULLETIN
2023 14 FEBRUARY
2024 AT 9:00
HONKARAKENNE OYJ'S FINANCIAL STATEMENTS BULLETIN 1 JANUARY - 31
DECEMBER 2023
NET SALES AND OPERATING PROFIT DECREASED, ADJUSTED PROFIT
POSITIVE
SUMMARY
Honkarakenne Group's net sales for the financial period were EUR
46.3 million (2022: 73.7), which is 37% lower than in the previous
year. The adjusted operating profit was EUR 0.3 million (4.2) and
adjust-ed profit before taxes was EUR 0.2 million (3.6). The
financial statements include non-recurring adjust-ment items of EUR
0.5 million (0.0), formed as a result of the change negotiations
decided in June.
At the end of the financial year, the order book was EUR 18.8
million (29.0), which is 35% lower than in the previous year. The
Group’s financial position remained at a good level and the equity
ratio is excel-lent.
July - December 2023
- Honkarakenne Group’s net sales in July-December amounted to EUR
23.3 million (H2 2022: 37.0), which is 37% lower than in the
previous year
- Adjusted operating profit decreased and was EUR 0.1 million
(1.9)
- Adjusted profit before taxes was EUR 0.3 million (1.9)
- Earnings per share was EUR 0.04 (0.25)
January - December 2023
- Honkarakenne Group’s net sales in January-December amounted to
EUR 46.3 million (2022: 73.7), which is 37% lower than in the
previous year
- The operating profit was EUR -0.1 million negative (4.2) and
profit before taxes was EUR -0.3 million negative (3.6)
- The adjusted operating profit was EUR 0.3 million (4.2), which
is 92% lower than in the previous year
- Adjusted profit before taxes was EUR 0.2 million (3.6) and
decreased by 95% compared to the corresponding period in the
previous year
- Earnings per share was EUR -0.04 (0.47)
- Net financial liabilities totalled EUR -3.0 million (-9.8)
- The equity ratio was 64.3% (66.6)
The Board of Directors proposes to the Annual General Meeting
that no dividend be paid for the financial year that ended on 31
December 2023 (2022: EUR 0.25). The Annual General Meeting also
proposes that a repayment of capital of EUR 0.09 per share be
distributed from the invested unrestricted equity fund.
The value of the Group's order book at the end of December was
EUR 18.8 million (29.0). The order book decreased by 35% from the
previous year. Order book refers to orders with a delivery date
within the next 24 months. Some orders may have a financing or
building permit condition.
OUTLOOK FOR 2024
According to Honkarakenne's view, the Group's net sales in 2024
will be at the level of the previous year and amount to EUR 43-50
million. The Group's operating profit will be between EUR +/-0.0
and +0.5 million.
GROUP’S KEY FIGURES |
7–12/2023 |
7–12/2022 |
1–12/2023 |
1–12/2022 |
Net sales, EUR million |
23.3 |
37.0 |
46.3 |
73.7 |
Operating
profit/loss, EUR million |
-0.0 |
1.9 |
-0.1 |
4.2 |
Adjusted
operating profit, EUR million |
0.1 |
1.9 |
0.3 |
4.2 |
Profit/loss
before taxes, EUR million |
0.2 |
1.9 |
-0.3 |
3.6 |
Adjusted
operating profit before taxes, EUR million |
0.3 |
1.9 |
0.2 |
3.6 |
Average number
of employees |
176 |
191 |
183 |
190 |
Average number
of employees in person-years |
163 |
185 |
174 |
183 |
Earnings per
share, EUR |
0.04 |
0.25 |
-0.04 |
0.47 |
Equity ratio,
% |
|
|
64.3 |
66.6 |
Return on
equity, % |
|
|
-1.4 |
15.8 |
Equity per
share, EUR |
|
|
2.79 |
3.10 |
Gearing ratio,
% |
|
|
-18.2 |
-53.8 |
Honkarakenne Oyj's CEO Marko Saarelainen commented on the
financial statements bulletin as follows:
“The Group’s net sales and operating profit for the
financial year decreased clearly from the corresponding period in
the previous year. Despite the historically challenging market
situation and operating environment, Honkarakenne generated a
positive result. The business cycles in the company’s market areas
were highly exceptional. The commercial recovery in late spring was
more subdued than expected, espe-cially in the Finnish consumer
business. In addition, 2023 was the first year in almost 25 years
for Honkarakenne when no net sales were recoded from the Russian
business. We succeeded in our efficien-cy measures and their timing
satisfactorily to say the least in the challenging year 2023,
otherwise the result would have been significantly
different.
The capacity utilization rate of the Karstula plant remained
at a low level. The lay-offs and adjustment measures initiated in
the previous year continued in production and among salaried
employees through-out the financial year. Despite these measures
and the decrease in raw material prices, the production cost per
unit increased. Lower production volumes did not sufficiently cover
all fixed cost items generated by production.
The delay in the market recovery led to further adjustments
in late spring, when Honka initiated new change negotiations. The
negotiations concluded in June resulted in redundancies of 22
people and an authorization to lay off all personnel.
Despite the adjustment measures, we continued our strategic
development projects. We carried out a business reorganization
based on the Customer Experience for Profitable Growth
transformation program. As a result, we can see improved customer
satisfaction and profitability especially in the domestic con-sumer
business.
Exports concentrated on the development of the sales and
resale network of the focus markets and the acquisition of new
customers. The Customer 360 project, which was launched in the
autumn, is proceed-ing as planned and a new customer management and
project tracking system will be introduced during spring 2024. In
addition, a new strategy was created for the Japanese business
operations for 2024-2026, which was implemented at year-end to the
subsidiary’s personnel and sales reps. Since the start of the COVID
pandemic, operations at the Chinese agency have been almost at a
standstill and the outlook has not brightened since China opened up
to the outside world. Plans to reorganize the Chinese agency are
being completed and decisions on the future of Chinese exports will
be made during spring.
The Karstula production plant improved the logistics
solutions of the area and implemented replacement investments in
production machinery for the gluer and the laminated timber plane.
In addition, a decision was made to launch a new production
investment in the production line for non-settling logs. This year
marks the 20th anniversary of the non-settling log developed by
Honka. During these years, we have systematically researched and
developed the properties of non-settling logs and various solid
wood build-ing concepts. During the past year, a solid wood-based
terraced house concept was launched and later in the autumn the
Honka MultiStorey™ concept was announced with which a safe and
low-carbon multisto-rey building can be built out of logs.
With housing production in Finland at a virtual standstill,
the outlook into a rapid market recovery is un-certain. The
portfolio of the domestic project business is stronger than in the
consumer business and demand is also growing favourably. There are
very positive new market openings in exports, and more favourable
development can be seen in the subsidiaries’ main markets after the
low sentiment. 'For dec-ades, Honkarakenne has been the export
driver of the Finnish housing industry. After the closing of the
Russian market, we have invested in new market openings and the
first successes have been achieved. From here it is good to
continue implementing the top project of our strategy 'Focus on
exports, new strong support for international growth'.
In a challenging economic situation, the Group’s strong
balance sheet and financial position provide us with an excellent
opportunity to further develop our operations and face the
recovering markets in the coming months. Customers,
representatives, partners, and personnel can count on Honka's
strong mar-ket position, reliability and security of
supply.'
NET SALES
Compared to the previous year, the Group’s operating environment
remained challenging throughout the financial year.
The Group’s net sales in the second half of 2023 decreased by
37%, to EUR 23.3 million (37.0). July-December net sales decreased
by 41% for Finland and by 25% for exports. The decrease in
Finland’s net sales was almost completely due to the decrease in
deliveries in the consumer business. In exports, Ger-many’s net
sales were positively higher than in the previous year, while other
export project countries remained at a lower level than before.
The net sales level for the remainder of the year was almost
identical to the net sales accrued in the first half of the year.
The Group’s net sales for the financial year were 37% below the
previous year and amounted to EUR 46.3 million (73.7). Compared
with the corresponding period of 2022, Finland ac-counted for 42%
of the net sales drop and exports for 23%. The decrease in export
net sales was mainly due to lower net sales in the Japanese market
and the fact that sales previously made in Russia could not yet be
replaced with net sales from new export regions. H1 net sales in
the comparison period included the last project deliveries to
Russia that were in the order and production process. Exports
excluding Russia were almost at the level of the previous year.
Honkarakenne presents its set sales data divided in two parts:
Finland and exports. Below we present the net sales based on this
division for the full year 2023 and the second half of 2022 with
the comparison year.
Geographical distribution of net sales:
NET SALES
DEVELOPMENT |
|
|
|
|
|
|
Net sales distribution, % |
1–12/2023 |
1–12/2022 |
|
|
|
|
Finland |
69 % |
74 % |
|
|
|
|
Exports |
31 % |
26 % |
|
|
|
|
Total |
100 % |
100 % |
|
|
|
|
|
|
|
|
|
|
|
Net sales, MEUR |
7–12/2023 |
7–12/2022 |
Change |
1–12/2023 |
1–12/2022 |
Change |
Finland |
16.9 |
28.4 |
-41 % |
31.8 |
54.8 |
-42 % |
Exports |
6.4 |
8.6 |
-25 % |
14.5 |
18.9 |
-23 % |
Total |
23.3 |
37.0 |
-37 % |
46.3 |
73.7 |
-37 % |
Finland also includes billet sales and the sale of process
by-products for recycling. Exports include all other countries
except Finland.
ORDER BOOK
The Group's order book was 35% lower than last year and amounted
to EUR 18.8 million (29.0). Order book refers to orders with a
delivery date within the next 24 months. Some orders may have a
financing or building permit condition.
TRENDS IN PROFIT AND PROFITABILITY
Operating profit for July-December was close to zero, totalling
EUR -0.0 million (1.9) and profit before taxes was positive after
revaluations of financial items amounting to EUR +0.2 million
(1.9).
The Group's operating profit for the financial period stood at
EUR -0.1 million (4.2) and the profit before taxes was EUR -0.3
million (3.6). The adjusted operating profit was EUR +0.3 million
(4.2) and adjusted profit before taxes was EUR +0.2 million
(3.6).
Non-recurring adjustment items include expense items allocated
to the accounting period as a result of the change negotiations,
amounting to EUR 0.5 million, which incurred from severance pay and
other expenses related to redundancies.
Financial items include EUR -0.5 million (-0.3) from valuation
of Japanese yen and EUR +0.4 million (-0.3) in repayment of the
value of financial assets.
Production profitability deteriorated as production volumes
decreased. Unit-priced costs increased and could not be covered in
full by the drop in the raw material purchase price.
To ensure the result for the financial year, the lay-offs and
adjustment measures started in the previous financial period
continued at the beginning of the year. In addition, change
negotiations resulting in redundancies were carried out in the
parent company. The negotiations concluded in June resulted in
redundancies of 22 people. In addition, a temporary lay-off
authorization was sought in the negotiations, which would allow
personnel lay-offs as a short- or long-term adjustment measure if
necessary.
Alongside the adjustment measures, the focus continued to be on
promoting and implementing devel-opment projects in line with the
strategy, which have improved project profitability and customer
experi-ence. On export focus markets, we invested in developing the
sales and resale network and new custom-er acquisition.
FINANCING AND INVESTMENT
At the end of 2023, Honkarakenne’s financial position was good.
The Group’s equity ratio was 64.3% (66.6). Gearing was negative at
-18.2% (-53.8). The Group's net financial liabilities amounted to
EUR -3.0 million (-9.8), so the Group's liquid assets exceeded its
financial liabilities. The Group's liquid assets including other
financial assets were EUR 6.4 million (12.6). The Group's EUR 3.0
million (3.0) overdraft facility was not in use at the time of the
financial statements.
The Group's gross investments in 2023 amounted to EUR 1.8
million (1.0), excluding right-of-use assets in accordance with the
IFRS 16 standard and investment grants received.
The investments during the financial year focus mainly on
replacement investments in the log line, gluer and laminated timber
plane at the Karstula plant. Installation of the laminated timber
plane began at the end of the year and implementation of the line
was completed in early 2024. An export offer calculation module was
introduced in the ERP system. The Customer 360 project was launched
in the autumn, in connection with which a new customer management
and project tracking system will be introduced dur-ing spring
2024.
PRODUCTS AND MARKET AREAS
Honka’s collection is updated and developed based on
market-specific customer understanding. In terms of the collection,
the review year focused on the quality and sustainability of
housing in the longer term. The collection inspires to look at
housing through more sustainable eyes, the impact that choices will
have on health and the environment for years to come.
The log houses in Honka’s new, convertible collection are
flexible and grow with life. For example, the basic model of the
modern, lean-to roofed Silmu house can be expanded in three ways.
The convertible models are designed to enable a wide variety of
variations to live different lives without the need to build or buy
a house when life situations change and to give up a healthy,
natural and sustainable log house.
During the financial year, the launch of the Honka Healthy
House™ concept, introduced at the end of the previous year,
continued in the domestic business.
Honka’s operations are certified with the ISO 9001 quality
standard and the ISO 14001 environmental standard.
In Finland, net sales decreased by 42% as the
construction and housing markets weakened significantly during the
financial year 2023. The decrease was sharp throughout the year,
both due to high cost and interest rate levels and the recession.
Net sales amounted to EUR 31.8 million (54.8). Compared to previous
years, the profitability of the consumer business increased,
project lead times shortened and customer satisfaction
improved.
Compared to the previous financial year, net sales decreased
more in the consumer business than in the project business. In
terms of sales, the second half of the year was better than the
first in project con-struction. In recent years, nearly 100 school,
day care and nursing home solutions have been delivered across
Finland. In 2023, deliveries were made, for example, to Järvenpää,
Vaasa, Vantaa, Lappeenranta, Nokia, Salo and Joensuu. The demand
for and interest in healthy log care facilities has developed
favourably.
At the beginning of the year, Honkarakenne and its founding
contractor partners won the contract to build a new block of log
apartment buildings and terraced houses in Järvenpää's new
Anni-täti residential area. Due to a complaint, the town plan for
the area has not yet been legally confirmed.
In the beginning of the year, Honka launched a new terraced
house concept for founding contracting and in the autumn for the
Honka MultiStorey™ concept development project. Honka MultiStorey™
offers a multistorey building instructions and a concept on how to
make a safe, low-carbon log block of flats. The solution can be
applied not only to residential blocks of flats but also to other
types of buildings, such as offices, schools and hotels. Honka
MultiStorey™ enables a combination of logs and concrete in
multistorey construction.
Development of domestic demand is expected to increase from the
previous year. There is still uncertainty in the market and if the
recession is prolonged, it may negatively affect the decision to
start building new leisure and especially detached houses.
Demand for exports was slow in the early part of the year and
picked up slightly before the turn of the year. The order book
decreased by 23% from the previous financial period and was EUR
14.5 million (18.9). The difference is mainly due to the net sales
from the last deliveries to Russia during the compar-ison year and
the weaker net sales accumulation in Japan. The largest single
export deliveries consisted of project business deliveries to new
leisure centres located in Asian region. These site deliveries
includ-ed, for example, a hotel building with a recreational area
reception building and individual holiday hous-es.
In exports we focused on collection
development, acquiring new customers, customer meetings and
participation in trade fairs and export events. Regional importer
and agent activities were clarified and strengthened through new
importers and local partners. After the end of the year, a new
Honka sales office was opened in Stockholm.
The Japanese organization was strengthened with in-house
architectural expertise, it invested in B2B sales and opened a new
office and showroom in Tokyo. The subsidiary completed a
comprehensive strat-egy work based on which the business will be
developed further in the coming years.
The demand and net sales of project exports in the Asian region
developed positively. A recovery can also be seen in other export
regions, such as Germany. There is also uncertainty as to whether
the demand will be reflected in new orders and deliveries and with
what timing. Interest rates, inflation and construction costs have
remained at relatively high levels in different export countries.
The Group’s exports to China are at a complete standstill and
measures for its own agency are being assessed.
Freight deliveries, which toward the end of the year were
directed to Asian regions had to be moved to longer routes away
from the Suez Canal due to the instability of the region. This is
to some extent reflected in longer delivery times and rising
freight costs in exports. The spill-over effect may negatively
impact new orders or shift deliveries forward.
STRATEGY 2022-2024
The aim of the strategy, which will be in force until the end of
2024, is to strengthen Honkarakenne Oyj’s position as Finland’s
largest exporter of wooden buildings. With the new export-driven
strategy, the Group is seeking to increase its net sales in the
strategy period with a focus on profitability. The profita-bility
objectives are based on process efficiency, while enhancing the
customer and employee experience.
Honkarakenne Group's vision is to become the leader in
environmentally friendly and healthy housing in our chosen market
areas. The Group’s mission is to improve the quality of people’s
lives and housing.
Honkarakenne’s strategic objectives for the 2022–2024 period
are:
- Increasing exports by focusing on and allocating resources to
selected markets
- Increased profitability through further enhancing the customer
and employee experience
- A responsible leader focused on health and the future
To implement the strategy, the Group’s key functions are
undergoing various assessment and develop-ment projects that
support the progress of the strategy. Due to the changed market
situation, invest-ments have been focused on increasing sales and
projects that improve profitability. At the beginning of the year,
the Customer Experience for Profitable Growth transformation
program was implemented to reorganize the business to ensure a
better customer experience and a more profitable business. In
addi-tion, market studies and projects concerning the renewal of
partners and distribution channels are ongo-ing in the various
export focus markets.
Honkarakenne states that it does not consider long-term targets
as market guidance for any particular year of the strategy
period.
SUSTAINABILITY
Sustainability is a key part of Honkarakenne's strategy.
Honkarakenne Group is continuously developing its production,
services and selection to enable healthier, more ecological and
better-quality living. Our choices are guided by human and natural
vitality. Honkarakenne’s sustainability programme, ‘We are building
the future’, is based on the changes we have identified in our
operating environment, our ethi-cal principles, recognised
expectations of our staff and other stakeholders, and understanding
the cus-tomer in our main markets. Responsible purchasing and
eco-friendly production are at the core of our business, and we are
constantly developing the health and safety of our houses.
As part of Honkarakenne's sustainability program, the parent
company uses 100% guaranteed electricity produced with a renewable
energy source with carbon dioxide emissions of 0 g/kWh in all its
own loca-tions.
THE HONKA BRAND
The core of the Honka brand is the close relationship with
nature and Finnish happiness. Honka's yellow is the colour of hope
and joy. Honka helps every customer realize the dreams that are
important to them and Honka has the honour to convey the vitality
of the northern forests.
SEASONAL NATURE OF OUR BUSINESS
Honkarakenne operates in a business that is seasonal by nature.
Especially in Finland, construction most-ly takes place during
summer, so there are more deliveries in summer and autumn than
during the win-ter. Considering the existing market and demand
conditions, the Group aims to even out this seasonality especially
with export activities. During the review period, the Group’s
market situation was challenging in all its areas.
RESEARCH AND DEVELOPMENT
During the financial period, we focused especially on developing
product solutions for export markets and continued to focus on log
structures suitable for larger public buildings in particular.
Honkarakenne‘s log product project for public and large buildings
was part of the Ministry of the Environment's Wood Building
Programme, which had also granted funding for the project.
Utilizing the solutions developed in the project, Honkarakenne
developed and launched a multistorey construction concept in the
autumn, with which Honka introduces the multistorey construction
opportunities of logs to its builders more widely. Honka
MultiStorey™ provides instructions and a concept on how to build a
safe, low-carbon log block of flats. The solutions can be applied
not only to residential blocks of flats but also to other types of
buildings, such as offices, schools and hotels.
The aim of the project and program is to increase the use of
wood in construction to promote climate targets. Wood is a
renewable raw material and wood construction is part of sustainable
use of forests.
The Group's R&D costs for the financial year were EUR 0.6
million (0.4), representing 1.3% (0.5) of net sales.
The Group has not capitalised development costs during the
financial period.
PERSONNEL
The Group’s average number of personnel, measured in
person-years, totalled 174 persons (183) during the year. The
number decreased by 9 persons from the comparison period. The Group
employed an aver-age of 183 (190) people in 2023.
In its February meeting, the Board of Directors of the Group’s
parent company decided to reward all em-ployees under the rules of
the personnel fund established in December based on the good
performance achieved in the financial year 2022. These bonuses were
paid to the persons covered by the staff fund after the Annual
General Meeting in April.
Due to low demand and weak market outlook, the parent company
had to undergo change negotiations aimed at adjusting its
personnel, which ended in June and eventually resulted in the
termination of em-ployment of 9 production employees and 13
salaried employees. In the same negotiations, the parent company
sought authorization to lay off personnel for a short or longer
period during the financial years 2023 and 2024, if the financial
or production situation so requires.
As a result of the measures taken, personnel costs and other
expences caused by redundancies totalling EUR 0.5 million were
recognized in the parent company’s result.
During the financial year, we strengthened our occupational
safety culture and focused on preventive occupational safety
measures, such as safety rounds, safety observations and corrective
measures, as well as risk assessments. Compared to the previous
year, the number of accidents at work decreased by half and
amounted to three. As in the previous year, the occupational
well-being survey was conducted at the end of the year. The number
of responses received reached an excellent level and was 90% (83)
and eNPS was 28.0 (39.9).
At the end of November, a joint personnel day was held, where we
focused on being together, teambuild-ing and promoting the shared
Honka spirit after a challenging year.
EXECUTIVE GROUP
During the financial year the Executive Group consisted of:
Marko Saarelainen, CEO; Juha-Matti Hanhi-koski, Vice President,
Production; Eino Hekali, Vice Precident, Product; Maarit Jylhä,
CFO; Petri Perttula Business Vice Precident, Operations Finland;
and Maarit Taskinen, Vice Precident, Operations Export.
HONKARAKENNE OYJ’S ANNUAL GENERAL MEETING, BOARD OF DIRECTORS
AND AUDITORS
Honkarakenne Oyj’s Annual General Meeting was held at
Honkarakenne’s Karstula plant on 20 April 2023. The General Meeting
adopted the financial statements, approved the remuneration report,
and granted discharge from liability for 2022 to the members of the
Board of Directors and the CEO. The Annual General Meeting decided
that a dividend of EUR 0.25 per share will be paid for the
financial year that ended on 31 December 2022 and that the
remaining profit should be left in equity. The dividend was paid to
shareholders at the beginning of May.
Arto Halonen, Timo Kohtamäki, Maria Ristola and Kari Saarelainen
were re-elected to the Board of Direc-tors of the parent company.
Antti Tiitola was elected as a new Member of the Board. At the
Board’s or-ganizing meeting, Timo Kohtamäki was elected as the
Chairman of the Board. At the same meeting, the Board of Directors
decided that it would not establish committees.
Ernst & Young Oy, member of the Finnish Institute of
Authorised Public Accountants, was re-appointed as auditor of the
company, with Elina Laitinen, APA, as chief auditor.
AUTHORISATIONS OF THE BOARD OF DIRECTORS
The Annual General Meeting decided on 20 April 2023 that the
Board of Directors is authorised to decide on the purchase of no
more than 400.000 of the company’s own B shares using funds from
the parent company’s unrestricted shareholders’ equity. In
addition, the Annual General Meeting authorised the Board of
Directors to decide on rights issue or bonus issue and on the
granting of special rights entitling to shares in one or more
instalments under the terms and conditions in Chapter 10, section 1
of the Companies Act. Under the authorisation, the Board of
Directors may issue a maximum of 1.500.000 new shares and/or
transfer old B shares held by the parent company inclusive of any
shares that may be is-sued. These two authorisations remain in
force until the next Annual General Meeting, however expiring at
the latest on 30 June 2024.
SHARES, SHARE CAPITAL AND OWN SHARES
During the review period, Honkarakenne Oyj’s shares numbered
6,211,419, of which 300,096 were class A shares and 5,911,323 class
B shares. The company’s share capital has not changed, remaining at
EUR 9,897,936.00. Each class B share entitles to one (1) vote and a
class A share to twenty (20) votes, bringing to total number of
votes conferred by the shares during the review period to
11,913,243.
Honkarakenne’s class B shares are listed on Nasdaq Helsinki
Ltd’s Small Cap list with the ticker HONBS. The highest price of
the listed class B share was EUR 4.98, and the lowest price was EUR
2.85. The clos-ing price at the balance sheet date was EUR 3.22.
The market capitalisation of the stock at the end of the financial
year was EUR 12.9 million. The traded class B shares was EUR 2.9
million and the trading vol-ume was 0.8 million shares.
Honkarakenne has not acquired its own shares during the review
period. In April, Honkarakenne trans-ferred 8,333 class B shares to
the CEO as part of the 2022 performance bonus. Following the merger
of Honka Management Oy, 286 250 class B shares held by the company
were transferred to the parent company. At the end of the report
period, the parent company held 321,052 of its own Series B shares
with a total purchase price of EUR 1,186,556.34. Own shares account
for 5.17% of all Honkarakenne shares and 2.69% of all votes. The
acquisition cost of own shares reduces the free equity of both the
parent company and the Group.
FLAGGING NOTIFICATIONS
No flagging notifications were received during the financial
year 2023.
CORPORATE GOVERNANCE
In 2023, Honkarakenne Oyj complied with the Finnish Corporate
Governance Code for listed companies issued by the Securities
Market Association in 2020. For more information about corporate
governance, go to www.honka.fi.
SHORT-TERM RISKS AND UNCERTAINTIES
The risks and uncertainties of Honkarakenne relate to negative
changes in the operating environment of the Group and its
customers, increased costs of raw materials and components, their
availability and the functioning of the overall supply chains. If
demand falls from the current level in the operating environ-ment
and costs remain high, it may have significant effects on the
Group's earnings development.
The economic uncertainty in the Group’s operating environment is
negatively reflected in business and consumer confidence. High
inflation and persistently high interest rates continue to increase
short-term economic risks.
The uncertainty of the military aggression initiated by Russia
and all its effects on business are difficult to assess.
Replacing the order book lost in the Russian market area with
other export markets may be prolonged or uncertain in the current
global market situation. If the war is prolonged or expands it can
have a consid-erable negative effect on the Group’s business,
financial position and operating profit.
The valuation of items in the balance sheet is based on the
management’s current estimates. Any changes to these estimates may
affect the company’s financial performance.
REPORTING
This report contains statements that relate to the future, and
these statements are based on hypotheses that the company's
management hold currently, and on the decisions and plans that are
currently in place. Although the management believes that the
hypotheses relating to the future are well-founded, there is no
guarantee that the said hypotheses will prove to be correct.
The Financial Statement Bulletin has not been audited and the
figures are unaudited.
Figures in brackets refer to the corresponding period one year
earlier, unless otherwise stated.
Honkarakenne complies with the Guidelines on Alternative
Performance Measures (APM) issued by the European Securities and
Markets Authority (ESMA). An APM is a financial measure of
performance other than a financial measure defined or specified in
IFRS. The term ‘adjusted’ is used here. The company classifies
significant business transactions that are considered to affect
comparisons between different reporting periods as adjustment
items. Such transactions include significant reorganisation
expenses, significant impairment losses or reversals thereof,
significant capital gains and losses on assets, and other
significant non-customary income or expenses.
This report has been prepared in accordance with IAS 34. The
report should be read together with the 2022 financial statements.
The accounting policies used in preparing the financial statements
2023 are the same as in the financial statements for 2022, with the
exception of standards and interpretations that have come into
force on 1 January 2023 or thereafter. The new standards or
interpretations effective as of 1 January 2023 did not have a
material impact on the figures presented for the review period.
EVENTS AFTER THE REPORTING PERIOD
At the beginning of February, the company signed an investment
agreement related to the non-settling log production line. The
total value of the investment is approximately EUR 1.7 million.
THE BOARD OF DIRECTOR'S PROPOSAL ON THE DISTRIBUTION OF RETAINED
EARNINGS
The parent company's equity according to the balance sheet 31
December 2023 is EUR 16,112,69.69, of which distributable assets
amount to EUR 5,694,760.69. The parent company's loss for the
financial year 1 Jan.-31 Dec. 2023 is EUR -223,343.50
The Board of Directors proposes to the Annual General Meeting
that no dividend be paid for the financial year that ended on 31
December 2023. The Annual General Meeting also proposes that a
repayment of capital of EUR 0.09 per share be distributed from the
invested unrestricted equity fund. No capital re-payment is paid on
shares held by the parent company.
OUTLOOK FOR 2024
According to Honkarakenne's view, the Group's net sales in 2024
will be on the level of the previous year and amount to EUR 43-50
million. The Group's operating profit will be between EUR +/-0.0
and +0.5 million.
BASIS FOR THE OUTLOOK
The company's outlook of the 2024 development is based on the
existing order book, the expectation of challenges in the operating
environment and on market development. Uncertainty about the
develop-ment of the economic situation, high interest rates and
weakened availability of financing may negatively affect demand
from consumer and professional builders and their decision-making
concerning con-struction, thus creating uncertainty in the starts
of new construction projects. In addition, the company sees that
the export focus market areas in accordance with the strategy
contain potetial and support profitable growth.
GENERAL MEETING
The Annual General Meeting of Honkarakenne Oyj will be held in
Tuusula on Thursday 18 April 2024 at 2:00 pm EET.
HONKARAKENNE OYJ
Board of Directors
Additional information:
CEO Marko Saarelainen, tel. +358 40 542
0254,marko.saarelainen@honka.com or
Maarit Jylhä, CFO, tel. +358 40 594 4099,
maarit.jylha@honka.com
This and previous releases can be found on the company's website
at www.honka.fi/fi/sijoittajat/
Honkarakenne will publish the Board of Directors’ Report and
financial statement for 2023 in full by week 13 at the latest on
the company's website at www.honka.fi as well as a separate
Corporate Governance Statement and a Remuneration Report for 2023.
The 2024 half-year report will be published on 22 August 2024.
DISTRIBUTION
Nasdaq Helsinki Ltd
Principal media
Finnish Financial Supervisory Authority
www.honka.com
Honkarakenne Oyj manufactures high-quality, healthy and ecological
log homes, holiday homes and public buildings under its Honka®
brand from Finnish solid wood. The company has delivered 85,000
buildings to over 50 countries. House kits are manufactured in
Finland, the company's own factory is located in Karstula. In 2023,
Honkarakenne Group's net sales were EUR 46.3 million, of which
exports accounted for 31%. www.honka.fi
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT |
|
|
Unaudited |
|
|
|
|
EUR million |
7–12/2023 |
7–12/2022 |
1–12/2023 |
1–12/2022 |
|
|
|
|
|
Net sales |
23.3 |
37.0 |
46.3 |
73.7 |
Other
operating income |
0.3 |
0.3 |
0.6 |
0.5 |
Change in
inventory of finished
goods and work in progress |
-0.5 |
-2.6 |
-1.2 |
0.1 |
Use of
materials and goods |
-16.5 |
-24.7 |
-30.7 |
-52.8 |
Employee
benefit expenses |
-3.1 |
-4.9 |
-8.1 |
-10.6 |
Depreciation
and impairment |
-1.1 |
-1.1 |
-2.2 |
-2.1 |
Other operating expenses |
-2.4 |
-2.1 |
-4.8 |
-4.6 |
Operating profit/loss |
0.0 |
1.9 |
-0.1 |
4.2 |
Financial
income |
0.0 |
0.0 |
0.1 |
0.1 |
Financial
expences |
0.2 |
-0.1 |
-0.2 |
-0.7 |
Share of associated companies' profit or loss |
0.0 |
0.0 |
0.0 |
0.1 |
Profit/loss before taxes |
0.2 |
1.9 |
-0.3 |
3.6 |
Income taxes |
0.0 |
-0.4 |
0.0 |
-0.8 |
Profit/loss for the period |
0.2 |
1.4 |
-0.2 |
2.8 |
|
|
|
|
|
Other items of
comprehensive income that may be re-classified subsequently to
profit or loss: |
|
|
|
|
Translation differences related to foreign subsidiaries |
0.3 |
0.0 |
0.2 |
0.0 |
Total comprehensive income for the period |
0.4 |
1.4 |
0.0 |
2.7 |
|
|
|
|
|
Allocated
to |
|
|
|
|
Shareholders
of the parent company |
0.2 |
1.4 |
-0.2 |
2.8 |
Non-controlling interests |
- |
- |
- |
- |
|
0.2 |
1.4 |
-0.2 |
2.8 |
Allocated
to |
|
|
|
|
Shareholders
of the parent company |
0.5 |
1.5 |
-0.0 |
2.7 |
Non-controlling interests |
- |
- |
- |
- |
|
0.5 |
1.5 |
-0.0 |
2.7 |
Earnings per
share calculated on the profit attributable to shareholders of the
parent company: |
|
|
|
|
undiluted
earnings per share (EUR) |
0.04 |
0.25 |
-0.04 |
0.47 |
diluted
earnings per share (EUR) |
0.04 |
0.25 |
-0.04 |
0.47 |
The company has two share series: A shares and B shares, which
have different rights to dividend. Profit distribution of EUR 0.20
per share will be first paid for B shares, then EUR 0.20 per share
for A shares, followed by equal distribution of remaining profit
between all shares.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
Unaudited |
|
|
EUR million |
31 Dec. 2023 |
31 Dec. 2022 |
|
|
|
Assets |
|
|
Non-current
assets |
|
|
Property,
plant and equipment |
12.2 |
11.4 |
Goodwill |
0.1 |
0.1 |
Other
intangible assets |
0.5 |
0.5 |
Shares in
associated companies |
0.5 |
0.5 |
Receivables |
0.3 |
0.2 |
Deferred tax assets |
1.1 |
1.0 |
|
14.6 |
13.6 |
Current
assets |
|
|
Inventories |
5.3 |
6.5 |
Trade and
other receivables |
3.8 |
3.8 |
Tax
receivables |
0.0 |
- |
Other
financial assets |
1.0 |
6.8 |
Cash and cash equivalents |
5.3 |
5.8 |
|
15.4 |
22.9 |
Total assets |
30.0 |
36.6 |
|
|
|
Shareholders'
equity and liabilities |
|
|
|
|
|
Equity
attributable to owners of the parent company |
|
|
Share
capital |
9.9 |
9.9 |
Share premium
fund |
0.5 |
0.5 |
Reserve for
invested unrestricted equity |
4.7 |
4.8 |
Treasury
shares |
-1.2 |
-1.2 |
Translation
differences |
0.0 |
0.0 |
Retained earnings |
2.6 |
4.2 |
|
16.5 |
18.2 |
Share of non-controlling interests |
- |
- |
Total equity |
16.5 |
18.2 |
|
|
|
Non-current
liabilities |
|
|
Deferred tax
liability |
0.0 |
0.1 |
Provisions |
0.3 |
0.4 |
Financial liabilities |
2.5 |
2.1 |
|
2.9 |
2.5 |
Current
liabilities |
|
|
Accounts
payable and other liabilities |
9.9 |
14.7 |
Current tax
liabilities |
0.0 |
0.4 |
Provisions |
0.0 |
0.1 |
Short-term financial liabilities |
0.8 |
0.7 |
|
10.7 |
15.8 |
Total liabilities |
13.6 |
18.4 |
Total equity and liabilities |
30.0 |
36.6 |
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY |
|
|
|
|
|
Abridged
Unaudited |
|
|
|
|
|
|
|
|
|
EUR 1,000 |
Shareholder’s equity |
|
|
|
a) |
b) |
c) |
d) |
e) |
f) |
Yht. |
g) |
Total equity |
Total equity,
1 Jan. 2022 |
9 898 |
520 |
6 275 |
89 |
-1 265 |
1 381 |
16 899 |
- |
16 899 |
Profit/loss for the period |
- |
- |
- |
- |
- |
2 772 |
2 772 |
- |
2 772 |
Translation difference |
- |
- |
- |
-72 |
- |
25 |
-46 |
- |
-46 |
Repayment of capital |
- |
- |
-1 471 |
- |
- |
- |
-1 471 |
- |
-1 471 |
Impact of share-based bonuses |
- |
- |
- |
- |
43 |
14 |
58 |
- |
58 |
Total equity,
31 Dec. 2022 |
9 898 |
520 |
4 805 |
17 |
-1 221 |
4 193 |
18 211 |
- |
18 211 |
|
|
|
|
|
|
|
|
|
|
|
Shareholder’s equity |
|
|
|
a) |
b) |
c) |
d) |
e) |
f) |
Yht. |
g) |
Total equity |
Total equity,
1 Jan. 2023 |
9 898 |
520 |
4 805 |
17 |
-1 221 |
4 193 |
18 211 |
- |
18 211 |
Profit/loss for the period |
- |
- |
- |
- |
- |
-239 |
-239 |
- |
-239 |
Translation difference |
- |
- |
- |
-63 |
- |
-3 |
-65 |
- |
-65 |
Payment of dividend |
- |
- |
- |
- |
- |
-1 473 |
-1 473 |
- |
-1 473 |
Impact of share-based bonuses |
- |
- |
- |
- |
35 |
-35 |
0 |
- |
0 |
Impact of mergers and acquisitions |
- |
- |
-113 |
- |
- |
129 |
16 |
- |
16 |
Total equity, 31 Dec. 2023 |
9 898 |
520 |
4 692 |
-46 |
-1 187 |
2572 |
16 450 |
- |
16 450 |
a) Share capital
b) Share premium fund
c) Reserve for invested unrestricted equity
d) Translation differences
e) Own shares
f) Retained earnings
g) Non-controlling interests
CONSOLIDATED CASH FLOW STATEMENT |
|
|
Abridged
Unaudited |
|
|
EUR million |
1 Jan. – 31 Dec. 2023 |
1 Jan. – 31 Dec. 2022 |
From
operations |
-2.4 |
4.6 |
From
investments, net |
-1.6 |
-1.1 |
From financial
activities, total |
-2.3 |
-2.2 |
Loan repayments |
-0.4 |
-0.4 |
Repayments of lease liabilities |
-0.4 |
-0.4 |
Repayment of capital/dividend |
-1.5 |
-1.5 |
Change in liquid assets |
-6.4 |
1.3 |
Impact of exchange rate fluctuations on cash assets |
-0.3 |
-0.2 |
Impact of stock exchange price changes on cash assets |
0.4 |
-0.3 |
Change in liquid assets |
-6.3 |
0.7 |
|
|
|
Liquid assets at end of period**) |
6.3 |
12.6 |
Liquid assets at beginning of period |
12.6 |
11.9 |
Change in liquid assets |
-6.3 |
0.7 |
**) Cash and cash equivalents |
5.3 |
5.8 |
**) Other financial assets |
1.0 |
6.8 |
NOTES TO THE REPORT
Accounting policies
This Financial Statement Bulletin has been prepared in
accordance with IAS 34. should be read together with the 2022
financial statements. The accounting policies used in preparing the
financial statements are the same as in the financial statements
for 2022, with the exception of standards and interpretations that
have come into force on 1 January 2023 or thereafter. The impact of
the new standards and inter-pretations is described later in the
section “New standards and interpretations”.
The Financial Statement Bulletin has not been audited and the
figures are unaudited.
The figures presented in the bulletin are rounded, so the sum of
individual figures may differ from the amount shown.
Figures in brackets refer to the corresponding period one year
earlier, unless otherwise stated.
New standards and interpretations
The new standards or interpretations effective as of 1 January
2023 did not have a material impact on the figures presented for
the review period.
Alternative Performance Measures
Honkarakenne complies with the Guidelines on Alternative
Performance Measures (APM) issued by the European Securities and
Markets Authority (ESMA). An APM is a financial measure of
performance other than a financial measure defined or specified in
IFRS. Therefore, instead of the previous term ‘without
non-recurring items’, the term ‘adjusted’ is used. The company
classifies significant business transac-tions that are considered
to affect comparisons between different reporting periods as
adjustment items. Such transactions include significant
reorganisation expenses, significant impairment losses or reversals
thereof, significant capital gains and losses on assets, and other
significant non-customary income or expenses.
In Honkarakenne’s view, Alternative Performance Measures provide
significant additional information to management, investors,
securities analysts and other parties on Honkarakenne’s operational
result, fi-nancial position and cash flows, and are frequently used
by analysts, investors and other parties. Return on equity, equity
ratio, net financial liabilities and gearing are presented as
supplementary key figures, as in the company’s view they are useful
indicators for assessing Honkarakenne’s ability to acquire
financing and pay its debts. In addition, gross investments and
R&D expenditure provide additional information on needs related
to Honkarakenne’s operational cash flow.
Segments
Honkarakenne has two geographical operating segments that are
combined into one segment for report-ing purposes. Geographically,
sales are divided as follows: Finland and Exports. As management’s
inter-nal reporting complies with IFRS reporting, separate
reconciliations are not presented.
Other notes to the report
Related party transactions
The Group’s related parties consist of subsidiaries and
associated companies; the company's manage-ment and any companies
in which they exert influence; and those involved in the
Saarelainen share-holder agreement and any companies controlled by
them. The management personnel considered to be related parties
comprise the Board of Directors, President & CEO, and the
company's Executive Group. The pricing of goods and services in
transactions with related parties conforms to market-based
pricing.
During the financial year, ordinary business transactions with
related parties were made as follows: sales of goods and services
to related parties amounted to EUR 0.2 million (0.7) and purchases
from related parties to EUR 0.4 million (0.4). Financial statements
of the Group include EUR 0.0 million (0.0) liabilities to related
parties and EUR 0.0 million (0.0) receivables from related parties.
No bad debts were recog-nised from related parties in 2023 or 2022.
At the time of the financial statements, the parent company has
claims from subsidiaries of EUR 1.8 million (2.4) and debts to
subsidiaries of EUR 0.1 million (0.1). No bad debts were recognised
from related parties in 2023 or 2022.
GROUP'S TANGIBLE ASSETS |
|
|
Unaudited |
|
|
EUR million |
31 Dec. 2023 |
31 Dec. 2022 |
Acquisition cost, 1 Jan. |
52.6 |
51.5 |
Increases |
2.9 |
1.3 |
Decreases |
-0.1 |
-0.2 |
Acquisition cost, 31 Dec. |
55.4 |
52.6 |
|
|
|
Accumulated
depreciation, 1 Jan. |
-41.2 |
-39.3 |
Accumulated
depreciation of decreases |
0.0 |
0.0 |
Depreciation for the financial period |
-2.0 |
-1.9 |
Accumulated write-downs at the end of the financial year |
-43.1 |
-41.2 |
|
|
|
Book value, 1 Jan. |
11.4 |
12.2 |
Book value, 31 Dec. |
12.2 |
11.4 |
Treasury shares
Honkarakenne has not acquired its own shares during the review
period. In April, Honkarakenne trans-ferred 8,333 class B shares to
the CEO as part of the 2022 performance bonus. Following the merger
of Honka Management Oy, 286 250 class B shares held by the company
were transferred to the parent company. At the end of the report
period, the parent company held 321,052 of its own Series B shares
with a total purchase price of EUR 1,186,556.34. Own shares account
for 5.17 % of all company shares and 2.69 % of all votes. The
purchase cost of own shares has been deducted from shareholders'
equity in the consolidated financial statements.
GROUP'S
CONTINGENT LIABILITIES |
|
|
Unaudited |
|
|
EUR million |
31 Dec. 2023 |
31 Dec. 2022 |
Own liabilities |
|
|
Mortgages |
6.0 |
6.0 |
Other
guarantees |
2.1 |
3.0 |
Off-balance
sheet lease liabilities |
0.1 |
0.1 |
GROUP'S KEY FIGURES |
|
|
|
Unaudited |
|
1–12/2023 |
1–12/2022 |
|
|
|
|
Net sales |
EUR
million |
46.3 |
73.7 |
Operating
profit |
EUR
million |
-0.1 |
4.2 |
|
% of net
sales |
-0.3 |
5.7 |
Adjusted
operating profit |
EUR
million |
0.3 |
4.2 |
|
% of net
sales |
0.7 |
5.7 |
Profit before
taxes |
EUR
million |
-0.3 |
3.6 |
|
% of net
sales |
-0.6 |
4.9 |
Adjusted
operating profit before taxes |
EUR
million |
0.2 |
3.6 |
|
% of net
sales |
0.4 |
4.9 |
Profit for the
period |
EUR
million |
-0.2 |
2.8 |
Earnings/share |
EUR |
-0.04 |
047 |
ROE |
% |
-1.4 |
15.8 |
ROI |
% |
0.1 |
17.1 |
Equity
ratio |
% |
64.3 |
66.6 |
Equity /
share |
EUR |
2.79 |
3.10 |
Net financial
liabilities |
EUR
million |
-3.0 |
-9.8 |
Net
gearing |
% |
-18.2 |
-53.8 |
Gross
investments |
EUR
million |
1.8 |
1.0 |
|
% of net
sales |
3.9 |
1.4 |
Order
book |
EUR
million |
18.8 |
29.0 |
|
|
|
|
Average number
of employees |
White-collar |
118 |
125 |
|
Blue-collar |
65 |
65 |
|
Total |
183 |
190 |
Average number
of personnel in person-years |
White-collar |
114 |
121 |
|
Blue-collar |
60 |
62 |
|
Total |
174 |
183 |
|
|
|
|
Adjusted
number of shares (1,000) |
At end of
period |
5 890 |
5 887 |
|
Average during
period |
5 888 |
5 880 |
Gross investments are presented excluding right-of-use assets
and investment grants received in ac-cordance with the IFRS 16
standard. There were no investment grants in 2023 and 2022.
Own shares held by the Group are excluded from the number of
shares.
FORMULAS FOR KEY INDICATOR CALCULATION |
|
|
|
|
Earnings/share:
|
Profit / loss for the period attributable to owners of parent |
|
Average number
of outstanding shares |
|
|
|
|
|
|
Return on equity %:
|
Profit/loss for the period under review |
x
100
|
Total equity,
average |
|
|
|
|
|
|
Equity/share:
|
Shareholder’s equity |
|
Number of
outstanding shares at the end of the period |
|
|
|
|
|
|
Equity ratio, %:
|
Total equity |
x
100
|
Balance sheet
total - advances received |
|
|
|
|
|
|
Net financial
liabilities: |
Interest-bearing financial liabilities - cash assets |
|
|
|
|
|
|
|
Gearing, %
|
Interest-bearing financial liabilities - cash assets |
x
100
|
Total equity |
- HONKARAKENNE OYJ Financial Statements Bulletin 2023 ENG
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