UPONOR
Comparable operating profit and sales climb / Cost savings help lift Europe
Pipes manufacturer Uponor (Vantaa / Finland; www.uponor.com) saw its 2016 comparable operating profit climbing nearly a fifth on the back of higher sales and a transformation programme that started to bear fruit in Europe. In the US, higher costs due to supply shortages in plastic fitting resin offset robust sales growth. Group net sales amounted to EUR 1.1 bn, up 4.6% year-on-year, with organic growth at 2.0%. Excluding effects from currency, divestments and acquisitions, like-for-like growth was 3%. Restructuring costs, partly for job cuts and closure of ten European offices, ate into operating profit, which stood at EUR 71.0m from the year-earlier EUR 71.4m. However, on a like-for-like basis, it was 19.7% at EUR 19m.

Comparable operating profit in Building Solutions - Europe rose by more than a third to EUR 38m and nearly seven-fold in Uponor Infra, which manages infrastructure activities. The two segments bore the brunt of efforts to make Uponor leaner and more agile. Building Solutions - Europe posted a 9.4% sales increase, driven by acquisitions and the good economic situation in Germany, the second most important market after North America. Sales trends in south-west Europe and the Nordic countries were also positive. In The Netherlands, construction activity continued to grow at a slower pace. Sweden’s residential boom endured while Finland's construction spending rose. In the UK, the “Brexit” fallout was muted, with both the residential and non-residential segments remaining steady, Uponor said.

Profit at Building Solutions - Europe was also buoyed by cost savings from the transformation programme (see Plasteurope.com of 03.01.2017 and 25.11.2016). Profitability however was burdened by increasing competition in indoor climate and plumbing solutions, mainly from private label and other offerings using lower price technologies, as well as tighter competition within the distribution channel.

US sales were strong in the first-half but hit a growth plateau afterwards, reflecting trends in the building and construction markets. Operating profit at Building Solutions - North America was at EUR 50m, down 1.8% and dragged by third-quarter extra spending to manage tight supply of a key resin for plastic fittings. Uponor had to use more expensive substitutes, pushing up costs to ensure supply for customers. The volatility had affected pipe and fittings system sales growth throughout most of the year.

Profit in Uponor Infra, the smallest business, plunged nearly six-fold to a reported loss of EUR 0.8m, burdened by restructuring costs in Europe and Canada as well as a 7.7% sales decline it attributed to weak developments in Poland and North America. Adjusted for one-time effects, operating profit gained 573% at EUR 6.4m.

CEO Jyri Luomakoski said Europe's building market was poised for broad-based recovery, bolstered by business confidence, low interest rates, immigration and pent up demand. Several European governments are also beginning to invest more on infrastructure projects. The outlook for North America remains solid, he noted.
17.02.2017 Plasteurope.com [236224-0]
Published on 17.02.2017
German version...German version of this article...
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