Vaisala Corporation Financial Statement Release 2016
(Thomson Reuters ONE) -
Vaisala Corporation Financial Statement Release
February 8, 2017 at 2.00 p.m. (EET)
Vaisala Corporation Financial Statement Release 2016
Fourth-quarter 2016 orders received all time high, net sales EUR 93.0 million
and decreased by 8%. Full year 2016 net sales on previous year's level.
October-December 2016 highlights
* Orders received EUR 93.0 (88.4) million, increase 5%
* Order book EUR 118.0 (129.2) million, decrease 9%
* Net sales EUR 93.0 (101.1) million, decrease 8%
* Gross margin 52.1% (54.1%)
* Operating result EUR 14.6 (19.1) million
* Earnings per share EUR 0.79 (0.98)
* Cash flow from operating activities EUR 24.7 (29.0) million, decrease 15%
January-December 2016 highlights
* Orders received EUR 311.3 (320.0) million, decrease 3%
* Net sales EUR 319.1 (318.5) million, flat
* Gross margin 51.6% (51.1%)
* Operating result EUR 22.3 (29.6) million
* EUR 10.5 million write-down of intangible assets to Weather Business Area's
operating result
* Earnings per share EUR 1.05 (1.52)
* Cash flow from operating activities EUR 41.8 (38.8) million, increase 8%
* Cash and cash equivalents EUR 72.4 (59.2) million, increase 22%
* Dividend paid EUR 17.1 (16.4) million
* The Board of Directors proposes to the AGM that dividend of EUR 1.00 per
share be paid out of distributable earnings
* Business outlook for 2017: Vaisala estimates its full-year 2017 net sales to
be in the range of EUR 310-340 million and its operating result (EBIT) to be
in the range of EUR 32-42 million.
Vaisala's President and CEO Kjell Forsén
"Vaisala's fourth quarter order intake was very strong reaching all time high
EUR 93.0 million. Orders received increased by 5% from previous year and the
increase was driven by 10% growth in Controlled Environment Business Area with
strong APAC and Americas. Also Weather Business Area's orders received developed
positively during the fourth quarter. In October, Vaisala signed a USD 18
million contract with Bahamas' Ministry for Transport and Aviation. This
contract was a consequence of outstanding customer service and Vaisala's
leadership in Automatic Weather Observation Systems and weather radars.
Vaisala's fourth quarter net sales decreased by 8% from previous year's record
high net sales and amounted to EUR 93.0 million. Controlled Environment Business
Area's strong performance continued with 8% net sales growth from previous year,
while Weather Business Area's net sales decreased by 13% due to low orders
received during the first three quarters of 2016. Fourth quarter operating
result decreased to EUR 14.6 million following sales performance.
In 2016, Weather observation market weakened, especially in EMEA, compared to
rather good previous two years. In APAC, Vaisala's performance improved in
weather observation market thanks to a few large projects. Industrial
measurement market was favorable overall and Vaisala's net sales grew faster
than the market. Vaisala's orders received were EUR 311.3 million and decreased
by 3% from previous year. Controlled Environment Business Area's orders received
increased in all regions and was strongest in APAC and Americas, while Weather
Business Area's orders received decreased in Transportation and Meteorology
Infrastructure business units.
Despite the decline in order intake during 2016, Vaisala's net sales reached the
previous year's level and were EUR 319.1 million. Increased investment in sales
and marketing continued to pay off and Controlled Environment Business Area's
net sales crossed the hundred million milestone. The growth of net sales was
excellent 11% reaching EUR 103.7 million and coming from all regions. Weather
Business Area's net sales decreased by 4% to EUR 215.4 million. Vaisala's
operating result excluding write-down of intangible assets improved compared to
previous year and was strong at EUR 32.8 million or 10.3% of net sales.
I want to thank all Vaisala employees for the strong engagement to our business
and strive for continuous improvement. The improved quality, operational
performance and customer satisfaction that has taken place during the year would
not have been possible without our employees' outstanding performance.
In 2016, strategy implementation continued with investments in strategic growth
areas in Weather and Controlled Environment Business Areas. In Weather Business
Area, we made an entry to the growing air quality monitoring market by acquiring
new technology, which measures pollution and particles in the air. On the other
hand, we reshaped successfully our Transportation business to simplify structure
and improve profitability. We also decided to reorganize Weather Business Area
from January 2017 onwards. The new region-based organization is closer to
customer and better aligned with the strategy. In Controlled Environment, we
continued investing in growth markets, life science and power transmission.
Regional expansion continued successfully by contracting new distributors in
countries with high industrial potential.
In 2017, Vaisala is expecting stable market for both weather observation and
industrial measurement. Weather observation market is expected to improve in
EMEA, APAC and Latin America and be stable in North America. In China, weather
observation market is expected to remain stable, even though market conditions
are currently difficult to project. Market outlook for renewable energy solution
is overall positive, even though growth of renewable power capacity has
decelerated. Market outlook for industrial measurement solutions is stable
globally, and Vaisala is expecting increase in 2017 deliveries.
We estimate our full-year net sales to be in the range of EUR 310-340 million
and the operating profit (EBIT) in the range of EUR 32-42 million."
Key Figures
10-12/2016 10-12/2015 1-12/2016 1-12/2015
--------------------------------------------------------------------------------
Orders received, EUR million 93.0 88.4 311.3 320.0
Order book, EUR million 118.0 129.2 118.0 129.2
Net sales, EUR million 93.0 101.1 319.1 318.5
Gross profit, EUR million 48.5 54.7 164.8 162.8
Gross margin, % 52.1 54.1 51.6 51.1
Operating expenses, EUR
million 34.2 35.7 141.5 131.9
Operating result, EUR
million 14.6 19.1 22.3 29.6
Operating result, % 15.7 18.9 7.0 9.3
Profit (loss) before taxes,
EUR million 16.3 20.2 22.1 33.0
Profit (loss) for the period, EUR
million 14.1 17.7 18.8 27.5
Earnings per share, EUR 0.79 0.98 1.05 1.52
Return on equity, % 10.5 15.7
Capital expenditure, EUR
million 1.5 2.9 7.7 8.3
Depreciation, EUR million 2.8 3.8 24.1 15.1
Cash flow from operating activities,
EUR million 24.7 29.0 41.8 38.8
Cash and cash equivalents,
EUR million 72.4 59.2
--------------------------------------------------------------------------------
Market situation in October-December 2016
Weather observation market improved seasonally towards the end of the year, and
as typically significant portion of Vaisala Weather Business Area's annual
revenue was recognized in the fourth quarter. Industrial measurement solutions
market remained favorable overall.
In EMEA, weather observation market customer activity for orders remained at
previous year's level, but Vaisala's deliveries were affected by weak market
conditions during the first three quarters. In North America, Vaisala's orders
from weather observation customers decreased from last year due to fewer large
contracts, whereas deliveries were on good level. In Latin America, Vaisala's
order book was increased by USD 18 million contract with Ministry for Transport
and Aviation of the Commonwealth of the Bahamas. In APAC, weather observation
market customer activity for orders remained stable.
Vaisala's industrial measurement solution orders received continued to increase
compared to previous year. This was a result of favorable market conditions, and
Vaisala also grew faster than the addressable market. The growth was strong both
in APAC and Americas.
October-December 2016 performance
Orders received
EUR million 10-12/2016 10-12/2015 Change, % 2016 2015
------------------------------------------------------------------
Weather 66.5 64.3 3 206.0 225.6
Controlled Environment 26.5 24.0 10 105.3 94.4
------------------------------------------------------------------
Total 93.0 88.4 5 311.3 320.0
------------------------------------------------------------------
In the fourth quarter 2016, Vaisala's orders received reached all time high
level and were EUR 93.0 (88.4) million. Orders received increased by 5% compared
to previous year. The increase came from Americas and APAC.
In the fourth quarter 2016, Weather Business Area's orders received were EUR
66.5 (64.3) million and increased by 3% compared to previous year. The increase
came from Meteorology Infrastructure business unit. In October 2016, Vaisala
signed a USD 18 million contract with the Ministry for Transport and Aviation of
the Commonwealth of the Bahamas. The contract includes four weather radars on
four islands, nine Automatic Weather Observation Systems (AWOS) for airports and
16 Automatic Weather Stations (AWS) as well as civil works and installation
services. Meteorological software and training will be delivered together with
the Finnish Meteorological Institute. In addition, the contract includes a five
years' service agreement. The deliveries started in the fourth quarter 2016 and
are planned to be completed by the end of 2018.
In the fourth quarter 2016, Controlled Environment Business Area's orders
received were EUR 26.5 (24.0) million and increased by 10% compared to previous
year. The increase came from APAC and Americas.
Order book
EUR million December 31, 2016 December 31, 2015 Change, %
--------------------------------------------------------------------
Weather 109.4 122.2 -11
Controlled Environment 8.6 7.0 23
--------------------------------------------------------------------
Total 118.0 129.2 -9
--------------------------------------------------------------------
At the end of December 2016, Vaisala's order book was EUR 118.0 (129.2) million
and decreased by 9% compared to previous year. The order book decreased in all
geographical areas. Of the order book EUR 79.3 (95.5) million is scheduled to be
delivered in 2017.
At the end of December 2016, Weather Business Area's order book was EUR 109.4
(122.2) million and decreased by 11% compared to previous year. Order book
decreased in Meteorology Infrastructure and Transportation business units. Of
the order book EUR 71.5 (88.8) million is scheduled to be delivered in 2017. The
EUR 20 million contract with National Hydro-Meteorological Service of Vietnam,
announced in February 2016, is not included in order book, as the order will be
added in order book when the customer has given the final administrative
approval.
At the end of December 2016, Controlled Environment Business Area's order book
was EUR 8.6 (7.0) million and increased by 23% compared to previous year. Order
book increased in APAC and Americas. Of the order book EUR 7.7 (6.7) million is
scheduled to be delivered in 2017.
Net sales by business area
EUR million 10-12/2016 10-12/2015 Change, % 2016 2015
------------------------------------------------------------------
Weather 66.7 76.6 -13 215.4 225.5
Products 34.3 41.3 -17 115.5 116.2
Projects 23.7 23.1 3 65.0 71.0
Services 8.7 12.2 -29 34.9 38.3
Controlled Environment 26.4 24.5 8 103.7 93.0
Products 23.7 22.2 7 93.0 83.5
Services 2.6 2.3 16 10.7 9.5
------------------------------------------------------------------
Total 93.0 101.1 -8 319.1 318.5
------------------------------------------------------------------
Net sales by geographical area
EUR million 10-12/2016 10-12/2015 Change, % 2016 2015
------------------------------------------------------------------
EMEA 24.3 33.8 -28 92.0 105.1
Americas 46.1 42.3 9 140.9 132.0
APAC 22.6 25.0 -10 86.2 81.3
------------------------------------------------------------------
Total 93.0 101.1 -8 319.1 318.5
------------------------------------------------------------------
In the fourth quarter 2016, Vaisala's net sales were EUR 93.0 (101.1) million
and decreased by 8% compared to previous year. Vaisala's net sales in EMEA were
EUR 24.3 (33.8) million and decreased by 28%, in the Americas EUR 46.1 (42.3)
million and increased by 9% and in APAC EUR 22.6 (25.0) million and decreased by
10%. At comparable exchange rates, the net sales would have been EUR 93.3
(101.1) million and decrease would have been EUR 7.8 million or 8% from previous
year. The negative exchange rate effect was EUR 0.2 million, which was mainly
caused by GBP exchange rate depreciation against EUR.
In the fourth quarter 2016, Weather Business Area's net sales were EUR 66.7
(76.6) million and decreased by 13% compared to previous year. The decrease came
from Meteorology Infrastructure and Transportation business units due low orders
received during the first three quarters of 2016. At comparable exchange rates,
the net sales would have been EUR 67.1 (76.6) million and decrease would have
been EUR 9.5 million or 12% from previous year. The negative exchange rate
effect was EUR 0.4 million, which was mainly caused by GBP depreciation against
EUR.
In the fourth quarter 2016, Controlled Environment Business Area's net sales
were EUR 26.4 (24.5) million and increased by 8% compared to previous year. The
increase came from APAC and Americas. At comparable exchange rates, the net
sales would have been EUR 26.2 (24.5) million and increase would have been EUR
1.7 million or 7% from previous year. The positive exchange rate effect was EUR
0.2 million, which was mainly caused by JPY appreciation against EUR.
Gross margin and operating result
10-12/2016 10-12/2015 2016 2015
-------------------------------------------------------------
Gross margin, % 52.1 54.1 51.6 51.1
Weather 48.0 51.9 47.3 47.4
Controlled Environment 62.2 62.5 60.8 60.4
Operating result, EUR million 14.6 19.1 22.3 29.6
Weather 9.5 15.1 3.4 15.2
Controlled Environment 4.9 4.9 21.6 18.3
Other 0.2 -0.9 -2.7 -4.0
-------------------------------------------------------------
In the fourth quarter 2016, Vaisala's operating result was EUR 14.6 (19.1)
million and decreased by EUR 4.5 million compared to previous year. Operating
result decreased mainly due to Weather Business Area's lower net sales. Gross
margin was 52.1% (54.1%). Gross margin decreased mainly due to lower sales
volumes and related weakening in scale economies as well as lower project gross
margin in Weather Business Area. Operating expenses were EUR 34.2 (35.7) million
and decreased by 4%. The decrease came mainly from lower administration and
sales expenses.
In the fourth quarter 2016, Weather Business Area's operating result was EUR
9.5 (15.1) million and decreased by EUR 5.6 million compared to previous year.
Operating result decreased mainly due to lower net sales. Gross margin was
48.0% (51.9%). Gross margin decrease was mainly due to lower sales volumes and
related weakening in scale economies as well as lower project gross margin.
Operating expenses were EUR 22.5 (24.7) million and decreased by 9%. The
decrease came mainly from lower sales expenses but also from decreased
administration and R&D expenses.
In the fourth quarter 2016, Controlled Environment Business Area's operating
result was flat at EUR 4.9 (4.9) million, even though operating expenses
continued to increase as planned. Gross margin was 62.2% (62.5%). Operating
expenses were EUR 11.5 (10.5) million and increased by 10%. The increase came
mainly from higher sales expenses and continued investments in R&D.
In the fourth quarter 2016, financial income and expenses were EUR 1.6 (1.2)
million. The increase was mainly due to foreign exchange gains related to
valuation of USD denominated receivables.
In the fourth quarter 2016, profit/loss before taxes was EUR 16.3 (20.2)
million. Income taxes were EUR 2.2 (2.5) million. Net result was EUR 14.1 (17.7)
million.
In the fourth quarter 2016, earnings per share were EUR 0.79 (0.98).
Market situation in 2016
In 2016, market environment for Vaisala was characterized by differences between
geographic areas and customer groups. Weather observation market conditions
weakened in 2016 compared to rather good previous two years. Industrial
measurement market was favorable overall.
In EMEA, weather observation market was weak. In North America, weather
observation market was stable, and Vaisala's deliveries increased as a result of
good order intake in 2015. In Latin America, weather observation market was
affected by weak macroeconomic conditions especially in Brazil. In APAC, weather
observation market was stable, and as a result of a few large projects,
Vaisala's performance improved.
Vaisala's industrial measurement solution orders received increased in all
regions. This was a result of favorable market conditions, and Vaisala also grew
faster than the addressable market. The growth was strong especially in APAC and
in life science market.
January-December 2016 performance
Orders received
EUR million 2016 2015 Change, %
--------------------------------------------
Weather 206.0 225.6 -9
Controlled Environment 105.3 94.4 11
--------------------------------------------
Total 311.3 320.0 -3
--------------------------------------------
In January-December 2016, Vaisala's orders received were EUR 311.3 (320.0)
million and decreased by 3% compared to previous year. The decrease came from
EMEA and Americas.
In January-December 2016, Weather Business Area's orders received were EUR
206.0 (225.6) million and decreased by 9% compared to previous year. The
decrease came from Transportation and Meteorology Infrastructure business units.
In January-December 2016, Controlled Environment Business Area's orders received
were EUR 105.3 (94.4) million and increased by 11% compared to previous year.
The increase came from all regions and was strongest in APAC and Americas.
Order book
EUR million December 31, 2016 December 31, 2015 Change, %
--------------------------------------------------------------------
Weather 109.4 122.2 -11
Controlled Environment 8.6 7.0 23
--------------------------------------------------------------------
Total 118.0 129.2 -9
--------------------------------------------------------------------
At the end of December 2016, Vaisala's order book was EUR 118.0 (129.2) million
and decreased by 9% compared to previous year. The order book decreased in all
geographical areas. Of the order book EUR 79.3 (95.5) million is scheduled to be
delivered in 2017.
At the end of December 2016, Weather Business Area's order book was EUR 109.4
(122.2) million and decreased by 11% compared to previous year. Order book
decreased in Meteorology Infrastructure and Transportation business units. Of
the order book EUR 71.5 (88.8) million is scheduled to be delivered in 2017. The
EUR 20 million contract with National Hydro-Meteorological Service of Vietnam,
announced in February 2016, is not included in order book, as the order will be
added in order book when the customer has given the final administrative
approval.
At the end of December 2016, Controlled Environment Business Area's order book
was EUR 8.6 (7.0) million and increased by 23% compared to previous year. Order
book increased in APAC and Americas. Of the order book EUR 7.7 (6.7) million is
scheduled to be delivered in 2017.
Net sales by business area
EUR million 2016 2015 Change, %
-------------------------------------------------
Weather 215.4 225.5 -4
Products 115.5 116.2 -1
Projects 65.0 71.0 -8
Services 34.9 38.3 -9
Controlled Environment 103.7 93.0 11
Products 93.0 83.5 11
Services 10.7 9.5 12
-------------------------------------------------
Total 319.1 318.5 0
-------------------------------------------------
Net sales by geographical area
EUR million 2016 2015 Change, %
-------------------------------------------------
EMEA 92.0 105.1 -12
Americas 140.9 132.0 7
APAC 86.2 81.3 6
-------------------------------------------------
Total 319.1 318.5 0
-------------------------------------------------
In January-December 2016, Vaisala's net sales were flat compared to previous
year, EUR 319.1 (318.5) million. Vaisala's net sales in EMEA were EUR 92.0
(105.1) million and decreased by 12%, in the Americas EUR 140.9 (132.0) million
and increased by 7% and in APAC EUR 86.2 (81.3) million and increased by 6%.
Operations outside Finland accounted for 98% (98%) of net sales. At comparable
exchange rates, net sales would have been EUR 318.8 (318.5) million and increase
would have been EUR 0.3 million or 0% from previous year. The positive exchange
rate effect was EUR 0.3 million, which was mainly caused by JPY exchange rate
appreciation against EUR.
In January-December 2016, Weather Business Area's net sales were EUR 215.4
(225.5) million and decreased by 4% compared to previous year. Net sales
decreased in Meteorology Infrastructure and Transportation business units due to
weak market situation and low weather radar deliveries. At comparable exchange
rates, the net sales would have been EUR 215.8 (225.5) million and decrease
would have been EUR 9.6 million or 4% from previous year. The negative exchange
rate effect was EUR 0.5 million, which was mainly caused by GBP depreciation
against EUR.
In January-December 2016, Controlled Environment Business Area's net sales were
EUR 103.7 (93.0) million and increased by 11% compared to previous year. The
growth came from all regions and was strongest in APAC. At comparable exchange
rates, the net sales would have been EUR 102.9 (93.0) million and increase would
have been EUR 9.9 million or 11% from previous year. The positive exchange rate
effect was EUR 0.8 million, which was mainly caused by JPY appreciation against
EUR.
Gross margin and operating result
2016 2015
---------------------------------------
Gross margin, % 51.6 51.1
Weather 47.3 47.4
Controlled Environment 60.8 60.4
Operating result, EUR million 22.3 29.6
Weather 3.4 15.2
Controlled Environment 21.6 18.3
Other -2.7 -4.0
---------------------------------------
In January-December 2016, Vaisala's operating result was EUR 22.3 (29.6) million
and decreased by EUR 7.3 million compared to previous year. Operating result
decreased mainly due to EUR 10.5 million write-down of intangible assets in
Weather Business Area, booked in the third quarter. The intangible assets are
from the acquisitions of Second Wind Systems Inc. and 3TIER Inc. in 2013 and are
related to technology and customer relationships. The write-down was due to
Vaisala's slower than anticipated market penetration in the renewable energy
market and related weakening of expected return on Vaisala's Energy business
investment. After the write-down, the carrying amount of intangible assets and
goodwill for Energy business unit is EUR 0.00. Gross margin was 51.6% (51.1%).
Gross margin increased mainly due to Controlled Environment Business Area's
higher sales volumes and related improvement in scale economies as well as cost
savings resulting from the restructuring of Transportation business unit in
Weather Business Area. Operating expenses were EUR 141.5 (131.9) million and
increased by 7%. The increase came mainly from the EUR 10.5 million write-down
of intangible assets. Operating result excluding write-down of intangible assets
was EUR 32.8 (29.6) million and 10.3% (9.3%) of net sales.
In January-December 2016, Weather Business Area's operating result was EUR 3.4
(15.2) million and decreased by EUR 11.8 million compared to previous year.
Operating result decreased mainly due to EUR 10.5 million write-down of
intangible assets and lower net sales. The intangible assets are from the
acquisitions of Second Wind Systems Inc. and 3TIER Inc. in 2013 and are related
to technology and customer relationships. The write-down was due to Vaisala's
slower than anticipated market penetration in the renewable energy market and
related weakening of expected return on Vaisala's Energy business investment.
After the write-down, the carrying amount of intangible assets and goodwill for
Energy business unit is EUR 0.00. Gross margin was 47.3% (47.4%). Gross margin
remained stable, as costs savings resulting from the restructuring of
Transportation business unit compensated for decreased volumes and related
weakening in scale economies. Operating expenses were EUR 98.4 (91.9) million
and increased by 7%. The increase came mainly from the EUR 10.5 million write-
down of intangible assets. Operating result excluding write-down of intangible
assets was EUR 13.9 (15.2) million and 6.5% (6.8%) of net sales.
In January-December 2016, Controlled Environment Business Area's operating
result was EUR 21.6 (18.3) million and improved by EUR 3.2 million compared to
previous year. Operating result increased due to higher net sales. Gross margin
was 60.8% (60.4%). Operating expenses were EUR 41.5 (37.9) million and increased
by 10%. The increase came mainly from continued investments in R&D and higher
sales expenses.
In January-December 2016, financial income and expenses were EUR -0.3 (3.5)
million. The decrease is mainly due to foreign exchange losses related to
valuation of USD denominated receivables.
In January-December 2016, profit/loss before taxes was EUR 22.1 (33.0) million.
Income taxes were EUR 3.3 (5.5) million. Group's effective tax rate was 15%
(17%). The effective tax rate decreased as the write-down of intangible assets
resulted in deferred tax liability adjustment with the US tax rate of 39.5%.
Excluding the write-down Group's effective tax rate would have been 21%. Net
result was EUR 18.8 (27.5) million.
In January-December 2016, earnings per share were EUR 1.05 (1.52).
Statement of financial position and cash flow
Vaisala's financial position remained strong at the end of December 2016. Cash
and cash equivalents amounted to EUR 72.4 (59.2) million. At the end of December
2016, Vaisala did not have any material interest bearing liabilities.
Despite increased cash balance, the statement of financial position total
decreased to EUR 255.0 (264.0) million. The decrease was due to EUR 10.5 million
write-down of intangible assets and related decrease in deferred tax liabilities
as well as decreased inventories.
In January-December 2016, Vaisala's cash flow from operating activities
increased to EUR 41.8 (38.8) million as a result of better working capital
development and increased EBITDA (earnings before interest, taxes, depreciation
and amortization).
During the financial year 2016, Vaisala repurchased 176 827 own shares with EUR
5.3 million and paid dividend EUR 17.1 million.
Capital expenditure and divestments
In January-December 2016, gross capital expenditure totaled EUR 7.7 (8.3)
million. Capital expenditure was mainly related to acquired technology as well
as investment in machinery and equipment to develop and maintain Vaisala's
production and service operations.
In February, Vaisala made the decision to reshape its Transportation business
unit within Weather Business Area to simplify structure and improve
profitability. Vaisala exited field services business in all countries except
the United Kingdom, and sold its United States Automated Weather Observing
System business. In 2016, Vaisala recognized EUR 1.0 million profit from this
divestiture in the United States. In total, these changes led to a reduction of
64 employees of which 11 employees were offered a new job in Vaisala. Most of
the employees under the scope of the business transfer in the United States were
employed by the acquiring company. Estimated annual cost savings are EUR 6
million and they are expected to contribute fully to 2017 profitability. The
already realized cost saving in 2016 was EUR 2.4 million and restructuring
expenses recognized EUR 2.1 million.
During the third quarter, Vaisala acquired new technology and products from
Envitems Oy to expand its offering in the growing air quality monitoring market.
The acquired technology and products measure pollution gases, like carbon
monoxide, nitrous oxides, sulfur dioxide, hydrogen sulfide and ozone, as well as
particles in the air. The products can be combined seamlessly with Vaisala
industry-leading WXT multi-weather stations, and they present a novel,
innovative way to build affordable but comprehensive air quality monitoring
networks.
Depreciation, amortization and write-downs were EUR 24.1 (15.1) million. The
increase was because of EUR 10.5 million write-down of intangible assets.
Research and development
In January-December 2016, research and development expenses totaled EUR 38.0
(36.1) million, representing 11.9% (11.3%) of net sales.
R&D by business area
EUR million 10-12/2016 10-12/2015 Change, % 2016 2015 Change, %
--------------------------------------------------------------------------
Weather 6.9 7.5 -8 26.5 26.7 -1
Controlled Environment 3.2 2.8 15 11.5 9.4 22
--------------------------------------------------------------------------
Total 10.1 10.3 -2 38.0 36.1 5
--------------------------------------------------------------------------
In January-December 2016, Weather Business Area R&D expenses were 12.3% (11.8%)
of net sales. Controlled Environment Business Area R&D expenses were 11.1%
(10.1%) of net sales, which is in line with continued investments in new product
development.
Key product and software releases
In 2016, Vaisala launched several new advanced products and software to enhance
growth as well as to replace existing products.
Weather Business Area continued to enhance Observation Network Manager NM10,
which is a scalable, automated system for remote monitoring and managing
different weather observation sites. User interface and connectivity of the
system were notably upgraded.
In addition, Vaisala introduced an enhanced AviMet Airport Weather Observation
System (AWOS). The enhancements are integrated capability to display lightning
data and IRIS weather radar information as part of the AviMet system. This
improves situational awareness and safety at airports as lighting and weather
radar data are easily available.
Third key launch of Weather Business Area was a new version of Sounding System
software. The new version supports the use of RS41 Radiosonde in the automated
sounding system, AUTOSONDE® AS15. This enables customers to take advantage of
RS41 Radiosonde in automated sounding systems.
Controlled Environment Business Area launched a new measurement device for
transformer online condition monitoring (Optimus(TM)). This online analyzer
gives repeatable and accurate data of possible fault gases in transformer oil.
Its core sensors are based on versatile in-house infrared gas detection
technology, CARBOCAP®. In addition to reliability, this device is easy and fast
to install.
Controlled Environment Business Area also launched next-generation viewLinc
Environmental Monitoring System (previously Continuous Monitoring System).
Major advancement include long-range wireless connectivity, ease of use and fast
deployment. The system is used in life science and industrial domains to monitor
large spaces like warehouses, laboratories, processing areas, environmental
chambers and other controlled environments.
In addition, Controlled Environment Business Area launched CARBOCAP® Carbon
Dioxide Probe GMP252, which is intended for industrial CO2 measurement
applications, such as greenhouse control, cold storage monitoring and demanding
HVAC (heating, ventilation and air conditioning) applications. The use of this
probe was supported with the launch of a modern and user-friendly host device
Indigo 201. With this host device, the measurement data can easily be displayed
and connected to wired or wireless interfaces.
More details concerning the new products and software can be found at
www.vaisala.com.
Personnel
The average number of personnel employed in Vaisala during January-December
2016 was 1,590 (1,611). At the end of December 2016, the number of employees was
1,569 (1,588).
On December 31, 2016, 69% (66%) of employees were located EMEA, 23% (26%) in the
Americas and 9% (8%) in APAC. 38% (41%) of employees were based outside Finland.
The total personnel expenses in 2016 were EUR 128.4 (130.0) million.
Number of employees by geographical area
December 31, 2016 December 31, 2015 Change
--------------------------------------------------------------------
Finland 971 930 41
EMEA (excluding Finland) 109 119 -10
Americas 354 407 -53
APAC 135 132 3
--------------------------------------------------------------------
Total 1,569 1,588 -19
--------------------------------------------------------------------
Number of employees by function
December 31, 2016 December 31, 2015 Change
---------------------------------------------------------------
Sales and marketing 371 374 -3
R&D 309 304 5
Operations 403 379 24
Services 322 369 -47
Administration 164 162 2
---------------------------------------------------------------
Total 1,569 1,588 -19
---------------------------------------------------------------
During 2016, number of employees decreased in Americas and services functions,
as a result of reshaping of Transportation business unit within Weather Business
Area.
The decision to reshape Transportation business unit within Weather Business
Area led to simplified organizational structure and profitability improvement.
In total, these changes led to a reduction of 64 employees of which 11 employees
were offered a new job in Vaisala. Most of the employees under the scope of the
business transfer in the United States were employed by the acquiring company.
In Weather Business Area, business development capability was strengthened by
building a business development team and launching new agile business concept
creation practices.
In Vaisala's annual Staff Survey response rate was 85%. All survey areas
developed positively compared to previous year. Engagement is a strength across
Vaisala, however, cooperation between teams still requires further improvement.
Leadership development programs for managers and another one for experts started
in the US, China and Finland. Also Vaisala Business Learning Program continued.
Fifth mentoring program was launched in order to support professional
development, enhance leadership and coaching culture across business units and
functions.
Vaisala's ninth Giant Leap Trainee Program took place in Finland, the U.S. and
the UK. This program is an important channel to attract and recruit young top
talent.
Share-based incentive plans
On February 6, 2013, Vaisala's Board of Directors resolved for the Group key
employees a share-based incentive plan that was based on the development of
Group's profitability in calendar year 2013. No reward was paid based on this
plan as the profitability targets were not met.
On February 10, 2014, Vaisala's Board of Directors resolved for the Group key
employees a share-based incentive plan that was based on the development of
Group's profitability in calendar year 2014. The reward will be paid partly in
Vaisala's A shares and partly in cash in spring 2017. The cash proportion will
cover taxes and tax-related costs arising from the reward to a key employee. The
maximum amount of this plan originally corresponded to 160,000 shares. No reward
will be paid if a key employee's employment or service ends before the reward
payment date. The expenses of this share-based incentive plan are accrued over
the term of the plan from May 2014 to March 2017. The cost of the proportion of
share reward corresponds to the value of Vaisala's A share closing price of EUR
23.69 on the effective date of the incentive plan, and the cash proportion is
valued at the closing price of the share on December 31, 2016. This share-based
incentive plan was directed to approximately 20 persons on December 31, 2016.
The maximum reward payable on the basis of this share-based plan totals to
43 412 Vaisala's A shares, including the cash portion.
On December 18, 2014, Vaisala's Board of Directors resolved for the Group key
employees a share-based incentive plan that was based on the development of
Group's profitability in calendar year 2015. The reward will be paid partly in
Vaisala's series A shares and partly in cash in spring 2018. The cash proportion
will cover taxes and tax-related costs arising from the reward to a key
employee. The maximum amount of this plan originally corresponded to 160,000
shares. No reward will be paid, if a key employee's employment or service ends
before the reward payment date. The expenses of this share-based incentive plan
are accrued over the term of the plan from May 2015 to March 2018. The cost of
the proportion of share reward corresponds to the value of Vaisala's A share
closing price of EUR 24.16 on the effective date of the incentive plan, and the
cash proportion is valued at the closing price of the share on December
31, 2016. This share-based incentive plan was directed to approximately 30
persons on December 31, 2016. The maximum reward payable on the basis of this
share-based plan totals to 101 791 Vaisala's A shares, including the cash
portion.
On December 16, 2015, Vaisala's Board of Directors resolved for the Group key
employees a share-based incentive plan that was based on the development of
Group's profitability in calendar year 2016. The reward will be paid partly in
Vaisala's series A shares and partly in cash in spring 2019. The cash proportion
will cover taxes and tax-related costs arising from the reward to a key
employee. The maximum amount of this plan originally corresponded to 200,000
shares. No reward will be paid if a key employee's employment or service ends
before the reward payment date. The expenses of this share-based incentive plan
are accrued over the term of the plan from May 2016 to March 2019. The cost of
the proportion of share reward corresponds to the value of Vaisala's A share
closing price of EUR 23.13 on the effective date of the incentive plan, and the
cash proportion is valued at the closing price of the share on December
31, 2016. This share-based incentive plan was directed to approximately 30
persons on December 31, 2016. The maximum reward payable on the basis of this
share-based plan totals to 95 060 Vaisala's A shares, including the cash
portion.
On February 10, 2016, Vaisala' Board of Directors resolved for a share-based
incentive plan, in which the earning criteria is uninterrupted employment of
certain Group employees for a defined number of years. The reward will be paid
partly in Vaisala's A shares and partly in cash in three equal installments
during the term of the plan. The cash proportion will cover taxes and tax-
related costs arising from the reward to a key employee. The maximum amount of
this plan originally corresponded to 9,000 shares. No reward will be paid if a
key employee's employment or service ends before the reward payment date. The
expenses of this share-based incentive plan are accrued over the term of the
plan from May 2016 to March 2018. The cost of the proportion of share reward
corresponds to the value of Vaisala A share closing price of EUR 23.13 on the
effective date of the incentive plan, and the cash proportion is valued at the
closing price of the share on December 31, 2016. The maximum reward payable on
the basis of this share-based plan totals to 6,000 Vaisala A shares, including
the cash portion.
On December 15, 2016, Vaisala's Board of Directors resolved for the Group key
employees a share-based incentive plan that is based on the development of
Group's profitability in calendar year 2017. The reward will be paid partly in
Vaisala's series A shares and partly in cash in spring 2020. The cash proportion
will cover taxes and tax-related costs arising from the reward to a key
employee. The maximum amount of this plan corresponds to 200,000 shares. No
reward will be paid if a key employee's employment or service ends before the
reward payment date. The expenses of this share-based incentive plan are accrued
over the term of the plan from May 2017 to March 2020.
Expenses for the share-based incentive plans
EUR million 2013 2014 2015 2016
----------------------------------------------------
Share-based incentive plan 2013 - - - -
Share-based incentive plan 2014 0.2 0.3 0.6
Share-based incentive plan 2015 0.5 1.1
Share-based incentive plans 2016 0.7
----------------------------------------------------
Vaisala's long-term financial targets for 2014-2018 and strategy
Vaisala's long-term financial targets
Growth: Vaisala targets an average annual growth of 5%. In selected businesses
such as renewable energy, life science and power transmission the target is to
exceed 10% annual growth.
Profitability: Vaisala's objective is profitable growth and the target is to
achieve 15% operating profit (EBIT) margin towards the end of the year 2018.
Vaisala does not consider the long-term financial targets as market guidance for
any given year.
Vaisala's strategy
Vaisala's goal of profitable growth will be achieved through the implementation
of the strategic themes: creation of customer value, reliability, and
simplification.
Additional customer value will be created in Weather Business Area by building
new business around decision support services that are offered to renewable
energy, aviation and roads customers. Controlled Environment Business Area will
focus on enhancing offering and developing the sales channel for life science
and industrial customers in order to create value for customers' operations.
Reliability will create customer satisfaction and loyalty. High quality of
products and services, well-functioning customer service and on-time actions
will deliver reliable customer experience.
Simplification will create operational efficiency. Optimized global networks,
streamlined supply chains, common capabilities and continual improvement in all
functions will ensure increased efficiency of Vaisala's operations.
Implementation of the strategy in 2016
In 2016, Vaisala continued the investments in strategic growth areas in Weather
and Controller Environment Business Areas.
Weather Business Area
Weather Business Area continued its efforts to create customer value and growth
by building business around information services that are offered to renewable
energy, aviation and roads customers. Key product launches to enhance growth as
well as to replace existing products included enhancements to Observation
Network Manager NM10, new version of AviMet Airport Weather Observation System
(AWOS) and new version of sounding system software.
In 2016, Vaisala made entry to growing air quality monitoring market by
acquiring products and technology, which measure pollution gases and particles
in the air. These products can be seamlessly combined with Vaisala industry-
leading weather sensors enabling a compact and cost effective solution for
measurement networks. This provides Vaisala a great opportunity to expand to the
air quality monitoring market, which is supplementing traditional high cost
reference measurement stations. Vaisala expects opportunities in particular in
markets like China, India and the Middle East in the near future.
While the renewable energy market outlook has remained solid, development and
adaptation of Vaisala's energy services has been slower than expected and
commoditization of certain products has led to deterioration of market prices.
Therefore, expected return on Vaisala's Energy business investment weakened, and
Vaisala recorded a EUR 10.5 million write-down of intangible assets, such as
technology and customer relationships, to Weather Business Area's operating
results in 2016. Vaisala has decided to focus its Energy business unit to areas
of more sustainable long-term competitive differentiation. Going forward Energy
business unit's offering is based on industry leading renewable energy
measurement systems, resource assessment and asset management solutions.
In February, Vaisala made the decision to reshape its Transportation business
unit within Weather Business Area to simplify structure and improve
profitability and divested partly the related business in the U.S. Going
forward, Transportation business unit will focus on product leadership, delivery
capability and expansion of information services in order to drive growth,
profitability and customer focus. Vaisala aims to improve Transportation
business profitability by focusing on Vaisala platform products providing high
value customer support and expanding information services.
At the end of the year, Vaisala decided to reorganize its Weather Business Area
in order to simplify structure and operations and to better align with the
strategy. From January 1, 2017 onwards Weather Business Area has organized its
business under four regions (Americas; Europe; Asia-Pacific, Middle East and
Africa; China), which have profit and loss responsibility. Additionally, Weather
Business Area separates its product and service offering into two business lines
(Offering and Information Services), which are responsible for product
management, application expertise and R&D.
Controlled Environment Business Area
Controlled Environment Business Area's product leadership strategy provided a
strong platform for further growth during 2016. Controlled Environment Business
Area continued to grow through industrial measurement solutions in various
industries across all geographical areas. Regional expansion continued by
contracting new distributors in countries with high industrial potential. This
had a positive impact on distributor sales, which achieved double-digit growth.
Controlled Environment Business Area continued investing in its growth markets,
life science and power transmission. Continuous monitoring systems offered to
life science and other industrial customer had, as in previous year, double-
digit growth with further improving profitability and contributing to Controlled
Environment Business Area's operating profit even though investment phase still
continues.
Vaisala made a new product entry to power transmission customers by launching a
measurement device for transformer online monitoring. For life science and
industrial domain customers Vaisala launched the viewLinc Environmental
Monitoring System. Other key launches included a new probe for industrial CO2
measurement applications and related host device.
More information on the product and software launches can be found on R&D
section.
Quality and operational excellence
In 2016, Vaisala continued improvement activities in product and services
quality widely through the company. Quality planning capability was strengthened
by introducing Design for Six Sigma methods in product development. Lean
principles were widely applied, not only in manufacturing but in many other
parts of the organization as well.
Vaisala continued developing material management and inventory processes. Main
focus was on product life-cycle management in order to improve inventory
rotation of end-of-life components.
Vaisala Production System (VPS) was launched in Operations unit during 2016. VPS
is a way to drive operational excellence in Vaisala's high mix - low volume
supply chain. Development of supply base, standardization of processes and
practices as well as engaging entire organization to development laid foundation
for efficient operations and resulted in high on-time delivery precision.
Management Group
On December 31, 2016 Vaisala's Management Group members were:
* Kjell Forsén, President and CEO, Chairman of the Management Group
* Marja Happonen, Executive Vice President, Human Resources
* Sampsa Lahtinen, Executive Vice President, Controlled Environment Business
Area
* Kaarina Muurinen, Chief Financial Officer
* Jarkko Sairanen, Executive Vice President, Weather Business Area
* Vesa Pylvänäinen, Executive Vice President, Operations
Sustainability
Vaisala is in a unique position to promote sustainable development through the
technologies it offers to its customers. Through its weather solutions, Vaisala
safeguards lives and property and reduces environmental impacts. Industrial
instruments bring efficiencies and reduce energy and material consumption in
customers' operations. Renewable energy solutions and services optimize site
selection and power output for the renewable energy sector. Air quality
measurement networks warn citizens and authorities about dangerous levels of
pollution in urban areas.
Vaisala pays special attention to the objectives of UN Global Compact in the
areas of human and labor rights, the environment and anti-corruption. Vaisala
actively monitors and works with its suppliers to extend the same ethical,
safety and environmental standards through the supply chain. In 2016, Vaisala
strengthened the traceability of raw materials used in sourced components, and
continues to develop its capabilities further.
Vaisala is a supporter of a strong climate agenda. Therefore, Vaisala is a
member of Caring for Climate, an initiative under UN Global Compact, and Climate
Leadership Council, a Finnish initiative for leading sustainable companies, as
well as benefactor of Helsinki Metropolitan Smart 'n' Clean, a foundation that
cultivates Helsinki capital area into a world-class test platform for clean and
smart solutions.
Vaisala is also at the forefront in both consuming and developing better ways to
produce renewable energy. In 2015, Vaisala made a public commitment to become
powered by 100% renewable energy by 2020. Vaisala is a member of RE100, an
initiative targeting the world's most influential companies to commit to using
100% renewable power in their operations.
Further information about Vaisala's sustainability is available on the company
website at www.vaisala.com/sustainability.
Near-term risks and uncertainties
Uncertainties in world economic and political situation as well as changes in
customer behavior may cause demand slowdown or delays in customer projects. In
the US, political decisions may have both positive and negative effects on the
demand for Vaisala's products and services for the public sector.
Weather Business Area offers its meteorological customers large infrastructure
projects. The closing of such contracts is characterized by budgetary
constraints, long-term negotiations concerning scope, project timing and
financing. Thus, Vaisala's financial performance may vary significantly over
time. Also increasing competition, changes in price levels and exchange rates
may impact Vaisala's net sales and profitability.
The ongoing business expansion in renewable energy and information services
market may be delayed due to long authorization and approval processes, evolving
business models and customers' postponing decision making. Delays in new product
ramp-ups and market acceptance of new offering, such as power transformer
monitoring products and continuous monitoring systems, may postpone the
realization of Vaisala's growth plans.
Suppliers' and subcontractors' delivery capability or operating environment as
well as product quality may impact Vaisala's net sales and profitability. Cyber
risk and availability of IT systems may impact operations, delivery of
information services or Internet-based services or cause financial loss.
Vaisala's capability to successfully complete investments, acquisitions,
divestments and restructurings on a timely basis and to achieve related
financial and operational targets represent a risk, which may impact net sales
and profitability.
Further information about risk management and risks are available on the company
website at http://www.vaisala.com/investors, Corporate Governance and
www.vaisala.com/investors, Vaisala as an Investment.
Decisions by Vaisala Corporation's Annual General Meeting
Vaisala Corporation's Annual General Meeting was held on April 5, 2016. The
meeting approved the financial statements and discharged the members of the
Board of Directors and the President and CEO from liability for the financial
period January 1-December 31, 2015.
Dividend
The Annual General Meeting decided a dividend of EUR 0.95 per share,
corresponding to the total of EUR 17.1 million. The record date for the dividend
payment was April 7, 2016 and the payment date was April 14, 2016.
Board of Directors
The Annual General Meeting confirmed that the number of Board members is seven.
Petra Lundström, Yrjö Neuvo, Mikko Niinivaara, Pertti Torstila, Raimo Voipio and
Ville Voipio will continue as members of the Board of Directors. Kaarina
Ståhlberg was elected as a new member of the Board of Directors.
The Annual General Meeting confirmed that that the annual fee payable to the
Chairman of the Board of Directors is EUR 45,000 and each Board member EUR
35,000 per year. Approximately 40 percent of the annual remuneration will be
paid in Vaisala Corporation's A shares acquired from the market and the rest in
cash. In addition, the Annual General Meeting confirmed that the compensation
for the Chairman of the Audit Committee would be EUR 1,500 per attended meeting
and EUR 1,000 for each member of the Audit Committee and Chairman and each
member of the Remuneration and HR Committee and any other committee established
by the Board of Directors for a term until the close of the Annual General
Meeting in 2017. The meeting compensation fees are paid in cash.
Auditor
The Annual General Meeting re-elected Deloitte & Touche Oy as the auditor of the
Company and APA Merja Itäniemi will act as the auditor with the principal
responsibility. The Auditors are reimbursed according to invoice presented to
the company.
Authorization for the directed repurchase of own A shares
The Annual General Meeting authorized the Board of Directors to decide on the
directed repurchase of a maximum of 200,000 of the Company's own A shares in one
or more instalments with funds belonging to the Company's unrestricted equity.
This authorization is valid until the closing of the next Annual General
Meeting, however, no longer than October 5, 2017.
Authorization on the issuance of the Company's own A shares
The Annual General Meeting authorized the Board of Directors to decide on the
issuance of a maximum of 391,550 Company's own A shares. The issuance of own
shares may be carried out in deviation from the shareholders' pre-emptive rights
(directed issue). The subscription price of the shares can instead of cash also
be paid in full or in part as contribution in kind. This authorization is valid
until April 5, 2021.
The organizing meeting of the Board of Directors
At its organizing meeting held after the Annual General Meeting, the Board
elected Raimo Voipio to continue as the Chairman of the Board of Directors and
Yrjö Neuvo to continue as the Vice Chairman.
The composition of the Board committees was decided to be as follows:
Kaarina Ståhlberg was elected as the Chairman and Petra Lundström and Mikko
Niinivaara as members of the Audit Committee. The Chairman and all members of
the Audit Committee are independent both of the Company and of significant
shareholders.
Raimo Voipio was elected as the Chairman and Yrjö Neuvo and Mikko Niinivaara as
members of the Remuneration and HR Committee. Raimo Voipio is independent of the
Company. Yrjö Neuvo and Mikko Niinivaara are independent both of the Company and
of significant shareholders.
Vaisala's shares and shareholders
Vaisala's share capital totaled EUR 7,660,808 on December 31, 2016. On December
31, 2016, Vaisala had 18,218,364 shares, of which 3,389,351 were series K shares
and 14
Unternehmensinformation / Kurzprofil:
Datum: 08.02.2017 - 13:00 Uhr
Sprache: Deutsch
News-ID 522843
Anzahl Zeichen: 65674
contact information:
Town:
Helsinki
Kategorie:
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