GLASTON CORPORATION                   FINANCIAL STATEMENTS BULLETIN   8 FEBRUARY 2018 at 13.00

This release is a summary of Glaston Corporation's financial statements bulletin 2017. The complete report is attached to this release as a pdf-file. The stock exchange release is also available on the company's website at the address www.glaston.net.

OCTOBER-DECEMBER 2017

  • Orders received totalled EUR 28.8 (33.6) million.
  • Net sales fell by 6% to EUR 33.1 (35.1) million.
  • Comparable EBITDA was EUR 3.3 (3.4) million. 
  • The operating profit was EUR 2.4 (2.4) million, i.e. 7.2 (6.8)% of net sales. 
  • The comparable operating profit remained at the previous year’s level and was EUR 2.6 (2.7) million, i.e. 7.8 (7.8)% of net sales. 

JANUARY-DECEMBER 2017

  • Orders received totalled EUR 103.7 (112.9) million.
  • The order book on 31 December 2017 was EUR 35.2 (45.6) million
  • Net sales grew by 3% to EUR 110.4 (107.1) million.
  • Comparable EBITDA was EUR 8.3 (5.4) million, i.e. 7.6 (5.1)% of net sales. 
  • The operating profit was EUR 5.0 (2.3) million, i.e. 4.5 (2.1)% of net sales. 
  • The comparable operating profit grew by 94% to EUR 5.4 (2.8) million, i.e. 4.8 (2.6)% of net sales. 
  • Return on capital employed (ROCE) was 9.8 (4.6)%.
  • Earnings per share were EUR 0.015 (0.005)
  • Net interest-bearing debt amounted to EUR 0.9 (-0.6) million. 
  • Research and development expenditure, excluding depreciation, totalled EUR 4.0 (3.0) million, i.e. 3.6 (2.8)% of net sales. 
  • The Board of Directors proposes that a return of capital of EUR 0.01 per share be distributed for 2017.


GLASTON’S OUTLOOK FOR 2018

Although the order book at the end of 2017 was lower than the previous year, the good order intake of the second half of the year and positive market development create good conditions for profitable growth in 2018. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.4 million.)
 
PRESIDENT & CEO ARTO METSÄNEN:
“After a quiet first quarter, Glaston’s markets continued to pick up. The positive note was maintained throughout the year and order intake grew steadily. Despite the good market activity, customers’ decision-making remained slow in certain areas and some deals were also delayed.

Full-year net sales rose by 3% compared with 2016 and totalled EUR 110.4 (107.1) million. A particular bright spot was the strongly increased operating profit. Compared with the previous year, the comparable operating profit nearly doubled to EUR 5.4 million.

In accordance with our strategy, we have invested heavily during the year in both digitalisation and emerging technologies. In addition to flat tempering, lamination technology has been taken forward utilising customer experience. Development projects in bending-tempering and in bent glass technology have continued. To accelerate development in our industry, in the summer we organised a startup event, aimed at bringing together the sector’s innovators, investors and operators.

In the field of digitalisation, we launched a number of development projects related, for example, to cloud services, utilisation of analytics, raising the degree of automation, and preventative maintenance. Within the framework of Glaston’s Emerging Technologies unit, we held active discussions with a number of companies on the development of new glass technologies, and development cooperation offers were made to several partners. We were able to respond to even highly challenging development requests, which strengthened our position as technology leader in our industry. The Heliotrope nanotechnology project progressed according to plan, and a prototype line was approved on a preliminary basis in December 2017. In addition, planning of a pilot line advanced to the decision stage.    

Our starting position for 2018 is good. The company is stronger and we expect the good market situation to continue. We look to the future with confidence and, in line with our strategy, we will continue on the path of profitable growth. We are confident that certain Emerging Technologies’ development projects will be realised as new machine orders during 2018–2019.” 

KEY FIGURES 31.12.2017    31.12.2016
Order book, EUR million 35.2 45.6
Orders. received, EUR million 103.7 112.9
Net sales, EUR million 110.4 107.1
EBITDA, comparable, EUR million 8.3 5.4
EBITDA, comparable, as % of net sales 7.6 5.1
Operating result (EBIT), comparable, EUR million 5.4 2.8
Operating result (EBIT) comparable, as % of net sales 4.8 2.6
Profit / loss for the period, EUR million 2.9 1.0
Earnings per share, EUR 0.015 0.005
Return of capital per share, EUR* 0,01 -
Net cash flow from operating activities 0.1 13.4
Return on capital employed, %, annualized 9.8 4.6
Gross capital expenditure, EUR million 2.3 3.9
Equity ratio, % 45.2 43.2
Gearing, % 34.9 46.7

     *The Board of Directors’ proposal to the Annual General Meeting

OPERATING ENVIRONMENT
In 2017, the glass processing market made a slow start, and the first quarter was quiet. In the second quarter, the market picked up and gradually improved throughout the rest of the year. The EMEA area strengthened its position as Glaston’s biggest market area. In North America, the market situation remained reasonably good. The South American market remained subdued. In the Asian market area, activity varied from region to region. In Southeast Asia and the Pacific area development was favourable. The Chinese market remained quiet, but the first signs of a pick-up in construction were perceptible.

MACHINES
October–December
In the final quarter of the year, the Machines business market was active. In the EMEA area, market activity increased. In Central Europe demand strengthened, and tempering machines were sold to Germany, Austria and the Netherlands, for example. In Portugal, demand continued to be strong, supported by a state support programme. In the UK, the market weakened further. In the Eastern European market, EU-supported projects advanced, but support decisions are taking longer and the criteria for support have tightened. In Russia, there was a significant pick-up in the market.

In North America, steady development continued. In the final quarter, Glaston made a number of important openings in laminating machines, and in flat tempering further orders were received from  several key customers. The South American market remained subdued and the focus was on smaller machines. In the Asian market, activity increased in the Southeast Asia and Pacific areas.

January–December
In the Machines business, there was a slow start to the year. Activity in the market increased, however, as the year progressed. In the EMEA area, market activity was on a good level throughout the year, and machine orders were received at a steady rate. The EMEA area strengthened its position as the biggest market area for Glaston’s Machines business. Despite the high activity, customers’ decision-making was slow in many countries and some deals were postponed to later date.

In the North American market, demand remained at a relatively good level throughout the year. In addition to the FC™ product series, customers were interested in laminating lines as, due to tightening building regulations, the market for laminated glass is expected to grow in the USA. Competition in the market continued to be intense. The South American market remained quiet, and customers’ interest was directed mainly at smaller machines.

In the Asian market area, development varied from region to region. The tempering machine markets in Australia and New Zealand remained active, and Glaston maintained its strong position. In Southeast Asia, the machine market developed positively in Thailand, the Philippines and Indonesia. High end-product quality and low emissivity (Low-E) glass were of particular interest to customers. The first signs of a recovery in construction were evident in China, and demand for glass processing machines picked up slightly. Activity of solar energy projects grew steadily during the year. In September, Glaston closed a deal for the delivery to China of a GlastonAir™ tempering line, which is particularly suited to manufacturing of glass for thin solar panels.

EMERGING TECHNOLOGIES
During 2017, the nanotechnology project focused on testing a prototype line and larger glass sizes, and on developing the electrochromic material. In August, Glaston delivered to Heliotrope Technologies for installation into the prototype line a device enabling the processing of larger glass sizes. In the latter part of the year, good test results were achieved with the prototype line and, in terms of flexibility and glass size, the line was approved on a preliminary basis in December 2017.

In December, a number of customer presentations were held at Heliotrope. The functionality of the prototype line, in particular, attracted the praise of potential customers. The engineering of a pilot line for delivery to Europe proceeded towards the decision stage, and the factory layout and machine configuration of the line were specified.

In addition to the Heliotrope project, Glaston held active discussions with a number of companies on developing new glass technologies and their practical application. Glaston’s role in possible future projects may include, for example, advanced glass coatings for automotive and aviation industry products or the development and assembly of production lines for glass-related solar energy applications. Offers relating to equipment and development cooperation have been made to a number of partners.

SERVICES
October–December
The slight pick-up in the services market continued in the fourth quarter of the year. Demand for upgrade products grew further. In the USA, Glaston received new orders from the area’s key customers, and the company also sold a laminating line modernisation package to Mexico. Tempering line modernisation products were sold to Australia and Argentina. In the EMEA area and South America, the sale of several larger spare parts packages was agreed. Demand for maintenance services fell short of the level of the corresponding period of the previous year. Sales of tools was at the previous year’s level.

January–December
In 2017, cautiously positive development was perceptible in the Services business market. Glaston’s position in the market continued to be strong. After a quiet first quarter, the market for modernisation products picked up, and good development continued throughout the year. During the year, we sold our largest ever individual modernisation package to a customer operating in the EMEA area. Spare parts and maintenance work developed positively. The development of the tools product group was good, and sales of tools began to grow cautiously.

The EMEA area and North America were still the strongest areas for the Services business. In these areas, orders received for maintenance services grew strongly. In the EMEA area, growth was 13% and in North America 19% compared with the previous year. A promising pick-up was seen in Russian business. In the UK, economic uncertainty cooled willingness to invest.

In the Asian market area, development varied. In China, demand for maintenance services continued to be good, but otherwise the market was relatively quiet. In Australia, Glaston strengthened its services organisation and in the latter part of the year an agreement on a modernisation delivery was closed with an Australian customer.

OUTLOOK
The development of the glass processing market gradually improved during 2017, and Glaston expects the positive development to continue in the current year. The strong growth expectations for the world economy support this view. Customers continue to take time over their investment decisions, which may cause delays in orders and fluctuations in quarterly order intake.

Although the order book at the end of 2017 was lower than the previous year, the good order intake of the second half of the year and positive market development create good conditions for profitable growth in 2018. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.4 million.)

 BOARD OF DIRECTORS’ PROPOSAL ON THE DISTRIBUTION OF PROFITS
The distributable funds of Glaston Corporation are EUR 16,247,313, of which EUR 6,150 represents the profit for the financial year. The company has no funds available for dividend distribution.

The Board of Directors proposes to the Annual General Meeting, to be held on 10 April 2018, that the profit for the financial year 2017 be added to retained earnings and that no dividend be distributed.

The Board of Directors proposes to the Annual General Meeting that, based on the balance sheet adopted for 2017, a return of capital of EUR 0.01 per share be paid. Capital will be repaid from the reserve for invested unrestricted equity. Capital will be repaid to shareholders who are registered in the company’s register of shareholders, maintained by Euroclear Finland Ltd, on the record date for payment, 12 April 2018. The Board of Directors proposes to the Annual General Meeting that the return of capital be paid on 26 April 2018.


PRESS MEETING
An analyst and press conference is organized at Glaston's office on Lönnrotinkatu 11, Helsinki, on 8 February 2018 at 14.00 p.m.

For further information, please contact:  
President & CEO Arto Metsänen, tel. +358 10 500 500
Chief Financial Officer Päivi Lindqvist, tel. +358 10 500 500 

GLASTON CORPORATION
Agneta Selroos
Communications Director 

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