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Sales up and unchanged losses at MARTELA CORPORATION

Monday 28 April 2014

First quarter revenue increased on the previous year and the operating result remained the same as the previous year. The Martela Group anticipates that its revenue in 2014 will remain at the previous year’s level and that its operating result will show a year-on-year improvement. Due to normal seasonal variation, the Group’s operating result is weighted towards the second half of the year.

There was no improvement in the demand for office furniture in Finland during the early part of the year. Demand in Finland is still largely focused on office alteration and enhancement projects of different kinds rather than on new offices. Demand in Sweden has also remained weak. Despite weak demand, the Activity Based Office concept, which is well-suited for alteration and enhancement projects, has attracted considerable interest among customers in Sweden, Norway and Finland. The Polish market remained at the normal level during the first quarter.
Consolidated revenue for January-March was EUR 34.1 million (31.9). There was a substantial decline in revenue in Finland. The Finnish market remained stagnant and there were no significant projects in Finland during the first quarter and most the revenue was generated by small and medium-sized deliveries. Like the previous year, there were no major deliveries in Poland during the early months of 2014 and for this reason, the revenue generated by Martela's operations in Poland also remained low. However, there were major customer deliveries in Sweden and Norway during the review period and, as a result, the revenue of the Business Unit in these countries grew substantially from the previous year. As a result of the major customer deliveries in Sweden and Norway, the consolidated revenue also increased during the first quarter. In Russia, revenue continued to increase, compared with 2013, even though the figures remained fairly low.
The operating result for the first quarter was EUR -1.4 million (-1.4). The Group’s fixed costs declined somewhat on the previous year as planned due to adjustment measures taken already in the previous year. At the same time, however, the sales margin of the Group’s products was slightly lower than a year earlier, a result of large customer projects. As a result of all these factors, Martela’s consolidated operating result remained at previous year’s levels.
In the third quarter of 2013, the Group began to plan measures to reduce its costs, targeting an annual cost saving of about EUR 6 million. The savings programme will be implemented by the end of 2014, after which the full impact of the savings will be felt. It is estimated that due to the timing of the measures the cost reduction impact of the programme in 2014 will be equivalent to about one third of the total savings target. The measures will allow the Group to adjust its cost structure to correspond to the company’s changed operating environment.
In February 2014, it was decided that P.O. Korhonen Oy, a joint enterprise of Martela Corporation and Artek Oy Ab, would cease operations due to the fact that they are unprofitable.
The result before taxes was EUR -1.5 million (-1.6), and the result after taxes was EUR -1.5 million (-1.7)

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