STOCK EXCHANGE RELEASE 6 Feb 2013
Pöyry increases domestic market focus and targets EUR 40-50 million savings by the end of 2014
Pöyry PLC Company announcement 6 February 2013 at 8.25 a.m.
* To strengthen long-term profitability Pöyry improves its organisation and increases its focus on domestic markets.
* Actions taken to address low-performing units, outsource elements of support operations and streamline administrative processes - EUR 40-50 million combined run-rate cost savings targeted by the end of 2014.
* Pöyry's strategic evolution aims at reaching net sales amounting to EUR 1,000 million with corresponding operating profit margin of 8-9% by the end of 2017.
Addressing low-performing units
By the end of 2013, business units representing net sales of approximately EUR 100 million will have been addressed. As part of these actions in late 2012 Pöyry divested a unit carrying out engineering services in the water, environment, waste and energy sectors in France and a unit in Spain carrying out engineering and consultancy services in the local rail sector representing net sales of approximately EUR 22 million. Moreover, restructuring actions have already commenced on several units. Profit improvements in the range of EUR 15-20 million are expected to be achieved by the end of 2013. Related restructuring costs of EUR 7.2 million have been recognised in the fourth quarter 2012 result.
Streamlining administrative processes
During late 2012 Pöyry simplified its business area/unit structure and streamlined its administrative processes. Administrative support function savings will be achieved through a globally controlled operating mode. Outsourcing of parts of the IT and Financial Accounting functions commenced during December 2012. These measures will lead to group-wide head-count reductions of approximately 300 persons and annualised cost savings in the range of EUR 25-30 million by the end of 2014. Related restructuring cost provisions of EUR 4.5 million have been recorded in the fourth quarter 2012 results.
Evolving business concept
Pöyry's competitive differentiation results from its ability to serve its clients across their entire business lifecycle. Pöyry has established global leadership positions in the industrial and energy sectors and it continues to build these global competence lines. At the same time, a major portion of Pöyry's business originates from a large number of medium and small-sized domestic projects, which contribute to a continuous order stream across multiple client sectors.
In order to strengthen Pöyry's long-term profitability the company is increasing its focus on developing the local business model. Going forward, Pöyry will adopt a clear dual approach to serving clients - a global competence-based model and in addition, a local business model focused on key geographies. As such, Pöyry is improving its organisation by introducing Regional Business Lines with the objective of strengthening its domestic engineering business in its main home markets.
Pöyry will continue to develop its large projects competence capabilities and its share in corresponding orders will be increasing. Large Projects are performed exclusively within the areas of Pöyry's Global Competence Lines, being Industry and Energy. Development of comprehensive strategic advisory services will be continued under Management Consulting.
During the first quarter of 2013, Pöyry will split its Urban Business Group operations into three distinct Regional Operations: Northern Europe, Central Europe and Alpine Arc.
Martin Bachmann, currently Executive Vice President (EVP) and President of the Urban Business Group, is appointed, Chairman, Regional Operations and President, Regional Operations Alpine Arc. Martin Bachmann will, as Chairman, Regional Operations, oversee the alignment of common business processes and systems between the 3 Regions and prepare the establishment of further Regional Operations covering Pöyry's activities in Asia, Latin and North America.
Martin Kuzaj, EVP and President of the Industry Business Group, is in addition appointed President, Regional Operations Central Europe.
Pasi Tolppanen, Senior Vice President, Operations is in addition appointed President, Regional Operations Northern Europe.
All three Regional Operations report to Alexis Fries, President and CEO.
Financial reporting structure
From the beginning of the first quarter 2013, Pöyry's financial reporting will be based on the following four Business Segments: Management Consulting business group; Industry business group; Energy business group; and Regional Operations.
Regional Operations are based on the regional operations of the former Urban Business Group. In addition, the Local Project Services business unit will be transferred from Industry business group to Regional Operations. The pro forma figures reflecting these changes will be communicated along the first quarter 2013 interim report.
During the latter part of the year, Pöyry intends to transfer certain parts of Energy segment to become part of its Regional Operations. Energy will thereby increase its focus on further developing its Global Competence Lines, in Hydro Power, Thermal Power, Nuclear Power, Renewable Energies and Electric Transmission and Distribution.
Financial targets by the end of 2017
The Group's financial targets for net sales and operating profit have been specified:
* The aim is to achieve net sales of EUR 1,000 million
- previous target: over-the-cycle average net sales growth 15%
* Targeted operating profit margin is 8-9% for the Group in average
- previous target: minimum 8% in medium term, 10% in long term for each business group
Other financial targets remain unchanged
* return on investment: 20 % or higher
* earnings per share, growth: 15 % or higher
* gearing: below 50 %
* dividend/earnings ratio: 50 % or higher.
Rebecca Bleasdale, Public Relations
+358 10 33 26000
Sanna Päiväniemi, Director, Investor relations
+358 10 33 23002
Pöyry is an international consulting and engineering company. We serve clients globally across the energy and industrial sectors and locally in our core markets. We deliver strategic advisory and engineering services, underpinned by strong project implementation capability and expertise. Our focus sectors are power generation, transmission & distribution, forest industry, chemicals & biorefining, mining & metals, transportation, water and real estate sectors. Pöyry has an extensive local office network employing about 7,000 experts. Pöyry's net sales in 2012 were EUR 775 million and the company's shares are quoted on NASDAQ OMX Helsinki (Pöyry PLC: POY1V).