Componenta was still loss-making in 2011

Casting solutions provider Componenta Corporation (OMXH: CTH1V) sounded optimistic and satisfied in its Q4 report despite posting another annual loss after one-off items pushed EPS to minus EUR 0.25. Consolidated net sales were 576 million and operating profit excluding special items nearly 30 million. Net cash flow from operations was slightly positive at 3.6 million. The order book has increased by 5% in one year to 100 million.

Fourth quarter sales were up 8% against the corresponding quarter in 2010. Capacity utilization rate was down to 60% from 66% but production volumes were higher. Higher prices in non-surcharged raw materials (meaning the company was unable to pass-on the costs to its customers) and additional 3 million in quality costs related to Orhangazi Foundry Business Unit in Turkey were weighing on the result.

Planned balance sheet strengthening measures will include a share issue and a hybrid bond totalling 20 million Euros. Manisa, Turkey aluminium wheels business unit will also be sold. The unit had 2011 net sales of 45 million and EBITDA of nearly 9 million made possible by nearly 400 employees.

Componenta assumes that these measures mentioned above will help it reduce interest-bearing debt by a third. The Board of Directors proposes no dividend is paid for 2011 and is proposing to the AGM that an authorization on a share issue of special rights be given up to 8 million new shares (close to a third of the current number of shares).

Corporate Executive Team will also face a shakeup with the current COO stepping down and new SVP’s in Finland and in Sales and Product Development. Despite the continued poor performance, shareholders representing more than 10 percent of the shares are proposing the General Meeting that the number of Board of Directors will be raised to 7 and that members of the Board will get a 20% raise. Three new members in Harri Suutari, Riitta Palomäki and Matti Ruotsala are suggested.

Componenta feels that the current demand outlook is satisfactory. Agricultural products and machinery are expected to see increased demand on relatively high food prices. Demand in automotive industry and in machine building industry is expected to remain flat. Wind power demand outlook in Europe is still sluggish. The company will report that as a part of machine building industry from now on. And finally Componenta is uncertain on the demand in the heavy trucks industry.

Componenta expects 2012 sales on the same level as in 2011 but higher operating profit as a result of price increases and improved cost structure. Capital investments are at a low level. The stock is down around 4% approaching the last three hours of trading for the day.