Investors

Financial Statements Release 1.1.-31.12.2018, 22.03.2019

Risks and factors causing uncertainty to business

The most significant risks to Componenta’s business operations include the risks linked to the operating environment (competitive situation, price risks, commodity risks and environmental risks), business risks (customer, supplier, productivity, production and process risks, labour market disruptions, contractual and product liability risks, personnel and data security risks) as well as financing risks (the risks related to the availability of financing and liquidity as well as currency, interest rate and credit risks). Exchange rate fluctuations are hedged using foreign currency loans and deposits, as well as other natural hedging relationships. Due to the restructuring procedures, the company does not currently achieve the necessary limits for hedging derivative contracts.

Essential for the Group’s business operations is the availability of certain commodities, such as recycled steel, pig iron and energy, at competitive prices. The cost risk related to raw materials is primarily managed using price agreements, on the basis of which the product prices are adjusted in line with the changes in the commodity prices. Rising raw material prices may result in more money being tied to working capital than estimated.

Componenta’s potential risks related to liquidity and access to working capital may weaken the volume of future trading and reduce the number of orders that will be placed on new products by customers in the future. Volumes may also shrink because of customers lost for commercial reasons.

From the point of view of the continuity of operations, the most significant risks and uncertainties related to the restructuring procedures are as follows:

  • Componenta Corporation and Componenta Finland Ltd will be able to make the payments in accordance with the restructuring programme that will begin in May 2019. A material risk to the success of the restructuring programmes is the availability of working capital, because the main customers will support Componenta with shorter-than-normal sales terms and because the group companies do not at the moment have access to external financing.

  • The objective of the change of Componenta Främmestad AB’s operational model is the structural reduction of committed working capital and need for working capital. Changing the operational model includes the risk that the projected sales volumes and margins will not be realised if the customers in question switch over to the competition.

  • When analysing cash flow and liquidity forecasts for the companies over the next 12 months, the management has estimated the companies’ future sales volumes, net sales, EBITDA margins, capital expenditure and working capital needs.

Business Review January-September 2018, 13.11.2018

Risks and factors causing uncertainty to business

The most significant risks to Componenta’s business are risks relating to the business environment (competition risk, situation and pricing risk, commodities risks and risks relating to the environment), risks relating to business operations (customer, supplier, productivity, production and process risks, upsets in the employment market, contract and product responsibility risks, personnel and data security risks) and financing risks (risks relating to arranging financing and liquidity; currency, interest and credit risks). Foreign currency loans, deposits and other natural hedging relationships are used to protect against exchange rate fluctuations. Due to the restructuring proceedings, at the moment the Company cannot obtain the credit facilities it would need for signing hedging derivatives. Uncertainties and other business risks related to the Company’s ability to continue as a going concern have been described in the financial statement published on 30 April 2018.

Regarding the ability of Componenta to continue as a going concern, the main risks and factors causing uncertainty are related to the ability of Componenta Corporation and Componenta Finland to pay the restructuring debts in accordance with the payment programs. A material risk regarding executing the restructuring programs is the adequacy of working capital, because the main customers support Componenta with shorter payment terms in sales and because the group companies are unable to obtain external financing at the moment. The change of operation model in Componenta Främmestad AB aims on structured reduction of invested capital and need of working capital. There is a risk that changing the operation model results in customers moving their large volume products to competitors. The realisation of this risk, however, is not expected to materially decrease the profitability of the Group after deduction of corresponding expenses.

Half-Year Financial Report January-June 2018, 8.9.2018

Risks and factors causing uncertainty to business

The most significant risks to Componenta’s business are risks relating to the business environment (competition risk, situation and pricing risk, commodities risks and risks relating to the environment), risks relating to business operations (customer, supplier, productivity, production and process risks, upsets in the employment market, contract and product responsibility risks, personnel and data security risks) and financing risks (risks relating to arranging financing and liquidity; currency, interest and credit risks). Foreign currency loans, deposits and other natural hedging relationships are used to protect against exchange rate fluctuations. Due to the restructuring proceedings, at the moment the Company cannot obtain the credit facilities it would need for signing hedging derivatives. Uncertainties and other business risks related to the Company’s ability to continue as a going concern have been described in the financial statement published on 30 April 2018. 

Regarding the ability of Componenta to continue as a going concern, the main risks and factors causing uncertainty are related to the ability of Componenta Corporation and Componenta Finland to pay the restructuring debts accordingly with the payment programs. A material risk regarding executing the restructuring programs is the adequacy of working capital, because the main customers support Componenta with shorter payment terms in sales and because the group companies are unable to obtain external financing at the moment. The change of operation model in Componenta Främmestad AB aims on structured reduction of invested capital and need of working capital.

Business Review January-March 2018, 18.05.2018

Risks and factors causing uncertainty to business

The most significant risks to Componenta’s business are risks relating to the business environment (competition risk, situation and pricing risk, commodities risks and risks relating to the environment), risks relating to business operations (customer, supplier, productivity, production and process risks, upsets in the employment market, contract and product responsibility risks, personnel and data security risks) and financing risks (risks relating to arranging financing and liquidity; currency, interest and credit risks). Foreign currency loans, deposits and other natural hedging relationships are used in order to protect from exchange rate fluctuations. Due to the restructuring proceedings, at the moment the company cannot obtain the credit facilities it would need for signing hedging derivatives. Regarding the ability of Componenta to continue as a going concern, the main risks and factors causing uncertainty are related to the ability of Componenta Corporation and Componenta Finland to pay the restructuring debts accordingly with the payment programmes. Uncertainties and other business risks related to the Company’s ability to continue as a going concern have been described in the financial statement published on 30 April 2018.

Financial Statements Release 1.1.-31.12.2017, 29.03.2018

Risks and factors causing uncertainty to business

The most significant risks to Componenta’s business are risks relating to the business environment (competition risk, situation and pricing risk, commodities risks and risks relating to the environment), risks relating to business operations (customer, supplier, productivity, production and process risks, upsets in the employment market, contract and product responsibility risks, personnel and data security risks) and financing risks (risks relating to arranging financing and liquidity; currency, interest and credit risks). Foreign currency loans, deposits and other natural hedging relationships are used in order to protect from exchange rate fluctuations. Due to the restructuring proceedings, at the moment the company cannot obtain the credit facilities it would need for signing hedging derivatives

For the Group’s business operations it is imperative that it can source certain raw materials, such as recycled steel, iron blocks and energy, at competitive prices. The cost risk associated with raw materials is primarily managed using pricing agreements, with which the prices of products are adjusted according to the prices of their raw materials. A rise in the price of raw materials can tie up more funds than estimated in working capital.

Componenta’s possible risks related to working capital and liquidity issues may adversely affect the volumes of future new sales and lessen the size of orders placed by customers for products to replace discontinued products. Volumes may be weakened by possible customer losses due to commercial reasons.

Concerning the continuity of operations, the significant estimates and assumptions made by the company and management as well as uncertainties are as follows:

  • Componenta Finland Ltd and Componenta Corporation are able to make payments stipulated in the restructuring programme. 
  • Componenta Främmestad AB will be able to pay its restructuring debts in accordance with the agreed payment schedules in July 2018. After the end of the financial year Componenta Främmestad has paid all its short-term restructuring debts, EUR 2.9 million. Furthermore, Componenta Främmestad AB has a debt of EUR 2.5 million to Componenta Dökümcülük. The debt will be paid off in six years after payment of other restructuring debts. The repayment is tied to the EBITDA of Componenta Främmestad. 
  • Componenta Wirsbo AB and Componenta Arvika AB filed for bankruptcy at the local district courts in July. In Componenta’s opinion, the failure of the restructuring proceedings for Componenta Wirsbo AB and Componenta Arvika AB is not estimated to have a significant impact on the restructuring proceedings for other Group companies or on the ability of the parent company to continue as a going concern. 
  • When analysing cash flow and liquidity forecasts for the companies over the next 12 months, the management has estimated the companies’ future sales volumes, net sales, operating margins, capital expenditure and working capital needs.