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The Finnvera Group’s Interim Report for January–June 2012 - Demand for financing continued to focus on exports and working capital

17.08.2012

During January–June, demand for export credit guarantees and special guarantees increased clearly when compared against the corresponding period in 2011. Demand for SME financing was lower than during the first six months of last year.

Offers pertaining to export transactions declined by 14 per cent on the previous year. Similarly, offers for SME financing were about one fifth less than during the first half of 2011.

Losses in SME financing increased significantly on the previous year owing to write-downs and provisions for losses made because of greater credit risks. Losses from export financing continued to be low. Export financing attained a positive result during the period under review, whereas SME financing was in the red.

Key figures for 1 January–30 June 2012

  • Loans, domestic guarantees and export guarantees granted (SME financing): EUR 492 million (H1/2011: EUR 572 million)
  • Export credit guarantees and special guarantees granted: EUR 2,037 million (H1/2011: EUR 2,332 million)
  • Outstanding commitments for SME financing: EUR 3,150 million (12/2011: EUR 3,149 million)
  • Outstanding commitments for export financing: EUR 11,040 million (12/2011: EUR 10,256 million)
  • The Finnvera Group’s financial performance: EUR 19 million (H1/2011: EUR 28 million)
  • Finnvera plc’s financial performance: EUR 24 million (H1/2011: EUR 23 million)
  • The Finnvera Group’s losses, impairment losses and provisions: EUR 58 million (H1/2011: EUR 42 million)

CEO Pauli Heikkilä:

The first half of 2012 was twofold. The situation of many of our client companies was better than a year ago but, on the other hand, factors such as the prolonged euro crisis has caused uncertainty about the future. Companies were cautious, especially when starting investments. Demand for Finnvera’s SME financing focused on the financing of working capital and was slightly lower than the year before. In contrast, international problems associated with the availability of financing clearly increased the number of applications for export financing. Demand was high not only for export credit guarantees but also for export credits. In venture capital investments, private investments in Finnvera’s targets increased. More private investors also joined the business angel network.

Financial trend

The Finnvera Group’s financial performance was clearly weaker than during the first half of 2011.In January–June, the Finnvera Group’s profit came to EUR 19 million, or EUR 9 million less than the year before (28 million).The main factor affecting the result was the loss shown by the subsidiaries’ venture capital investments. The Group companies and associated companies together had an effect of EUR -4 million on the financial performance (5 million).

The parent company Finnvera plc’s profit for January–June came to EUR 24 million, or nearly the same as the year before (23 million). Impairment losses on receivables and guarantee losses increased significantly during the period under review, or about EUR 11 million, but this was offset by an almost equal increase in fee and commission income.

Outlook for the Rest of the Year

The uncertain economic outlook has to some extent increased the number of SMEs that find it difficult for their business to attain the goals relating to turnover and profitability required by debt management. The more stringent situation on the financial market and the revised, stricter regulation of banks may also weaken the financial position of some SMEs.

The recovery of exports is likely to continue slower than anticipated. The export transactions carried out have had a lower domestic content than before. The economic trends of countries important for Finnish exports have a significant impact on the demand for export financing.

Uncertain economic trends make it difficult to estimate Finnvera’s future financial performance. According to the current estimate, the parent company’s financial performance for this year is expected to remain at last year’s level, whereas the Group’s financial performance is likely to be weaker than in 2011. Significant uncertainty factors pertain to the result of venture capital investments. If materialised, individual risks in export financing and SME financing may weaken the financial performance considerably.

Additional information:

Pauli Heikkilä, CEO, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 29 460 2458
Kaisa Sailas, Communications Manager, tel. +358 29 460 2422

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