Tulikivi Oyj - Interim report (Q1 and Q3)

Tulikivi Corporations´s interim report 1-3/2013

TULIKIVI CORPORATION                        INTERIM REPORT 1-3/2013

                                                                 24.4.2013 at 
2.00 p.m. 





Interim report, 1 January - 31 March 2013



- The Tulikivi Group's net sales were EUR 9.2 million (EUR 10.7 million in
Q1/2012). 
- The Group's operating result was EUR -1.7 (-1.4) million.  Earnings per share
amounted to EUR -0.04 (-0.03). 
- Cash flow from operating activities before investments was EUR -2.5 (-3.5)
million. 
- Order books were at EUR 6.0 million on 31 March 2013 (EUR 7.8 million on 31
March 2012). 
- Future outlook: The demand for Tulikivi products is dependent on consumer
confidence. New products will allow us to increase our market share; however,
no significant growth is anticipated for net sales in 2013. Operating profit is
expected to improve with improved operating efficiency. 

Summary of the interim report 1-3/2013.  The full interim report is attached to
this release. 

Key financial ratios



                   1-3/13  1-3/12  Change, %  1-12/12
Sales, Meur           9.2    10.7      -14.0     51.2
Operating profit/    -1.7    -1.4      -21.4      0.1
loss, MEUR                                           
Profit before        -2.0    -1.6      -25.0     -0.8
tax, MEUR                                            
Total                -1.6    -1.2      -33.3     -0.6
comprahensive                                        
income for the                                       
period, MEUR                                         
Earnings per        -0.04   -0.03               -0.02
share/EURO                                           
Net cash flow        -2.5    -3.5                 0.1
from operating                                       
activities, MEUR                                     
Equity ratio, %      32.0    31.8                35.2
Net indebt-         142.2   126.7               112.9
ness ratio, %                                        
Return on           -16.5   -12.3                 0.3
investments,                                         
%                                                    





Comments by Jouni Pitko, Managing Director:

Net sales in the Fireplaces Business grew in Russia but in Central Europe they
were somewhat lower than a year earlier.  Due to weak domestic demand in the
winter, net sales in the first quarter declined from the comparison period in
the Fireplaces and the Interior Stone Businesses. 

Order books improved on the situation at the beginning of the year. The
fireplace sales campaign in Central Europe was held at a different time, and
this resulted in a decline in order books on the previous year. 


Measures to improve profitability were continued at the beginning of the year
by reorganising sales operations in Finland and adjusting production capacity. 

Measures to cut costs will be continued and sales operations will further
intensified. Production processes will be developed to improve efficiency. In
exports, growth will be sought by renewing and expanding the distribution
network. Tulikivi Corporation's strategy will be simplified to better
correspond to the changed markets in Finland and abroad. Changes to our
strategy will be announced in the third quarter. 

Interim Report

Net sales and result

The Group's net sales were EUR 9.2 million (Jan-March/2012: EUR 10.7 million).
The net sales of the Fireplaces Business were EUR 8.3 (9.6) million and of the
Natural Stone Business EUR 0.9 (1.1) million. 

Net sales in Finland accounted for EUR 4.5 (5.6) million, i.e. 49.3 (52.3) per
cent, of total net sales. Exports amounted to EUR 4.7 (5.1) million in net
sales. The principal export countries were France, Belgium Germany, Russia and
Sweden. 

The consolidated operating result was EUR -1.7 (-1.4) million. The operating
result for the review period was adversely affected by the restructuring
provision of EUR 0.1 million recognised for adjustment measures. In the segment
reporting, the operating result for the Fireplaces Business was EUR -1.6 (-1.2)
million, and for the Interior Stone Business EUR -0.1 (-0.2) million. 

The consolidated result before taxes was EUR -2.0 (-1.6) million, and the net
result EUR -1.5 (-1.2) million. Earnings per share amounted to EUR -0.04
(-0.03). 

Financing and investments

Cash flow from operating activities before investments was EUR -2.5 (-3.5)
million. Working capital increased by EUR 1.5 million in the period and came to
EUR 11.4 million (31 March 2012: EUR 9.7 million). The growth in working
capital was a result of an increase in inventories at the Suomussalmi plant and
the concentration of trade receivables in Finland to customers, with longer
payment terms. Interest-bearing debt was EUR 25.6 (26.4) million. Financial
income was EUR 0.0 (0.0) million and financial expenses EUR 0.3 (0.2) million.
The equity ratio was 32.0 (31.8) per cent. The ratio of interest-bearing net
debt to equity, or gearing, was 142.2 (126.7) per cent. The current ratio was
1.6 (1.7). Equity per share was EUR 0.45 (0.47). 

At the end of the reporting period, the Group's cash and other liquid assets
were EUR 2.0 (4.1) million. The total of undrawn credit facilities and unused
credit limits amounted to EUR 0.5 (1.6) million. 

The Group's interest-bearing debt includes covenants which are tied to the
Group's equity.  The covenant conditions were met at the close of the reporting
period. In addition, the Group has a covenant, concerning the second and fourth
quarter, on the relation of net debt to EBITDA. 

The Group's investments in production, quarrying and development were EUR 0.6
(0.8) million. Research and development costs were EUR 0.4 (0.5) million, i.e.
4.4 (4.7) per cent of net sales. EUR 0.1 (0.2) million of this figure, after
deduction of subsidies, was capitalised in the balance sheet. Product
development focused on the efficient production and commercialisation of the
new modular Aalto and Kide hybrid fireplaces which are members of the Hiisi
product family. 

Near-term risks and uncertainties

A substantial decline in euro zone consumer confidence is the Group's most
significant risk.  If access to consumer credit weakens, it will reduce new
construction and renovation, which could have an impact on the demand for
fireplaces. 

In the EU, construction legislation is currently being revised. New
country-specific energy efficiency provisions that meet the EU's energy
efficiency policies will come into force within 2013 and could influence the
competition between different forms of heating and thus the demand for
fireplaces in different markets. 

Maintaining the Group's current financial position will require improvements in
profitability. Weaker profitability will force Tulikivi to reinforce its
financial position or reorganise its financing. A more comprehensive
explanation of the Tulikivi Group's risks can be found under note 38: Major
risks and their management, in the Consolidated Financial Statements in the
Annual Report for 2012. 

Events following the end of the period
Resolutions of the Annual General Meeting

Dividends
Tulikivi Corporation's Annual General Meeting, held on 16 April 2013, resolved
not to distribute a dividend on the 2012 financial year. 

Decision-making bodies
The following persons were elected to the Board of Directors of the parent
company and domestic business subsidiaries: Nella Ginman-Tjeder, Olli
Pohjanvirta, Markku Rönkkö, Pasi Saarinen, Harri Suutari and Heikki Vauhkonen.
The Board elected from among its members Heikki Vauhkonen as its full-time
Chairman. KPMG Oy Ab, Authorized Public Accountants, was appointed as auditor. 

Jouni Pitko was appointed Managing Director on 16 April 2013. In addition to
the Managing Director, the Management Group includes Michel Mercier, Export
Director, Ismo Mäkeläinen, Head of Production and Purchasing, Martti Purtola,
Business Director, saunas, Juha Sivonen, Sales Director, Finland, Jouko
Toivanen, Business Director, lining and interior stones, Anu Vauhkonen,
Corporate Communications Director, and Risto Vidgren, Financial Director. 

Amending the Articles of Association

The General Meeting approved the Board's  proposals for amending the Articles
of Association. A new article 3 a, following article 3, was added to the
Articles of Association on converting series K shares into series A shares if
so requested by a holder of the series K share and on condition that the number
of shareholders owning series K shares is less than 150. In addition, an
amendment was made to article 8 of the Articles of Association to the effect
that the notice of meeting will be published as a stock exchange release and on
the company's website. 


Authorisation to repurchase the company's own shares

The Annual General Meeting authorised the Board of Directors to acquire shares
of the company as proposed by the Board. The shares are repurchased for
improving the company's capital structure and for use as consideration in
corporate acquisitions or other structural arrangements in accordance with and
to the extent of the Board's decision.  Furthermore, shares may be repurchased
for the purpose of implementing the share-based incentive system, to pay a
share-based incentives or otherwise to be transferred or cancelled. A maximum
of 2,760,397 of series consideration, however, that the amount of treasury
shares may not exceed 10 per cent of the total number of the company's shares.
The authorisation is valid until the 2014 Annual General Meeting, but not
longer than 18 months as of the decision of the Annual General Meeting. 

The authorisation to decide on share issues and on the transfer of Tulikivi
Corporation shares held by the company, and on the right to issue special
rights giving entitlement to shares as defined in Chapter 10, section 1, of the
Limited Liability Companies Act 

The Annual General Meeting authorised the Board of Directors to decide on
issuing new shares and on the transfer of Tulikivi Corporation shares held by
the company in accordance with the proposal of the Board. New shares can be
issued or the company's own shares held by the company transferred as follows:
a maximum of 5,520,794 Series A shares and 1,908,000 Series K shares. 

The authorisation includes the right to decide on a directed rights issue,
deviating from the shareholders' right of pre-emption, provided that there is
compelling financial reason for the company. The authorisation also includes
the right to decide on a bonus issue to the company itself, where the number of
issued shares is no more than one tenth of the total number of the company's
shares. 

The authorisation also includes, as proposed by the Board, the right to issue
special rights, as defined in Chapter 10, Section 1, of the Limited Liability
Companies Act, which give entitlement to subscribe shares against payment or by
setting off the receivable. The authorisation includes the right to pay the
company's share rewards. The Board is authorised to decide on other matters
concerning share issues. The authorisation is valid until the 2014 Annual
General Meeting. 

Other events following the end of the financial year

Result of the codetermination negotiations of 11 March 2013


The outcome of the negotiations was that 6 people will be made redundant in
domestic sales, customer service and production, and 21 people will be laid off
until further notice. In addition, the company may, until 30 June 2014,
implement fixed-term layoffs according to the situation regarding demand. 

New Managing Director


Jouni Pitko was appointed Managing Director of Tulikivi Corporation on 16 April
2013. 

Future outlook

The demand for Tulikivi products is dependent on consumer confidence.

New products will allow us to increase our market share; however, no
significant growth is anticipated for net sales in 2013. Operating profit is
expected to improve with improved operating efficiency. 

Order books at the end of the reporting period amounted to EUR 6.0 million (31
March 2012: EUR 7.8 million). 

TULIKIVI CORPORATION

Board of Directors


Heikki Vauhkonen
Chairman of the Board

Distribution: NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com



Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358 403 063
100, 

www.tulikivi.com

- Chairman of the Board of Directors Heikki Vauhkonen,  +358 207 636 555
- Managing Director Jouni Pitko,  +358 403 063 222



ATTACHEMENT:   Interim Report 1-3/2013

Liitteet:

Interim Report_Q1_2013_FINAL.pdf