Tulikivi Oyj - Interim report (Q1 and Q3)

Tulikivi Corporation´s interim report 1-6/2013

TULIKIVI CORPORATION                        INTERIM REPORT 1-6/2013

                                                                  8 August
2013, at 10.00 a.m. 







Interim report, 1 January - 30 June 2013



- The Tulikivi Group's second-quarter net sales were EUR 10.6 million (EUR 13.2
million, Q2/2012), operating result EUR -0.8 (0.6) million and the result
before taxes was EUR -1.0 (0.3) million. 

- The Group's net sales for the January-June 2013 review period were EUR 19.8
million (EUR 23.9 million for Jan-Jun/2012), operating result EUR -2.5 (-0.8)
million and the result before taxes was EUR -3.0 (-1.2) million. 

- Earnings per share amounted to EUR -0.06 (-0.02) for the review period, and
EUR -0.02 (0.01) for the second quarter. 

- Net cash flow from operating activities in the review period was EUR -1.5
(-3.7) million. 

- Order books at the end of the period were at EUR 7.2 million (EUR 7.3 million
on 30 June 2012). 

- Future outlook: The demand for Tulikivi  products is dependent on consumer
confidence. New products will allow us to increase our market share; however,
the turnover is expected to be lower than in 2012. The company estimates that
operating result in 2013 will be unprofitable. 

Summary of the interim report 1-6/2013.  The full interim report is attached to
this release. 



Key financial ratios





                        1-6/    1-6/   Change,  1-12/  4-6/   4-6/  Change,
                        2013    2012   %        2012   2013   2012  %      
Sales, MEUR               19.8   23.9    -17.2   51.2   10.6  13.2    -19.7
Operating profit/         -2.5   -0.8   -212.5    0.1   -0.8   0.6   -233.3
loss, MEUR                                                                 
Profit before tax,        -3.0   -1.2   -150.0   -0.8   -1.0   0.3   -433.3
MEUR                                                                       
Total comprehensive       -2.3   -0.9   -155.6   -0.6   -0.7   0.3   -333.3
income for the period,                                                     
MEUR                                                                       
Earnings per share,      -0.06  -0.02   -200.0  -0.02  -0.02  0.01   -300.0
Euro                                                                       
Net cash flow from        -1.5   -3.7             0.1                      
operating activities,                                                      
MEUR                                                                       
Equity ratio, %           30.2   32.2            35.2                      
Net indebtness           143.6  127.9           112.9                      
ratio, %                                                                   
Return on               - 11.6   -3.4             0.3   -1.8   5.4         
investments, %                                                             





Comments by Jouni Pitko, Managing Director:

Due to the weak state of low-rise housing construction and renovation projects
in the domestic market, net sales for the review period were lower than in 2012
in the Fireplaces and Interior Stone businesses in Finland. This is in part a
result of tighter lending by the banks and deteriorating consumer confidence. 



Europe's persistent recession has led to lower export sales. Moreover
uncertainty concerning changes to building regulations and the tax treatment of
different modes of heating in certain countries has also reduced the demand for
fireplaces. For these reasons sales have been weak since the start of the year.
On the other hand, in its second largest export market, Russia, Tulikivi
successfully increased its net sales in the Fireplaces business. There are also
signs of sales picking up in Central Europe, especially Germany, in comparison
with the situation at the start of the year. 



The company's order books have become stronger following the weak situation
earlier in the year and now correspond to the situation a year ago. Working
capital has developed more favourably during the review period compared to the
same period a year earlier. To improve profitability, production capacity has
been adjusted to the market situation. 



Tulikivi Corporation's adjustment measures undertaken in 2011 and 2012 as a
consequence of the decline in sales have not had a sufficient impact, and so
the company has started to plan a new performance improvement programme. The
performance improvement programme is part of the company's strategy to focus on
its core business and competence in order to ensure profitable future growth. 



Interim report

Operating environment

The reduced level of low-rise housing construction and renovation projects has
weakened the demand for fireplaces in Finland, which is in part also a result
of tighter lending by the banks and deteriorating consumer confidence. 

Europe's persistent recession has led to lower export sales. Moreover,
uncertainty concerning changes to building regulations and the tax treatment of
different modes of heating in certain countries has also had an impact on
sales. For these reasons both sales and profit performance have been weak. 



After a weak start to the year, the company's order books returned to the level
of a year earlier, amounting to EUR 7.2 million (EUR 7.3 million on 30 June
2012) at the end of the period. 



Net sales and result

The Group's net sales were EUR 19.8 million (EUR 23.9 million, Jan-Jun/2012).
The net sales of the Fireplaces Business were EUR 17.8 (21.6) million and of
the Interior Stone Business EUR 2.0 (2.3) million. 



Net sales in Finland accounted for EUR 10.0 (12.2) million, or 50.5 (51.2) per
cent, of total net sales. Exports amounted to EUR 9.8 (11.7) million in net
sales. The principal export countries were France, Russia, Germany, Belgium and
Sweden. 



The consolidated operating result was EUR -2.5(-0.8) million. In the segment
reporting, the corresponding operating result for the Fireplaces Business was
EUR -2.4 (-0.7) million, and for the Interior Stone Business EUR -0.1 (-0.1)
million. 



The consolidated result before taxes was EUR -3.0 (-1.2) million, and the
result for the reporting period was EUR -2.3 (-0.9) million. Earnings per share
amounted to EUR -0.06 (-0.02). 



The Group's second-quarter net sales were EUR 10.6 million (EUR 13.2 million
for 1 April-30 June 2012), the operating result was EUR -0.8 (0.6) million and
profit before taxes was EUR -1.0 (0.3) million. 



Financing and investments

Cash flow from operating activities before investments was EUR -1.5 (-3.7)
million. Working capital increased by EUR 0.5 (4.5) million in the period and
came to EUR 10.4 million (EUR 10.0 million on 30 June 2012). Interest-bearing
debt was EUR 27.1 (26.8) million. Financial income was EUR 0.0 (0.1) million
and financial expenses EUR 0.6 (0.5) million. The equity ratio was 30.2
gearing, was 143.6 (126.3) per cent. The current ratio was 1.5 (1.6). Equity
per share was EUR 0.43 (0.48). 



At the end of the reporting period, the Group's cash and other liquid assets
were EUR 4.3 (3.8) million. The total of undrawn credit facilities and unused
credit limits amounted to EUR 0.0 (0.0) 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 relation of net
debt to EBITDA, the review of which was transferred from the end of the second
quarter to the end of the fourth quarter, in accordance with an agreement
reached with the financiers. 



The Group's investments in production, quarrying and development were EUR 0.9
(1.5) million in the reporting period. Research and development expenditure was
EUR 0.8 (0.8) million, i.e. 4.0 (3.3) per cent of net sales. EUR 0.2 (0.2)
million of this was capitalised in the balance sheet. 



In product development, the Group focused on improving the new modular hybrid
fireplaces of the Hiisi product family to better meet the new needs of the
export market. New fireplace and sauna heater products were also launched. 



Personnel

The Group employed an average of 290 (370) people during the reporting period.

Salaries and bonuses during the period totalled EUR 6.4 (7.4) million. The 2012
comparison figure is reduced by the cancellation of a restructuring provision. 



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. 



Maintaining the Group's current financial position will require improvements in
profitability. On account of the weakening level of profitability, the company
has begun to prepare a performance improvement programme for the years
2013-2015. The company is investigating options for reinforcing its financial
position. 



A more comprehensive explanation of the Tulikivi Group's other risks can be
found under note 38 (‘Major risks and their management') in the Consolidated
Financial Statements of the Annual Report for 2012. 



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. 



Future outlook
The demand for Tulikivi products is dependent on consumer confidence. New
products will allow us to increase our market share; however, the turnover is
expected to be lower than in 2012. The company estimates that operating result
in 2013 will be unprofitable. 

Order books at the end of the reporting period amounted to EUR 7.2 million (EUR
7.3 million on 30 June 2012). 

TULIKIVI CORPORATION





Board of Directors



Distribution: NASDAQ OMX Helsinki

Key media

www.tulikivi.com



Additional information: Tulikivi Corporation, FIN-83900 Juuka, Finland, tel.
+358 207 636 000, www.tulikivi.com 

- Heikki Vauhkonen, Chairman of the Board, tel. +358 207 636 555

- Jouni Pitko, Managing Director, tel. +358 403 063 222





ATTACHEMENT: Interim Report 1-6/2013

Attachments:

Interim report 01-062013.pdf