2011-11-10 08:00:28 CET
2011-11-10 08:01:22 CET
REGULATED INFORMATION
Marimekko - Interim report (Q1 and Q3)
MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2011
Marimekko Corporation, Interim Report, 10 November 2011 at 9.00 a.m.
MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2011
During the January-September period of 2011, the Marimekko Group's net sales
grew by 5 per cent. Brand sales* of Marimekko products increased by 17 per
cent. International sales rose very strongly, by 22 per cent. The growth was
driven by the Asia-Pacific region as well as by Central and Southern Europe.
Operating profit decreased as expected, as a result of considerable investments
in internationalisation and increased personnel and marketing costs.
January to September
-- Net sales grew by 5.2% to EUR 53.9 million (EUR 51.2 million).
-- International sales rose by 22.0% to EUR 19.7 million (EUR 16.2
million). Growth was strongest in the Asia-Pacific region and Central
and Southern Europe. Sales also grew well in North America; when
measured in the invoicing currency (mainly the US dollar), sales growth
amounted to about 11%.
-- Sales in Finland fell by 2.6% to EUR 34.2 million (EUR 35.1 million).
The decline was due to the changes made in the distribution network
during the third quarter in accordance with the company's distribution
strategy and a decrease in deliveries for promotions.
-- Operating profit amounted to EUR 1.9 million (EUR 6.0 million). The
decrease in operating profit was mainly due to considerable investments in
internationalisation and increased personnel and marketing costs.
-- Investments amounted to an exceptionally high figure, EUR 5.5 million (EUR
0.7 million).
-- Brand sales* grew briskly, by 16.7%, and amounted to EUR 121.1 million (EUR
103.8 million).
-- The full-year estimate for 2011 given by the company in its interim report
of 17 August 2011 remains unchanged: net sales growth for the Marimekko
group is expected to be at the bottom end of the announced range (about
5-10%), close to 5%, and the anticipated decline in operating profit is
estimated to be at the top end of the range (about 40-60%), roughly 50-60%
compared with the previous year.
July to September
-- Net sales grew by 1.8% to EUR 19.8 million (EUR 19.5 million).
-- International sales rose by 19.5% to EUR 7.2 million (EUR 6.0 million).
Sales grew in all market areas. The strongest growth was seen in the
Asia-Pacific region and Central and Southern Europe.
-- Sales in Finland decreased by 6.2% to EUR 12.6 million (13.4 million).
-- Operating profit fell as expected and amounted to EUR 2.3 million (EUR 4.2
million).
1-9/201 1-9/201 Change, 1-12/201
1 0 % 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net sales, EUR 1,000 53,861 51,223 5.2 73,297
--------------------------------------------------------------------------------
Operating profit, EUR 1,000 1,883 5,981 -68.5 8,169
--------------------------------------------------------------------------------
Operating profit without non-recurring 2,052 5,981 -65.7 8,169
items, EUR 1,000
--------------------------------------------------------------------------------
Profit for the period, EUR 1,000 1,415 4,421 -68.0 6,072
--------------------------------------------------------------------------------
Earnings per share, EUR 0.18 0.55 -67.3 0.76
--------------------------------------------------------------------------------
Cash flow from operating activities, -1,816 922 4,559
EUR 1,000
--------------------------------------------------------------------------------
Return on investment (ROI), % 7.2 24.8 25.0
--------------------------------------------------------------------------------
Equity ratio, % 65.5 80.4 78.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Brand sales*, EUR 1,000 121,149 103,793 16.7 149,717
--------------------------------------------------------------------------------
Number of retail stores & shop-in-shops** 83 81 2.5 84
--------------------------------------------------------------------------------
* Estimated sales of Marimekko products at consumer prices. Brand sales are
calculated by adding together the company's own retail sales and the estimated
retail value of Marimekko products sold by other retailers. The estimate, based
on Marimekko's actual wholesale sales to these retailers, is unofficial and
does not include VAT. The key figure is not audited.
** Includes the company's own retail stores, retailer-owned Marimekko stores
(previously “concept stores”) and shop-in-shops with an area exceeding 30 m2.
The company's own retail stores numbered 30 (25). The decrease in the total
number of stores in the July-September period of 2011 results from changes in
the Finnish distribution network, made in accordance with the company's
distribution strategy. Store changes in each market will be discussed in more
detail in the reviews by business unit below.
Mika Ihamuotila, President and CEO:
“I am pleased with our progress this year: we have taken several bold steps on
the way to international growth, and all planned measures, as substantial as
they have been considering the company's size, have been completed on schedule.
I find the development of our business in the January-September period positive
and encouraging. Brand sales grew strongly, by 17% to EUR 121 million.
International brand sales already accounted for about half of this amount, 49%.
Net sales grew by 5%. The investments we have made are beginning to pay off: in
international sales a 22% growth was achieved. In the Asia-Pacific region, the
excellent trend in sales builds faith in increasing interest in our products.
This year the region has replaced Scandinavia as the second largest market for
us. We are actively investigating the possibilities of expanding our operations
in this growing market. Our objective is to find local partners in certain
areas, who would be responsible for opening Marimekko stores and other
distribution of our products to high-end department stores, for instance. Sales
grew well in Central and Southern Europe and North America, too. In the third
quarter, new company-owned stores were opened in Copenhagen and Stockholm and a
Marimekko shop-in-shop opened its doors in Boston. Our flagship store, which
opened in New York after the review period, has been received enthusiastically
and has exceeded our expectations. October also saw the opening of our first
own retail store in Oslo; in the Miami area, a Marimekko shop-in-shop was
opened.
In Finland, net sales decreased by 3%. However, it is important to bear in mind
that this decrease is attributable to changes with which we seek profitability
improvement and sales growth in the long term. According to our distribution
strategy, stores located in central areas or shopping centres of towns that are
significant to us should, as a rule, be owned by the company itself. In the
third quarter, five retailer-owned Marimekko stores were closed. In their stead
two Marimekko's own retail stores were opened in October. Cutting down on
deliveries for promotions also impaired net sales. In early November, two new
stores were opened: one in the centre of Helsinki and the other in Lahti. All
in all, 15 new stores have opened in Finland and abroad this year, 7 of which
are owned by Marimekko.
In the review period, the trend in our earnings was in line with expectations.
Operating profit decreased as a result of considerable investments in
internationalisation, increased personnel and marketing costs, higher raw
material costs and a rise in the general cost level. For instance, the number
of Marimekko employees abroad more than doubled compared with the previous
year. However, we expect that the earnings trend will improve when the
investments we have made in expansion begin to bear fruit. It should also be
borne in mind that, due to the seasonal nature of our business, the major
portion of our net sales and earnings are generated during the last two
quarters of the year and that, in the last quarter, a significant share of
sales is accounted for by retail sales.”
For additional information, contact:
Mika Ihamuotila, President and CEO, tel. +358 9 758 71
Thomas Ekström, CFO, tel. +358 9 758 7261
MARIMEKKO CORPORATION
Group Communications
Piia Pakarinen
Tel. +358 9 758 7293
piia.pakarinen@marimekko.fi
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Key media
Marimekko is a Finnish textile and clothing design company renowned for its
original prints and colours. The company designs and manufactures high-quality
interior decoration items ranging from furnishing fabrics to tableware as well
as clothing, bags and other accessories. When Marimekko was founded in 1951,
its unparalleled printed fabrics gave it a strong and unique identity.
Marimekko products are sold in approximately 40 countries. In 2010, brand sales
of Marimekko products worldwide amounted to approximately EUR 150 million and
the company's net sales were EUR 73 million. The number of Marimekko stores
totalled 84 at the year end. The key markets in 2011 are North America,
Northern Europe and the Asia-Pacific region. The Group employs around 400
people. The company's share is quoted on NASDAQ OMX Helsinki Ltd.
www.marimekko.fi
MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2011
MARKET SITUATION
The overall uncertainty about the global economy has increased markedly as a
result of the intensified national debt situation in the US and in the European
crisis countries, particularly in Greece. Even though it is estimated that the
global economy will grow by nearly 4% next year, driven by growth in Asia,
increasing uncertainty may impact consumers' purchasing behaviour in all
markets. In the United States and Europe, the economy is expected to grow
weakly.
The Finnish economy took a downward turn in late summer and the current
economic situation is slightly weaker than average. Increased costs burden the
profitability of companies. Consumer confidence has weakened considerably as
estimates of the development of the Finnish economy have become significantly
more pessimistic (Confederation of Finnish Industries EK: Business Tendency
Survey, November 2011). The Federation of Finnish Commerce estimates that the
value of Christmas sales will increase by about 4% despite economic uncertainty
(the Federation of Finnish Commerce, estimate for Christmas sales in 2011).
From January to September 2011, the value of retail sales in Finland rose by
2.9% (Statistics Finland: Turnover of trade 2011, September, flash estimate).
From January to September 2011, retail sales of clothing (excluding sportswear)
grew by 2.2% (Textile and Fashion Industries TMA). Sales of womenswear rose by
2.2% and sales of menswear by 4.5%. Sales of childrenswear fell by 1.0%. Sales
of bags rose by 7.1%. In the January-August period of 2011, exports of clothing
(SITC 84) rose by 33% and imports by 21%; exports of textiles (SITC 65) grew by
7% and imports by 10% (National Board of Customs, monthly review, August 2011).
NET SALES
January to September
In the January-September period of 2011, the Marimekko Group's net sales rose
by 5.2% to EUR 53,861 thousand (EUR 51,223 thousand), thanks to growth in
international sales.
In Finland, net sales declined by 2.6% to EUR 34,154 thousand (EUR 35,072
thousand). Retail sales in Finland grew by 2.0%, while wholesale sales fell by
10.7%. Retail sales growth slowed partly due to changes implemented in sales
areas in the Helsinki stores in 2010. The decline in wholesale sales was
attributable to changes in the distribution network, made in accordance with
the company's distribution strategy, and a decrease in deliveries for
promotions. In the third quarter, five retailer-owned Marimekko stores were
closed. In their stead two Marimekko's own retail stores were opened in
October. The revenues generated from deliveries for individual promotions were
very low compared with the previous year, as estimated earlier. The resulting
impact could be seen in the third quarter and will also be seen in the last
quarter of the year. Excluding these factors - changes implemented in sales
areas in the Helsinki stores in 2010, changes in the distribution network and a
decrease in deliveries for promotions - sales grew by about 2%.
International sales grew very well, by 22.0% to EUR 19,707 thousand (EUR 16,151
thousand). International sales represented 36.6% (31.5%) of the Group's net
sales. As for brand sales, 48.8% of the sales came from abroad (45.9%). Sales
grew vigorously in the Asia-Pacific region, up 53.9%, and in Central and
Southern Europe, by 27.1%, mainly thanks to a favourable trend in wholesale
sales. New stores opened at the end of 2010 and this year also increased sales
in these market areas. Sales in North America grew by 5.8%. When measured in
the invoicing currency (mainly the US dollar), sales in North America showed
growth of about 11%. In Scandinavia, sales were at the same level as in the
comparison period. Consumers' purchasing behaviour was cautious in Denmark in
particular, decreasing sales. Sales were boosted by the stores opened during
the third quarter in Copenhagen and Stockholm.
The breakdown of the Group's net sales by product line was as follows: clothing
38.1%, interior decoration 41.4% and bags 20.5%. Net sales by market area were:
Finland 63.4%, Scandinavia 9.8%, Central and Southern Europe 9.0%, North
America 5.3% and Asia-Pacific 12.5%.
July to September
In the July-September period of 2011, the Marimekko Group's net sales rose by
1.8% to EUR 19,812 thousand (EUR 19,468 thousand). International sales grew
well, by 19.5% to EUR 7,206 thousand (EUR 6,031 thousand). Sales growth was
mainly due to a very favourable trend in wholesale sales to the Asia-Pacific
region and to Central and Southern Europe. The stores opened in Berlin and
Malmö at the end of 2010 and in Copenhagen and Stockholm in the review period
also contributed to the increase in sales. In Finland, net sales declined by
6.2% to EUR 12,606 thousand (EUR 13,437 thousand). This was due to a decrease
in wholesale sales, which in turn was affected by changes in the distribution
network, made in accordance with the company's distribution strategy. During
the period, five retailer-owned Marimekko stores were closed. In their stead
two Marimekko's own retail stores were opened in October. The revenues
generated from deliveries for individual promotions were also very low compared
with the corresponding period of the previous year. Excluding these factors,
sales developed favourably and grew by about 3%.
REVIEWS BY BUSINESS UNIT
Clothing
In the January-September period of 2011, net sales of clothing rose by 5.9% to
EUR 20,534 thousand (EUR 19,387 thousand). Sales grew markedly in the
Asia-Pacific region, partly due to purchases by new stores and successful
collections. Sales also rose in Scandinavia and Central and Southern Europe.
Sales in Finland were at the same level as in the comparison period. In North
America, sales fell. International sales accounted for 31.3% of net sales of
clothing.
Interior decoration
Net sales of interior decoration products increased by 1.7% to EUR 22,289
thousand (EUR 21,919 thousand). The growth came mainly from the Asia-Pacific
region and Central and Southern Europe. Purchases by new stores contributed to
the growth. Slight sales growth was seen in North America, while sales in
Scandinavia fell a little. In Finland, sales of interior decoration products
declined due to changes in the distribution network and a decrease in
deliveries for promotions. International sales accounted for 41.5% of net sales
of interior decoration products.
Bags
Net sales of bags grew by 11.3% to EUR 11,038 thousand (EUR 9,917 thousand).
Sales rose significantly in North America, in Central and Southern Europe and
in the Asia-Pacific region. Sales in Finland and Scandinavia increased
slightly. In Finland, sales growth slowed due to changes in the distribution
network. International sales accounted for 36.5% of net sales of bags.
Finland
In the January-September period of 2011, sales in Finland decreased by 2.6% to
EUR 34,154 thousand (EUR 35,072 thousand). Marimekko's retail sales, i.e. sales
by Marimekko's own retail stores in Finland, rose by 2.0%. Sales growth slowed
partly due to changes implemented in sales areas in the Helsinki stores in
2010. Wholesale sales in Finland decreased by 10.7%. The decline was partly
attributable to changes in the distribution network, made in accordance with
the company's distribution strategy. The strategy indicates that stores located
in central areas or shopping centres of towns that are significant to the
company should, as a rule, be owned by the company itself. In the third
quarter, five retailer-owned Marimekko stores were closed. In their stead two
Marimekko's own retail stores were opened after a complete revamping in
October. Another factor behind the decline in wholesale sales was the fact that
the revenues generated from deliveries for individual promotions were very low
compared with the corresponding period of the previous year. By cutting down on
price-led promotions, the company aims to further improve the average sales
margin and the brand's pricing power. The factors mentioned above particularly
affected sales of interior decoration products, which declined somewhat. Sales
of clothing were at the same level as in the comparison period, while sales of
bags grew slightly. Three retailer-owned Marimekko stores included other brands
in their selection and, as a result, these stores are no longer classified as
Marimekko stores. This change had no financial impact.
Scandinavia
Sales in Scandinavia (previously “the other Nordic countries”) were at the same
level as in the comparison period, EUR 5,294 thousand (EUR 5,284 thousand).
Sales of the various product lines were also fairly close to last year's
figures. During the review period, two new company-owned retail stores were
opened: one at Copenhagen airport in August and the other in Stockholm in
mid-September. Consumers' purchasing behaviour has been cautious, especially in
Denmark, where general distrust with regard to development of national economy
and government has increased. Without the new stores, sales trends in
Scandinavia would have been considerably weaker.
Central and Southern Europe
In Central and Southern Europe (previously “the rest of Europe”), net sales
rose to EUR 4,866 thousand, up 27.1% on the previous year (EUR 3,827 thousand).
Bag sales increased strongly, and sales of clothing and interior decoration
products also grew well. The growth was partly accounted for by sales in the
retail store opened in Berlin at the end of 2010, but other sales in Germany
and in the Benelux countries were brisk, too.
North America
Net sales in North America rose by 5.8% to EUR 2,835 thousand (EUR 2,679
thousand). When measured in the invoicing currency (mainly the US dollar),
sales in North America showed growth of about 11%. Very strong growth was seen
in bag sales. Sales of interior decoration products also grew slightly, while
clothing sales fell. Purchases by the six new Marimekko shop-in-shops opened in
the United States at the end of 2010 and in this year accounted for a
significant part of the increase in sales of bags and interior decoration
products. The latest shop opening was in Boston in September.
The Asia-Pacific region
In the Asia-Pacific region (previously “other countries”), net sales grew
extremely well, by 53.9% to EUR 6,712 thousand (EUR 4,361 thousand). Strong
sales growth in all countries of the region builds faith in increasing interest
in the company's products in this market area. This year the region has
replaced Scandinavia as the second largest market for the company. Sales of all
product lines rose markedly but growth was particularly strong in clothing
sales, thanks to the positive reception of new collections. The increase in net
sales was also partly attributable to the initial inventory purchases by the
new store opened in Japan in the first quarter of the year as well as the
purchases by the store opened in Seoul at the end of 2010.
Production
During the January-September period of 2011, the output of the Herttoniemi
textile printing factory increased by 30% compared to the corresponding period
of the previous year. In the comparison period, the production volume was
reduced by lower-than-normal demand; demand recovered toward the end of the
year. Increased staff resources, improved production processes and the fact
that some previously outsourced textile printing was re-insourced also
contributed to the rise in output. The production volume of the Sulkava factory
was at the same level as in the comparison period. The output of the Kitee
factory declined substantially due to changes in the production structure;
after these changes, the capacity of the factory has been fully utilised.
EARNINGS
January to September
In the January-September period of 2011, the Group's operating profit decreased
as expected and was EUR 1,883 thousand (EUR 5,981 thousand). Profit after taxes
was EUR 1,415 thousand (EUR 4,421 thousand) and earnings per share were EUR
0.18 (EUR 0.55). The result was burdened by considerable investments in
internationalisation, particularly in the United States, increased personnel
and raw material costs and a rise in the general cost level. In addition,
marketing expenses were substantially higher than in the comparison period: EUR
3,476 thousand (EUR 1,882 thousand), or 6.5% (3.7%) of the Group's net sales.
The difference was due to exceptionally low marketing expenses in the
comparison period as well as costs related to store openings and different
events celebrating the company's anniversary. In addition, the decline in
wholesale sales in Finland impaired the result. The decline was attributable to
changes in the distribution network, made in accordance with the company's
distribution strategy, and a decrease in deliveries for promotions. The
excellent trend in sales in the Asia-Pacific region had a positive impact on
the result. Retail sales growth in Finland and sales increase generated by new
stores opened abroad also improved the result.
As a result of significant investments, the Group's depreciation grew to EUR
1,450 thousand (EUR 1,108 thousand), representing 2.7% (2.2%) of net sales. Net
financial expenses totalled EUR 47 thousand (EUR 12 thousand), or 0.1% (0.02%)
of net sales.
July to September
In the July-September period of 2011, the Group's operating profit amounted to
EUR 2,321 thousand (EUR 4,170 thousand). As expected, profitability was
weakened by considerable investments in internationalisation, particularly in
the United States, increased personnel and raw material costs and a rise in the
general cost level. In addition, the result was burdened by the decline in
wholesale sales in Finland, which was attributable to changes in the
distribution network, made in accordance with the company's distribution
strategy, and a decrease in deliveries for promotions. Retail sales growth in
Finland and sales increase generated by new stores opened abroad improved the
result. Furthermore, the strong trend in sales in the Asia-Pacific region also
had a positive impact on the result.
INVESTMENTS
The Group's gross investments amounted to EUR 5,529 thousand (EUR 689
thousand), representing 10.3% (1.3%) of net sales. The majority of investments
were directed at the company's e-commerce project, building new store premises
and purchasing new equipment, purchasing a new printing machine and acquiring
and improving information systems.
EQUITY RATIO AND FINANCING
The Group's equity ratio was 65.5% at the end of the period (80.4% on 30
September 2010; 78.8% on 31 December 2010). The ratio of interest-bearing
liabilities minus financial assets to shareholders' equity (gearing) was 6.7%,
while it was -21.0% at the end of the corresponding period in the previous
year.
The Group's financial liabilities stood at EUR 5,360 thousand (EUR 0) at the
end of the period. The Group's financial assets at the end of the period
amounted to EUR 3,260 thousand (EUR 6,860 thousand).
SHARES AND SHARE PRICE TREND
Share capital
At the end of the period, the company's fully paid-up share capital, as
recorded in the Trade Register, amounted to EUR 8,040,000 and the number of
shares totalled 8,040,000.
Shareholdings
According to the book-entry register, Marimekko had 6,858 (6,676) shareholders
at the end of the period. Of the shares, 13.6% (14.5%) were registered in a
nominee's name and 15.9% (15.8%) were in foreign ownership. The number of
shares owned either directly or indirectly by members of the Board of Directors
and the President of the company was 1,150,930 (1,086,440), representing 14.3%
(13.5%) of the total share capital and of the votes conferred by the company's
shares.
The largest shareholders according to the book-entry register on 30 September
2011 Number of shares Percentage of holding
and votes and votes
--------------------------------------------------------------------------------
1. Muotitila Ltd 1,127,700 14.03
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2. Semerca Investment Ltd 850,377 10.58
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3. ODIN Finland 404,513 5.03
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4. Varma Mutual Employment Pension 385,920 4.80
Insurance Company
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5. Keva 301,987 3.76
--------------------------------------------------------------------------------
6. Ilmarinen Mutual Pension 265,419 3.30
Insurance Company
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7. Veritas Pension Insurance 218,163 2.71
Company
--------------------------------------------------------------------------------
8. Mutual Fund Tapiola Finland 66,395 0.82
--------------------------------------------------------------------------------
9. Foundation for Economic 50,000 0.62
Education
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10. Investment Fund SEB Gyllenberg 50,000 0.62
Small Firm
--------------------------------------------------------------------------------
Total 3,720,474 46.27
--------------------------------------------------------------------------------
Nominee-registered 1,096,249 13.64
--------------------------------------------------------------------------------
Others 3,223,277 40.09
--------------------------------------------------------------------------------
Total 8,040,000 100.00
--------------------------------------------------------------------------------
Flaggings
SEB Asset Management S.A.'s share of Marimekko Corporation's share capital and
voting rights declined to 2.05%, or 164,560 shares, due to a stock loan on 19
April 2011 and reverted to 5.77%, or 464,152 shares at the termination of the
stock loan on 10 May 2011.
Authorisations
At the end of the review period, the Board of Directors had no valid
authorisations to carry out share issues or issue convertible bonds or bonds
with warrants, or to acquire or surrender Marimekko shares.
Share trading
During the period under review, a total of 950,707 Marimekko shares were
traded, representing 11.8% of the shares outstanding. The total value of
Marimekko's share turnover was EUR 12,799,110. The lowest price of the
Marimekko share was EUR 10.50, the highest was EUR 15.90 and the average price
was EUR 13.48. At the end of the period, the final price of the share was EUR
10.70. The company's market capitalisation on 30 September 2011 was EUR
86,028,000 (EUR 90,691,200 on 30 September 2010; EUR 115,776,000 on 31 December
2010).
PERSONNEL
During the January-September period of 2011, the number of employees averaged
393 (372). At the end of the period, the Group employed 405 (378), of whom 47
(18) worked abroad.
RISK MANAGEMENT AND MAJOR RISKS
No significant changes have occurred in the general risk factors since the
review presented in the report of the Board of Directors on 7 February 2011
other than the clearly increased general uncertainty in the world economy. The
particular risks in the near future are associated with general economic
development and the resulting unsteadiness in the operating environment as well
as its potential effect on consumers' purchasing behaviour and purchasing power
in all of the Group's markets. In addition, growth management, changes in raw
material and other purchase prices and the rise in the general cost level are
emphasised in the risk management of the company. Due to the general
uncertainty in the market, the company is also monitoring changes in exchange
rates even more carefully. They are, however, not expected to have a
significant influence on the financial position of the company. The Group's
main invoicing currency is the euro. The other significant invoicing currencies
are the Swedish krona and the US dollar. The US dollar's share of total
invoicing will be increasing as a result of investments made in North America.
RESEARCH AND DEVELOPMENT
Marimekko's product planning and development costs arise from the design of
collections. Design costs are recorded in expenses.
THE ENVIRONMENT, HEALTH AND SAFETY
Responsibility for the environment and nature is an integral aspect of
Marimekko's business. In environmental matters, the company's business
supervision is largely based on legislation and other regulations.
Environmental, health and safety issues are reported in the 2010 Annual Report.
MERGER OF SUBSIDIARIES
The Board of Directors of Marimekko Corporation decided to merge the company's
fully-owned subsidiaries Marimekko Tuotanto Oy, Marimekko Kitee Oy and Decembre
Oy into the parent company. The merger is executed in order to simplify the
group structure and administration as well as to enhance the efficiency of
business operations and save costs.
In the merger, all assets and liabilities of the merging companies will be
transferred to the acquiring company, Marimekko Corporation, without
liquidation proceedings. No merger consideration shall be paid to the sole
shareholder of the merging companies, i.e. Marimekko Corporation, since the
merger is a subsidiary merger. The merger has no implications for personnel.
The planned date of registration of the implementation of the merger is 31
December 2011.
MAJOR EVENTS AFTER THE CLOSE OF THE REVIEW PERIOD
New stores
The company's own flagship store was opened in Manhattan, New York in early
October. The store, with a sales floor area of 350 m2, is located in one of the
busiest blocks in Manhattan's Flatiron District at the intersection of Fifth
Avenue and Broadway. October also saw the opening of the first company-owned
retail store in Oslo; in the Miami area, a Marimekko shop-in-shop was opened.
Four new stores have been opened in Finland during late October-early November:
in Espoo, Vantaa, Lahti and the centre of Helsinki.
OUTLOOK FOR THE REMAINDER OF 2011
The increased uncertainty concerning overall economic development makes it
difficult to forecast market trends and the company's outlook for the remainder
of the year. The uncertainty may affect consumers' purchasing behaviour and
buying power. In the last quarter, Marimekko's sales are anticipated to stay on
the growth track and the opening of new stores is expected to boost
particularly international sales. The sales trend in Finland is expected to be
good, but the changes in the distribution network, reported earlier and made in
accordance with the company's distribution strategy, are anticipated to have a
negative impact on sales. In addition, the revenues generated from deliveries
for individual promotions will be very low. By cutting down on price-led
promotions, the company aims to further improve the average sales margin and
the brand's pricing power.
Substantial investments in internationalisation, especially in the United
States, and in developing business operations and the distribution network are
of such magnitude that they will be reflected in a significant growth in fixed
costs and continue to burden the operating result considerably during the rest
of the year. With these measures and investments, which are exceptionally
extensive and of which many occur predominantly during this year, the structure
of Marimekko's business is transformed and a more solid foundation for
long-term growth and improved profitability is laid. Moreover, increased raw
material costs and the rise in the general cost level put the company under
pressure to raise prices.
The total investments planned by the Marimekko Group for 2011 are estimated at
about EUR 6.5 million. This includes, among others, the roughly EUR 1.5 million
investment in machinery for the Helsinki textile printing factory, the roughly
EUR 1 million investment in e-commerce, the construction costs for the flagship
store and the showroom in New York, and the costs for other new retail stores.
The full-year estimate for 2011 given by the company in its interim report of
17 August 2011 remains unchanged: net sales growth for the Marimekko group is
expected to be at the bottom end of the announced range (about 5-10%), close to
5%, and the anticipated decline in operating profit is estimated to be at the
top end of the range (about 40-60%), roughly 50-60% compared with the previous
year.
Due to the seasonal nature of Marimekko's business, the major portion of the
company's net sales and earnings are traditionally generated during the last
two quarters of the year. In the last quarter, a significant share of sales is
accounted for by retail sales.
Helsinki, 10 November 2011
MARIMEKKO CORPORATION
Board of Directors
Information presented in the interim report has not been audited.
APPENDICES
Accounting principles
Consolidated income statement and comprehensive consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of changes in shareholders' equity
Key figures
Consolidated net sales by market area and product line
Segment information
Quarterly trend in net sales and earnings
Accounting principles
This interim report was prepared in accordance with IAS 34: Interim Financial
Reporting. The same accounting principles were applied as in the 2010 financial
statements.
FORMULAS FOR THE KEY FIGURES
Earnings per share (EPS), EUR:
(Profit before taxes - income taxes) / Number of shares (average for the
financial period)
Equity per share, EUR:
Shareholders' equity / Number of shares, 30 September
Return on equity (ROE), %:
(Profit before taxes - income taxes) X 100 / Shareholders' equity (average for
the financial period)
Return on investment (ROI), %:
(Profit before taxes + interest and other financial expenses) X 100 / (Balance
sheet total - non-interest-bearing liabilities (average for the financial
period))
Equity ratio, %
Shareholders' equity X 100 / (Balance sheet total - advances received)
Gearing, %:
Interest-bearing net debt X 100 / Shareholders' equity
CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 7-9/20 7-9/20 1-9/20 1-9/20 1-12/2
11 10 11 10 010
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NET SALES 19,812 19,468 53,861 51,223 73,297
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Other operating income - 3 2 13 16
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Increase or decrease in inventories of -1,181 -42 -3,162 -1,072 -1,173
completed and unfinished products
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Raw materials and consumables 8,392 7,051 22,809 19,860 28,496
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Employee benefit expenses 4,530 3,786 14,145 12,459 17,311
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Depreciation 534 385 1,450 1,108 1,478
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Other operating expenses 5,216 4,121 16,738 12,900 19,032
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OPERATING PROFIT 2,321 4,170 1,883 5,981 8,169
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Financial income 2 3 43 9 83
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Financial expenses -32 -40 -90 -21 -29
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-30 -37 -47 -12 54
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PROFIT BEFORE TAXES 2,291 4,133 1,836 5,969 8,223
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Income taxes 568 1,075 421 1,548 2,151
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NET PROFIT FOR THE PERIOD 1,723 3,058 1,415 4,421 6,072
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Distribution of net profit to equity 1,723 3,058 1,415 4,421 6,072
holders of the parent company
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Basic and diluted earnings per share 0.21 0.38 0.18 0.55 0.76
calculated on the profit attributable
to equity holders of the parent
company, EUR
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COMPREHENSIVE CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 7-9/20 7-9/20 1-9/20 1-9/20 1-12/2
11 10 11 10 010
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Net result for the period 1,723 3,058 1,415 4,421 6,072
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Other comprehensive income
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Change in translation difference -67 -4 -45 -5 8
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COMPREHENSIVE RESULT FOR THE PERIOD 1,656 3,054 1,370 4,416 6,080
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Distribution of net result to equity 1,656 3,054 1,370 4,416 6,080
holders of the parent company
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CONSOLIDATED BALANCE SHEET
(EUR 1,000) 30.9.2011 30.9.2010 31.12.2010
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ASSETS
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NON-CURRENT ASSETS
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Tangible assets 11,798 9,184 9,390
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Intangible assets 2,540 619 869
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Available-for-sale financial assets 16 12 16
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Deferred tax assets 197 - -
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14,551 9,815 10,275
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CURRENT ASSETS
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Inventories 21,449 16,708 17,172
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Trade and other receivables 7,884 7,188 6,437
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Current tax assets 566 18 -
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Cash and cash equivalents 3,260 6,860 9,667
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33,159 30,774 33,276
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ASSETS, TOTAL 47,710 40,589 43,551-----------------------------------------------------------------------------
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SHAREHOLDERS' EQUITY AND LIABILITIES
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EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF
THE PARENT COMPANY
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Share capital 8,040 8,040 8,040
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Translation differences -35 -3 10
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Retained earnings 23,230 24,586 26,237
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Shareholders' equity, total 31,235 32,623 34,287
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NON-CURRENT LIABILITIES
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Deferred tax liabilities 633 692 651
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Financial liabilities 5,360 - -
----------------------------------------------------------------------------- 5,993 692 651
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CURRENT LIABILITIES
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Trade and other payables 10,482 7,274 8,583
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Current tax liabilities - - 30
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10,482 7,274 8,613
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Liabilities, total 16,475 7,966 9,264
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SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL 47,710 40,589 43,551
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The Group has no liabilities resulting from derivative contracts, and there are
no outstanding guarantees or any other contingent liabilities which have been
granted on behalf of the management of the company or its shareholders.
CONSOLIDATED CASH FLOW STATEMENT
(EUR 1,000) 1-9/2011 1-9/2010 1-12/2010
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CASH FLOW FROM OPERATING ACTIVITIES
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Net profit for the period 1,415 4,421 6,072
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Adjustments
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Depreciation according to plan 1,450 1,108 1,478
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Financial income and expenses 47 12 -54
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Taxes 421 1,548 2,151
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Cash flow before change in working capital 3,333 7,089 9,647
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Change in working capital -4,086 -3,670 -2,452
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Increase (-) / decrease (+) in current -1,646 -1,594 -1,193
non-interest-bearing trade receivables
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Increase (-) / decrease (+) in inventories -4,276 -1,479 -1,943
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Increase (-) / decrease (+) in current 1,836 -597 684
non-interest-bearing liabilities
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Cash flow from operating activities before -753 3,419 7,195
financial items and taxes
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Paid interest and payments on other -90 -21 -30
financial expenses
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Interest received 44 9 81
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Taxes paid -1,017 -2,485 -2,687
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CASH FLOW FROM OPERATING ACTIVITIES -1,816 922 4,559
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CASH FLOW FROM INVESTING ACTIVITIES
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Investments in tangible and intangible assets -5,529 -689 -1,519
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CASH FLOW FROM INVESTING ACTIVITIES -5,529 -689 -1,519
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CASH FLOW FROM FINANCING ACTIVITIES
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Long-term loans drawn 5,360 - -
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Dividends paid -4,422 -3,618 -3,618
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CASH FLOW FROM FINANCING ACTIVITIES 938 -3,618 -3,618
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Change in cash and cash equivalents -6,407 -3,385 -578
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Cash and cash equivalents at the beginning of the 9,667 10,245 10,245
period
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Cash and cash equivalents at the end of the 3,260 6,860 9,667
period
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(EUR 1,000) Equity attributable to equity holders of the
parent company
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Share Translatio Retained Shareholder
capital n earnings s'
difference equity,
s total
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Shareholders' equity 1 Jan. 8,040 2 23,783 31,825
2010
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Comprehensive result for the -5 4,421 4,416
period
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Dividends paid -3,618 -3,618
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Shareholders' equity 8,040 -3 24,586 32,623
30 Sept. 2010
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Shareholders' equity 1 Jan. 8,040 10 26,237 34,287
2011
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Comprehensive result for the -45 1,415 1,370
period
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Dividends paid -4,422 -4,422
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Shareholders' equity 8,040 -35 23,230 31,235
30 Sept. 2011
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KEY FIGURES
1-9/2011 1-9/2010 Change, % 1-12/2010
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Earnings per share, EUR 0.18 0.55 -67.3 0.76
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Equity per share, EUR 3.88 4.06 -4.4 4.26
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Return on equity (ROE), % 5.8 18.3 18.4
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Return on investment (ROI), % 7.2 24.8 25.0
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Equity ratio, % 65.5 80.4 78.8
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Gearing, % 6.7 -21.0 -28.2
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Gross investments, EUR 1,000 5,529 689 1,519
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Gross investments, % of net sales 10.3 1.3 2.1
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Contingent liabilities, EUR 1,000 19,555 9,142 113.9 11,147
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Average personnel 393 372 5.6 375
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Personnel at the end of the period 405 378 7.1 388
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Number of shares at the end of the 8,040 8,040 8,040
period
(1,000)
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Number of shares outstanding, average 8,040 8,040 8,040
(1,000)
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NET SALES BY MARKET AREA
(EUR 1,000) 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/
2011 2010* % 2011 2010* % 2010*
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Finland 12,606 13,437 -6.2 34,154 35,072 -2.6 51,277
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Scandinavia 1,956 1,871 4.5 5,294 5,284 0.2 7,045
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Central and Southern 1,696 1,409 20.4 4,866 3,827 27.1 5,248
Europe
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North America 1,144 1,062 7.7 2,835 2,679 5.8 4,020
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Asia-Pacific 2,410 1,689 42.7 6,712 4,361 53.9 5,707
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TOTAL 19,812 19,468 1.8 53,861 51,223 5.2 73,297
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* Due to adjustments made in the review period in internal sales reporting
structures, the previously reported sales figures by market area have changed.
NET SALES BY PRODUCT LINE
(EUR 1,000) 7-9/ 7-9/ Change, % 1-9/ 1-9/ Change, % 1-12/
2011 2010* 2011 2010* 2010*
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Clothing 7,571 7,028 7.7 20,534 19,387 5.9 25,703
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Interior 7,782 8,232 -5.5 22,289 21,919 1.7 34,028
decoration
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Bags 4,459 4,208 6.0 11,038 9,917 11.3 13,566
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TOTAL 19,812 19,468 1.8 53,861 51,223 5.2 73,297
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* Due to adjustments made in the review period in internal sales reporting
structures, the previously reported sales figures by product line have changed.
SEGMENT INFORMATION
(EUR 1,000) 1-9/2011 1-9/2010 Change, % 1-12/2010
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Marimekko business
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Net sales 53,861 51,223 5.2 73,297
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Operating profit 1,883 5,981 -68.5 8,169
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Assets 47,710 40,569 17.6 43,551
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QUARTERLY TREND IN NET SALES AND EARNINGS
(EUR 1,000) 7-9/2011 4-6/2011 1-3/2011 10-12/2010
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Net sales 19,812 16,815 17,234 22,074
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Operating result 2,321 -798 360 2,188
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Earnings per share, EUR 0.21 -0.07 0.04 0.21
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(EUR 1,000) 7-9/2010 4-6/2010 1-3/2010 10-12/2009
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Net sales 19,468 15,747 16,008 20,719
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Operating result 4,170 588 1,223 2,353
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Earnings per share, EUR 0.38 0.05 0.12 0.22
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