2014-02-06 08:30:00 CET
2014-02-06 08:30:34 CET
REGULATED INFORMATION
Rapala VMC - Company Announcement
RAPALA VMC CORPORATION'S ANNUAL ACCOUNTS 2013: SALES DEPRESSED BY CURRENCIES, PROFIT MARGINS AND EPS IMPROVED
Rapala VMC Corporation
Stock Exchange Release
February 6, 2014 at 9:30 a.m.
RAPALA VMC CORPORATION'S ANNUAL ACCOUNTS 2013: SALES DEPRESSED BY CURRENCIES,
PROFIT MARGINS AND EPS IMPROVED
* Net sales for the fourth quarter decreased from last year by 7% to 63.3 MEUR
(67.9 MEUR) and the full year net sales were slightly below last year's
level at 286.6 MEUR (290.7 MEUR) burdened heavily by foreign exchange rates.
With comparable foreign exchange rates quarterly net sales were close to
last year's level and full year sales increased 2% from last year.
* Comparable operating profit, excluding non-recurring items and mark-to-
market valuation of operative currency derivatives, increased from last year
to 2.7 MEUR (1.0 MEUR) for the fourth quarter and reached last year's level
at 27.1 MEUR (27.1 MEUR) for the full year.
* Fourth quarter net profit for the period and earnings per share increased to
2.9 MEUR (-2.1 MEUR) and 0.08 EUR (-0.05 EUR) respectively and were 16.1
MEUR (14.0 MEUR) and 0.32 EUR (0.26 EUR) for the full year.
* Cash flow from operations was down from last year's record levels to 15.3
MEUR (25.2 MEUR) and was 0.6 MEUR (6.0 MEUR) for the fourth quarter. Net
interest-bearing debt increased to 96.3 MEUR (89.9 MEUR) and gearing to
71.2% (65.3%). Equity-to-assets ratio improved to 44.5% (42.2%).
* The Group's new ice drill manufacturing unit in Korpilahti, Finland started
operations in the fourth quarter. Expansion of lure manufacturing operations
in Batam accelerated towards the end of the year, making it the largest lure
factory in the world. The Group's own manufacturing operations in China will
be fully closed down by the end of Q2/2014.
* Outlook for 2014 is stable, while cautious. Assuming comparable translation
exchange rates, the Group expects to maintain net sales and comparable
operating profit (excluding non-recurring items and mark-to-market valuation
of operative currency derivatives) at 2013 level.
* Board proposes to the Annual General Meeting a dividend of 0.24 EUR (0.23
EUR) per share. This represents 75% of earnings per share.
The attachment presents the summary of the annual review by the Board of
Directors as well as extracts from the financial statements for 2013.
Contact information and conference call details are at the end of the review by
the Board of Directors.
Distribution: NASDAQ OMX Helsinki ja Main Media
Market Situation and Sales
Year 2013 started on a growth trend in line with expectations. In the latter
part of the year sales slowed down especially in Russia and some other East
European countries, South Africa and in some Asian Pacific countries as
economical uncertainties increased. In North America annual sales were supported
by successful product introductions and favorable winter conditions during the
fourth quarter. Full year sales were also supported by good performance in
France, South America and in some Asian countries as well as in Russia despite
the slowdown towards the end of the year. At the same time late spring and
floods in Central Europe as well as a late start of the 2013/2014 winter season
in Europe impacted sales negatively. Fluctuations in foreign exchange rates and
growing economical uncertainties impacted consumer behavior and trading
environment in several countries and put pressure in some retailers' financial
position, as well as created some uncertainties to the coming season.
Net sales for the fourth quarter decreased from last year by 7% to 63.3 (67.9
MEUR) and the full year net sales were slightly below last year's level at
286.6 MEUR (290.7 MEUR). Sales were heavily burdened by foreign exchange rates,
primarily weakening of US Dollar, Russian Ruble and South African Rand. Changes
in foreign exchange rates reduced the annual net sales by some 11 MEUR compared
to last year. With comparable rates quarterly net sales were close to last
year's level and full year sales increased by 2% from last year.
Fourth quarter net sales of Group Products decreased by 6 % from last year to
41.5 MEUR (44.2 MEUR) and full year sales were at last year's level at 176.3
MEUR (176.4 MEUR). Sales of Group Products and Third Party Products both
suffered from unfavorable changes in foreign exchange rates and late spring.
Excluding foreign exchange rates, Group Products' quarterly sales were close to
last year's level and full year sales above last year's level. Quarterly and
full year sales were supported by strong ice fishing sales in North America and
increased sales of lures, hooks and fishing accessories, while winter sports
equipment sales were down.
Sales of Third Party Products were down by 8% to 21.8 MEUR (23.7 MEUR) for the
fourth quarter and down by 3% to 110.5 MEUR (114.3 MEUR) for the full year
resulting from decline in sales of third party fishing products. Excluding
foreign exchange rates, full year sales were at last year's level and quarterly
sales close to last year. Quarterly sales were supported by third party ice
fishing products in North America.
Net sales in North America were down by 1% for the fourth quarter and up by 6%
for the full year. Currencies had a negative impact on quarterly and full year
sales compared to last year. With comparable exchange rates North American sales
were up 4% for the quarter and up 10% for the full year. The growth came from
strong ice fishing sales, new product launches and positive development in sales
of group branded fishing products. In the US, consumer and retail sentiment is
improving.
In Nordic counties, sales were down by 1% for the fourth quarter and down by 3%
for the full year. Decline of currencies, mainly Swedish and Norwegian Kronas,
had a negative impact on quarterly sales compared to last year and with
comparable exchange rates quarterly sales were up 2%. Full year sales were
impacted by a delayed start of the summer fishing season as well as suppliers'
delivery problems hurting summer season sales. Fourth quarter sales were
impacted by a timing of deliveries between the third and the fourth quarter.
Fourth quarter net sales in Rest of Europe decreased by 14% and full year sales
by 4%. Quarterly sales were impacted by increasing economical uncertainties and
thereby decreasing consumer demand in Russia as well as a delayed start of the
winter season. Full year sales in Central and Eastern Europe were impacted by
late spring and floods, weakening of currencies and increasing economical
uncertainties. With comparable exchange rates quarterly sales were down by 9%
and full year sales by 2%. Full year sales were supported by good performance in
France as well as in Russia, despite slowdown towards the end of the year.
Macro-economic situation continued to burden sales in Spain and Hungary, and in
the UK difficult market conditions and increasing competition impacted sales
negatively. The restructuring of operations had adverse impact on Swiss sales.
In Rest of the World sales decreased by 15% for the fourth quarter and by 7% for
the full year burdened by foreign exchange rates, especially weakening of South
African Rand, Australian Dollar and Japanese Yen. With comparable exchange rates
quarterly sales were down by 2% and full year sales up by 5%. Full year and
quarterly sales were supported by the new distribution company in Chile as well
as good sales in some Asian countries and in Latin America. South Africa
continued to suffer from macro-economic uncertainties and weakening of the
currency.
Financial Results and Profitability
Comparable operating profit, excluding non-recurring items and mark-to-market
valuation of operative currency derivatives, increased from last year to 2.7
MEUR (1.0 MEUR) for the fourth quarter and reached last year's level at 27.1
MEUR (27.1 MEUR) for the full year. Comparable operating profit margin was 4.3%
(1.4%) for the fourth quarter and 9.5% (9.3%) for the full year. Fourth quarter
profitability was supported by strong sales in North America, foreign exchange
rate benefit on purchases and year-end release of accruals. For the whole year,
profitability was especially burdened by costs related to expansion and ramp-up
of the lure factory in Batam as well as sales and margins lost due to a late
start of the summer fishing season and increased uncertainties in several
markets. Whole year profitability was also negatively impacted by unfavorable
change in product and customer mix and increased fixed costs.
Key figures IV IV I-IV I-IV
MEUR 2013 2012 2013 2012
-----------------------------------------------------
Net sales 63.3 67.9 286.6 290.7
EBITDA as reported 3.7 1.9 33.6 32.7
Comparable EBITDA* 4.9 2.7 34.4 33.8
Operating profit (EBIT) 1.5 0.2 26.1 25.9
Comparable EBIT* 2.7 1.0 27.1 27.1
-----------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of operative
currency derivatives.
Reported operating profit was 1.5 MEUR (0.2 MEUR) for the fourth quarter and
26.1 MEUR (25.9 MEUR) for the full year. Reported operating margin was 2.4%
(0.3%) and 9.1% (8.9%) respectively. Reported operating profit included net loss
of non-recurring items of 0.9 MEUR (0.3 MEUR) for the fourth quarter and 1.3
MEUR (0.6 MEUR) for the full year consisting mainly of costs related to closing
of lure manufacturing in China and restructuring in Switzerland. Reported
operating profit included mark-to-market valuation loss of operative currency
derivatives of 0.3 MEUR (0.5 MEUR loss) for the quarter and a valuation gain of
0.3 MEUR (0.6 MEUR loss) for the full year.
Operating profit for Group Products was at last year's level in the fourth
quarter amounting to 2.0 MEUR (2.0 MEUR) and increased from last year to 19.4
MEUR (18.9 MEUR) for the full year supported by increased sales, while
negatively affected by costs related to expansion and ramp-up of lure production
in Batam. Operating profit for Third Party Products increased to -0.5 MEUR (-
1.8 MEUR) for the fourth quarter supported by more favorable exchange rates on
purchases and decreased to 6.7 MEUR (7.0 MEUR) for the full year burdened by
change in product mix. Full year profitability of both operating segments
suffered from lost sales due to late spring and growing economic uncertainties
as well as increased fixed costs.
Total financial (net) expenses were below last year's level at 0.3 MEUR (2.0
MEUR) for the quarter and above last year's level at 5.5 MEUR (4.9 MEUR) for the
full year. Total net interest and other financing expenses were 0.9 MEUR (0.8
MEUR) for the fourth quarter and 3.7 MEUR (4.0 MEUR) for the full year.
Financial foreign exchange expenses (net) resulted in a gain of 0.6 MEUR (1.1
MEUR loss) for the quarter and in a loss of 1.7 MEUR (0.9 MEUR loss) for the
full year. Quarterly foreign exchange net expenses include a reclassification of
foreign exchange losses to other comprehensive income related to designation of
intra-group loans as net investment in a foreign operation.
Net profit for the full year and earnings per share increased to 16.1 MEUR (14.0
MEUR) and 0.32 EUR (0.26 EUR) respectively and were 2.9 MEUR (-2.1 MEUR) and
0.08 EUR (-0.05 EUR) for the fourth quarter, impacted by improved profitability
and positive adjustments to prior year taxes relating to disputes with Finnish
tax authorities.
Cash Flow and Financial Position
Cash flow from operations was down from last year's record levels to 15.3 MEUR
(25.2 MEUR) and was 0.6 MEUR (6.0 MEUR) for the fourth quarter driven by cash
being tied up into working capital, especially inventories. Due to decreasing
currency impact of 7.2 MEUR, balance sheet value of the Group's inventories
remained at last year's level amounting to 110.3 MEUR (110.6 MEUR). Working
capital was impacted by the increased inventories resulting from transfer of
production from China to Batam and slowing down of sales during the fourth
quarter as well as timing of receivables tied up into the growing ice fishing
business.
Net cash used in investing activities was 3.3 MEUR (1.2 MEUR) for the fourth
quarter and 10.8 MEUR (13.6 MEUR) for the full year. Operative capital
expenditure was 3.8 MEUR (2.1 MEUR) for the fourth quarter and 10.7 MEUR (7.7
MEUR) for the full year, driven by investments in Batam and setting up new ice
drill manufacturing unit in Finland. 2012 investing activities included
acquisition of the assets of Strike Master Corporation and Mora Ice brand with a
total of 6.7 MEUR.
The liquidity position of the Group was good. Following the increased focus on
cash management, cash and cash equivalents reduced to 16.9 MEUR (38.2 MEUR) and
undrawn committed long-term credit facilities amounted to 78.5 MEUR at the end
of the period. Net interest-bearing debt increased to 96.3 MEUR (89.9 MEUR) and
gearing to 71.2% (65.3%). Equity-to-assets ratio improved to 44.5% (42.2%). The
Group fulfills the financial covenants imposed by the credit facilities, and
does not foresee any factors impairing this ability.
Strategy Implementation
Execution of Rapala Group's strategy of profitable growth is based on three
cornerstones: brands, manufacturing and distribution, supported by strong
corporate culture. In 2013 strategy implementation continued in various areas.
To strengthen its position in global ice drill business, the Group made a
decision to establish own ice drill manufacturing operations in Korpilahti,
Finland. In-house manufacturing of Mora ICE and Rapala-UR branded ice drills
started during the fourth quarter of the year. In USA Otter ice fishing products
were added to "The Ice Force" distribution platform for this season.
The expansion of lure manufacturing operations in Batam, Indonesia, accelerated
towards the end of the year, making it already the largest in the world as
number of employees more than tripled during the year. The ramp-up and transfer
of production from the Group's own and subcontractors' facilities in China has
been more challenging than expected, which together with costs associated with
running two parallel manufacturing operations has burdened profitability this
year. During fourth quarter Group made a decision to fully close down its own
manufacturing operations in China by the end of Q2/2014.
The establishment of new VMC hook manufacturing unit in Batam was finalized
during the first quarter and the production volumes were increased during the
year.
During the first quarter the Group increased its ownership in Peltonen cross
country ski factory to 100%. The operations of the Group's distribution company
in Switzerland were restructured during the year.
Working capital and cash flow management was still one of the top priorities of
the Group, and the Group continues to work to reduce the inventory levels and
streamline the supply chain.
During the year the Group introduced several new products including
exceptionally well received Rapala Scatter Rap and Storm Arashi lures, award
winning Sufix NanoBraid fishing line and Rapala Eco Wear Reflection jacket as
well as Angry Birds lures and other fishing equipment, which successfully
expanded sales to new customer segments.
The Group continued to seek growth opportunities throughout the year and
participated in various discussions and negotiations concerning acquisitions and
business combinations.
Short-term Outlook
The Group's outlook for 2014 is stable, while cautious.
The US retail and consumer sentiment is developing positively, supporting the
sales. The Group has a strong competitive position, but the late winter and lack
of snow in Finland, slowing down of business in Eastern Europe during the fourth
quarter, heavy fluctuations in currencies and political unrest in some countries
are raising uncertainty and reducing short-term visibility.
Closing down own manufacturing operations in China and ramping up the new
production in Batam will lead to improved efficiency and performance, but will
still have adverse impact on profitability in 2014.
Assuming comparable translation exchange rates, the Group expects to maintain
net sales and comparable operating profit (excluding non-recurring items and
mark-to-market valuations of operative currency derivatives) at 2013 level.
Short term risks and uncertainties are described in more detail in the end of
this release.
Proposal for profit distribution
The Board of Directors proposes to the Annual General Meeting that a dividend of
0.24 EUR (0.23 EUR) per share is distributed from the Group's distributable
equity and any remaining distributable funds are allocated to retained earnings.
At December 31, 2013 the distributable equity totaled to 24.1 MEUR.
No material changes have taken place in the Group's financial position after the
end of the financial year. The Group's liquidity is good and the view of the
Board of Directors is that the distribution of the proposed dividend will not
undermine this liquidity.
Financial Statements and Annual General Meeting
Financial Statements for 2013 and Corporate Governance Statement will be
published in week 12. Annual General Meeting is planned to be held on April
10, 2014.
Helsinki, February 6, 2014
Board of Directors of Rapala VMC Corporation
For further information, please contact:
Jorma Kasslin, President and Chief Executive Officer, +358 9 7562 540
Jussi Ristimäki, Chief Financial Officer, +358 9 7562 540
Olli Aho, Investor Relations, +358 9 7562 540
A conference call on the quarter result will be arranged today at 2:00 p.m.
Finnish time (1:00 p.m. CET). Please dial +44 (0)20 3147 4971 or
+1 212 444 0889 or +358 (0)9 2310 1667 (pin code: 849608#) five minutes before
the beginning of the event. A replay facility will be available for 14 days
following the teleconference. The number to dial is +44 (0)20 7111 1244 (pin
code: 849608#). Financial information and teleconference replay facility are
available at www.rapalavmc.com.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME IV IV I-IV I-IV
MEUR 2013 2012 2013 2012
------------------------------------------------------------------------------
Net sales 63.3 67.9 286.6 290.7
Other operating income 0.4 0.6 0.8 1.3
Materials and services 30.1 35.8 134.4 140.7
Personnel expenses 15.5 15.8 64.0 62.6
Other costs and expenses 14.2 14.8 54.9 55.8
Share of results in associates and joint ventures -0.2 -0.2 -0.5 -0.3
----------------------------
EBITDA 3.7 1.9 33.6 32.7
Depreciation, amortization and impairments 2.2 1.7 7.5 6.8
----------------------------
Operating profit (EBIT) 1.5 0.2 26.1 25.9
Financial income and expenses 0.3 2.0 5.5 4.9
----------------------------
Profit before taxes 1.2 -1.7 20.6 21.0
Income taxes -1.7 0.3 4.6 7.1
----------------------------
Net profit for the period 2.9 -2.1 16.1 14.0
----------------------------
Attributable to:
Equity holders of the company 3.0 -2.1 12.5 10.1
Non-controlling interests 0.0 0.0 3.6 3.8
Earnings per share for profit attributable
to the equity holders of the company:
Earnings per share, EUR (diluted = non-diluted) 0.08 -0.05 0.32 0.26
STATEMENT OF COMPREHENSIVE INCOME IV IV I-IV I-IV
MEUR 2013 2012 2013 2012
------------------------------------------------------------------------
Net profit for the period 2.9 -2.1 16.1 14.0
-----------------------
Other comprehensive income, net of tax
Change in translation differences* -2.5 -1.9 -7.1 -0.3
Gains and losses on cash flow hedges* 0.1 0.1 0.9 -0.6
Gains and losses on hedges of net investments* -2.2 0.1 -2.3 0.2
Actuarial gains (losses) on defined benefit plan 0.1 -0.3 0.1 -0.3
-----------------------
Total other comprehensive income, net of tax -4.5 -2.0 -8.4 -1.0
-----------------------
Total comprehensive income for the period -1.6 -4.1 7.7 12.9
-----------------------
Total comprehensive income attributable to:
Equity holders of the Company -1.3 -4.1 5.1 9.2 Non-controlling interests -0.3 0.0 2.6 3.7
* Item that may be reclassified subsequently to the statement of income
STATEMENT OF FINANCIAL POSITION Dec 31 Dec 31
MEUR 2013 2012
-----------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 70.0 72.6
Property, plant and equipment 30.6 29.3
Non-current assets
Interest-bearing 3.0 3.7
Non-interest-bearing 10.1 11.4
--------------
113.7 117.1
Current assets
Inventories 110.3 110.6
Current assets
Interest-bearing 1.0 2.5
Non-interest-bearing 62.1 58.5
Cash and cash equivalents 16.9 38.2
--------------
190.3 209.7
Total assets 304.1 326.8
--------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the company 123.1 128.3
Non-controlling interests 12.0 9.4
--------------
135.1 137.7
Non-current liabilities
Interest-bearing 39.4 78.7
Non-interest-bearing 12.8 15.6
--------------
52.2 94.3
Current liabilities
Interest-bearing 77.8 55.5
Non-interest-bearing 38.9 39.3
--------------
116.7 94.8
Total equity and liabilities 304.1 326.8
--------------
IV IV I-IV I-IV
KEY FIGURES 2013 2012 2013 2012
-----------------------------------------------------------------------
EBITDA margin, % 5.8% 2.8% 11.7% 11.2%
Operating profit margin, % 2.4% 0.3% 9.1% 8.9%
Return on capital employed, % 2.6% 0.4% 11.4% 11.4%
Capital employed at end of period, MEUR 231.4 227.5 231.4 227.5
Net interest-bearing debt at end of 96.3 89.9 96.3 89.9
period, MEUR
Equity-to-assets ratio at end of period, 44.5% 42.2% 44.5% 42.2%
%
Debt-to-equity ratio at end of period, % 71.2% 65.3% 71.2% 65.3%
Earnings per share, EUR (diluted = non- 0.08 -0.05 0.32 0.26
diluted)
Equity per share at end of period, EUR 3.19 3.31 3.19 3.31
Average personnel for the period 2 387 2 104 2 428 2 127
-----------------------------------------------------------------------
Definitions of key figures are consistent with those in the financial
statement 2012.
STATEMENT OF CASH FLOWS IV IV I-IV I-IV
MEUR 2013 2012 2013 2012
----------------------------------------------------------------------------
Net profit for the period 2.9 -2.1 16.1 14.0
Adjustments to net profit for the period * 0.7 5.2 18.6 20.6
Financial items and taxes paid and received -0.3 -2.9 -8.6 -13.6
Change in working capital -2.8 5.7 -10.8 4.2
----------------------------------------------------------------------------
Net cash generated from operating activities 0.6 6.0 15.3 25.2
Investments -3.8 -2.1 -10.7 -7.7
Proceeds from sales of assets 0.1 0.1 0.2 0.8
Sufix brand acquisition - - -0.7 -0.8
Strikemaster and Mora Ice acquisitions - - - -6.7
Acquisition of other subsidiaries, net of cash - - 0.0 0.0
Proceeds from disposal of subsidiaries, net of 0.5 0.8 0.5 0.8
cash
Change in interest-bearing receivables -0.1 0.0 -0.1 0.0
----------------------------------------------------------------------------
Net cash used in investing activities -3.3 -1.2 -10.8 -13.6
Dividends paid to parent company's - - -8.9 -8.9
shareholders
Dividends paid to non-controlling interest - -0.1 - -1.6
Net funding -4.4 2.1 -16.0 9.1
Purchase of own shares -0.2 -0.5 -1.0 -0.7
----------------------------------------------------------------------------
Net cash generated from financing activities -4.6 1.4 -25.9 -2.2
Adjustments 0.1 0.2 1.5 0.2
Change in cash and cash equivalents -7.3 6.3 -19.8 9.6
Cash & cash equivalents at the beginning of 24.4 32.0 38.2 28.9
the period
Foreign exchange rate effect -0.2 -0.1 -1.4 -0.4
----------------------------------------------------------------------------
Cash and cash equivalents at the end of the 16.9 38.2 16.9 38.2
period
* Includes reversal of non-cash items, income taxes and financial income and
expenses.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Attributable to equity
holders of the company
---------------------------------------------------
Cumul. Fund for Non-
Share Fair trans- invested Re- contr-
pre- value lation non-rest- Own tained olling
Share mium re- diffe- ricted sha- earn- inte- Total
MEUR capital fund serve rences equity res ings rests equity
-------------------------------------------------------------------------------
Equity on Jan
1, 2012 3.6 16.7 -1.6 -4.1 4.9 -2.6 111.8 7.2 135.8
-------------------------------------------------------------------------------
Impact of new
standards - - - - - - -0.1 - -0.1
-------------------------------------------------------------------------------
Restated
balance 3.6 16.7 -1.6 -4.1 4.9 -2.6 111.7 7.2 135.7
-------------------------------------------------------------------------------
Comprehensive
income * - - -0.6 0.0 - - 9.8 3.7 12.9
Purchase of
own shares - - - - - -0.7 - - -0.7
Dividends - - - - - - -8.9 -1.5 -10.4
Share based
payment - - - - - - 0.3 - 0.3
Other changes - - - - - - 0.0 0.0 0.0
-------------------------------------------------------------------------------
Equity on Dec
31, 2012 3.6 16.7 -2.3 -4.1 4.9 -3.4 112.8 9.4 137.7
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity on Jan
1, 2013 3.6 16.7 -2.3 -4.1 4.9 -3.4 112.8 9.4 137.7
-------------------------------------------------------------------------------
Comprehensive
income * - - 0.9 -8.4 - - 12.6 2.6 7.7
Purchase of
own shares - - - - - -1.0 - - -1.0
Dividends - - - - - - -8.9 - -8.9
Share based
payments - - - - - - -0.3 - -0.3
Other changes - - - - - - 0.0 0.0 0.0
-------------------------------------------------------------------------------
Equity on Dec
31, 2013 3.6 16.7 -1.4 -12.5 4.9 -4.4 116.2 12.0 135.1
-------------------------------------------------------------------------------
*For the period, net of tax
SEGMENT INFORMATION*
MEUR IV IV I-IV I-IV
Net Sales by Operating Segment 2013 2012 2013 2012
-----------------------------------------------------------
Group Products 41.5 44.2 176.3 176.4
Third Party Products 21.8 23.7 110.5 114.3
Eliminations 0.0 - -0.1 -
-----------------------------------------------------------
Total 63.3 67.9 286.6 290.7
Operating Profit by Operating Segment
-----------------------------------------------------------
Group Products 2.0 2.0 19.4 18.9
Third Party Products -0.5 -1.8 6.7 7.0
-----------------------------------------------------------
Total 1.5 0.2 26.1 25.9
Dec 31 Dec 31
Assets by Operating Segment 2013 2012
----------------------------------------------------------
Group Products 215.7 214.0
Third Party Products 67.4 68.5
----------------------------------------------------------
Non-interest-bearing assets total 283.1 282.5
Unallocated interest-bearing assets 21.0 44.3
----------------------------------------------------------
Total assets 304.1 326.8
* Segments are consistent
with those in the financial statements 2012. Segments are described in detail in
note 2 of the financial statements 2012.
External Net Sales by Area IV IV I-IV I-IV
MEUR 2013 2012 2013 2012
-------------------------------------------------------
North America 25.3 25.6 88.4 83.6
Nordic 13.3 13.4 60.8 62.7
Rest of Europe 16.5 19.1 103.6 108.2
Rest of the world 8.3 9.8 33.8 36.2
-------------------------------------------------------
Total 63.3 67.9 286.6 290.7
KEY FIGURES BY I II III IV I-IV I II III IV I-IV
QUARTERS
MEUR 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013
-------------------------------------------------------------------------------
Net sales 73.5 83.7 65.6 67.9 290.7 75.3 81.4 66.6 63.3 286.6
EBITDA 12.0 13.3 5.4 1.9 32.7 10.3 15.2 4.5 3.7 33.6
Operating profit 10.4 11.6 3.7 0.2 25.9 8.6 13.4 2.6 1.5 26.1
Profit before 10.4 10.5 1.9 -1.7 21.0 8.3 11.6 -0.4 1.2 20.6
taxes
Net profit for the 7.5 7.2 1.3 -2.1 14.0 6.6 7.8 -1.2 2.9 16.1
period
-------------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT AND FINANCIAL POSITION
The financial statement figures included in this release are unaudited.
This report has been prepared in accordance with IAS 34. Accounting principles
adopted in the preparation of this report are consistent with those used in the
preparation of the Financial Statements 2012, except for the adoption of the new
or amended standards and interpretations.
Adoption of amendment of IFRS 7 did not result in any changes in the accounting
principles that would have affected the information presented in this interim
report. The adoption of IFRS 13 added notes related to fair values. The
amendment to IAS 1 standard changed the grouping of items presented in other
comprehensive income. Items that would be reclassified to profit or loss at
future point of time are presented separately from items that will never be
reclassified.
The revised IAS 19 standard removed the option for corridor approach in
recognizing the actuarial gains and losses from defined benefit plans. Under the
revised standard, actuarial gains and losses are required to be recognized
immediately and in full in other comprehensive income and they are excluded
permanently from the consolidated income statement. Previously, actuarial gains
and losses were deferred in accordance with the corridor method.
The amendments to IAS 19 have been applied retrospectively. The impact on
comparative figures presented in the statement of financial position, statement
of income and statement of other comprehensive income in this interim report are
presented in the first quarter interim report. The change impacted also key
figures, which have been restated in this interim report. The adjustments on
income statement and other comprehensive income were booked in the fourth
quarter.
Use of estimates and rounding of figures
Complying with IFRS in preparing financial statements requires the management to
make estimates and assumptions. Such estimates affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the amounts of revenues and expenses. Although these estimates are based on the
management's best knowledge of current events and actions, actual results may
differ from these estimates.
All figures in these accounts have been rounded. Consequently, the sum of
individual figures can deviate from the presented sum figure. Key figures have
been calculated using exact figures.
Events after the end of the interim period
The Group has no knowledge of any significant events after the end of the
interim period that would have a material impact on the financial statements for
January-December 2013. Material events after the end of the interim period, if
any, have been discussed in the interim review by the Board of Directors.
Inventories
On December 31, 2013, the book value of inventories included a provision for net
realizable value of 4.5 MEUR (4.4 MEUR at December 31, 2012).
Impact of business acquisitions on the consolidated financial statements
In March 2013, the Group purchased a 10% share of the Finnish ski manufacturing
unit. This acquisition raised the Group's ownership to 100%. Acquisition has no
significant impact on the Group's consolidated financial statements.
In September, the escrow deposit of 1.3 MEUR relating to the acquisition of
Dynamite Baits in 2010 was released to the sellers.
In January 2014, the Group acquired 100% of the shares and voting rights of a
French coarse fishing attractant manufacturer Mystic s.a.r.l.. The consideration
amounted to 0.2 MEUR and is subject to finalization of the closing accounts. The
acquisition does not have material impact on the result or financial position of
the Group.
Non-recurring income and expenses included in
operating profit IV IV I-IV I-IV
MEUR 2013 2012 2013 2012
-------------------------------------------------------------------------------
Costs related to business acquisitions - 0.0 - 0.0
Sale of gift manufacturing unit in China - -0.3 - -0.7
Gain on disposal of real estate in Finland - - - 0.1
Closure of Chinese lure manufacturing -0.8 - -0.8 -
Other restructuring costs -0.1 - -0.2 -
Other non-recurring items -0.1 0.0 -0.1 0.0
-------------------------------------------------------------------------------
Total included in EBITDA and operating profit -0.9 -0.3 -1.1 -0.6
-------------------------------------------------------------------------------
Other non-recurring impairments - - -0.2 -
-------------------------------------------------------------------------------
Total included in operating profit -0.9 -0.3 -1.3 -0.6
-------------------------------------------------------------------------------
Commitments Dec 31 Dec 31
MEUR 2013 2012
--------------------------------------------------------------------
On own behalf
Guarantees - 0.1
Minimum future lease payments on operating leases 16.8 16.6
--------------------------------------------------------------------
Related party Sales and
transactions other Pur- Rents Other expen- Recei- Paya-
MEUR income chases paid ses vables bles
-------------------------------------------------------------------------------
I-IV 2013
Joint venture
Shimano Normark UK
Ltd 3.0 - - - 0.1 -
Associated company
Lanimo Oü 0.0 0.1 - - 0.0 -
Entity with
significant
influence over the
Group* - - 0.2 0.1 0.0 -
Management - - 0.3 - 0.0 0.0
I-IV 2012
Joint venture
Shimano Normark UK
Ltd 3.9 - - - 0.1 0.0
Associated company
Lanimo Oü - 0.0 - - 0.0 -
Entity with
significant
influence over the
Group* - - 0.2 0.1 0.0 -
Management 0.0 - 0.4 - - 0.0
-------------------------------------------------------------------------------
* Lease agreement for the real estate for the consolidated operations in
France and a service fee.
Dec 31 Dec 31
Open derivatives 2013 2012
-----------------------------
Nominal Fair Nominal Fair
MEUR Value Value Value Value
----------------------------------------------------------
Operative hedges
Foreign currency derivatives 49.4 0.0 35.1 -0.4
Monetary hedges
Foreign currency derivatives 24.6 0.1 27.2 0.0
Interest rate derivatives 69.5 -2.0 85.0 -3.0
----------------------------------------------------------
The changes in the fair values of derivatives that are designated as hedging
instruments but do not qualify for hedge accounting are recognized based on
their nature either in operative costs, if the hedged item is an operative
transaction, or in financial income and expenses if the hedged item is a
monetary transaction. Some derivatives designated to hedge monetary items are
accounted for according to hedge accounting. Financial risks and hedging
principles are described in detail in the financial statements 2012 and will
be updated in financial statements 2013.
Changes in unrealized mark-to-market valuations for operative foreign currency
derivatives
IV IV I-IV I-IV
2013 2012 2013 2012
--------------------------------------------------
Included in operating profit -0.3 -0.5 0.3 -0.6
--------------------------------------------------
Operative foreign currency derivatives that are marked-to-market on reporting
date cause timing differences between the changes in derivative's fair values
and hedged operative transactions. Changes in fair values for derivatives
designated to hedge future cash flow but are not accounted for according to
the principles of hedge accounting impact the Group's operating profit for the
accounting period. The underlying foreign currency transactions will realize
in future periods.
Fair values of financial instruments Dec 31
2013
MEUR Carrying value Fair value
------------------------------------------------------------------------
Financial assets
Loans and receivables 77.8 77.8
Available-for-sale financial assets (level 3) 0.3 0.3
Derivatives (level 2) 0.8 0.8
Financial liabilities
Financial liabilities at amortized cost 138.1 138.7
Derivatives (level 2) 2.8 2.8
------------------------------------------------------------------------
Share based
incentive plan resolved in June 2012
The Group had one share based incentive plan for the Group's key personnel. In
line with the terms of the share-based payment program, the Board modified the
conditions and term of the program during the second quarter. Earning period was
prolonged to December 31, 2013 and the fair value of the program was reassessed.
The potential reward was based on the development of Rapala Group's inventory
levels and EBITDA. The program ended at the end of December and no rewards
materialized.
The gross value of the program corresponded to the value maximum total of
235 000 company shares.
Shares and share capital
On April 11, 2013 The Annual General Meeting (AGM) updated Board's authorization
on repurchase of shares. A separate stock exchange release on the decisions of
the AGM was given, and up to date information on the board's authorizations and
other decision of the AGM are available also on the corporate website.
At the end of the reporting period the share capital fully paid and reported in
the Trade Register was 3.6 MEUR and the total number of shares was 39 468 449.
The average number of shares during the reporting period was 39 468 449. During
the reporting period, company bought back a total of 205 908 own shares. At the
end of the reporting period the company held 907 308 own shares, representing
2.3% of the total number of shares and the total voting rights. The average
share price of all repurchased own shares held by the company was 4.80 EUR.
During the reporting period, 3 122 353 shares (5 679 621) were traded at a high
of 5.50 EUR and a low of 4.56 EUR. The closing share price at the end of the
period was 5.20 EUR.
Short term risks and uncertainties
The objective of Rapala VMC Corporation's risk management is to support the
implementation of the Group's strategy and execution of business targets. The
importance of risk management has increased as Rapala VMC Corporation has
continued to expand its operations. Accordingly, Group management continuously
develops it's risk management practices and internal controls. Detailed
descriptions of the Group's strategic, operative and financial risks as well as
risk management principles will be included in the Financial Statements 2013.
Due to the nature of the fishing tackle business and the geographical scope of
the Group's operations, the business has traditionally been seasonally stronger
in the first half of the year compared to the second half, although this
seasonality pattern may partly change as the Group has increased its role in
winter fishing business. Weathers impact consumer demand and may have impact on
the Group's sales for current and following seasons. The Group is more affected
by winter weathers after the expansion into winter fishing business, while the
impacts on summer and winter seasons are partly offsetting each other. The
biggest deliveries for both summer and winter seasons are concentrated into
relatively short time periods, and hence a well functioning supply chain is
required.
Working capital and inventory management is still a top priority for the Group
and initiatives to improve the Group's inventory turnovers and shorten factory
lead-times continue. Inventory clearance sales supporting the inventory
reduction targets may have some short-term negative impacts on sales and
profitability of some product groups. The uncertainties in future demand as well
as the length of the Group's supply chain increases the importance of supply
chain management. Strong and rapid increases in consumer demand may put
challenges on the Group's supply chain to meet the demand. Management balances
between the risk of shortages and the risk of excess production and purchasing,
which would lead to excess inventories in the Group.
Closing down lure manufacturing operations in China and ramping up and expanding
the new production facility in Batam, Indonesia, may increase certain production
cost and supply chain risks temporarily. The same applies to establishment of
the new ice drill manufacturing unit in Finland.
The Group successfully refinanced its main credit facilities in 2012. These
credit facilities include some financial covenants, which are actively
monitored. The Group's liquidity and refinancing risks are well in control.
The fishing tackle business has not traditionally been strongly influenced by
increased uncertainties and downturns in the general economic climate. They may
influence, however, at least for a short while, the sales of fishing tackle,
when retailers reduce their inventory levels and face financial challenges. Also
quick and strong increases in living expenses, such as gasoline price,
uncertainties concerning employment, sudden fluctuations in foreign exchange
rates and governmental austerity measures may temporarily affect consumer
spending also in the fishing tackle business. However, the underlying consumer
demand has historically proven to be fairly solid.
The truly global nature of the Group's sales and operations spreads the market
risks caused by the current uncertainties in the global economy. The Group is
cautiously monitoring the development both in the global macro economy as well
as in the various local markets it operates in.
Cash collection and credit risk management is high on the agenda of local
management and this may affect sales to some customers. Quality of the accounts
receivables is monitored closely and write-downs are initiated if needed.
The Group's sales and profitability are impacted by the changes in foreign
exchange rates and the risks are monitored actively. To fix the exchange rates
of future foreign exchange denominated sales and purchases, the Group has
entered into several currency hedging agreements according to the foreign
exchange risk management policy set by the Board of Directors. As the Group is
not applying hedge accounting in accordance to IAS 39, the unrealized mark-to-
market valuations of currency hedging agreements have an impact on the Group's
reported operating profit. The Group is closely monitoring market development as
well as its cost structure and considering possibility and feasibility of price
increases, hedging actions and cost rationalization.
No significant changes are identified in the Group's strategic risks or business
environment.
[HUG#1759410]
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