2012-07-24 08:30:00 CEST
2012-07-24 08:30:48 CEST
SÄÄNNELTY TIETO
Rapala VMC - Interim report (Q1 and Q3)
RAPALA'S INTERIM REPORT FOR JANUARY TO JUNE 2012: RECORD SALES AND CASH FLOW. PROFITABILITY WEAKER DUE TO CURRENCIES AND STOCK CLEARANCES.
Rapala VMC Corporation
Stock Exchange Release
July 24, 2012 at 9:30 a.m.
* Net sales for the second quarter increased by 3% from last year to 83.7
(80.9 MEUR) and was up by 1% at 157.1 MEUR (155.6 MEUR) for January to June,
reaching all time record sales for the quarter and the first half of the
year. Sales were supported by foreign exchange rates and growth in sales
especially in North America.
* Comparable operating profit decreased from last year and reached 11.7 MEUR
(13.2 MEUR) for the second quarter and 22.0 MEUR (25.3 MEUR) for the first
six months, driven by reduced gross margin due to foreign exchange rate
changes and stock clearance campaigns. Comparable operating margin was lower
than last year amounting to 14.0% (16.3%) for the quarter and 14.0 % (16.3%)
for the first half of the year. Reported operating profit for the second
quarter amounted to 11.6 MEUR (12.8 MEUR) and 22.0 MEUR (24.9 MEUR) for the
first half of the year.
* Net profit for the quarter reduced to 7.2 MEUR (8.0 MEUR) and was 14.7 MEUR
(15.9 MEUR) for the first half of the year. Quarterly earnings per share
were 0.15 EUR (0.17 EUR) and 0.31 EUR (0.35 EUR) for the first half.
* Cash flow for operating activities reached a quarterly and first half record
level, following the intense focus on cash flow and working capital
management. Cash flow from operating activities for second quarter improved
significantly to 21.5 MEUR (17.0 MEUR) and was 12.2 MEUR (1.5 MEUR) for the
first half of the year.
* Implementation of Rapala's strategy of profitable growth continued during
the second quarter of the year by taking several actions relating to
manufacturing and distribution activities.
* Outlook for the full year remains positive, while cautious. It is expected
that in 2012 the net sales will increase from 2011. Profitability estimate
is specified so that comparable operating profit is expected to remain close
to last year's level.
The attachment presents the interim review by the Board of Directors as well as
the accounts.
A conference call on the second quarter result will be arranged today at 3.00
p.m. Finnish time (2.00 p.m. CET). Please dial +44 (0)20 3147 4971 or
+1 212 444 0889 or +358 (0)9 2310 1667 (pin code: 196873#) 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: 196873#). Financial information and teleconference replay facility are
available at www.rapala.com.
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
Distribution: NASDAQ OMX Helsinki and Main Media
Market Situation and Sales
During the second quarter of the year Rapala's business developed positively,
and as a result of good sales performance in several countries, Group's net
sales reached record levels for the second quarter and for the first six months,
despite the divestment of the gift business. Business grew especially in the US,
Eastern Europe, Baltics, Asia and in several European countries. Early spring
and warm weathers supported the sales in the beginning of the second quarter,
while in June weather turned unfavorable in many markets having some negative
impact on consumer demand and replenishment orders. First six-month sales were
also burdened by last winter's challenging business conditions, which have also
had an impact on summer sales as some retailers have faced cash flow challenges.
The re-emerging economical uncertainties especially in Europe and tighter credit
control and limited availability of financing have impacted customer behavior in
some countries. Changes in foreign exchange rates impacted the net sales
positively compared to last year.
Net sales for the second quarter increased by 3% from last year reaching all-
time quarterly high at 83.7 MEUR (80.9 MEUR). Changes in currency exchange rates
increased sales by 3.5 MEUR, while establishment of new units, offset by
divestment of the gift business, reduced the sales in net of 3.0 MEUR. The six-
month net sales were 157.1 MEUR (155.6 MEUR), 1% increase from last year, also
reaching all time sales record for the first half of the year. With comparable
exchange rates and organization structure, net sales increased by 3% in the
second quarter and 1% during the first six months.
Compared to last year, net sales of Group Products decreased by 1% in the second
quarter and 2% for the first six months, negatively impacted by the divestment
of the gift business, structural changes in UK distribution and slow winter
sports equipment sales. Excluding the impact of gift and winter sports, Group
Product sales increased by 7% for the quarter and 5% for the first half of the
year. Sales of Third Party Products grew by 11% during the quarter and 5% year-
to-date, following good second quarter sales in fishing, hunting and outdoor
products.
In North America external sales were up by 16% for the second quarter and by
12% for the first half of the year. This was significantly impacted by the US
dollar, which was 8% stronger year-to-date against euro compared to last year.
In local currency, sales for the first six months were 4% above last year's
level, evidencing a clear improvement in the North American business
environment.
In Nordic countries, sales were up by 5% for the quarter and down by 5% for the
first half of the year. First half sales were impacted by challenging winter
business conditions and by structural changes in the Norwegian retail market.
Especially the Finnish market has been negatively impacted by the economic
uncertainties and past winter season.
In Rest of Europe sales increased by 4% for the quarter and by 3% for the first
half of the year, supported by good sales in Eastern Europe, Baltics and France,
while negatively impacted by European economical uncertainties especially in
Spain, Hungary and Switzerland. Rest of Europe sales have also been impacted by
the structural changes in UK distribution.
In Rest of the World sales decreased by 23% for the second quarter and by 17%
for the first half of the year primarily as a result of the gift business
divestment. Excluding the gift business divestment net sales of Rest of the
World were up by 15% in the second quarter and 16% during the first six months.
Sales increased in all Asian markets.
Financial Results and Profitability
Comparable operating profit, excluding non-recurring items, decreased from last
year and amounted to 11.7 MEUR (13.2 MEUR) for second quarter and 22.0 MEUR
(25.3 MEUR) for the six-month period. Comparable operating margin was lower than
last year amounting to 14.0% (16.3%) for the quarter and 14.0 % (16.3%) for the
six-month period. Operating profit was negatively impacted by the divestment of
the gift business, decline in gross margin due to foreign exchange rate changes
and stock clearance campaigns, establishment of new manufacturing units and cost
of performance improvement initiatives.
Reported operating profit for the second quarter amounted to 11.6 MEUR (12.8
MEUR) and 22.0 MEUR (24.9 MEUR) for the first half of the year. Reported
operating margin was 13.9% (15.8%) and 14.0% (16.0%) respectively. Reported
operating profit for the quarter and for the first six months included 0.0 MEUR
non-recurring costs (0.4 MEUR non-recurring costs in January-June 2011). Return
on capital employed fell to 19.9% (22.6%) for second quarter and to 18.8%
(22.0%) for the six-month period.
Key figures II II I-II I-II I-IV
MEUR 2012 2011 2012 2011 2011
--------------------------------------------------------------
Net sales 83.7 80.9 157.1 155.6 279.5
EBITDA as reported 13.3 14.4 25.3 28.1 37.7
EBITDA excl. one-off items 13.3 14.8 25.3 28.5 37.1
Operating profit (EBIT) 11.6 12.8 22.0 24.9 30.7
EBIT excl. one-off items 11.7 13.2 22.0 25.3 30.5
--------------------------------------------------------------
Operating profit for Group Products decreased from last year in the second
quarter amounting to 7.8 MEUR (8.3 MEUR) and to 14.7 MEUR (17.3 MEUR) for the
six-month period. Profitability was impacted by the divestment of the gift
business, inventory clearance sales with lower margins and establishment of new
manufacturing units. Six-months profit margin reduced in hooks and fishing
accessories, while margin on lures improved. Six-month sales have also been
impacted by declined sales in winter sports equipment. Operating profit for
Third Party Products decreased to 3.9 MEUR (4.5 MEUR) in the second quarter and
to 7.3 MEUR (7.6 MEUR) in first half of the year, impacted especially by
currency impact on purchases of fishing products.
Total financial (net) expenses were 1.2 MEUR (1.5 MEUR) for the quarter and 1.2
MEUR (2.6 MEUR) for the first half of the year. Net interest and other financing
expenses were 0.9 MEUR (1.1 MEUR) for the quarter and 1.9 MEUR (1.9 MEUR) for
the first half of the year. Financial items were positively impacted by the
change in (net) currency exchange expenses of 0.3 MEUR (0.4 MEUR) for the
quarter and gain 0.7 MEUR (expense 0.6 MEUR) for the six-month period.
Net profit for the quarter was reduced to 7.2 MEUR (8.0 MEUR) and was 14.7 MEUR
(15.9 MEUR) for the first half of the year. Earnings per share for the second
quarter reached 0.15 EUR (0.17 EUR) and were 0.31 EUR (0.35 EUR) for the six-
month period.
Cash Flow and Financial Position
Following the intense focus on cash flow and working capital management, cash
flow from operating activities improved significantly and reached record levels
for the second quarter and first half of the year at 21.5 MEUR (17.0 MEUR) and
12.2 MEUR (1.5 MEUR) respectively. Positive cash flow impact came from the net
change in working capital, mainly inventories, being 12.1 MEUR (6.4 MEUR) for
the quarter and -6.8 MEUR (-20.2 MEUR) for the six-month period.
Group's inventories increased 3.3 MEUR from last June to 119.5 MEUR (116.2
MEUR), of which 4.2 MEUR came from net impact of currency movements, having no
cash flow impact, and 1.5 MEUR from net increase from divested gift business
offset by the new winter fishing business, which will start during the second
half of the year. Excluding the currency impact and the structural changes,
inventories decreased 2.4 MEUR from last June.
Net cash used in investing activities was 2.5 MEUR (2.3 MEUR) for the quarter
and 10.8 MEUR (4.0 MEUR) for the six-month period. Operative capital expenditure
was 1.9 MEUR (1.7 MEUR) for the quarter and 4.2 MEUR (3.5 MEUR) for the six-
month period, increased mainly by establishment of the manufacturing units in
Batam. Investing activities also include acquisition of the assets of Strike
Master Corporation and Mora ICE brand with total of 6.4 MEUR and proceeds from
the sale of a real estate in Finland of 0.3 MEUR.
Net interest bearing debt decreased to 99.9 MEUR (103.4 MEUR) in the end of
June. Gearing decreased accordingly to 70.6% (79.9%), close to second quarter
record of 70.0%. Equity-to-assets ratio weakened by 50 basis points to 39.9%
(40.4%) compared to last year.
Strategy Implementation
Implementation of Rapala's strategy of profitable growth continued during the
second quarter of the year by taking several actions relating to manufacturing
and distribution activities.
In February Rapala closed the deals to acquire assets of Strike Master
Corporation as well as the brand and intellectual property rights relating to
Mora ICE products. These deals together with the supply agreement concluded with
Marcum Electronics Corporation will give Rapala the global leadership position
in the ice fishing category and increase the sales in the seasonally slower
second half of the year in all main arctic markets. During the second quarter
the integration and development of the newly acquired business has proceeded
swiftly.
Group's new lure and hook manufacturing units on Batam Island in Indonesia
started their operations during the first quarter. Production volumes and
operational efficiencies have been ramped up during the second quarter and lure
production is already in line with planned output levels. Group has decided to
triple the size of Batam lure manufacturing operations during the coming 6-12
months and preparations for this have started.
In order to strengthen presence in Latin America, the Group decided to establish
a new distribution company in Chile, where the sales should start during the
third quarter. Rapala already has distribution companies in Mexico and Brazil.
In line with the existing joint venture agreements with Shimano, the
distribution company in Belarus was transferred to the Rapala Shimano East
Europe structure in June 2012.
A special initiative to improve the performance of the distribution company in
Switzerland was started during the second quarter. The performance initiatives
in Norway continued.
During the second quarter Rapala refinanced its bank loan facilities and
extended its commercial paper program. These will provide flexibility to arrange
Group's seasonal and long term funding and strengthens Rapala's capabilities to
finance its strategy of profitable growth.
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
develop the Group's internal supply chain. In June 2012, the Board approved a
new share based incentive plan for the Group's key personnel, in which potential
reward is based on development of Rapala Group's inventory levels and EBITDA.
The range of new products for the season 2013 was introduced to the market in
the major fishing tackle shows in Europe and USA in June and July. Rapala was
honored with the Best New Hard Lure and Best New Metal Lure awards at EFTTEX
2012, the Europe's largest and most important international fishing tackle trade
show. By combining balsa wood and plastic, the new Rapala BX Minnow lure is
another example of Rapala's innovativeness and it will continue to support
Rapala's organic growth.
Discussions and negotiations regarding acquisitions and business combinations
continued during the second quarter.
Short-term Outlook
Outlook for the full year remains positive, while cautious. During the first
half of the year Rapala's sales reached record levels, despite the divestment of
the gift business, challenging winter and summer weather conditions in some of
the main markets and the continuing economical uncertainties originating from
Europe, which are to some extent shadowing the general business sentiment and
consumer confidence globally.
Although last winter's difficult business conditions may have some knock-on
effect on coming winter season's sales, the new acquisitions and distribution
agreements relating to winter fishing business will impact positively on the
Group's sales and operating profit during the second half of the year. E.g. in
USA, where also the overall retail and consumer sentiment has improved during
this year, the order book for winter fishing products is exceptionally strong
and the category is expected to generate some 10 to 15 MUSD additional sales for
the second half of 2012.
Group has put more emphasis on cash flow and working capital management, which
together with foreign exchange rate changes, establishment of new manufacturing
units and performance improvement initiatives will pressure the profitability
this year.
It is expected that in 2012 the net sales will increase from 2011. Profitability
estimate is specified so that the comparable operating profit is expected to
remain close to last year's level.
Third quarter interim report will be published on October 23.
Helsinki, July 24, 2012
Board of Directors of Rapala VMC Corporation
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME II II I-II I-II I-IV
MEUR 2012 2011 2012 2011 2011
-------------------------------------------------------------------------------
Net sales 83.7 80.9 157.1 155.6 279.5
Other operating income 0.2 0.3 0.5 0.4 2.9
Materials and services 40.5 36.4 72.6 68.3 129.0
Personnel expenses 15.9 16.0 31.6 31.5 62.4
Other costs and expenses 14.2 14.4 28.0 28.0 53.3
Share of results in associates and joint 0.0 0.0 0.0 0.0 -0.1
ventures
-----------------------------------
EBITDA 13.3 14.4 25.3 28.1 37.7
Depreciation, amortization and impairments 1.7 1.6 3.3 3.2 7.0
-----------------------------------
Operating profit (EBIT) 11.6 12.8 22.0 24.9 30.7
Financial income and expenses 1.2 1.5 1.2 2.6 5.5
-----------------------------------
Profit before taxes 10.5 11.3 20.8 22.4 25.2
Income taxes 3.3 3.3 6.1 6.4 8.0
-----------------------------------
Net profit for the period 7.2 8.0 14.7 15.9 17.2 -----------------------------------
Attributable to:
Equity holders of the Company 6.0 6.6 12.2 13.6 14.0
Non-controlling interests 1.2 1.4 2.5 2.3 3.2
Earnings per share for profit attributable
to the equity holders of the Company:
Earnings per share, EUR (diluted = non- 0.15 0.17 0.31 0.35 0.36
diluted)
STATEMENT OF COMPREHENSIVE INCOME II II I-II I-II I-IV
MEUR 2012 2011 2012 2011 2011
-------------------------------------------------------------------------------
Net profit for the period 7.2 8.0 14.7 15.9 17.2
-----------------------------------
Other comprehensive income, net of tax
Change in translation differences 3.9 -1.1 2.0 -5.3 2.0
Gains and losses on cash flow hedges -0.6 -0.2 -0.6 0.3 -0.1
Gains and losses on hedges of net -0.4 0.2 -0.1 0.8 -0.4
investments
-----------------------------------
Total other comprehensive income, net of 2.8 -1.1 1.4 -4.2 1.5
tax
-----------------------------------
Total comprehensive income for the period 10.0 6.9 16.1 11.8 18.7
-----------------------------------
Total comprehensive income attributable to:
Equity holders of the Company 9.1 5.5 13.7 9.6 15.8
Non-controlling interests 0.9 1.4 2.4 2.2 2.9
STATEMENT OF FINANCIAL POSITION June 30 June 30 Dec 31
MEUR 2012 2011 2011
-------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 73.9 65.1 68.0
Property, plant and equipment 29.5 28.5 28.5
Non-current financial assets
Interest-bearing 8.4 1.7 7.6
Non-interest-bearing 9.8 8.7 9.1
--------------------------------------------
121.7 104.0 113.2
Current assets
Inventories 119.5 116.2 115.5
Current financial assets
Interest-bearing 1.3 0.0 1.6
Non-interest-bearing 67.0 67.9 55.0
Cash and cash equivalents 45.0 32.3 28.9
--------------------------------------------
232.8 216.5 201.0
Assets classified as held-for-sale 0.3 - 0.3
Total assets 354.7 320.4 314.5
--------------------------------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity 133.4 122.4 128.6
holders of the Company
Non-controlling interests 8.1 6.9 7.2
--------------------------------------------
141.4 129.3 135.8
Non-current liabilities
Interest-bearing* 64.7 23.6 12.7
Non-interest-bearing 14.5 13.0 13.5
--------------------------------------------
79.2 36.6 26.2
Current liabilities
Interest-bearing* 90.0 113.9 116.6
Non-interest-bearing 44.1 40.7 35.9
--------------------------------------------
134.1 154.6 152.5
Total equity and liabilities 354.7 320.4 314.5
--------------------------------------------
* As of April 2012 the revolving credit facilities of the new bank loan
agreements were classified as non-current liabilities to the extent banks'
commitment is valid for longer than 12 months.
II II I-II I-II I-IV
KEY FIGURES 2012 2011 2012 2011 2011
-------------------------------------------------------------------------------
EBITDA margin, % 15.9% 17.8% 16.1% 18.1% 13.5%
Operating profit margin, % 13.9% 15.8% 14.0% 16.0% 11.0%
Return on capital 19.9% 22.6% 18.8% 22.0% 13.7%
employed, %
Capital employed at end of 241.3 232.7 241.3 232.7 227.0
period, MEUR
Net interest-bearing debt 99.9 103.4 99.9 103.4 91.2
at end of period, MEUR
Equity-to-assets ratio at 39.9% 40.4% 39.9% 40.4% 43.2%
end of period, %
Debt-to-equity ratio at 70.6% 79.9% 70.6% 79.9% 67.2%
end of period, %
Earnings per share, EUR 0.15 0.17 0.31 0.35 0.36
(diluted = non-diluted)
Equity per share at end of 3.43 3.15 3.43 3.15 3.30
period, EUR
Average personnel for the 2 025 2 304 2 058 2 304 2 208
period
-------------------------------------------------------------------------------
Definitions of key figures in the interim report are consistent with those in
the Annual Report 2011.
STATEMENT OF CASH FLOWS II II I-II I-II I-IV
MEUR 2012 2011 2012 2011 2011
-------------------------------------------------------------------------------
Net profit for the period 7.2 8.0 14.7 15.9 17.2
Adjustments to net profit for the period * 6.1 5.8 10.7 11.9 17.6
Financial items and taxes paid and received -3.9 -3.3 -6.4 -6.2 -12.3
Change in working capital 12.1 6.4 -6.8 -20.2 -7.3
-------------------------------------------------------------------------------
Net cash generated from operating 21.5 17.0 12.2 1.5 15.2
activities
Investments -1.9 -1.7 -4.2 -3.5 -8.4
Proceeds from sales of assets 0.1 0.0 0.6 0.2 0.7
Acquisition of joint venture Shimano - - - - -1.5
Normark UK
Dynamite Baits acquisition, net of cash - - - - -0.1
Sufix brand acquisition -0.8 -0.7 -0.8 -0.7 -0.7
Strikemaster and Mora ICE acquisitions - - -6.4 - -
Acquisition of other subsidiaries, net of - - - - 0.0
cash
Proceeds from disposal of subsidiaries, net - - - - 0.6
of cash
Change in interest-bearing receivables 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
Net cash used in investing activities -2.5 -2.3 -10.8 -4.0 -9.6
Dividends paid to parent company's -8.9 -9.0 -8.9 -9.0 -9.0
shareholders
Dividends paid to non-controlling interest -1.5 -2.7 -1.5 -2.7 -2.9
Net funding 6.6 3.4 24.9 19.7 6.7
Purchase of own shares - - -0.1 0.0 -0.1
-------------------------------------------------------------------------------
Net cash generated from financing -3.8 -8.3 14.5 8.0 -5.2
activities
Adjustments 0.0 0.0 0.2 0.0 0.4
Change in cash and cash equivalents 15.1 6.4 16.1 5.5 0.8
Cash & cash equivalents at the beginning of 29.3 26.0 28.9 27.9 27.9
the period
Foreign exchange rate effect 0.6 -0.1 0.0 -1.1 0.2
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the 45.0 32.3 45.0 32.3 28.9
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, 2011 3.6 16.7 -1.5 -6.0 4.9 -2.5 106.7 7.4 129.2
-------------------------------------------------------------------------------
Comprehensive
income * - - 0.3 -4.4 - - 13.6 2.2 11.8
Purchase of own
shares - - - - - 0.0 - - 0.0
Dividends paid - - - - - - -9.0 -2.7 -11.7
Other changes - - - - - - - 0.0 0.0
-------------------------------------------------------------------------------
Equity on Jun
30, 2011 3.6 16.7 -1.1 -10.3 4.9 -2.5 111.3 6.9 129.3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity on Jan
1, 2012 3.6 16.7 -1.6 -4.1 4.9 -2.6 111.8 7.2 135.8
-------------------------------------------------------------------------------
Comprehensive
income * - - -0.6 2.0 - - 12.2 2.4 16.1
Purchase of own
shares - - - - - -0.1 - - -0.1
Dividends paid - - - - - - -8.9 -1.5 -10.4
Share based
payments - - - - - - 0.0 - 0.0
-------------------------------------------------------------------------------
Equity on Jun
30, 2012 3.6 16.7 -2.2 -2.1 4.9 -2.7 115.1 8.1 141.4
-------------------------------------------------------------------------------
* For the
period, (net of
tax)
SEGMENT INFORMATION*
MEUR II II I-II I-II I-IV
Net Sales by Operating Segment 2012 2011 2012 2011 2011
-------------------------------------------------------------------------
Group Products 48.8 49.5 94.6 96.3 174.5
Third Party Products 34.8 31.4 62.5 59.3 105.0
-------------------------------------------------------------------------
Total 83.7 80.9 157.1 155.6 279.5
Operating Profit by Operating Segment
-------------------------------------------------------------------------
Group Products 7.8 8.3 14.7 17.3 22.4
Third Party Products 3.9 4.5 7.3 7.6 8.4
-------------------------------------------------------------------------
Total 11.6 12.8 22.0 24.9 30.7
June 30 June 30 Dec 31
Assets by Operating Segment 2012 2011 2011
--------------------------------------------------------------------------
Group Products 221.8 208.9 207.7
Third Party Products 78.2 77.4 68.8
--------------------------------------------------------------------------
Non-interest bearing assets total 300.0 286.3 276.5
Unallocated interest-bearing assets 54.7 34.1 38.1
--------------------------------------------------------------------------
Total assets 354.7 320.4 314.5
Liabilities by Operating Segment
--------------------------------------------------------------------------
Group Products 44.1 40.3 35.0
Third Party Products 14.5 13.3 14.5
--------------------------------------------------------------------------
Non-interest bearing liabilities total 58.7 53.6 49.5
Unallocated interest-bearing liabilities 154.6 137.5 129.3
--------------------------------------------------------------------------
Total liabilities 213.3 191.1 178.8
Net Sales by Area** II II I-II I-II I-IV
MEUR 2012 2011 2012 2011 2011
-------------------------------------------------------
North America 21.4 18.4 41.9 37.3 69.1
Nordic 20.7 19.7 35.9 37.7 65.3
Rest of Europe 33.3 32.1 63.1 61.0 102.7
Rest of the world 8.2 10.7 16.3 19.6 42.4
-------------------------------------------------------
Total 83.7 80.9 157.1 155.6 279.5
* As of January 1, 2012 the reportable operating segments include the following
product lines: Group Products include Group Fishing Products, such as Lures,
Fishing Hooks, Fishing Lines and Fishing Accessories, as well as Other Group
Products, mainly Winter Sports and some other non-fishing related business
manufactured and/or sourced by the Group and sold under the Group's brands.
Third Party Products include non-Group branded fishing products and third party
products for hunting, outdoor and winter sports distributed by the Group.
** Geographical information has been prepared on source basis i.e. based on the
location of the business unit. As of January 1, 2012 the net sales is presented
excluding intra-Group transactions, i.e. including only Group's external sales
KEY FIGURES BY QUARTERS I II III IV I-IV I II
MEUR 2011 2011 2011 2011 2011 2012 2012
--------------------------------------------------------------------
Net sales 74.7 80.9 63.0 60.8 279.5 73.5 83.7
EBITDA 13.7 14.4 4.1 5.5 37.7 12.0 13.3
Operating profit 12.1 12.8 2.3 3.5 30.7 10.4 11.6
Profit before taxes 11.1 11.3 0.3 2.5 25.2 10.4 10.5
Net profit for the period 7.9 8.0 0.2 1.1 17.2 7.5 7.2
--------------------------------------------------------------------
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 Annual Report 2011, 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.
Rapala changed its reportable operating segments from January 1, 2012. Rapala's
reportable operating segments are Group Products consisting of Group Fishing
Products and Other Group Products, and Third Party Products.
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-June 2012. 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 June 30, 2012, the book value of inventories included a provision for net
realizable value of 3.4 MEUR (2.8 MEUR at June 30, 2011 and 3.2 MEUR at December
31, 2011).
Assets held for sale
As part of the relocation of Finnish distribution operations, an office and
warehouse building in Korpilahti, Finland, was classified as held for sale
during the fourth quarter in 2011.
Impact of business acquisitions on the consolidated financial statements
During the first quarter Rapala acquired the assets, including Mora trademark in
North America, of Minnesota based Strike Master Corporation ("Strike Master"),
the leading supplier of ice augers in the US. Rapala also acquired 100% of the
share capital of Swedish Mora Ice Ab including the Mora ICE brand, together with
all intellectual property rights relating to the Mora ICE products. Mora ICE is
Europe's leading and premium brand of ice augers and auger cutting blades. Both
of the acquisitions were completed in February. The total consideration of 6.8
MEUR is subject to finalization of the closing accounts. Fair values of the
acquired assets are provisional.
These strategic initiatives will give Rapala the global leadership position in
the ice fishing category. Rapala is well equipped to exploit this position as it
is having strong distribution companies in all main arctic markets: US, Canada,
Russia, East European and Nordic countries, Japan and China.
Net sales after the acquisitions, 0.1 MEUR, are included in the consolidated
income statement. The acquisitions did not have material impact on the profit of
the Group. Due to the structure of the acquisitions it is not possible to
reliably determine pre-transaction sales and profit prior in 2012. Together with
Marcum distribution agreement these transactions are expected to increase
Rapala's 2012 net sales some 10 MEUR.
The transaction costs of 0.0 MEUR have been expensed and are included in the
other operating expenses in the income statement and treated as a non-recurring
item.
The goodwill of 0.7 MEUR is justified by expansion of product assortment and
market coverage as well as utilization of economies of scale in sourcing and
distribution. None of the goodwill is expected to be deductible for income tax
purposes. The goodwill will be tested for impairment.
The business combinations are accounted for by applying the acquisition method.
The fair value of intellectual property rights is established using the relief
from royalty method. The fair value of customer relationships is established
with the income approach based on the future economic returns from the customers
over their useful lives.
MEUR 2012
--------------------------------------------------------
Inventories 1.8
Trade and other non-interest-bearing receivables 0.4
Intangible assets 4.4
Tangible assets 0.1
Trade and other non-interest-bearing payables 0.0
Deferred tax liability (net) -0.6
--------------------------------------------------------
Fair value of acquired net assets 6.1
--------------------------------------------------------
MEUR 2012
--------------------------------------------------------
Cash paid upon closing 6.4
Cash to be paid later 0.4
--------------------------------------------------------
Total purchase consideration 6.8
--------------------------------------------------------
Goodwill 0.7
--------------------------------------------------------
Cash paid for the acquisitions 6.4
Cash and cash equivalents acquired -
--------------------------------------------------------
Net cash flow 6.4
--------------------------------------------------------
Non-recurring income and expenses included in II II I-II I-II I-IV
operating profit
MEUR 2012 2011 2012 2011 2011
-------------------------------------------------------------------------------
Costs related to business acquisitions 0.0 -0.1 0.0 -0.1 -0.3
Restructuring of Hungarian operations - - - - 0.1
Relocation of Finnish operations - -0.1 - -0.1 -0.3
Net gain from sale of gift manufacturing unit in 0.0 -0.2 -0.1 -0.2 1.5
China*
Other restructuring costs - 0.0 - 0.0 -0.4
Gain on disposal of real estate in Finland - - 0.1 - -
Other non-recurring items 0.0 - 0.0 - -
-------------------------------------------------------------------------------
Total included in EBITDA 0.0 -0.4 0.0 -0.4 0.6
-------------------------------------------------------------------------------
Impairment of non-current assets relating to - - - - -0.4
relocation of Finnish operations
Other non-recurring impairments - - - - 0.0
-------------------------------------------------------------------------------
Total included in operating profit 0.0 -0.4 0.0 -0.4 0.2
-------------------------------------------------------------------------------
* I-IV 2011: Including a gain of 1.9 MEUR and costs related to divestment.
Commitments June 30 June 30 Dec 31
MEUR 2012 2011 2011
-------------------------------------------------------------------------------
On own behalf
Business mortgage* - 16.1 16.1
Guarantees 0.1 0.1 0.1
Minimum future lease payments on 14.0 10.1 15.2
operating leases
-------------------------------------------------------------------------------
* The Group refinanced its loan facilities in April 2012, and the business
mortgage related to the previous facility was released. The new loan
facilities are unsecured and include normal financial covenants.
Sales Other
Related party transactions and other Pur- Rents expen- Recei- Paya-
MEUR income chases paid ses vables bles
-------------------------------------------------------------------------------
I-II 2012
Joint venture Shimano Normark 2.0 - - - 0.5 0.0
UK Ltd
Associated company Lanimo Oü - 0.0 - - 0.0 -
Entity with significant
influence over the Group* - - 0.1 0.1 0.0 -
Management - - 0.2 - 0.0 0.1
I-II 2011
Associated company Lanimo Oü 0.1 - - - 0.0 -
Entity with significant
influence over the Group* - - 0.1 0.0 0.0 0.0
Management - - 0.2 - - 0.0
I-IV 2011
Joint venture Shimano Normark 1.6 - - - 0.1 -
UK Ltd
Associated company Lanimo Oü - 0.1 - - 0.0 -
Entity with significant
influence over the Group* - - 0.2 0.1 0.0 0.0
Management - - 0.3 - 0.0 0.0
-------------------------------------------------------------------------------
* Lease agreement for the real estate for the consolidated operations in
France and a service fee.
Open derivatives Nominal Positive fair Negative Net fair
MEUR amount values fair values values
------------------------------------------------------------------------------
June 30, 2012
Foreign currency 3.0 0.1 0.0 0.1
options and forwards
Cross currency swaps 70.4 - 2.1 -2.1
------------------------------------------------------------------------------
Total 73.4 0.1 2.1 -2.0
June 30, 2011
Foreign currency 6.0 0.0 0.4 -0.4
options and forwards
Interest rate swaps 84.3 - 1.5 -1.5
------------------------------------------------------------------------------
Total 90.3 0.0 1.9 -1.9
Dec 31, 2011
Foreign currency 3.4 0.2 - 0.2
options
Interest rate swaps 67.9 - 2.1 -2.1
------------------------------------------------------------------------------
Total 71.3 0.2 2.1 -1.9
------------------------------------------------------------------------------
The Group's financial risks and hedging principles are described in detail
in the Annual Report 2011.
Share based incentive plan
In June 2012, the Board approved a new share based incentive plan for the
Group's key personnel. The plan includes one earning period which commenced on
April 1, 2012 and will end on June 30, 2013. The potential reward from the plan
will be based on development of Rapala Group's inventory levels and EBITDA. The
potential reward will be paid primarily as Rapala's shares in August 2013. The
target group of the plan consists of 20 key employees. The gross rewards to be
paid on the basis of the plan will correspond to the value maximum total of
235 000 Rapala shares.
Shares and share capital
On April 11, 2012 The Annual General Meeting updated Board's authorization on
issuance and repurchase of shares.
On June 30, 2012, 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 in January-June 2012 was 39 468 449. On February 8, 2012, the
Board decided to continue buying back own shares in accordance with the
authorization granted by the AGM on April 5, 2011. The repurchasing ended on
March 31, 2012. At the end of June 2012, Rapala held 563 235 own shares,
representing 1.4% of the total number and the total voting rights of Rapala
shares. The average share price of all repurchased own shares held by Rapala was
EUR 4.75.
During the first six months, 2 513 753 shares (5 394 111) were traded at a high
of 6.50 EUR and a low of 4.75 EUR. The closing share price at the end of the
period was 5.12 EUR.
Short term risks and uncertainties
The objective of Rapala'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 has continued to expand its operations.
Accordingly, Group management continues to develop risk management practices and
internal controls during 2012. Detailed descriptions of the Group's strategic,
operative and financial risks as well as risk management principles are included
in the Annual Report 2011.
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. The new ice fishing
business will to some extent offset this seasonality during latter part of
2012, while introduction of such new business will be subject to increased
uncertainties and risks.
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. The Group's sales are to some extent affected by weather as it impacts
consumer demand and the timing and length of the seasons. The 2011/2012 winter
season was challenging in some markets and consequently retailers may be left
with excess inventories. This together with general cautiousness may affect
winter business in the next winter season. Difficult winter season may also
increase some retailers' credit risk and thereby decrease the Group's sales.
A major supply chain and logistics initiative to improve the Group's inventory
turnovers and shorten the factory lead-times continues in 2012, including
planning of new initiatives. Before fully implemented, these initiatives may
temporarily have negative impact on the Group's inventory levels. The possible
product life-cycle initiatives as well as inventory clearance sales supporting
the inventory reduction targets may have some short-term negative impacts on
sales and profitability of some product groups. The ramp-up phase of the new
production facility in Batam, Indonesia, may increase certain production and
supply chain risks temporarily. The Group successfully refinanced its credit
facilities in April, 2012. This has decreased the Group's liquidity and
refinancing risks. The new credit facilities include some financial covenants,
which are actively monitored.
The fishing tackle business has not traditionally been strongly influenced by
the increased uncertainties and downturns in the general economic climate. They
may, however, influence, 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 and governmental austerity measures
may temporarily affect consumer spending also in the fishing tackle business.
The major global sporting events of summer 2012 might have some effect on the
end consumer demand. 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. 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 Group's supply chain to meet the demand. Management
balances between risk of shortages and risk of excess production and purchasing,
which would lead to excess inventories in the Group. 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, especially US dollar and other currencies connected to it. The
disturbances in global economy may cause heavy and unexpected fluctuations in
foreign exchange rates. The Group monitors actively its currency position and
risks and uses e.g. foreign currency denominated loans to generate natural
hedges. In order to fix the exchange rates of some of the future USD-denominated
purchases, the Group has entered into currency hedging agreements. As the Group
is not applying hedge accounting to currency hedging agreements in accordance to
IAS 39, the change in fair value of these unrealized currency hedging agreements
has an impact on the Group's operating profit. Development of oil price may
impact value of Russian rouble, which has become a significant inflow currency
to the Group. The continuing strengthening of the Chinese yuan coupled with the
possible strengthening of the US dollar increases cost pressures. Additionally,
certain inflationary trends increase this pressure. The Group is closely
monitoring market development and 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#1628638]
© 2024 Nasdaq, Inc. All Rights Reserved |
| Evästeet |