2013-07-19 07:30:00 CEST
2013-07-19 07:30:33 CEST
REGULATED INFORMATION
Rapala VMC - Interim report (Q1 and Q3)
RAPALA VMC CORPORATION'S JANUARY TO JUNE 2013: GOOD QUARTERLY PROFITABILITY DRIVEN BY SALES OF GROUP FISHING PRODUCTS
Rapala VMC Corporation
Stock Exchange Release
July 19, 2013 at 8:30 a.m.
* Net sales for the second quarter decreased from last year by 3% to 81.4
(83.7 MEUR) and the six-month net sales were at last year's level at 156.7
MEUR (157.1 MEUR). Sales of Group manufactured products developed
positively, while weathers and foreign exchange rates had negative impact.
With comparable currency exchange rates net sales increased slightly in the
second quarter and 1% during the first six months.
* Comparable operating profit, excluding non-recurring items and mark-to-
market valuation of operative currency derivatives, increased from last year
to 13.1 MEUR (11.6 MEUR) for the second quarter and was close to last year's
level at 21.2 MEUR (22.2 MEUR) for the six month period. Comparable
operating profit margin was 16.1% (13.9%) for the quarter and 13.5% (14.1%)
for the six month period.
* Net profit for the quarter increased to 7.8 MEUR (7.2 MEUR) and was 14.4
MEUR (14.7 MEUR) for the first half of the year. Earnings per share for the
second quarter were 0.16 EUR (0.15 EUR) and 0.31 (0.31 EUR) for the six
month period.
* Cash flow from operations was down from last year's record level at 16.2
MEUR (21.5 MEUR) for the second quarter and 8.1 MEUR (12.2 MEUR) for the
first half of the year. Interest-bearing net debt decreased and consequently
gearing decreased to second quarter record of 68.1% (69.7%)
* Implementation of the Rapala Group's strategy of profitable growth continued
by expanding the lure manufacturing operations in Batam and setting up new
ice drill manufacturing unit in Finland as well as introducing new
products.
* Guidance remains unchanged. The Group's sales are expected to increase from
last year and comparable operating profit, excluding non-recurring items and
mark-to-market valuations of operative currency derivatives, to be 30 MEUR
plus or minus 10%.
The attachment presents the interim review by the Board of Directors as well as
the accounts.
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
During the second quarter and first half of the year Rapala Group's business has
developed in line with expectations. Sales were strong in North America, Russia,
Finland, Australia, South America and some Asian counties. Sales were negatively
impacted by foreign exchange rates in several countries. Due to late spring the
beginning of the summer fishing season was delayed impacting negatively sales
especially in Europe, but also in USA. Second quarter sales were also affected
by floods in Central Europe and delays in shipments from suppliers as well as
difficult financial position of some retail customers. The continuing economical
uncertainties in some European countries and South Africa have impacted consumer
behavior.
Net sales for the second quarter decreased from last year by 3% to 81.4 (83.7
MEUR) and the six-month net sales were at last year's level at 156.7 MEUR (157.1
MEUR). Changes in currency exchange rates decreased quarterly sales by 2.5 MEUR
and six month sales by 2.6 MEUR. With comparable currency exchange rates net
sales increased slightly in the second quarter and 1% during the first six
months.
Net sales of Group Products increased by 1% from last year to 49.4 MEUR (48.8
MEUR) for the second quarter and 2% to 96.6 MEUR (94.6 MEUR) for the first half
of the year. Quarter sales were supported by strong sales of lures and hooks as
well as accessories but on the other hand negatively impacted by foreign
exchange rates. Six month sales were also supported by new ice fishing products.
Sales of Third Party Products were down 8% to 32.1 MEUR (34.8 MEUR) for the
quarter and down 4% to 60.2 MEUR (62.5 MEUR) for the first half of the year,
with decrease in Third Party Fishing sales impacted by late spring as well as
foreign exchange rates.
Net sales in North America were up by 2% for the quarter and by 4% for the first
half of the year supported by good sales Rapala lures and VMC hooks in the US.
US dollar had a slight negative impact on quarter and half year sales compared
to last year. With comparable exchange rates quarterly sales were up 5% and
first half sales 6%. In USA the improved housing and stock markets have
increased the general consumer confidence, while the increasing payroll taxes
have reduced discretionary spending of lower income consumers and limited the
retail growth. US retailers continued in second quarter their increased focus on
sports categories other than fishing and put more emphasis on promoting their
own brands.
In Nordic counties, sales were down by 4% for the quarter and down by 3% for the
first half of the year impacted by delayed beginning of summer fishing season.
Sales increased in Finland while in Norway the proportion of presales decreased.
In addition Norway and Denmark were affected by delayed deliveries from
suppliers. Second quarter sales were also negatively impacted by foreign
exchange rates.
Second quarter net sales in Rest of Europe decreased by 4% and first six month
sales by 3%. Sales in Central Europe were impacted by late spring and floods.
Sales continued strong in France and Russia, although sales in Russia were
negatively impacted by weakening of Russian Ruble and delayed deliveries from
suppliers. Sales were down in UK partly due to poor weathers. Spain, Hungary and
some other Eastern European countries continued to be affected by macro-economic
challenges and the restructuring of operations in Switzerland continued.
In Rest of the world sales decreased by 5% for the quarter and increased by 2%
for the first half of the year burdened by foreign exchange rates, especially
weakening of South African Rand and Japanese Yen. With comparable exchange rates
quarterly sales were up 2% and first six month sales up 10%. South Africa is
facing macro-economic uncertainties that have impacted customer sentiment. Sales
were supported by new distribution company in Chile and good sales in Latin
America as well as in some Asian countries.
Financial Results and Profitability
Comparable operating profit, excluding non-recurring items and mark-to-market
valuation of operative currency derivatives, increased 13% from last year to
13.1 MEUR (11.6 MEUR) for the second quarter but was down 5% for the six month
period at 21.2 MEUR (22.2 MEUR). Comparable operating profit margin was 16.1%
(13.9%) for the quarter and 13.5% (14.1%) for the six month period. Improvement
in second quarter profitability was supported by recovery of margins and
increased sales of Group manufactured products. Six months operating profit was
burdened by ongoing production transfers from China to Batam, margin and volume
impacts of continuing inventory reduction initiatives impacting especially first
quarter profitability, as well as foreign exchange rates.
Key figures II II I-II I-II I-IV
MEUR 2013 2012 2013 2012 2012
-------------------------------------------------------------------------------
Net sales 81.4 83.7 156.7 157.1 290.7
EBITDA as reported 15.2 13.3 25.4 25.3 32.7
Comparable EBITDA* 14.8 13.3 24.6 25.5 33.8
Operating profit (EBIT) 13.4 11.6 22.0 22.0 25.9
Comparable EBIT* 13.1 11.6 21.2 22.2 27.1
-------------------------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of operative
currency derivatives.
Reported operating profit was up 16% at 13.4 MEUR (11.6 MEUR) for the second
quarter and on last year's level at 22.0 MEUR (22.0 MEUR) for the first half of
the year. Reported operating margin was 16.5% (13.9%) and 14.1% (14.0%)
respectively. Reported operating profit for the quarter and for the six months
included net loss of non-recurring items of 0.1 MEUR (0.0 MEUR). Reported
operating profit included mark-to-market valuation of operative currency
derivatives of 0.5 MEUR gain (0.1 MEUR gain) for the quarter and 0.9 MEUR gain
(0.2 MEUR loss) for six months.
Operating profit for Group Products increased from last year in the second
quarter amounting to 9.1 MEUR (7.8 MEUR) and to 15.3 MEUR (14.7 MEUR) for the
first six months supported by increased sales and improvement of gross margin in
the second quarter. Six month profitability was negatively impacted by late
spring delaying the shipments of summer fishing products, inventory clearance
initiatives and setting up the second phase of lure production in Batam.
Operating profit for Third Party Products increased to 4.3 MEUR (3.9 MEUR) in
the second quarter supported by currency exchange impact on purchases and
decreased in the first half of the year to 6.7 MEUR (7.3 MEUR). First six months
profitability was burdened by decreased sales, currency exchange movements
during the first quarter and inventory clearances.
Total financial (net) expenses were above last year's levels at 1.9 MEUR (1.2
MEUR) for the quarter and 2.2 MEUR (1.2 MEUR) for the first half of the year.
Net interest and other financing expenses were 1.0 MEUR (0.9 MEUR) for the
quarter and 1.8 MEUR (1.9 MEUR) for the first half of the year. Financial items
were negatively impacted by the change in (net) currency exchange expenses of
0.8 MEUR (0.3 MEUR) for the quarter and 0.4 MEUR (gain 0.7 MEUR).
Net profit for the quarter increased to 7.8 MEUR (7.2 MEUR) and was close to
last year's level at 14.4 MEUR (14.7 MEUR) for the first half of the year.
Earnings per share for the second quarter increased from last year to 0.16 EUR
(0.15 EUR) and were at last year's level at 0.31 (0.31 EUR) for the six month
period.
Cash Flow and Financial Position
Cash flow from operations was down from last year's record level at 16.2 MEUR
(21.5 MEUR) for the second quarter and at 8.1 MEUR (12.2 MEUR) for the first
half of the year. During the second quarter inventories and trade receivables
released less cash compared to last year, partly due to late spring and floods
in Europe.
Group's inventory levels continued to develop positively. Inventories decreased
by 7.0 MEUR from June 2012 to 112.5 MEUR (119.5 MEUR), even if the ice fishing
business is tying more inventories in second quarter than last year. New
business units and impact of foreign exchange rate movements decreased
inventories by net of 3.3 MEUR compared to last year, consequently on comparable
basis inventories reduced 3.8 MEUR from last year.
Net cash used in investing activities was 2.4 MEUR (2.5 MEUR) for the second
quarter and 4.5 MEUR (10.8 MEUR) for the first six months. Normal operative
capital expenditure was 1.9 MEUR (1.9 MEUR) for the quarter and 3.9 MEUR (4.2
MEUR) for the first six months. 2012 first six months investing activities
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.
The liquidity position of the Group was good. Cash and cash equivalents were
28.1 MEUR (45.0 MEUR) and undrawn committed long-term credit facilities amounted
to 57.2 MEUR at the end of the period. Strengthening of the Group's balance
sheet continued and net interest bearing debt decreased to 95.7 MEUR (98.6 MEUR)
in the end of June. Gearing decreased accordingly and reached second quarter
record of 68.1% (69.7%) and equity-to-assets ratio improved to 42.8% (39.9%).
Strategy Implementation
Execution of the 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 will continue 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. Preparations to start the operations are proceeding according to plans,
with a target to finalize the equipment installations and gradually start the
manufacturing by the end of the year.
The first phase of setting up lure production in Batam was technically finalized
during second quarter and bulk of the products planned to be transferred from
China at the first phase have been transferred. Streamlining the production
process and supply chain is continuing. The construction and installation work
for tripling the size of lure manufacturing operations in Batam are proceeding.
Space of the plant has been doubled, training of the personnel started and all
equipment should be installed by the end of third quarter. The transfer of
certain new production phases have already started and new products and
production phases are added gradually during next 9-12 months as Batam
operations are being further developed. As part of the project, the product
range is being rationalized.
The establishment of new VMC hook manufacturing unit in Batam was finalized
during the first quarter and the production volumes are increasing. The unit is
offering flexible production at good quality level and new products are being
added to the production range.
During first quarter the Group increased its ownership in Peltonen cross country
ski factory to 100%. Previously Group's ownership was 90%. The restructuring of
Group's distribution company in Switzerland is proceeding.
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 as well as its purchasing processes.
The evaluation period of a share based incentive plan for Group's key personnel,
connected to Group's inventory levels, was prolonged until end of the year.
The Group has successfully launched various new products into the markets.
Introduction of the new Rapala Scatter Rap lure family into the USA and a few
other selected territories outside of Europe for summer season 2013 has been a
true success and forms solid basis for entry into other markets and new product
applications. New Arashi model has entered Storm-lures into new higher price-
point hard bait categories, previously not reached by this brand. Group's
products have continued to receive various awards.
Sufix NanoBraid was honored with the Best New Braided Line Award at the 2013
European Fishing Tackle Trade Exhibition (EFTTEX), Europe's largest and most
important international fishing tackle trade show, while Rapala Eco Wear®
Reflection Pants was named Runner Up in the Best New Fishing Clothing category.
Eco Wear® Reflection Jacket was already earlier honored with the Red Dot Award.
Group's cooperation with Rovio Entertainment Ltd on introducing Angry Birds
-branded lures and other fishing products into seven countries was successful
and the program will be expanded into new countries and product categories for
coming seasons. While still relatively small in scale, Angry Birds business has
opened new distribution channels, generated significant amount of publicity and
worked as a pilot for a multinational co-branding project.
Discussions and negotiations regarding acquisitions and business combinations
continued during second quarter of 2013.
Short-term Outlook
The outlook for second half of the year is confident. There are no major issues
in sight significantly threatening the sales of the ongoing season.
The ice fishing business, which the Group seriously entered into in global scale
last year, is expected to give positive contribution during latter part of the
year. While ice fishing and winter sports equipment businesses are sensitive to
weathers, the Group's pre-sales of these products has been better than last
year. In North America, after difficult start of the ice fishing season last
year, the winter lasted long and accordingly the retail pipeline of winter
fishing products is expected to be rather empty. The Rapala Group's winter
fishing program "The Ice Force" is well established among retailers in the USA
for coming season, which will secure improved sales volumes during latter part
of the year, while year-end shipments are always subject to uncertainties
concerning the timing. For coming season the US distribution range will be
further complemented with Otter winter fishing products.
Expanding the lure manufacturing operations in Batam and setting up new ice
drill manufacturing unit Finland will generate some additional expenditure,
while profitability of few other underperforming units is expected to improve
from last year. The continuing actions to reduce the Group's inventory levels
may have some negative impact on profitability.
The guidance for 2013 remains unchanged. The Group's sales are expected to
increase from last year and comparable operating profit, excluding non-recurring
items and mark-to-market valuations of operative currency derivatives, to be 30
MEUR plus or minus 10%.
Third quarter interim report will be published on October 22.
Helsinki, July 19, 2013
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: 108196#) 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: 108196#). Financial information and teleconference replay facility are
available at www.rapalavmc.com.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME II II I-II I-II I-IV
MEUR 2013 2012 2013 2012 2012
------------------------------------------------------------------------------
Net sales 81.4 83.7 156.7 157.1 290.7
Other operating income 0.2 0.2 0.3 0.5 1.3
Materials and services 36.0 40.5 71.2 72.6 140.7
Personnel expenses 16.7 15.9 32.9 31.6 62.6
Other costs and expenses 13.7 14.2 27.3 28.0 55.8
Share of results in associates and joint 0.0 0.0 -0.2 0.0 -0.3
ventures
------------------------------------
EBITDA 15.2 13.3 25.4 25.3 32.7
Depreciation, amortization and 1.7 1.7 3.4 3.3 6.8
impairments
------------------------------------
Operating profit (EBIT) 13.4 11.6 22.0 22.0 25.9
Financial income and expenses 1.9 1.2 2.2 1.2 4.9
------------------------------------
Profit before taxes 11.6 10.5 19.8 20.8 21.0
Income taxes 3.8 3.3 5.4 6.1 7.1
------------------------------------
Net profit for the period 7.8 7.2 14.4 14.7 14.0
------------------------------------
Attributable to:
Equity holders of the company 6.2 6.0 11.9 12.2 10.1
Non-controlling interests 1.6 1.2 2.5 2.5 3.8
Earnings per share for profit attributable
to the equity holders of the company:
Earnings per share, EUR (diluted = non- 0.16 0.15 0.31 0.31 0.26
diluted)
STATEMENT OF COMPREHENSIVE INCOME II II I-II I-II I-IV
MEUR 2013 2012 2013 2012 2012
------------------------------------------------------------------------------
Net profit for the period 7.8 7.2 14.4 14.7 14.0
------------------------------------
Other comprehensive income, net of tax
Change in translation differences* -4.9 3.9 -2.9 2.0 -0.3
Gains and losses on cash flow hedges* 0.4 -0.6 0.7 -0.6 -0.6
Gains and losses on hedges of net 0.2 -0.4 -0.1 -0.1 0.2
investments*
Actuarial gains (losses) on defined - - - - -0.3
benefit plan
------------------------------------
Total other comprehensive income, net of -4.4 2.8 -2.3 1.4 -1.0
tax
------------------------------------
Total comprehensive income for the period 3.4 10.0 12.1 16.1 12.9
------------------------------------
Total comprehensive income attributable
to:
Equity holders of the Company 2.3 9.1 10.1 13.7 9.2
Non-controlling interests 1.1 0.9 2.0 2.4 3.7
* Item that may be reclassified subsequently to the statement of income
STATEMENT OF FINANCIAL POSITION June 30 June 30 Dec 31
MEUR 2013 2012 2012
--------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 71.8 73.9 72.6
Property, plant and equipment 29.6 29.5 29.3
Non-current assets
Interest-bearing 3.4 6.6 3.7
Non-interest-bearing 10.3 11.7 11.4
------------------------
115.0 121.7 117.1
Current assets
Inventories 112.5 119.5 110.6
Current assets
Interest-bearing 2.3 1.1 2.5
Non-interest-bearing 70.8 67.2 58.5
Cash and cash equivalents 28.1 45.0 38.2
------------------------
213.7 232.8 209.7
Assets classified as held-for-sale - 0.3 -
Total assets 328.7 354.8 326.8
------------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the 129.1 133.3 128.3
company
Non-controlling interests 11.4 8.1 9.4
------------------------ 140.5 141.4 137.7
Non-current liabilities
Interest-bearing 70.1 84.1 78.7
Non-interest-bearing 13.8 17.5 15.6
------------------------
83.9 101.7 94.3
Current liabilities
Interest-bearing 59.5 67.2 55.5
Non-interest-bearing 44.9 44.6 39.3
------------------------
104.3 111.8 94.8
Total equity and liabilities 328.7 354.8 326.8
------------------------
II II I-II I-II I-IV
KEY FIGURES 2013 2012 2013 2012 2012
-------------------------------------------------------------------------------
EBITDA margin, % 18.6% 15.9% 16.2% 16.1% 11.2%
Operating profit margin, % 16.5% 13.9% 14.1% 14.0% 8.9%
Return on capital employed, % 22.3% 19.1% 19.0% 18.9% 11.4%
Capital employed at end of period, MEUR 236.2 239.9 236.2 239.9 227.5
Net interest-bearing debt at end of 95.7 98.6 95.7 98.6 89.9
period, MEUR
Equity-to-assets ratio at end of period, 42.8% 39.9% 42.8% 39.9% 42.2%
%
Debt-to-equity ratio at end of period, % 68.1% 69.7% 68.1% 69.7% 65.3%
Earnings per share, EUR (diluted = non- 0.16 0.15 0.31 0.31 0.26
diluted)
Equity per share at end of period, EUR 3.34 3.43 3.34 3.43 3.31
Average personnel for the period 2 183 2 025 2 235 2 058 2 127
-------------------------------------------------------------------------------
Definitions of key figures are consistent with those in the financial
statement 2012.
STATEMENT OF CASH FLOWS II II I-II I-II I-IV
MEUR 2013 2012 2013 2012 2012
-------------------------------------------------------------------------------
Net profit for the period 7.8 7.2 14.4 14.7 14.0
Adjustments to net profit for the period * 7.5 6.1 10.8 10.7 20.6
Financial items and taxes paid and received -1.2 -3.9 -4.1 -6.4 -13.6
Change in working capital 2.1 12.1 -13.0 -6.8 4.2
-------------------------------------------------------------------------------
Net cash generated from operating 16.2 21.5 8.1 12.2 25.2
activities
Investments -1.9 -1.9 -3.9 -4.2 -7.7
Proceeds from sales of assets 0.1 0.1 0.1 0.6 0.8
Sufix brand acquisition -0.7 -0.8 -0.7 -0.8 -0.8
Strikemaster and Mora Ice acquisitions - - - -6.4 -6.7
Acquisition of other subsidiaries, net of - - 0.0 - 0.0
cash
Proceeds from disposal of subsidiaries, net - - - - 0.8
of cash
Change in interest-bearing receivables 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
Net cash used in investing activities -2.4 -2.5 -4.5 -10.8 -13.6
Dividends paid to parent company's -8.9 -8.9 -8.9 -8.9 -8.9
shareholders
Dividends paid to non-controlling interest - -1.5 - -1.5 -1.6
Net funding -7.1 6.6 -4.5 24.9 9.1
Purchase of own shares -0.2 - -0.5 -0.1 -0.7
-------------------------------------------------------------------------------
Net cash generated from financing -16.3 -3.8 -14.0 14.5 -2.2
activities
Adjustments 1.0 0.0 1.1 0.2 0.2
Change in cash and cash equivalents -1.5 15.1 -9.3 16.1 9.6
Cash & cash equivalents at the beginning of 30.8 29.3 38.2 28.9 28.9
the period
Foreign exchange rate effect -1.2 0.6 -0.8 0.0 -0.4
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the 28.1 45.0 28.1 45.0 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 3.6 16.7 -1.6 -4.1 4.9 -2.6 111.8 7.2 135.8
1, 2012
-------------------------------------------------------------------------------
Impact of new - - - - - - -0.1 - -0.1
standards
-------------------------------------------------------------------------------
Restated 3.6 16.7 -1.6 -4.1 4.9 -2.6 111.7 7.2 135.7
balance
-------------------------------------------------------------------------------
Comprehensive - - -0.6 2.0 - - 12.2 2.4 16.1
income *
Purchase of own - - - - - -0.1 - - -0.1
shares
Dividends - - - - - - -8.9 -1.5 -10.4
Share based - - - - - - 0.0 - 0.0
payment
-------------------------------------------------------------------------------
Equity on Jun 3.6 16.7 -2.2 -2.1 4.9 -2.7 115.1 8.1 141.4
30, 2012
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity on Jan 3.6 16.7 -2.3 -4.1 4.9 -3.4 112.8 9.4 137.7
1, 2013
-------------------------------------------------------------------------------
Comprehensive - - 0.7 -2.5 - - 11.9 2.0 12.1
income *
Purchase of own - - - - - -0.5 - - -0.5
shares
Dividends - - - - - - -8.9 - -8.9
Share based - - - - - - 0.2 - 0.2
payments
Other changes - - - - - - 0.0 0.0 0.0
-------------------------------------------------------------------------------
Equity on Jun 3.6 16.7 -1.5 -6.6 4.9 -3.9 116.0 11.4 140.5
30, 2013
-------------------------------------------------------------------------------
* For the
period, (net of
tax)
SEGMENT INFORMATION*
MEUR II II I-II I-II I-IV
Net Sales by Operating Segment 2013 2012 2013 2012 2012
-------------------------------------------------------------------
Group Products 49.4 48.8 96.6 94.6 176.4
Third Party Products 32.1 34.8 60.2 62.5 114.3
Eliminations -0.1 - -0.1 - -
-------------------------------------------------------------------
Total 81.4 83.7 156.7 157.1 290.7
Operating Profit by Operating Segment
-------------------------------------------------------------------
Group Products 9.1 7.8 15.3 14.7 18.9
Third Party Products 4.3 3.9 6.7 7.3 7.0
-------------------------------------------------------------------
Total 13.4 11.6 22.0 22.0 25.9
Jun 30 Jun 30 Dec 31
Assets by Operating Segment 2013 2012 2012
-------------------------------------------------------------------
Group Products 217.8 224.6 214.0
Third Party Products 77.1 78.2 68.5
-------------------------------------------------------------------
Non-interest bearing assets total 294.9 302.9 282.5
Unallocated interest-bearing assets 33.8 51.9 44.3
-------------------------------------------------------------------
Total assets 328.7 354.8 326.8
Net Sales by Area II II I-II I-II I-IV
MEUR 2013 2012 2013 2012 2012
-----------------------------------------------------
North America 21.9 21.4 43.7 41.9 83.6
Nordic 19.8 20.7 34.9 35.9 62.7
Rest of Europe 31.9 33.3 61.4 63.1 108.2
Rest of the world 7.8 8.2 16.6 16.3 36.2
-----------------------------------------------------
Total 81.4 83.7 156.7 157.1 290.7
* Segments are consistent with
those in the financial statements 2012. Segments
are described in detail in note 2 of the financial statements 2012.
KEY FIGURES BY QUARTERS I II III IV I-IV I II
MEUR 2012 2012 2012 2012 2012 2013 2013
--------------------------------------------------------------------
Net sales 73.5 83.7 65.6 67.9 290.7 75.3 81.4
EBITDA 12.0 13.3 5.4 1.9 32.7 10.3 15.2
Operating profit 10.4 11.6 3.7 0.2 25.9 8.6 13.4
Profit before taxes 10.4 10.5 1.9 -1.7 21.0 8.3 11.6
Net profit for the period 7.5 7.2 1.3 -2.1 14.0 6.6 7.8
--------------------------------------------------------------------
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.
Presentation of comparative periods has been adjusted following the
reclassification of interest-bearing and non-interest bearing items as announced
on stock exchange release on January 4, 2013.
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 first quarter interim report. The change impacted also key figures,
which have been restated in this interim report. The adjustment on income
statement and other comprehensive income was 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-June 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 June 30, 2013, the book value of inventories included a provision for net
realizable value of 5.0 MEUR (3.4 MEUR at June 30, 2012 and 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.
Non-recurring income and expenses included in
operating profit II II I-II I-II I-IV
MEUR 2013 2012 2013 2012 2012
-------------------------------------------------------------------------------
Costs related to business acquisitions - 0.0 - 0.0 0.0
Net gain from sale of gift manufacturing unit in - 0.0 - -0.1 -0.7
China*
Gain on disposal of real estate in Finland - - - 0.1 0.1
Other restructuring costs -0.1 - -0.1 - -
Other non-recurring items - 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
Total included in EBITDA and operating profit -0.1 0.0 -0.1 0.0 -0.6
-------------------------------------------------------------------------------
* Including an adjustment to sales price and costs related to the
disposed business.
Commitments June 30 June 30 Dec 31
MEUR 2013 2012 2012
--------------------------------------------------------------------------
On own behalf
Guarantees 0.1 0.1 0.1
Minimum future lease payments on operating 14.2 14.0 16.6
leases
--------------------------------------------------------------------------
Sales Other
Related party transactions and other Pur- Rents expen- Recei- Paya-
MEUR income chases paid ses vables bles
-------------------------------------------------------------------------------
I-II 2013
Joint venture Shimano Normark 1.5 - - - 0.5 -
UK Ltd
Associated company Lanimo Oü 0.0 0.1 - - - -
Entity with significant - - 0.1 0.1 0.0 0.0
influence over the Group*
Management - - 0.1 - - 0.0
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 - - 0.1 0.1 0.0 -
influence over the Group*
Management - - 0.2 - 0.0 0.1
I-IV 2012
Joint venture Shimano Normark 3.9 - - - 0.1 0.0
UK Ltd
Associated company Lanimo Oü - 0.0 - - 0.0 -
Entity with significant - - 0.2 0.1 0.0 -
influence over the Group*
Management 0.0 - 0.4 - - 0.0
-------------------------------------------------------------------------------
* Lease agreement for the real estate for the consolidated operations in
France and a service fee.
Jun 30 Jun 30 Dec 31
Open derivatives 2013 2012 2012
------------------------------------------------------
Nominal Fair Normal Fair Nominal Fair
MEUR Value Value Value Value Value Value
-------------------------------------------------------------------------------
Operative hedges
Foreign currency 44.1 0.6 3.0 0.1 35.1 -0.4
derivatives
Monetary hedges
Foreign currency 20.7 0.0 - - 27.2 0.0
derivatives
Interest rate 80.0 -3.1 70.4 -2.1 85.0 -3.0
derivatives
-------------------------------------------------------------------------------
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.
Changes in unrealized mark-to-market valuations for operative foreign currency
derivatives
II II I-II I-II I-IV
2013 2012 2013 2012 2012
-------------------------------------------------------
Included in operating profit 0.5 0.1 0.9 -0.2 -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 Jun 30
2013
MEUR Carrying value Fair value
------------------------------------------------------------------------
Financial assets
Loans and receivables 97.4 97.4
Available-for-sale financial assets (level 3) 0.3 0.3
Derivatives (level 2) 1.1 1.1
Financial liabilities
Financial liabilities at amortized cost 152.1 152.7
Derivatives (level 2) 3.7 3.7
------------------------------------------------------------------------
Changes to share based incentive plan resolved in June 2012
The Group has one share based incentive plan for the Group's key personnel. In
line with the terms of the share-based payment program, the Board has modified
the conditions and term of the program. Earning period has been prolonged to
December 31, 2013. The potential reward from the plan remains to be based on
development of Rapala Group's inventory levels and EBITDA. The Group has
reassessed the fair value of the program.
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 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 112 276 own shares. At the
end of the reporting period the company held 813 676 own shares, representing
2.1% 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 4.78 EUR.
During the reporting period, 2 052 824 shares (2 513 753) were traded at a high
of 5.20 EUR and a low of 4.56 EUR. The closing share price at the end of the
period was 4.80 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 continues to
develop risk management practices and internal controls during 2013. Detailed
descriptions of the Group's strategic, operative and financial risks as well as
risk management principles are included in the Financial Statements 2012.
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 sale 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 the
factory lead-times continue in 2013. 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.
The production transfers and ramp-up phase of the new production facilities 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 during the latter part of the year.
The Group successfully refinanced its credit facilities in April, 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
the 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 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 has an impact on the Group's
operating profit. 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#1717356]
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