2015-07-23 12:04:34 CEST
2015-07-23 12:05:35 CEST
BIRTINGARSKYLDAR UPPLÝSNINGAR
Rapala VMC - Interim report (Q1 and Q3)
RAPALA VMC CORPORATION'S JANUARY TO JUNE 2015: SALES AND PROFITABILITY IMPROVEMENT CONTINUED
Rapala VMC Corporation
Interim report
July 23, 2015 at 1:00 p.m.
RAPALA VMC CORPORATION'S JANUARY TO JUNE 2015: SALES AND PROFITABILITY
IMPROVEMENT CONTINUED
April-June in brief:
* Net sales were 80.1 MEUR, up 3% from previous year (77.7). With comparable
exchange rates sales up 1%.
* Comparable operating profit was 9.9 MEUR (9.7), up 2%.
* Cash flow from operations was 17.6 MEUR (21.5).
* Earnings per share was 0.09 EUR (0.08).
* Full year guidance unchanged.
January-June in brief:
* Net sales were 154.0 MEUR, up 7% from previous year (143.9). With comparable
exchange rates sales up 4%.
* Comparable operating profit was 20.6 MEUR (16.3), up 26%.
* Cash flow from operations was 10.7 MEUR (13.5).
* Earnings per share was 0.19 EUR (0.19).
President and CEO Jorma Kasslin: "In the second quarter our sales and comparable
profitability continued to improve from last year and after the first six months
we are ahead of last year. In the second quarter sales continued strong in the
USA supported with the good momentum created by new product introductions and
favorable fishing conditions. Also several Rest of the World markets had good
sales performance in the second quarter. However business conditions in Russia
were very challenging, which was having negative impact to our sales,
profitability and inventory figures compared to last year.
While strengthening of US Dollar was increasing our top line and Group Products'
profitability, it was also burdening our profitability here in Europe especially
on Third Party Products.
The operative performance of our lure manufacturing unit in Batam, Indonesia is
improving all the time. The unit was having positive impact on our profitability
also in second quarter and this positive trend is expected to continue.
The outlook for the full year remains positive. During second half of the year,
we'll be following closely the developments in winter fishing and winter sports
sales, situation in Russia as well as our gross margin."
Key figures
--------------------------------------------------------------------
II II change I-II I-II change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
--------------------------------------------------------------------
Net sales 80.1 77.7 +3% 154.0 143.9 +7% 273.2
Operating profit 8.3 8.6 -3% 17.4 16.0 +9% 22.9
% of net sales 10.4% 11.1% 11.3% 11.1% 8.4%
Comparable
operating profit 9.9 9.7 +2% 20.6 16.3 +26% 20.9
*
% of net sales 12.4% 12.4% 13.4% 11.4% 7.6%
Cash flow from 17.6 21.5 -18% 10.7 13.5 -21% 21.7
operations**
Gearing % 75.9% 73.2% 75.9% 73.2% 73.2%
EPS, EUR 0.09 0.08 +13% 0.19 0.19 0% 0.24
--------------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of
operative currency derivatives.
**Comparative periods restated, see notes.
Market environment
Overall the business conditions during second quarter of the year remained
relatively stable and unchanged. Summer weather conditions has supported sales
of fishing tackle in certain markets such as the US and France, whereas abnormal
and cold weather conditions had an adverse impact on the peak season of summer
fishing sales in some markets such as Nordic countries. Situation in Russia
continues to be very challenging, which is impacting the whole Group.
Business Review April-June 2015
The Group's net sales for the second quarter were up 3%. Changes in translation
exchange rates explain approximately 2.0 MEUR of the increase in net sales. With
comparable translation exchange rates quarterly net sales grew 1% from last
year.
North America
North America continued with solid growth in second quarter supported by good
fishing conditions boosting replenishment orders of Group branded fishing
tackle. Customer activity and confidence have strengthened in the US, while
business conditions in Canada are tougher. Strengthening of US Dollar is
supporting the US performance, but hurting the Canadian business.
Nordic
Nordic sales development was negative, hit by cold and rainy summer as well as
earlier timing of summer fishing sales which advanced sales to the first
quarter. Sales in Finland were supported by a new hunting dealership.
Rest of Europe
Sales declined from last year. The situation in Russia and Ukraine continued to
be very difficult, seriously impacting the consumer demand. This combined with
weakening of Ruble is heavily burdening the sales of Rest of Europe. Excluding
Russia and Ukraine, Rest of Europe sales improved 6% from last year with
comparable rates supported by strong sales growth in France.
Rest of the World
Sales improved from last year. Sales were growing in South Africa, Thailand and
several other markets, while the business conditions were tough in Australia and
Japan. Sales were supported by a favorable currency impact.
External Net Sales by Area
---------------------------------------------------------------
II II change I-IV
Comparable change %
MEUR 2015 2014 % 2014
---------------------------------------------------------------
North America 26.6 19.8 +34% +11% 86.1
Nordic 17.7 19.5 -9% -8% 54.9
Rest of Europe 27.0 30.7 -12% -5% 98.7
Rest of the World 8.8 7.6 +16% +6% 33.5
Total 80.1 77.7 +3% +1% 273.2
---------------------------------------------------------------
Business Review January-June 2015
The Group net sales for the first half of the year were up 7%. Changes in
translation exchange rates explain approximately 3.6 MEUR of the increase in net
sales. With comparable translation exchange rates six-month net sales were 4%
ahead last year's level. Summer season shipments started early in many markets
weighting the sales growth to the first quarter.
North America
First half of the year was solid in the US. Good sales growth in the US was
supported by currencies, improving economy, successful launch of new Shadow Rap
lure family having a positive impact throughout the first half of the year and
some shift of sales from last year's fourth quarter.
Nordic
Nordic sales increased from last year despite weak second quarter sales. Strong
first quarter sales were positively impacted by improved winter weather
conditions, earlier timing of sales of summer fishing products, on-time
deliveries of suppliers and exchange gains on currency nominated accounts
receivable.
Rest of Europe
Sales decreased from last year. Political and economic turbulence in Russia and
Ukraine continued to have adverse impact on sales in these countries.
Currencies, mainly Ruble, had a clear negative impact on sales in the Rest of
Europe compared to last year. Excluding Russia and Ukraine the sales improved
6% from last year with comparable rates driven by sales in France, Hungary,
Romania and Poland.
Rest of the World
Rest of the World sales increased from last year in local currency terms and
currencies impacted sales further positively. Growth was steady in South Africa,
Thailand, Malaysia, Chile and Korea. Sales were suffering in Australia, Japan
and Indonesia.
External Net Sales by Area
------------------------------------------------------
I-II I-II change Comparable I-IV
MEUR 2015 2014 % change % 2014
------------------------------------------------------
North America 51.6 39.2 +32% +10% 86.1
Nordic 34.2 32.7 +5% +7% 54.9
Rest of Europe 51.4 57.3 -10% -2% 98.7
Rest of the World 16.8 14.7 +14% +4% 33.5
Total 154.0 143.9 +7% +4% 273.2
------------------------------------------------------
Financial Results and Profitability
Comparable (excluding non-recurring items and mark-to-market valuations of
operative currency derivatives) operating profit increased from last year for
the second quarter and for the first half of the year. Changes in translation
exchange rates, especially weakening of Ruble, burdened quarterly and six-month
operating profit by approximately 0.7 MEUR. With comparable translation exchange
rates comparable operating profit was 1.0 MEUR ahead of last year's level for
the quarter and 4.9 MEUR for the first half of the year.
Comparable operating profit margin was 12.4% (12.4) for the quarter and 13.4%
(11.4) for the six-month period. Second quarter profitability was supported by
stronger sales of Group branded products especially in the USA and continuing
recovery of Asian manufacturing operations' profitability. Profitability was
burdened by the unfavorable US dollar impact on purchases impacting the margins
as well negative sales development in Russia.
Reported operating profit increased for the six-month period, but was down for
the second quarter. Respectively reported operating profit margin was 10.4%
(11.1) for the quarter and 11.3% (11.1) for the six-month period. Reported
operating profit included loss on non-recurring items of 0.0 MEUR (0.5) for the
quarter and 1.2 MEUR (0.4) for the first half of the year related to the closing
down of the manufacturing operations in China. Mark-to-market valuation of
operative currency derivatives included in the reported operating profit was
1.6 MEUR loss (0.6 loss) for the quarter and 2.0 MEUR loss (0.1 gain) for six-
months.
Total financial (net) expenses were 2.0 MEUR (1.6) for the quarter and 4.1 MEUR
(3.5) for the first half. Financial items were negatively impacted by the (net)
foreign exchange expenses of 1.2 MEUR (0.5) for the quarter and 2.7 MEUR (1.5)
for the six-months. Net interest and other financing expenses decreased from
last year's level to 0.8 MEUR (1.0) for the quarter and 1.5 MEUR (1.9) for the
first half.
Net profit was at last year's level and earnings per share were 0.09 EUR (0.08)
for the quarter and 0.19 EUR (0.19) for the first half of the year. Change in
mark-to-market valuation of operative currency derivatives was having notable
negative impact on Group's net profit and EPS compared to last year. Last year
six-month net profit included a positive tax impact of 1.0 MEUR related to an
agreement with the Finnish tax authority. The share of non-controlling interest
in net profit decreased from last year and totaled 0.7 MEUR (1.0) for the
quarter and 1.1 MEUR (0.9) for the first half of the year.
Key figures
-------------------------------------------------------------------------------
II II change I-II I-II change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
-------------------------------------------------------------------------------
Net sales 80.1 77.7 +3% 154.0 143.9 +7% 273.2
Operating profit 8.3 8.6 -3% 17.4 16.0 +9% 22.9
Comparable operating 9.9 9.7 +2% 20.6 16.3 +26% 20.9
profit *
Net profit 4.0 4.1 -2% 8.3 8.4 -1% 10.2
-------------------------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of
operative currency derivatives.
Segment Review
Group Products
Second quarter and six-month sales increased from last year. Quarterly and year-
to-date sales were supported by favorable currency impact, strong start of
summer fishing season and very successful launch of the new Rapala Shadow Rap
lure in the US as well as overall solid summer fishing tackle sales in the US.
On the other hand Group product sales were slower in Russia and in the Nordic
countries impacted by the economic crisis and cold summer weather respectively.
Operating profit for Group Products improved notably compared to last year.
Operating profit was supported by stronger sales by improved profitability of
Batam operations.
Third Party Products
Sales of Third Party Products were down for the quarter and first half of the
year. Sales of Third Party Hunting products were strong in the Nordic, whereas
economical instabilities continue to negatively affect Third Party Fishing
products sales in Russia. Sales were burdened by foreign exchange rates, mainly
weaker Ruble.
Operating profit for Third Party Products was down from last year level burdened
by unfavorable exchange rates on purchases and decline of sales and
profitability in Russia.
Net Sales by Segment
---------------------------------------------------------
II II change Comparable I-IV
MEUR 2015 2014 % change % 2014
---------------------------------------------------------
Group Products 52.7 47.0 +12% +3% 171.3
Third Party Products 27.3 30.7 -11% -5% 102.0
Eliminations 0.0
Total 80.1 77.7 +3% +1% 273.2
---------------------------------------------------------
---------------------------------------------------------
I-II I-II change Comparable I-IV
MEUR 2015 2014 % change % 2014
---------------------------------------------------------
Group Products 103.5 90.3 +15 % +6% 171.3
Third Party Products 50.5 53.6 -6 % +1% 102.0
Eliminations 0.0
Total 154.0 143.9 +7 % +4% 273.2
---------------------------------------------------------
Operating profit by Segment
-----------------------------------------------------------------
II II change I-II I-II change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
-----------------------------------------------------------------
Group Products 6.6 4.7 +40% 13.8 9.7 +42% 15.0
Third Party Products 1.7 3.9 -56% 3.6 6.4 -44% 7.9
Total 8.3 8.6 -3% 17.4 16.0 +9% 22.9
-----------------------------------------------------------------
Financial position
Cash flow from operations decreased from last year's record levels to 17.6 MEUR
(21.5) for the second quarter and 10.7 MEUR (13.5 MEUR) for the first half of
the year. Decline was driven by negative development in the net working capital
as especially receivables tied more cash, following the increased sales. Net
change in working capital amounted to 9.6 MEUR (13.0) for the quarter and -6.7
MEUR (-2.6) for the six-month period. Inventories increased in line with the
sales by 7.9 MEUR from last June amounting to 121.8 MEUR (113.9), of which 1.8
MEUR is related to change in translation exchange rates. Increase in inventories
was driven primarily by transfer of production from China to Batam and slowdown
in sales in Russia and Scandinavia, which prevented the Group from achieving
planned inventory reductions.
Net cash used in investing activities was at last year's level and totaled 2.7
MEUR (2.4) for the quarter and 4.1 MEUR (4.5) for the first half of the year,
for the most part consisting of normal operative capital expenditure.
Liquidity position of the Group was good. Undrawn committed long-term credit
facilities amounted to 78.2 MEUR at the end of the period. Gearing and net
interest-bearing debt increased from last year and equity-to-assets was slightly
below last year's level. The Group fulfils all financial covenants related to
its credit facilities.
Key figures
-------------------------------------------------------------------------------
II II change I-II I-II change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
-------------------------------------------------------------------------------
Cash flow from operations * 17.6 21.5 -18% 10.7 13.5 -21% 21.7
Net interest-bearing debt at end 108.8 96.4 +13% 108.8 96.4 +13% 99.9
of period
Gearing % 75.9% 73.2% 75.9% 73.2% 73.2%
Equity-to-assets ratio at end of 42.3% 42.6% 42.3% 42.6% 44.1%
period, %
-------------------------------------------------------------------------------
* Comparative periods restated, see notes.
Strategy Implementation
Execution of the Rapala Group's strategy is based on three cornerstones: brands,
manufacturing and distribution, supported by strong corporate culture. During
the second quarter strategy implementation continued in various areas.
The Group is putting a lot of focus and resources to its Asian lure
manufacturing unit in Batam, to develop the business and operations in order to
exploit the strengths and capture the benefits of this unit. The performance of
the manufacturing operations has already clearly improved from last year and
there is still room for considerable improvement in the future. This unit forms
solid basis for future growth of the Group's Storm, Luhr Jensen and Williamson
branded lures.
Reducing the amount of inventories, largely driven by the Group's business
model, is high on the agenda of the Group and new initiatives to achieve
permanent inventory reductions through structural changes are being
investigated.
Discussions and negotiations regarding acquisitions and business combinations
continued during the second quarter of the year, as the Group continues to seek
also non-organic growth opportunities.
Product Development
Continuous product development and consistent innovation are core competences
for the Group and major contributor to the value and commercial success of the
brands.
The launch of the new Rapala Shadow Rap to the US market earlier this year has
been extremely successful. This lure also was commenced as Runner Up in the Best
New Hard Bait category at the 2015 European Fishing Tackle Trade Exhibition
(EFTTEX), where Group's Rapala and Sufix branded products also received other
awards, including Best New Bag Award for Rapala Urban Hip Bag.
In addition to Rapala, Group is also putting lot of product development and
sales and marketing focus on Storm lures, manufactured in the new Batam factory.
Organization and Personnel
Average number of personnel for the second quarter was 3 006 (2 672) and 2 943
(2 666) for the first half of the year, increase coming mainly from expansion of
lure manufacturing operations in Batam and reduction of outsourcing in China. At
the end of June, the number of personnel was
3 156 (2 692).
Short-term Outlook and Risks
Following the increase in sales and comparable profitability after first six
months, the outlook for the whole year is positive. In USA presales of winter
fishing equipment has progressed well and is expected to be close to last year's
level, despite termination of a third party winter fishing equipment
distribution agreement, which contributed ca. 5 MUSD sales during latter part of
last year.
Improvement in performance of the manufacturing unit in Batam is supporting the
profitability of the Group this year.
The biggest concern and uncertainly concerning latter part of the year is the
development in Russia, where the situation is currently very challenging.
Actions to reduce the Group's inventory levels as well as strengthening of US
Dollar may put further pressure on Group's profit margins.
The Group expects full year net sales and comparable operating profit (excluding
non-recurring items and mark-to-market valuations of operative currency
derivatives) to be above 2014 levels.
Short term risks and uncertainties and seasonality of the business are described
in more detail in the end of this interim report.
Third quarter interim report will be published on October 22.
Helsinki, July 23, 2015
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 3364 5719 or
+1 212 444 0096 or +358 (0)9 2310 1675 (pin code: 736596#) 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 3427 0598 (pin
code: 2096709#). 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 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Net sales 80.1 77.7 154.0 143.9 273.2
Other operating income 0.2 0.2 0.3 0.3 1.0
Materials and services 37.3 35.8 70.6 64.3 128.1
Personnel expenses 17.9 17.1 35.3 34.0 65.6
Other costs and expenses 15.3 14.8 27.8 26.7 50.8
Share of results in associates and joint
ventures 0.2 0.2 0.3 0.2 0.2
------------------------------
EBITDA 10.1 10.4 20.9 19.5 30.0
Depreciation, amortization and impairments 1.7 1.8 3.5 3.5 7.1
------------------------------
Operating profit (EBIT) 8.3 8.6 17.4 16.0 22.9
Financial income and expenses 2.0 1.6 4.1 3.5 7.2
------------------------------
Profit before taxes 6.4 7.0 13.3 12.5 15.7
Income taxes 2.3 2.9 5.0 4.1 5.5
------------------------------
Net profit for the period 4.0 4.1 8.3 8.4 10.2
------------------------------
Attributable to:
Equity holders of the company 3.3 3.1 7.2 7.5 9.2
Non-controlling interests 0.7 1.0 1.1 0.9 1.1
Earnings per share for profit attributable
to the equity holders of the company:
Earnings per share, EUR (diluted = non-diluted) 0.09 0.08 0.19 0.19 0.24
STATEMENT OF COMPREHENSIVE INCOME II II I-II I-II I-IV
MEUR 2015 2014 2015 2014 2014
---------------------------------------------------------------------------
Net profit for the period 4.0 4.1 8.3 8.4 10.2
--------------------------
Other comprehensive income, net of tax
Change in translation differences* -2.6 2.2 7.8 1.0 4.7
Gains and losses on cash flow hedges* 0.2 0.0 0.2 0.1 0.2
Gains and losses on hedges of net investments* -0.5 -0.5 -1.7 0.1 0.1
Actuarial gains (losses) on defined benefit plan - - - - -0.2
--------------------------
Total other comprehensive income, net of tax -2.8 1.6 6.3 1.2 4.8
--------------------------
Total comprehensive income for the period 1.2 5.8 14.6 9.6 15.1
--------------------------
Total comprehensive income attributable to:
Equity holders of the Company 0.7 4.5 13.4 8.8 15.3
Non-controlling interests 0.5 1.3 1.3 0.9 -0.2
* Item that may be reclassified subsequently to the statement of income
STATEMENT OF FINANCIAL POSITION Jun 30 Jun 30 Dec 31
MEUR 2015 2014 2014
------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 78.1 70.7 74.4
Property, plant and equipment 32.0 30.9 32.0
Non-current assets
Interest-bearing 5.1 3.8 3.0
Non-interest-bearing 12.0 9.6 11.5 ---------------------
127.2 115.0 120.8
Current assets
Inventories 121.8 113.9 113.8
Current assets
Interest-bearing 1.1 1.0 1.1
Non-interest-bearing 74.0 64.2 62.3
Cash and cash equivalents 15.4 15.6 12.2
---------------------
212.4 194.7 189.4
Total assets 339.5 309.7 310.3
---------------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the company 133.8 122.4 128.3
Non-controlling interests 9.5 9.3 8.2
---------------------
143.3 131.7 136.5
Non-current liabilities
Interest-bearing 73.7 40.1 72.3
Non-interest-bearing 14.5 12.3 13.3
---------------------
88.2 52.4 85.5
Current liabilities
Interest-bearing 56.6 76.6 43.9
Non-interest-bearing 51.3 49.0 44.2
---------------------
108.0 125.6 88.2
Total equity and liabilities 339.5 309.7 310.3
---------------------
II II I-II I-II I-IV
KEY FIGURES 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
EBITDA margin, % 12.6% 13.4% 13.6% 13.5% 11.0%
Operating profit margin, % 10.4% 11.1% 11.3% 11.1% 8.4%
Return on capital employed, % 12.9% 14.6% 14.3% 13.9% 9.8%
Capital employed at end of
period, MEUR 252.1 228.1 252.1 228.1 236.4
Net interest-bearing debt at
end of period, MEUR 108.8 96.4 108.8 96.4 99.9
Equity-to-assets ratio at end
of period, % 42.3% 42.6% 42.3% 42.6% 44.1%
Debt-to-equity ratio at end
of period, % 75.9% 73.2% 75.9% 73.2% 73.2%
Earnings per share, EUR
(diluted = non-diluted) 0.09 0.08 0.19 0.19 0.24
Equity per share at end of
period, EUR 3.49 3.18 3.49 3.18 3.34
Average personnel for the
period 3 006 2 672 2 943 2 666 2 716
-------------------------------------------------------------------------------
Definitions of key figures are consistent with those in the
financial statement 2014.
STATEMENT OF CASH FLOWS II II I-II I-II IV
MEUR 2015 2014 2015 2014 2014
Restated** Restated** Restated**
-------------------------------------------------------------------------------
Net profit for the period 4.0 4.1 8.3 8.4 10.2
Adjustments to net profit for
the period * 6.8 6.8 14.0 10.7 17.1
Financial items and taxes
paid and received -2.7 -2.4 -4.9 -3.0 -7.1
-------------------------------------------------------------------------------
Change in working capital 9.6 13.0 -6.7 -2.6 1.5
Net cash generated from
operating activities 17.6 21.5 10.7 13.5 21.7
Investments -1.9 -1.8 -3.4 -3.8 -8.5
Proceeds from sales of assets 0.1 0.1 0.1 0.2 0.4
Sufix brand acquisition -0.9 -0.7 -0.9 -0.7 -0.8
Acquisition of other
subsidiaries, net of cash - - - -0.2 -0.2
Proceeds from disposal of
subsidiaries, net of cash - - - - 1.0
-------------------------------------------------------------------------------
Change in interest-bearing
receivables 0.0 0.0 0.0 0.0 0.0
Net cash used in investing
activities -2.7 -2.4 -4.1 -4.5 -8.1
Dividends paid to parent
company's shareholders -7.7 -9.2 -7.7 -9.2 -9.2
Dividends paid to non-
controlling interest - - - - -3.6
Net funding -1.8 -5.4 4.1 -0.9 -4.2
-------------------------------------------------------------------------------
Purchase of own shares - -0.1 -0.2 -0.3 -0.9
Net cash generated from
financing activities -9.4 -14.8 -3.8 -10.5 -17.9
Change in cash and cash
equivalents 5.5 4.3 2.8 -1.4 -4.2
Cash & cash equivalents at
the beginning of the period 10.3 11.0 12.2 16.9 16.9
-------------------------------------------------------------------------------
Foreign exchange rate effect -0.4 0.2 0.5 0.1 -0.5
Cash and cash equivalents at
the end of the period 15.4 15.6 15.4 15.6 12.2
* Includes reversal of non-cash items, income taxes and
financial income and expenses.
**Comparative
periods restated,
see notes
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Attributable to equity holders of the company
-------------------------------------------------
Cumul. Fund for Non-
Share Fair trans- invested Re- contr-
non-
pre- value lation 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, 2014 3.6 16.7 -1.4 -12.5 4.9 -4.4 116.2 12.0 135.1
------------------------------------------------------------------------------
Comprehensive
income * - - 0.1 1.2 - - 7.5 0.9 9.6
Purchase of
own shares - - - - - -0.3 - - -0.3
Dividends - - - - - - -9.2 -3.6 -12.8
------------------------------------------------------------------------------
Equity on Jun
30, 2014 3.6 16.7 -1.3 -11.3 4.9 -4.6 114.5 9.3 131.7
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Equity on Jan
1, 2015 3.6 16.7 -1.1 -6.5 4.9 -5.2 116.0 8.2 136.5
------------------------------------------------------------------------------
Comprehensive
income *
Purchase of - - 0.2 6.0 - - 7.2 1.3 14.6
own shares - - - - - -0.2 - - -0.2
Dividends - - - - - - -7.7 - -7.7
------------------------------------------------------------------------------
Equity on Jun
30, 2015 3.6 16.7 -1.0 -0.5 4.9 -5.4 115.5 9.5 143.3
------------------------------------------------------------------------------
* For the period, (net
of tax)
SEGMENT INFORMATION*
MEUR II II I-II I-II I-IV
Net Sales by Operating Segment 2015 2014 2015 2014 2014
--------------------------------------------------------------
Group Products 52.7 47.0 103.5 90.3 171.3
Third Party Products 27.3 30.7 50.5 53.6 102.0
Eliminations 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------
Total 80.1 77.7 154.0 143.9 273.2
Operating Profit by Operating Segment
---------------------------------------------------------------
Group Products 6.6 4.7 13.8 9.7 15.0
Third Party Products 1.7 3.9 3.6 6.4 7.9
--------------------------------------------------------------
Total 8.3 8.6 17.4 16.0 22.9
Assets by Operating Segment Jun 30 Jun 30 Dec 31
MEUR 2015 2014 2014
------------------------------------------------------------
Group Products 243.5 218.3 230.4
Third Party Products 74.5 71.1 63.6
------------------------------------------------------------
Non-interest-bearing assets total 317.9 289.4 294.0
Unallocated interest-bearing assets 21.6 20.4 16.3
------------------------------------------------------------
Total assets 339.5 309.7 310.3
* Segments are consistent
with those in the financial statements 2014. Segments are described in detail in
note 2 of the financial statements 2014.
External Net Sales by Area II II I-II I-II I-IV
MEUR 2015 2014 2015 2014 2014
---------------------------------------------------------
North America 26.6 19.8 51.6 39.2 86.1
Nordic 17.7 19.5 34.2 32.7 54.9
Rest of Europe 27.0 30.7 51.4 57.3 98.7
Rest of the world 8.8 7.6 16.8 14.7 33.5
---------------------------------------------------------
Total 80.1 77.7 154.0 143.9 273.2
KEY FIGURES BY QUARTERS I II III IV I-IV I II
MEUR 2014 2014 2014 2014 2014 2015 2015
--------------------------------------------------------------------
Net sales 66.2 77.7 67.8 61.5 273.2 73.9 80.1
EBITDA 9.1 10.4 7.5 3.0 30.0 10.8 10.1
Operating profit 7.4 8.6 5.7 1.2 22.9 9.1 8.3
Profit before taxes 5.5 7.0 3.5 -0.3 15.7 6.9 6.4
Net profit for the period 4.3 4.1 2.7 -0.8 10.2 4.3 4.0
--------------------------------------------------------------------
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 2014, except for the adoption of the new
or amended standards and interpretations.
Adoption of the amended standard IAS 19 did not result in any changes in the
accounting principles that would have affected the information presented in this
interim report.
Change in presentation of statement of cash flows
Presentation of statement of cash flows has been updated from the beginning of
2015 to better distinguish the three types of financial activities. Previously
unrealized foreign exchange impact from elimination of internal transactions was
presented separately under Adjustments. Also the cash flow from derivative
instruments was included fully in Net cash generated from operating activities.
After the change the unrealized foreign exchange impact related to the
elimination of internal transactions and cash flow from derivative instruments
are presented according to their nature. This resulted in changes between the
three financial activities.
Comparative periods have been restated and changes to previously reported
figures were disclosed in the first quarter interim report.
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 2015. 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, 2015, the book value of inventories included a provision for net
realizable value of 5.4 MEUR (4.7 MEUR at June 30, 2014 and 4.1 MEUR at December
31, 2014).
Non-recurring income and expenses included in
operating profit II II I-II I-II I-IV
MEUR 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Closure of Chinese lure manufacturing * 0.0 -0.5 -1.2 -0.5 -1.7
Other restructuring costs - - - 0.1 0.0
Other non-recurring items - - - - -0.1
-------------------------------------------------------------------------------
Total included in EBITDA and operating profit 0.0 -0.5 -1.2 -0.4 -1.8
-------------------------------------------------------------------------------
Other non-recurring impairments - - - - -
-------------------------------------------------------------------------------
Total included in operating profit 0.0 -0.5 -1.2 -0.4 -1.8
-------------------------------------------------------------------------------
* The Group classifies all exceptional income and expenses related to the
closure of China manufacturing that are not related to normal business operation
as non-recurring, primarily consisting of write-offs and one-off costs related
to restructuring.
Commitments Jun 30 Jun 30 Dec 31
MEUR 2015 2014 2014
-----------------------------------------------------------------------
Minimum future lease payments on operating leases 15.5 16.5 16.4
Sales Other
Related party transactions and other Pur- Rents expen- Recei- Paya-
MEUR income chases paid ses vables bles
-------------------------------------------------------------------------------
I-II 2015
Joint venture Shimano Normark
UK Ltd 1.9 - - 0.0 - -
Associated company Lanimo Oü 0.0 0.1 - - 0.0 -
Entity with significant
influence over the Group* - - 0.1 0.1 0.0 -
Management - - 0.1 0.0 - 0.0
I-II 2014
Joint venture Shimano Normark
UK Ltd 1.6 - - 0.0 0.5 -
Associated company Lanimo Oü - - - - 0.0 -
Entity with significant
influence over the Group* - - 0.1 0.1 0.0 -
Management - - 0.1 - 0.0 0.0
I-IV 2014
Joint venture Shimano Normark
UK Ltd 3.2 - - - 0.1 0.0
Associated company Lanimo Oü 0.0 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.
Jun 30 Jun 30 Dec 31
Open derivatives 2015 2014 2014
--------------------------------------------
Nominal Fair Normal Fair Nominal Fair
MEUR Value Value Value Value Value Value
-------------------------------------------------------------------------
Operative hedges
Foreign currency derivatives 34.9 1.8 45.1 0.1 44.1 3.8
Monetary hedges
Foreign currency derivatives 57.9 1.3 39.7 -0.8 30.6 -0.7
Interest rate derivatives 103.3 1.6 69.6 -1.2 101.4 -0.7
-------------------------------------------------------------------------
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 2014.
Changes in unrealized mark-to-market valuations for operative foreign
currency derivatives
II II I-II I-II I-IV
2015 2014 2015 2014 2014
-------------------------------------------------------
Included in operating profit -1.6 -0.6 -2.0 0.1 3.8
-------------------------------------------------------
Operative foreign currency derivatives that are marked-to-market on reporting
date cause timing differences between the changes in derivatives' 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 changes in unrealized valuations include both valuations
of derivatives that will realize in the future periods as well as reversal of
previously accumulated value of derivatives that realized in the accounting
period.
Fair values of
financial
instruments Jun 30 Jun 30 Dec 31
2015 2014 2014
---------------------------------------------------------------------------
Carrying Fair Carrying Fair Carrying Fair
MEUR value value value value value value
---------------------------------------------------------------------------
Assets
Available-for-
sale financial
assets (level
3) 0.3 0.3 0.3 0.3 0.3 0.3
Derivatives
(level 2) 6.7 6.7 1.2 1.2 5.4 5.4
---------------------------------------------------------------------------
Total 7.0 7.0 1.4 1.4 5.7 5.7
Liabilities
Non-current
interest-
bearing
liabilities
(excl.
derivatives) 73.7 74.1 40.1 40.6 72.3 72.7
Derivatives
(level 2) 2.0 2.0 3.1 3.1 3.1 3.1
---------------------------------------------------------------------------
Total 75.7 76.1 43.3 43.7 75.3 75.8
Fair values of other financial instruments do not differ
materially from their carrying value.
Shares and share capital
On March 27, 2015 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.
In the beginning of the financial year, the share capital fully paid and
reported in the Trade Register was 3.6 MEUR and the total number of shares was
39 000 000. The average number of shares during the financial year was
39 000 000.
During the financial year, the company bought back a total of 32 864 own shares.
At the end of the period the company held 639 671 own shares, representing 1.6%
of the total number of shares and the total voting rights. The amount of
outstanding shares at the end of the period was
38 360 329. The average share price of all repurchased own shares held by the
company was 4.87 EUR.
During the reporting period, 1 483 777 shares (425 993) were traded at a high of
5.55 EUR and a low of 4.72 EUR. The closing share price at the end of the period
was 5.31 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 its risk management practices and internal controls. Detailed updated
descriptions of the Group's strategic, operative and financial risks as well as
risk management principles are included in the Financial Statements 2014.
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. 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 weather risk is diversified
due to the wide geographical footprint of the Group.
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 uncertainties in future demand as well as the length of the
Group's supply chain increases the challenges in supply chain management. Delays
in shipments from internal or external suppliers or unexpected changes in
customer demand upwards or downwards may lead to shortages and lost sales or
excess inventories and subsequent clearance sales with lower margins.
The Group rearranged its main credit facilities in September 2014. These credit
facilities include some profitability, net debt and equity related financial
covenants, which are actively monitored. The Group's liquidity and refinancing
risks are well under control.
The fishing tackle business has traditionally not been strongly influenced by
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, sudden fluctuations in foreign
exchange rates and governmental austerity measures may temporarily affect
consumer spending. However, the underlying consumer demand has historically
proven to be fairly solid. Political tensions, such as the conflict between
Russia and Ukraine, may have negative effects on the Group's business. The
development in geopolitical situation is followed closely by the Group.
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 as well as financial
assets and liabilities, 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 operative currency
hedging agreements have an impact on the Group's reported operating profit. Some
of Group's currency positions are not possible or feasible to be hedged, and
therefore may have impact on the Group's net result. 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, except in Russia were uncertainties have increased.
[HUG#1940499]
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