2015-02-13 07:30:00 CET
2015-02-13 07:31:00 CET
REGULATED INFORMATION
Rapala VMC - Financial Statement Release
RAPALA VMC CORPORATION'S ANNUAL ACCOUNTS 2014: STRONG CASH FLOW, WHILE CHALLENGES WITH SALES AND PROFITABILITY
Rapala VMC Corporation
Financial Statement Release
February 13, 2015 at 8:30 a.m.
RAPALA VMC CORPORATION'S ANNUAL ACCOUNTS 2014: STRONG CASH FLOW, WHILE
CHALLENGES WITH SALES AND PROFITABILITY
October-December in brief:
* Net sales were 61.5 MEUR, down 3% from previous year (63.3). With comparable
exchange rates sales was at last year's level.
* Operating profit was 1.2 MEUR (1.5). Comparable operating profit was -0.2
MEUR (2.7).
* Cash flow from operations was 4.6 MEUR (0.6).
* Earnings per share was -0.01 EUR (0.08).
January-December in brief:
* Net sales were 273.2 MEUR, down 5% from previous year (286.6). With
comparable exchange rates sales were at last year's level.
* Operating profit was 22.9 MEUR (26.1). Comparable operating profit was 20.9
MEUR (27.1).
* Cash flow from operations was 21.6 MEUR (15.3).
* Earnings per share was 0.24 EUR (0.32).
* Outlook for 2015: 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.
* Dividend proposal 0.20 EUR (0.24 EUR) per share, 83% of earnings per share.
President and CEO Jorma Kasslin: "Year 2014 has been challenging and development
of our business was mixed. In several markets in Europe, Asia and North America
there is good momentum and sales have developed well. At the same time some of
our biggest markets, such as Russia, are suffering a lot from the economic and
political uncertainties. Here in Finland lack of proper winter weathers has hurt
our winter sports business this year.
This year we closed down our manufacturing operations in China and put full
effort on ramping up the operations in Batam, Indonesia. This project had a
major negative impact to our profitability this year. We expect a major
improvement of our Batam operations in 2015, following the development of the
fourth quarter.
Despite several challenges we generated strong operative cash flow showing the
strength of the Group. Apart from uncertainties concerning Russia, outlook for
2015 looks cautiously positive."
Key figures
-------------------------------------------------------------------------------
IV IV change I-IV I-IV change
MEUR 2014 2013 % 2014 2013 %
-------------------------------------------------------------------------------
Net sales 61.5 63.3 -3% 273.2 286.6 -5%
Operating profit 1.2 1.5 -20% 22.9 26.1 -12%
% of net sales 1.9% 2.4% 8.4% 9.1%
Comparable operating
profit * -0.2 2.7 -107% 20.9 27.1 -23%
% of net sales -0.3% 4.3% 7.6% 9.5%
Cash flow from operations 4.6 0.6 +667% 21.6 15.3 +41%
Gearing % 73.2% 71.2% 73.2% 71.2%
EPS, EUR -0.01 0.08 -113% 0.24 0.32 -25%
-------------------------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of operative
currency derivatives.
Market environment
As the Rapala Group's direct distribution operations expand over 35 countries
all around the world, the market conditions varied between different regions
throughout the year. While many countries in North America, Europe and Asia
showed positive economic development, in several markets the overall market
conditions remained challenging with ongoing economic, political and overall
uncertainties depressing consumer demand and retailers' purchasing behaviour.
Similarly weathers had mixed impact on the Group's business, supporting sales in
Western Europe and winter businesses in North America, but simultaneously
hurting the winter sports sales in Finland. Big and sudden changes in currency
exchange rates had impact on the Group's business also in 2014.
Regardless of the turbulent business environment the Group's underlying business
was stable, as comparable sales were at last year's level and cash flow and
balance sheet remained healthy.
Business Review October-December 2014
The Group's net sales for the fourth quarter were down 3%. Changes in
translation exchange rates decreased sales by approximately 1.3 MEUR. With
comparable translation exchange rates quarterly net sales were at last year's
level.
North America
In the USA economic indicators are positive. The general economy and consumer
sentiment improved throughout the year and fishing tackle retailers are opening
new shops. Low fuel prices have historically supported the fishing tackle sales
in the USA. Despite the generally positive economic development, the Group's
sales in North America were down 8% with comparable exchange rates impacted by
earlier timing of the ice fishing sales and customers' year-end buying
behaviour, which shifted some sales to 2015.
Nordic
With comparable exchange rates Nordic net sales were 27% below last year level.
Quarterly sales were negatively impacted by major decline in winter sports
equipment sales in Finland following the poor winter conditions in two
consecutive seasons and lower sales in Sweden due to loss of a hunting
dealership.
Rest of Europe
With comparable rates net sales of Rest of Europe were up 21%. Sales in Russia
and Ukraine increased in local currency even though they continued to suffer
from the political and economic unrest, as fear of inflation is driving consumer
demand. Strong weakening of Russian Ruble and Ukrainian Hryvnia had a major
negative impact on sales in the Rest of Europe. Sales continued to develop well
in many Rest of European countries, particularly in France and Spain.
Rest of the World
With comparable rates sales were 18% above last year's level. Rest of the World
market developed overall positively, with uncertainties in some markets such as
Brazil, Thailand and Indonesia. Sales volumes grew in almost all Asian and Latin
countries as well as in South Africa and Australia.
External Net Sales by Area
-------------------------------------
IV IV change
MEUR 2014 2013 %
-------------------------------------
North America 24.7 25.3 -2%
Nordic 9.7 13.3 -27%
Rest of Europe 17.3 16.5 +5%
Rest of the World 9.8 8.3 +18%
Total 61.5 63.3 -3%
-------------------------------------
Business Review January-December 2014
The Group's net sales for the year were down 5%. Changes in translation exchange
rates explain approximately 12.2 MEUR of the decline in net sales. With
comparable translation exchange rates full year net sales were at last year's
level.
North America
During 2014 US economy recovered and economic indicators improved throughout the
year. The Group's position with retailers was good. Currencies reduced North
American sales compared to last year as with comparable rates net sales were
down only 1%. During the first half of the year extreme winter weather, late
start of spring and rainy summer delayed the sales of summer fishing products,
but conversely supported the sales of ice fishing products in 2013/2014 winter
season as well as pre-sales for 2014/2015 winter season. Fourth quarter sales
were impacted negatively by customers' year-end buying behaviour shifting some
sales to 2015.
Nordic
Nordic sales were down 8% with comparable rates. Nordic countries suffered from
two consecutive late and mild winters, which impacted negatively the sales of
winter sports and ice fishing products especially in Finland. Sales in Norway
have developed positively whereas fishing tackle sales in other Scandinavian
countries have been more difficult. Hunting sales were good except in Sweden due
to loss of a hunting dealership. Sales were positively impacted by Marttiini
kitchen knife sales in Finland and foreign exchange impact from currency
nominated accounts receivable.
Rest of Europe
Rest of Europe sales were up 2% with comparable rates despite political and
economic instability in Russia and Ukraine that had adverse impact on sales in
these countries as dramatic devaluation of the currencies increased the prices
of imported goods. Currencies, mainly Rouble and Hryvnia, had a clear negative
impact on sales in the Rest of Europe compared to last year. Excluding Russian
and Ukrainian sales the local currency sales of Rest of Europe improved 5 % from
last year supported by growth in France, Poland, UK as well as Spain and Hungary
where economies have improved.
Rest of the World
Despite volume growth, net sales declined due to currency impact, most of all
South African Rand and Australian dollar. Local currency sales increased 6% and
developed well in South Africa, Australia as well as all Asian and Latin
American countries, while reduced in Japan and Brazil. Rest of the World sales
were supported above all by Chilean distribution company established in 2012,
growth in South Africa and improved export sales of Sufix fishing lines.
External Net Sales by Area
-------------------------------------
I-IV I-IV change
MEUR 2014 2013 %
-------------------------------------
North America 86.1 88.4 -3%
Nordic 54.9 60.8 -10%
Rest of Europe 98.7 103.6 -5%
Rest of the World 33.5 33.8 -1%
Total 273.2 286.6 -5%
-------------------------------------
Financial Results and Profitability
Comparable (excluding non-recurring items and mark-to-market valuations of
operative currency derivatives) and reported operating profit decreased from
last year for the fourth quarter and full year. Changes in translation exchange
rates decreased quarterly operating profit by approximately -0.7 MEUR and full
year operating profit by approximately -1.3 MEUR. With comparable translation
exchange rates comparable operating profit was 2.2 MEUR behind last year's level
for the quarter and 4.9 MEUR behind last year for the full year.
Comparable operating profit margin was -0.3% (4.3) for the quarter and 7.6%
(9.5) for the full year. Decline in profitability was driven by weaker sales and
consequently lower gross margin. Development in Russia and Ukraine had
significant negative impact on the Group's profitability throughout the year.
Closing down manufacturing operations in China and ramp-up of the new factory in
Batam was also heavily burdening the Group's full year profitability, while in
fourth quarter the results of this operation improved from last year. Last year
the Group's fourth quarter profitability was supported by release of accruals.
Respectively reported operating profit margin was 1.9% (2.4) for the quarter and
8.4% (9.1) for the full year. Reported operating profit included net loss of
non-recurring items of 0.9 MEUR (0.9) for the quarter and 1.8 MEUR (1.3) for the
full year related mainly to direct one-off costs on closing down of the
manufacturing operations in China. Mark-to-market valuation of the Group's
operative currency derivative position is having significant positive impact on
reported operating profit resulting in 2.3 MEUR gain (0.3 loss) for the quarter,
and 3.8 MEUR gain (0.3 gain) for the full year, led by movements in US Dollar,
Russian Rouble and Indonesian Rupiah.
Total financial (net) expenses were 1.5 MEUR (0.3) for the quarter and 7.2 MEUR
(5.5) for the full year. Financial items were negatively impacted by the (net)
foreign exchange expenses of 0.6 MEUR (0.6 gain) for the quarter and 3.4 MEUR
(1.7) for the full year. Net interest and other financing expenses were at last
year's level at 0.8 MEUR (0.9) for the quarter and 3.8 MEUR (3.7) for the full
year.
Net profit decreased from last year for the quarter and the full year. Earnings
per share were -0.01 EUR (0.08) for the quarter and 0.24 EUR (0.32) for the full
year. Full year net profit includes a positive tax impact of 1.0 MEUR relating
to past years' tax assessments. The effective tax rate was increased by loss
making units. The share of non-controlling interest in net profit totalled -0.6
MEUR (0.0) for the quarter and 1.0 MEUR (3.6) for the full year. Full year
decline was impacted by the development in Russia and Ukraine.
Key figures
----------------------------------------------------------------
IV IV change I-IV I-IV change
MEUR 2014 2013 % 2014 2013 %
----------------------------------------------------------------
Net sales 61.5 63.3 -3% 273.2 286.6 -5%
Operating profit 1.2 1.5 -20% 22.9 26.1 -12%
Comparable operating
profit * -0.2 2.7 -107% 20.9 27.1 -23%
Net profit -0.8 2.9 -128% 10.2 16.1 -37%
----------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of operative
currency derivatives.
Segment Review
Group Products
Fourth quarter sales of Group Products decreased 5% from last year with
comparable rates burdened by lower sales of winter sports equipment. Excluding
winter sports sales decline, quarterly sales were at last year's level. Full
year sales were burdened by foreign exchange rates and with comparable rates net
sales were at last year's level. Full year sales were hurt by lower sales of
winter fishing and winter sports products in Europe due to mild winter
2013/2014 and late start of 2014/2015 winter season.
Operating profit for Group Products was below last year for the quarter burdened
particularly by low winter sports sales. Also full year profitability decreased
from last year. Profitability was impacted by lower sales, especially in winter
sports, and losses relating to closing down of the manufacturing unit in China
and ramp-up of the Batam unit.
Third Party Products
Net sales declined due to currency impact, especially weakening of Russian
rouble. With comparable rates fourth quarter sales of Third Party Products
increased from last year by 7%. Full year sales of Third Party Products almost
at last year level assuming comparable rates. Quarterly sales increase resulted
from good last quarter sales in France and Russia, where sales increased in
local currency. Full year sales were negatively impacted by suppliers' delivery
problems, economical instabilities in some regions, loss of a hunting dealership
in Sweden and weak winter sport sales, which also impacted fourth quarter sales.
Operating profit for Third Party Products was below last year for the quarter
but above for the full year supported by favourable exchange rates on purchases
and UK joint venture result.
Reported profitability of both Group and Third Party Products are positively
impacted by the mark-to-market valuation of operative currency derivatives.
Net Sales by Segment
-----------------------------------------------------------
IV IV change I-IV I-IV change
MEUR 2014 2013 % 2014 2013 %
-----------------------------------------------------------
Group Products 40.0 41.5 -4% 171.3 176.3 -3%
Third Party Products 21.5 21.8 -1% 102.0 110.5 -8%
Eliminations 0.0 0.0 0.0 -0.1
Total 61.5 63.3 -3% 273.2 286.6 -5%
-----------------------------------------------------------
Operating profit by Segment
-----------------------------------------------------------
IV IV change I-IV I-IV change
MEUR 2014 2013 % 2014 2013 %
-----------------------------------------------------------
Group Products 1.7 2.0 -15% 15.0 19.4 -23%
Third Party Products -0.6 -0.5 -20% 7.9 6.7 +18%
Total 1.2 1.5 -20% 22.9 26.1 -12%
-----------------------------------------------------------
Financial position
Cash flow from operations was strong for the quarter and full year cash flow
increased notably from last year's levels. Full year improvement was driven by
positive development in the net working capital as especially receivables
released more cash in the fourth quarter.
Net change in working capital amounted to 2.5 MEUR (-2.8) for the quarter and
1.5 MEUR (-10.8) for the full year. Inventories increased by 3.5 MEUR from last
December amounting to 113.8 MEUR (110.3). Currency impact decreased inventories
by some 1.0 MEUR. Increase in inventories was driven primarily by lower than
expected sales, transfer of production from China to Batam and timing of
incoming Third Party Products.
Net cash used in investing activities was 1.6 MEUR (3.3) for the quarter and
8.0 MEUR (10.8) for the full year. Normal operative capital expenditure was 2.7
MEUR (3.8 MEUR) for the fourth quarter and 8.5 MEUR (10.7 MEUR) for the full
year. Fourth quarter investing activities included 1.0 MEUR (0.5 MEUR) of
proceeds received related to disposal of the gift business.
Liquidity position of the Group was good. Following an increased focus on cash
management, cash and cash equivalents reduced to 12.2 MEUR (16.9) and undrawn
committed long-term credit facilities amounted to 78.4 MEUR at the end of the
period. Net interest-bearing debt and gearing increased from last year. Equity-
to-assets ratio was slightly below last year's level. The Group fulfils all
financial covenants related to its credit facilities.
Key figures
-------------------------------------------------------------------------------
IV IV change I-IV I-IV change
MEUR 2014 2013 % 2014 2013 %
-------------------------------------------------------------------------------
Cash flow from operations 4.6 0.6 +667% 21.6 15.3 +41%
Net interest-bearing debt at end of
period 99.9 96.3 +4% 99.9 96.3 +4%
Gearing % 73.2% 71.2% 73.2% 71.2%
Equity-to-assets ratio at end of period,
% 44.1% 44.5% 44.1% 44.5%
-------------------------------------------------------------------------------
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 year strategy implementation continued in various areas.
Ramp-up of the Group's new ice drill manufacturing unit in Korpilahti, Finland,
was finalized in 2014 and the unit is producing and shipping Mora Ice and Rapala
UR branded ice drills and related accessories.
The project to cease own manufacturing in China and transfer the operations to
Batam, Indonesia, reached its peak in 2014. Chinese factory closed down its
operations in second quarter and exit process continued until end of the year.
The new lure manufacturing unit in Batam is intensively focusing on increasing
the operative efficiencies and product development efforts, in order to
capitalize the benefits of streamlined production processes and cheaper
production costs.
Initiatives to streamline the Group's supply chain continued during 2014,
focusing on consolidating purchasing and logistics processes in selected third
party products in Europe and setting up a new logistics hub in Asia. The Group-
level supply chain organization was reorganized and strengthened by appointing
Group Supply Chain and Sourcing Director. Reducing the amount of inventories,
largely driven by Group's business model, is high on the agenda of the Group.
In September, the Group rearranged its loan and credit facilities in order to
decrease interest rate margins, diversify the maturity profile and strengthen
the Group's capabilities to finance its strategy.
During third quarter the Group appointed management resources to develop the
distribution business in hunting and outdoor distribution categories as the
Group is putting more focus on seeking growth in these areas.
Discussions and negotiations regarding acquisitions and business combinations
continued throughout 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.
New products for 2015 season were successfully presented globally in trade shows
during summer 2014. Development process of next season's novelties proceeded
according to plans and a new Rapala lure innovation will be first introduced to
the US market already early 2015. In addition to product development the Group
has put focus on developing the manufacturing processes, in order to further
improve efficiency and quality.
Organization and Personnel
Average number of personnel for the fourth quarter was 2 694 (2 387) and 2 716
(2 428) for the full year, majority of the increase relating to expansion of
lure manufacturing operations in Batam and reduction of outsourcing in China.
Batam unit is currently employing 1 200 people. At the end of December, the
number of personnel was 2 822 (2 590).
Short-term Outlook and Risks
After challenging year 2014, the outlook for year 2015 is cautiously positive,
although the uncertainties concerning development in Russia and Ukraine are
shadowing the visibility.
In several markets the general economic situation as well as retail and consumer
sentiment has improved, supporting the demand of Group's products. For example
in the biggest market USA start of year 2015 has been strong.
After the difficulties of transferring manufacturing from China to Batam, a
clear improvement is expected from this unit, supporting Group's profitability
improvement in 2015.
Actions to reduce the Group's inventory levels may lower margins, but should
support the cash flow.
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.
Proposal for profit distribution
The Board of Directors proposes to the Annual General Meeting that a dividend of
0.20 EUR (0.24 EUR) per share is distributed from the Group's distributable
equity and any remaining distributable funds are allocated to retained earnings.
At December 31, 2014 the distributable equity totaled to 16.1 MEUR.
No material changes have taken place in the Group's financial position after the
end of the financial year. The Group's liquidity is good and the view of the
Board of Directors is that the distribution of the proposed dividend will not
undermine this liquidity.
Financial Statements and Annual General Meeting
Financial Statements for 2014 and Corporate Governance Statement will be
published in the beginning of week 10. Annual General Meeting is planned to be
held on March 27, 2015.
First quarter interim report 2015 will be published on May 5, 2015.
Helsinki, February 13, 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 40 700 1344
Olli Aho, Investor Relations, +31 653 140 818
A conference call on the quarter result will be arranged today at 14:00 p.m.
Finnish time (13:00 p.m. CET). Please dial +44 (0) 20 3367 9433 or
+1 917 286 8056 or +358 (0) 9 2310 1675 (pin code: 901066#) 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: 7708155). Financial information and teleconference replay facility are
available at www.rapalavmc.com.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME IV IV I-IV I-IV
MEUR 2014 2013 2014 2013
--------------------------------------------------------------------------
Net sales 61.5 63.3 273.2 286.6
Other operating income 0.4 0.4 1.0 0.8
Materials and services 30.2 30.1 128.1 134.4
Personnel expenses 16.0 15.5 65.6 64.0
Other costs and expenses 12.5 14.2 50.8 54.9
Share of results in associates and joint ventures -0.1 -0.2 0.2 -0.5
------------------------
EBITDA 3.0 3.7 30.0 33.6
Depreciation, amortization and impairments 1.9 2.2 7.1 7.5
------------------------
Operating profit (EBIT) 1.2 1.5 22.9 26.1
Financial income and expenses 1.5 0.3 7.2 5.5
------------------------
Profit before taxes -0.3 1.2 15.7 20.6
Income taxes 0.6 -1.7 5.5 4.6
------------------------
Net profit for the period -0.8 2.9 10.2 16.1
------------------------
Attributable to:
Equity holders of the company -0.3 3.0 9.2 12.5
Non-controlling interests -0.6 0.0 1.0 3.6
Earnings per share for profit attributable
to the equity holders of the company:
Earnings per share, EUR (diluted = non-diluted) -0.01 0.08 0.24 0.32
STATEMENT OF COMPREHENSIVE INCOME IV IV I-IV I-IV
MEUR 2014 2013 2014 2013
-----------------------------------------------------------------------
Net profit for the period -0.8 2.9 10.2 16.1
----------------------|
Other comprehensive income, net of tax |
|
Change in translation differences* -1.0 -2.5 4.7 -7.1
Gains and losses on cash flow hedges* 0.1 0.1 0.2 0.9
Gains and losses on hedges of net investments* 0.0 -2.2 0.1 -2.3
Actuarial gains (losses) on defined benefit plan -0.2 0.1 -0.2 0.1
----------------------
Total other comprehensive income, net of tax -1.0 -4.5 4.8 -8.4
----------------------
Total comprehensive income for the period -1.9 -1.6 15.1 7.7
----------------------
|
Total comprehensive income attributable to: |
|
Equity holders of the Company -0.4 -1.3 15.3 5.1
Non-controlling interests -1.5 -0.3 -0.2 2.6
|
* Item that may be reclassified subsequently to the statement of income |
STATEMENT OF FINANCIAL POSITION Dec 31 Dec 31
MEUR 2014 2013
-----------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 74.4 70.0
Property, plant and equipment 32.0 30.6
Non-current assets
Interest-bearing 3.0 3.0
Non-interest-bearing 11.5 10.1
--------------
120.8 113.7
Current assets
Inventories 113.8 110.3
Current assets
Interest-bearing 1.1 1.0
Non-interest-bearing 62.3 62.1
Cash and cash equivalents 12.2 16.9
--------------
189.4 190.3
Total assets 310.3 304.1
--------------
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders of the company 128.3 123.1
Non-controlling interests 8.2 12.0
--------------
136.5 135.1
Non-current liabilities
Interest-bearing 72.3 39.4
Non-interest-bearing 13.3 12.8
--------------
85.5 52.2
Current liabilities
Interest-bearing 43.9 77.8
Non-interest-bearing 44.2 38.9
--------------
88.2 116.7
Total equity and liabilities 310.3 304.1
--------------
IV IV I-IV I-IV
KEY FIGURES 2014 2013 2014 2013
-------------------------------------------------------------------
EBITDA margin, % 4.9% 5.8% 11.0% 11.7%
Operating profit margin, % 1.9% 2.4% 8.4% 9.1%
Return on capital employed, % 2.0% 2.6% 9.8% 11.4%
Capital employed at end of period, MEUR 236.5 231.4 236.5 231.4
Net interest-bearing debt at end of 99.9 96.3 99.9 96.3
period, MEUR
Equity-to-assets ratio at end of period, 44.1% 44.5% 44.1% 44.5%
%
Debt-to-equity ratio at end of period, % 73.2% 71.2% 73.2% 71.2%
Earnings per share, EUR (diluted = non- -0.01 0.08 0.24 0.32
diluted)
Equity per share at end of period, EUR 3.34 3.19 3.34 3.19
Average personnel for the period 2 694 2 387 2 716 2 428
-------------------------------------------------------------------
Definitions of key figures are consistent with those in the financial
statement 2013.
STATEMENT OF CASH FLOWS IV IV I-IV I-IV
MEUR 2014 2013 2014 2013
------------------------------------------------------------------------
Net profit for the period -0.8 2.9 10.2 16.1
Adjustments to net profit for the period * 3.1 0.7 17.1 18.6
Financial items and taxes paid and received -0.2 -0.3 -7.3 -8.6
Change in working capital 2.5 -2.8 1.5 -10.8
------------------------------------------------------------------------
Net cash generated from operating activities 4.6 0.6 21.6 15.3
Investments -2.7 -3.8 -8.5 -10.7
Proceeds from sales of assets 0.1 0.1 0.4 0.2
Sufix brand acquisition - - -0.8 -0.7
Acquisition of other subsidiaries, net of cash - - -0.2 0.0
Proceeds from disposal of subsidiaries, net of 1.0 0.5 1.0 0.5
cash
Change in interest-bearing receivables 0.0 -0.1 0.1 -0.1
------------------------------------------------------------------------
Net cash used in investing activities -1.6 -3.3 -8.0 -10.8
Dividends paid to parent company's - - -9.2 -8.9
shareholders
Dividends paid to non-controlling interest - - -3.6 -
Net funding -2.3 -4.4 -4.5 -16.0
Purchase of own shares -0.5 -0.2 -0.9 -1.0
------------------------------------------------------------------------
Net cash generated from financing activities -2.8 -4.6 -18.1 -25.9
Adjustments 0.0 0.1 0.3 1.5
Change in cash and cash equivalents 0.2 -7.3 -4.2 -19.8
Cash & cash equivalents at the beginning of 12.8 24.4 16.9 38.2
the period
Foreign exchange rate effect -0.9 -0.2 -0.5 -1.4
------------------------------------------------------------------------
Cash and cash equivalents at the end of the 12.2 16.9 12.2 16.9
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, 2013 3.6 16.7 -2.3 -4.1 4.9 -3.4 112.8 9.4 137.7
-------------------------------------------------------------------------------
Comprehensive
income * - - 0.9 -8.4 - - 12.6 2.6 7.7
Purchase of own
shares - - - - - -1.0 - - -1.0
Dividends - - - - - - -8.9 - -8.9
Share based
payment - - - - - - -0.3 - -0.3
Other changes - - - - - - 0.0 0.0 0.0
-------------------------------------------------------------------------------
Equity on Dec
31, 2013 3.6 16.7 -1.4 -12.5 4.9 -4.4 116.2 12.0 135.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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 * - - 0.2 6.1 - - 9.0 -0.2 15.1
Purchase of own
shares - - - - - -0.9 - - -0.9
Dividends - - - - - - -9.2 -3.6 -12.8
-------------------------------------------------------------------------------
Equity on Dec
31, 2014 3.6 16.7 -1.1 -6.5 4.9 -5.2 116.0 8.2 136.5
-------------------------------------------------------------------------------
* For the period, (net
of tax)
SEGMENT INFORMATION*
MEUR IV IV I-IV I-IV
Net Sales by Operating Segment 2014 2013 2014 2013
--------------------------------------------------------
Group Products 40.0 41.5 171.3 176.3
Third Party Products 21.5 21.8 102.0 110.5
Eliminations 0.0 0.0 0.0 -0.1
--------------------------------------------------------
Total 61.5 63.3 273.2 286.6
Operating Profit by Operating Segment
---------------------------------------------------------
Group Products 1.7 2.0 15.0 19.4
Third Party Products -0.6 -0.5 7.9 6.7
--------------------------------------------------------
Total 1.2 1.5 22.9 26.1
Dec 31 Dec 31
Assets by Operating Segment 2014 2013
--------------------------------------------------------
Group Products 230.4 215.7
Third Party Products 63.6 67.4
--------------------------------------------------------
Non-interest-bearing assets total 294.0 283.1
Unallocated interest-bearing assets 16.3 21.0
--------------------------------------------------------
Total assets 310.3 304.1
* Segments are consistent with those in the financial statements 2013. Segments
are described in detail in note 2 of the financial statements 2013.
External Net Sales by Area IV IV I-IV I-IV
MEUR 2014 2013 2014 2013
---------------------------------------------------
North America 24.7 25.3 86.1 88.4
Nordic 9.7 13.3 54.9 60.8
Rest of Europe 17.3 16.5 98.7 103.6
Rest of the world 9.8 8.3 33.5 33.8
---------------------------------------------------
Total 61.5 63.3 273.2 286.6
KEY FIGURES BY I II III IV I-IV I II III IV I-IV
QUARTERS
MEUR 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014
-------------------------------------------------------------------------------
Net sales 75.3 81.4 66.6 63.3 286.6 66.2 77.7 67.8 61.5 273.2
EBITDA 10.3 15.2 4.5 3.7 33.6 9.1 10.4 7.5 3.0 30.0
Operating profit 8.6 13.4 2.6 1.5 26.1 7.4 8.6 5.7 1.2 22.9
Profit before 8.3 11.6 -0.4 1.2 20.6 5.5 7.0 3.5 -0.3 15.7
taxes
Net profit for the 6.6 7.8 -1.2 2.9 16.1 4.3 4.1 2.7 -0.8 10.2
period
-------------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT AND FINANCIAL POSITION
The financial statement figures included in this release are unaudited.
This report has been prepared in accordance with IAS 34. Accounting principles
adopted in the preparation of this report are consistent with those used in the
preparation of the Financial Statements 2013, except for the adoption of the new
or amended standards and interpretations.
Adoption of the revised standards IFRS 10, IFRS 11, IFRS 12 as well as the
amended standards IAS 36 and IAS 39, IAS 19 and interpretation IFRIC 21 did not
result in any changes in the accounting principles that would have affected the
information presented in this 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-December 2014. Material events after the end of the interim period, if
any, have been discussed in the interim review by the Board of Directors.
Inventories
On December 31, 2014, the book value of inventories included a provision for net
realizable value of 4.1 MEUR (4.5 MEUR at December 31, 2013).
Impact of business acquisitions on the consolidated financial statements
In January 2014, the Group acquired 100% of the shares and voting rights of a
French coarse fishing attractant manufacturer Mystic s.a.r.l.. The consideration
amounted to 0.2 MEUR. The closing accounts were finalized during the first
quarter and goodwill of 0.3 MEUR was recognized. The acquisition does not have
material impact on the result or financial position of the Group.
Non-recurring income and expenses included in
operating profit IV IV I-IV I-IV
MEUR 2014 2013 2014 2013
-------------------------------------------------------------------------------
Closure of Chinese lure manufacturing * -0.8 -0.8 -1.7 -0.8
Other restructuring costs 0.0 -0.1 0.0 -0.2
Other non-recurring items -0.1 -0.1 -0.1 -0.1
-------------------------------------------------------------------------------
Total included in EBITDA and operating profit -0.9 -0.9 -1.8 -1.1
-------------------------------------------------------------------------------
Other non-recurring impairments - - - -0.2
-------------------------------------------------------------------------------
Total included in operating profit -0.9 -0.9 -1.8 -1.3
-------------------------------------------------------------------------------
* 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 Dec 31 Dec 31
MEUR 2014 2013
------------------------------------------------------------------
Minimum future lease payments on operating leases 16.4 16.8
Sales Other
Related party transactions and other Pur- Rents expen- Recei- Paya-
MEUR income chases paid ses vables bles
-------------------------------------------------------------------------------
I-IV 2014
Joint venture Shimano Normark
UK Ltd 3.2 - - 0.0 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
I-IV 2013
Joint venture Shimano Normark
UK Ltd 3.0 - - - 0.1 -
Associated company Lanimo Oü 0.0 0.1 - - 0.0 -
Entity with significant
influence over the Group* - - 0.2 0.1 0.0 -
Management - - 0.3 - - 0.0
-------------------------------------------------------------------------------
* Lease agreement for the real estate for the consolidated operations in
France and a service fee.
Dec 31 Dec 31
Open derivatives 2014 2013
--------------------------------------------------
Nominal Fair Nominal Fair
MEUR Value Value Value Value
-------------------------------------------------------------------------------
Operative hedges
Foreign currency derivatives 44.1 3.8 49.4 0.0
Monetary hedges
Foreign currency derivatives 30.6 -0.7 24.6 0.1
Interest rate derivatives 101.4 -0.7 69.5 -2.0
-------------------------------------------------------------------------------
The changes in the fair values of derivatives that are designated as hedging
instruments but do not qualify for hedge accounting are recognized based on
their nature either in operative costs, if the hedged item is an operative
transaction, or in financial income and expenses if the hedged item is a
monetary transaction. Some derivatives designated to hedge monetary items are
accounted for according to hedge accounting. Financial risks and hedging
principles are described in detail in the financial statements 2013 and will
be updated in financial statements 2014.
Changes in unrealized mark-to-market valuations for operative foreign currency
derivatives
IV IV I-IV I-IV
2014 2013 2014 2013
-------------------------------------------------------------------------------
Included in operating profit 2.3 -0.3 3.8 0.3
-------------------------------------------------------------------------------
Operative foreign currency derivatives that are marked-to-market on reporting
date cause timing differences between the changes in derivative's fair values
and hedged operative transactions. Changes in fair values for derivatives
designated to hedge future cash flow but are not accounted for according to
the principles of hedge accounting impact the Group's operating profit for the
accounting period. The underlying foreign currency transactions will realize
in future periods.
Fair values of financial
instruments Dec 31 Dec 31
2014 2013
-------------------------------------------------------------------------------
MEUR Carrying value Fair value Carrying value Fair value
-------------------------------------------------------------------------------
Financial assets
Loans and receivables 71.5 71.5 77.8 77.8
Available-for-sale
financial assets (level 3) 0.3 0.3 0.3 0.3
Derivatives (level 2) 5.4 5.4 0.8 0.8
-------------------------------------------------------------------------------
Total financial assets 77.2 77.2 78.9 78.9
Other assets 233.0 233.0 225.2 225.2
-------------------------------------------------------------------------------
Total assets 310.3 310.3 304.1 304.1
Financial liabilities
Financial liabilities at
amortized cost 140.6 141.1 138.1 138.7
Derivatives (level 2) 3.1 3.1 2.8 2.8
-------------------------------------------------------------------------------
Total financial
liabilities 143.7 144.1 141.0 141.5
Other liabilities 30.0 30.0 27.9 27.9
-------------------------------------------------------------------------------
Total liabilities 173.7 174.2 168.9 169.4
Shares and share capital
On April 10, 2014 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
39 468 449. On April 10, 2014 the Board decided to cancel 468 449 treasury
shares. The cancellation did not have an effect on the share capital. The
cancellation was registered with the Trade Register on April 28, 2014. After the
cancellation, the number of Rapala VMC Corporation's shares is 39 000 000. The
average number of shares during the financial year was 39 151 030.
During the financial year, the company bought back a total of 167 948 own
shares. At the end of the year the company held 606 807 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 financial year was 38 393 193. The average
share price of all repurchased own shares held by the company was 4.85 EUR.
During the financial year, 1 065 880 shares (3 122 353) were traded at a high of
6.00 EUR and a low of 4.69 EUR. The closing share price at the end of the period
was 4.71 EUR.
Short term risks and uncertainties
The objective of Rapala VMC Corporation's risk management is to support the
implementation of the Group's strategy and execution of business targets. The
importance of risk management has increased as Rapala VMC Corporation has
continued to expand its operations. Accordingly, Group management continuously
develops it's risk management practices and internal controls. Detailed updated
descriptions of the Group's strategic, operative and financial risks as well as
risk management principles will be 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 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. 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 transfer of lure manufacturing operations from China to Batam have increased
certain production cost and supply chain risks temporarily, while this risk is
now significantly reduced as Chinese operations have ceased and transfer project
is finalized .
The Group rearranged its main credit facilities in September 2014. These credit
facilities include some financial covenants, which are actively monitored. The
Group's liquidity and refinancing risks are well under control.
The fishing tackle business has not traditionally 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 effects on the Group's business negatively and the
Group is following this development closely.
The truly global nature of the Group's sales and operations spreads the market
risks caused by the current uncertainties in the global economy. The Group is
cautiously monitoring the development both in the global macro economy as well
as in the various local markets it operates in.
Cash collection and credit risk management is high on the agenda of local
management and this may affect sales to some customers. Quality of the accounts
receivables is monitored closely and write-downs are initiated if needed.
The Group's sales and profitability are impacted by the changes in foreign
exchange rates and the risks are monitored actively. To fix the exchange rates
of future foreign exchange denominated sales and purchases, the Group has
entered into several currency hedging agreements according to the foreign
exchange risk management policy set by the Board of Directors. As the Group is
not applying hedge accounting in accordance to IAS 39, the unrealized mark-to-
market valuations of currency hedging agreements have an impact on the Group's
reported operating profit. The Group is closely monitoring market development as
well as its cost structure and considering possibility and feasibility of price
increases, hedging actions and cost rationalization.
No significant changes are identified in the Group's strategic risks or business
environment, except in Russia were uncertainties have increased.
[HUG#1894131]
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