2011-02-08 08:00:00 CET
2011-02-08 08:00:07 CET
REGULATED INFORMATION
Marimekko - Financial Statement Release
MARIMEKKO CORPORATION'S FINANCIAL STATEMENT BULLETIN, 1 JANUARY - 31 DECEMBER 2010
Marimekko Corporation, Financial statement bulletin, 8 February 2011 at 9 a.m.
MARIMEKKO CORPORATION'S FINANCIAL STATEMENT BULLETIN, 1 January - 31 December
2010
In 2010, the Marimekko Group's net sales increased slightly; operating profit
improved significantly. Net sales rose by 1.1% to EUR 73.3 million (EUR 72.5
million). Operating profit grew by 29.9% to EUR 8.2 million (EUR 6.3 million).
Operating profit for 2009 included a non-recurring expense of EUR 0.5 million
related to personnel reductions. Operating profit excluding non-recurring items
stood at EUR 8.2 million (EUR 6.8 million). Profit after taxes for the
financial year was EUR 6.1 million (EUR 4.7 million) and earnings per share
were EUR 0.76 (EUR 0.59). The Board of Directors will propose to the Annual
General Meeting that a dividend of EUR 0.55 (EUR 0.45) per share be paid for
2010.
In 2011, Marimekko will continue its substantial investments in international
growth. Net sales for 2011 are estimated to grow by roughly 5-10%, but
operating profit is forecast to decline by some 40-60% compared with the
previous year. The estimated decline in operating profit is due to the measures
and considerable investments planned for 2011 in internationalisation,
particularly in the United States, and in developing business operations and
the distribution network. With these measures and investments, of which many
occur predominantly during this year, the structure of Marimekko's business is
transformed and a more solid foundation for long term growth and improved
profitability is laid. Moreover, increases in the costs of raw materials,
higher overall cost levels, and fewer deliveries for promotions compared with
the previous year are anticipated to have an adverse impact on earnings.
1-12/2010 1-12/2009 Change, %
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Net sales, EUR 1,000 73,297 72,473 1.1
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Operating profit, EUR 1,000 8,169 6,291 29.9
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Operating profit without non-recurring items 8,169 6,803 20.1
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Profit before taxes, EUR 1,000 8,223 6,354 29.4
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Profit for the financial year, EUR 1,000 6,072 4,701 29.2
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Earnings per share, EUR 0.76 0.59 28.8
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Equity per share, EUR 4.26 3.96 7.6
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Cash flow from operating activities, 4,559 9,941 -54.1
EUR 1,000
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Return on equity (ROE), % 18.4 14.8
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Return on investment (ROI), % 25.0 20.1
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Equity ratio, % 78.8 77.7
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Mika Ihamuotila, President and CEO:
“The year 2010 was productive for Marimekko. Net sales grew slightly, by 1.1%
to EUR 73.3 million. Profitability rose markedly: operating profit improved by
29.9% to EUR 8.2 million. The improvement in profitability was influenced by a
distinct increase in average sales margin as well as growth in wholesale sales
and royalty earnings. The rise in sales margin was partly due to the fact that
we carried out considerably fewer price-led promotions in 2010 than in the
previous year.
In the October-December period of 2010, net sales were up 6.5% on the same
period in 2009, but operating profit fell from EUR 2.4 million to EUR 2.2
million. The difference relative to the comparison period is due partly to
smaller deliveries for individual promotions. A drag was also exerted on the
fourth quarter earnings by larger investments in growth, which had been started
in the second quarter, and by higher marketing expenses for the period compared
to the same period in 2009.
Marimekko has a long-term international growth strategy. Our
internationalisation projects in 2010 were fulfilled according to plan. Four
new shops opened outside Finland: a Marimekko shop-in-shop in the Crate and
Barrel store in SoHo, New York City, a concept store in Seoul, and retail
stores of our own in Berlin, Germany and Malmö, Sweden. Product development
projects from previous years have also borne fruit, and new products, including
ceramics and glassware, are very profitable.
I believe we are now in a stage of development in which we can and should dare
to invest in future growth and in the development of our company boldly, even
if we might have to wait for the fruits of our labour for a little longer. The
present year is likely to see the biggest investments in the history of the
company to date. The machinery investment for the textile printing factory will
triple the output capacity of our printing facility. The added capacity will be
rolled out gradually; the investment will enable us to prepare for higher
demand in the future. As part of our overall strategy in the United States, our
collaboration with Crate and Barrel will be extended with the opening in spring
2011 of four new Marimekko shop-in-shops: on Madison Avenue in New York as well
as in Chicago, Los Angeles and San Francisco. Crate and Barrel plans to open a
total of 22 new Marimekko shops by the end of 2013. Our long-term goal is to
extend our distribution in the US through high-end department stores and
specialist retailers, and by opening new Marimekko stores.
Internationalisation in accordance with our strategy requires considerable -
and I believe justified - investments. The planned investments in the future
will make themselves felt in the form of a marked increase in fixed costs and
they will exert a substantial drag on earnings in 2011. Furthermore, increases
in the costs of raw materials and in particular the record price of cotton put
us under pressure to raise prices. Marimekko is advancing in my opinion
steadily and confidently in the direction we have marked out in the past few
years.
We are also celebrating an anniversary in 2011 as Marimekko will be 60 years
old in May. The anniversary year will be filled with work in every field, which
fits in splendidly with our chosen theme, with which we aim to remind everyone
of the importance of doing things together. In the course of the year there
will be a lot of different events, some of which will be full of surprises,
both in Finland and in our main market areas internationally.”
Financial calendar 2011
The Annual Report for 2010 will be published in week 12. The Annual General
Meeting will be held on Tuesday 19 April 2011 at 2:00 p.m. The following
interim reports will be published in 2011: January to March, on Tuesday 3 May
2011 at 9:00 a.m.; January to June, on Wednesday 17 August 2011 at 9:00 a.m.;
and January to September, on Thursday 10 November 2011 at 9:00 a.m.
Annual summary 2010 and releases
A summary of Marimekko's stock exchange releases published during the 2010
financial year is available on the company's website at www.marimekko.com under
Company/Investors/Financial Releases/Summary of Significant Releases. All of
the company's releases are available under Investors/Releases.
For additional information, contact:
Thomas Ekström, CFO and acting CEO, tel. +358 9 758 7261
MARIMEKKO CORPORATION
Group Communications
Piia Pakarinen
Tel. +358 9 758 7293
Fax +358 9 755 3051
E-mail: piia.pakarinen@marimekko.fi
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Principal media
Marimekko's website www.marimekko.com
Marimekko, established in 1951, is a leading Finnish textile and clothing
design company renowned for its original prints and colours. The company
designs and manufactures high-quality clothing, interior decoration textiles,
bags and other accessories. Marimekko products are sold in approximately 40
countries. Products with Marimekko designs are also manufactured under license
in various countries. In 2010, the company's net sales amounted to EUR 73.3
million, of which international sales accounted for 29.4%. The Group employs
about 390 people. The company's share is quoted on NASDAQ OMX Helsinki Ltd.
MARIMEKKO CORPORATION ‘S FINANCIAL STATEMENT BULLETIN, 1 January - 31 December
2010
MARKET SITUATION
The economic situation in Finland has continued to improve as expected and is
anticipated to further improve gradually in the early part of 2011. The outlook
for the near future is fairly good. However, production costs have risen, and
they are expected to continue to rise markedly. Although average sales prices
have increased, the rise in overall cost levels creates profitability pressures
for companies. The world economy is forecast to grow fairly well in 2011, but
the situation varies considerably between different areas and countries.
Consumer confidence in the United States is low, but economic growth is
nevertheless expected to be faster than forecast in the autumn. Huge growth in
China will continue, and the focus of the world economy will increasingly be on
the developing economies. In Asian countries, there is a danger of the economy
overheating. A strong polarization is evident in the European economy. Optimism
in Germany is at a record level, while in the crisis countries in Southern
Europe, in Portugal, Spain and Greece, consumer's' and businesses' confidence
in the economy falters seriously. The situation is worst in Greece.
(Confederation of Finnish Industries EK: Business Tendency Survey, February
2011)
Retail trade confidence indicator dropped slightly in January, but remained at
a high level. In December, the economic trend in the Finnish retail trade was
one of the strongest within the EU, and sales have continued to grow at a good
pace in the current year. (Confederation of Finnish Industries EK: Business
Confidence Indicators, January 2011) From January to December In 2010, the
value of retail sales in Finland increased by 2.9% (Statistics Finland: Retail
trade turnover 2010, December, quick estimate). In the January-December period
of 2010, retail sales of clothing (excluding sportswear) grew by 3.7% (Textile
and Fashion Industries TMA). Sales of womenswear rose by 3.7%, sales of
menswear by 5.5%, and sales of childrenswear by 0.9%. Sales of bags grew by
4.4%. From January to November 2010, exports of clothing (SITC 84) increased by
14% and imports by 9%; exports of textiles (SITC 65) decreased by 3%, while
imports grew by 15% (National Board of Customs, monthly review, August 2010).
NET SALES
Financial year 2010
In 2010, the Marimekko Group's net sales increased by 1.1% to EUR 73,297
thousand (EUR 72,473 thousand). Net sales in Finland fell by 1.8% to EUR 51,768
thousand (EUR 52,711 thousand). The fall was partly attributable to a decrease
in revenues from individual promotions. International sales rose by 8.9% to EUR
21,529 thousand (EUR 19,762 thousand). Sales grew vigorously in North America
and in the market areas referred to as “the rest of Europe” and “other
countries”. New retail stores opened during the year increased sales in these
areas. International sales represented 29.4% (27.3%) of the Group's net sales.
The breakdown of the Group's net sales by product line was as follows: clothing
36.0%, interior decoration 46.4% and bags 17.6%. Net sales by market area were:
Finland 70.6%, the other Nordic countries 9.7%, the rest of Europe 7.2%, North
America 5.2%, and other countries (Japan and other regions outside Europe and
North America) 7.3%.
4Q of 2010
In the October-December period of 2010, the Marimekko Group's net sales rose by
6.5% to EUR 22,074 thousand (EUR 20,719 thousand). In Finland, net sales
declined by 1.2% to EUR 16,342 thousand (EUR 16,538 thousand). The difference
in relation to the comparison period is due to deliveries for an individual
promotion in the corresponding period of the previous year. International sales
grew by 37.1% to EUR 5,732 thousand (EUR 4,181 thousand). Sales increased in
all markets. In North America and in the market areas referred to as “the rest
of Europe” and “other countries”, sales grew vigorously. The opening of new
retail stores contributed to the strong growth.
REVIEWS BY BUSINESS UNIT
Clothing
In 2010, net sales of clothing decreased by 3.9% to EUR 26,384 thousand (EUR
27,466 thousand). Sales in Finland and the market area referred to as "the rest
of Europe" declined, while sales in other markets increased. International
sales accounted for 24.7% of net sales of clothing.
Interior decoration
Net sales of interior decoration products increased by 4.0% to EUR 34,006
thousand (EUR 32,687 thousand). The growth came from North America and the
market areas referred to as “the rest of Europe” and “other countries”. In
Finland and the other Nordic countries, sales remained at the same level as in
the previous year. International sales accounted for 32.2% of net sales of
interior decoration products.
Bags
Net sales of bags increased by 4.8% to EUR 12,907 thousand (EUR 12,320
thousand). Sales grew in Finland, North America and the market area referred to
as “the rest of Europe”. Sales in other market areas decreased slightly.
International sales accounted for 31.4% of net sales of bags.
Sales in Finland
In 2010, Marimekko's retail sales, i.e. sales by Marimekko's own retail shops
in Finland, declined by 3.8%. The decrease was partly due to changes in sales
areas in the Helsinki shops. Wholesale sales in Finland fell by 1.2%. The
difference relative to the previous year is due to a decrease in revenues from
individual promotions. Both retail and wholesale sales in Finland were
adversely affected by the extensive price-led promotion organised in the first
quarter of 2009 in order to reduce inventories.
International sales
In 2010, the trend in Marimekko's international sales (previously “exports and
international operations”) took a marked turn for the better. Sales rose by
8.9% to EUR 21,529 thousand (EUR 19,762 thousand). In North America and in the
market areas referred to as “the rest of Europe” and “other countries”, sales
grew vigorously. New retail stores opened during the year increased sales in
these areas. The major countries for exports were Japan, Sweden, the United
States, Denmark and Germany.
In the market area referred to as “the other Nordic countries”, clothing sales
increased, while sales of interior decoration products and bags declined. Net
sales rose to EUR 7,101 thousand, which was 0.8% up on the previous year (EUR
7,042 thousand). The opening of a new company-owned retail shop in Malmö,
Sweden and the rise in the value of the Swedish krona contributed to the
increase in sales.
In the market area referred to as “the rest of Europe”, net sales rose by 9.6%
to EUR 5,284 thousand (EUR 4,821 thousand). Bag sales grew well. Sales of
interior decoration products increased and sales of clothing decreased
somewhat. The growth in net sales was partly attributable to the opening of a
new company-owned retail shop in Berlin, Germany.
In North America, net sales rose by 27.0% to EUR 3,814 thousand (EUR 3,003
thousand). Sales of interior decoration products and bags grew extremely
vigorously; clothing sales increased somewhat. Initial inventory purchases and
sales by a new shop-in-shop in the United States and an increase in royalty
earnings accounted for a significant share of the growth.
In the market area referred to as “other countries”, net sales rose by 8.9% to
EUR 5,330 thousand (EUR 4,896 thousand). Sales of clothing and interior
decoration products showed grew well; bag sales decreased slightly. The growth
was generated by Japan and South Korea where a new concept store was opened in
Seoul.
Licensing
Royalty earnings from sales of licensed products increased significantly in
2010. All of the growth came from the United States and Japan.
Production
The output of the Herttoniemi textile printing factory increased by 1.5% in
2010. The production volume of the Sulkava factory decreased slightly compared
to the previous year. The output of the Kitee factory declined substantially
due to changes implemented in the production structure in 2009.
EARNINGS
Financial year 2010
In 2010, the Group's operating profit rose by 29.9% to EUR 8,169 thousand (EUR
6,291 thousand). Operating profit as a percentage of net sales amounted to
11.1% (8.7%). Operating profit for 2009 included a non-recurring expense of EUR
0.5 million related to personnel reductions. Operating profit excluding
non-recurring items stood at EUR 8,169 thousand (EUR 6,803 thousand). At the
end of 2009, the company announced that it sought cost savings of approximately
EUR 1.5 million in total through personnel cutbacks and other measures. The
target was almost fully achieved in 2010.
Earnings for the year were improved by a distinct increase in average sales
margin as well as growth in wholesale sales and royalty earnings. On the other
hand, earnings were depressed by additional investments in product development
and building up the company's international distribution network. In addition,
earnings were weakened by the fact that the revenues generated from deliveries
for individual promotions were lower than in the previous year and that, in
2010, the company carried out considerably fewer price-led promotions than the
year before. Marketing expenses were also slightly higher than in 2009. The
Group's marketing expenses for the year totalled EUR 3,341 thousand (EUR 3,137
thousand), representing 4.6% (4.3%) of net sales.
The Group's depreciation amounted to EUR 1,478 thousand (EUR 1,394 thousand),
representing 2.0% (1.9%) of net sales. Net financial income totalled EUR 54
thousand (EUR 63 thousand), or 0.1% (0.1%) of net sales.
Profit after taxes was EUR 6,072 thousand (EUR 4,701 thousand), representing
8.3% (6.5%) of net sales. Earnings per share were EUR 0.76 (EUR 0.59).
4Q of 2010
In the October-December period of 2010, the Group's operating profit fell by
7.0% on the comparison period, amounting to EUR 2,188 thousand (EUR 2,353
thousand). Earnings per share were EUR 0.21 (EUR 0.22). Earnings for the period
were weakened by the fact that revenues generated from an individual promotion
were lower than in the corresponding of the previous year. Earnings were also
depressed by additional investments in product development and building up the
company's international distribution network, and by higher marketing expenses
for the period compared to the same period in 2009. On the other hand, earnings
for the period were boosted by an increase in average sales margin and growth
in wholesale sales.
INVESTMENTS
The Group's gross investments amounted to EUR 1,519 thousand (EUR 1,202
thousand), representing 2.1% (1.7%) of net sales. The majority of investments
were directed at the procurement and updating of information systems, and at
the construction of new shops and the procurement of furniture.
EQUITY RATIO AND FINANCING
The Group's equity ratio was 78.8% at the end of the year (77.7% on 31 December
2009). The ratio of interest-bearing liabilities minus financial assets to
shareholders' equity (gearing) was -28.2%, while it was -32.2% at the end of
the previous year.
At the end of the year, the Group's financial liabilities stood at EUR 0 (EUR
0). The Group's financial assets at the end of the financial year amounted to
EUR 9,667 thousand (EUR 10,245 thousand).
SHARES AND SHARE PRICE TREND
Share capital
At the end of the financial year, the company's fully paid-up share capital, as
recorded in the Trade Register, amounted to EUR 8,040,000, and the number of
shares totalled 8,040,000.
Shareholdings
According to the book-entry register, Marimekko had 6,673 (6,716) shareholders
at the end of the year. Of the shares, 15.0% were registered in a nominee's
name and 15.9% were in foreign ownership. The number of shares owned either
directly or indirectly by members of the Board of Directors and the President
of the company was 1,086,440, representing 13.5% of the total share capital and
of the votes conferred by the company's shares.
The largest shareholders according to the book-entry register on 31 December
2010
Number of Percentage of holding
shares and and votes
votes
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1. Muotitila Ltd 1,045,200 13.00
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2. Semerca Investment Ltd 850,377 10.58
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3. ODIN Finland 406,992 5.06
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4. Varma Mutual Employment Pension 385,920 4.80
Insurance Company
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5. Nordea Nordic Small Cap Fund 269,204 3.35
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6. Ilmarinen Mutual Pension Insurance 265,419 3.30
Company
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7. Veritas Pension Insurance Company 220,000 2.74
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8. Mutual Fund Tapiola Finland 66,395 0.83
--------------------------------------------------------------------------------
9. FIM Pankki Oy 60,000 0.75
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10. Foundation for Economic Education 50,000 0.62
--------------------------------------------------------------------------------
11. Scanmagnetics Oy 40,000 0.50
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12. Fromond Elsa 37,000 0.46
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13. Haapanala Auvo 35,000 0.43
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14. Westerberg Olof 33,600 0.42
--------------------------------------------------------------------------------
15. Karvonen Eero 27,900 0.34
--------------------------------------------------------------------------------
Total 3,793,007 47.18
--------------------------------------------------------------------------------
Nominee-registered 1,207,281 15.01
--------------------------------------------------------------------------------
Others 3,039,712 37.81
--------------------------------------------------------------------------------
Total 8,040,000 100.00
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Flaggings
SEB Asset Management S.A.'s share of Marimekko Corporation's share capital and
voting rights rose to 5.13%, or 412,259 shares, as a result of a transaction
concluded on 5 February 2010.
SEB Asset Management S.A.'s share of Marimekko Corporation's share capital and
voting rights fell to 0.00%, or 0 shares, due to a stock loan on 15 April 2010
and then reverted to 5.13%, or 412,259 shares, at the termination of the stock
loan on 28 April 2010.
The combined share of Marimekko Corporation's share capital and voting rights
held by organisations controlled by Credit Suisse Group AG rose to 5.60%, or
450,000 shares, as a result of a transaction made on 20 April 2010. After the
transaction, Credit Suisse Securities (Europe) Ltd held 400,000 Marimekko
shares and Credit Suisse Securities (USA) LLC held 50,000 shares. The combined
share of Marimekko Corporation's share capital and voting rights held by the
abovementioned organisations controlled by Credit Suisse Group AG fell below
5.00% as a result of a transaction made on 23 April 2010.
Authorisations
At the end of the review period, the Board of Directors had no valid
authorisations to carry out share issues or issue convertible bonds or bonds
with warrants, or to acquire or surrender Marimekko shares.
Share trading
In 2010, a total of 1,046,014 Marimekko shares were traded, representing 13.0%
of the shares outstanding. The total value of Marimekko's share turnover was
EUR 11,898,520. The lowest price of the Marimekko share was EUR 10.00, the
highest was EUR 14.45 and the average price was EUR 11.66. At the end of the
year, the final price of the share was EUR 14.45. The company's market
capitalisation on 31 December 2010 was EUR 115,776,000 (EUR 82,812,000 on 31
December 2009).
PERSONNEL
In 2010, the number of employees averaged 375 (400). At the end of the year,
the Group employed 388 (370) people, of whom 19 (17) worked abroad.
CHANGES IN COMPANY MANAGEMENT
On 1 July 2010, Minna Kemell-Kutvonen commenced as Creative Director of all of
the Marimekko Group's product lines and as a member of the Management Group.
Piia Rossi, Director for Marimekko's own retail shops in Finland and member of
the Management Group, resigned on 16 August 2010. Päivi Lonka was appointed
Sales Director for the Group, responsible for sales and shops, on 16 August
2010. After the retirement on 1 November 2010 of Helinä Uotila, Director for
Marimekko's production, purchases, and interior decoration line, all three of
the company's product lines are managed by one Product Director, Niina Nenonen.
The appointed persons have also previously held management positions in the
company.
The organisational changes implemented during 2010aim to improve consistency in
design across the different product lines, enhance efficiency in production and
sourcing, and develop product assortment planning to better respond to the
needs of different distribution channels. As of 1 November 2010, the Marimekko
Group's Management Group comprises Mika Ihamuotila as Chairman, and Thomas
Ekström (finance and administration), Malin Groop (marketing), Minna
Kemell-Kutvonen (design), Päivi Lonka (sales) and Niina Nenonen (product lines)
as members.
RISK MANAGEMENT AND MAJOR RISKS
Risk management is an integral element of the company's management and
decision-making process, covering all of the Group's functions. Risk
identification builds on Marimekko's strategic and operational objectives. The
company's Board of Directors has confirmed the principles, responsibilities and
organisation of risk management. The Board of Directors also monitors the
success of risk management. According to its risk management principles,
Marimekko classifies its risks as strategic, operational, economic and accident
risks. Risk reporting is part of the company's regular reporting.
The risk factors described below may have a harmful impact on the company's
shareholder value, business, or financial standing. However, other risks which
Marimekko is currently not aware of or which are not currently considered major
may become significant in the future.
Key strategic risks assessed by Marimekko are associated with the general
economic development and the consequent uncertainty in the operating
environment as well as the management of change. Trends in the world economy
affect consumers' purchasing behaviour and buying power in all of the company's
market areas. The decline in consumer demand at the end of 2008 and during 2009
had an adverse impact on the company's growth and earnings outlook. In 2010,
the general economic outlook has improved gradually and this is also reflected
in Marimekko's growth and earnings outlook. Simultaneously Marimekko is going
through a phase of intensive change and the company has a number of development
projects in progress. With these measures the structure of Marimekko's business
is transformed and a more solid foundation for long term growth and improved
profitability is laid. In 2010, several projects related to
internationalisation and product development were carried out. The company's
ability to develop and commercialise new products that meet consumers'
expectations has an impact on the company's sales and profitability. The
management and monitoring of change and ensuring sufficient core expertise are
emphasised in risk management.
Among the company's operational risks, the key factor is the operational
reliability of procurement and logistics processes. Risks related to changes in
the prices of raw materials and other purchase prices are also significant. The
share of in-house production has diminished, and Marimekko uses subcontractors
to an increasing extent. Therefore, the company's dependence on the supply
chain has increased. Any delays or disturbances in supply may have a temporary
harmful impact on business. Control points and responsibilities were determined
in order to take notice of any realisation of risks and to take preventive
action. Risks are managed by improving the disturbance tolerance of the
procurement process and by training purchasing staff. The company is
continuously developing the availability of key products and alternative
procurement channels, the operational efficiency of procurement, the competence
of the purchasing staff and the comprehensiveness and functionality of
reporting. In 2010, a comprehensive long-term project to develop logistics
processes was launched.
Among the company's economic risks, those related to the structure of sales,
the price trends for factors of production, customers' liquidity and changes in
exchange rates may have an impact on the company's financial status. Sudden
changes in the prices of raw materials may also have an impact on the company's
earnings. A number of raw materials are used to manufacture Marimekko products,
the most important being cotton. The company closely monitors the near-term
trend in cotton prices. So far, the steep price increase of cotton has not had
an effect on the companys's earnings. The risks related to raw material price
fluctuations are diminished by taking the fluctuations into account in product
pricing. If the price of cotton remains at its present high level or rises
further and if the company fails to pass the increased raw material costs on to
selling prices, the company's earnings may be affected. The company protects
itself against credit risks related to trade receivables by continuously
monitoring its customers' credit limits, credit history and financial
situation. Credit risks are also reduced by means of advance payments, bank
guarantees and letters of credit. In 2010, no significant changes took place in
credit losses or the customers' payment behaviour. The company's main invoicing
and purchasing currency is the euro. The other significant invoicing currencies
are the Swedish krona and the US dollar. Marimekko protects itself against
foreign currency risks of sales by taking exchange rate fluctuations into
account when pricing its products. In 2010, changes in exchange rates did not
have any material effect on the company's business.
The company strives to minimize its accident risks by means of labour
protection and security training, as well as operating procedures concerning
work and working methods. Group companies have taken out policies to insure
their personnel, assets and operations. The scope, insurance value and excess
amount of the policies are reviewed annually with the insurance companies.
RESEARCH AND DEVELOPMENT
Marimekko's product planning and development costs arise from the design of
collections. Design costs are recorded in expenses.
THE ENVIRONMENT, HEALTH AND SAFETY
Responsibility for the environment and nature is an integral aspect of
Marimekko's business. Where environmental matters are concerned, the company's
business supervision is largely based on legislation and other regulations. The
Herttoniemi textile printing factory has a valid environmental permit and the
production operations comply with its terms. Marimekko's production processes
do not generate any waste that is classified as hazardous or detrimental to
health. In the interest of monitoring the environmental impact of production
and other business operations, the company develops its operating models and
conducts regular tests on the materials used in products. Cooperation
agreements require Marimekko's subcontractors and other partners to commit
themselves to shouldering their environmental responsibilities. The company
seeks to save energy by developing its production methods, investing in
energy-efficient machinery and equipment, and monitoring energy consumption.
In 2010, Marimekko continued the long-term development of a corporate social
responsibility management system. The company has chosen sourcing, design,
production and quality control as well as warehousing, distribution and
logistics as the key areas for the next few years. Marimekko's Annual Report
contains a more extensive report on environmental, health and safety issues. A
summary is also included in each interim report. The framework for reporting is
provided by the G3 guidelines of the Global Reporting Initiative (GRI).
DECISIONS OF THE ANNUAL GENERAL MEETING
The decisions of Marimekko Corporation's Annual General Meeting are reported in
the stock exchange release dated 15 April 2010 as well as in the interim
reports dated 6 May 2010 and 12 August 2010.
INTERNATIONAL PROJECTS
On 12 August 2010, Marimekko announced significant projects related to
internationalisation to be implemented during the rest of the year 2010.
In the United States, a subsidiary, Marimekko North America LLC, was
established in October 2010 to manage and develop the local operations in
collaboration with the brand management firm C2Group. The renowned home
furnishings retailer Crate and Barrel opened a Marimekko shop-in-shop in its
SoHo store in New York in mid-October. Marimekko's long-term goal is to expand
the distribution of its products in the United States through high-end
department and specialty stores as well as by increasing the number of
Marimekko stores.
The first Marimekko concept store in South Korea was opened in Seoul in
mid-October. The store is owned by I.D. Look Co., Ltd., a subsidiary of
Marimekko's Japanese distributor Look Inc. In November 2010, Marimekko opened
open its own retail shops in Berlin, Germany and Malmö, Sweden.
MAJOR EVENTS AFTER THE CLOSE OF THE REVIEW PERIOD
The CEO's substitute
On 21 January 2011, Marimekko announced that the company's President and CEO
Mika Ihamuotila will undergo a minor repeat neurosurgical procedure at the
beginning of February 2011. After the operation, he will be on sick leave for
approximately 4 to 6 weeks. During Ihamuotila's leave of absence, the duties of
president will be taken over by the company's CFO Thomas Ekström.
Investment in a printing machine
On 2 February 2011, Marimekko announced that it will invest in a new printing
machine and screen-making equipment at the company's textile printing factory
in Helsinki. The value of the investment will be roughly EUR 1.5 million. The
investment will triple the textile printing factory's output capacity compared
to present levels. In 2010, Marimekko's printing factory produced 1.1 million
metres of fabric. The new machinery will come online towards the end of the
year 2011, and the added capacity will be deployed in stages. The investment
will also enable the company to prepare for higher demand in the long term.
The textile printing factory has been operating at full capacity since summer
2009, when the company's older printing machine was taken out of use. A sizable
boost in capacity is needed because of both current order books and the
company's longer-term growth targets. The acquisition of the printing machine
is intended to secure sufficient capacity for foreseeable demand, to shorten
delivery lead times, and to improve manufacturing efficiency. Also, the
investment will reduce dependency on a single printing machine and open up
opportunities for product development.
Collaboration with Crate and Barrel
On 4 February 2011, Marimekko announced that it will expand its distribution
and reinforce its position in the United States by extending its collaboration
with the home furnishings retailer Crate and Barrel. Crate and Barrel plans to
open 22 new Marimekko shop-in-shops by the end of the year 2013. The first four
of the new shops will be opened in spring 2011: on Madison Avenue in New York
as well as in Chicago, Los Angeles and San Francisco. Crate and Barrel will
have exclusive rights to retail Marimekko interior decoration products in the
US and Canada in the home specialty and department store chain category; these
exclusive rights will not apply to clothes, bags or accessories. In addition to
furnishing products imported from Finland, the product range for Crate and
Barrel's stores will also include Marimekko products made under licence such as
bedding and bath textiles. During this spring, Crate and Barrel will also open
an online shop specialising in Marimekko products within its website.
Management Group's long-term bonus system
The Board of Directors of Marimekko Corporation has agreed on establishing a
new long-term bonus system targeted to the company's Management Group. The
purpose of the bonus system is to encourage the Management Group to operate
with a business mentality and to add the company's value in the long-term in
particular. The aim is to combine the owners' and the Management Group's
targets in order to increase the company's value and to elicit the Management
Group's commitment to the company in the span of several years.
The system is composed of two earning periods, which are 1 January 2011 - 31
October 2014 and 1 January 2011 - 28 February 2015. The possible bonus for each
earnings period will be based on the total yield on Marimekko Corporation's
shares, including dividends. The possible bonus will be paid in cash in two
batches, one in autumn 2014 and the other in spring 2015. Earning the bonus
requires that the person still work for the company at the time of the payment.
When receiving the bonus the person in question commits to use 50% of the net
value of the bonus for acquiring the company's shares in transaction price
within six months from receiving the bonus. The shares acquired with the bonus
cannot be surrendered prior to two years from the time of acquiring the shares.
The annual maximum value of the bonus paid to a member of the Management Group
in the bonus system cannot exceed the approximate value of fixed annual salary.
Marimekko's Management Group comprises of six persons at the moment.
THE BOARD OF DIRECTORS' PROPOSAL FOR THE DIVIDEND FOR THE 2010 FINANCIAL YEAR
A dividend of EUR 0.45 per share was paid for 2009 to a total of EUR 3,618,000.
The Board of Directors will propose to the Annual General Meeting that a
dividend of EUR 0.55 per share be paid for 2010. The proposed dividends
represent 72.4% of the Group's earnings per share for the financial year. On 31
December 2010, the parent company's distributable funds amounted to EUR
22,373,746.84. The Board of Directors will propose 26 April 2011 as the
dividend record, and 3 May 2011 as the dividend payout date.
OUTLOOK FOR 2011
In 2011, sales are forecast to continue on their growth track, and openings of
new shops and other actions to develop the distribution network are expected to
accelerate sales, particularly in the second half of the year. The planned
measures and considerable investments in internationalisation, particularly in
the United States, and in developing business operations and the distribution
network are so extensive that they will make themselves felt in the form of a
significant increase in fixed costs and they will exert a substantial drag on
earnings this year. With these measures and investments, of which many occur
predominantly during this year, the structure of Marimekko's business is
transformed and a more solid foundation for long term growth and improved
profitability is laid.
Moreover, increases in the costs of raw materials and in particular the record
price of cotton put the company under pressure to raise prices. Revenues
generated from deliveries for individual promotions are expected to be very
low. By cutting down on price-led promotions, the company aims further to
improve the average sales margin and the brand's pricing power.
The total investments planned by the Marimekko Group for 2011 are estimated at
roughly EUR 5 million. This includes the investment in machinery for the
Helsinki textile printing factory, amounting to approximately EUR 1.5 million,
the purpose of which is to secure capacity in line with currently foreseeable
demand and also to prepare for higher demand in the long term.
The Marimekko Group's net sales in 2011 are estimated to grow by roughly 5-10%,
but operating profit is forecast to decline by some 40-60% compared with the
previous year.
Helsinki, 8 February 2011
MARIMEKKO CORPORATION
Board of Directors
Information presented in the financial statement bulletin has not been audited.
APPENDICES
Accounting principles
Consolidated income statement and comprehensive consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of changes in shareholders' equity
Key indicators
Consolidated net sales by market area and product line
Segment information
Quarterly trend in net sales and earnings
Accounting principles
This financial statement bulletin was prepared in accordance with IAS 34:
Interim Financial Reporting. The same accounting principles were applied as in
the 2009 financial statements. The new or amended standards and interpretations
that have become effective in 2010 and whose contents are presented in the
financial statements for 2009 have had no effect on the information in the
financial statement bulletin.
FORMULAS FOR THE KEY FIGURES
Earnings per share (EPS), EUR:
(Profit before taxes - income taxes) / Number of shares (average for the
financial period)
Equity per share, EUR:
Shareholders' equity / Number of shares, 31 December
Return on equity (ROE), %:
(Profit before taxes - income taxes) X 100 / Shareholders' equity (average for
the financial period)
Return on investment (ROI), %:
(Profit before taxes + interest and other financial expenses) X 100 / (Balance
sheet total - non-interest-bearing liabilities (average for the financial
period))
Equity ratio, %
Shareholders' equity X 100 / (Balance sheet total - advances received)
Gearing, %:
Interest-bearing net debt X 100 / Shareholders' equity
CONSOLIDATED INCOME STATEMENT
(EUR, 1,000) 10-12/ 10-12/ 1-12/ 1-12/
2010 2009 2010 2009
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NET SALES 22,074 20,719 73,297 72,473
--------------------------------------------------------------------------------
Other operating income 3 6 16 41
--------------------------------------------------------------------------------
Increase or decrease in inventories of completed -101 739 -1,173 2,135
and unfinished products
--------------------------------------------------------------------------------
Raw materials and consumables 8,636 7,678 28,496 26,890
--------------------------------------------------------------------------------
Employee benefit expenses 4,852 4,660 17,311 18,202
--------------------------------------------------------------------------------
Depreciation 370 363 1,478 1,394
--------------------------------------------------------------------------------
Other operating expenses 6,132 4,932 19,032 17,602
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OPERATING PROFIT 2,188 2,353 8,169 6,291
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 74 26 83 86
--------------------------------------------------------------------------------
Financial expenses -8 -10 -29 -23
--------------------------------------------------------------------------------
66 16 54 63
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROFIT BEFORE TAXES 2,254 2,369 8,223 6,354
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income taxes 603 630 2,151 1,653
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NET INCOME FOR THE PERIOD 1,651 1,739 6,072 4,701
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distribution of net income to equity holders of 1,651 1,739 6,072 4,701
the parent company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic and diluted earnings per share calculated 0.21 0.22 0.76 0.59
on the profit attributable to equity holders of
the parent company, EUR
--------------------------------------------------------------------------------
COMPREHENSIVE CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 10-12/ 10-12/ 1-12/ 1-12/
2010 2009 2010 2009
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net income for the period 1,651 1,739 6,072 4,701
--------------------------------------------------------------------------------
Other comprehensive income
--------------------------------------------------------------------------------
Change in translation difference 13 13 8 4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPREHENSIVE INCOME FOR THE PERIOD 1,664 1,752 6,080 4,705
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distribution of net income to equity holders of 1,664 1,752 6,080 4,705
the parent company
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR 1,000) 31.12.2010 31.12.2009
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT ASSETS
--------------------------------------------------------------------------------
Tangible assets 9,390 9,805
--------------------------------------------------------------------------------
Intangible assets 869 409
--------------------------------------------------------------------------------
Available-for-sale financial assets 16 20
--------------------------------------------------------------------------------
10,275 10,234
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CURRENT ASSETS
--------------------------------------------------------------------------------
Inventories 17,172 15,229
--------------------------------------------------------------------------------
Trade and other receivables 6,437 5,241
--------------------------------------------------------------------------------
Current tax assets -- 18
--------------------------------------------------------------------------------
Cash and cash equivalents 9,667 10,245
--------------------------------------------------------------------------------
33,276 30,733
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSETS, TOTAL 43,551 40,967
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
COMPANY
--------------------------------------------------------------------------------
Share capital 8,040 8,040
--------------------------------------------------------------------------------
Translation differences 10 2
--------------------------------------------------------------------------------
Retained earnings 26,237 23,783
--------------------------------------------------------------------------------
Shareholders' equity, total 34,287 31,825
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
--------------------------------------------------------------------------------
Deferred tax liabilities 651 683
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CURRENT LIABILITIES
--------------------------------------------------------------------------------
Trade and other payables 8,583 7,874
--------------------------------------------------------------------------------
Current tax liabilities 30 585
--------------------------------------------------------------------------------
8,613 8,459
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities, total 9,264 9,142
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL 43,551 40,967
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Group has no liabilities resulting from derivative contracts, and there are
no outstanding guarantees or any other contingent liabilities which have been
granted on behalf of the management of the company or its shareholders.
CONSOLIDATED CASH FLOW STATEMENT
(EUR 1,000) 2010 2009
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net profit for the period 6,072 4,701
--------------------------------------------------------------------------------
Adjustments
--------------------------------------------------------------------------------
Depreciation according to plan 1,478 1,394
--------------------------------------------------------------------------------
Financial income and expenses -54 -63
--------------------------------------------------------------------------------
Taxes 2,151 1,653
--------------------------------------------------------------------------------
Cash flow before change in working capital 9,647 7,685
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in working capital
--------------------------------------------------------------------------------
Increase (--) / decrease (+) in current non-interest-bearing - 1,193 834
trade receivables
--------------------------------------------------------------------------------
Increase (--) / decrease (+) in inventories -1,943 2,055
--------------------------------------------------------------------------------
Increase (--) / decrease (+) in current non-interest-bearing 684 108
liabilities
--------------------------------------------------------------------------------
Cash flow from operating activities before financial items and 7,195 10,682
taxes
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paid interest and payments on other financial expenses -30 -24
--------------------------------------------------------------------------------
Interest received 81 120
--------------------------------------------------------------------------------
Taxes paid -2,687 -837
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CAH FLOW FROM OPERATING ACTIVITIES 4,559 9,941
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investments in tangible and intangible assets -1,519 -1,202
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES -1,519 -1,202
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Short-term loans repaid -185
--------------------------------------------------------------------------------
Dividends paid -3,618 -4,422
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES -3,618 -4,607
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents -578 4,133
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the period 10,245 6,112
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 9,667 10,245
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(EUR 1,000) Equity attributable to equity holders of the parent
company
--------------------------------------------------------------------------------
Share Translation Retained Shareholders'
capital differences earnings equity, total
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity 8,040 -2 23,504 31,542
1 Jan. 2009
--------------------------------------------------------------------------------
Comprehensive income 4 4,701 4,705
for the period
--------------------------------------------------------------------------------
Dividends paid -4,422 -4,422
--------------------------------------------------------------------------------
Shareholders' equity 8,040 2 23,783 31,825
31 Dec. 2009
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity 8,040 2 23,783 31,825
1 Jan. 2010
--------------------------------------------------------------------------------
Comprehensive income 8 6,072 6,080
for the period
--------------------------------------------------------------------------------
Dividends paid -3,618 -3,618
--------------------------------------------------------------------------------
Shareholders' equity 8,040 10 26,237 34,287
31 Dec. 2010
--------------------------------------------------------------------------------
KEY INDICATORS
1-12/2010 1-12/2009 Change, %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share, EUR 0.76 0.59 28.8
--------------------------------------------------------------------------------
Equity per share, EUR 4.26 3.96 7.6
--------------------------------------------------------------------------------
Return on equity (ROE), % 18.4 14.8
--------------------------------------------------------------------------------
Return on investment (ROI), % 25.0 20.1
--------------------------------------------------------------------------------
Equity ratio, % 78.8 77.7
--------------------------------------------------------------------------------
Gearing, % -28.2 -32.2
--------------------------------------------------------------------------------
Gross investments, EUR 1,000 1,519 1,202 26.4
--------------------------------------------------------------------------------
Gross investments, % of net sales 2.1 1.7
--------------------------------------------------------------------------------
Contingent liabilities, EUR 1,000 11,147 11,306 -1.4
--------------------------------------------------------------------------------
Average personnel 375 400 -6.3
--------------------------------------------------------------------------------
Personnel at the end of the period 388 370 4.9
--------------------------------------------------------------------------------
Number of shares at the end of the period 8,040 8,040
(1,000)
--------------------------------------------------------------------------------
Number of shares outstanding, average (1,000) 8,040 8,040
--------------------------------------------------------------------------------
NET SALES BY MARKET AREA
(EUR, 1,000) 10-12/ 10-12/ Change,% 1-12/ 1-12/ Change, %
2010 2009 2010 2009
---------------------------------------------------------------------------
Finland 16,342 16,538 -1.2 51,768 52,711 -1.8
---------------------------------------------------------------------------
Other Nordic countries 1,786 1,725 3.5 7,101 7,042 0.8
---------------------------------------------------------------------------
Rest of Europe 1,454 978 48.7 5,284 4,821 9.6
---------------------------------------------------------------------------
North America 1,268 694 82.7 3,814 3,003 27.0
---------------------------------------------------------------------------
Other countries 1,224 784 56.1 5,330 4,896 8.9
---------------------------------------------------------------------------
TOTAL 22,074 20,719 6.5 73,297 72,473 1.1
---------------------------------------------------------------------------
NET SALES BY PRODUCT LINE
(EUR, 1,000) 10-12/ 10-12/ Change,% 1-12/ 1-12/ Change, %
2010 2009 2010 2009
------------------------------------------------------------------------
Clothing 6,008 6,213 -3.3 26,384 27,466 -3.9
------------------------------------------------------------------------
Interior decoration 12,100 11,658 3.8 34,006 32,687 4.0
------------------------------------------------------------------------
Bags 3,966 2,848 39.3 12,907 12,320 4.8
------------------------------------------------------------------------
TOTAL 22,074 20,719 6.5 73,297 72,473 1.1
------------------------------------------------------------------------
SEGMENT INFORMATION
(EUR 1,000) 2010 2009
----------------------------------
----------------------------------
Marimekko business
----------------------------------
Net sales 73,297 72,473
----------------------------------
Operating result 8,169 6,291
----------------------------------
Assets 43,551 40,967
----------------------------------
QUATERLY TREND IN NET SALES AND EARNING
(EUR, 1,000) 10-12/2010 7-9/2010 4-6/2010 1-3/2010
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 22,074 19,468 15,747 16,008
-----------------------------------------------------------------
Operating result 2,188 4,170 588 1,223
-----------------------------------------------------------------
Earnings per share, EUR 0.21 0.38 0.05 0.12
-----------------------------------------------------------------
-----------------------------------------------------------------
(EUR 1,000) 10-12/2009 7-9/2009 4-6/2009 1-3/2009
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 20,719 19,492 15,999 16,263
-----------------------------------------------------------------
Operating result 2,353 2,901 1,058 -21
-----------------------------------------------------------------
Earnings per share, EUR 0.22 0.27 0.10 0.00
-----------------------------------------------------------------
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