2011-08-17 08:00:00 CEST
2011-08-17 08:00:13 CEST
REGULATED INFORMATION
Marimekko - Interim report (Q1 and Q3)
MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY-30 JUNE 2011
Marimekko Corporation, Interim Report, 17 August 2011 at 9.00 a.m.
MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY-30 JUNE 2011
Considering market conditions, the Marimekko Group's net sales rose strongly,
by 7 per cent, during the January-June period of 2011. International sales grew
especially well, by 24 per cent. Operating result decreased as expected as a
result of considerable investments in internationalisation and increased
personnel and marketing costs.
January to June
-- Net sales grew by 7.2% to EUR 34.0 million (EUR 31.8 million)
-- International sales rose by 23.5%. Sales grew vigorously in Japan and in
Central and Southern Europe.
-- Sales in Finland decreased by 0.4%. Excluding the impact of changes
implemented in sales areas in the Helsinki stores in 2010 as well as the
changes made in the distribution network in accordance with the company's
distribution strategy, sales in Finland grew at a good rate of about 3%.
-- Operating result amounted to EUR -0.4 million (EUR 1.8 million). Operating
result for the period includes a non-recurring expense of EUR 0.2 million
related to personnel reductions. Operating result without non-recurring
items amounted to EUR -0.3 million (EUR 1.8 million).
-- Result after taxes for the period was EUR -0.3 million (EUR 1.4 million).
-- Earnings per share were EUR -0.04 (EUR 0.17).
-- Investments amounted to EUR 3.2 million (EUR 0.5 million).
-- Brand sales* grew by 23.5% to EUR 79.8 million (EUR 64.6 million).
-- In its interim report published on 3 May 2011, the company announced the
following outlook: the Marimekko Group's net sales 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 company specifies its full-year estimate for 2011 within the announced
range as follows: net sales growth for the Group is expected to be at the
bottom end of the range, close to 5%, and the anticipated decline in
operating profit is estimated to be at the top end of the range (roughly
50-60% compared with the previous year).
April to June
-- Net sales rose by 6.8% to EUR 16.8 million (EUR 15.7 million).
-- Operating result turned negative and amounted to EUR -0.8 million (EUR 0.6
million).
1-6/201 1-6/201 Change, 1-12/201
1 0 % 0
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--------------------------------------------------------------------------------
Net sales, EUR 1,000 34,049 31,755 7.2 73,297
--------------------------------------------------------------------------------
Operating result, EUR 1,000 -438 1,811 -124.2 8,169
--------------------------------------------------------------------------------
Operating result without non-recurring -269 1,811 -114.9 8,169
items, EUR 1,000
--------------------------------------------------------------------------------
Result for the period, EUR 1,000 -308 1,363 -122.6 6,072
--------------------------------------------------------------------------------
Earnings per share, EUR -0.04 0.17 -123.5 0.76
--------------------------------------------------------------------------------
Cash flow from operating activities, EUR -2,297 -964 4,559
1,000
--------------------------------------------------------------------------------
Return on investment (ROI), % -2.5 11.8 25.0
--------------------------------------------------------------------------------
Equity ratio, % 71.1 78.9 78.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Brand sales*, EUR 1,000 79,812 64,615 23.5 149,717
--------------------------------------------------------------------------------
Number of retail stores** 88 81 8.6 84
--------------------------------------------------------------------------------
* Estimated sales of Marimekko products at consumer prices. Brand sales are
calculated by adding together the company's own retail sales and the estimated
retail value of Marimekko products sold by other retailers. The estimate, based
on Marimekko's actual wholesale sales to these retailers, is unofficial and
does not include VAT. The key figure is not audited.
** Includes the company's own retail stores, the concept stores, and the
Marimekko stores at Crate and Barrel.
Mika Ihamuotila, President and CEO:
“I am pleased that our investments in international growth were clear to see in
the first half of the year. Marimekko's net sales grew by 7.2% and
international sales by as much as 23.5%. Brand sales were EUR 79.8 million, up
23.5% on the previous year. Sales in Finland decreased by 0.4%. The decline was
partly due to changes implemented in sales areas in the Helsinki stores in 2010
as well as changes in the distribution network, made in accordance with our
distribution strategy. Excluding the impact of these changes, sales in Finland
grew at a good rate of about 3%. It is also good to note that, in the long run,
these changes will have a positive effect on our business operations.
Exceptionally strong investments in internationalisation and product
development decreased profitability as expected during the first two quarters
of the year and caused our operating result to fall to EUR -0.4 million.
Increased personnel and marketing expenses also had a negative impact on
profitability. We believe, however, that the earnings trend will improve
towards the end of the year, when the investments we have made in expansion
begin to bear fruit. It should also be borne in mind that, due to the seasonal
nature of our business, the major portion of our net sales and earnings are
traditionally generated during the last two quarters of the year and that, in
the last quarter, a significant share of sales is accounted for by retail
sales.
In the next few years, Marimekko's expansion in international markets will
focus on North America, Northern Europe and the Asia-Pacific region. Several
new Marimekko stores will be opened abroad this autumn. Two weeks ago, we
opened our own retail store at Copenhagen Airport. The autumn will also see the
opening of our own stores in Stockholm, Oslo and London. In the United States,
our own flagship store will be opened on Fifth Avenue in New York at the
beginning of October, and two more Marimekko stores will open in Crate and
Barrel home furnishings stores later in the autumn, one in Boston and the other
in the Miami area. During the second quarter of the year, Crate and Barrel
opened Marimekko stores in its stores in San Francisco, Los Angeles, Chicago
and New York's Madison Avenue.
We are also actively investigating the possibilities to expand our operations
in the Asia-Pacific region. Our objective is to find a local partner in certain
markets, who would be responsible for opening Marimekko stores and other
distribution of our products, to high-end department stores, for example. This
method of operations has brought very positive results in Japan and South
Korea; in these countries, 22 Marimekko stores have already been opened. The
store openings and investigations taking place this autumn are in line with our
previously announced internationalisation strategy.”
2011 calendar
The interim report for the January-September period will be published on
Thursday, 10 November 2011 at 9 a.m.
For additional information, contact:
Mika Ihamuotila, President and CEO, tel. +358 9 758 71
Thomas Ekström, CFO, tel. +358 9 758 7261
MARIMEKKO CORPORATION
Group Communications
Piia Pakarinen
Tel. +358 9 758 7293
piia.pakarinen@marimekko.fi
DISTRIBUTION:
NASDAQ OMX Helsinki Oy
Key media
Marimekko is a Finnish textile and clothing design company renowned for its
original prints and colours. The company designs and manufactures high-quality
interior decoration items ranging from furnishing fabrics to tableware as well
as clothing, bags and other accessories. When Marimekko was founded in 1951,
its unparalleled printed fabrics gave it a strong and unique identity.
Marimekko products are sold in approximately 40 countries. In 2010, brand sales
of Marimekko products worldwide amounted to approximately EUR 150 million and
the company's net sales were EUR 73 million. The number of Marimekko stores
totalled 84 at the year end. The key markets in 2011 are North America,
Northern Europe and the Asia-Pacific region. The Group employs around 390
people. The company's share is quoted on NASDAQ OMX Helsinki Ltd.
www.marimekko.com
MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY-30 JUNE 2011
MARKET SITUATION
The overall uncertainty about the global economy has increased markedly as a
result of the debt situation in the US and in the European crisis countries.
Although the development of the world economy still remains at a relatively
good level, increased uncertainty may affect consumers' purchasing behaviour.
Also, buying power is affected by higher inflation.
The Finnish economy developed steadily at the beginning of the summer period.
The current situation is close to average, but the outlook is slightly more
cautious than before and only a minor increase in growth is expected towards
the end of the year. In addition, increased costs burden the profitability of
companies. Consumer confidence has weakened as estimates of the development of
the Finnish economy have become less optimistic. (Confederation of Finnish
Industries EK: Business Tendency Survey, August 2011).
From January to June 2011, the value of retail sales in Finland rose by 3.3%
(Statistics Finland: Turnover of trade 2011, June, quick estimate). From
January to May 2011, retail sales of clothing (excluding sportswear) grew by
2.0% (Textile and Fashion Industries TMA). Sales of womenswear rose by 2.0% and
sales of menswear by 3.6%. Sales of childrenswear fell by 0.9%. Sales of bags
rose by 11.4%. In the January-May period of 2011, exports of clothing (SITC 84)
rose by 29% and imports by 19%; exports of textiles (SITC 65) grew by 14% and
imports by 12% (National Board of Customs, monthly review, May 2011).
NET SALES
January to June
In the January-June period of 2011, the Marimekko Group's net sales rose by
7.2% to EUR 34,049 thousand (EUR 31,755 thousand), thanks to growth in
international sales. In Finland, net sales declined by 0.4% to EUR 21,548
thousand (EUR 21,635 thousand). Retail sales in Finland grew by 1.0%, while
wholesale sales fell by 2.8%. Retail sales growth slowed partly due to changes
implemented in sales areas in the Helsinki stores in 2010. The decline in
wholesale sales was attributable to changes in the distribution network, made
in accordance with the company's distribution strategy. Excluding the impact of
these changes, sales in Finland grew by about 3%. Sales grew vigorously in
Japan and in Central and Southern Europe, mainly due to a favourable trend in
wholesale sales. New stores opened at the end of 2010 and this year increased
sales in these market areas. Sales in North America rose somewhat, by 4.6%.
When measured in the invoicing currency (mainly the US dollar), sales in North
America showed growth of about 17%. In Scandinavia, sales declined slightly.
Overall, international sales grew very well, by 23.5% to EUR 12,501 thousand
(EUR 10,120 thousand). International sales represented 36.7% (31.9%) of the
Group's net sales. As for brand sales, 48.2% of the sales came from abroad
(45.7%).
The breakdown of the Group's net sales by product line was as follows: clothing
38.1%, interior decoration 42.6%, and bags 19.3%. Net sales by market area
were: Finland 63.3%, Scandinavia 9.8%, Central and Southern Europe 9.3%, North
America 5.0%, and Asia-Pacific 12.6%.
April to June
In the April-June period of 2011, the Marimekko Group's net sales rose by 6.8%
to EUR 16,815 thousand (EUR 15,747 thousand). International sales grew by 35.7%
to EUR 5,833 thousand (EUR 4,297 thousand). Sales growth was mainly due to a
favourable trend in wholesale sales to Japan and to Central and Southern
Europe. The stores opened in Berlin and Malmö at the end of 2010 also
contributed to the increase in sales. Net sales in Finland declined by 4.1% to
EUR 10,982 thousand (EUR 11,450 thousand). This was due to decline in wholesale
sales. On the other hand, retail sales in Finland grew by around 2%.
REVIEWS BY BUSINESS UNIT
Clothing
In the January-June period of 2011, net sales of clothing rose by 4.9% to EUR
12,963 thousand (EUR 12,359 thousand). Sales grew markedly in the Asia-Pacific
region, partly due to purchases by new concept stores. Sales also rose in
Scandinavia and Central and Southern Europe. Sales in other market areas fell.
International sales accounted for 30.5% of net sales of clothing.
Interior decoration
Net sales of interior decoration products increased by 6.0% to EUR 14,507
thousand (EUR 13,687 thousand). The growth came from the Asia-Pacific region
and Central and Southern Europe. Purchases by new stores contributed to the
growth. Sales in North America increased slightly; in Finland and Scandinavia,
sales fell a little. International sales accounted for 41.5% of net sales of
interior decoration products.
Bags
Net sales of bags grew by 15.2% to EUR 6,579 thousand (EUR 5,709 thousand).
Sales increased significantly in North America and in Central and Southern
Europe. The growth was mainly attributable to initial inventory purchases by
new stores. Sales in the Asia-Pacific region also grew well. Sales in Finland
rose slightly. Sales in Scandinavia fell instead. International sales accounted
for 38.3% of net sales of bags.
Finland
In the January-June period of 2011, sales in Finland decreased by 0.4% to EUR
21,548 thousand (EUR 21,635 thousand). Marimekko's retail sales, i.e. sales by
Marimekko's own retail stores in Finland, rose by 1.0%. Sales growth slowed
partly due to changes implemented in sales areas in the Helsinki stores in
2010. Wholesale sales in Finland decreased by 2.8%. The decline was
attributable to changes in the distribution network, made in accordance with
the company's distribution strategy. Some retailer-owned concept stores will be
closed and the company's own retail stores will be opened instead.
Scandinavia
Sales in Scandinavia (previously “the other Nordic countries”) fell by 2.2% to
EUR 3,338 thousand (EUR 3,413 thousand). Sales of bags and interior decoration
products decreased somewhat. Clothes sales rose slightly. The decline in sales
was partly due to the difficult economic situation in Denmark.
Central and Southern Europe
In Central and Southern Europe (previously “the rest of Europe”), net sales
rose to EUR 3,170 thousand, up 31.1% on the previous year (EUR 2,418 thousand).
Sales of bags increased strongly. Sales of interior decoration products also
grew well; clothing sales rose slightly. The growth was partly accounted for by
sales by the retail store opened in Berlin at the end of 2010.
North America
Net sales in North America rose by 4.6% to EUR 1,691 thousand (EUR 1,617
thousand). When measured in the invoicing currency (mainly the US dollar),
sales in North America showed growth of about 17%. Very strong growth was seen
in bag sales. Sales of interior decoration products also grew slightly, while
clothing sales fell. Purchases by the shop-in-shops opened in the United States
accounted for a significant part of the increase in sales of bags and interior
decoration products.
The Asia-Pacific region
In the Asia-Pacific region (previously “other countries”), net sales rose by
61.0% to EUR 4,302 thousand (EUR 2,672 thousand). Sales of all product lines
grew very well. The growth was partly due to the initial purchases by a new
concept store opened in Japan in the first quarter of the year as well as to
purchases by the concept store opened in Seoul at the end of 2010.
Production
During the January-June period of 2011, the output of the Herttoniemi textile
printing factory increased by 49% compared to the corresponding period of the
previous year. The capacity of the factory was fully utilised. In the
comparison period, the production volume was reduced by lower-than-normal
demand. Increased staff resources and improved production processes also
contributed to the rise in output. The production volume of the Sulkava factory
decreased slightly on the comparison period; the factory had a good order book.
The output of the Kitee factory declined substantially due to changes in the
production structure; the capacity of the factory was fully utilised.
EARNINGS
January to June
In the January-June period of 2011, the Group's operating result was EUR -438
thousand (EUR 1,811 thousand). Operating result for the period includes a
non-recurring expense of EUR 169 thousand related to personnel reductions.
Operating result excluding non-recurring items was EUR -269 thousand (EUR 1,811
thousand). Result after taxes was EUR -308 thousand (EUR 1,363 thousand) and
earnings per share were EUR -0.04 (EUR 0.17). The result was burdened by
considerable investments in developing business operations and the distribution
network in the United States. Increased personnel expenses also had a negative
impact on profitability. In addition, marketing expenses were substantially
higher than in the comparison period: EUR 2,543 thousand (EUR 1,365 thousand),
or 7.5% (4.3%) of the Group's net sales. Marketing expenses in the comparison
period were exceptionally low, while store openings and different events
celebrating the company's anniversary raised marketing costs in the first half
of the current year. The result was improved by increased sales in Japan and in
Central and Southern Europe.
The Group's depreciation amounted to EUR 916 thousand (EUR 723 thousand),
representing 2.7% (2.3%) of net sales. Net financial expenses totalled EUR 17
thousand (net financial income EUR 25 thousand), or 0.1% (0.1%) of net sales.
April to June
In the April-June period of 2011, the Group's operating result turned negative,
amounting to EUR -798 thousand (EUR 558 thousand). Marketing costs were
substantially higher than in the comparison period. Marketing expenses in the
comparison period were exceptionally low, while store openings and different
events celebrating the company's anniversary raised marketing costs in the
second quarter of the current year. As expected, profitability was also
weakened by considerable investments in developing business operations and the
distribution network in the United States as well as a decline in average sales
margin.
INVESTMENTS
The Group's gross investments amounted to EUR 3,152 thousand (EUR 523
thousand), representing 9.3% (1.6%) of net sales. The majority of investments
were directed at developing business operations in the United States, at
building new store premises and purchasing new equipment and furniture, and at
acquiring and improving information systems.
EQUITY RATIO AND FINANCING
The Group's equity ratio was 71.1% at the end of the period (78.9% on 30 June
2010; 78.8% on 31 December 2010). The ratio of interest-bearing liabilities
minus financial assets to shareholders' equity (gearing) was 0.7%, while it was
-17.4% at the end of the corresponding period in the previous year.
The Group's financial liabilities stood at EUR 2,391 thousand (EUR 0) at the
end of the period. The Group's financial assets at the end of the period
amounted to EUR 2,187 thousand (EUR 5,139 thousand).
SHARES AND SHARE PRICE TREND
Share capital
At the end of the period, 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 6,900 (6,749) shareholders
at the end of the period. Of the shares, 13.4% 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 1,150,930, representing 14.3% 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 30 June 2011
Number of shares Percentage of holding
and votes and votes
--------------------------------------------------------------------------------
1. Muotitila Ltd 1,127,700 14.03
--------------------------------------------------------------------------------
2. Semerca Investment Ltd 850,377 10.58
--------------------------------------------------------------------------------
3. ODIN Finland 403,010 5.01
--------------------------------------------------------------------------------
4. Varma Mutual Employment Pension 385,920 4.80
Insurance Company
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5. Keva 286,987 3.57
--------------------------------------------------------------------------------
6. Ilmarinen Mutual Pension 265,419 3.30
Insurance Company
--------------------------------------------------------------------------------
7. Veritas Pension Insurance 218,402 2.72
Company
--------------------------------------------------------------------------------
8. Mutual Fund Tapiola Finland 66,395 0.82
--------------------------------------------------------------------------------
9. Foundation for Economic 50,000 0.62
Education
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10. Investment Fund SEB Gyllenberg 50,000 0.62
Small Firm
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Total 3,704,210 46.07
--------------------------------------------------------------------------------
Nominee-registered 1,075,619 13.38
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Others 3,260,171 40.55
--------------------------------------------------------------------------------
Total 8,040,000 100.00
--------------------------------------------------------------------------------
Flaggings
SEB Asset Management S.A.'s share of Marimekko Corporation's share capital and
voting rights declined to 2.05%, or 164,560 shares, due to a stock loan on 19
April 2011 and reverted to 5.77%, or 464,152 shares, at the termination of the
stock loan on 10 May 2011.
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
During the period under review, a total of 811,101 Marimekko shares were
traded, representing 10.1% of the shares outstanding. The total value of
Marimekko's share turnover was EUR 11,157,452. The lowest price of the
Marimekko share was EUR 11.95, the highest was EUR 15.90 and the average price
was EUR 13.88. At the end of the period, the final price of the share was EUR
13.00. The company's market capitalisation on 30 June 2011 was EUR 104,520,000
(EUR 90,530,400 on 30 June 2010; EUR 115,776,000 on 31 December 2010).
PERSONNEL
During the January-June period of 2011, the number of employees averaged 392
(372). At the end of the period, the Group employed 385 (375) people, of whom
27 (19) worked abroad.
THE MARKETING DIRECTOR'S SUBSTITUTE
Marimekko's marketing director and member of the Management Group, Malin Groop,
went on maternity leave in June 2011. Her substitute will be Tiina
Alahuhta-Kasko, Head of PR. The composition of the Management Group remains
unchanged.
RISK MANAGEMENT AND MAJOR RISKS
No significant changes have occurred in the general risk factors since the
review presented in the report of the Board of Directors on 7 February 2011
other than the clearly increased general uncertainty about the world economy.
The particular risks in the near future are associated with general economic
development and the resulting unsteadiness in the operating environment as well
as its potential effect on customers' purchasing behaviour and purchasing power
in all of the Group's markets. In addition, growth management, changes in raw
material and other purchase prices and the rise in the general cost level are
emphasised in the risk management of the company. Due to the general
uncertainty in the market, the company is also monitoring changes in exchange
rates even more carefully. They are, however, not expected to have a
significant influence on the financial position of the company. The Group's
main invoicing currency is the euro. The other significant invoicing currencies
are the Swedish krona and the US dollar. The share of the US dollar of total
invoicing will be increasing as a result of investments made in North America.
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. In environmental matters, the company's business
supervision is largely based on legislation and other regulations.
Environmental, health and safety issues are reported in the 2010 Annual Report.
DECISIONS OF THE ANNUAL GENERAL MEETING
The decisions made during Marimekko Corporation's Annual General Meeting are
reported in the stock exchange release dated 19 April 2011 and in the interim
report dated 3 May 2011.
INVESTMENT IN A PRINTING MACHINE
On 2 February 2011, Marimekko announced that it will invest in a new printing
machine and screen-making equipment in the company's textile printing factory
in Helsinki. The value of the investment is approximately EUR 1.5 million. The
investment will triple the textile printing factory's output capacity compared
to present levels. In 2010, a total of 1.1 million metres of fabric were
printed at the factory. The new machinery will be taken into use in October,
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.
MANAGEMENT GROUP'S LONG-TERM BONUS SYSTEM
The Board of Directors of Marimekko Corporation agreed on 7 February 2011 on
establishing a new long-term bonus system targeted at 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 to 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 over the span of several years.
The bonus system is explained in more detail in the financial statement
bulletin of 8 February 2011 and in the Annual Report for 2010.
INTERNATIONAL PROJECTS
Marimekko announced on 4 February 2011 that it was expanding its cooperation
with the home furnishings retailer Crate and Barrel. Crate and Barrel plans to
open a total of 23 Marimekko shop-in-shops in its stores by the end of the year
2013. In April 2011, Crate and Barrel opened a Marimekko shop on Madison Avenue
in New York as well as launched an online shop specialising in Marimekko
products within its website. Shops in Chicago, Los Angeles and San Francisco
were opened in May.
On 3 March 2011, the company announced that it was building international
e-commerce. The first online shop was opened in the United States at the end of
June. Online retailing will augment and strengthen Marimekko's existing
distribution channels. Next, it is intended to start e-commerce in Finland,
currently planned for the beginning of 2012. The investment is valued this year
at roughly EUR 1.0 million.
On 18 March 2011, the company announced that it was opening its own flagship
store in Manhattan, New York, during the autumn of 2011. The store, with a
sales floor area of 350 square metres, will be in one of the busiest blocks in
Manhattan's Flatiron District at the intersection of Fifth Avenue and Broadway.
The store will open at the beginning of October. The Marimekko showroom that
opened in New York last autumn will move in September to larger premises, near
to the new shop.
Marimekko North America Retail LLC, a subsidiary established in the United
States this year, will manage the operations of the new store and the online
shop. The subsidiary founded in 2010, Marimekko North America LLC, will be
leading the expansion of Marimekko in the United States.
MARIMEKKO TUOTANTO OY'S STATUTORY EMPLOYER-EMPLOYEE NEGOTIATIONS
Marimekko Corporation's subsidiary Marimekko Tuotanto Oy announced on 8 March
2011 its intention to reorganise its warehousing operations in the Herttoniemi
district of Helsinki and the start of statutory employer-employee negotiations
on possible permanent reductions in staffing. The decision to start
negotiations was made in the light of the operational changes required by the
Marimekko Group's e-commerce project as well as measures aimed at enhancing the
general cost-effectiveness of warehousing operations. On 28 April 2011,
Marimekko announced that the negotiations had been concluded. Enhancing the
efficiency of the warehousing operations and their consolidation in a single
location resulted in the elimination of 11 positions. The estimated overall
need for permanent reductions in personnel in the negotiation proposal was at
most 18 jobs. However, the number of different positions filled by transfers
within the Group exceeded original estimates.
MAJOR EVENTS AFTER THE CLOSE OF THE REVIEW PERIOD
Merger of subsidiaries
The Board of Directors of Marimekko Corporation has decided to merge the
company's fully-owned subsidiaries Marimekko Tuotanto Oy, Marimekko Kitee Oy ja
Decembre Oy into the parent company. The merger is executed in order to
simplify the group structure and administration as well as to enhance the
efficiency of business operations and to save costs.
In the merger, all assets and liabilities of the merging companies will be
transferred to the acquiring company Marimekko Corporation without liquidation
proceedings. No merger consideration shall be paid to the sole shareholder of
the merging companies, i.e. Marimekko Corporation, since the merger is a
subsidiary merger. The merger has no implications for personnel. The planned
date of registration of the implementation of the merger is 31 December 2011.
OUTLOOK FOR THE REMAINDER OF 2011
The recently increased uncertainty concerning overall economic development
makes it very difficult to forecast market trends and the company's outlook for
the remainder of the year. The uncertainty may affect consumers' purchasing
behaviour and buying power. Marimekko's sales are anticipated to stay on the
growth track for the rest of 2011, and the opening of new stores and other
development activities in the distribution network are expected to boost sales
especially during the last quarter of the year. International sales are
forecast to grow by about 25% in 2011. The sales trend in Finland is expected
to be slightly poorer than previously estimated due to changes in the
distribution network, which will be made in accordance with the company's
distribution strategy. Some retailer-owned concept stores will be closed and
Marimekko's own retail shops will be opened instead. In addition, revenues
generated from deliveries for individual promotions are expected to be very
low, as announced earlier. By cutting down on price-led promotions, the company
aims to further improve the average sales margin and the brand's pricing power.
The planned measures and substantial investments in internationalisation,
especially in the United States, and in developing business operations and the
distribution network are of such magnitude that they will be reflected in a
significant growth in fixed costs and continue to burden the operating result
considerably during the rest of the year. With these measures and investments,
which are exceptionally extensive and 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 high
price of cotton as well as the rise in overall cost levels put the company
under pressure to raise prices.
The total investments planned by the Marimekko Group for 2011 are estimated at
about EUR 6.5 million instead of the approximately EUR 5 million that was
announced earlier. This includes, among others, the roughly EUR 1.5 million
investment in machinery for the Helsinki textile printing factory, the roughly
EUR 1 million investment in e-commerce, the construction costs for the flagship
store and the showroom in New York, and the costs for the other company-owned
retail stores to be opened during the autumn.
In its interim report published on 3 May 2011, the company announced the
following outlook: the Marimekko Group's net sales 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 company specifies its full-year estimate
for 2011 within the announced range as follows: net sales growth for the Group
is expected to be at the bottom end of the range, close to 5%, and the
anticipated decline in operating profit is estimated to be at the top end of
the range (roughly 50-60% compared with the previous year).
Due to the seasonal nature of Marimekko's business, the major portion of the
company's net sales and earnings are traditionally generated during the last
two quarters of the year. In the last quarter, a significant share of sales is
accounted for by retail sales.
Helsinki, 17 August 2011
MARIMEKKO CORPORATION
Board of Directors
Information presented in the interim report 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 figures
Consolidated net sales by market area and product line
Segment information
Quarterly trend in net sales and earnings
Accounting principles
This interim report was prepared in accordance with IAS 34: Interim Financial
Reporting. The same accounting principles were applied as in the 2010 financial
statements.
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, 30 June
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) 4-6/20 4-6/20 1-6/20 1-6/20 1-12/2
11 10 11 10 010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NET SALES 16,815 15,747 34,049 31,755 73,297
--------------------------------------------------------------------------------
Other operating income 0 3 2 10 16
--------------------------------------------------------------------------------
Increase or decrease in inventories of -50 487 -1,981 -1,030 -1,173
completed and unfinished products
--------------------------------------------------------------------------------
Raw materials and consumables 6,301 5,319 14,417 12,809 28,496
--------------------------------------------------------------------------------
Employee benefit expenses 4,947 4,457 9,615 8,673 17,311
--------------------------------------------------------------------------------
Depreciation 496 366 916 723 1,478
--------------------------------------------------------------------------------
Other operating expenses 5,919 4,533 11,522 8,779 19,032
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OPERATING RESULT -798 588 -438 1,811 8,169
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 28 8 41 6 83
--------------------------------------------------------------------------------
Financial expenses -22 7 -58 19 -29
--------------------------------------------------------------------------------
6 15 -17 25 54
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RESULT BEFORE TAXES -792 603 -455 1,836 8,223
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income taxes -200 168 -147 473 2,151
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NET RESULT FOR THE PERIOD -592 435 -308 1,363 6,072
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distribution of net result to equity -592 435 -308 1,363 6,072
holders of the parent company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Basic and diluted earnings per share -0.07 0.05 -0.04 0.17 0.76
calculated on the profit/loss
attributable to equity holders of the
parent company, EUR
--------------------------------------------------------------------------------
COMPREHENSIVE CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 4-6/20 4-6/20 1-6/20 1-6/20 1-12/2
11 10 11 10 010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net result for the period -592 435 -308 1,363 6,072
--------------------------------------------------------------------------------
Other comprehensive income
--------------------------------------------------------------------------------
Change in translation difference 10 1 22 -1 8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPREHENSIVE RESULT FOR THE PERIOD -582 436 -286 1,362 6,080
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distribution of net result to equity -582 436 -286 1,362 6,080
holders of the parent company
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR 1,000) 30.6.2011 30.6.2010 31.12.2010
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ASSETS
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
NON-CURRENT ASSETS
-----------------------------------------------------------------------------
Tangible assets 10,841 9,450 9,390
-----------------------------------------------------------------------------
Intangible assets 1,654 564 869
-----------------------------------------------------------------------------
Available-for-sale financial assets 16 20 16
-----------------------------------------------------------------------------
Deferred tax assets 87 - -
-----------------------------------------------------------------------------
12,598 10,034 10,275
-----------------------------------------------------------------------------
CURRENT ASSETS
-----------------------------------------------------------------------------
Inventories 19,957 16,125 17,172
-----------------------------------------------------------------------------
Trade and other receivables 6,003 6,196 6,437
-----------------------------------------------------------------------------
Current tax assets 896 18 -
-----------------------------------------------------------------------------
Cash and cash equivalents 2,187 5,139 9,667
-----------------------------------------------------------------------------
29,043 27,478 33,276
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
ASSETS, TOTAL 41,641 37,512 43,551
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF
THE PARENT COMPANY
-----------------------------------------------------------------------------
Share capital 8,040 8,040 8,040
-----------------------------------------------------------------------------
Translation differences 32 1 10
-----------------------------------------------------------------------------
Retained earnings 21,507 21,528 26,237
-----------------------------------------------------------------------------
Shareholders' equity, total 29,579 29,569 34,287
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
NON-CURRENT LIABILITIES
-----------------------------------------------------------------------------
Deferred tax liabilities 652 694 651
-----------------------------------------------------------------------------
Financial liabilities 2,391 - -
-----------------------------------------------------------------------------
3,043 694 651
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
CURRENT LIABILITIES
-----------------------------------------------------------------------------
Trade and other payables 9,019 7,249 8,583
-----------------------------------------------------------------------------
Current tax liabilities - - 30
-----------------------------------------------------------------------------
9,019 7,249 8,613
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Liabilities, total 12,062 7,943 9,264
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL 41,641 37,512 43,551
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
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) 1-6/2011 1-6/2010 1-12/2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net result for the period -308 1,363 6,072
--------------------------------------------------------------------------------
Adjustments
--------------------------------------------------------------------------------
Depreciation according to plan 916 723 1,478
--------------------------------------------------------------------------------
Financial income and expenses 17 -25 -54
--------------------------------------------------------------------------------
Taxes -148 473 2,151
--------------------------------------------------------------------------------
Cash flow before change in working capital 477 2,534 9,647
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in working capital -1,980 -1,661 -2,452
--------------------------------------------------------------------------------
Increase (-) / decrease (+) in current 345 -150 -1,193
non-interest-bearing trade receivables
--------------------------------------------------------------------------------
Increase (-) / decrease (+) in inventories -2,784 -896 -1,943
--------------------------------------------------------------------------------
Increase (-) / decrease (+) in current 459 -615 684
non-interest-bearing liabilities
--------------------------------------------------------------------------------
Cash flow from operating activities before -1,503 873 7,195
financial items and taxes
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paid interest and payments on other -58 19 -30
financial expenses
--------------------------------------------------------------------------------
Interest received 42 -4 81
--------------------------------------------------------------------------------
Taxes paid -778 -1,852 -2,687
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES -2,297 -964 4,559
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investments in tangible and intangible assets -3,152 -523 -1,519
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES -3,152 -523 -1,519
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Long-term loans drawn 2,391 - -
--------------------------------------------------------------------------------
Dividends paid -4,422 -3,618 -3,618
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES -2,031 -3,618 -3,618
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents -7,480 -5,106 -578
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at the beginning of the 9,667 10,245 10,245
period
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the 2,187 5,139 9,667
period
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(EUR 1,000) Equity attributable to equity holders of the
parent company
--------------------------------------------------------------------------------
Share Translatio Retained Shareholder
capital n earnings s'
difference equity,
s total
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity 1 Jan. 8,040 2 23,783 31,825
2010
--------------------------------------------------------------------------------
Comprehensive result for the -1 1,363 1,362
period
--------------------------------------------------------------------------------
Dividends paid -3,618 -3,618
--------------------------------------------------------------------------------
Shareholders' equity 30 June 8,040 1 21,528 29,569
2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity 1 Jan. 8,040 10 26,237 34,287
2011
--------------------------------------------------------------------------------
Comprehensive result for the 22 -308 -286
period
--------------------------------------------------------------------------------
Dividends paid -4,422 -4,422
--------------------------------------------------------------------------------
Shareholders' equity 30 June 8,040 32 21,507 29,579
2011
--------------------------------------------------------------------------------
KEY FIGURES
1-6/2011 1-6/2010 Change, % 1-12/2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share, EUR -0.04 0.17 0.76
--------------------------------------------------------------------------------
Equity per share, EUR 3.68 3.68 4.26
--------------------------------------------------------------------------------
Return on equity (ROE), % -1.93 8.9 18.4
--------------------------------------------------------------------------------
Return on investment (ROI), % -2.5 11.8 25.0
--------------------------------------------------------------------------------
Equity ratio, % 71.1 78.9 78.8
--------------------------------------------------------------------------------
Gearing, % 0.7 -17.4 -28.2
--------------------------------------------------------------------------------
Gross investments, EUR 1,000 3,152 523 1,519
--------------------------------------------------------------------------------
Gross investments, % of net sales 9.3 1.6 2.1
--------------------------------------------------------------------------------
Contingent liabilities, EUR 1,000 18,569 9,974 86.2 11,147
--------------------------------------------------------------------------------
Average personnel 392 372 5.4 375
--------------------------------------------------------------------------------
Personnel at the end of the period 385 375 2.7 388
--------------------------------------------------------------------------------
Number of shares at the end of the 8,040 8,040 8,040
period
(1,000)
--------------------------------------------------------------------------------
Number of shares outstanding, average 8,040 8,040 8,040
(1,000)
--------------------------------------------------------------------------------
NET SALES BY MARKET AREA
(EUR 1,000) 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
2011 2010 % 2011 2010 % 2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finland 10,982 11,450 -4.1 21,548 21,635 -0.4 51,768
--------------------------------------------------------------------------------
Scandinavia 1,594 1,427 11.7 3,338 3,413 -2.2 7,101
--------------------------------------------------------------------------------
Central and Southern 1,473 975 51.1 3,170 2,418 31.1 5,284
Europe
--------------------------------------------------------------------------------
North America 978 885 10.5 1,691 1,617 4.6 3,814
--------------------------------------------------------------------------------
Asia-Pacific 1,788 1,010 77.0 4,302 2,672 61.0 5,330
--------------------------------------------------------------------------------
TOTAL 16,815 15,747 6.8 34,049 31,755 7.2 73,297
--------------------------------------------------------------------------------
NET SALES BY PRODUCT LINE
(EUR 1,000) 4-6/ 4-6/ Change, % 1-6/ 1-6/ Change, % 1-12/
2011 2010 2011 2010 2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Clothing 5,988 5,143 16.4 12,963 12,359 4.9 26,384
--------------------------------------------------------------------------------
Interior 7,456 7,398 0.8 14,507 13,687 6.0 34,006
decoration
--------------------------------------------------------------------------------
Bags 3,371 3,206 5.1 6,579 5,709 15.2 12,907
--------------------------------------------------------------------------------
TOTAL 16,815 15,747 6.8 34,049 31,755 7.2 73,297
--------------------------------------------------------------------------------
SEGMENT INFORMATION
(EUR 1,000) 1-6/2011 1-6/2010 Change, % 1-12/2010
------------------------------------------------------------
------------------------------------------------------------
Marimekko business
------------------------------------------------------------
Net sales 34,049 31,755 7.2 73,297
------------------------------------------------------------
Operating result -438 1,811 -124.2 8,169
------------------------------------------------------------
Assets 41,641 37,512 11.0 43,551
------------------------------------------------------------
QUARTERLY TREND IN NET SALES AND EARNINGS
(EUR 1,000) 4-6/2011 1-3/2011 10-12/2010 7-9/2010
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 16,815 17,234 22,074 19,468
-----------------------------------------------------------------
Operating result -798 360 2,188 4,170
-----------------------------------------------------------------
Earnings per share, EUR -0.07 0.04 0.21 0.38
-----------------------------------------------------------------
-----------------------------------------------------------------
(EUR 1,000) 4-6/2010 1-3/2010 10-12/2009 7-9/2009
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 15,747 16,008 20,719 19,492
-----------------------------------------------------------------
Operating result 588 1,223 2,353 2,901
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Earnings per share, EUR 0.05 0.12 0.22 0.27
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