Tulikivi Oyj - Interim report (Q1 and Q3)

Interim report 1-3/2011

TULIKIVI CORPORATION                 Interim report
                                                           April 20, 2011 at
16.30 

Interim report 1-3/2011



- The Tulikivi Group's net sales were EUR 12.6 million (EUR 10.7 million,
01-03/2010). 
- The Group posted an operating loss of EUR -1.5 million (-1.7).  Earnings per
share amounted to EUR -0.04 (-0.04). The result was lowered by EUR 0.5 million
in non-recurring additional expenses arising from product launches in the new
Sauna Business and the expansion of the distribution channel in Finland. The
distribution channel was expanded in Finland by opening 35 new sales points. 
- Cash flow from operating activities before investments was EUR -2.2 (-2.4)
million. 
- Order books were at EUR 9.7 million (EUR 8.2 million 31 March 2010) on 31
March. 
- Future outlook: The full-year consolidated net sales are expected to increase
over 10 per cent. As a result of improved cost efficiency the operating result
for the year is expected to improve significantly and to be profitable. 
- The project concentrating on core businesses will allow improvement of Group
profitability as of the 2012 financial year, but it will also cause
non-recurring expenses during the current financial year, the amount of which
will become known once codetermination negotiations are concluded. 

Summary of the interim report 1-3/2011

Key financial ratios

                      1-3/   1-3/   Change,  1-12/
                      2011   2010   %        2010 
Sales, MEUR            12.6   10.7     17.1   55.9
Operating profit/      -1.5   -1.7     11.7   -0.3
loss, MEUR                                        
Profit before tax      -1,7   -1.9     10.4   -1.0
Total comprehensive    -1.3   -1.4     11.9   -0.8
income for the                                    
period, MEUR                                      
Earnings per share    -0.04  -0.04      0.0   -0.2
Euro                                              
Net cash flow from     -2.2   -2.4      8.3    2.9
operating activities                              
MEUR                                              
Equity ratio,          35.6   37.3            37,0
%                                                 
Net indebtness         88.6   76.5            68,1
ratio, %                                          
Return on             -12.7  -13.8            -0,1
investments, %                                    

Managing Director´s comments:
 “During the first quarter, there was favourable development in demand for
Tulikivi products. 

In fireplace exports demand has improved on last year. Improving consumer
confidence and higher energy prices have increased demand for fireplaces in
Central Europe.In the case of Lining Stones, demand has remained good but
growth in net sales will be more moderate than before during the remainder of
the year. Demand for lining stone is boosted by heater manufacturers'
increasing interest in improving the heat retention capacity of their products. 

In the Sauna Business, sales have been launched in Tulikivi showrooms and sales
points. In the next few months, our goal is to expand distribution and launch
new products on the market. Investments in launching the Sauna Business were
made as planned. 

We also set up more than 50 new service points in Finland and the neighbouring
countries during the first half of the year, which decreased profitability
during the early months of the year. 

Stronger order books in all business areas will improve net sales and
profitability in the next few months. Thanks to the expanded distribution
channel, brisk new construction and our new products, demand will be high in
the remaining part of the year. 

By concentrating on our core businesses we will improve profitability and
streamline our operations in the long term.” 



Net sales and result
The Group's net sales were EUR 12.6 million (Jan-March/2010: EUR 10.7 million).
The net sales of the Fireplaces Business were EUR 11.4 (9.5) million and of the
Natural Stone Products Business EUR 1.2 (1.2) million. 
Net sales in Finland accounted for EUR 6.8 (5.3) million, or 54.0 (49.9) per
cent, of total net sales. Exports amounted to EUR 5.8 (5.4) million in net
sales. The principal export countries were Sweden, Germany and France. The
growth in export net sales was from increased lining stone sales. 

The consolidated operating result was EUR -1.5 (-1.7) million. In accordance
with the Group's segment reporting, the Fireplaces Business had an operating
loss of EUR -0.9 (-1.1) million, and the Natural Stone Products Business an
operating loss of EUR -0.2 (-0.2) million, while other items' expenses were EUR
-0.4 (-0.4) million. The result was lowered by non-recurring additional costs
from market launches of electric sauna heaters, the expansion of the
distribution channel in Finland and the new corporate image, amounting to EUR
0.5 million in total. 

Consolidated result before taxes was EUR -1.7 (-1.9) million and net losses
were EUR 1.3 million (1.4) million. Earnings per share amounted to EUR -0.04
(-0.04). 



Expansion of the Finnish distribution channel
A network of 35 Tulikivi showrooms forms the framework for Tulikivi's Finnish
distribution channel which provides consumers with Tulikivi's full product
range and comprehensive services. This network is complemented by a network of
Tulikivi sales points in hardware stores that operate in cooperation with the
Tulikivi showrooms. 

During the first quarter, distribution was expanded with 35 new sales points,
taking the number of sales points up to 150. Fireplace sales through the S
Group will be launched during the second quarter. 

Sauna product sales will be launched first in the Tulikivi showroom and sales
point network. Tulikivi is also in the process of starting a new method of
distribution of sauna products to professional builders following the signing
of distribution agreements with Onninen and Elektroskandia. 



Financing and investments
Cash flow from operating activities before investments was EUR -2.2 (-2.4)
million. Working capital increased by EUR 1.5 million in the period and came to
EUR 8.8 (7.2 on March, 31 2010) million. Interest-bearing debt was EUR 25.9
(26.1) million. Net financial expenses were EUR 0.2 (0.2) million. 

The Group's investments in production, quarrying and development were EUR 1.0
(0.7) million. Research and development costs were EUR 0.7 (0.5) million, i.e.
5.2 (4.2) per cent of net sales. A total of EUR 0.2 (0.1) million of this
figure after subsidies had been deducted was capitalized. In March, the Group
launched its range of electric sauna heaters. 



Near-term risks and uncertainties
The Group's risks in the near future include unexpected negative fluctuations
in the economy in some market areas. Consumer demand driven solely by price and
not the qualities of the product is also a risk. 

The renewal of the enterprise resource planning system is being launched. A
schedule and cost risk is often associated with such projects. More information
on risks can be found in the 2010 Board of Directors' report and the notes to
the financial statements. 



Events following the end of the period
Tulikivi has issued its plan to concentrate on its core business to improve
profitability.  Under the plan, the utility ceramics business and building
stone manufacturing will be divested by the end of 2011. Also, the aim is to
divest the earth-moving and loading equipment used in soapstone quarrying and
to increase outsourcing in quarrying. The goal is also to concentrate the
production of the Natural Stone Products Business.  The focus of the Group's
growth strategy is in the manufacture of fireplaces and sauna and interior
stone products, development of related product concepts and their marketing to
consumers.  By concentrating on the core business, we can increase our
investment in growth in new product groups and in distribution in accordance
with our strategy. 

The effect on personnel will involve roughly 50 persons. Because of the
arrangements, Tulikivi will initiate codetermination negotiations in the
Natural Stone Products Business, quarrying and at the Heinävesi factory. 

Resolutions of the Annual General Meeting
Tulikivi Corporation's Annual General Meeting, held on 14 April 2011, resolved
to pay a dividend of EUR 0.0250 on Series A shares and EUR 0.0233 on Series K
shares. The dividend will be paid out on 28 April 2011. The other decisions of
the general meeting can be found in the separate release published in the date
of the meeting. 



Future outlook
In Finland, the outlook for fireplace products is good as a result of
increasing new construction and rising consumer energy prices. In exports, the
revival in new construction and increasing consumer confidence will improve the
demand for fireplaces during the financial year. The demand for lining stone
products will remain good. 

The new sauna and fireplace products and expanding distribution network will
all increase net sales. 

The full-year consolidated net sales are expected to increase over 10 per cent.
As a result of improved cost efficiency the operating result for the year is
expected to improve significantly and to be profitable. 

Due to the seasonal nature of the industry, profit is mostly accumulated in the
second half of the year. 

The project concentrating on core businesses will allow improvement of Group
profitability as of the 2012 financial year, but it will also cause
non-recurring expenses during the current financial year, the amount of which
will become known once codetermination negotiations are concluded. 



TULIKIVI CORPORATION



Board of Directors
Matti Virtaala Chairman of the Board

Distribution: NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com

Additional information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com
- Chairman of the Board of Directors MattiVirtaala, +358 207 636 666
- Managing Director HeikkiVauhkonen, +358 207 636 555





Enclosure:  Tulikivi Corporation´s Interim report Jan-March 2011

Attachments:

Interim report January-March 2011.pdf