2017-02-16 08:00:49 CET
2017-02-16 08:00:49 CET
REGULATED INFORMATION
Rapala VMC - Financial Statement Release
RAPALA VMC CORPORATION'S ANNUAL ACCOUNTS 2016: CASH FLOW AT RECORD LEVEL BUT SALES AND PROFITABILITY DOWN FROM LAST YEAR
Rapala VMC Corporation
Financial Statement Release
February 16, 2017 at 9:00 a.m.
RAPALA VMC CORPORATION'S ANNUAL ACCOUNTS 2016: CASH FLOW AT RECORD LEVEL BUT
SALES AND PROFITABILITY DOWN FROM LAST YEAR
January-December (FY) in brief:
* Net sales were 260.6 MEUR, down 6% from previous year (278.2). With
comparable exchange rates sales were 5% lower than last year.
* Operating profit was 7.2 MEUR (21.0), heavily impacted by items affecting
comparability.
* Comparable operating profit* was 18.8 MEUR (25.3).
* Cash flow from operations was 26.7 MEUR (15.6).
* Earnings per share was -0.08 EUR (0.17), heavily impacted by one-off items
included in items affecting comparability.
* 2017 guidance: Full year net sales are expected to be above last year's
level and comparable operating profit in the same range as in 2016.
* Separate stock exchange release issued summarizing Group's updated strategy.
* Dividend proposal 0.10 EUR (0.15 EUR) per share that is distributed in two
equal installments.
July-December (H2) in brief:
* Net sales were 117.5 MEUR, down 5% from previous year (124.2).
* Operating profit was -7.0 MEUR (3.6).
* Comparable operating profit* was 3.2 MEUR (4.8).
* Cash flow from operations was 20.5 MEUR (4.9).
* Earnings per share was -0.27 EUR (-0.01).
President and CEO Jussi Ristimäki: "Our 2016 sales were behind last year's
levels in many of our big markets. North America was impacted by slow start of
the year in the USA and difficult trading conditions in Canada. In Europe,
France was hurt by unfavorable weathers and overall depressed market sentiment.
The Russian situation continued to be challenging throughout the year, although
small positive signs are now in the air. In Nordic our hunting business is
recovering nicely.
Reduced sales had a direct negative impact on our comparable profitability. Cost
savings accelerated during latter part of the year, but were not sufficient to
offset the lost gross profits. However, despite lower than expected topline, we
managed to reduce our inventories and generate record high annual operative cash
flow.
After changes in the management during the third quarter, we initiated a
strategy update project to crystallize our future priorities. In short to mid-
term, utilizing the Group's existing assets and capabilities, the focus will be
on capturing organic growth opportunities in fishing tackle business. We will
also take determined actions to improve profitability, lighten balance sheet and
improve operational performance. In longer term the target is to return to more
aggressive growth track and actively seek synergistic growth opportunities also
outside the fishing tackle business."
* Excluding mark-to-market valuations of operative currency derivatives and
other items affecting comparability. From 2016 onwards the Rapala Group has
relabeled the previously referenced "non-recurring items" with "other items
affecting comparability" including material restructuring costs, impairments,
gains and losses on business combinations and disposals, insurance
compensations and other non-operational items.
Rapala Group presents alternative performance measures to reflect the
underlying business performance and to enhance comparability between financial
periods. Alternative performance measures should not be considered in
isolation as a substitute for measures of performance in accordance with IFRS.
Definitions and reconciliation of key figures are presented in the financial
section of the release.
Key figures
H2 H2 Change FY FY Change
MEUR 2016 2015 % 2016 2015 %
Net sales 117.5 124.2 -5% 260.6 278.2 -6%
Operating profit/loss -7.0 3.6 -294% 7.2 21.0 -66%
% of net sales -6.0% 2.9% 2.8% 7.6%
Comparable operating 3.2 4.8 -33% 18.8 25.3 -26%
profit *
% of net sales 2.7% 3.8% 7.2% 9.1%
Cash flow from operations 20.5 4.9 +318% 26.7 15.6 +71%
Gearing % 70.6% 77.3% 70.6% 77.3%
EPS, EUR -0.27 -0.01 -0.08 0.17 -147%
* Excluding mark-to-market valuations of operative currency derivatives and
other items affecting comparability. From 2016 onwards the Rapala Group has
relabeled the previously referenced "non-recurring items" with "other items
affecting comparability" including material restructuring costs, impairments,
gains and losses on business combinations and disposals, insurance
compensations and other non-operational items.
Rapala Group presents alternative performance measures to reflect the
underlying business performance and to enhance comparability between financial
periods. Alternative performance measures should not be considered in
isolation as a substitute for measures of performance in accordance with IFRS.
Definitions and reconciliation of key figures are presented in the financial
section of the release.
Market environment
Year 2016 sales were behind last year as trading conditions were challenging
throughout the year, especially in big markets the US, Russia and France. In the
Group's biggest market, the US, slow start of the year impacted the whole year,
even if the second half sales were above last year's levels. The struggling
market situation in Russia continued to strongly affect the sales, but in the
fourth quarter the sales strengthened in Russia and more stable Ruble slightly
improved the market situation. The sales in France were also down, burdened by
tightened competition and reserved market sentiment. Several markets witnessed
changes and uncertainties, causing retailers to be careful with their
purchasing.
Favorable late summer and early fall weathers were good for the summer fishing
tackle sales, but not enough to offset the slower sales in early summer. Group's
sales of winter fishing and winter sports equipment were negatively impacted by
unfavorable winter weathers.
Business Review January-December 2016
The Group's net sales for the full year were down 6%. Changes in translation
exchange rates decreased sales by approximately 3.3 MEUR for the full year.
Correspondingly in local currency terms net sales were down 5% from last year.
North America
The sales in North America were below last year's levels throughout the year.
The US retail scene was under some turmoil which impacted the sales. The second
half sales in the US were above last year's level, supported by strong sales of
group branded lures. The retailers' purchases started to reflect better the
consumer demand after retailers' destocking earlier in the year. Late beginning
of winter combined with carryover of winter fishing stock at retail level from
last year's short winter slowed down the winter fishing tackle sales. In Canada,
economic situation and trading conditions were weak throughout the year,
burdening the region's sales.
Nordic
In the Nordic countries the sales for the full year were slightly below last
year, but growing towards the end of the year. Excluding impacts of valuation of
currency nominated accounts receivables, Nordic full year sales were slightly
above last year's level. Full year as well as last quarter sales were supported
by stronger hunting sales, especially in Sweden and Denmark. In Norway full year
sales improved from last year supported by better weather conditions. The winter
fishing sales in the region also improved slightly from last year's low levels.
Export sales from the Group's manufacturing units to non-Group distribution
channels were down compared to last year.
Rest of Europe
The sales were below last year's level for the full year and the second half of
the year, following slowdown in sales especially in big markets Russia and
France. The fourth quarter sales for the region were above last year's level
supported by improved sales in Spain, Baltics and Russia, where ice fishing
sales picked up. Currency exchange rate changes, especially Russian Ruble, had a
negative impact on the regions full year sales. During fourth quarter the Ruble
started to strengthen. The instability and uncertainties in Russia and Ukraine
impacted sales volumes in the respective countries, but the market sentiment
slightly improved towards the end of the year in Russia. In France the poor
summer weathers affected the summer fishing tackle sales and tightened price
competition and overall reserved market sentiment continued to burden the sales.
In Poland the strong sales for the second half of the year were boosted by
closeout sales of a third party category, while in Spain and Baltics sales were
supported by increasing third party hunting sales.
Rest of the World
The region's sales were behind last year throughout the year. Currency exchange
rate changes, especially South African Rand, had a negative impact on the
regions full year sales. The sales were burdened by struggling Asian markets,
especially in Southeast Asia where the Group's distribution organization is
being restructured. After a strong start of the year the sales slowed down on
the fourth quarter in South Africa. The full year sales in China, South Korea,
Chile and Mexico were stronger than last year. The region's sales were supported
by new group distribution operation handling markets in Middle East and North
Africa. Export sales from the Group's manufacturing units to non-Group
distribution channels and sales in Australia were down compared to last year.
Valuation of currency nominated accounts receivables had a positive impact on
last year's full year sales.
External Net Sales by Area*
FY FY Change Comparable
MEUR 2016 2015 % change %
North America 91.3 99.2 -8% -8%
Nordic 55.3 56.2 -2% -1%
Rest of Europe 81.3 86.9 -6% -4%
Rest of the World 32.7 35.9 -9% -6%
Total 260.6 278.2 -6% -5%
H2 H2 Change Comparable
MEUR 2016 2015 % change %
North America 44.9 47.6 -6% -6%
Nordic 21.9 22.0 0% 0%
Rest of Europe 33.3 35.5 -6% -5%
Rest of the World 17.4 19.1 -9% -9%
Total 117.5 124.2 -5% -5%
Q4 Q4 Change Comparable
MEUR 2016 2015 % change %
North America 23.6 25.8 -9% -10%
Nordic 11.0 10.5 +5% +5%
Rest of Europe 14.6 13.8 +6% +3%
Rest of the World 8.9 9.4 -5% -7%
Total 58.1 59.7 -3% -4%
*Geographical areas are presented based on unit location. Rest of Europe
includes France, Russia, Eastern Europe, Spain, Portugal, Great Britain, the
Baltic countries, Switzerland and Kazakhstan. Rest of the World includes Asia,
Latin America, Australia and South-Africa.
Financial Results and Profitability
Comparable (excluding mark-to-market valuations of operative currency
derivatives and other items affecting comparability) and reported operating
profit decreased from last year for the full year and second half of the year.
With comparable translation exchange rates, comparable operating profit was 6.4
MEUR behind last year's level for the year and 1.7 MEUR behind for the second
half year.
Comparable operating profit margin was 7.2% (9.1) for the full year and 2.7%
(3.8) for the second half year. The decline in the full year and second half
year profitability was directly driven by the lower sales, especially of higher
margin Group Branded Products. Lower sales volumes impacted profitability
negatively both at distribution and manufacturing level. Profit was also
burdened by lower result of joint venture in the UK that was sold in September
2016. The Group did realize cost savings during the year but fixed costs'
decrease did not offset the reduced gross profit caused by lower sales.
Respectively reported operating profit margin was for the full year 2.8% (7.6)
and for the second half of the year -6.0% (2.9). Reported operating profit
included loss of mark-to-market valuation of operative currency derivatives of
1.6 MEUR (2.1) for the year and loss of 0.7 MEUR (0.1) for the second half. Net
expenses of other items affecting comparability included in the reported
operating profit were 10.0 MEUR (2.3) for the full year and 9.5 MEUR (1.1) for
the second half year of which 9.2 MEUR relates to redefined inventory valuations
recognized in conjunction with the Group's strategy update initiated during
fourth quarter. Items affecting comparability also include costs related to
restructurings in Southeast Asia distribution and France, as well as in various
other units.
Total financial (net) expenses were 5.0 MEUR (6.8) for the full year and 2.2
MEUR (2.7) for the second half year. Net interest and other financing expenses
were slightly above last year's level at 3.7 MEUR (3.5) for the full year and
2.0 MEUR (2.0) for the second half. Compared to last year financial items were
impacted less by (net) foreign exchange expenses of 1.3 MEUR (3.3) for the full
year and 0.2 MEUR (0.6) for the second half of the year.
Driven by items affecting comparability, net profit and earnings per share for
the full year and second half of the year fell below zero and under last year's
levels. Excluding inventory allowance, net of tax impact, the net profit for the
full year would have been about 5.7 MEUR and earnings per share about 0.12 EUR.
Income taxes were impacted by loss making units and included a positive 0.7 MEUR
tax adjustment on income taxes related to past years. The share of non-
controlling interest in net profit decreased from last year and totaled 1.0 MEUR
(1.4) for the year and 0.2 MEUR (0.3) for the second half of the year.
Key figures
H2 H2 Change FY FY Change
MEUR 2016 2015 % 2016 2015 %
Net sales 117.5 124.2 -5% 260.6 278.2 -6%
Operating profit/loss -7.0 3.6 -294% 7.2 21.0 -66%
Comparable operating 3.2 4.8 -33% 18.8 25.3 -26%
profit *
Net profit -10.2 -0.2 -4647% -2.0 8.1 -125%
* Excluding mark-to-market valuations of operative currency derivatives and
other items affecting comparability. Other items affecting comparability
include material restructuring costs, impairments, gains and losses on
business combinations and disposals, insurance compensations and other non-
operational items.
Bridge calculation of comparable operating profit
H2 H2 Change FY FY Change
MEUR 2016 2015 % 2016 2015 %
Operating profit/loss -7.0 3.6 -294% 7.2 21.0 -66%
Mark-to-market valuations of
operative currency
derivatives 0.7 0.1 +600% 1.6 2.1 -24%
Other items affecting 9.5 1.1 +764% 10.0 2.3 +335%
comparability
Comparable operating profit 3.2 4.8 -33% 18.8 25.3 -26%
More detailed bridge of comparable operating profit and definitions and
reconciliation of key figures are presented in the financial section of the
release.
Segment Review
Group Products
Group Fishing Products full year sales were down from last year's levels,
negatively impacted by lower sales of fishing lures, lines and accessories
especially in North America. Challenges in Rest of Europe market drove reduction
of the Group's hook sales, while in North America VMC hook sales were growing.
Group Fishing Products fourth quarter and second half year sales were supported
by better sales of fishing lures in the US, but burdened by lower sales of
winter fishing tackle.
The full year and second half year sales of Other Group Products were at last
year's level and the fourth quarter sales slightly above last year's level.
Compared to last year both Group Products and Third Party Products full year
sales were also negatively impacted by valuation of currency nominated accounts
receivable, which supported the sales last year.
Comparable operating profit for Group Fishing Products declined compared to last
year for the full year and the second half of the year. Full year comparable
operating profit was burdened by lower sales, which reduced profitability both
at distribution and manufacturing level. Fixed costs were below last year levels
driven by cost saving measures, but not sufficient to offset the reduced gross
profit. Comparable operating profit in Other Group Products was above last year,
raising Group Products' comparable operating profit for the second half of the
year slightly above last year.
Third Party Products
The sales of Third Party Products were below last year's level, burdened by
lower sales of Third Party Fishing Products. The challenging trading conditions
in Russia continued to reduce the Third Party Fishing products sales in the
region. Also the difficult market situation in France affected negatively the
Third Party Fishing Products sales. Third Party Hunting sales were up from last
year in Nordic and new hunting markets in Europe and Rest of the World. Currency
fluctuations had negative impact on full year sales in Russia and South Africa.
Comparable operating profit for Third Party Products was behind last year's
level burdened by lower sales and aggressive sales campaigns' negative impact on
margins, but supported by price increases issued to offset the unfavorable
development in purchase currencies last year.
Net Sales by Segment
FY FY Change Comparable
MEUR 2016 2015 % change %
Group Products 172.1 184.7 -7% -6%
Third Party Products 88.5 93.5 -5% -3%
Eliminations 0.0
Total 260.6 278.2 -6% -5%
H2 H2 Change Comparable
MEUR 2016 2015 % change %
Group Products 77.1 81.2 -5% -5%
Third Party Products 40.3 43.1 -6% -6%
Eliminations 0.0
Total 117.5 124.2 -5% -5%
Q4 Q4 Change Comparable
MEUR 2016 2015 % change %
Group Products 39.2 40.2 -2% -3%
Third Party Products 18.9 19.5 -3% -5%
Eliminations 0.0
Total 58.1 59.7 -3% -4%
Comparable operating profit by Segment
H2 H2 Change FY FY Change
MEUR 2016 2015 % 2016 2015 %
Group Products 5.4 5.2 +4% 17.4 22.2 -22%
Third Party Products -2.2 -0.5 -349% 1.4 3.2 -56%
Comparable operating profit 3.2 4.8 -33% 18.8 25.3 -26%
Items affecting -10.2 -1.2 -777% -11.6 -4.3 -168%
comparability
Operating profit / loss -7.0 3.6 -294% 7.2 21.0 -66%
Rapala Group has changed the measurements of segment performance by excluding
items affecting comparability from operating profit. Comparative figures
2014-2015, definitions and reconciliations are presented in the financial
section of the release.
Financial position
Following the Group's intense focus on cash flow and inventories, cash flow from
operating activities reached all time annual record of 26.7 MEUR (15.6) for the
full year and 20.5 MEUR (4.9 MEUR) for the second half of the year despite
challenging trading conditions and lower sales. Change in working capital
amounted to 10.5 MEUR (-3.3) for the full year and 17.8 MEUR (3.5 MEUR) for the
second half of the year.
Inventories were in the end of December 102.2 MEUR (116.2) decreasing by 14.0
MEUR from last year, of which 9.5 MEUR (9.2 MEUR with average FX rates) results
from non-cash allowances relating to redefined inventory valuation. On
comparable basis, the Group's inventories decreased by 8.1 MEUR from last
December despite slowdown in sales. Change in translation exchange rates
increased inventory value by 3.7 MEUR.
Net cash used in investing activities was below last year's level and totaled
6.0 MEUR (8.6) for the full year and 1.2 MEUR (4.5 MEUR) for the second half of
the year. Operative capital expenditure was notably lower compared to last year
in the second half of the year at 3.4 MEUR (5.7), while full year operative
capital expenditure was 8.4 MEUR (9.1). Investments in manufacturing operations
in Indonesia and extension of the hook factory and warehouse building in France
were finalized already in the first half of the year. Full year and second half
year net investing activities included 1.0 MEUR (1.1 MEUR) annual installment
received related to the 2011 disposal of the gift business and sale of UK joint
venture shares of 1.2 MEUR in second half of 2016. Last year's investing
activities included the last installment of the acquisition of the Sufix brand
of 0.9 MEUR.
Liquidity position of the Group was good. Undrawn committed long-term credit
facilities amounted to 59.9 MEUR at the end of the period. Driven by strong cash
flow, gearing and net interest-bearing debt decreased from last year and equity-
to-assets was slightly below last year's level. Following the higher ratio
between net interest bearing debt and reported EBITDA, the Group has during the
year agreed with its lenders on higher covenant levels covering also the last
quarter of 2016. The Group expects to fulfill the requirements of the lenders
also at the end of the first quarter of 2017.
Key figures
H2 H2 Change FY FY Change
MEUR 2016 2015 % 2016 2015 %
Cash flow from operations 20.5 4.9 +318% 26.7 15.6 +71%
Net interest-bearing debt 96.1 108.2 -11% 96.1 108.2 -11%
at end of period
Gearing % 70.6% 77.3% 70.6% 77.3%
Equity-to-assets ratio at 43.1% 44.7% 43.1% 44.7%
end of period, %
Definitions and reconciliation of key figures are presented in the financial
section of the release.
Strategy Implementation
After changes in the Group's management in the third quarter of 2016, the Group
initiated during fourth quarter a process to update its future strategies.
Following the conclusions of this strategy update, in order to build solid
financial and operational platform for long term growth, the Group's primary
focus in coming three years will be on capturing organic growth opportunities in
fishing tackle business. The Group will also take determined actions to improve
its profitability, lighten balance sheet and improve operational performance. In
longer term the target is to return to more aggressive growth track and actively
seek synergistic growth opportunities also outside the fishing tackle business.
The Group's existing assets and capabilities form the foundation for the future
strategies, both in short and long term. Future strategies are built upon
utilizing and capitalizing the brand portfolio, own manufacturing platform,
research and development knowledge, as well as the broad distribution network
and strong local presence all around the world supporting the sales of Group's
own and selected synergistic third party products.
In 2016 the Group's key priorities included improving the performance and
capturing the benefits of the lure factory in Batam, Indonesia, improving
operational efficiencies of manufacturing operations and developing global
supply chain management. New global product launch initiatives, Asian
distribution restructuring as well as improving the cost efficiency were also
high on the management agenda. These topics will continue to be on the Group's
focus and be further accelerated together with various new strategic
initiatives.
Product Development
In line with the Group's updated strategy, strengthening and further leveraging
the Group's global innovation power is one of the key success factors in the
future and key requirement for enhancing the organic growth. By utilizing its
unique global market knowledge combined with R&D, manufacturing and sourcing
capabilities, the Group will address target markets with new innovative products
and concepts and will swiftly respond to market needs.
The Group is reorganizing and boosting its lure product development procedure by
centralizing the product development know-how and key resources to one location
in Vääksy, Finland. The R&D center will serve both the European and Asian lure
manufacturing units. This will also increase the agility of the product
development procedures.
The most important product launch in 2016 was the introduction of the new Rapala
Shadow Rap Shad lure launched in early spring. Other notable releases were new
series of Rapala fisherman's tools and accessories which received Best New
Product Awards in the European trade show EFTTEX and the Australian trade show
AFTA.
Introductions of new Storm hero lures were prepared during the second half of
the year, and the Storm 360GT soft plastic lure was launched globally to the
markets in January 2017, supported with coordinated global marketing campaigns.
Organization and Personnel
Average number of personnel was 2 829 (3 078) for the full year and 2 740 (3
206) for the last six months. At the end of December, the number of personnel
was 2 751 (3 159), decrease coming from optimizing the capacity and streamlining
the lure manufacturing operations in Asia as well as restructuring in South East
Asia, France and various other units.
The Group made the following appointments and changes in the Group's Board and
Executive Committee effective September 1, 2016: Jorma Kasslin was appointed as
Executive Chairman of the Board. Jussi Ristimäki was appointed as President and
Chief Executive Officer. Cyrille Viellard was appointed to be in charge of
Group's distribution in Europe (excluding Russia) and Latin America. Lars
Ollberg was appointed, in addition to his current role as Head of Accessory and
Outdoor Business and Distribution in Asia, Pacific and Middle East, to be
responsible for global coordination of Group's innovations as well as
distribution in South Africa. Stanislas de Castelnau was appointed as Head of
Manufacturing Operations and Global Supply Chain Development. He also maintained
the role as Head of Hook and Carp business unit.
Arto Nygren was appointed as Executive Vice President, Lure Manufacturing and
member of the Executive Committee as of January 1, 2017.
Short-term Outlook and Risks
In 2016 the Group's sales decreased in many big markets and the outlook for
2017 is still somewhat cautious. In many countries changes in political regimes
are causing uncertainties on the future development of the economic activity.
In North America sales picked up during latter part of 2016 and this development
is expected to continue. New product introductions, including the new Storm
360GT soft bait manufactured in the Batam factory, are expected to support the
sales. In Russia the market continues to be challenging, although the
strengthening of Ruble has slightly improved the sentiment. In Central Europe
the markets continue to be competitive. Sales in Rest of the World markets are
expected to improve.
Following the updated strategy, the Group will launch various initiatives to
boost the organic growth and improve the cost and capital efficiency as well as
operational performance in the future. These initiatives will trigger some
additional expenses and investments in 2017.
The Group expects full year net sales to be above last year's level and
comparable operating profit (excluding mark-to-market valuations of operative
currency derivatives and other items affecting comparability) to be in the same
range as in 2016.
Proposal for profit distribution
Taking into consideration the Group's reduced net result (impacted by the non-
cash inventory allowance) and strong cash flow the Board of Directors proposes
to the Annual General Meeting that a dividend of 0.10 EUR for 2016 (0.15 EUR)
per share is distributed from the Group's distributable equity and remaining
distributable funds are carried forward to retained earnings. It is proposed
that the dividend is distributed in two equal installments. At December
31, 2016 the distributable equity totaled to 25.1 MEUR.
No material changes have taken place in the Group's financial position after the
end of the financial year. The Group's liquidity is good and the view of the
Board of Directors is that the distribution of the proposed dividend will not
undermine this liquidity.
Financial Statements and Annual General Meeting
Financial Statements for 2016 and Corporate Governance Statement will be
published in the beginning of week 10 commencing on March 6, 2017. Annual
General Meeting is planned to be held on March 30, 2017.
First quarter Trading Report 2017 will be published on April 28, 2017.
Helsinki, February 16, 2017
Board of Directors of Rapala VMC Corporation
For further information, please contact:
Jussi Ristimäki, President and Chief Executive Officer, +358 9 7562 540
Olli Aho, Investor Relations, +358 9 7562 540
A conference call on the financial year result will be arranged today at 10:30
a.m. Finnish time (9:30 p.m. CET). Please dial +44 (0)330 336 9104 or
+1 719 325 2340 or +358 (0)9 7479 0360 (pin code: 831981) five minutes before
the beginning of the event. A replay facility will be available for 14 days
following the teleconference. The number to dial +44 (0) 207 984 7568 (pin code:
1095716). Financial information and teleconference replay facility are available
at www.rapalavmc.com.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME H2 H2 FY FY
MEUR 2016 2015 2016 2015
Net sales 117.5 124.2 260.6 278.2
Other operating income 1.1 0.7 1.3 1.0
Materials and services 65.3 60.2 129.0 130.9
Employee benefit expenses 32.5 33.1 67.6 68.4
Other operating expenses 24.1 24.5 51.1 52.3
Share of results in associates and joint ventures -0.1 0.1 -0.1 0.4
EBITDA -3.5 7.2 14.1 28.1
Depreciation, amortization and impairments 3.5 3.6 6.9 7.1
Operating profit/loss (EBIT) -7.0 3.6 7.2 21.0
Financial income and expenses 2.2 2.7 5.0 6.8
Profit/loss before taxes -9.2 0.9 2.2 14.2
Income taxes 1.1 1.2 4.2 6.1
Net profit/loss for the period -10.2 -0.2 -2.0 8.1
Attributable to:
Equity holders of the company -10.4 -0.5 -3.0 6.7
Non-controlling interests 0.2 0.3 1.0 1.4
Earnings per share for profit attributable
to the equity holders of the parent company:
Earnings per share, EUR (diluted = non-diluted) -0.27 -0.01 -0.08 0.17
STATEMENT OF COMPREHENSIVE INCOME H2 H2 FY FY
MEUR 2016 2015 2016 2015
Net profit/loss for the period -10.2 -0.2 -2.0 8.1
Other comprehensive income, net of tax
Change in translation differences* 6.2 -2.3 4.2 5.5
Gains and losses on cash flow hedges* 0.4 0.3 0.5 0.4
Gains and losses on net investment hedges* 0.0 -1.2 0.8 -2.9
Remeasurements of defined benefit liabilities 0.1 0.1 0.1 0.1
Total other comprehensive income, net of tax 6.7 -3.2 5.6 3.2
Total comprehensive income for the period -3.6 -3.4 3.6 11.3
Total comprehensive income attributable to:
Equity holders of the parent company -4.1 -2.4 1.9 11.0
Non-controlling interests 0.5 -1.0 1.6 0.3
* Item that may be reclassified subsequently to the statement of income
STATEMENT OF FINANCIAL POSITION Dec 31 Dec 31
MEUR 2016 2015
ASSETS
Non-current assets
Intangible assets 78.2 78.2
Property, plant and equipment 36.2 33.9
Non-current assets
Interest-bearing 0.0 2.8
Non-interest-bearing 9.1 11.8
123.5 126.7
Current assets
Inventories 102.2 116.2
Current assets
Interest-bearing 0.9 1.0
Non-interest-bearing 55.8 58.1
Cash and cash equivalents 33.8 11.4
192.7 186.7
Total assets 316.1 313.4
EQUITY AND LIABILITIES
Equity
Equity attributable to the equity holders
of the parent company 127.5 131.5
Non-controlling interests 8.6 8.5
136.1 140.0
Non-current liabilities
Interest-bearing 41.5 58.6
Non-interest-bearing 11.6 13.4
53.1 72.0
Current liabilities
Interest-bearing 89.3 64.8
Non-interest-bearing 37.6 36.6
126.9 101.5
Total equity and liabilities 316.1 313.4
STATEMENT OF CASH FLOWS H2 H2 FY FY
MEUR 2016 2015 2016 2015
Net profit/loss for the period -10.2 -0.2 -2.0 8.1
Adjustments to net profit/loss for the period 16.9 7.8 26.4 21.8
*
Financial items and taxes paid and received -3.9 -6.2 -8.2 -11.1
Change in working capital 17.8 3.5 10.5 -3.3
Net cash generated from operating activities 20.5 4.9 26.7 15.6
Investments -3.4 -5.7 -8.4 -9.1
Proceeds from sales of assets 0.0 0.1 0.2 0.2
Sufix brand acquisition - 0.0 - -0.9
Proceeds from disposal of subsidiaries, net of 1.0 1.1 1.0 1.1
cash
Proceeds from disposal of joint ventures 1.2 - 1.2 -
Change in interest-bearing receivables 0.0 0.0 0.0 0.0
Net cash used in investing activities -1.2 -4.5 -6.0 -8.6
Dividends paid to parent company's - - -5.7 -7.7
shareholders
Net funding 1.9 -4.1 5.7 0.0
Purchase of own shares - - -0.2 -0.2
Net cash generated from financing activities 1.9 -4.1 -0.2 -7.8
Change in cash and cash equivalents 21.2 -3.7 20.5 -0.9
Cash & cash equivalents at the beginning of 10.4 15.4 11.4 12.2
the period
Foreign exchange rate effect 2.2 -0.3 1.9 0.1
Cash and cash equivalents at the end of the 33.8 11.4 33.8 11.4
period
* Includes reversal of non-cash items, income taxes and financial income and
expenses.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Attributable to equity holders of the
parent company
Fund for Non-
Share invested Trans- Re- contr-
pre- non- Own lation tained olling
rest-
Share mium Hedging ricted sha- diffe- earn- inte- Total
MEUR capital fund fund equity res rences ings rests equity
Equity on Jan 3.6 16.7 -1.1 4.9 -5.2 -6.5 116.0 8.2 136.5
1, 2015
Comprehensive - - 0.4 - - 3.8 6.7 0.3 11.3
income *
Purchase of - - - - -0.2 - - - -0.2
own shares
Dividends - - - - - - -7.7 - -7.7
Equity on Dec 3.6 16.7 -0.7 4.9 -5.4 -2.6 115.0 8.5 140.0
31, 2015
Equity on Jan 3.6 16.7 -0.7 4.9 -5.4 -2.6 115.0 8.5 140.0
1, 2016
Comprehensive - - 0.5 - - 4.3 -2.9 1.6 3.6
income *
Purchase of - - - - -0.2 - - - -0.2
own shares
Dividends - - - - - - -5.7 -1.5 -7.2
Equity on Dec 3.6 16.7 -0.2 4.9 -5.6 1.7 106.4 8.6 136.1
31, 2016
* For the
period, (net
of tax)
NOTES TO THE STATEMENT OF INCOME AND FINANCIAL POSITION
The financial information included in this financial statement release is
unaudited.
This financial statement release has been prepared in accordance with IAS 34.
Accounting principles adopted in the preparation of this report are consistent
with those used in the preparation of the financial statements 2015 except for
change in measurement of segment performance. Any new amendments to IFRS
standards or IFRIC interpretations did not have a material impact on the
information presented in this report. The Group has not applied any new
standards as of January 1, 2016.
Impact of new ESMA guidelines
New ESMA (European Securities and Markets Authority) guidelines on alternative
performance measures are effective for the financial year 2016. Rapala Group
presents alternative performance measures to reflect the underlying business
performance and to enhance comparability between financial periods. Alternative
performance measures presented in this report should not be considered as a
substitute for measures of performance in accordance with the IFRS and may not
be comparable to similarly titled amounts used by other companies.
Change in measurements of segment performance
The Group has changed the measurements of segment performance by excluding items
affecting comparability from operating profit. The Group measures segment
performance based on sales, comparable operating profit and assets. Definitions
and reconciliations to alternative performance measures are presented in the end
of the notes. Reportable segments are consistent with those in the financial
statements 2015. Segments are described in detail in note 2 of the financial
statements 2015 and will be updated to financial statements 2016.
Use of estimates and rounding of figures
Complying with IFRS in preparing financial statements requires the management to
make estimates and assumptions. Such estimates affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the amounts of revenues and expenses. Although these estimates are based on the
management's best knowledge of current events and actions, actual results may
differ from these estimates.
All figures in these accounts have been rounded. Consequently, the sum of
individual figures can deviate from the presented sum figure. Key figures have
been calculated using exact figures.
Events after the end of the reporting period
The Group has no knowledge of any significant events after the end of the
reporting period that would have a material impact on the financial statements
for January-December 2016. Material events after the end of the reporting
period, if any, have been discussed in the commentary section of the Board of
Directors.
Inventories
On December 31, 2016, the book value of inventories included a net realizable
value allowance of 14.2 MEUR (5.3 MEUR on December 31, 2015). The increase in
allowance is due to decisions made in conjunction with the strategy update that
the Group redefines inventory valuation to support new strategic actions to
improve the Group's capital efficiency (e.g. renewal and optimization of product
range, improved product lifecycle and inventory management) and to support
implementation of new management procedures.
H2 H2 FY FY
Key figures 2016 2015 2016 2015
EBITDA, % of net sales -2.9% 5.8% 5.4% 10.1%
Operating profit/loss, % of net -6.0% 2.9% 2.8% 7.6%
sales
Return on capital employed, % -5.8% 2.9% 3.0% 8.7%
Capital employed at end of 232.2 248.1 232.2 248.1
period, MEUR
Net interest-bearing debt at end 96.1 108.2 96.1 108.2
of period, MEUR
Equity-to-assets ratio at end of 43.1% 44.7% 43.1% 44.7%
period, %
Debt-to-equity ratio at end of 70.6% 77.3% 70.6% 77.3%
period, %
Earnings per share, EUR (diluted -0.27 -0.01 -0.08 0.17
= non-diluted)
Equity per share at end of 3.33 3.43 3.33 3.43
period, EUR
Average personnel for the period 2 740 3 206 2 829 3 078
Definitions and reconciliation of key figures are presented in the end of the
financial section.
Key figures by half year H1 H2 H1 H2 H1 H2
MEUR 2014 2014 2015 2015 2016 2016
Net sales 143.9 129.3 154.0 124.2 143.1 117.5
EBITDA 19.5 10.5 20.9 7.2 17.6 -3.5
Operating profit/loss 16.0 6.9 17.4 3.6 14.2 -7.0
Profit before taxes 12.5 3.2 13.3 0.9 11.4 -9.2
Net profit/loss for the period 8.4 1.8 8.3 -0.2 8.2 -10.2
Bridge calculation of comparable operating H2 H2 Change FY FY Change
profit
MEUR 2016 2015 % 2016 2015 %
----------------------------------------------
Operating profit/loss -7.0 3.6 -294 % 7.2 21.0 -66 %
----------------------------------------------
Items affecting comparability
Mark-to-market valuations of operative 0.7 0.1 +600 % 1.6 2.1 -24 %
currency derivatives
Other items affecting comparability
Restructurings
France restructuring 0.5 0.7
Southeast Asian distribution restructuring 0.2
Closure of Chinese lure manufacturing 0.5 1.7
Closing down of Norwegian warehousing 0.5 0.5
operations
Other restructurings 0.2 0.2
Impairments 0.1 0.1
Insurance compensations -0.6 -0.6
Redefined provision on inventory value 9.2 9.2
Other items 0.3 0.3
-------------------------------------------------------------------------------
Comparable operating profit 3.2 4.8 -33 % 18.8 25.3 -26 %
-------------------------------------------------------------------------------
Segment information*
MEUR H2 H2 FY FY
Net sales by operating segment 2016 2015 2016 2015
Group Products 77.1 81.2 172.1 184.7
Third Party Products 40.3 43.1 88.5 93.5
Eliminations 0.0 0.0
Total 117.5 124.2 260.6 278.2
Operating profit/loss by operating segment
Group Products 5.4 5.2 17.4 22.2
Third Party Products -2.2 -0.5 1.4 3.2
Comparable operating profit 3.2 4.8 18.8 25.3
Items affecting comparability -10.2 -1.2 -11.6 -4.3
Operating profit/loss -7.0 3.6 7.2 21.0
* The Group has changed the measurements of segment performance by excluding
items affecting comparability from operating profit. The Group measures
segment performance based on sales, comparable operating profit and assets.
Reportable segments are consistent with those in the financial statements
2015. Segments are described in detail in note 2 of the financial statements
2015 and will be updated to financial statements 2016.
Comparative figures 2014-2015 for comparable operating profit by
operating segment
H1 H2 FY H1 H2 FY
MEUR 2014 2014 2014 2015 2015 2015
Group Products 10.0 4.4 14.4 16.9 5.2 22.2
Third Party Products 6.3 0.2 6.5 3.7 -0.5 3.2
Comparable operating
profit 16.3 4.5 20.9 20.6 4.8 25.3
Items affecting
comparability -0.3 2.4 2.0 -3.2 -1.2 -4.3
Operating profit 16.0 6.9 22.9 17.4 3.6 21.0
Assets by operating segment Dec 31 Dec 31
MEUR 2016 2015
Group Products 226.3 236.8
Third Party Products 55.1 61.3
Non-interest-bearing assets total 281.4 298.2
Unallocated interest-bearing assets 34.7 15.2
Total assets 316.1 313.4
External net sales by area H2 H2 FY FY
MEUR 2016 2015 2016 2015
North America 44.9 47.6 91.3 99.2
Nordic 21.9 22.0 55.3 56.2
Rest of Europe 33.3 35.5 81.3 86.9
Rest of the world 17.4 19.1 32.7 35.9
Total 117.5 124.2 260.6 278.2
Commitments Dec 31 Dec 31
MEUR 2016 2015
Minimum future lease payments on operating leases 14.2 14.4
Sales Other
Related party transactions and other Pur- Rents expen- Recei- Paya-
MEUR income chases paid ses vables bles
FY 2016
Joint venture Shimano Normark
UK Ltd* 2.8 - - - - -
Associated company Lanimo Oü - 0.1 - - 0.0 -
Entity with significant
influence over the Group** - - 0.2 0.1 0.0 -
Management - - 0.2 0.0 - 0.0
FY 2015
Joint venture Shimano Normark 3.6 - - 0.0 0.1 -
UK Ltd
Associated company Lanimo Oü 0.0 0.1 - - 0.0 -
Entity with significant
influence over the Group** - - 0.2 0.1 0.0 -
Management - - 0.2 0.0 - 0.0
* Group's share in joint venture disposed on September 1, 2016.
**Lease agreement for the real estate for the consolidated operations in
France and a service fee.
Open derivatives 31.12.2016 31.12.2015
Nominal Fair Nominal Fair
MEUR Value Value Value Value
Derivative financial instruments designed as
cash flow hedges
Interest rate swaps, less than 27.5 -0.1 - -
12 months
Interest rate swaps, 1 to 5 16.7 -0.1 58.9 -0.4
years
-------------------------------------------------------------------------------
Total 44.1 -0.2 58.9 -0.4
-------------------------------------------------------------------------------
Derivative financial instruments designed as
cash flow and fair value hedges
Cross currency swaps, less than 15.0 -0.7 - -
12 months
Cross currency swaps, 1 to 5 - - 15.0 1.3
years
-------------------------------------------------------------------------------
Total 15.0 -0.7 15.0 1.3
-------------------------------------------------------------------------------
Non-hedge accounting derivative
financial instruments
Interest rate swaps, less than 20.0 -0.2 - -
12 months
Interest rate swaps, 1 to 5 16.0 0.0 20.0 -0.4
years
Currency derivatives, less than 52.2 0.1 70.9 1.6
12 months
-------------------------------------------------------------------------------
Total 88.2 -0.1 90.9 1.2
-------------------------------------------------------------------------------
The changes in the fair values of derivatives that are designated as hedging
instruments but do not qualify for hedge accounting are recognized based on
their nature either in other operating expenses, if the hedged item is an
operative transaction, or in financial income and expenses if the hedged item
is a monetary transaction. Some derivatives designated to hedge monetary items
are accounted for according to hedge accounting. Financial risks and hedging
principles are described in detail in the financial statements 2015 and will
be updated in financial statements 2016.
In 2016 full year, the amount of the ineffective portion that was recognized
in the financial income and expenses of income statement was MEUR 0.0 (2015:
MEUR -0.1). Testing for effectiveness of the hedging relationship is conducted
on a monthly basis.
Changes in unrealized mark-to-market valuations for operative foreign currency
derivatives
H2 H2 FY FY
2016 2015 2016 2015
------------------------------
Included in operating profit -0.7 -0.1 -1.6 -2.1
------------------------------
Operative foreign currency derivatives that are mark-to-market on reporting
date cause timing differences between the changes in derivatives' fair values
and hedged operative transactions. Changes in fair values for derivatives
designated to hedge future cash flow, but are not accounted for according to
the principles of hedge accounting, impact the Group's operating profit for
the accounting period. The changes in unrealized valuations include both
valuations of derivatives that will realize in the future periods as well as
reversal of previously accumulated value of derivatives that realized in the
accounting period.
Fair values of Dec 31 Dec 31
financial instruments
2016 2015
MEUR Carrying value Fair value Carrying value Fair value
Assets
Available-for-sale financial 0.3 0.3 0.3 0.3
assets (level 3)
Derivatives (level 2) 0.8 0.8 3.7 3.7
Total 1.0 1.0 4.0 4.0
Liabilities
Non-current interest-bearing
liabilities (excl. derivatives) 41.5 41.5 58.6 58.7
Derivatives (level 2) 1.7 1.7 1.6 1.6
Total 43.2 43.2 60.1 60.3
Fair values of other financial instruments do not differ materially from their
carrying value.
Shares and share capital
On April 1, 2016 The Annual General Meeting (AGM) updated Board's authorization
on repurchase of shares. A separate stock exchange release on the decisions of
the AGM was given, and up to date information on the Board's authorizations and
other decisions of the AGM are available also on the corporate website.
Share related key figures Dec 31, 2016 Dec 31, 2015
Number of shares 39 000 000 39 000 000
Number of shares, average 39 000 000 39 000 000
Number of treasury shares 677 208 639 671
Number of treasury shares, % 1.7% 1.6%
Number of outstanding shares 38 322 792 38 360 329
Number of shares traded, YTD 2 782 154 2 074 690
Share price at the end of the period 4.13 4.74
Highest share price, YTD 4.90 5.85
Lowest share price, YTD 3.90 4.57
Average price of treasury shares, all time 5.08 5.13
Acquired treasury shares, YTD 37 537 32 864
Short term risks and uncertainties
The objective of Rapala VMC Corporation's risk management is to support the
implementation of the Group's strategy and execution of business targets. Group
management continuously develops its risk management practices and internal
controls. Detailed updated descriptions of the Group's strategic, operative and
financial risks as well as risk management principles will be included in the
Financial Statements 2016.
Due to the nature of the fishing tackle business and the geographical scope of
the Group's operations, the business has traditionally been seasonally stronger
in the first half of the year compared to the second half. Weathers impact
consumer demand and may have impact on the Group's sales for current and
following seasons. The Group is more affected by winter weathers after the
expansion into winter fishing business, while the weather risk is diversified
due to the wide geographical footprint of the Group.
The biggest deliveries for both summer and winter seasons are concentrated into
relatively short time periods, and hence a well functioning supply chain is
required. The uncertainties in future demand as well as the length of the
Group's supply chain increases the challenges in supply chain management. Delays
in shipments from internal or external suppliers or unexpected changes in
customer demand upwards or downwards may lead to shortages and lost sales or
excess inventories and subsequent clearance sales with lower margins.
The Group's credit facilities include some profitability, net debt and equity
related financial covenants, which are actively monitored. Following higher
leverage (net debt to EBITDA), the Group and its lenders agreed on a higher
leverage covenant for Q4/2016. The Group expects to fulfill the requirements of
its lenders at the end of the first quarter 2017. Liquidity and refinancing
risks are under control, but increased leverage level may put pressure on
Group's financing costs.
The fishing tackle business has traditionally not been strongly influenced by
increased uncertainties and downturns in the general economic climate. They may
however influence, at least for a short while, the sales of fishing tackle, when
retailers reduce their inventory levels and face financial challenges. Also
quick and strong increases in living expenses, sudden fluctuations in foreign
exchange rates and governmental austerity measures may temporarily affect
consumer spending. However, the underlying consumer demand has historically
proven to be fairly solid. Political tensions, such as the conflict between
Russia and Ukraine, may have negative effects on the Group's business. The
development in geopolitical situation is followed closely by the Group.
The truly global nature of the Group's sales and operations spreads the market
risks caused by the current uncertainties in the global economy. The Group is
cautiously monitoring the development both in the global macro economy as well
as in the various local markets it operates in.
Cash collection and credit risk management is high on the agenda of local
management and this may affect sales to some customers. Quality of the accounts
receivables is monitored closely and write-downs are initiated if needed.
The Group's sales and profitability are impacted by the changes in foreign
exchange rates and the risks are monitored actively. To fix the exchange rates
of future foreign exchange denominated sales and purchases as well as financial
assets and liabilities, the Group has entered into several currency hedging
agreements according to the foreign exchange risk management policy set by the
Board of Directors. As the Group is not applying hedge accounting in accordance
to IAS 39, the unrealized mark-to-market valuations of operative currency
hedging agreements have an impact on the Group's reported operating profit. Some
of Group's currency positions are not possible or feasible to be hedged, and
therefore may have impact on the Group's net result. The Group is closely
monitoring market development as well as its cost structure and considering
possibility and feasibility of price increases, hedging actions and cost
rationalization.
No significant changes are identified in the Group's strategic risks or business
environment.
Definitions of key figures
Operating profit before depreciation Operating profit + depreciation and
and impairments (EBITDA) impairments
Items affecting comparability Change in mark-to-market valuations of
operative currency derivatives +/-
other items affecting comparability
Other items affecting comparability Restructuring costs + impairments +/-
gains and losses on business
combinations and disposals - insurance
compensations +/- other non-
operational items
Comparable operating profit Operating profit +/- change in mark-
to-market valuations of operative
currency derivatives +/- other items
affecting comparability
Net interest-bearing debt Total interest-bearing liabilities -
total interest-bearing assets - cash
and cash equivalents
Capital employed (average for the Total equity (average for the period)
period) + net interest-bearing debt (average
for the period)
Working capital Inventories + total non-interest-
bearing assets - total non-interest-
bearing liabilities
Total non-interest-bearing assets Total assets - interest-bearing assets
- intangible and tangible assets -
assets classified as held-for-sale
Total non-interest-bearing liabilities Total liabilities - interest-bearing
liabilities
Return on capital employed (ROCE), % Operating profit (full-year adjusted)
x 100
Capital employed (average for the
period)
Debt-to-equity ratio (Gearing), % Net interest-bearing debt x 100
Total equity
Equity-to-assets ratio, % Total equity x 100
Total shareholders' equity and
liabilities - advances received
Earnings per share, EUR Net profit for the period attributable
to the equity holders of the parent
company
Adjusted weighted average number of
shares
Equity per share, EUR Equity attributable to equity holders
of the parent company
Adjusted number of shares at the end
of the period
Average number of personnel Calculated as average of month end
personnel amounts
Reconciliation of key figures to
IFRS
H2 H2 FY FY
2016 2015 2016 2015
Items affecting comparability
Change in mark-to-market 0.7 0.1 1.6 2.1
valuations of operative
derivatives
Other items affecting 9.5 1.1 10.0 2.3
comparability
-------------------------------------------------------------------------------
Items affecting comparability 10.2 1.2 11.6 4.3
-------------------------------------------------------------------------------
Other items affecting
comparability
Restructuring costs 0.7 0.9 1.1 2.1
Impairments 0.0 0.1 0.0 0.1
Insurance compensations -0.6 -0.6
Redefined provision on inventory 9.2 9.2
value
Other non-operational items 0.3 0.3
-------------------------------------------------------------------------------
Other items affecting 9.5 1.1 10.0 2.3
comparability
-------------------------------------------------------------------------------
Capital employed (average)
Total equity (average for the 137.9 141.6 138.0 138.2
period)
Net interest-bearing debt 105.2 108.5 102.1 104.0
(average for the period)
-------------------------------------------------------------------------------
Capital employed (average) 243.1 250.1 240.2 242.3
-------------------------------------------------------------------------------
Return on capital employed (ROCE),
%
Operating profit (full-year -14.0 7.2 7.2 21.0
adjusted)
Capital employed (average for 243.1 250.1 240.2 242.3
the period)
-------------------------------------------------------------------------------
Return on capital employed (ROCE), -5.8% 2.9% 3.0% 8.7%
%
-------------------------------------------------------------------------------
Equity-to-assets ratio, %
Total equity 136.1 140.0 136.1 140.0
Total shareholders' equity and 316.1 313.4 316.1 313.4
liabilities
Advances received 0.6 0.5 0.6 0.5
-------------------------------------------------------------------------------
Equity-to-assets ratio, % 43.1% 44.7% 43.1% 44.7%
-------------------------------------------------------------------------------
Earnings per share, EUR
Net profit for the period
attributable to the equity
holders of the parent company -10.4 -0.5 -3.0 6.7
Adjusted weighted average number 38 322 792 38 360 329 38 329 216 38 366 251
of shares
-------------------------------------------------------------------------------
Earnings per share, EUR -0.27 -0.01 -0.08 0.17
-------------------------------------------------------------------------------
Equity per share, EUR
Equity attributable to equity
holders of the parent company 127.5 131.5 127.5 131.5
Adjusted number of shares at the 38 322 792 38 360 329 38 322 792 38 360 329
end of the period
-------------------------------------------------------------------------------
Equity per share, EUR 3.33 3.43 3.33 3.43
-------------------------------------------------------------------------------
[]
© 2024 Nasdaq, Inc. All Rights Reserved |