2011-04-27 07:30:00 CEST
2011-04-27 07:30:04 CEST
REGULATED INFORMATION
Martela Oyj - Interim report (Q1 and Q3)
MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2011
MARTELA CORPORATION STOCK EXCHANGE RELEASE 27 April 2011 at
8.30 a.m.
MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2011
The revenue grew and the operating result improved slightly during the first
quarter.
Key figures:
1-3 1-3 1-12
EUR million 2011 2010 2010
- Revenue 27.4 22.6 108.4
- Change in revenue % 21.4 -6.1 13.7
- Operating result -0.8 -1.1 1.3
- Operating result % -2.9 -4.8 1.2
- Earnings per share, EUR -0.22 -0.24 0.16
- Return on investment, % -8.6 -10.7 3.7
- Return on equity, % -11.8 -12.9 2.0
- Equity ratio, % 54.9 57.2 55.6
- Gearing, % -16.1 -30.1 -14.1
Martela Corporation's revenue is estimated to grow and its profit to improve in
2011. The new businesses, the most notable of which are the Danish subsidiary
Martela A/S and Martela Corporation's Outlet chain, will be responsible for
most of this revenue growth.
Market
In our primary market, there was no significant change in the demand for office
furniture during the first quarter of the year.
There have been signs of recovery in office construction, but the impact of
this on Martela will be delayed. Based on the number of square metres built,
the amount of office buildings that were completed in Finland in 2010 was 23
per cent lower than the previous year. However, during the period more building
permits were granted (+31%) than the previous year and the construction of new
office buildings was at a significantly higher level than in 2009 (+19%).
Consolidated revenue and profit
Consolidated revenue for January-March was EUR 27.4 million (22.6), an increase
of 21.4 per cent on the previous year. Factors increasing the revenue included
the Martela Outlet sales channel that was acquired and launched in June 2010
and the Danish importer acquired in November. Moreover, revenue grew
substantially in the traditional sales channels in Finland, Sweden and Poland.
The comparable revenue growth without acquisitions in this quarter was 14.5 per
cent.
During the first quarter, operating profit improved slightly and was EUR -0.8
million (-1.1). The Group has invested significantly in the development and
growth of its operations, which has increased fixed expenses resulting from
staff recruitment, new sales outlets and acquisitions. The investments focused
in particular on strengthening the Group's service business and sales channels.
Profit before taxes was EUR -0.9 million (-1.1), and profit after taxes was EUR
-0.9 million (-1.0).
Segment reporting
The segments presented in the interim report comply with the company's segment
division. The comparison year's figures have also been rendered in the same
way. The business segments are based on the Group's internal organisational
structure and internal financial reporting.
Sales between segments are reported as part of the segments' revenue. The
segments' results presented are their operating profits, because tax items and
financial items are not allocated by segment. The Group's assets and
liabilities are not allocated or monitored by segment in the internal financial
reporting. Revenue and operating profit are as recorded in the consolidated
financial statements.
Business Unit Finland is responsible for sales and marketing, service
production and manufacturing in Finland. Martela has an extensive sales and
service network covering the whole of Finland, with a total of 28 service
locations. The Business Unit's logistics centre is in Nummela.
Business Unit Sweden and Norway is responsible for sales in Sweden and Norway,
handled through about 70 dealers. In addition, the Business Unit has its own
sales and showroom facilities at three locations: Stockholm and Bodafors in
Sweden and Oslo in Norway. The Business Unit's logistics centre and order
handling are also located in Bodafors.
Business Unit Poland is responsible for the sales and distribution of Martela
products in Poland and Eastern Central Europe. Sales in Poland are organized
via the sales network maintained by the Business Unit and as of August 2010, a
Martela subsidiary and sales centre has been established in Hungary. The
company has altogether 7 sales centres in Poland. The Business Unit's principal
export countries are Ukraine, the Czech Republic and Slovakia, in each of which
sales are handled by established dealers. Business Unit Poland is based in
Warsaw, where it has its logistics centre and administration.
Revenue by segment
EUR million Business unit Business unit Business Other Total
Finland Sweden & Norway unit Poland segments
1.1.2011-31.3.
2011
External 18.4 4.6 2.3 2.0 27.4
Revenue
Internal 0.2 0.4 0.0 3.0 3.6
Revenue
Yhteensä 2011 18.7 5.0 2.3 5.0
1.1.2010-31.3.
2010
External 15.1 4.0 1.6 1.9 22.6
Revenue
Internal 0.0 0.3 0.0 3.6 3.9
Revenue
Yhteensä 2010 15.1 4.3 1.6 5.5
External 22.2 15.0 48.1 6.2 21.4
revenue
change %
“Other segments” includes the revenues of Kidex Oy and Business Unit
International. The Business Unit is responsible for the Group's other export
markets. The revenue of P.O. Korhonen was included in the figures in “Other
segments” in 2010 and until the end of January 2011; however, these figures
will no longer be included after this due to changes in the Group structure.
Change in external revenue and percentage of consolidated revenue
1-3 1-3 1-12
EUR million 2011 2010 Change-% Percentage 2010 Percentage
Business unit Finland 18.4 15.1 22.2 67.3 % 71.8 66.2 %
Business unit Sweden & 4.6 4.0 15.0 16.9 % 18.6 17.1 %
Norway
Business unit Poland 2.3 1.6 48.1 8.5 % 9.3 8.6 %
Other segments 2.0 1.9 6.2 7.3 % 8.7 8.1 %
Total 27.4 22.6 21.4 100.0 % 108.4 100.0 %
Operating profit by segment
1-3 1-3 1-12
EUR million 2011 2010 2010
Business Unit Finland 1.0 0.2 5.0
Business Unit Sweden & Norway -0.2 -0.3 0.0
Business Unit Poland -0.3 -0.4 -1.4
Other Segments -1.0 -0.2 -0.5
Other -0.3 -0.4 -1.8
Total -0,8 -1.1 1.3
“Other segments” includes the operating profits of P.O. Korhonen, Kidex Oy and
Business Unit International. The revenue of P.O. Korhonen was included in the
figures in “Other segments” in 2010 and until the end of January 2011; however,
these figures will no longer be included after this due to changes in the Group
structure. The item “Others” includes non-allocated Group functions and
non-recurring sales gains and losses.
Financial position
The Group's financial position is strong. At the end of the review period,
interest-bearing liabilities were EUR 5.4 million (8.1), and net liabilities
were EUR -4.6 million (-8.7). The gearing ratio was -16.1 per cent (-30.1) and
the equity ratio was 54.9 per cent (57.2). Net financing costs amounted to EUR
0.1 million (0.0).
The cash flow from operating activities in January-March was EUR 2.3 million
(0.0).
The balance sheet total at the end of the review period was EUR 52.3 million
(51.2).
Capital expenditure
The Group's gross capital expenditure in January-March totalled EUR 1.0 million
(0.6). The capital expenditure mainly concerned the ERP project and production
replacements.
Staff
The Group employed an average of 619 (590) persons, a year-on-year increase of
4.9 per cent.
Average personnel by region
1-3 1-3 1-12
2011 2010 2010
Finland 441 441 451
Scandinavia 77 56 54
Poland and Hungary 95 90 91
Russia 6 3 5
Group total 619 590 601
Product development and Martela's collection
In early 2011, the design, product development, marketing, corporate
responsibility and brand organisations, and product control were integrated
into one unit, Products and Communication (PCO). Martela's design director
Petteri Kolinen was appointed as the director of PCO. The goal of this change
is to harmonise processes from collection control to product development and
brand control to marketing.
Martela's collection was strongly renewed in early 2011. A new chair was
introduced to the James task chair product range, the mesh-backed JamesH.
JamesH serves both as a task chair and in demanding meeting room use. In
offices, people spend an increasing amount of time in meeting rooms, and
Martela's new JamesH hybrid chair is an excellent solution for this customer
need. Another significant new product is the Kuru all-purpose chair by the
respected designer Antti Kotilainen. Kuru has a classical design and very
high-quality finishing. Thanks to its innovative design, Kuru can be easily
linked into rows and it is also stackable. The Cube lobby furniture by Mikko
Halonen was also renewed. The product family was complemented with a high-back
version and a curved element which enables the creation of curved sofa units.
The new Cube will provide fascinating options for the design of various spaces,
such as learning environments.
Group structure
Artek Oy Ab and Martela Corporation signed an agreement to establish a new
company on 17 January 2011. On 1 February 2011, the new joint enterprise
acquired the business of Martela's subsidiary P.O. Korhonen. The joint
enterprise will focus on the manufacture of products marketed and sold by
Martela and Artek. Martela has a 51-per cent stake in the new company while
Artek's holding is 49 per cent. According to the shareholding agreement,
Martela has no control of the company as defined in IFRS 3 and IAS 27. The new
company, P.O. Korhonen, will operate as a contract manufacturer specialising in
the production of form-pressed wooden furniture. Of the new company's figures,
Martela's consolidated income statement will only include the share of the
company's profit according to Martela's holding, and it will be reported in the
consolidated income statement on the row “result in associated undertakings”.
There were no other changes in Group structure during the review period or
during the same period of the previous year.
Shares
During January-March, 299,287 (287,682) of the company's A shares were traded
on NASDAQ OMX Helsinki, corresponding to 8.4 per cent (8.1) of all A shares.
The value of trading turnover was EUR 2.4 million (2.2), and the share price
was EUR 7.77 at the beginning of the year and EUR 8.08 at the end of the first
quarter. During January-March the share price was EUR 8.56 at its highest and
EUR 7.77 at its lowest. At the end of March, equity per share was EUR 7.06
(7.22).
Treasury shares
The company did not purchase any Martela shares in January-March. On 31 March
2011, Martela owned a total of 67,700 Martela A shares, purchased at an average
price of EUR 10.65. Martela's holding of treasury shares amounts to 1.6 per
cent of all shares and 0.4 per cent of all votes.
The acquisition of shares related to the share-based incentive scheme and its
management have been outsourced to an external service provider. These shares
have been entered under equity on 31 March 2011 in the consolidated financial
statements. On 31 March 2011, 60,517 shares under the incentive scheme were
still undistributed.
2011 Annual General Meeting
The Annual General Meeting of Martela Corporation was held on Tuesday 15 March
2011. The meeting approved the financial statements for 2010 and discharged the
members of the Board of Directors and the Managing Director from liability. The
AGM decided, in accordance with the Board of Directors' proposal, to distribute
a dividend of EUR 0.45 per share. The dividends were paid on 25 March 2011.
The number of members in the Board of Directors was confirmed as seven, and
Heikki Ala-Ilkka, Tapio Hakakari, Jori Keckman, Heikki Martela, Pekka Martela,
Pinja Metsäranta and Jaakko Palsanen were re-elected. KPMG Oy Ab, Authorised
Public Accountants, was elected again as the company's auditor.
The AGM also approved the Board of Directors' proposals, detailed in the
meeting notice, to authorise the Board to acquire and/or dispose of Martela
shares.
The new Board of Directors convened after the Annual General Meeting and
elected Heikki Ala-Ilkka as Chairman and Pekka Martela as Vice Chairman.
Post-balance sheet events
No significant reportable events have taken place since the January-March
period and operations have continued according to plan.
Short-term risks
The greatest risk to profit performance is related to the continuation of
general economic uncertainty and the consequent effects on the overall demand
for office furniture.
Outlook for 2011
Martela Corporation's revenue is estimated to grow and its result to improve in
2011. The new businesses, the most notable of which are the Danish subsidiary
Martela A/S and Martela Corporation's Outlet chain, will be responsible for
most of this revenue growth.
TABLE PART
Accounting policies
This interim report has been prepared in accordance with IFRS recognition and
measurement principles, but not all the IAS 34 requirements have been complied
with. The interim report should be read in conjunction with the 2010 financial
statements.
All figures in the financial report has been rounded and consequently the sum
of the individual figures can deviate from the sum figure. This interim report
has not been audited.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR 1 000)
2011 2010 2010
1-3 1-3 1-12
Revenue 27 382 22 563 108 392
Other operating income 150 72 252
Employee benefits expenses -7 546 -6 424 -27 886
Operating expenses -20 163 -16 603 -76 781
Depreciation and impairment -605 -686 -2 664
Operating profit/loss -782 -1 078 1 313
Financial income and expenses -74 -40 -229
Share of result in associated undertakings -35 0 0
Profit/loss before taxes -891 -1 118 1 084
Income tax 15 133 -446
Profit/loss for the period -876 -985 638
Other comprehensive income:
Translation differences -56 134 312
Total comprehensive income -932 -851 950
Earnings per share, eur 0,22 -0,24 0,16
Diluted earnings per share, eur 0,22 -0,24 0,16
Allocation of net profit for the period:
To equity holders of the parent -876 -985 638
Allocation of total comprehensive income:
To equity holders of the parent -932 -851 950
GROUP BALANCE SHEET (EUR 1 000) 31.3.2011 31.12.2010 31.3.2010
ASSETS
Non-current assets
Intangible assets 2 397 2 051 930
Tangible assets 12 216 12 721 11 660
Investments 375 260 38
Deferred tax assets 297 298 313
Pension receivables 250 250 197
Receivables 105 17 0
Investment properties 600 600 600
Total 16 240 16 197 13 738
Current assets
Inventories 11 362 10 449 8 853
Receivables 14 711 19 793 11 798
Financial assets at fair value
through profit and loss 1 114 1 107 1 098
Cash and cash equivalents 8 884 9 142 15 739
Total 36 071 40 492 37 488
Total assets 52 311 56 689 51 227
EQUITY AND LIABILITIES
Equity
Share capital 7 000 7 000 7 000
Share premium account 1 116 1 116 1 116
Other reserves 117 117 117
Translation differences -153 -97 -275
Retained earnings 20 780 23 496 21 859
Treasury shares -1 212 -1 212 -1 212
Share-based incentives 776 747 512
Total 28 424 31 167 29 117
Non-current liabilities
Interest-bearing liabilities 3 005 3 197 2 979
Deferred tax liabilities 1 145 1 214 1 216
Other liabilities 175 240 0
Total 4 325 4 651 4 195
Current liabilities
Interest-bearing 2 408 2 670 5 109
Non-interest bearing 17 154 18 201 12 806
Total 19 562 20 871 17 915
Total liabilities 23 886 25 522 22 110
Equity and liabilities, total 52 311 56 689 51 227
STATEMENT OF CHANGES IN EQUITY (EUR 1 000)
Equity attributable to equity holders of the parent
Share Share Other Trans. Retained Treasury Total
capital premium reserves diff. earnings shares
account
01.01.2010 7 000 1 116 117 -409 25 138 -1 200 31 762
Other -12 -12
change
Total 134 -985 -851
comprehen
sive
income
Dividends -1 828 -1 828
Share-base 46 46
d
incentive
s
31.03.2010 7 000 1 116 117 -275 22 371 -1 212 29 117
01.01.2011 7 000 1 116 117 -97 24 243 -1 212 31 167
Other 0
change
Total -56 -876 -932
comprehen
sive
income
Dividends -1 840 -1 840
Share-base 29 29
d
incentive
s
31.03.2011 7 000 1 116 117 -153 21 556 -1 212 28 424
CONSOLIDATED CASH FLOW STATEMENT 2011 2010 2010
(EUR 1 000)
1-3 1-3 1-12
Cash flows from operating activities
Cash flow from sales 31 564 24 340 103 207
Cash flow from other operating income 146 72 225
Payments on operating costs -29 283 -24 080 -102 873
Net cash from operating activities
before financial items and taxes 2 428 332 559
Interest paid -56 -63 -277
Interest received 10 13 47
Other financial items -10 10 -31
Taxes paid -72 -263 -361
Net cash from operating activities (A) 2 299 28 -63
Cash flows from investing activities
Capital expenditure on tangible and -424 -563 -4 354
intangible assets
Proceeds from sale of tangible and 293 0 459
intangible assets
Capital expenditure on associated -150 0 -250
undertaking
Proceeds from sale of other investments 0 0 31
Net cash used in investing activities (B) -281 -563 -4 114
Cash flows from financing activities
Repayments of short-term loans -87 -156 -506
Repayments of long-term loans -521 -291 -2 297
Dividends paid and other profit -1 664 -1 650 -1 813
distribution
Net cash used in financial activities (C) -2 273 -2 098 -4 616
Change in cash and cash equivalents ( -254 -2 633 -8 793
A+B+C)
(+ increase, - decrease)
Cash and cash equivalents in the beginning 10 249 19 304 19 304
of period
Translation differences 3 166 -261
Cash and cash equivalents at the end of 9 998 16 837 10 249
period
SEGMENT REPORTING (EUR 1 000)
Segment revenue 2011 2010 2010
1-3 1-3 1-12
Business Unit Finland
external 18 437 15 092 71 780
internal 235 0 140
Business Unit Sweden and Norway
external 4 631 4 026 18 584
internal 369 299 1 001
Business Unit Poland
external 2 320 1 567 9 289
internal 8 0 28
Other segments
external 1 994 1 878 8 739
internal 3 036 3 606 15 477
Total external revenue 27 382 22 563 108 392
Segment operating profit/loss 2011 2010 2010
1-3 1-3 1-12
Business Unit Finland 1 025 185 5 024
Business Unit Sweden and Norway -205 -301 -34
Business Unit Poland -276 -411 -1 371
Other segments -1 046 -237 -495
Other -280 -315 -1 811
Total operating profit/loss -782 -1 078 1 313
Other segments include Kidex Oy and Business Unit International, which is
responsible for export markets. Year 2010 and up till end January 2011 Other
segments include P.O. Korhonen, which is no more included in the segment
reporting in the future because of change in group structure. The item "Other"
includes non-allocated Group functions and non-recurring sales gains and
losses.
TANGIBLE ASSETS
1.1-31.3.2011
Land Buildings Machinery & Other Work in
areas equipment tangibles progress
Acquisitions 0 0 375 0 171
Decreases 0 0 -298 0 -224
TANGIBLE ASSETS
1.1-31.3.2010
Land Buildings Machinery & Other Work in
areas equipment tangibles progress
Acquisitions 0 0 223 0 65
Decreases 0 0 0 0 0
RELATED PARTY AND SHARE-BASED INCENTIVE PROGRAMME
The CEO and the group's management are included in a long-term share-based
incentive scheme, extending from 2010 to the end of 2012.
KEY FIGURES/RATIOS 2011 2010 2010
1-3 1-3 1-12
Operating profit/loss -782 -1 078 1 313
- in relation to revenue -2,9 -4,8 1,2
Profit/loss before taxes -891 -1 118 1 084
- in relation to revenue -3,3 -5,0 1,0
Profit/loss for the period -876 -985 638
- in relation to revenue -3,2 -4,4 0,6
Earnings per share, eur -0,22 -0,24 0,16
Diluted earnings per share, eur -0,22 -0,24 0,16
Equity/share, eur 7,06 7,22 7,74
Equity ratio 54,9 57,2 55,6
Return on equity * -11,8 -12,9 2,0
Return on investment * -8,6 -10,7 3,7
Interest-bearing net-debt, eur million -4,6 -8,7 -4,4
Gearing ratio -16,1 -30,1 -14,1
Capital expenditure, eur million 1,0 0,6 4,7
- in relation to revenue 3,5 2,5 4,4
Personnel at the end of period 609 583 625
Average personnel 619 590 601
Revenue/employee, eur thousand 44,2 38,2 180,4
Key figures are calculated according to formulas as presented in Annual Report
2010.
* When calculating return on equity and return on investment the profit/loss for
the period has been multiplied in interim reports.
CONTINGENT LIABILITIES 31.3.2011 31.12.2010 31.3.2010
Mortgages and shares pledged 14 912 14 899 14 643
Other commitments 406 385 261
Rental commitments 8 014 8 086 7 838
DEVELOPMENT OF SHARE PRICE 2011 2010 2010
1-3 1-3 1-12
Share price at the end of period, eur 8,08 7,45 7,77
Highest price, eur 8,56 8,60 8,60
Lowest price, eur 7,77 7,05 6,26
Average price, eur 8,18 7,73 7,57
Martela Corporation
Board of Directors
Heikki Martela
Managing Director
Additional information
Heikki Martela, Managing Director, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606
Distribution
NASDAQ OMX Helsinki
Main news media
www.martela.com
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