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2007-05-09 08:20:00 CEST 2007-05-09 08:20:00 CEST REGULATED INFORMATION Marimekko - Quarterly reportMARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2007 BRISK GROWTH IN EXPORTS CONTINUESIn the January-March period, the Marimekko Group's net sales rose by 5% to EUR 16.9 million (EUR 16.2 million). Operating profit increased by 3% to EUR 1.5 million (EUR 1.5 million). Profit after taxes for the period grew by 5% to EUR 1.1 million (EUR 1.1 million). Earnings per share rose to EUR 0.14 (EUR 0.13). The estimate for the remainder of 2007 is unchanged. Full-year net sales growth for 2007 is forecast to stay at the same level as in 2006. Profitability is expected to remain good. The Group racks up its strongest earnings and net sales growth in the last two quarters of the financial year. MARKET SITUATION Brisk growth in the world economy continued during the first quarter of 2007. Economic trends were favourable in all of Marimekko's key markets. In Finland, consumers' confidence in their own finances remained strong and maintained a high level of consumption demand. In the January-February period of 2007, retail sales in Finland were up 6.3% (Statistics Finland, Wholesale and retail sales, February 2007). Retail sales of clothing increased by 2.7% (Association of Textile and Footwear Importers and Wholesalers). Sales of womenswear rose by 2.6%, menswear by 4.7%, and childrenswear by 2.6%. Sales of bags increased by 8.0%. Exports of textile products (SITC 65) rose by 5%, while imports fell by 5%. Exports of clothing (SITC 84) increased by 2%, and imports declined by 3% (National Board of Customs, monthly review, February/2007). NET SALES In the January-March period of 2007, the Marimekko Group's net sales rose by 4.6% to EUR 16,912 thousand (EUR 16,174 thousand). Net sales in Finland fell by 3.6% to EUR 11,609 thousand (EUR 12,044 thousand). The Group's exports and income from international operations increased by 28.4% during the period under review. Growth was good in all market areas. Exports and income from international operations totalled EUR 5,303 thousand (EUR 4,130 thousand) and accounted for an increased proportion of the Group's net sales at 31.4% (25.5%). The breakdown of the Group's net sales by product line was as follows: clothing, 45.6%, interior decoration, 40.2%, and bags, 14.2%. Net sales by market area were: Finland, 68.7%, the other Nordic countries, 12.2%, the rest of Europe, 9.2%, North America, 5.3%, and other countries (Japan and other regions outside Europe and North America), 4.6%. In the January-March period of 2007, sales in Marimekko's own retail shops in Finland rose by 0.3% (6.9%). Sales to retailers in Finland fell by 7.0% (+7.8%). This fall was primarily due to a reduction in retailers' promotional purchases compared to the corresponding period of the previous year. REVIEWS BY BUSINESS UNIT Clothing In the January-March period of 2007, net sales of clothing rose by 1.3% to EUR 7,708 thousand (EUR 7,606 thousand). Sales fell noticeably in Finland, but clothing exports grew well in almost all markets. Particularly brisk growth was seen in the United States and the market area referred to as "the rest of Europe". Exports and income from international operations accounted for 29.0% of net sales of clothing. Interior decoration Net sales of interior decoration products rose by 2.9% to EUR 6,798 thousand (EUR 6,609 thousand). Sales in Finland declined, while buoyant growth continued in export markets. The strongest increase in sales was seen in the market areas referred to as “other Nordic countries” and “the rest of Europe”. Exports and income from international operations accounted for 33.1% of net sales of interior decoration products. Bags Net sales of bags increased by 22.8% to EUR 2,406 thousand (EUR 1,959 thousand). Growth picked up significantly both in Finland and in export markets. Particularly vigorous sales growth was seen in Japan, the United States and the market area referred to as "the rest of Europe". Exports and income from international operations accounted for 33.8% of net sales of bags. Business gifts and contract sales Sales of business gifts and contract sales fell by 7.4%. Exports and international operations In the January-March period of 2007, the Group's exports and income from international operations rose by 28.4% to EUR 5,303 thousand (EUR 4,130 thousand). Buoyant growth was seen in all key market areas. A good rate of growth was maintained in the market area referred to as "other Nordic countries". Net sales rose by 16.2% to EUR 2,069 thousand (EUR 1,780 thousand). Growth was briskest in Norway and Denmark. The greatest increase was seen in sales of interior decoration products and bags. Sales in all product lines grew extremely vigorously in the market area referred to as "the rest of Europe". Net sales rose by 63.0% to EUR 1,563 thousand (EUR 959 thousand). All countries showed a significant pickup in growth. Sales growth strengthened noticeably in all product lines in North America. Net sales rose by 40.7% to EUR 899 thousand (EUR 639 thousand). The greatest increase was seen in sales of clothing and bags. Growth was boosted by the new Marimekko concept stores opened in 2006. Net sales rose by 2.7% to EUR 772 thousand (EUR 752 thousand) in the market area referred to as "other countries", where Japan is the major export country. At the beginning of March, Marimekko's Japanese distributor Look Inc. opened a Marimekko concept store in Yokohama, bringing the total number of Marimekko shops in Japan to eight. Licensing Royalty earnings from sales of licensed products were down on the corresponding period of the previous year. Royalty earnings grew extremely well in Finland, but fell noticeably in the United States. The termination of licensing operations in Japan at the end of 2006 also influenced the decline in royalty earnings. Production The production volume of the Herttoniemi textile printing factory increased by 6% on the comparison period. Production volumes at the factories in Kitee and Sulkava remained at the same level as in the corresponding period of the previous year. EARNINGS During the period under review, the Group's operating profit rose by 3.1% to EUR 1,497 thousand (EUR 1,452 thousand). Operating profit as a percentage of net sales amounted to 8.9% (9.0%). The Group's marketing expenses for the period totalled EUR 1,165 thousand (EUR 1,230 thousand), representing 6.9% (7.6%) of net sales. The Group's depreciation amounted to EUR 322 thousand (EUR 258 thousand), or 1.9% (1.6%) of net sales. Net financial income totalled EUR 16 thousand (net financial expenses EUR 10 thousand), representing 0.1% (0.1%) of the Group's net sales. The Group's profit after taxes increased by 4.9% to EUR 1,124 thousand (EUR 1,071 thousand), or 6.6% (6.6%) of net sales. Earnings per share rose to EUR 0.14 (EUR 0.13). INVESTMENTS The Group's gross investments amounted to EUR 500 thousand (EUR 660 thousand), representing 3.0% (4.1%) of net sales. The major investments focused on production equipment renewal at the Herttoniemi textile printing factory and the construction of new premises for Marimekko's Joensuu shop. EQUITY RATIO AND FINANCING Equity ratio was 73.3% at the end of the period (68.3% on 31 March 2006, 70.5% on 31 December 2006). The ratio of interest-bearing liabilities minus financial assets to shareholders' equity (gearing) was -4.5%, while it was -3.0% at the same time in the previous year (-11.7% on 31 December 2006). At the end of the period, the Group's interest-bearing liabilities amounted to EUR 2,212 thousand (EUR 3,524 thousand). The Group's financing from operations was EUR 1,446 thousand (EUR 1,329 thousand) and its financial assets amounted to EUR 3,482 thousand (EUR 4,271 thousand). SHARES AND SHARE PRICE TREND At the end of the review 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. The accounting countervalue of a share is one (1) euro. According to the book-entry register, the company had 5,152 registered shareholders at the end of the review period. 17.7% of the shares were registered in a nominee's name and 2.3% 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 1,657,500, representing 20.6% of the total votes conferred by the company's shares. At the end of the review period, the Board of Directors had no valid authorisations to carry out a share issue or issue of convertible bonds or bonds with warrants, or to acquire or dispose of the company's shares. During the January-March period of 2007, a total of 654,557 Marimekko shares were traded, representing 8.1% of the shares outstanding. The total value of share turnover was EUR 10,624,887. In the review period, the lowest price of the Marimekko share was EUR 14.60, the highest was EUR 16.98 and the average price was EUR 16.23. At the end of the review period, the share price was EUR 16.79 and the company's market capitalisation EUR 134,991,600 (EUR 117,786,000 on 31 December 2006). PERSONNEL During the period under review, the number of Group personnel averaged 403 (388). At the end of the period, the Group employed 403 (391) people, of whom 17 (10) worked abroad. Kirsi Räikkönen was appointed the Group's marketing and development director as of 16 April 2007, when she also became a member of the management group. RISK MANAGEMENT AND MAJOR RISKS The major risks that may affect the company's business are presented in the company's Annual Report 2006; no changes have occurred during the report period. MAJOR EVENTS AFTER THE CLOSE OF THE PERIOD ANNUAL GENERAL MEETING Marimekko Corporation's Annual General Meeting, held on 12 April 2007, adopted the company's accounts for 2006 and approved the Board of Directors' proposal for payment of a dividend for 2006 of EUR 0.65 per share, totalling EUR 5,226,000.00. The record date was 17 April 2007 and the dividend payout date 24 April 2007. The Annual General Meeting resolved that the Board of Directors shall consist of three members. Mr Matti Kavetvuo, M.Sc. (Eng.), B.Sc. (Econ.), and Mrs Kirsti Paakkanen, President, were re-elected and Mrs Tarja Pääkkönen, Ph.D. (Eng., Business Strategies), was elected as a new member of the Board of Directors until the end of the next Annual General Meeting. At its organisation meeting held after the Annual General Meeting, the Board of Directors elected Matti Kavetvuo as Chairman of the Board. The Annual General Meeting also decided that Nexia Tilintarkastus Oy, Authorised Public Accountants, will continue as regular auditor, with Mr Seppo Tervo, Authorised Public Accountant, as chief auditor, and Mr Matti Hartikainen, Authorised Public Accountant, as deputy auditor of the company. Flagging notifications Morgan Stanley & Co International Plc's share of Marimekko Corporation's share capital and voting rights rose to 5.08%, or 408,689 shares, as a result of a transaction made on 12 April 2007; and then fell to 4.77%, or 383,689 shares, as a result of a transaction made on 20 April 2007. Largest shareholders according to the book-entry register on 30 April 2007 Shareholder Percentage of holding and votes 1. Workidea Oy 20.00 2. Varma Mutual Employment Pension Insurance Company 4.34 3. ODIN Forvaltning AS 2.22 4. SEB Gyllenberg Small Firm 1.52 5. Säästöpankki Kotimaa 1.34 6. Nordea Nordic Small Cap Fund 1.33 7. Evli Select 1.30 8. Nordea Fennia Fund 1.14 9. Neste Oil Eläkesäätiö 1.12 10. Nordea Life Assurance Finland Ltd 1.10 11. Nordea Stable Return Fund 1.04 12. Evli Nordic Dividend 1.01 13. Nordea Pro Finland Fund 0.86 14. Ilmarinen Mutual Pension Insurance Company 0.70 15. Foundation for Economic Education 0.62 Total 39.64 Nominee-registered 17.84 Others 45.52 OUTLOOK FOR THE REMAINDER OF 2007 Strong growth in the world economy is forecast to continue throughout 2007 (ETLA, the Research Institute of the Finnish Economy, “Suhdanne” 1/2007). The fastest growth will be seen in Asia. The growth outlook for the euro zone is also favourable thanks to a revival in foreign trade and a pickup in domestic demand. Growth in total output in the United States is forecast to slow due to weakened private consumption. Growth in Finland during 2007 is also expected to be slightly slower than in 2006. Based on the business climate outlook and the market situation, growth in the Marimekko Group's net sales in 2007 is estimated to remain at the same level as in 2006. The brisk growth in exports is expected to continue and the Group's profitability is forecast to remain good. The Group racks up its strongest earnings and net sales growth in the last two quarters of the financial year. Helsinki, 9 May 2007 MARIMEKKO CORPORATION Board of Directors The company's interim report for the January-June period of 2007 will be published on 16 August and the interim report for the January-September period on 31 October. For additional information, contact: Kirsti Paakkanen, President, tel. +358 9 758 71 Thomas Ekström, Chief Financial Officer, tel. +358 9 758 7261 MARIMEKKO CORPORATION Corporate Communications Marja Korkeela Tel. +358 9 758 7238 Fax +358 9 759 1676 Email: marja.korkeela@marimekko.fi APPENDICES TO THE INTERIM REPORT Consolidated income statement Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in shareholders' equity Key indicators Consolidated net sales by market area and product line Segment information Quarterly trend in net sales and earnings Marimekko's stock exchange releases are available on the company's website at www.marimekko.com under Investors/Stock Exchange Releases. DISTRIBUTION: Helsinki Stock Exchange Principal media Marimekko's web site www.marimekko.com -------------------- APPENDICES This interim report has been prepared in accordance with IAS 34: Interim Financial Reporting. The same accounting policy has been applied as in the 2006 financial statements. In addition, the following new or amended standards and interpretations have been adopted as from 1 January 2007: IFRS 7 Financial Instruments: Disclosures. The Group estimates that the adoption of this standard primarily affects the scope of the notes to the annual financial statements. IAS 1 (amended) Presentation of Financial Statements: Capital Disclosures. The amendment does not affect this interim report. IFRIC 9 Reassessment of Embedded Derivatives. The application of the interpretation does not affect this interim report. IFRIC 10 Interim Financial Reporting and Impairment. The application of the interpretation does not affect this interim report. The information presented in this interim report has not been audited. CONSOLIDATED INCOME STATEMENT 1.1.-31.3. 1.1.-31.3. Change, 1.1.-31.12. (EUR 1,000) 2007 2006 % 2006 NET SALES 16,912 16,174 4.6 71,424 Other operating income 18 18 0.0 60 Increase or decrease in inventories of completed and unfinished products 857 1,535 -44.2 -33 Raw materials and consumables 4,972 5,568 -10.7 27,868 Employee benefit expenses 4,046 3,796 6.6 15,407 Depreciation and impairment 322 258 24.8 1,158 Other operating expenses 6,950 6,653 4.5 16,154 OPERATING PROFIT 1,497 1,452 3.1 10,864 Financial income 46 30 53.3 124 Financial expenses -30 -40 -25.0 -192 16 -10 -260.0 -68 PROFIT BEFORE TAXES 1,513 1,442 4.9 10,796 Income taxes 389 371 4.9 2,806 NET PROFIT FOR THE PERIOD 1,124 1,071 4.9 7,990 Distribution To equity holders of the parent company 1,124 1,071 7,990 Earnings per share calculated on the profit attributable to equity holders of the parent company, EUR 0.14 0.13 7.7 1.00 CONSOLIDATED BALANCE SHEET (EUR 1,000) 31.3.2007 31.3.2006 31.12.2006 ASSETS NON-CURRENT ASSETS Tangible assets 10,204 9,116 9,992 Intangible assets 314 329 348 Available-for-sale investments 20 20 20 10,538 9,465 10,360 CURRENT ASSETS Inventories 16,767 16,537 16,304 Trade and other receivables 7,457 6,627 5,717 Cash and cash equivalents 3,482 4,271 5,789 27,706 27,435 27,810 ASSETS, TOTAL 38,244 36,900 38,170 SHAREHOLDERS' EQUITY AND LIABILITIES EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY Share capital 8,040 8,040 8,040 Retained earnings 19,992 17,175 18,861 Shareholders' equity, total 28,032 25,215 26,901 NON-CURRENT LIABILITIES Deferred tax liabilities 638 563 614 Interest-bearing liabilities 841 1,842 841 1,479 2,405 1,455 CURRENT LIABILITIES Trade and other payables 7,152 7,240 7,803 Tax liabilities 210 358 210 Interest-bearing liabilities 1,371 1,682 1,801 8,733 9,280 9,814 Liabilities, total 10,212 11,685 11,269 SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL 38,244 36,900 38,170 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) 1.1.-31.3. 1.1.-31.3. 1.1.-31.12. 2007 2006 2006 CASH FLOW FROM OPERATING ACTIVITIES Net profit for the period 1,124 1,071 7,990 Adjustments Depreciation and impairment 322 258 1,158 Financial income and expenses +16 -10 68 Income taxes 389 371 2,806 Cash flow before change in working capital 1,819 1,710 12,022 Change in working capital -2,517 -3,499 -2,069 Cash flow from operating activities before financial items and taxes -698 -1,738 9,953 Paid interest and payments on other financial expenses -14 -21 -194 Interest received 70 33 101 Taxes paid -734 -644 -2,958 CASH FLOW FROM OPERATING ACTIVITIES -1,377 -2,370 6,902 CASH FLOW FROM INVESTING ACTIVITIES Investments in tangible and intangible assets -500 -660 -2,301 CASH FLOW FROM INVESTING ACTIVITIES -500 -660 -2,301 CASH FLOW FROM FINANCING ACTIVITIES Short-term loans drawn - - 3,000 Short-term loans repaid -400 -200 -3,100 Long-term loans repaid - - -946 Finance leasing debts paid -30 -14 -55 Dividends paid - - -5,226 CASH FLOW FROM FINANCING ACTIVITIES -430 -214 -6,327 Change in cash and cash equivalents -2,307 -3,244 -1,726 Cash and cash equivalents at the beginning of the period 5,789 7,515 7,515 Cash and cash equivalents at the end of the period 3,482 4,271 5,789 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Equity attributable to equity holders of the parent company (EUR 1,000) Share Transla- Fair value Retained Share- capital tion and other earnings holders' differ- reserves equity, ences total Adjusted share- holders' equity 1 Jan. 2006 8,040 16,097 24,137 Net profit for the period 1,071 Shareholders' equity 31 March 2006 8,040 7 17,168 25,215 Equity attributable to equity holders of the parent company (EUR 1,000) Share Transla- Fair value Retained Share- capital tion and other earnings holders' differ- reserves equity, ences total Adjusted share- holders' equity 1 Jan. 2007 8,040 18,861 26,901 Net profit for the period 1,124 Shareholders' equity 31 March 2007 8,040 7 19,985 28,032 KEY INDICATORS 1.1.-31.3. 1.1.-31.3. Change, 1.1.-31.12. 2007 2006 % 2006 Earnings per share, EUR 0.14 0.13 7.7 1.00 Equity per share, EUR 3.49 3.14 3.35 Share of exports and, international operations, % of net sales 31.4 25.5 24.6 Return on equity (ROE), % 16.4 17.4 31.3 Return on investment (ROI), % 20.7 20.9 38.2 Equity ratio, % 73.3 68.3 70.5 Gross investments, EUR 1,000 500 660 -24.3 2,455 Gross investments, % of net sales 3.0 4.1 3.4 Contingent liabilities, EUR 1,000 15,032 15,885 5.4 14,513 Average personnel 403 388 3.9 393 Personnel at the end of the period 403 391 3.1 396 Number of shares at the end of the period (1,000) 8,040 8,040 8,040 Number of shares outstanding, average (1,000) 8,040 8,040 8,040 NET SALES BY MARKET AREA AND PRODUCT LINE BY MARKET AREA (EUR 1,000) 1.1.-31.3. 1.1.-31.3. Change, 1.1.-31.12. 2007 2006 % 2006 Finland 11,609 12,044 -3.6 53,826 Other Nordic countries 2,069 1,780 16.2 7,373 Rest of Europe 1,563 959 63.0 3,655 North America 899 639 40.7 3,410 Other countries 772 752 2.7 3,160 TOTAL 16,912 16,174 4.6 71,424 BY PRODUCT LINE (EUR 1,000) 1.1.-31.3. 1.1.-31.3. Change, 1.1.-31.12. 2007 2006 % 2006 Clothing 7,708 7,606 1.3 30,309 Interior decoration 6,798 6,609 2.9 30,716 Bags 2,406 1,959 22.8 10,399 TOTAL 16,912 16,174 4.6 71,424 SEGMENT INFORMATION 1.1.-31.3. 1.1.-31.3. 1.1.-31.12. 2007 2006 2006 Net sales Finland 11,609 12,044 53,826 Other countries 5,303 4,130 17,598 Total 16,912 16,174 71,424 Assets Finland 37,912 35,999 36,662 Other countries 1,609 1,341 2,228 Eliminations -1,277 -855 -720 Total 38,244 36,900 38,170 Investments Finland 482 660 2,365 Other countries 18 - 90 Total 500 660 2,455 QUATERLY TREND IN NET SALES AND EARNINGS (EUR 1,000) I/2007 IV/2006 III/2006 II/2006 I/2006 Net sales 16,912 20,142 18,357 16,751 16,174 Operating profit 1,497 3,776 3,492 2,144 1,452 Earnings per share, EUR 0.14 0.35 0.32 0.20 0.13 |
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