2015-10-22 13:00:00 CEST
2015-10-22 13:00:53 CEST
REGULATED INFORMATION
Rapala VMC - Interim report (Q1 and Q3)
RAPALA VMC CORPORATION'S JANUARY TO SEPTEMBER 2015: MARKET CONDITIONS MIXED BUT STABLE. THIRD QUARTER SALES IMPACTED BY TIMING.
Rapala VMC Corporation
Interim report
October 22, 2015 at 2:00 p.m.
RAPALA VMC CORPORATION'S JANUARY TO SEPTEMBER 2015: MARKET CONDITIONS MIXED BUT
STABLE. THIRD QUARTER SALES IMPACTED BY TIMING.
July-September in brief:
* Net sales were 64.5 MEUR, down 5% from previous year (67.8). With comparable
exchange rates sales down also 5%.
* Comparable operating profit was 3.5 MEUR (4.7), down 26%.
* Cash flow from operations was 5.2 MEUR (4.3), up 21%.
* Earnings per share was -0.01 EUR (0.05).
* Full year guidance unchanged.
January-September in brief:
* Net sales were 218.6 MEUR, up 3% from previous year (211.7). With comparable
exchange rates sales up 1%.
* Comparable operating profit was 24.1 MEUR (21.1), up 14%.
* Cash flow from operations was 15.9 MEUR (17.8), down 11%.
* Earnings per share was 0.17 EUR (0.25).
President and CEO Jorma Kasslin: "The overall market conditions in the third
quarter were relatively stable and unsurprising, but varying from one market to
another. The third quarter sales were behind last year, largely impacted by
timing issues in the US market. On year to date basis we were ahead of last
year.
Our comparable operating profit came down from last year following lower sales.
The decline in reported operating profit was impacted by currency derivatives
where we recognized big gains in latter part of last year. The positive
profitability development trend of our lure manufacturing unit in Batam,
Indonesia continued during third quarter.
Outlook for the full year remains unchanged and we expect some of the winter
fishing sales to have transferred from third to fourth quarter, nevertheless
fourth quarter winter product sales always depends on the weather conditions.
During third quarter we announced some changes in our management organization.
The target of these changes is to accelerate the profitable growth strategy and
improve the capital efficiency."
Key figures
--------------------------------------------------------------------
III III change I-III I-III change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
--------------------------------------------------------------------
Net sales 64.5 67.8 -5% 218.6 211.7 +3% 273.2
Operating profit 2.9 5.7 -49% 20.4 21.7 -6% 22.9
% of net sales 4.5% 8.5% 9.3% 10.3% 8.4%
Comparable
operating profit
* 3.5 4.7 -26% 24.1 21.1 +14% 20.9
% of net sales 5.4% 7.0% 11.0% 9.9% 7.6%
Cash flow from
operations** 5.2 4.3 +21% 15.9 17.8 -11% 21.7
Gearing % 75.0% 71.7% 75.0% 71.7% 73.2%
EPS, EUR -0.01 0.05 -120% 0.17 0.25 -32% 0.24
--------------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of
operative currency derivatives.
**Comparative period restated, see notes.
Market environment
Business conditions during third quarter of the year were relatively stable, yet
diverse with mixed performance around the globe. Summer weather conditions were
favorable in some markets such as US and France whereas summer was overall cold
in other markets such as Nordic countries. Although weather conditions in Nordic
countries improved towards the end of the summer, Nordic countries were not able
to fully recover the sales lost earlier in the season. Market situation in
Russia and Ukraine continue to be difficult. Start of the sales of ice fishing
products in North America was behind last year's strong opening, partly due to
timing issues, shifting sales to the last quarter.
Business Review July-September 2015
The Group's net sales for the third quarter were down 5%. Changes in translation
exchange rates increased sales by approximately 0.4 MEUR, US Dollar and Russian
Ruble impact offsetting each other. Correspondingly also with comparable
translation exchange rates quarterly net sales were down 5% from last year.
North America
North American sales decreased from last year's very strong third quarter both
in the US and Canada. Favorable summer weather conditions advanced sales to the
second quarter compared to last year, whereas ice fishing deliveries were partly
postponed to the last quarter of the year. US economy remains good and retailers
are looking for growth opportunities, while business conditions in Canada
continue tougher. Stronger US Dollar is supporting the US performance, but
hurting the Canadian business. North America sales were negatively impacted by
termination a third party winter fishing equipment distribution agreement, which
contributed ca. 5 MUSD sales during second half of last year.
Nordic
Nordic sales development was negative in third quarter compared to last year
impacted by slower start of ice fishing sales, decrease in sales of hunting
products in Denmark and Sweden as well as overall unfavorable summer weather.
Sales in Finland were supported by a new hunting dealership. Pre-sales of winter
sports products were slightly above last year's levels.
Rest of Europe
With comparable rates sales were slightly above last year level and showed a
mixed picture with ups and downs around the region. Russian Ruble remains weak,
negatively impacting the reported sales and causing uncertainties for the
future. Although the market situation in Russia and Ukraine continue difficult,
it has stabilized a bit and sales in these countries were at last year levels in
local currency.
Rest of the World
Sales improved from last year supported by growth in nearly all Asian and Latin
countries as well as Australia and South Africa. Sales suffered in Asia Pacific
countries.
External Net Sales by Area--------------------------------------------------------
III III change Comparable I-IV
change %
MEUR 2015 2014 % 2014
--------------------------------------------------------
North America 21.8 22.2 -2% -15% 86.1
Nordic 11.4 12.5 -9% -7% 54.9
Rest of Europe 21.7 24.1 -10% +2% 98.7
Rest of the World 9.7 9.1 +7% +7% 33.5
Total 64.5 67.8 -5% -5% 273.2
--------------------------------------------------------
Business Review January-September 2015
The Group net sales for the nine-month period were up 3%. Changes in translation
exchange rates explain approximately 4.0 MEUR of the increase in net sales. With
comparable translation exchange rates nine-month net sales were 1% ahead last
year's level.
North America
Sales were above last year's level supported by solid first half of the year
sales in the US. Good sales growth in the US was supported by strong US Dollar,
good weather in the key fishing markets, successful launch of new Shadow Rap
lure family and some shift of sales from last year's fourth quarter. Business
conditions were tough in Canada.
Nordic
Nordic sales increased slightly from last year due to strong first quarter sales
that were supported by improved winter weather conditions, earlier timing of
sales of summer fishing products, on-time deliveries from suppliers and exchange
gains on currency nominated accounts receivable. Nordic sales were hit by an
overall cold and rainy summer. Despite improved fishing conditions towards the
end of the summer, season's fishing tackle sales remained behind last year.
Rest of Europe
On comparable currencies sales were slightly below last year's level. Political
and economic turbulence in Russia and Ukraine continued to have adverse impact
on sales in these countries. Currencies, mainly Ruble, had a clear negative
impact on sales in the Rest of Europe compared to last year. Excluding Russia
and Ukraine the sales improved 5% from last year with comparable rates driven by
increased sales in France, Romania and Spain.
Rest of the World
Rest of the World sales increased from last year. Growth was steady in South
Africa, Latin America and several Asian countries. Sales were suffering in
Australia, Japan and Indonesia.
External Net Sales by Area
--------------------------------------------------------
I-III I-III change Comparable I-IV
MEUR 2015 2014 % change % 2014
--------------------------------------------------------
North America 73.4 61.4 +20% +1% 86.1
Nordic 45.6 45.2 +1% +3% 54.9
Rest of Europe 73.1 81.4 -10% -1% 98.7
Rest of the World 26.5 23.8 +11% +6% 33.5
Total 218.6 211.7 +3% +1% 273.2
--------------------------------------------------------
Financial Results and Profitability
Comparable (excluding non-recurring items and mark-to-market valuations of
operative currency derivatives) operating profit increased from last year for
the nine-months but was behind last year for the quarter. Changes in translation
exchange rates, especially weakening of Ruble, burdened quarterly comparable
operating profit by approximately 0.4 MEUR and nine-month operating profit by
approximately 1.0 MEUR. With comparable translation exchange rates comparable
operating profit was 0.9 MEUR behind of last year's level for the quarter and
4.1 MEUR ahead of last year for the nine-month period.
Comparable operating profit margin was 5.4% (7.0) for the quarter and 11.0%
(9.9) for the nine-month period. Decline in third quarter profitability was
driven by lower sales and reduced gross margin impacted by clearance sales.
Quarter and nine-month profitability were both supported by continuing recovery
of Asian manufacturing operations' profitability, while negatively impacted by
stronger US dollar lowering the margins of third party products. Nine-month
profitability was further supported by stronger sales of Group branded products
especially in the USA, while burdened by the negative sales development in
Russia.
Reported operating profit was down for the quarter and nine-month period.
Respectively reported operating profit margin was 4.5% (8.5) for the quarter and
9.3% (10.3) for the nine-month period. Reported operating profit included loss
on non-recurring items of 0.1 MEUR (0.4) for the quarter and 1.3 MEUR (0.9) for
the nine-month period related to the closing down of the manufacturing
operations in China. Mark-to-market valuation of operative currency derivatives
had a significant impact on the reported operating profit compared to last year,
being 0.5 MEUR loss (1.5 gain) for the quarter and 2.4 MEUR loss (1.6 gain) for
nine-months.
Total financial (net) expenses were 1.6 MEUR (2.3) for the quarter and 5.7 MEUR
(5.7) for the nine-month period. Financial items were negatively impacted by the
net foreign exchange expenses of 0.8 MEUR (1.2) for the quarter and 3.4 MEUR
(2.7) for the nine-months. Net interest and other financing expenses decreased
from last year's level to 0.8 MEUR (1.1) for the quarter and 2.3 MEUR (3.0) for
the nine-months.
Net profit was behind last year for the quarter and nine-month period. Earnings
per share were -0.01 EUR (0.05) for the quarter and 0.17 EUR (0.25) for
the nine-months. Change in mark-to-market valuation of operative currency
derivatives was having notable negative impact on Group's net profit and EPS
compared to last year. Last year nine-month net profit included a positive tax
impact of 1.0 MEUR related to an agreement with the Finnish tax authority. The
share of non-controlling interest in net profit decreased from last year and
totaled 0.4 MEUR (0.7) for the quarter and 1.5 MEUR (1.6) for the nine-months.
Key figures
-------------------------------------------------------------------------------
III III change I-III I-III change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
-------------------------------------------------------------------------------
Net sales 64.5 67.8 -5% 218.6 211.7 +3% 273.2
Operating profit 2.9 5.7 -49% 20.4 21.7 -6% 22.9
Comparable operating
profit * 3.5 4.7 -26% 24.1 21.1 +14% 20.9
Net profit -0.2 2.7 -107% 8.1 11.1 -27% 10.2
-------------------------------------------------------------------------------
* Excluding non-recurring items and mark-to-market valuations of
operative currency derivatives.
Group Products
Third quarter sales of Group Products were supported by currency exchange rates
but decreased from last year with comparable rates. Nine-month comparable sales
were above last year due to the strong start in the first half of the year
especially in the US. Third quarter ice fishing sales didn't reach last year's
strong levels, impacted by change in some customers' pre-order behavior and some
delays in shipments postponing sales to fourth quarter.
Operating profit for Group Products was above last year for the nine-month
period supported by increased sales and improved profitability of Asian
manufacturing operations. For the third quarter, operating profit was down from
last year mainly due to lower sales volumes and negative gross margin impact
from actions to reduce inventory levels.
Third Party Products
Third quarter and nine-month sales of Third Party Products decreased from last
year and were further negatively impacted by currencies. Quarterly sales
increased for outdoor products while third party fishing and especially ice
fishing sales were lower than last year due to losing a distribution dealership
in the US. Nine-month sales were affected by economical instabilities which
impacted fishing products sales in Russia.
Operating profit for Third Party Products was down from last year both for the
quarter and nine-months following the reduced sales, inventory clearance and
unfavorable exchange rates impact on purchases.
Net Sales by Segment
-----------------------------------------------------------
III III change Comparable I-IV
MEUR 2015 2014 % change % 2014
-----------------------------------------------------------
Group Products 41.0 41.0 0% -4% 171.3
Third Party Products 23.6 26.9 -12% -8% 102.0
Eliminations 0.0 0.0
Total 64.5 67.8 -5% -5% 273.2
-----------------------------------------------------------
-----------------------------------------------------------
I-III I-III change Comparable I-IV
MEUR 2015 2014 % change % 2014
-----------------------------------------------------------
Group Products 144.5 131.3 +10 % +3% 171.3
Third Party Products 74.0 80.5 -8 % -2% 102.0
Eliminations 0.0 0.0
Total 218.6 211.7 +3 % +1% 273.2
-----------------------------------------------------------
Operating profit by Segment
-------------------------------------------------------------------
III III change I-III I-III change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
-------------------------------------------------------------------
Group Products 2.1 3.7 -43% 15.9 13.3 +20% 15.0
Third Party Products 0.9 2.1 -57% 4.5 8.4 -46% 7.9
Total 2.9 5.7 -49% 20.4 21.7 -6% 22.9
-------------------------------------------------------------------
Financial position
Cash flow from operations increased from last year for the quarter being 5.2
MEUR (4.3), but for nine-months decreased from last year's strong levels to
15.9 MEUR (17.8). Net change in working capital amounted to 2.5 MEUR (1.1) for
the quarter and -4.3 MEUR (-1.5) for the nine-month period. Quarterly
improvement was driven by positive development in working capital as especially
receivables released more cash in the third quarter, but on year to date basis
receivables still tie more cash driving the negative development in the net
working capital.
Inventories increased slightly by 0.6 MEUR from last September amounting to
117.8 MEUR (117.2), of which -3.5 MEUR is related to change in translation
exchange rates. Increase in inventories was driven by timing of shipments,
transfer of production from China to Batam and lower than expected sales in
various countries, which prevented the Group from achieving planned inventory
reductions.
Net cash used in investing activities was at last year's level and totaled 2.1
MEUR (2.0) for the quarter and 6.3 MEUR (6.4) for the nine-months, for the most
part consisting of normal operative capital expenditure.
Liquidity position of the Group was good. Undrawn committed long-term credit
facilities amounted to 78.2 MEUR at the end of the period. Gearing and net
interest-bearing debt increased from last year and equity-to-assets was slightly
below last year's level. The Group fulfils all financial covenants related to
its credit facilities. Increased net interest-bearing debt and lowered reported
EBITDA has put some pressure on Group's capital management objectives.
Key figures
-------------------------------------------------------------------------------
III III change I-III I-III change I-IV
MEUR 2015 2014 % 2015 2014 % 2014
------------------------------------------------------------------------------- Cash flow from operations * 5.2 4.3 +21% 15.9 17.8 -11% 21.7
Net interest-bearing debt at end
of period 104.1 99.7 +4% 104.1 99.7 +4% 99.9
Gearing % 75.0% 71.7% 75.0% 71.7% 73.2%
Equity-to-assets ratio at end of 43.4% 44.1% 43.4% 44.1% 44.1%
period, %
-------------------------------------------------------------------------------
* Comparative periods restated, see notes.
Strategy Implementation
Execution of the Rapala Group's strategy is based on three cornerstones: brands,
manufacturing and distribution, supported by strong corporate culture. During
the third quarter strategy implementation continued in various areas.
During third quarter the Group announced changes in its management organization
targeted to accelerate the profitable growth strategy and improve the capital
efficiency. The new management structure will put more focus on managing and
improving the end-to-end performance of Group's businesses, consolidate the
reporting lines of geographical regions and increase the co-ordination between
Group's brands. The role of global supply chain management is reinforced in
order to achieve significant reductions in the Group's working capital levels.
The Group is putting a lot of attention and resources to its Asian lure
manufacturing unit in Batam to develop the business and operations in order to
exploit the strengths and capture the benefits of this unit. By putting focus on
improving production efficiencies, capacity and quality and by implementing new
modern manufacturing techniques, the performance of the operations has already
clearly improved from last year and there is still room for considerable
improvement in the future. This unit forms solid basis for future growth of the
Group's Storm, Luhr Jensen, Blue Fox and Williamson branded lures.
Discussions and negotiations regarding acquisitions and business combinations
continued during the third quarter of the year, as the Group continues to seek
also non-organic growth opportunities.
Product Development
Continuous product development and consistent innovation are core competences
for the Group and major contributor to the value and commercial success of the
brands, which was also taken into account in the new organization by appointing
Mr. Jari Kokkonen as a director to co-ordinate Group's lure product development
and innovations on global basis.
Manufacturing of next season's Rapala lure novelties has already started and
these will be introduced to North American markets early next year. In addition
to Rapala, Group is also putting lot of focus on Storm lures, especially soft
plastics, manufactured in the new Batam factory.
For the coming winter season Group will introduce to European markets new
Finnish manufactured Mora Ice Chrome -ice drill series. Peltonen ski collection
will be renewed and redesigned, including a new waxless skies with Skintech-
technology.
Organization and Personnel
Average number of personnel for the third quarter was 3 209 (2 669) and 3 038
(2 672) for the nine-months, increase coming mainly from expansion of lure
manufacturing operations in Batam and reduction of outsourcing in China. At the
end of September, the number of personnel was
3 308 (2 714).
On September 24(th), 2015 the Board of Directors made appointments and changes
in the Group's Executive Committee with immediate effect. Jussi Ristimäki was
appointed as Deputy Chief Executive Officer. Aku Valta and Cyrille Viellard were
appointed as new members to Executive Committee.
Short-term Outlook and Risks
Outlook for the full year remains unchanged. Reduction in third quarter sales
was impacted by timing and some of the winter fishing sales is expected to have
transferred from third to fourth quarter. Pre-sales of winter sports equipment
has been slightly better than last year, but like with winter fishing business,
the final outcome of the season is dependent on the weather conditions.
Improvement in performance of the manufacturing unit in Batam is supporting the
profitability of the Group this year.
Situation in Russia has stabilized to some extent, but is still causing concern
and uncertainty. Actions to reduce the Group's inventory levels will continue,
which together with stronger US Dollar will have some pressure on Group's profit
margins.
The Group expects full year net sales and comparable operating profit (excluding
non-recurring items and mark-to-market valuations of operative currency
derivatives) to be above 2014 levels.
Short term risks and uncertainties and seasonality of the business are described
in more detail in the end of this interim report.
Fourth quarter interim report and annual accounts 2015 will be published on
February 9(th).
Helsinki, October 22, 2015
Board of Directors of Rapala VMC Corporation
For further information, please contact:
Jorma Kasslin, President and Chief Executive Officer, +358 9 7562 540
Jussi Ristimäki, Deputy CEO and CFO, +358 9 7562 540
Olli Aho, Investor Relations, +358 9 7562 540
A conference call on the quarter result will be arranged today at 4:00 p.m.
Finnish time (3:00 p.m. CET). Please dial +44 (0)20 3367 9433 or
+1 917 286 8056 or +358 (0)9 2310 1675 (pin code: 225813#) five minutes before
the beginning of the event. A replay facility will be available for 14 days
following the teleconference. The number to dial is +44 (0)20 3427 0598 (pin
code: 3737943). Financial information and teleconference replay facility are
available at www.rapalavmc.com.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
STATEMENT OF INCOME III III I-III I-III I-IV
MEUR 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Net sales 64.5 67.8 218.6 211.7 273.2
Other operating income 0.1 0.3 0.4 0.6 1.0
Materials and services 31.7 33.6 102.3 97.9 128.1
Personnel expenses 15.7 15.6 51.0 49.6 65.6
Other costs and expenses 12.6 11.6 40.4 38.3 50.8
Share of results in associates and joint
ventures 0.2 0.2 0.5 0.4 0.2
------------------------------
EBITDA 4.8 7.5 25.7 27.0 30.0
Depreciation, amortization and impairments 1.9 1.8 5.3 5.2 7.1
------------------------------
Operating profit (EBIT) 2.9 5.7 20.4 21.7 22.9
Financial income and expenses 1.6 2.3 5.7 5.7 7.2
------------------------------
Profit before taxes 1.3 3.5 14.6 16.0 15.7
Income taxes 1.5 0.8 6.5 4.9 5.5
------------------------------
Net profit for the period -0.2 2.7 8.1 11.1 10.2
------------------------------
Attributable to:
Equity holders of the company -0.6 2.0 6.6 9.5 9.2
Non-controlling interests 0.4 0.7 1.5 1.6 1.0
Earnings per share for profit attributable
to the equity holders of the company:
Earnings per share, EUR (diluted = non-diluted) -0.01 0.05 0.17 0.25 0.24
STATEMENT OF COMPREHENSIVE INCOME III III I-III I-III IV
MEUR 2015 2014 2015 2014 2014
------------------------------------------------------------------------------
Net profit for the period -0.2 2.7 8.1 11.1 10.2
------------------------------
Other comprehensive income, net of tax
Change in translation differences* -2.9 4.7 4.9 5.7 4.7
Gains and losses on cash flow hedges* 0.0 0.0 0.2 0.1 0.2
Gains and losses on hedges of net investments* -1.4 0.0 -3.1 0.1 0.1
Actuarial gains (losses) on defined benefit - - - - -0.2
plan
------------------------------
Total other comprehensive income, net of tax -4.3 4.7 2.0 5.9 4.8
------------------------------
Total comprehensive income for the period -4.5 7.3 10.1 16.9 15.1
------------------------------
Total comprehensive income attributable to:
Equity holders of the -4.1 6.9 9.3 15.6 15.3
Company
Non-controlling interests -0.5 0.4 0.8 1.3 -0.2
* Item that may be reclassified subsequently to the statement of income
STATEMENT OF FINANCIAL POSITION Sep 30 Sep 30 Dec 31
MEUR 2015 2014 2014
------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 77.0 73.5 74.4
Property, plant and equipment 31.6 31.5 32.0
Non-current assets
Interest-bearing 4.2 4.6 3.0
Non-interest-bearing 11.9 10.4 11.5
---------------------
124.7 120.0 120.8
Current assets
Inventories 117.8 117.2 113.8
Current assets
Interest-bearing 1.1 1.0 1.1
Non-interest-bearing 65.4 64.3 62.3
Cash and cash equivalents 11.4 12.8 12.2
---------------------
195.7 195.3 189.4
Total assets 320.4 315.3 310.3
---------------------
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the company 129.8 129.2 128.3
Non-controlling interests 9.0 9.8 8.2
---------------------
138.8 138.9 136.5
Non-current liabilities
Interest-bearing 73.2 81.8 72.3
Non-interest-bearing 14.8 12.8 13.3
---------------------
88.0 94.6 85.5
Current liabilities
Interest-bearing 47.5 36.2 43.9
Non-interest-bearing 46.0 45.5 44.2
---------------------
93.5 81.8 88.2
Total equity and liabilities 320.4 315.3 310.3
---------------------
III III I-III I-III I-IV
KEY FIGURES 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
EBITDA margin, % 7.5% 11.1% 11.8% 12.7% 11.0%
Operating profit margin, % 4.5% 8.5% 9.3% 10.3% 8.4%
Return on capital employed, % 4.7% 9.8% 11.3% 12.3% 9.8%
Capital employed at end of
period, MEUR 242.9 238.6 242.9 238.6 236.5
Net interest-bearing debt at
end of period, MEUR 104.1 99.7 104.1 99.7 99.9
Equity-to-assets ratio at end
of period, % 43.4% 44.1% 43.4% 44.1% 44.1%
Debt-to-equity ratio at end
of period, % 75.0% 71.7% 75.0% 71.7% 73.2%
Earnings per share, EUR
(diluted = non-diluted) -0.01 0.05 0.17 0.25 0.24
Equity per share at end of
period, EUR 3.38 3.36 3.38 3.36 3.34
Average personnel for the
period 3 209 2 669 3 038 2 672 2 716
-------------------------------------------------------------------------------
Definitions of key figures are consistent with those in the
financial statement 2014.
STATEMENT OF CASH FLOWS III III I-III I-III IV
MEUR 2015 2014 2015 2014 2014
Restated** Restated** Restated**
------------------------------------------------------------------------------
Net profit for the period -0.2 2.7 8.1 11.1 10.2
Adjustments to net profit for
the period * 5.5 3.3 19.5 14.0 17.1
Financial items and taxes paid
and received -2.6 -2.8 -7.5 -5.8 -7.1
Change in working capital 2.5 1.1 -4.3 -1.5 1.5
------------------------------------------------------------------------------
Net cash generated from
operating activities 5.2 4.3 15.9 17.8 21.7
Investments -2.2 -2.1 -5.6 -5.8 -8.5
Proceeds from sales of assets 0.1 0.1 0.2 0.3 0.4
Sufix brand acquisition 0.0 0.0 -0.9 -0.7 -0.8
Acquisition of other
subsidiaries, net of cash - - - -0.2 -0.2
Proceeds from disposal of
subsidiaries, net of cash - - - - 1.0
Change in interest-bearing
receivables 0.0 0.0 0.0 0.0 0.0
------------------------------------------------------------------------------
Net cash used in investing
activities -2.1 -2.0 -6.3 -6.4 -8.1
Dividends paid to parent
company's shareholders - - -7.7 -9.2 -9.2
Dividends paid to non-
controlling interest - -3.6 - -3.6 -3.6
Net funding -6.5 -1.7 -2.4 -2.6 -4.2
Purchase of own shares - -0.1 -0.2 -0.4 -0.9
------------------------------------------------------------------------------
Net cash generated from
financing activities -6.5 -5.3 -10.3 -15.8 -17.9
Change in cash and cash
equivalents -3.4 -3.0 -0.6 -4.4 -4.2
Cash & cash equivalents at the
beginning of the period 15.4 15.6 12.2 16.9 16.9
Foreign exchange rate effect -0.6 0.2 -0.2 0.3 -0.5
------------------------------------------------------------------------------
Cash and cash equivalents at the
end of the period 11.4 12.8 11.4 12.8 12.2
* Includes reversal of non-cash items, income taxes and financial
income and expenses.
**Comparative periods
restated, see notes
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Attributable to equity holders of the company
-------------------------------------------------
Cumul. Fund for Non-
Share Fair trans- invested Re- contr-
non-
pre- value lation rest- Own tained olling
Share mium re- diffe- ricted sha- earn- inte- Total
MEUR capital fund serve rences equity res ings rests equity
-----------------------------------------------------------------------------
Equity on Jan
1, 2014 3.6 16.7 -1.4 -12.5 4.9 -4.4 116.2 12.0 135.1
-----------------------------------------------------------------------------
Comprehensive
income * - - 0.1 6.1 - - 9.5 1.3 16.9
Purchase of
own shares - - - - - -0.4 - - -0.4
Dividends - - - - - - -9.2 -3.6 -12.8
-----------------------------------------------------------------------------
Equity on Sep
30, 2014 3.6 16.7 -1.2 -6.5 4.9 -4.7 116.4 9.8 138.9
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Equity on Jan
1, 2015 3.6 16.7 -1.1 -6.5 4.9 -5.2 116.0 8.2 136.5
-----------------------------------------------------------------------------
Comprehensive
income * - - 0.2 2.5 - - 6.6 0.8 10.1
Purchase of
own shares - - - - - -0.2 - - -0.2
Dividends - - - - - - -7.7 - -7.7
------------------------------------------------------------------------------
Equity
on Sep
30, 2015 3.6 16.7 -0.9 -4.0 4.9 -5.4 115.0 9.0 138.8
------------------------------------------------------------------------------
* For the period, (net
of tax)
SEGMENT INFORMATION*
MEUR III III I-III I-III I-IV
Net Sales by Operating Segment 2015 2014 2015 2014 2014
--------------------------------------------------------------
Group Products 41.0 41.0 144.5 131.3 171.3
Third Party Products 23.6 26.9 74.0 80.5 102.0
Eliminations 0.0 0.0 0.0
--------------------------------------------------------------
Total 64.5 67.8 218.6 211.7 273.2
Operating Profit by Operating Segment
--------------------------------------------------------------
Group Products 2.1 3.7 15.9 13.3 15.0
Third Party Products 0.9 2.1 4.5 8.4 7.9
--------------------------------------------------------------
Total 2.9 5.7 20.4 21.7 22.9
Assets by Operating Segment Sep 30 Sep 30 Dec 31
MEUR 2015 2014 2014
-----------------------------------------------------------
Group Products 237.5 228.7 230.4
Third Party Products 66.2 68.2 63.6
-----------------------------------------------------------
Non-interest-bearing assets total 303.7 296.9 294.0
Unallocated interest-bearing assets 16.7 18.4 16.3
-----------------------------------------------------------
Total assets 320.4 315.3 310.3
* Segments are consistent with those in the financial statements 2014. Segments
are described in detail in note 2 of the financial statements 2014.
External Net Sales by Area III III I-III I-III I-IV
MEUR 2015 2014 2015 2014 2014
---------------------------------------------------------
North America 21.8 22.2 73.4 61.4 86.1
Nordic 11.4 12.5 45.6 45.2 54.9
Rest of Europe 21.7 24.1 73.1 81.4 98.7
Rest of the world 9.7 9.1 26.5 23.8 33.5
---------------------------------------------------------
Total 64.5 67.8 218.6 211.7 273.2
KEY FIGURES BY QUARTERS I II III IV I-IV I II III
MEUR 2014 2014 2014 2014 2014 2015 2015 2015
--------------------------------------------------------------------------
Net sales 66.2 77.7 67.8 61.5 273.2 73.9 80.1 64.5
EBITDA 9.1 10.4 7.5 3.0 30.0 10.8 10.1 4.8
Operating profit 7.4 8.6 5.7 1.2 22.9 9.1 8.3 2.9
Profit before taxes 5.5 7.0 3.5 -0.3 15.7 6.9 6.4 1.3
Net profit for the period 4.3 4.1 2.7 -0.8 10.2 4.3 4.0 -0.2
--------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT AND FINANCIAL POSITION
The financial statement figures included in this release are unaudited.
This report 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 2014, except for the adoption of the new
or amended standards and interpretations.
Adoption of the amended standard IAS 19 did not result in any changes in the
accounting principles that would have affected the information presented in this
interim report.
Change in presentation of statement of cash flows
Presentation of statement of cash flows has been updated from the beginning of
2015 to better distinguish the three types of financial activities. Previously
unrealized foreign exchange impact from elimination of internal transactions was
presented separately under Adjustments. Also the cash flow from derivative
instruments was included fully in Net cash generated from operating activities.
After the change the unrealized foreign exchange impact related to the
elimination of internal transactions and cash flow from derivative instruments
are presented according to their nature. This resulted in changes between the
three financial activities.
Comparative periods have been restated and changes to previously reported
figures were disclosed in the first quarter interim report.
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 interim period
The Group has no knowledge of any significant events after the end of the
interim period that would have a material impact on the financial statements for
January-September 2015. Material events after the end of the interim period, if
any, have been discussed in the interim review by the Board of Directors.
Inventories
On September 30, 2015, the book value of inventories included a provision for
net realizable value of 5.1 MEUR (4.6 MEUR at September 30, 2014 and 4.1 MEUR at
December 31, 2014).
Non-recurring income and expenses included in
operating profit III III I-III I-III I-IV
MEUR 2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Closure of Chinese lure
manufacturing * 0.0 -0.4 -1.2 -0.9 -1.7
Other restructuring costs - 0.0 - 0.0 0.0
Other non-recurring items - 0.0 - 0.0 -0.1
-------------------------------------------------------------------------------
Total included in EBITDA and
operating profit 0.0 -0.4 -1.2 -0.9 -1.8
-------------------------------------------------------------------------------
Other non-recurring impairments -0.1 - -0.1 - -
-------------------------------------------------------------------------------
Total included in operating profit -0.1 -0.4 -1.3 -0.9 -1.8
-------------------------------------------------------------------------------
* The Group classifies all exceptional income and expenses related to the
closure of China manufacturing that are not related to normal business operation
as non-recurring, primarily consisting of write-offs and one-off costs related
to restructuring.
Commitments Sep 30 Sep 30 Dec 31
MEUR 2015 2014 2014
---------------------------------------------------------------------
Minimum future lease payments on operating leases 14.9 16.1 16.4
---------------------------------------------------------------------
Sales Other
Related party transactions and other Pur- Rents expen- Recei- Paya-
MEUR income chases paid ses vables bles
-------------------------------------------------------------------------------
I-III 2015
Joint venture Shimano Normark
UK Ltd 3.2 - - 0.0 0.3 -
Associated company Lanimo Oü 0.0 0.1 - - 0.0 -
Entity with significant
influence over the Group* - - 0.1 0.1 0.0 -
Management - - 0.2 0.0 - 0.0
I-III 2014
Joint venture Shimano Normark
UK Ltd 2.8 - - - 0.4 -
Associated company Lanimo Oü - 0.1 - - 0.0 -
Entity with significant
influence over the Group* - - 0.1 0.1 0.0 -
Management - - 0.2 - 0.0 0.0
I-IV 2014
Joint venture Shimano Normark
UK Ltd 3.2 - - - 0.1 0.0
Associated company Lanimo Oü 0.0 0.1 - - 0.0 -
Entity with significant
influence over the Group* - - 0.2 0.1 0.0 0.0
Management - - 0.3 - 0.0 0.0
-------------------------------------------------------------------------------
* Lease agreement for the real estate for the consolidated operations in
France and a service fee.
Sep 30 Sep 30 Dec 31
Open derivatives 2015 2014 2014
-------------------------------------------
Nominal Fair Nominal Fair Nominal Fair
MEUR Value Value Value Value Value Value
------------------------------------------------------------------------
Operative hedges
Foreign currency derivatives 36.4 1.3 44.8 1.5 44.1 3.8
Monetary hedges
Foreign currency derivatives 57.4 1.4 49.2 -1.1 30.6 -0.7
Interest rate derivatives 103.2 0.7 110.7 -0.4 101.4 -0.7
------------------------------------------------------------------------
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 operative costs, 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 2014.
Changes in unrealized mark-to-market valuations for operative foreign currency
derivatives
III III I-III I-III I-IV
2015 2014 2015 2014 2014
-------------------------------------------------------------------------------
Included in operating profit -0.5 1.5 -2.4 1.6 3.8
-------------------------------------------------------------------------------
Operative foreign currency derivatives that are marked-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 financial
instruments Sep 30 Sep 30 Dec 31
2015 2014 2014
-------------------------------------------------------------------------------
Carrying Fair Carrying Fair Carrying Fair
MEUR value value value value value value
-------------------------------------------------------------------------------
Assets
Available-for-sale
financial assets (level
3) 0.3 0.3 0.3 0.3 0.3 0.3
Current non-interest-
bearing assets (excl.
derivatives) 62.5 62.7 63.0 63.0 58.8 58.8
Derivatives (level
2) 5.3 5.3 3.4 3.4 5.4 5.4
-------------------------------------------------------------------------------
Total 68.1 68.3 66.7 66.7 64.5 64.5
Liabilities
Non-current interest-
bearing liabilities (excl.
derivatives) 73.2 73.4 81.8 82.3 72.3 72.7
Derivatives (level
2) 1.9 1.9 3.4 3.4 3.1 3.1
-------------------------------------------------------------------------------
Total 75.1 75.3 85.3 85.7 75.3 75.8
Fair values of other financial instruments do not differ materially
from their carrying value.
Shares and share capital
On March 27, 2015 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 decision of the AGM are available also on the corporate website.
Share related key figures Sep 30, 2015 Sep 30, 2014
-----------------------------------------------------------------------
Number of shares 39 000 000 39 000 000
Number of shares, average 39 000 000 39 201 741
Number of treasury shares 639 671 506 807
Number of treasury shares, % 1.6% 1.3%
Number of outstanding shares 38 360 329 38 493 193
Number of shares traded, YTD 1 763 813 617 698
Share price 4.85 5.32
Highest share price, YTD 5.85 6.00
Lowest share price, YTD 4.70 4.95
Average price of treasury shares, all time 4.87 5.15
Acquired treasury shares, YTD 32 864 15 521
-----------------------------------------------------------------------
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 are included in the
Financial Statements 2014.
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. The Group's liquidity
and refinancing risks are well 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, except in Russia where uncertainties have increased during the past
two years.
[HUG#1958152]
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