TULIKIVI CORPORATION INTERIM REPORT 01-03/2009
April 21, 2009 at 10.30
Interim report 01-03/2009
- The Tulikivi Group's sales were EUR 11.0 million (EUR 14.6
million, 01-03/2008).
- The Group's result before taxes was a loss of EUR -3.0 (-0.6)
million after EUR 1 million in non-recurring expenses incurred
from the centralisation and profitability programme. Earnings per
share amounted to EUR -0,06 (-0,01).
- Cash flow from operating activities before investments was EUR -
1.0 (0.8) million.
- Order books were at EUR 6.6 million (EUR 4.9 million 31 Dec) on
31 March.
- Net sales for the period are expected to fall well below that of
last year and the result after non-recurring items is expected to
be in the red.
Managing Director's comments:
"Net sales for the first quarter were notably lower than a year
before, especially in Finland, Russia and the Baltic countries. A
decrease in private home building and the general uncertainty
among consumers had a strong impact on demand. Fireplace sales to
Central-Europe, where sales focus on renovation, performed well
considering the challenging environment.
Despite the challenging demand situation, we have continued to
develop our domestic distribution network and services and started
logistics operations in Russia. These measures will increase net
sales from the level of early 2009 in the markets in question. The
programme to centralise Group functions and improve profitability
is making progress. Structural changes made in addition to
personnel reductions will also result in substantial cost savings,
which will improve the Group's relative profitability in the
latter part of the year.
In the upcoming months demand for fireplaces will be higher in
Central Europe than in Finland and its neighbouring regions.
However, in order for demand to recover consumer confidence must
improve substantially on the current level. As a whole, however,
demand for fireplaces will be higher during the coming months than
it was in the first quarter.
Segment reporting
Since the beginning of 2009, the Group's operating segments have
been the Fireplaces Business and the Natural Stone Products
Business. The Fireplaces Business includes the soapstone Tulikivi
and the ceramic Kermansavi fireplaces, their accessories, utility
ceramics and fireplace lining stones. The Natural Stone Products
Business includes interior decoration stone products for
households and stone deliveries to construction sites. Expenses
not allocated to a Segment are included under Other items, which
also includes financial costs and taxes.
Net sales and result
The net sales of the Tulikivi Group were EUR 11.0 million (EUR
14.6 million in January - March 2008). The net sales of the
Fireplaces Business was EUR 9.6 (12.6) million and of the Natural
Stone Business EUR 1.4 (2.0) million. The decrease in the net
sales of the Fireplaces Business was the result of declining
Finnish sales of fireplaces and lining stone.
Exports accounted for EUR 5.6 (6.5) million, or 50.6 (44.8) per
cent, of total sales. The largest countries for exports were
France, Belgium and Germany.
Finnish sales were EUR 5.4 (8.1) million.
The Group posted a loss of EUR -2.7 (-0.3) million at the
operating profit level. In accordance with the Group's segment
reporting, the Fireplaces Business had an operating loss of EUR -
1.9 (0.4) million, and the Natural Stone Products Business an
operating loss of EUR -0.1 (0.2) million, while the other items´
expenses were EUR -0.7 (-0.9) million.
Consolidated loss before taxes was EUR -3.0 (-0.6) million and net
losses were EUR -2.4 million (-0.4) million. Earnings per share
were EUR -0,06 (-0,01).
The Group launched a programme to centralise functions and improve
profitability. The codetermination negotiations concluded in March
led to 79 redundancies and 41 layoffs until further notice. A
restructuring provision of EUR 1.0 million was entered for these
measures for the review period, most of which was recorded under
the Fireplaces Business' expenses. The restructuring will also
result in approximately EUR 0.2 in further non-recurring expenses,
which will be recorded in future periods.
Financing and investments
We are prepared for the change in operating environment and the
Group has a solid financial position. Cash flow from operating
activities before investments was EUR -1.0 (0.8) million.
The management's view is that the Group's available financing will
be sufficient in the near future.
Equity ratio was 37.4 per cent (42.3 per cent at March 31, 2008).
The ratio of interest-bearing net debt to equity, or gearing, was
69.4 (65.7) per cent. Current ratio was 1.6 (1.6). Financial
income for the period was EUR 0.1 (0.0.) million and financial
expenses EUR 0.4 (0.3) million. The equity per share amounted to
EUR 0.64 (0.73).
The Group's investments in production, quarrying and development
were EUR 0.5 (0.7) million. Research and development costs were
EUR 0.4 (0.4) million or 3.3 (3.1) per cent of net sales. EUR
0.1 (0.1) million of this amount was capitalized in the balance
sheet. A product development project in which the fireplace range
was converted to use the whirlbox technique was completed. As a
result, all model ranges of Tulikivi Corporation now display the
CE marking.
Personnel
The Group employed an average of 399 (550) people during the
reporting period. Salaries and bonuses during the review period
totalled EUR 4.2 (4.2) million, to which the restructuring
provision contributed EUR 0.5 million.
The Tulikivi Group has an incentive plan that includes a share-
based incentive plan for the managing director and key personnel
and an incentive pay scheme for all personnel.
The share-based incentive system was introduced in 2008 and had
three earning periods, which were the calendar years 2008, 2009
and 2010. The maximum reward is 360 000 Tulikivi Corporation A
shares and a cash payment corresponding to the value of the
shares. The realized reward from the plan for the earning period
2008 was 9 800 A shares.
The maximum share reward for 2009 is 175 000 A shares and a cash
payment corresponding to the value of the shares. A maximum of 40
000 A shares of this can go to the managing director. The share
reward is based on the improvement of the Group's result and cash
flow.
The incentive pay scheme is based on the improvement of the
Group's result and productivity, and the managing director and key
persons also have personal targets in addition to this.
Resolutions of the Annual General Meeting
Dividends
Tulikivi Corporation´s Annual General Meeting, held on 31 March
2009, resolved to pay a dividend of EUR 0.0280 on Series A shares
and EUR 0.0263 on Series K shares. The dividend was paid out on
April 14, 2009.
Board of Directors, Managing Director and auditors
Tulikivi Corporation's Annual General Meeting elected to the Board
of Directors of the parent company and domestic business
subsidiaries: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Markku
Rönkkö, Maarit Toivanen-Koivisto, Heikki Vauhkonen and Matti
Virtaala. The Board of Directors elected Matti Virtaala as
Chairman from amongst its members. The auditor is KPMG Oy Ab,
Authorized Public Accountants.
Authorisation to repurchase the company's own shares
The Annual General Meeting authorised the Board to acquire the
company's own shares as proposed by the Board.
Authorisation to decide on share issues and on transfer of the
company's own shares in the possession of the company and the
right to issue special rights which give entitlement to shares as
defined in Chapter 10, Article 1, of the Companies Act
The Annual General Meeting authorised the Board of Directors to
decide on issuing new shares and the transfer of the company's own
shares in the possession of the company as proposed by the Board.
The authorization also includes the right to issue special rights,
as defined in Chapter 10, Article 1, of the Companies Act, which
entitle to subscribe for shares against payment or by setting off
the receivable.
Share repurchase
At the beginning of the period Tulikivi Corporation hold 74 000 of
its own A series shares.During the period 60 000 A shares were
purchased at the repurchase value of EUR 43 875. The average
purchase price per share was EUR 0.73. The purchase price was the
exchange rate at the moment of the purchase, which varied between
EUR 0.68 and EUR 0.83 during the purchase periods. The repurchased
shares account for 0.20 per cent of all shares and 0.0 per cent of
votes carried by all shares. The number of the shares in the
company´s possession at the end of the period was 134 000 A shares
which corresponds to 0.4 per cent of the company´s share capital
and 0.1 per cent of all voting rights.
The repurchase of own shares had no material impact on the on
shareholdings and voting rights in the company.
The shares are repurchased for use as consideration in corporate
acquisitions or other structural arrangements or to implement the
share-based incentive system, to pay a share-based incentive or
otherwise to be transferred or cancelled.
Risks and uncertainties
A rapid decline in private house construction and remodelling and
fluctuation of exchange rates will weaken the demand for
fireplaces. The decrease of consumer prices of energy may also
affect the demand for fireplace products. The risks the Group will
face in the near future relate to the decline in demand for
fireplaces products as well as to the success of cost savings
attained with the profitability programme.
According to the Group's long-term risk assessment, its strategic
risks concern, but are not limited to, the Group's raw material
reserves, legislative amendments and the market position.
Operational risks are related to products, distribution channels
and processes. For more information, see the 2008 Annual Report.
Future outlook
Housing construction is at a low level in many market-areas,
which, in addition to the uncertain economic situation, has an
impact on the demand for fireplaces and natural stone products.
Demand for fireplaces is expected to be higher in relative terms
in Central Europe than in Finland and its neighbouring regions.
The inflow of orders is not expected to improve significantly in
the next few months. The centralisation and productivity
improvement programme being implemented by the company will
improve profitability in the latter half of the year. However, net
sales for the current year are estimated to fall well below that
of last year and the result before taxes after non-recurring items
is expected to be in the red.
The order books at the end of the review period amounted to EUR
6.6 (9.2 on 31 March 2008 and 4.9 on 31 Dec 2008).
The strategic objectives set for the Tulikivi Group are: annual
organic growth of 5 per cent in the long term, return on
investment of over 20 per cent and the improvement of relative
profitability by two percentage points per year. Sales growth,
return on investment and the improvement of profitability will
fall short of these objectives during the current year, mainly due
to the decline in demand.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
MEUR 01-03/ 01-03/ Change, 01-12/
2009 2008 % 2008
Sales 11.0 14.6 -24.7 66.5
Other operating income 0.1 0.1 0.7
Increase/decrease in inventories in
finished goods and in work
in progress -0.5 -0.3 -0.6
Production for own use 0.1 0.1 0.8
Raw materials and consumables 2.1 2.8 12.5
External services 1.5 2.0 10.0
Personnel expenses 5.4 5.4 23.1
Depreciation 1.3 1.4 5.7
Other operating expenses 3.1 3.2 12.9
Operating profit/loss -2.7 -0.3 3.2
Percentage of sales -24.7 -1.7 4.9
Finance income 0.1 0.0 0.2
Finance expense -0.4 -0.3 -1.4
Share of the profit of
associated company 0.0 0.0 0.0
Profit/loss before tax -3.0 -0.6 2.1
Percentage of sales -27.7 -4.0 3.1
Direct taxes 0.6 0.2 -0.6
Profit/loss for the period -2.4 -0.4 1.4
Other comprehensive income
Interest rate swaps 0.0 -0.1
Translation differences 0.0 0.0 0.0
Total comprehensive
Income for the period -2.4 -0.4 1.3
Earnings per share attributable
to the equity holders of the
parent company, EUR
basic and diluted -0.06 -0.01 0.04
CONSOLIDATED BALANCE SHEET
MEUR 03/2009 03/2008 12/2008
ASSETS
Non-current assets
Property, plant and equipment
Land 1.0 1.1 1.0
Buildings 7.9 8.5 8.0
Machinery and equipment 9.8 12.1 10.3
Other tangible assets 1.2 1.3 1.2
Intangible assets
Goodwill 4.3 4.3 4.3
Other intangible assets 11.1 11.0 11.2
Investment properties 0.2 0.2 0.2
Available-for-sale investments 0.1 0.1 0.1
Receivables
Deferred tax assets 1.5 1.1 0.9
Total non-current assets 37.1 39.7 37.2
Current assets
Inventories 11.2 12.3 11.5
Trade receivables 4.6 5.4 5.3
Current income tax receivables 0.2 0.5
Other receivables 1.0 0.9 0.4
Cash and cash equivalents 9.6 5.2 11.7
Total current assets 26.6 24.3 28.9
Total assets 63.7 64.0 66.1
EQUITY AND LIABILITIES
Equity
Share capital 6.3 6.3 6.3
Share premium fund 7.4 7.4 7.4
Treasury shares -0.1 -0.1
Translation difference 0.0 -0.1 0.0
Revaluation reserve -0.1 -0.1
Retained earnings 10.3 13.5 13.7
Total equity 23.8 27.1 27.2
Non-current liabilities
Deferred income tax liabilities 2.0 2.2 2.1
Provisions 0.9 0.9 0.9
Interest-bearing debt 20.8 18.4 21.6
Other debt 0.0 0.3
Total non-current liabilities 23.7 21.8 24.6
Current liabilities
Trade and other payables 9.8 10.3 9.1
Current income tax liabilities 0.1 0.1
Current provisions 1.0 0.3
Short-term interest-bearing debt 5.3 4.5 5.1
Total current liabilities 16.2 15.1 14.3
Total liabilities 39.9 36.9 38.9
Total equity and liabilities 63.7 64.0 66.1
CONSOLIDATED CASH FLOW STATEMENT 01-03/ 01-03/ 01-12/
MEUR 2009 2008 2008
Cash flows from operating activities
Profit for the period -2.4 -0.4 1.4
Adjustments:
Non-cash transactions 1.3 1.3 5.8
Interest expenses
and interest income and taxes -0.3 0.2 1.8
Change in working capital 0.7 0.3 0.2
Interest paid and received
and taxes paid -0.3 -0.6 -1.6
Net cash flow from operating
activities -1.0 0.8 7.6
Cash flows from investing activities
Investment in property, plant and
equipment and intangible assets -0.4 -0.8 -3.3
Grants received for investments
and sales of property, plant and
equipment 0.1 0.2
Net cash flow from investing
activities -0.4 -0.7 -3.1
Cash flows from financing activities
Proceeds from non-current and
current borrowings 2.0 10.0
Repayment of non-current and current
borrowings -0.6 -0.7 -4.9
Dividends paid treasury shares -0.1 -1.7
Net cash flow from financing
activities -0.7 1.3 3.4
Change in cash and cash
equivalents -2.1 1.4 7.9
Cash and cash equivalents at
beginning of period 11.7 3.8 3.8
Cash and cash equivalents at
end of period 9.6 5.2 11.7
STATEMENT OF CHANGES IN EQUITY
MEUR
Share Share Trans- Revalu- Trea- Re- Total
capital premium lation ation sury tained
fund diff. re- share earn-
serve ings
Equity
Jan. 1, 2009 6.3 7.4 0.0 -0.1 -0.1 13.7 27.2
Dividends paid
and treasury shares 0.0 -1.0 -1.0
Total comprehensive
income for the period -2.4 -2.4
Equity
March 31, 2009 6.3 7.4 0.0 -0.1 -0.1 10.3 23.8
Equity
Jan. 1, 2008 6.3 7.4 -0.1 0.0 0.0 14.0 27.6
Total comprehensive
income for the period -0.4 -0.4
Equity
March 1, 2008 6.3 7.4 -0.1 0.0 0.0 13.5 27.1
BUSINESS SEGMENTS Q1/ Q1/ 1-12
MEUR 2009 2008 2008
Operating segments
Sales 11.0 14.6 66.5
Fireplaces 9.6 12.6 58.5
Natural stone products 1.4 2.0 8.0
Other items - - -
Operating profit/loss -2.7 -0.3 3.2
Fireplaces -1.9 0.5 6.1
Natural stone products -0.1 0.1 0.3
Other items -0.7 -0.9 -3.2
BUSINESS SEGMENTS QUARTERLY
Q1/ Q4/ Q3/ Q2/ Q1/
2009 2008 2008 2008 2008
Operating segments
Sales 11.0 18.3 16.6 17.0 14.6
Fireplaces 9.6 16.4 14.9 14.6 12.6
Natural stone products 1.4 1.9 1.7 2.4 2.0
Other items - - - - -
Operating profit/loss -2.7 1.3 1.3 0.9 -0.3
Fireplaces -1.9 2.1 1.9 1.7 0.4
Natural stone products -0.1 -0.1 0.1 0.1 0.2
Other items -0.7 -0.7 -0.7 -0.9 -0.9
ASSETS AND LIABILITIES BY SEGMENT 03/09
Fire- Natural Other Total
places Stone items
Products
Assets by segment 47.7 4.8 11.2 63.7
Liabilities by
Segment 9.1 0.7 30.1 39.9
Investments 0.4 0.0 0.1 0.5
Depreciation and amortisation
expenses 1.1 0.1 0.1 1.3
KEY FINANCIAL RATIOS AND
SHARE RATIOS
03/09 03/08 1-12/08
Earnings per share, EUR -0.06 -0.01 0.04
Equity per share, EUR 0.64 0.73 0.73
Return on equity, % -37.0 -6.5 5.2
Return on investments, % -20.1 -1.8 6.8
Equity ratio, % 37.4 42.3 41.2
Net indebtness ratio, % 69.4 65.7 55.1
Current ratio 1.6 1.6 2.0
Gross investments, MEUR 0.5 0.7 2.9
Gross investments, % of sales 4.6 4.5 4.4
Research and development
costs, MEUR 0.4 0.4 1.8
%/sales 3.4 3.1 2.7
Outstanding orders (31 March),
MEUR 6.6 9.2 4.9
Average number of staff 399 550 526
Rate development of shares, EUR
Lowest share price, EUR 0.67 1.37 0.60
Highest share price, EUR 0.85 1.88 1.88
Average share price, EUR 0.73 1.53 1.28
Closing price, EUR 0.70 1.50 0.67
Market capitalization at the
end of period, 1000 EUR 25907 55716 24837
(Supposing that the market price of the K-share
is the same as that of the A-share)
Number of shares traded,
(1000 pcs) 673 641 2455
% of total amount of A-shares 2.5 2.3 8.9
Number of shares
average 37043690 37143970 37128494
Number of shares
31 March 37009970 37143970 37069970
NOTES TO THE INTERIM REPORT
This interim report has been prepared in accordance with
International Financial Reporting Standard IAS 34 Interim
Financial Reporting. In preparing of this interim report, Tulikivi
has applied same accounting policies as in the 2008 financial
statements, with the exception of the following new/amended
standards that the group has adopted as from January 1, 2009:
- IFRS 8, Operating Segments
- IAS 1 Presentation of Financial Statements (revised)
and the following new/amended standards and interpretations the
adoption of which has not have any material impact on the figures
for the period:
- Amendment to IFRS 2 Share-based Payment
- IAS 23 Borrowing Costs (revised)
-Amendments to IFRS 7 Financial Instruments: Discloseres -
improving Disclosures about Financial Instruments
- Amendments to IFRIC 9 and IAS 39: Embedded Derivatives
- Amendment to IAS 28 Investments in Associates (and consequential
amendments to IAS 32 Financial Instruments: Presentation and IFRS
7 Financial Instruments: Disclosures)
- Amendment to IAS 36 Impairment of Assets
- Amendment to IAS 38 Intangible Assets
- Amendment to IAS 19 Employee Benefits
- Amendment to IAS 39 Financial Instruments: Recognition and
Measurement
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation
- IFRIC 13 Customer Loyalty Programmes
- Amendment to IAS 16 Property, Plant and Equipment
- Amendment to IAS 29 Financial Reporting in Hyperinflationary
Economies
- Amendment to IAS 31 Interests in Joint Ventures
- Amendment to IAS 40 Investment Property
- Amendment to IAS 20 Accounting for Government Grants and
Disclosures for Government Assistance
- IFRIC 15 Agreements for the Construction of a Real Estate
The key figures presented in the Interim Report have been
calculated using the same formulas as in the 2008 financial
statements. The formulas can be found on page 67 of the Annual
Report 2008.
Income taxes
01-03/0901-03/08 01-12/08
Taxes for the current and previous
financial periods -0.1 0.0 -0.7
Deferred taxes 0.7 0.2 0.1
Total 0.6 0.2 -0.6
Collateral and securities given and other commitments
MEUR 3/2009 3/2008 12/
2008
Loans from credit institutions
and other non-current liabilities,
secured by mortgages and pledges 20.7 18.5 30.9
Mortgages and pledges given 25.1 25.5 25.1
Other mortgages and pledges given
by the company on its own behalf 0.5 0.8 0.5
Derivatives
Interest rate swaps;
nominal value 12.8 7.4 13.0
Interest rate swaps;
fair value -0.3 0.1 -0.2
The fair value of derivatives is the gain or loss for closing the
contract based on market rates at the balance sheet date.
Provisions
The Group's non-current provisions are an environmental provision
of EUR 0.4 million and a warranty provision of EUR 0.5 million.
Current provisions include a restructuring provision of EUR 1.0
million during the review period.
Non-current provisions are itemized in greater detail in notes 24
Provisions and 33. Other contingent liabilities in the
consolidated financial statements in Annual Report 2008.
Contingent liabilities have not changed after the end of the
financial period.
Share capital
Share capital by share series
Number % of % of Share,
of shares shares voting EUR of
rights share
capital
K-shares(10 votes) 9 540 000 25.7 77.6 1 621 800
A-shares (1 vote) 27 603 970 74.3 22.4 4 692 675
Total March 31, 2009 37 143 970 100.0 100.0 6 314 475
There have been no changes in Tulikivi Corporation´s share capital
during the period. According to the articles of association the
dividend paid for Series A shares shall be 0.0017 EUR higher than
the dividend paid on Series K shares. The Series A share is
listed on the NASDAQOMX Helsinki Ltd. No flagging notifications
were made to the company during the review period.
Board authorizations
The Annual General Meeting of March 31, 2009 authorized the Board
of Directors to acquire the company's own shares. A maximum of
2,760,397 Series A shares in the company and 954,000 Series K
shares in the company can be bought back. The authorization is
valid until the 2010 Annual General Meeting. In addition, the
Board of Directors has an authorization to decide on issuing new
shares and the conveyance of own shares in the company's
possession. New shares can be issued or own shares held by the
company conveyed amounting to a maximum of 5,520,794 Series A
shares and 1,908,000 Series K shares. The authorization is valid
until the 2010 Annual General Meeting.
At the end of the review period, the company hold 134 000 of its
own A-shares.
Related party transactions
The following transactions with related parties took place:
1000 e 3/2009 3/2008 12/2008
Sales of goods and services to
associated companies 5 11 13
Purchases of goods and services
from associated companies 44 13 173
Leases from related parties 32 30 115
Transactions with other related parties
Tulikivi Corporation is a founder member of the Finnish Stone
Research Foundation. The company has leased offices and storages
from the property owned by the Foundation and North Karelia
Educational Federation of Municipalities. The rent paid for these
facilities was EUR 32 thousand (31 thousand)in the period. The
rent corresponds with the market rents.
Largest shareholders on 31 March 2009
Name of shareholder Shares Proportion
of total
vote
Vauhkonen Reijo 4 186 827 24,2 %
Vauhkonen Heikki 3 003 887 24,1 %
Elo Eliisa 2 957 020 5,9 %
Virtaala Matti 2 421 300 12,6 %
Mutual Pension Insurance
Ilmarinen 1 902 380 1,5 %
Mutanen Susanna 1 643 800 7,2 %
Vauhkonen Mikko 792 700 3,6 %
Paatero Ilkka 718 430 0,6 %
Nuutinen Tarja 674 540 3,5 %
Investment Fond Phoebus 585 690 0,5 %
Other shareholders 18 257 396 16,3 %
The Financial Statements have not been audited.
The companies included in the Group are the parent company
Tulikivi Corporation, Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc.
and OOO Tulikivi. Group companies include also Uuni Vertriebs GmbH
and The New Alberene Stone Company, Inc., which are dormant. The
parent company has a fixed place of business in Germany, Tulikivi
Oyj Niederlassung Deutschland. The Group has interests in
associated companies Stone Pole Oy and Leppävirran Matkailukeskus
Oy.
TULIKIVI CORPORATION
Board of Directors
Matti Virtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com
Additional information: Tulikivi Corporation, 83900 Juuka, tel.
+358-207-636 000, www.tulikivi.com
- Chairman of the Board of Directors Matti Virtaala
- Managing Director Heikki Vauhkonen