Financial results, 3 months 2014

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| Source: Skano Group
multilang-release

Pärnu, 2014-05-30 15:49 CEST (GLOBE NEWSWIRE) -- THE FIRST QUARTER IN SHORT

Consolidated net sales of the first quarter of 2014 was 5.35 mil. euros, representing a 23% increase on the first quarter compared to the same period in 2013. At the same time, consolidated EBITDA amounted to 100 thousand euros (EBITDA -37 thousand euros in Q1 2013).

The sales in Skano Fibreboard OÜ Pärnu factory (incl. Isotex) was 2.2 mil. euros, increased as compared to the respective period last year by 22%, the operating loss of the first quarter was 54 thousand euros compared with the operating loss 135 thousand euros last year.

The turnover of Skano Fibreboard OÜ Püssi factory was 1.2 mil. euros, representing 100% increase in the first quarter compared to the same period in 2013. Operating loss amounted to 204 thousand euros compared with the operating loss 212 thousand euros last year.

Sales growth came from Finland and Asia but despite of that other foreign markets remained weak due to general economic situation in Europe. We have continuously expanded list of our target markets and made considerable efforts in product development to obtain certificates necessary for different markets. Profitability has suffered also due to higher sales costs in Finland and higher production cost resulting from bigger energy consumption during winter season. On the first quarter we also conducted product testing and tuning of production process in both factories in order to achieve a lower production cost.  

The priority of the management of the company is continuously to ensure the sales of the production of both factories in order to guarantee the maximum production capacity and efforts are taken in this direction on an on-going basis.

The turnover of Skano Furniture Factory OÜ factory in Pärnu increased in the first quarter by 2,4% and amounted to 1,7 mil. euros. The operating profit of the first quarter was 122 thousand euros as in 2013 the operating profit of the same period was 33 thousand euros. Sales in the first quarter of 2014 decreased in Finland by 11% as compared to 2013 but sales to the Baltics (through the subsidiary) and Russia grew. The company is seeking new sale’s possibilities in the current markets but going into totally new markets is a substantial direction for us.

The turnover of Skano Furniture OÜ retail chain increased 11% as compared to the same period last year being 608 thousand euros, operating loss was 245 thousand euros compared with the sales 549 thousand and operating profit 59 thousand euros in the first quarter of 2013. Current year first quarter operating loss 245 thousand euros contains also loss from steep drop of currency exchange rate of hryvnia 256 thousand euros due to revaluation of intragroup loans as in separate subsidiary but which will be eliminated out on group level and will not affect Skano Group end result (profit from currency exchange rate 45 thousand euros in the same period of 2013). Retail sale increased in Estonia but decreased in Lithuania and Ukraine. Sales in Ukraine suffered due to instable political and economic situation. The sales of Skano Furniture Factory OÜ own furniture still forms a considerable part of the retail sale and it enables the furniture factory to operate much more profitably than it would be possible without its own retail chain.

INCOME STATEMENT

Consolidated net sales of the first quarter in 2014 was 5.35 mil. euros (4.36 mil. euros in same period of 2013) representing a 23% increase compared to Q1 2013. The Group’s gross margin in the first quarter of 2014 was 15.2% compared to 11.9% in the first quarter of 2013. Consolidated operating loss amounted to 125 thousand euros (operating loss 266 thousand euros from main activities in same period 2013). The consolidated operating margin of net sales was -2.3% (-6% from main activities in Q1 2013).

Consolidated net loss amounted to 186 thousand euros (compared to net loss 322 thousand euros in Q1 2013), and the net margin was -3.5% (-7% in Q1 2013).

POSITION OF FINANCIAL STATEMENT

As of 31.03.2014 the total assets of Skano Group AS amounted to 15.0 mil. euros (31.03.2013: 15.5 mil. euros). The liabilities of the company accounted for 56.1% (31.03.2013: 53.8%) thereof, i.e. 8.4 mil. euros (31.03.2013: 8.3 mil. euros).

Receivables and prepayments have decreased by 0.5 mil. euros i.e. 23% decrease with 12 months. The reason of decrease of receivables was implementation of factoring instrument.

Inventories have remained at the same level compared to last year, amounting to 3.3 mil. euros on 31.03.2014. (31.03.2013: 3.3 mil. euros). Property, plant and intangibles decreased by 0.3 mil. euros mainly as a result of depreciation.

Short-term loans have increased by 0.5 mil. euros and amounted to 1.9 mil. euros in 31.03.2014 which was result of restructuring of loan payments (31.03.2013: 1.4 mil. euros). Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 2.8 mil. euros (31.03.2013: 2.3 mil. euros).

Long-term loans have decreased by 0.9 mil euros and amounted to 3.4 mil. euros in 31.03.2014 (31.03.2013: 4.3 mil. euros). The decrease was due to principal payments mounted to 0.4 mil. euros and loan restructuring 0.5 mil. euros.

Current and non-current liabilities decreased by 0.1 mil. euros to 8.4 mil. euros (31.03.2013: 8.3 mil. euros).

DIVISIONAL REVIEW

NET SALES BY BUSINESS SEGMENTS

  th EUR % of net sales
  Q1 2014 Q1 2013 Q1 2014 Q1 2013
Skano Fibreboard OÜ 3,388 2,462 63.4% 56.5%
Skano Furniture Factory OÜ 1,717 1,676 32.1% 38.4%
Skano Furniture OÜ retail 608 549 11.4% 12.6%
Elimination (362) (326) (6.8%) (7.5%)
TOTAL 5,351 4,361 100.0% 100.0%

 

NET SALES BY GEOGRAPHICAL SEGMENTS

  th EUR % of net sales
  Q1 2014 Q1 2013 Q1 2014 Q1 2013
Finalnd 2,181 1,242 40.8% 28.5%
Russia 1,275 1,230 23.8% 28.2%
Estonia 679 621 12.7% 14.2%
Great Britain 241 373 4.5% 8.6%
Sweden 176 96 3.3% 2.2%
Ukraine 165 185 3.1% 4.2%
Latvia 142 120 2.7% 2.8%
Taiwan 135 0 2.5% 0.0%
Netherlands 93 215 1.7% 4.9%
Lithuania 89 95 1.7% 2.2%
Australia 23 0 0.4% 0.0%
Japan 21 0 0.4% 0.0%
Other countries 131 184 2.4% 4.2%
TOTAL 5,351 4,361 100.0% 100.0%

Regarding the markets, turnover has increased in Finland, Russia and Estonia. The percentage of turnover has decreased in most in the Great Britain and the Netherlands.

PROFIT BY BUSINESS SEGMENTS  

th EUR Q1 2014 Q1 2013
Skano Furniture factory 122 33
Skano Furniture retail (245) 59
Skano Fibreboard (258) (347)
Elimination 256 (11)
TOTAL (125) (266)
Net financial costs (61) (55)
Income tax 0 (1)
NET PROFIT (186) (322)

SKANO FIBREBOARD

The net sales of Skano Fibreboard in the first quarter of 2014 amounted to 3.4 mil. euros and operating loss to 258 thousand euros. In the same period last year, the turnover of Skano Fibreboard totaled to 2.5 mil. euros and the operating loss from main activities 347 thousand euros. Due to a new distribution partner in Finland we have managed to increase sales considerably. Sales to Finland grew by 159%. Implementing the new sales structure in Finland has and will cause higher sales costs that is optimal during 6-9 months period. Due to that increased sales to Finland have brought along bigger costs and profitability hasn’t improved yet. As production of fibreboard is very energy-intensive the production cost is higher compare to average production cost in winter season. Production cost differs between summer and winter season up to 20%.      

The biggest drop in sales in the first quarter compare to last year took place in the Great Britain and the Netherlands, 38% and 57% respectively due to optimization of production portfolio for efficiency’s sake.

NET SALES BY GEOGRAPHICAL SEGMENTS

  th EUR % of net sales
  Q1 2014 Q1 2013 Q1 2014 Q1 2013
Finland 1,639 632 48.4% 25.7%
Russia 437 472 12.9% 19.2%
Estonia 326 354 9.6% 14.4%
Great Britain 231 373 6.8% 15.2%
Sweden 176 96 5.2% 3.9%
Taiwan 135 0 4.0% 0.0%
Netherlands 93 215 2.7% 8.7%
Latvia 64 64 1.9% 2.6%
Ukraine 37 19 1.1% 0.8%
Australia 23 0 0.7% 0.0%
Japan 21 0 0.6% 0.0%
Other countries 141 162 4.2% 6.5%
Intragroup 65 75 1.9% 3.0%
TOTAL 3,388 2,462 100.0% 100.0%

   

th EUR Net sales Operating Profit
  Q1 2014 Q1 2013 Q1 2014 Q1 2013
Pärnu Fibreborad factory 1,633 1,235 (25) (193)
Püssi Fibreboard factory 1,197 591 (204) (212)
Pärnu interior boards factory (Isotex) 493 561 (29) 58
Not allocated 65 75 0 0
TOTAL 3,388 2,462 (258) (347)

The net sales of the Pärnu fibreboard factory and interior board’s line increased 18% in the first quarter of 2014 compared to the same quarter of 2013 and amounted to 2.1 mil. euros. Due to higher energy consumption in winter season and higher sales cost in Finland, production testing and too fragmented production portfolio the production efficiency was very low in the first quarter.

The turnover of Püssi fibreboard factory amounted to 1.2 mil. euros growing 100% compared to the same quarter in 2013 and operating loss amounted to 204 thousand euros (turnover 591 thousand euros and operating loss 212 thousand euros in Q1 2013). Output of Püssi Fibreboard factory grew in the first quarter but the main challenge is still to secure Püssi Fibreboard factory with sufficient sales volumes and optimizing production portfolio.

SKANO FURNITURE 

FURNITURE RETAIL SALES

Skano Group AS retail business is operated by a private limited company Skano Furniture OÜ and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has totally 10 stores in Tallinn (2), Tartu, Pärnu, Riga, Vilnius, Kiev (2), Kharkiv and Dnipropetrovs’k at the end of the first quarter in 2014.

RETAIL SALES BY COUNTRIES  

  th EUR % of net sales Number of stores
  Q1 2014 Q1 2013 Q1 2014 Q1 2013 31.03.14 31.03.13
Estonia 329 251 54.1% 45.8% 4 3
Latvia 78 56 12.8% 10.2% 1 1
Lithuania 73 76 12.0% 13.8% 1 1
Ukraine 128 166 21.1% 30.2% 4 4
TOTAL 608 549 100.0% 100.0% 10 9

The furniture retail sale amounted to 608 thousand euros in the first quarter of 2014 and operating loss 245 thousand euros (sales 549 thousand euros and operating profit 59 thousand euros in Q1 2013). Current year first quarter operating loss 245 thousand euros contains also loss from steep drop of currency exchange rate of hryvnia 256 thousand euros due to revaluation of intragroup loans as in separate subsidiary but which will be eliminated out on group level and will not affect Skano Group end result (on the contrary profit from currency exchange rate 45 thousand euros in the same period last year). Retail sale increased in Estonia and in Latvia, remained the same in Lithuania and decreased in Ukraine.  

FURNITURE PRODUCTION

The net sales of the Skano Furniture Factory in the first quarter amounted to 1.7 mil. euros and operating profit to 122 thousand euros. In the same period last year, the turnover of the factory amounted to 1.7 mil. euros and the profit to 33 thousand euros. As compared to the previous year the turnover of the factory has increased 2.4% and the operating profit has increased by 89 thousand euros. Sales in the first quarter of 2014 increased to our subsidiary and to Russia. In the first quarter the sales decreased especially in Finland due to weak demand.

FURNITURE FACTORY SALES BY COUNTRIES

  th EUR % of net sales
  Q1 2014 Q1 2013 Q1 2014 Q1 2013
Russia 838 758 48.8% 45.2%
Finland 542 610 31.6% 36.4%
Kazakhstan 0 41 0.0% 2.4%
Estonia 24 16 1.4% 1.0%
Other countries 16 0 0.9% 0.0%
Subsidiaries 297 251 17.3% 15.0%
TOTAL 1,717 1,676 100.0% 100.0%

  

FORECAST AND DEVELOPMENT

SKANO FIBREBOARD. Sales of Skano Fibreboard in Q2 2014 will exceed sales of the same period last year. In Q2 2014 we hope to improve production efficiency and profitability. In addition to production portfolio the management’s priority is to improve also energy efficiency in production process, where 2014 1H investment program is aimed to.  

In spite of weak demand of foreign markets and economic situation in Europe we are moderately optimistic about sales growth in 2014. Sales growth is expected mostly from Finland, where the strategic agreement with a new distribution partner is starting to pay off.

SKANO FURNITURE RETAIL SALES. We expect retail sale in the second quarter of 2014 to decrease compare to the sale of the same period last year. We expect bigger negative impact to sales from Ukraine due to political and economic instability. 

SKANO FURNITURE FACTORY. In the second quarter of 2014 we expect smaller sales of the furniture factory compared to the same period in 2013 because of the deteriorated economic situation in the near region and especially in Finland. Sales to new markets are not yet exceeding the lag from our main markets

 

FINANCIAL HIGHLIGHTS

th EUR 3 m 2014 3 m 2013 3 m 2012
Income statement      
Revenue 5,351 4,361 4,559
EBITDA 100 (37) 147
EBITDA margin 1.9% (0.8%) 3.2%
Operating profit (125) (266) (99)
Operating margin (2.3%) (6.1%) (2.2%)
Net profit (186) (322) (173)
Net margin (3.5%) (7.4%) (3.8%)
 
Balance sheet (31.03)      
Total assets 14,980 15,511 16,337
Return on assets (1.2%) (2.1%) (1.1%)
Equity 6,574 7,170 7,529
Return on equity (2.8%) (4.5%) (2.3%)
Debt-to-equity ratio 56.1% 53.8% 53.9%
 
Share (31.03)      
Closing price 0.995 1.19 1.55
Earnings per share (0.04) (0.07) 0.04
Price-earnings ratio (24.88) (17.00) (39.25)
Book value of a share 1.46 1.59 1.67
Market to book ratio 0.68 0.75 0.94
Market capitalization 4,477 5,354 7,064

EBITDA = Earnings before interest, taxes, depreciation and amortization

EBITDA margin = EBITDA / Revenue

Operating margin = Operating profit / Revenue

Net margin = Net profit / Revenue

Return on assets = Net profit / Total assets

Return on equity = Net profit / Equity

Debt-to-equity ratio = Liabilities / Total assets

Earnings per share = Net profit / Total shares

Price-earnings ratio = Closing price / Earnings per share

Book value of a share = Equity / Total shares

Market to book ratio = Closing price / Book value of a share

Market capitalization = Closing price * Total shares

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

th EUR 31.03.2014 31.12.2013 31.03.2013
       
Cash and bank 392 355 137
Receivables and prepayments (Note 1) 1,477 1,368 1,925
Inventories (Note 2) 3,301 2,974 3,347
Total current assets 5,170 4,697 5,409
       
Investment property (Note 3) 408 408 185
Tangible fixed assets (Note 4) 9,374 9,505 9,896
Intangible fixed assets (Note 5) 28 26 21
Total fixed assets 9,810 9,939 10,102
       
TOTAL ASSETS 14,980 14,636 15,511
       
Debt obligations (Note 6) 1,931 1,919 1,444
Payables and prepayments (Note 7) 2,822 2,255 2,324
Short-term provisions (Note 8) 10 14 9
Total current liabilities 4,763 4,188 3,777
       
Non-current debt obligations (Note 6) 3,413 3,413 4,328
Non-current provisions (Note 8) 230 230 236
Total non-current liabilities 3,643 3,643 4,564
       
Total liabilities 8,406 7,831 8,341
       
Share capital at nominal value (Note 9) 2,699 2,699 2,699
Issue premium 364 364 364
Statutory capital reserve 288 288 288
Currency translation (37) 8 (11)
Retained profits 3,446 4,152 4,152
Net profit (loss) for the year (Note 10) (186) (706) (322)
Total equity 6,574 6,805 7,170
       
TOTAL LIABILITIES AND EQUITY 14,980 14,636 15,511

 

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME  

th EUR 1st Q 2014 1st Q 2013
     
     
RETURN ON SALES (Note 11) 5,351 4,361
     
Cost of production sold (4,538) (3,841)
     
Gross profit 813 520
     
Marketing expenses (722) (580)
General administrative expenses (173) (207)
Other income 27 42
Other expenses (60) (41)
     
Operating profit (loss) (Note 11) (125) (266)
Financial income and financial expenses (61) (55)
     
Profit (loss) before taxes (186) (321)
Prepaid income tax 0 (1)
     
NET PROFIT (LOSS)  FOR THE PERIOD (186) (322)
     
Basic earnings per share (Note 10) (0.04) (0.07)
Diluted earnings per share (Note 10) (0.04) (0.07)
     
Other comprehensive income:    
Currency translation differences (45) 10
     
TOTAL COMPREHENSIVE INCOME (231) (312)
       

The planned time of publishing of interim report of the second quarter of 2014 is week 35 (25-29 August 2014)

         Martin Kalle
         CEO
         +372 4478 331
         martin.kalle@skano.com