Source: Nordic Fibreboard AS
Financial results, 3 months 2014
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