Financial results, 3 months 2016


THE FIRST QUARTER IN SHORT

Consolidated net sales of the first quarter of 2016 were 4.5 mil. euros, representing a 11% decrease on the first quarter compared to the same period in 2015 (net sales 5.1 mil. euros in Q1 2015). At the same time, consolidated EBITDA amounted to -50 thousand euros (EBITDA 257 thousand euros in Q1 2015).   

The turnover of Skano Fibreboard OÜ Pärnu factory (incl. Isotex) was 2.1 mil. euros, increasing 12% as compared to the respective period last year, the operating profit of the first quarter was 76 thousand euros compared with the operating profit 114 thousand euros last year.   

The turnover of Skano Fibreboard OÜ Püssi factory was 1.2 mil. euros, representing 25% decrease in the first quarter compared to the same period in 2015. Operating loss amounted to 41 thousand euros compared with the operating loss 9 thousand euros last year.

Sales mainly decreased in our core markets. As our main foreign markets Russia and Finland are still very weak due to the general economic situation we have been continuously expanding the list of our target markets and made significant efforts in product development. 

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.

Sales of Suomen Tuulielijona OY in Q1 2016 decreased 14% compared to last year, which amounted to 1.4 mil. euros (1,6 mil euros in Q1 2015). Suomen Tuulileijona OY is the wholesaler of Skano fibreboard products in Finland.

The turnover of Skano Furniture Factory OÜ in Pärnu decreased in the first quarter by 21% and amounted to 1.1 mil. euros. The operating loss of the first quarter was 211 thousand euros as in 2015 the operating loss of the same period was 89 thousand euros. In the first quarter of 2016 sales to Russia decreased due to very weak demand by 19% as compared to 2015. In addition to seeking new sales possibilities in the current markets the company has made considerable effort to enter into new markets like UK, France and USA.

The turnover of Skano Furniture OÜ retail chain decreased 25% as compared to the same period last year being 490 thousand euros, operating loss was 157 thousand euros compared with the sales 653 thousand and operating loss 240 thousand euros in the first quarter of 2015. 2016 first quarter operating loss 157 thousand euros (in Q1 2015: operating loss 240 thousand euros) contains also a loss from a drop of currency exchange rate of hryvnia 116 thousand euros (in Q1 2015: exchange rate loss 268 thousand euros).  

Retail sale decreased in all markets and is still very weak in Ukraine due to the conflict and difficult 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 more profitably than it would be possible without its own retail chain.

 

INCOME STATEMENT

Consolidated net sales of the first quarter in 2016 was 4.5 mil. euros (5.1 mil. euros in same period of 2015) representing a 11% decrease compared to Q1 2015. The Group’s gross margin in the first quarter of 2016 was 18% compared to 23% in the first quarter of 2015. Consolidated operating loss amounted to 268 thousand euros (operating profit 36 thousand euros from main activities in same period 2015. The consolidated operating margin of net sales was -5.9% (0.7% from main activities in Q1 2015). Consolidated net loss amounted to 355 thousand euros (compared to net loss 39 thousand euros in Q1 2015), and the net margin was -7.8% (-0.8% in Q1 2015).

POSITION OF FINANCIAL STATEMENT

As of 31.03.2016 the total assets of Skano Group AS amounted to 14.6 mil. euros (31.03.2015: 15.0 mil. euros). The liabilities of the company accounted for 68% (31.03.2015: 65%) thereof, i.e. 10.0 mil. euros (31.03.2015: 9.8 mil. euros).

Receivables and prepayments have remained at the same level, 2.3 mil. euros within 12 months. Inventories have increased 0.3 mil euros with 12 months, amounting to 3.7 mil. euros on 31.03.2016. (31.03.2015: 3.3 mil. euros). Property, plant and intangibles amounted to 8,0 mil euros decreased by 0.2 mil. euros mainly as a result of depreciation.

Short-term loans have decreased by 0.6 mil. euros and amounted to 2.2 mil. euros in 31.03.2016 which was a result of usage of bank overdraft and restructuring of the loan between short- and long-term payment schedule (31.03.2015: 2.8 mil. euros). Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 3.4 mil. euros (31.03.2015: 3.2 mil. euros).

Long-term loans have increased by 0.6 mil euros and amounted to 4.2 mil. euros in 31.03.2016 (31.03.2015: 3.6 mil. euros). The increase was caused by restructuring of the loan between short- and long-term payment schedule.

Current and non-current liabilities have increased by 0.2 mil. euros to 10.0 mil. euros (31.03.2015: 9.8 mil. euros).

 

DIVISIONAL REVIEW

 

NET SALES BY BUSINESS SEGMENTS

 

 

  th EUR % of net sales
  Q1 2016 Q1 2015 Q1 2016 Q1 2015
Skano Fibreboard OÜ 3,273 3,445 72.0% 67.4%
Skano Furniture Factory OÜ 1,052 1,325 23.1% 25.9%
Skano Furniture OÜ retail 490 653 10.8% 12.8%
Suomen Tuulileijona OY 1,379 1,604 30.3% 31.4%
Elimination (1,649) (1,919) (36.3%) (37.6%)
TOTAL 4,545 5,108 100.0% 100.0%

 

 

NET SALES BY GEOGRAPHICAL SEGMENTS

 

 

  th EUR % of net sales
  Q1 2016 Q1 2015 Q1 2016 Q1 2015
Finland 1,898 2,076 41.8% 40.6%
Estonia 654 792 14.4% 15.5%
Russia 579 773 12.7% 15.1%
Great Britain 324 206 7.1% 4.0%
Portugal 263 0 5.8% 0.0%
Latvia 187 181 4.1% 3.5%
Sweden 139 199 3.1% 3.9%
South Africa 99 360 2.2% 7.0%
Lithuania 93 101 2.0% 2.0%
Ukraine 61 86 1.3% 1.7%
Denmark 48 56 1.1% 1.1%
Germany 27 38 0.6% 0.7%
Other countries 173 240 3.8% 4.7%
TOTAL 4,545 5,108 100.0% 100.0%

 

Regarding the markets, turnover has increased in Great Britain and in new market Portugal. The turnover has decreased most in Russia and South Africa.

 

PROFIT BY BUSINESS SEGMENTS

 

 

th EUR Q1 2016 Q1 2015
Skano Furniture factory (211) (89)
Skano Furniture retail (157) (240)
Skano Fibreboard 35 105
Suomen Tuulileijona OY (19) 41
Elimination 84 219
TOTAL (268) 36
Net financial costs (86) (72)
Income tax (1) (3)
NET PROFIT (355) (39)

 

 

SKANO FIBREBOARD

The net sales of Skano Fibreboard in the first quarter of 2016 amounted to 3.3 mil. euros and operating profit to 35 thousand euros. In the same period last year, the turnover of Skano Fibreboard totaled to 3.4 mil. euros and the operating profit from main activities 105 thousand euros.     

The decrease in sales in the first quarter compare to last year took place in Russia and South Africa. Sales increased most in Great Britain and Portugal.

 NET SALES BY GEOGRAPHICAL SEGMENTS

 

 

  th EUR % of net sales
  Q1 2016 Q1 2015 Q1 2016 Q1 2015
Finland (incl. to Suomen Tuulileijona OY) 1,469 1,612 44.9% 46.8%
Estonia 372 415 11.4% 12.0%
Great Britain 318 199 9.7% 5.8%
Portugal 263 0 8.0% 0.0%
Russia 251 368 7.7% 10.7%
Sweden 139 199 4.2% 5.8%
South Africa 99 360 3.0% 10.4%
Latvia 84 57 2.6% 1.7%
Denmark 48 56 1.5% 1.6%
Germany 27 38 0.8% 1.1%
Other countries 203 141 6.2% 4.1%
TOTAL 3,273 3,445 100.0% 100.0%

 

 

 

th EUR Net sales Operating Profit
  Q1 2016 Q1 2015 Q1 2016 Q1 2015
Pärnu Fibreborad factory 1,712 1,310 126 77
Püssi Fibreboard factory 1,182 1,577 (41) (9)
Pärnu interior boards factory (Isotex) 379 558 (50) 37
TOTAL 3,273 3,445 35 105

 

The net sales of the Pärnu fibreboard factory and interior board’s line increased 12 % in the first quarter of 2016 compared to the same quarter of 2015 and amounted to 2.1 mil. euros.

The turnover of Püssi fibreboard factory amounted to 1.2 mil. euros decreasing 25% compared to the same quarter in 2015 (turnover 1.6 mil. euros in Q1 2015).  

 

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 (3), Tartu, Pärnu, Riga, Vilnius, Kiev (2) and Kharkiv at the end of the first quarter in 2016. A shop in Dnipropetrovsk was handed over to a local dealer based on franchise agreement.

RETAIL SALES BY COUNTRIES

 

 

  th EUR % of net sales Number of stores
  Q1 2016 Q1 2015 Q1 2016 Q1 2015 31.03.16 31.03.15
Estonia 277 369 56.5% 56.5% 5 4
Latvia 103 124 21.0% 19.0% 1 1
Lithuania 69 84 14.1% 12.9% 1 1
Ukraine 41 76 8.4% 11.6% 3 4
TOTAL 490 653 100.0% 100.0% 10 10

 

Retail sale amounted to 490 thousand euros in the first quarter of 2016 and operating loss 157 thousand euros (sales 653 thousand euros and operating loss 240 thousand euros in Q1 2015). Current year first quarter operating loss 157 thousand euros (in Q1 2015: operating loss 240 thousand euros) contains also a loss from a drop of currency exchange rate of hryvnia 116 thousand euros (in Q1 2015: exchange rate loss 268 thousand euros).

 

FURNITURE PRODUCTION

The net sales of the Skano Furniture Factory in the first quarter amounted to 1.1 mil. euros and operating loss to 211 thousand euros. In the same period last year, the turnover of the factory amounted also to 1.3 mil. euros and the operating loss to 89 thousand euros. As compared to the previous year the turnover of the factory has decreased 21%. In the first quarter the sales decreased in Russia by 19% due to colder economic environment and weaker purchasing power for imported durable goods.

 

FURNITURE FACTORY SALES BY COUNTRIES

 

 

  th EUR % of net sales
  Q1 2016 Q1 2015 Q1 2016 Q1 2015
Finland 445 433 42.3% 32.7%
Russia 328 405 31.2% 30.6%
Other countries 25 146 2.4% 11.0%
Subsidiaries 254 341 24.1% 25.7%
TOTAL 1,052 1,325 100.0% 100.0%

 

 

FORECAST AND DEVELOPMENT

SKANO FIBREBOARD. We expect sales of Skano Fibreboard in Q2 2016 to be similar compared to sales of the same period last year. Sales in our core markets are lower due to weak demand which we expect to compensate with sales in new markets. On the other hand we see already better results in efficiency even with lower production volumes compared to last year as a result of the recent production improvement plan.  

SKANO FURNITURE RETAIL SALES. We expect total retail sale in Q2 2016 to be lower compared to sales of the same period last year. We expect steady sales in the Baltics but decrease in Ukraine due to political and economic instability. 

SKANO FURNITURE FACTORY. In Q2 2016 we expect smaller sales of the furniture factory compared to the same period in 2015 because of the deteriorated economic situation in the near regions, especially in Russia. In Russia sales are down due to weak currency, broad-based economic downturn and low consumer confidence.

 

FINANCIAL HIGHLIGHTS

 

 

th EUR 3 m 2016 3 m 2015 3 m 2014
Income statement      
Revenue 4,545 5,108 5,351
EBITDA (50) 257 100
EBITDA margin (1.1%) 5.0% 1.9%
Operating profit (268) 36 (125)
Operating margin (5.9%) 0.7% (2.3%)
Net profit (355) (39) (186)
Net margin (7.8%) (0.8%) (3.5%)
 
Balance sheet (31.03)      
Total assets 14,591 14,989 14,980
Return on assets (2.4%) (0.3%) (1.2%)
Equity 4,529 5,212 6,574
Return on equity (7.8%) (0.7%) (2.8%)
Debt-to-equity ratio 68.0% 65.2% 56.1%
 
Share (31.03)      
Closing price 0.726 0.845 0.995
Earnings per share (0.08) (0.01) (0.04)
Price-earnings ratio (9.08) (84.5) (24.9%)
Book value of a share 1.01 1.16 1.46
Market to book ratio 0.72 0.73 0.68
Market capitalization 3,266 3,802 4,477

 

 

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 31.03.2016 31.12.2015 31.03.2015
       
Cash and bank 278 292 691
Receivables and prepayments (Note 1) 2,252 997 2,326
Inventories (Note 2) 3,681 3,426 3,347
Total current assets 6,211 4,715 6,364
       
Investment property (Note 3) 406 406 407
Tangible fixed assets (Note 4) 7,955 8,120 8,189
Intangible fixed assets (Note 5) 19 21 29
Total fixed assets 8,380 8,547 8,625
       
TOTAL ASSETS 14,591 13,262 14,989
       
       
Debt obligations (Note 6) 2,237 1,253 2,795
Payables and prepayments (Note 7) 3,422 2,684 3,185
Short-term provisions (Note 8) 12 15 11
Total current liabilities 5,671 3,952 5,991
       
Non-current debt obligations (Note 6) 4,163 4,163 3,563
Non-current provisions (Note 8) 228 228 223
Total non-current liabilities 4,391 4,391 3,786
       
Total liabilities 10,062 8,343 9,777
       
Share capital at nominal value (Note 9) 2,699 2,699 2,699
Issue premium 364 364 364
Statutory capital reserve 288 288 288
Other reserves 6 7 0
Currency translation (25) 7 (65)
Retained profits 1,552 1,965 1,965
Net profit (loss) for the year (Note 10) (355) (411) (39)
Total equity 4,529 4,919 5,212
       
TOTAL LIABILITIES AND EQUITY 14,591 13,262 14,989

 

 

 

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

 

 

th EUR 1st Q 2016 1st Q 2015
     
     
RETURN ON SALES (Note 11) 4,545 5,108
     
Cost of production sold (3,728) (3,922)
     
Gross profit 817 1,186
     
Marketing expenses (874) (833)
General administrative expenses (145) (174)
Other income 8 65
Other expenses (74) (208)
     
Operating profit (loss) (Note 11) (268) 36
Financial income and financial expenses (86) (72)
     
Profit (loss) before taxes (354) (36)
Prepaid income tax (1) (3)
     
NET PROFIT (LOSS)  FOR THE PERIOD (355) (39)
     
Basic earnings per share (Note 10) (0.08) (0.01)
Diluted earnings per share (Note 10) (0.08) (0.01)
     
Other comprehensive income:    
Currency translation differences (32) (49)
     
TOTAL COMPREHENSIVE INCOME (387) (88)
       

 

 

The planned time of publishing of interim report of the second quarter of 2016 is week 35 (29-31st of August 2016)

 

Gregory Devine Grace

CEO

+372 4478 338

greg.grace@skanogroup.com


Attachments

Skano 2016 1Q vahearuanne ENG.pdf