MARIMEKKO CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2007, NET SALES
RISE BY 6%, EARNINGS ARE AT THE SAME LEVEL AS THE YEAR BEFORE
In the January-September period of 2007, Marimekko Group's net sales rose by 6%
to EUR 54.6 million (EUR 51.3 million). Exports and income from international
operations grew by 19%. Operating profit amounted to EUR 7.1 million (EUR 7.1
million). Net profit for the period was EUR 5.2 million (EUR 5.2 million).
Earnings per share were EUR 0.65 (EUR 0.65). The company's forecast for the
remainder of 2007 remains unchanged. The Group's full-year net sales growth for
2007 is forecast to stay at the same level as in 2006. Profitability is
estimated to remain good although slightly weaker than in the previous year.
NET SALES
July-September
In the July-September period of 2007, the Group's net sales grew by 12.8% to EUR
20,699 thousand (EUR 18,357 thousand). Net sales in Finland increased by 10.9%
to EUR 14,876 thousand (EUR 13,416 thousand). Exports and income from
international operations grew by 17.8% and totalled EUR 5,823 thousand (EUR
4,941 thousand).
January-September
In the January-September period of 2007, the Group's net sales grew by 6.5% to
EUR 54,608 thousand (EUR 51,282 thousand). Net sales in Finland increased by
2.3% to EUR 39,319 thousand (EUR 38,453 thousand). Exports and income from
international operations grew by 19.2% to EUR 15,289 thousand (EUR 12,829
thousand). Exports and income from international operations accounted for 28.0%
(25.0%) of the Group's net sales.
The breakdown of the Group's net sales by product line was as follows: clothing
41.9%, interior decoration 42.5%, and bags 15.6%. Net sales by market area were
the following: Finland 72.0%, the other Nordic countries 11.7%, the rest of
Europe 6.8%, North America 5.2%, and other countries (Japan as well as other
regions outside Europe and North America) 4.3%.
During the January-September period of 2007, sales in Marimekko's own retail
shops in Finland rose by 0.1% (2.3%). Sales to retailers in Finland increased by
5.7% (-2.6%). The growth was primarily due to significant promotional purchases
by retailers.
MARKET SITUATION
Strong growth in the world economy has continued throughout the year. The
briskest growth has been seen in Asia. Growth in Europe has also picked up
noticeably. In the United States, growth expectations have weakened due to
economic instability. Total production in Finland has grown faster than
anticipated as a result of higher exports and private consumption (ETLA, The
Research Institute of the Finnish Economy, forecast 2007/2). In the
January-August period of 2007, retail sales in Finland grew by 7.8% over the
corresponding period of the previous year (Statistics Finland, Wholesale and
retail trade 2007, August). Retail sales of clothing increased by 2.5% (Textile
and Fashion Industries TMA). Sales of womenswear rose by 3.6% and menswear by
2.6%. Sales of childrenswear fell by 1.6%. Sales of bags rose by 7.7%. In the
January-July period of 2007, exports of textile products (SITC 65) increased by
8% and imports by 5%. Exports of clothing (SITC 84) rose by 10% and imports by
4% (National Board of Customs, monthly review, August 2007).
REVIEWS BY BUSINESS UNIT
Clothing
In the January-September period of 2007, net sales of clothing fell by 0.5% to
EUR 22,900 thousand (EUR 23,024 thousand). The fall was due to slower sales in
Finland. In exports, sales growth was extremely good in all markets except the
market area referred to as “other countries”, which saw a fall in sales. The
most notable sales growth was seen in the United States and the market area
referred to as “the rest of Europe”. Exports and income from international
operations accounted for 24.2% of net sales of clothing.
Interior decoration
Net sales of interior decoration products rose by 13.9% to EUR 23,194 thousand
(EUR 20,356 thousand). Growth accelerated in almost all markets. The market
areas referred to as “other Nordic countries” and “the rest of Europe” enjoyed
the strongest growth in sales. Net sales declined in the market area referred to
as “other countries”. Exports and income from international operations accounted
for 30.7% of net sales of interior decoration products.
Bags
Net sales of bags increased by 7.7% to EUR 8,514 thousand (EUR 7,902 thousand).
Net sales in Finland grew slightly. Exports picked up significantly in all
markets. Exports and income from international operations accounted for 30.9% of
net sales of bags.
Business gifts and contract sales
Business gift and contract sales declined by 5.9%.
Exports and international operations
In the January-September period of 2007, the Group's exports and income from
international operations grew by 19.2% to EUR 15,289 thousand (EUR 12,829
thousand). Strong growth continued in all export markets except the market area
referred to as “other countries”, in which sales declined. The major export
countries were Sweden, the United States, Japan, Denmark, Norway, Germany and
Great Britain.
In the market area referred to as "other Nordic countries", the growth rate
remained high. Net sales rose by 20.0% to EUR 6,423 thousand (EUR 5,353
thousand). Sales increased significantly in all product lines.
In the market area referred to as "the rest of Europe", sales growth was notable
in all product lines. Net sales rose by 33.2% to EUR 3,708 thousand (EUR 2,783
thousand). Positive growth continued in Germany. The fastest relative growth in
sales was seen in Great Britain and Italy. A retailer-established Marimekko
concept store was opened in Graz, Austria at the end of June 2007.
In North America, growth remained strong. There was a significant increase in
sales in all product lines. Net sales rose by 31.5% to EUR 2,817 thousand (EUR
2,143 thousand). The new Marimekko concept stores opened in the 2006 financial
period played a major role in the growth of sales. There were a total of four
retailer-established Marimekko concept stores in the United States at the end of
the period under review. The newest one was opened in May 2007 in Silver Spring
in metropolitan Washington DC.
In the market area referred to as "other countries", development was clearly
slower than in the comparison period. Net sales fell by 8.2% to EUR 2,341
thousand (EUR 2,550 thousand). The termination of licensing operations in Japan
at the end of 2006 reduced sales of interior decoration products and was partly
responsible for the overall decline in sales. The difference compared with the
corresponding period of the previous year was also partly due to the opening of
Japanese concept stores, which then boosted sales significantly. Two new
Marimekko concept stores were opened in Japan in the period under review: one in
Yokohama in March and the other in Nagoya in September. At the end of September,
there were a total of nine Marimekko concept stores in Japan.
Licensing
Royalty earnings from sales of licensed products were down slightly. In Finland,
royalty earnings remained at the same level as in the corresponding period of
the previous year. Royalty earnings in the United States contracted noticeably
while extremely strong growth was seen in the Netherlands. The termination of
licensing operations in Japan at the end of 2006 resulted in a significant
decline in earnings from licensed products.
Production
The production volume of the Herttoniemi textile printing factory increased by
13% on the comparison period. Production volumes at the factories in Kitee and
Sulkava remained at the same level as in the corresponding period of the
previous year. Demand for some product groups exceeded expectations and
increased the need for production capacity faster than anticipated; for this
reason, delivery times had to be extended.
EARNINGS
July-September
In the July-September period of 2007, the Group's operating profit rose by 13.5%
to EUR 3,965 thousand (EUR 3,492 thousand). The improvement was due to a rise in
sales in Finland. Earnings per share were EUR 0.36 (EUR 0.32).
January-September
In the January-September period of 2007, the Group's operating profit rose by
0.2% to EUR 7,105 thousand (EUR 7,088 thousand). Operating profit as a
percentage of the Group's net sales amounted to 13.0% (13.8%). The Group's
marketing expenses totalled EUR 2,945 thousand (EUR 2,892 thousand), or 5.4%
(5.6%) of net sales.
The Group's depreciation amounted to EUR 982 thousand (EUR 846 thousand), or
1.8% (1.6%) of net sales. Net financial expenses totalled EUR 38 thousand (EUR
54 thousand), or 0.1% (0.1%) of net sales.
The Group's profit before taxes grew by 0.5% to EUR 7,067 thousand (EUR 7,034
thousand). Net profit for the period rose by 0.4% to EUR 5,231 thousand (EUR
5,211 thousand), or 9.6% (10.2%) of net sales. Earnings per share were EUR 0.65
(EUR 0.65).
Earnings for the period under review were boosted by increased wholesale sales
in Finland in the third quarter. This growth was mainly due to large promotional
purchases by retailers.
INVESTMENTS
The Group's gross investments amounted to EUR 1,164 thousand (EUR 1,794
thousand), representing 2.1% (3.5%) of net sales. The major investments focused
on production equipment renewal at the Herttoniemi textile printing factory and
the construction of new premises for Marimekko´s Joensuu shop.
EQUITY RATIO AND FINANCING
The equity ratio was 68.1% at the end of the period (66.4% on 30 September 2006,
70.5% on 31 December 2006). The ratio of interest-bearing liabilities minus
financial assets to shareholders' equity (gearing) was 5.8%, while it was 3.1%
at the same time in the previous year (-11.7% on 31 December 2006).
At the end of the period, the Group's interest-bearing liabilities amounted to
EUR 4,711 thousand (EUR 4,976 thousand). The Group's financing from operations
was EUR 6,213 thousand (EUR 6,057 thousand) and its financial assets amounted to
EUR 3,160 thousand (EUR 4,221 thousand).
SHARES AND SHARE PRICE TREND
At the end of the review period, the company's fully paid-up share capital, as
recorded in the Trade Register, amounted to EUR 8,040,000 and the number of
shares totalled 8,040,000. The accounting countervalue of a share is one (1)
euro.
According to the book-entry register, the company had 5,277 registered
shareholders at the end of the period. 18.3% of the shares were registered in a
nominee's name and 2.9% were in foreign ownership. The number of shares owned
either directly or indirectly by members of the Board of Directors and the
president of the company was 1,610,200, representing 20.0% of the total votes
conferred by the company's shares.
At the end of the review period, the Board of Directors had no valid
authorisations to carry out a share issue or issue of convertible bonds or bonds
with warrants, or to acquire or dispose of the company's shares.
During the January-September period of 2007, a total of 1,950,758 Marimekko
shares were traded, representing 24.3% of the outstanding shares. The total
value of share turnover was EUR 29,739,349. In the review period, the lowest
price of the Marimekko share was EUR 13.10, the highest was EUR 17.00 and the
average price was EUR 15.24. At the end of the review period, the share price
was EUR 14.05. On 30 September 2007, the company's market capitalisation was EUR
113,042,400 (EUR 104,118,000 on 30 September 2006, EUR 117,786,000 on 31
December 2006).
FLAGGING NOTIFICATIONS
Morgan Stanley & Co International plc's share of Marimekko Corporation's share
capital and voting rights rose to 5.08%, or 408,689 shares, as a result of a
transaction made on 12 April 2007; and then fell to 4.77%, or 383,689 shares, as
a result of a transaction made on 20 April 2007.
Grantham, Mayo, Van Otterloo & Co. LLC's share of Marimekko Corporation's share
capital and voting rights fell to 4.75%, or 382,200 shares, as a result of a
transaction made on 27 June 2007.
Largest shareholders according to the book-entry register on 30 September 2007
Percentage of holding and votes
1. Workidea Oy 20.00
2. Varma Mutual Employment Pension Insurance Company 4.10
3. ODIN Forvaltning AS 2.84
4. Säästöpankki Kotimaa 2.09
5. Evli Nordic Dividend 1.51
6. Nordea Nordic Small Cap Fund 1.33
7. Evli Select 1.18
8. Nordea Life Assurance Finland Ltd 1.14
9. Neste Oil Eläkesäätiö 1.12
10. Nordea Stable Return Fund 1.04
11. Nordea Pro Finland Fund 0.86
12. Ilmarinen Mutual Pension Insurance Company 0.70
13. Moisio Martti 0.67
14. Foundation for Economic Education 0.62
15. Miettinen Kari 0.60
Total 39.80
Nominee-registered 18.31
Others 41.89
100.00
PERSONNEL
During the period under review, the number of Group personnel averaged 402
(392). At the end of period, the Group employed 406 (392) people, of whom 16
(14) worked abroad. Kirsi Räikkönen was appointed the Group's marketing and
development director as of 16 April 2007, when she also became a member of the
management group.
RISK MANAGEMENT AND MAJOR RISKS
The major risks to Marimekko's business operations have been detailed in the
company's 2006 Annual Report. No change in these risks occurred during the
period under review.
ANNUAL GENERAL MEETING
Marimekko Corporation's Annual General Meeting, held on 12 April 2007, adopted
the company's accounts for 2006 and approved the Board of Directors' proposal
for payment of a dividend for 2006 of EUR 0.65 per share, totalling EUR
5,226,000.00. The record date was 17 April 2007 and the dividend payout date 24
April 2007.
The Annual General Meeting resolved that the Board of Directors shall consist of
three members. Mr Matti Kavetvuo, M.Sc. (Eng.), B.Sc. (Econ.), and Mrs Kirsti
Paakkanen, President, were re-elected and Mrs Tarja Pääkkönen, Ph.D. (Eng.,
Business Strategies), was elected as a new member of the Board of Directors
until the end of the next Annual General Meeting. At its organisation meeting
held after the Annual General Meeting, the Board of Directors elected Matti
Kavetvuo as Chairman of the Board.
The Annual General Meeting also decided that Nexia Tilintarkastus Oy, Authorised
Public Accountants, will continue as regular auditor, with Mr Seppo Tervo,
Authorised Public Accountant, as chief auditor, and Mr Matti Hartikainen,
Authorised Public Accountant, as deputy auditor of the company.
OUTLOOK FOR THE REMAINDER OF 2007
Strong growth in the world economy is forecast to continue throughout the year.
The fastest growth is expected in Asia. Economic growth outlook in the euro area
has remained favourable. In the United States, total production growth is
expected to slow down slightly. In Finland, consumption demand is expected to
remain strong and total output is estimated to increase by 4.4% in 2007 (ETLA,
The Research Institute of the Finnish Economy, forecast 2007/2). Based on the
business climate outlook and the company's order book for the fourth quarter,
growth in Marimekko Group's net sales in 2007 is estimated to remain at the same
level as in 2006. Profitability is estimated to remain good although slightly
weaker than in the previous year.
Helsinki, 31 October 2007
MARIMEKKO CORPORATION
Board of Directors
For additional information, please contact:
Thomas Ekström, CFO, tel. +358 9 758 7261
Marja Korkeela, Group Communications, tel. +358 9 758 7238
MARIMEKKO CORPORATION
Group Communications
Marja Korkeela
Tel. +358 9 758 7238
Fax +358 9 759 1676
E-mail: marja.korkeela@marimekko.fi
APPENDICES TO THE INTERIM REPORT
Consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of changes in shareholders' equity
Key indicators
Consolidated net sales by market area and product line
Segment information
Quarterly trend in net sales and earnings
The information presented in this interim report has not been audited.
Marimekko's stock exchange releases are available on the company's website at
www.marimekko.com under Investors/Stock Exchange Releases.
DISTRIBUTION: OMX Nordic Exchange Helsinki
Principal media
Marimekko's website www.marimekko.com
---------------
APPENDICES
This interim report has been prepared in accordance with IAS 34: Interim
Financial Reporting. The same accounting policy has been applied as in the 2006
financial statements. In addition, the following new or amended standards and
interpretations have been adopted as from 1 January 2007:
IFRS 7 Financial Instruments: Disclosures. The Group estimates that the adoption
of this standard primarily affects the scope of the notes to the annual
financial statements.
IAS 1 (amended) Presentation of Financial Statements: Capital Disclosures. The
amendment does not affect this interim report.
IFRIC 9 Reassessment of Embedded Derivatives. The application of the
interpretation does not affect this interim report.
IFRIC 10 Interim Financial Reporting and Impairment. The application of the
interpretation does not affect this interim report.
CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2007 2006 2007 2006 2006
NET SALES 20,699 18,357 54,608 51,282 71,424
Other operating
income 21 10 56 44 60
Increase or decrease
in inventories of
completed and
unfinished products 204 -227 1,128 87 -33
Raw materials and
consumables 8,625 6,826 22,670 20,209 27,868
Employee benefit
expenses 3,745 3,596 11,985 11,215 15,407
Depreciation and
impairment 327 297 982 846 1,158
Other operating
expenses 4,262 3,929 13,050 12,055 16,154
OPERATING PROFIT 3,965 3,492 7,105 7,088 10,864
Financial income 34 34 116 88 124
Financial expenses -68 -48 -154 -142 -192
-34 -14 -38 -54 -68
PROFIT BEFORE TAXES 3,931 3,478 7,067 7,034 10,796
Income taxes 1,019 898 1,836 1,823 2,806
NET PROFIT FOR
THE PERIOD 2,912 2,580 5,231 5,211 7,990
Distribution
To equity holders of
the parent company 2,912 2,580 5,231 5,211 7,990
Earnings per share
calculated on the
profit attributable
to equity holders of
the parent
company, EUR 0.36 0.32 0.65 0.65 1.00
CONSOLIDATED BALANCE SHEET
(EUR 1,000) 30.9.2007 30.9.2006 31.12.2006
ASSETS
NON-CURRENT ASSETS
Tangible assets 10,242 9,569 9,992
Intangible assets 279 421 348
Available-for-sale
investments 20 20 20
10,541 10,010 10,360
CURRENT ASSETS
Inventories 17,785 15,604 16,304
Trade and other
receivables 7,758 6,443 5,717
Tax receivables 325 88 -
Cash and cash equivalents 3,160 4,221 5,789
29,028 26,356 27,810
ASSETS, TOTAL 39,569 36,366 38,170
SHAREHOLDERS' EQUITY
AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT COMPANY
Share capital 8,040 8,040 8,040
Retained earnings 18,869 16,087 18,861
Shareholders' equity, total 26,909 24,127 26,901
NON-CURRENT LIABILITIES
Deferred tax liabilities 644 544 614
Interest-bearing liabilities 370 1,371 841
1,014 1,915 1,455
CURRENT LIABILITIES
Trade and other payables 7,305 6,719 7,803
Tax liabilities - - 210
Interest-bearing liabilities 4,341 3,605 1,801
11,646 10,324 9,814
Liabilities, total 12,660 12,239 11,269
SHAREHOLDERS' EQUITY AND
LIABILITIES, TOTAL 39,569 36,366 38,170
The Group has no liabilities resulting from derivative contracts, and there are
no outstanding guarantees or any other contingent liabilities which have been
granted on behalf of the management of the company or its shareholders.
CONSOLIDATED CASH FLOW STATEMENT
(EUR 1,000) 1-9/2007 1-9/2006 1-12/2006
CASH FLOW FROM OPERATING
ACTIVITIES
Net profit for the period 5,231 5,211 7,990
Adjustments
Depreciation and impairment 982 846 1,158
Financial income and expenses -38 -54 -68
Taxes 1,836 1,823 2,806
Cash flow before change
in working capital 8,087 7,934 12,022
Change in working capital -4,098 -3,168 -2,069
Cash flow from operating
activities before
financial items and taxes 3,989 4,766 9,953
Paid interest and payments
on other financial expenses -141 -125 -194
Interest received 141 105 101
Taxes paid -2,309 -2,259 -2,958
CASH FLOW FROM
OPERATING ACTIVITIES 1,679 2,487 6,902
CASH FLOW FROM
INVESTING ACTIVITIES
Investments in tangible
and intangible assets -1,164 -1,794 -2,301
CASH FLOW FROM
INVESTING ACTIVITIES -1,164 -1,794 -2,301
CASH FLOW FROM
FINANCING ACTIVITIES
Short-term loans drawn 4,000 3,000 3,000
Short-term loans repaid -1,400 -1,250 -3,100
Long-term loans repaid -471 -471 -946
Finance leasing debts paid -60 -41 -55
Dividends paid -5,226 -5,226 -5,226
CASH FLOW FROM
FINANCING ACTIVITIES -3,157 -3,988 -6,327
Change in cash and
cash equivalents -2,642 -3,294 -1,726
Cash and cash equivalents
at the beginning of the period 5,789 7,515 7,515
Cash and cash equivalents
at the end of the period 3,147 4,221 5,789
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Equity attributable to equity holders of the parent company
(EUR 1,000) Transla- Share-
tion Fair value holders'
Share differ- and other Retained equity,
capital ences reserves earnings total
Adjusted share-
holders' equity
1 Jan. 2006 8,040 16,097 24,137
Net profit for
the period 5,211
Dividends paid -5,226
Shareholders'
equity
30 Sept. 2006 8,040 5 16,082 24,127
Equity attributable to equity holders of the parent company
(EUR 1,000) Transla- Share-
tion Fair value holders'
Share differ- and other Retained equity,
capital ences reserves earnings total
Adjusted share-
holders' equity
1 Jan. 2007 8,040 18,861 26,901
Net profit for
the period 5,231
Dividends paid -5,226
Shareholders'
equity
30 Sept. 2007 8,040 3 18,869 26,909
KEY INDICATORS
1-9/ 1-9/ Change, % 1-12/
2007 2006 2006
Earnings per
share, EUR 0.65 0.65 0.0 1.00
Equity per share, EUR 3.35 3.00 11.7 3.35
Share of exports and
international operations,
% of net sales 28.0 25.0 24.6
Return on equity
(ROE), % 25.9 28.8 31.3
Return on
investment (ROI), % 31.5 33.5 38.2
Equity ratio, % 68.1 66.4 70.5
Gross investments,
EUR 1,000 1,164 1,793 -35.1 2,455
Gross investments,
% of net sales 2.1 3.5 3.4
Contingent liabilities,
EUR 1,000 13,957 15,097 -7.6 14,513
Average personnel 402 392 2.6 393
Personnel at the end
of the period 406 392 3.6 396
Number of shares
at the end of
the period (1,000) 8,040 8,040 8,040
Number of shares
outstanding
average (1,000) 8,040 8,040 8,040
NET SALES BY MARKET AREA AND PRODUCT LINE
BY MARKET AREA, JULY-SEPTEMBER
(EUR 1,000) 7-9/2007 7-9/2006 Change, %
Finland 14,876 13,416 10.9
Other Nordic countries 2,558 2,025 26.3
Rest of Europe 1,284 1,065 20.6
North America 1,104 856 29.0
Other countries 877 995 -11.9
TOTAL 20,699 18,357 12.8
BY PRODUCT LINE, JULY-SEPTEMBER
(EUR 1,000) 7-9/2007 7-9/2006 Change, %
Clothing 7,797 7,745 0.7
Interior decoration 9,367 7,232 29.5
Bags 3,534 3,380 4.6
TOTAL 20,699 18,357 12.8
BY MARKET AREA, JANUARY-SEPTEMBER
(EUR 1,000) 1-9/2007 1-9/2006 Change, % 1-12/2006
Finland 39,319 38,453 2.3 53,826
Other Nordic countries 6,423 5,353 20.0 7,373
Rest of Europe 3,708 2,783 33.2 3,655
North America 2,817 2,143 31.5 3,410
Other countries 2,341 2,550 -8.2 3,160
TOTAL 54,608 51,282 6.5 71,424
BY PRODUCT LINE, JANUARY-SEPTEMBER
(EUR 1,000) 1-9/2007 1-9/2006 Change, % 1-12/2006
Clothing 22,900 23,024 -0.5 30,309
Interior decoration 23,194 20,356 13.9 30,716
Bags 8,514 7,902 7.7 10,399
TOTAL 54,608 51,282 6.5 71,424
SEGMENT INFORMATION
(EUR 1,000) 1-9/2007 1-9/2006 1-12/2006
Net sales
Finland 39,319 38,453 53,826
Other countries 15,289 12,829 17,598
Total 54,608 51,282 71,424
Assets
Finland 37,709 34,558 36,662
Other countries 1,860 1,808 2,228
Eliminations -1,804 -1,610 -720
Total 39,569 36,366 38,170
Investments
Finland 1,102 1,723 2,365
Other countries 62 70 90
Total 1,164 1,793 2,455
QUARTERLY TREND IN NET SALES AND EARNINGS
(EUR 1,000) III/2007 II/2007 I/2007 IV/2006
Net sales 20,699 16,997 16,912 20,142
Operating profit 3,965 1,643 1,497 3,776
Earnings per share, EUR 0.36 0.15 0.14 0.35
(EUR 1,000) III/2006 II/2006 I/2006
Net sales 18,357 16,751 16,174
Operating profit 3,492 2,144 1,452
Earnings per share, EUR 0.32 0.20 0.13
