The net sales of Viisnurk AS for the first half of 2006 were 109.2 mil kroons/7.0 mil euros (in the same period last year the net sales were 118.5 mil kroons/7.6 mil euros) and the net profit 4.9 mil kroons/310 thousand euros (6.7 mil kroons/428 thousand euros in 2005). The net sales of the 2nd quarter of the accounting year amounted to 56.2 mil kroons/3.6 mil euros (56.6 mil kroons/3.6 mil euros in 2005) and the net profit amounted to 3.0 mil kroons/189 thousand euros (2.7 mil kroons/173 thousand euros in 2005).

The results of Viisnurk AS in the first half of 2006 were significantly influenced by cold weather in January and February that brought along higher heating costs and work stoppages in the Building Materials Division. The fire on the storage area in May had also negative impact on the company’s results. Although the finished goods of the company are insured (excess 157 thousand kroons/10 thousand euros), the sales margin was lost on the destroyed goods; in addition the accident caused a three day work stoppage in the division.

In connection with the expenses related to the implementation of the retail trade strategy developed in 2006 the decrease in profitability of the Furniture Division is expected in the last quarter of the year. Although the net profit of the first half of the year is approx. 40% more than in 2005, the division has been influenced by a lower demand than expected in German market during the summer period as well as the increasing personnel expenses.

Considering the above factors the management of the company shall correct the profit estimation from the initial 16-18 mil kroons (1-1.15 mil euros) to 12-14 mil kroons (0.77-0.89 mil euros).

The total assets of Viisnurk amounted to 153.5 mil kroons (9.8 mil euros) at 30.06.2006. The liabilities of the company accounted for 57% thereof, i.e. 87 mil kroons (5.6 mil euros).

In the 2^nd quarter of 2006, the dividends paid out to the shareholders amounted to 4.2 mil kroons (267 thousand euros). The income tax on dividends amounted to 438 thousand kroons (27 thousand euros).

 

 

Divisional review:

 

 

 

 

Furniture Division

 

The net sales of the Furniture Division of Viisnurk for six months were 65.2 mil kroons (4.2 mil euros) and the profit 4.5 mil kroons (288 thousand euros). As compared to the previous year the turnover of the division has increased by 626 thousand kroons (40 thousand euros) and the profit by 1.3 mil kroons (86 thousand euros).

 

The six-month performance of the Furniture Division proves the success of the selected strategy that focuses on stable customers and production of more profitable product lines. Sales in the company’s basic target markets in Finland and Russia have proceeded according to the plans. However, the increase in profit of the Furniture Division is less than estimated due to lower demand during summer period in Germany and the increasing pressure on personnel expenses.

 

Retail sale of furniture shows a rising tendency and, according to the strategy, the division is preparing itself for the expansion of retail business to on-shore markets. In connection with additional expenses due to the extension of retail business this year the profitability of the Furniture Division may decrease in the last quarter of the year.

 

 

Building Materials Division

 

The Building Materials Division earned a profit of 5.0 mil kroons (317 mil euros) at the net sales of 44 mil kroons (2.8 mil euros) in six months. In the same period of the last year, the turnover of the division totalled 53.8 mil kroons (3.4 mil euros) and the net profit 9.7 mil kroons (617 mil euros).

 

The results of the six months were significantly influenced by extreme weather conditions in the beginning of the year when cold weather in January and February brought along higher heating costs and work stoppages (around 15 % of the working time of the main production line was lost). The fire on 6 May had also an impact on the results. The destroyed property was insured and the excess in the case of an insured event is 157 thousand kroons (10 thousand euros). The insurance covers the cost of the goods in cost price, having an impact on the revenues and profit by sales margin.

 

Among “Isoplaat” general building boards the demand of wind protection board in the internal market has leaped ahead. The increase of sales in Finland, which was planned for the 1^st quarter of this year, achieved success in the 2^nd quarter by selling under our trademark in all of the most significant retail chains.

 

Sales volumes and results of “Isotex” internal finishing boards were on planned levels both in the internal and external markets.

 

Since the beginning of the 2^nd quarter production volumes, sales and profitability of the division have improved rapidly and the factory is working on full capacity in order to satisfy the increased demand. In addition, active selling has been initiated in the eastern market - Russia, Ukraine, Latvia and Lithuania.

 

 

 

 

 

 

 

Einar Pähkel

Business- and Administration Manager

+3724 47 8331