First quarter in short
Consolidated net sales of first quarter 2011 was 4.0 mil. euros, representing a 28% increase on the first quarter compared to the same period 2010. At the same time, consolidated net profit amounted to 101 thousand euros, compared to 191 thousand euros in Q1 2010.
In first quarter, sales revenue increased in all fields of business. The sales of construction materials showed up the highest growth, namely 59%. Company started to sell into Japan and sales into Finland is remarkably higher. The reasons of decrease of profitability are higher costs to technological heat due to cold weather and very thick snow in winter. Transport costs into Finland and price of electricity are higher than Q1 2010.
Retail sale made a 2% growth, the result was 112 thousand euros loss caused by change of exchange rate of Ukrainian hryvnia, costumes problems in Ukraine at the beginning of year and continuously bad economical situation in Latvia.
The sales of Furniture factory increased by 11% compared to Q1 2010. The biggest growth was sales into Russia.
Income statement
Consolidated net sales of first quarter 2011 was 4.0 mil. euros (3.1 mil. euros in same period of 2010) representing a 28% increase on the first quarter compared to Q1 2010. The Group’s gross margin in the first quarter of 2011 was 21.0% compared to 24.5% in the first quarter of 2010. Consolidated operating profit amounted to 129 thousand euros (219 thousand euros in same period 2010). The consolidated operating margin of net sales was 3.2% (7.0% in Q1 2010).
Consolidated net profit amounted to 102 thousand euros, compared to 191 thousand euros in Q1 2010, and the net margin was 2.5% (6.1% in Q1 2010). In Q1 2011, the Group’s return on equity was 1.9% (4.0% in Q1 2010) and return on assets was 1.1% (2.2% in Q1 2010).
Position of financial statement
As of 31.3.2011 the total assets of Viisnurk amounted to 9.6 mil. euros (31.12.2010: 9.1 mil. euros). The liabilities of the company accounted for 43.1% (31.12.2010: 41.5%) thereof, i.e. 4.1 mil. euros (31.12.2010: 3.8 mil. euros).
Receivables and prepayments have increased by 0.8 mil. euros i.e. 66% increase with 3 months. The reason of increase of receivables is small sales in December 2010, which essentially lowered the amount of receivables at the end of December.
Inventories increased by 0.2 mil. euros to reach 2.7 mil. euros on 31.3.2011. (31.12.2010: 2.5 mil. euros). Property, plant and intangibles decreased by 0.05 mil. euros mainly as a result of depreciation.
Short-term loans decreased by 0.8 mil. euros and amounted to 0.6 mil. euros in 31 March 2011 (31.12.2010: 1.4 mil. euros). Short-term loan 0.6 mil. euros refinanced and over classified to long term. Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 2.0 mil. euros (31.12.2010: 1.5 mil. euros). Current and non-current liabilities increased by 0.3 mil. euros to 4.1 mil. euros (31.12.2010: 3.8 mil. euros).
Divisional review:
Net sales by business segments
| th. EUR | % of net sales | |||
| Q1 2011 | Q1 2010 | Q1 2011 | Q1 2010 | |
| Furniture Factory | 1,854 | 1,667 | 46.1% | 53.2% |
| Skano | 426 | 417 | 10.6% | 13.3% |
| Building Materials Division | 1,980 | 1,242 | 49.2% | 39.6% |
| Elimination | (236) | (194) | (5.9)% | (6.1)% |
| TOTAL | 4,024 | 3,132 | 100.0% | 100.0% |
Net sales by geographical segments
| th. EUR | % of net sales | |||
| Q1 2011 | Q1 2010 | Q1 2011 | Q1 2010 | |
| Finland | 1,837 | 1,450 | 45.7% | 46.3% |
| Russia | 990 | 622 | 24.6% | 19.9% |
| Estonia | 437 | 454 | 10.9% | 14.5% |
| Ukraine | 162 | 152 | 4.0% | 4.9% |
| Sweden | 116 | 135 | 2.9% | 4.3% |
| Lithuania | 92 | 92 | 2.3% | 2.9% |
| Kazakhstan | 78 | 41 | 1.9% | 1.3% |
| Latvia | 77 | 49 | 1.9% | 1.6% |
| India | 71 | 30 | 1.8% | 1.0% |
| Denmark | 52 | 38 | 1.3% | 1.2% |
| Japan | 36 | 0 | 0.9% | 0.0% |
| Israel | 19 | 0 | 0.5% | 0.0% |
| Germany | 15 | 44 | 0.4% | 1.4% |
| Malaisia | 14 | 0 | 0.3% | 0.0% |
| Greece | 11 | 10 | 0.3% | 0.3% |
| Other countries | 17 | 15 | 0.4% | 0.5% |
| TOTAL | 3,393 | 3,132 | 100.00% | 100.00% |
Regarding the markets, turnover has increased in Finland and Russia. The percentage of turnover has decreased in most in Estonia, Sweden and Germany.
Profit by business segments
| th. EUR | ||
| Q1 2011 | Q1 2010 | |
| Furniture Factory | 155 | 149 |
| Skano | (112) | (4) |
| Building Materials Division | 74 | 98 |
| Elimination | 12 | (24) |
| TOTAL | 129 | 219 |
| Net financial costs | (25) | (28) |
| Income tax | (2) | 0 |
| NET PROFIT | 102 | 191 |
Furniture Division
Furniture Retail – Skano
AS Viisnurk retail business is operated by a private limited company OÜ Skano and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has totally 13 stores: two in Tallinn, Pärnu, Riga, Vilnius, Kaunas, three in Kiev, Donetsk, Kharkiv and Dnipropetrovs’k. There were opened one store in Tallinn at Rocca al Mare shopping mall.
Retail sales by countries
| th. EUR | % of net sales | Number of stores | ||||
| Q1 2011 | Q1 2010 | Q1 2010 | Q1 2010 | 31.03.10 | 31.03.10 | |
| Estonia | 156 | 156 | 36.6% | 37.4% | 3 | 2 |
| Latvia | 35 | 24 | 8.2% | 5.9% | 1 | 1 |
| Lithuania | 86 | 91 | 20.2% | 21.9% | 2 | 3 |
| Ukraine | 149 | 145 | 35.0% | 34.8% | 7 | 4 |
| TOTAL | 426 | 416 | 100.0% | 100.0% | 13 | 10 |
The retail sale increased, but the loss of Skano was remarkably big. The main reasons for weak result are small purchase power in Latvia, loss from exchange rate of hryvnia (30 thousand euros) and problems with costumes in Ukraine. Ukrainian Republic fighting against VAT cheating and at the beginning of the year there was total costumes control on the borders. Most of the cargo delivered into Ukraine stopped for weeks in costumes area. This caused canceling of deliveries at January and February and Skano paid compensations for clients for late deliveries. The situation is normalized for now and our business model works as planned.
Furniture Factory
The Furniture Factory’s sales in the first quarter in one of the company’s basic target market in Russia has increased and on other – in Finland, decreased. Our clients does not estimate significant increase of demand in near future.
The net sales of the Furniture Factory in the first quarter amounted to 1.9 mil. euros and profit to 155 thousand euros. In the same period last year, the turnover of the factory totalled to 1.7 mil. euros and the profit 149 thousand euros. As compared to the previous year the turnover of the factory has increased by 187 thousand euros and the profit has increased 6 thousand euros.
Furniture Factory sales by countries
| th EUR | % of net sales | |||
| Q1 2011 | Q1 2010 | Q1 2011 | Q1 2010 | |
| Finland | 792 | 852 | 42.7% | 51.1% |
| Russia | 734 | 510 | 39.6% | 30.6% |
| Kazakhstan | 78 | 41 | 4.2% | 2.4% |
| Estonia | 14 | 32 | 0.8% | 1.9% |
| Other countries | 0 | 40 | - | 2.4% |
| Subsidiaries | 236 | 193 | 12.7% | 11.6% |
| TOTAL | 1,854 | 1,668 | 100.0% | 100.0% |
Building Materials Division
The net sales of the Building Materials Division in the first quarter amounted to 2.0 mil. euros and profit to 74 thousand euros. In the same period last year, the turnover of the division totalled to 1.2 mil. euros and the profit 98 thousand euros. As compared to the previous year the turnover of the division has increased by 738 thousand euros and the profit has decreased by 24 thousand euros.
Net sales by geographical segments
| th. EUR | % of net sales | |||
| Q1 2011 | Q1 2010 | Q1 2011 | Q1 2010 | |
| Finland | 1,045 | 598 | 52.8% | 48.2% |
| Estonia | 267 | 267 | 13.5% | 21.5% |
| Russia | 256 | 112 | 12.9% | 9.0% |
| Sweden | 116 | 135 | 5.9% | 10.9% |
| India | 71 | 30 | 3.6% | 2.4% |
| Denmark | 52 | 37 | 2.6% | 3.0% |
| Latvia | 42 | 24 | 2.1% | 1.9% |
| Japan | 36 | 0 | 1.8% | - |
| Isreal | 19 | 0 | 1.0% | - |
| Germany | 15 | 15 | 0.8% | 1.2% |
| Malaysia | 14 | 0 | 0.7% | - |
| Ukraine | 13 | 7 | 0.7% | 0.6% |
| Greece | 11 | 10 | 0.5% | 0.7% |
| Other countries | 23 | 7 | 1.1% | 0.6% |
| TOTAL | 1,980 | 1,242 | 100.0% | 100.0% |
The biggest growth has been in sales to Finland and Russia. There is also sales growth into Asia, we started to sale into Japan. The percentage of sales into Estonia and Sweden decreased. Despite of the remarkable growth of sales the profit of the segment has decreased. The main reason for that is high price of technological heat caused by cold weather and big amount of snow. There are significantly increased transport costs into Finland and compared to the same period of last year, increase of the price of electricity.
AS Fortum Termest and AS Viisnurk terminated the operator agreement of the boiler plant belonging to AS Viisnurk from 01.02.2011 and AS Viisnurk will continue to produce heat in the boiler plant. As AS Viisnurk has no main heat lines, heat is produced only for the company itself.
Forecast and development
Skano. We do not expect significant growth of retail sale in the second quarter of 2011. Therefore we shall continue to save the costs and do not plan any extension of the retail chain.
Furniture factory. In the second quarter of 2011 we expect similar turnover as in the preceding quarters in the furniture factory, but the volume will still remain lower than the production capabilities would allow. Therefore the workload is continuously low in the furniture factory. Agreements have been concluded with the employees for application of undertime until 31.03.2012. From April 1, 2011 the business hours were extended, however for most of the employees the weekly number of business hours will remain below 40.
Building Materials Division. Work was started with full load at the end of 2010. At the main production line the production is performed in four shifts round the clock. On Isotex lines one or two shifts are used as necessary. At the same time turnover has increased and we expect for second quarter comparable sales number as in first quarter. At the same time managements priority is rising the effectiveness and profitability.
Consolidated statement of financial position
| Th EUR | Th EUR | Th EUR | |
| 31.3.2011 | 31.12.2010 | 31.03.2010 | |
| Cash and bank | 478 | 1,011 | 184 |
| Receivables and prepayments | 1,990 | 1,198 | 1,520 |
| Inventories | 2,723 | 2,484 | 2,816 |
| Total current assets | 5,191 | 4,693 | 4,520 |
| Investment property | 185 | 185 | 185 |
| Tangible fixed assets | 4,173 | 4,217 | 3,928 |
| Intangible fixed assets | 19 | 20 | 1 |
| Total fixed assets | 4,377 | 4,422 | 4,114 |
| TOTAL ASSETS | 9,568 | 9,115 | 8,634 |
| Debt obligations | 556 | 1,383 | 418 |
| Payables and prepayments | 1,978 | 1,462 | 1,525 |
| Short-term provisions | 6 | 8 | 5 |
| Total current liabilities | 2,540 | 2,853 | 1,948 |
| Non-current debt obligations | 1,382 | 733 | 1,731 |
| Non-current provisions | 198 | 198 | 200 |
| Total non-current liabilities | 1,580 | 931 | 1,931 |
| Total liabilities | 4,120 | 3,784 | 3,879 |
| Share capital at nominal value | 2,875 | 2,875 | 2,875 |
| Issue premium | 364 | 364 | 364 |
| Statutory capital reserve | 288 | 288 | 288 |
| Currency translation reserve | 31 | 16 | 20 |
| Retained profits | 1,788 | 1,017 | 1,017 |
| Net profit for the year | 102 | 771 | 191 |
| Total equity | 5,448 | 5,331 | 4,755 |
| TOTAL LIABILITIES AND EQUITY | 9,568 | 9,115 | 8,634 |
Consolidated statement of comprehensive income
| Th EUR | Th EUR | |
| 1st quarter 2011 | 1st quarter 2010 | |
| RETURN ON SALES | 4,024 | 3,132 |
| Cost of production sold | (3,179) | (2,366) |
| Gross profit | 845 | 766 |
| Marketing expenses | (581) | (460) |
| General administrative expenses | (99) | (95) |
| Other income | 3 | 32 |
| Other expenses | (39) | (24) |
| Operating profit | 129 | 219 |
| Financial income and financial expenses | (25) | (28) |
| Profit before taxes | 104 | 191 |
| Prepaid income tax | (2) | 0 |
| NET PROFIT FOR THE PERIOD | 102 | 191 |
| Basic earnings per share | 0.02 | 0.04 |
| Diluted earnings per share | 0.02 | 0.04 |
| Currency translation differences | 15 | (6) |
| TOTAL COMPREHENSIVE INCOME | 117 | 185 |
Einar Pähkel
CFO
+372 44 78 331
This email address is being protected from spambots. You need JavaScript enabled to view it.