First quarter in short
Consolidated net sales of the first quarter 2012 increased 13% compared to the same period 2011, and was 4.6 mil. euros. At the same time, consolidated EBITDA decreased from 275 thousand euros in first quarter 2011 to 147 thousand euros in first quarter 2012.
Relatively weak result of the first quarter was expected and the management estimated that in the report of the fourth quarter. The sales growth came basically from the sales of natural softboards products of Püssi factory and from Skano retail chain, which grew 30% compared to the same period last year.
At the same time, net sales of the comparable business units of the company (Pärnu softboard factory and Isotex unit, furniture factory and retail chain Skano), decreased 8% compared to the first quarter of 2011. Sales into Finland was 46% of total sales of the company in the first quarter of 2011, but at the beginning of this year an unexpectedly big decrease of demand occurred and sales into Finland dropped to 29% in the first quarter of this year. At the same time sales into other markets has not decreased, but has moderate growth and operating profit of comparable business units increased 7% and amounted to 138 thousand euros.
Despite of the decrease of sales, the profit of furniture factory increased by 2.6% and reached to 159 thousand euros. Factory works effectively and makes profit; the profit margin of factory was 9% in the first quarter.
Retail sale made a 30% growth and was 553 thousand euros in the first quarter of 2012, the result was 5 thousand euros loss caused by the change of exchange rate of Ukrainian hryvnia in the amount of 24 thousand euros. The relevant revenue of the sales of Skano is continuously furniture produced in Pärnu furniture factory and it allows to operate the furniture factory more profitable as without Skano retail sales.
The net sales of the Püssi factory in first quarter amounted to 733 thousand euros and loss to 237 thousand euros. The sales of Püssi factory was operated at half capacity due to the low sales volume.
As a positive trend it is possible to report the monthly sales of building materials division during the first quarter of 2012: 674 thousand euros in January, 761 thousand euros in February and 1,049 thousand euros in March. That trend influenced positively the result of the group and it reached the profit side in March. The monthly growth of sales was caused by increasing demand, seasonality and better sales of Püssi factory.
Income statement
Consolidated net sales of first quarter 2012 was 4.6 mil. euros (4.0 mil. euros in same period of 2011) representing a 13% increase on the first quarter compared to Q1 2011. The Group’s gross margin in the first quarter of 2012 was 13.7% compared to 21.0% in the first quarter of 2011. Consolidated operating loss amounted to 0.1 mil. euros (0.1 mil. euros profit in same period 2011). The consolidated operating margin of net sales was -2.2% (3.2% in Q1 2011).
Consolidated EBITDA amounted to 147 thousand euros, compared to 275 thousand euros in Q1 2011. Consolidated net loss amounted to 173 thousand euros, compared to net profit of 102 thousand euros in Q1 2011, and the net margin was -3.8% (2.5% in Q1 2011).
Position of financial statement
As of 31.3.2012 the total assets of Viisnurk amounted to 16.3 mil. euros (31.12.2011: 16.0 mil. euros). The liabilities of the company accounted for 53.9% (31.12.2011: 51.8%) thereof, i.e. 8.8 mil. euros (31.12.2011: 8.3 mil. euros).
Receivables and prepayments have increased by 0.5 mil. euros i.e. 27% increase with 3 months. The reason of increase of receivables is small sales in December 2011, which essentially lowered the amount of receivables at the end of December.
Inventories increased by 0.1 mil. euros to reach 3.3 mil. euros on 31.3.2012. (31.12.2011: 3.2 mil. euros). Property, plant and intangibles decreased by 0.2 mil. euros mainly as a result of depreciation.
Short-term loans decreased by 0.1 mil. euros and amounted to 1.5 mil. euros in 31.3.2012 (31.12.2011: 1.4 mil. euros). Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 2.6 mil. euros (31.12.2011: 2.1 mil. euros). Current and non-current liabilities increased by 0.5 mil. euros to 8.8 mil. euros (31.12.2011: 8.3 mil. euros).
Divisional review
Net sales by business segments
| th. EUR | % of net sales | |||
| Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | |
| Building Materials Division | 2,485 | 1,980 | 54.5% | 49.2% |
| Furniture Factory | 1,757 | 1,854 | 38.5% | 46.1% |
| Retail sales | 553 | 426 | 12.1% | 10.6% |
| Elimination | (236) | (236) | (5.2)% | (5.9)% |
| TOTAL | 4,559 | 4,024 | 100.0% | 100.0% |
Net sales by geographical segments
| th. EUR | % of net sales | |||
| Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | |
| Finland | 1,342 | 1,837 | 29.4% | 45.7% |
| Russia | 1,267 | 990 | 27.8% | 24.6% |
| Estonia | 564 | 437 | 12.4% | 10.9% |
| Great Britain | 455 | 8 | 10.0% | 0.2% |
| Ukraine | 204 | 162 | 4.5% | 4.0% |
| Latvia | 141 | 77 | 3.1% | 1.9% |
| Lithuania | 133 | 92 | 2.9% | 2.3% |
| Nederland | 133 | 0 | 2.9% | 0.0% |
| Sweden | 126 | 116 | 2.8% | 2.9% |
| Denmark | 48 | 52 | 1.1% | 1.3% |
| Germany | 32 | 15 | 0.7% | 0.4% |
| China | 21 | 0 | 0.5% | 0.0% |
| India | 18 | 71 | 0.4% | 1.8% |
| Other countries | 75 | 167 | 1.6% | 4.2% |
| TOTAL | 4,559 | 4,024 | 100.0% | 100.0% |
Regarding the markets, turnover has increased in Russia, Great Britain and Nederland. The percentage of turnover has decreased in most in Finland and India.
Profit by business segments
| th. EUR | ||
| Q1 2012 | Q1 2012 | |
| Furniture Factory | 159 | 155 |
| Skano | (5) | (112) |
| Building Materials Division | (264) | 74 |
| Elimination | 11 | 12 |
| TOTAL | (99) | 129 |
| Net financial costs | (67) | (25) |
| Income tax | (7) | (2) |
| NET PROFIT | (173) | 102 |
Building Materials Division
The net sales of the Building Materials Division in the first quarter of 2012 amounted to 2.5 mil. euros and loss to 264 thousand euros. In the same period last year, the turnover of the division totalled to 2.0 mil. euros and the profit 74 thousand euros. As compared to the previous year the turnover of the division has increased by 505 thousand euros (26%). The growth of sales came from production of Püssi softboard factory.
Net sales by geographical segments
| th. EUR | % of net sales | |||
| Q1 2012 | Q1 2012 | Q1 2012 | Q1 2012 | |
| Finland | 680 | 1,045 | 27.4% | 52.8% |
| Great Britain | 455 | 8 | 18.3% | 0.4% |
| Russia | 427 | 256 | 17.2% | 12.9% |
| Estonia | 362 | 267 | 14.6% | 13.5% |
| Nederland | 133 | 0 | 5.4% | 0.0% |
| Sweden | 126 | 116 | 5.1% | 5.9% |
| Latvia | 68 | 42 | 2.7% | 2.1% |
| Denmark | 48 | 52 | 1.9% | 2.6% |
| Germany | 32 | 15 | 1.3% | 0.8% |
| Ukraine | 27 | 13 | 1.1% | 0.7% |
| Lithuania | 21 | 6 | 0.8% | 0.3% |
| China | 21 | 0 | 0.8% | 0.0% |
| India | 18 | 71 | 0.7% | 3.6% |
| Other countries | 67 | 89 | 2.7% | 4.5% |
| TOTAL | 2,485 | 1,980 | 100.0% | 100.0% |
The biggest growth has been in sales to Great Britain and Russia. The percentage of sales into Finland decreased remarkably. Despite of the growth of sales the profit of the segment has decreased. Despite of the remarkable growth of sales, profit of division decreased. Instead of one softboard production unit the company operates now with two.
| th EUR | Net sales | Profit | ||
| Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | |
| Pärnu softboard factory | 1,142 | 1,388 | (88) | 42 |
| Pärnu interior boards factory | 521 | 549 | 49 | 71 |
| Püssi softboard factory | 733 | 0 | (237) | 0 |
| Not allocated | 89 | 43 | 14 | (39) |
| TOTAL | 2,485 | 1,980 | (264) | 74 |
The net sales of the Pärnu softboard factory and interiors boards line decreased 16% in the first quarter of 2012 compared to the same quarter of 2011 and amounted to 1.7 mil. euros. As the result of decrease of sales and stoppages, loss of these units amounted to 39 thousand euros. The loss is connected with the decreasing sales volumes in Finland, where the activity of construction sector was remarkably smaller in the first months of the year. As for the weak demand, the factory did not work at full load. The production at lowered capacity caused additional costs. Due to weak demand, the factory did not work at full capacity during the first quarter.
The net sales of the Püssi factory in the first quarter amounted to 733 thousand euros and loss to 237 thousand euros. The sales of Püssi factory were much smaller than expected. Company succeeded to conclude sales contracts with several big costumers, but sales volumes are not sufficient to run the factory at full load. The company continues with several negotiations, but unfortunately the sales activity is inert and the conclusion of bigger contracts takes time.
Although Püssi factory has reached, in the fourth quarter of the previous year, a position to guarantee a sufficient volume, security of supply and quality for corporate clients, without taking disproportionate risks, the attainment of actual greater amounts of supplies have been taken longer than expected due to the decreased demand in Finland, general uncertainty in the economic environment in Europe, as well as a relatively lengthy procurement processes of bigger retail chains. Whereas the existing customer base of Viisnurk prefers keeping of low level reserves in the today’s environment and in the today’s environment we do not expect an increase in the number of orders from the same clients, then practically a total production volume of the Püssi factory shall be sold to new clients. We are also continuously and substantially contributing in dispersion of the customer base outside of Europe, especially to Asia.
Today the Püssi factory is operating at approximately of 50% of its capacity, but we hope to significantly increase this percentage by the end of the second quarter. It is also important to note that due to high fixed costs, the factory shall, for a profitable outcome, be operated at as high capacity as possible, which shall ensure a lower average cost price of the product. We are still confident that purchasing of the Püssi was a very good decision in the medium term and after introducing of significant technological and procedural changes we have succeeded to reduce the cost price more than we had expected before the purchase of the factory.
Furniture Division
Furniture Retail – Skano
AS Viisnurk retail business is operated by a private limited company OÜ Skano Furniture and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has totally 10 stores: two in Tallinn, Pärnu, Riga, Vilnius, two in Kiev, Donetsk, Kharkiv and Dnipropetrovs’k. There was closed one store in Dnipropetrovs’k.
Retail sales by countries
| th. EUR | % of net sales | Number of stores | ||||
| Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | 31.03.12 | 31.03.11 | |
| Estonia | 191 | 156 | 34.5% | 36.6% | 3 | 3 |
| Latvia | 73 | 35 | 13.2% | 8.2% | 1 | 1 |
| Lithuania | 112 | 86 | 20.3% | 20.2% | 1 | 2 |
| Ukraine | 177 | 149 | 32.0% | 35.0% | 5 | 7 |
| TOTAL | 553 | 426 | 100.0% | 100.0% | 10 | 13 |
The retail sale increased, but the Skano ended with small loss. The main reasons for the result was loss from exchange rate of hryvnia (24 thousand euros).
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 estimate small increase of sales on second quarter (5-8% compared to the last year).
The net sales of the Furniture Factory in the first quarter amounted to 1.8 mil. euros and profit to 159 thousand euros. In the same period last year, the turnover of the factory totalled to 1.9 mil. euros and the profit 155 thousand euros. As compared to the previous year the turnover of the factory has decreased by 97 thousand euros and the profit has increased by 7 thousand euros.
Furniture Factory sales by countries
| th EUR | % of net sales | |||
| Q1 2012 | Q1 2011 | Q1 2012 | Q1 2011 | |
| Finland | 662 | 792 | 37.7% | 42.7% |
| Russia | 840 | 734 | 47.8% | 39.6% |
| Kazakhstan | 0 | 78 | 0.0% | 4.2% |
| Estonia | 11 | 14 | 0.6% | 0.8% |
| Other countries | 8 | 0 | 0.5% | 0.0% |
| Subsidiaries | 236 | 236 | 13.4% | 12.7% |
| TOTAL | 1,757 | 1,854 | 100.0% | 100.0% |
Forecast and development
Building Materials Division.
On the main production line the production is performed in full capacity at Pärnu softboard factory. According to orders list, factory fill produce in full capacity again in second quarter. Isotex lines are used one or two shifts accordingly the demand of clients.
Due to the low demand Püssi softboard factory shall operate about 50% of capacity in the second quarter 2012. The growth of production we estimate to the end of second quarter 2012.
In connection with the decreasing sales volumes in Finland we have continued the search of customers from other areas, especially the Asian countries.
Skano.
We do not expect growth of retail sale in the first quarter of 2012. 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 2012 we expect 10% sales growth compared to first quarter 2012 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.
Financial highlights
| th EUR | Q1 2012 | Q1 2011 | Q1 2010 |
| Income statement | |||
| Revenue | 4,559 | 4,024 | 3,132 |
| EBITDA | 147 | 275 | 343 |
| EBITDA margin | 3.2% | 6.8% | 10.9% |
| Operating profit | (99) | 129 | 219 |
| Operating margin | (2.2%) | 3.2% | 7.0% |
| Net profit | (173) | 102 | 191 |
| Net margin | (3.8%) | 2.5% | 6.1% |
| Balance sheet (31.3) | |||
| Total assets | 16,337 | 9,568 | 8,634 |
| Return on assets | (1.1%) | 1.1% | 2.2% |
| Equity | 7,529 | 5,448 | 4,755 |
| Return on equity | (2.3%) | 1.9% | 4.0% |
| Debt-to-equity ratio | 53.9% | 43.1% | 44.9% |
| Share (31.3) | |||
| Closing price (EUR) | 1.57 | 1.50 | 1.14 |
| Earnings per share (EUR) | (0.04) | 0.02 | 0.04 |
| Price-earnings ratio | - | 75.00 | 28.50 |
| Book value of a share (EUR) | 1.67 | 1.21 | 1.06 |
| Market to book ratio | 0.94 | 1.24 | 1.08 |
| Market capitalization | 7,064 | 6,749 | 5,129 |
EBITDA = Earnings before interest, taxes, deprecation and amortisation
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 | 31.3.2012 | 31.12.2011 | 31.03.2011 |
| Cash and bank | 204 | 206 | 478 |
| Receivables and prepayments | 2,126 | 1,674 | 1,990 |
| Inventories | 3,336 | 3,177 | 2,723 |
| Total current assets | 5,666 | 5,057 | 5,191 |
| Investment property | 185 | 185 | 185 |
| Tangible fixed assets | 10,471 | 10,692 | 4,173 |
| Intangible fixed assets | 15 | 16 | 19 |
| Total fixed assets | 10,671 | 10,893 | 4,377 |
| TOTAL ASSETS | 16,337 | 15,950 | 9,568 |
| Debt obligations | 1,519 | 1,380 | 556 |
| Payables and prepayments | 2,552 | 2,137 | 1,978 |
| Short-term provisions | 8 | 11 | 6 |
| Total current liabilities | 4,079 | 3,528 | 2,540 |
| Non-current debt obligations | 4,490 | 4,490 | 1,382 |
| Non-current provisions | 239 | 239 | 198 |
| Total non-current liabilities | 4,729 | 4,729 | 1,580 |
| Total liabilities | 8,808 | 8,257 | 4,120 |
| Share capital at nominal value | 2,699 | 2,699 | 2,875 |
| Issue premium | 364 | 364 | 364 |
| Statutory capital reserve | 288 | 288 | 288 |
| Currency translation reserve | (2) | (11) | 31 |
| Retained profits | 4,353 | 1,788 | 1,788 |
| Net profit for the year | (173) | 2,565 | 102 |
| Total equity | 7,529 | 7,693 | 5,448 |
| TOTAL LIABILITIES AND EQUITY | 16,337 | 15,950 | 9,568 |
Consolidated statement of comprehensive income
| Th EUR | 1st quarter 2012 | 1st quarter 2011 |
| RETURN ON SALES | 4,559 | 4,024 |
| Cost of production sold | (3,934) | (3,179) |
| Gross profit | 625 | 845 |
| Marketing expenses | (600) | (581) |
| General administrative expenses | (110) | (99) |
| Other income | 36 | 3 |
| Other expenses | (50) | (39) |
| Operating profit (loss) | (99) | 129 |
| Financial income and financial expenses | (67) | (25) |
| Profit (loss) before taxes | (166) | 104 |
| Prepaid income tax | (7) | (2) |
| NET PROFIT (LOSS) FOR THE PERIOD | (173) | 102 |
| Basic earnings per share | (0.04) | 0.02 |
| Diluted earnings per share | (0.04) | 0.02 |
| Currency translation differences | 9 | 15 |
| TOTAL COMPREHENSIVE INCOME (LOSS) | (164) | 117 |
The planned time of publishing of interim report of first quarter 2012 is week 33 (13. - 17. August 2012).