Skano Group Quarterly report 27.02.2013
Financial result, 12 months 2012
Pärnu, 2013-02-27 15:30 CET (GLOBE NEWSWIRE) --
MANAGEMENT REPORT
FOURTH QUARTER IN SHORT
Consolidated net sales of the fourth quarter of 2012 was 4.9 mil. euros, representing a 2% increase on the fourth quarter compared to the same period in 2011. At the same time, consolidated EBITDA amounted to 178 thousand euros (83 thousand euros in Q4 2011).
The sales in Skano Pärnu fibreboard factory (incl. Isotex) increased as compared to the respective period last year by 10%, the operating loss decreased 10% and operating loss amounted to 80 thousand euros.
The turnover of Skano Püssi fibreboard factory was 822 thousand euros and operating loss 139 thousand euros. The priority of the management of the enterprise is continuously to ensure the sales of the production of Skano Püssi fibreboard factory in order to guarantee the maximum production capacity and efforts are taken in this direction on an on-going basis. In addition to efforts regarding the sales volumes we are constantly working on raising the production efficiency of the factory. We have raised the maximum speed of the production line and thereby lowered the cost price of products.
The turnover of Skano furniture factory in Pärnu decreased by 5% and the operating profit by 26% as compared to the same period last year, and the operating profit was 120 thousand euros.
The turnover of Skano furniture retail chain increased by 12% as compared to the same period last year being 707 thousand euros and the operating profit was 34 thousand euros containing loss from currency exchange rate of hryvnia 32 thousand euros. The sales of Skano Group AS own furniture still forms a considerable part of the retail sale and it enables the furniture factory to operate much more profitably than it would be possible without its own retailchain.
INCOME STATEMENT
Consolidated net sales of the fourth quarter in 2012 was 4.9 mil. euros (4.8 mil. euros in same period of 2011) representing a 2% increase on the fourth quarter compared to Q4 2011. The Group’s gross margin in the fourth quarter of 2012 was 15.9% compared to 14.9% in the fourth quarter of 2011. Consolidated operating loss amounted to 46 thousand euros (loss 134 thousand euros from main activities in same period 2011). The consolidated operating margin of net sales was -1% (-3% from main activities in Q4 2011).
Consolidated net loss amounted to 110 thousand euros (compared to net loss 210 thousand euros in Q4 2011), and the net margin was -2% (-4% in Q4 2011).
POSITION OF FINANCIAL STATEMENT
As of 31.12.2012 the total assets of Skano Group AS amounted to 15.5 mil. euros (31.12.2011: 16.0 mil. euros). The liabilities of the company accounted for 51.6% (31.12.2011: 51.8%) thereof, i.e. 8 mil. euros (31.12.2011: 8.3 mil. euros).
Receivables and prepayments have increased by 0.1 mil. euros i.e. 7% increase with 12 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 31.12.2012. (31.12.2011: 3.2 mil. euros). Property, plant and intangibles decreased by 0.7 mil. euros mainly as a result of depreciation.
Short-term loans increased by 0.4 mil. euros and amounted to 1.8 mil. euros in 31.12.2012 (31.12.2011: 1.4 mil. euros) as a result of re-classification part of long-term loan into short-term loan. Supplier payables, tax liabilities,
other payables, including payables to employees, and provisions amounted to 1.9 mil. euros (31.12.2011: 2.1 mil. euros). Current and non-current liabilities decreased by 0.3 mil. euros to 8.0 mil. euros (31.12.2011: 8.3 mil. euros).
DIVISIONAL REVIEW:
NET SALES BY BUSINESS SEGMENTS
| tuh EUR | % of net sales | |||
| Q4 2012 | Q4 2011 | Q4 2012 | Q4 2011 | |
| Skano Fibreboard | 2 606 | 2 414 | 52,8% | 50,1% |
| Skano Furniture factory | 1 930 | 2 026 | 39,1% | 42,1% |
| Skano Furniture retai | 707 | 631 | 14,3% | 13,1% |
| Elimination | (312) | (255) | (6,2%) | (5,3%) |
| TOTAL | 4 931 | 4 816 | 100,0% | 100,0% |
NET SALES BY GEOGRAPHICAL SEGMENTS
| tuh EUR | % of net sales | |||
| Q4 2012 | Q4 2011 | Q4 2012 | Q4 2011 | |
| Russia | 1 444 | 1 297 | 29,3% | 26,9% |
| Finland | 1 174 | 1 454 | 23,8% | 30,2% |
| Estonia | 674 | 506 | 13,7% | 10,5% |
| Great Britain | 456 | 526 | 9,2% | 10,9% |
| Nederland | 268 | 179 | 5,4% | 3,7% |
| Ukraine | 257 | 282 | 5,2% | 5,9% |
| Latvia | 134 | 95 | 2,7% | 2,0% |
| Sweden | 116 | 135 | 2,4% | 2,8% |
| Lithuania | 108 | 103 | 2,2% | 2,1% |
| India | 74 | 17 | 1,5% | 0,4% |
| Denmark | 39 | 39 | 0,8% | 0,8% |
| Kazakhstan | 38 | 74 | 0,8% | 1,5% |
| Other countries | 149 | 109 | 3,0% | 2,3% |
| TOTAL | 4 931 | 4 816 | 100,0% | 100,0% |
Regarding the markets, turnover has increased in Russia, Estonia, Latvia and Nederland. The percentage of turnover has decreased in most in Finland.
PROFIT BY BUSINESS SEGMENTS
| tuh EUR | Q4 2012 | Q4 2011 |
| Skano Furniture factory | 120 | 162 |
| Skano Furniture retail | 34 | 59 |
| Skano Fibreboard | (220) | (347) |
| Elimination | 20 | (8) |
| TOTAL | (46) | (134) |
| Neto financial costs | (61) | (73) |
| Income tax | (3) | (3) |
| NET PROFIT | (110) | (210) |
SKANO FIBREBOARD
The net sales of Skano Fibreboard in the fourth quarter of 2012 amounted to 2.6 mil. euros and operating loss to 220 thousand euros. In the same period last year, the turnover of the division totaled to 2.4 mil. euros and the operating loss from main activities 347 thousand euros. Sales in Finland, which is one the most important markets to us decreased by 31%. Such a decline in the fourth quarter was due to high comparison basis in the fourth quarter of 2011 when an aggressive marketing campaign was launched in Finland. In spite of the decline
in Finland, overall sales of Skano Fibreboard increased by 192 thousand euros i.e. 8% mainly due to increased client base.
NET SALES BY GEOGRAPHICAL SEGMENTS
| tuh EUR | % of net sales | |||
| Q4 2012 | Q4 2011 | Q4 2012 | Q4 2011 | |
| Russia | 594 | 403 | 22,8% | 16,7% |
| Finland | 463 | 669 | 17,8% | 27,7% |
| Great Britain | 456 | 526 | 17,5% | 21,8% |
| Estonia | 366 | 290 | 14,0% | 12,0% |
| Nederland | 268 | 179 | 10,3% | 7,4% |
| Sweden | 116 | 135 | 4,5% | 5,6% |
| India | 74 | 17 | 2,8% | 0,7% |
| Latvia | 46 | 15 | 1,8% | 0,6% |
| Denmark | 39 | 39 | 1,5% | 1,6% |
| Ukraine | 39 | 25 | 1,5% | 1,0% |
| Germany | 17 | 7 | 0,7% | 0,3% |
| Other countries | 128 | 109 | 4,8% | 4,6% |
| TOTAL | 2 606 | 2 414 | 100,0% | 100,0% |
The biggest growth has been in sales to Russia, Estonia and Nederland. The
percentage of sales into Finland decreased significantly.
| tuh EUR | Net sales | Profit | ||
| Q4 2012 | Q4 2011 | Q4 2012 | Q4 2011 | |
| Pärnu Fibreborad factory | 1 285 | 1 224 | (74) | (47) |
| Püssi Fibreboard factory | 822 | 814 | (139) | (260) |
| Pärnu interior boards factory (Isotex) | 477 | 375 | (6) | (41) |
| Not allocated | 22 | 1 | (1) | 1 |
| TOTAL | 2 606 | 2 414 | (220) | (347) |
The net sales of the Pärnu Fibreboard factory and interiors boards line increased 10% in the fourth quarter of 2012 compared to the same quarter of 2011 and amounted to 1.8 mil. euros.
The turnover of Püssi fibreboard factory amounted to 822 thousand euros and operating loss amounted to 139 thousand euros. The main question is still weak sales volumes of Püssi Fibreboard factory. In the fourth quarter Püssi factory was operated at 70% of its capacity.
It is also important to note that due to high fixed costs, the factory must be, for a profitable outcome, operated at as high capacity as possible, which shall ensure a lower average cost of the product. Presently, the cost price
considerably higher than the optimum is greatly caused by technological standstills and reconstruction of equipment in order to ensure better efficiency.
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 in the factory we succeed in reducing the cost price more than we had expected before the purchase of the factory.
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 9 stores in Tallinn (2), Pärnu, Riga, Vilnius, Kiev, Donetsk, Kharkiv
and Dnipropetrovs’k at the end of the fourth quarter.
RETAIL SALES BY COUNTRIES
| tuh EUR | % of net sales | Number of stores | ||||
| Q4 2012 | Q4 2011 | Q4 2012 | Q4 2011 | 31.12.12 | 31.12.11 | |
| Estonia | 292 | 197 | 41,3% | 31,2% | 3 | 3 |
| Latvia | 88 | 80 | 12,4% | 12,7% | 1 | 1 |
| Lithuania | 109 | 97 | 15,4% | 15,4% | 1 | 1 |
| Ukraine | 218 | 257 | 30,9% | 40,7% | 4 | 6 |
| TOTAL | 707 | 631 | 100,0% | 100,0% | 9 | 11 |
The furniture retail sale has reached to the profitable sales level, and it results with profit 34 thousand euros in the fourth quarter 2012. Loss from currency exchange rate of hryvnia was 32 thousand euros.
FURNITURE PRODUCTION
The net sales of the Furniture Factory in the fourth quarter amounted to 1.9 mil. euros and profit to 120 thousand euros. In the same period last year, the turnover of the factory totaled to 2.0 mil. euros and the profit 162 thousand euros. As compared to the previous year the turnover of the factory has decreased 96 thousand euros and the operating profit has decreased 42 thousand euros.
FURNITURE FACTORY SALES BY COUNTRIES
| tuh EUR | % of net sales |
|||
| Q4 2012 | Q4 2011 | Q4 2012 | Q4 2011 | |
| Russia | 850 | 894 | 44,0% | 44,1% |
| Finland | 711 | 785 | 36,8% | 38,7% |
| Kazakhstan | 38 | 74 | 2,0% | 3,7% |
| Estonia | 16 | 19 | 0,8% | 0,9% |
| Other countries | 25 | 0 | 1,3% | 0,0% |
| Subsidiaries | 290 | 254 | 15,1% | 12,6% |
| TOTAL | 1 930 | 2 026 | 100,0% | 100,0% |
FORECAST AND DEVELOPMENT
SKANO FIBREBOARD. The main production line of Pärnu Fibreboard factory is operating at reduced capacity in the first quarter of 2013. Production lines of Isotex interior finishing boards use one or two shifts as necessary. Due to low demand Püssi factory is operating at approximately of 60-70% of its capacity in the first quarter of the year 2013.
We expect significant sales growth for H2 2013, mostly from CIS and Finland. Russian and CIS sales volumes have been growing steadily over the past years and we expect this to continue in 2013. In 2012 our sales in Finland saw a sharp decline, largely due to us choosing the wrong distribution partner. We have changed our distribution partner at the end of 2012 and plan to significantly add to our marketing efforts in Finland in 2013. We have also
signed a strategic cooperation agreement in Finland, which if implemented successfully, will allow us to increase the output of Püssi factory significantly in second half of 2013. We also expect this to help us our Pärnu
factory reach higher capacity utilization and as a result of this, expect the whole production process to become more efficient, lead to lower average production price and higher sales volumes in H2 2013
SKANO FURNITURE RETAIL SALES. We expect retail sale in the first quarter of 2013 to remain the same level compared to the same period of last year.
SKANO FURNITURE FACTORY.
In the first quarter of 2013 we expect small decrease in sales of the furniture factory compared to the same period in 2012.
FINANCIAL HIGHLIGHTS
| tuh EUR | 12m 2012 | 12m 2011 |
12m 2010 |
| Income statement | |||
| Revenue | 19 080 | 17 330 | 13 929 |
| EBITDA | 1 040 | 3 436 | 1 430 |
| EBITDA margin | 5,5% | 19,8% | 10,3% |
| Operating profit | 74 | 2 759 | 887 |
| Operating margin | 0,4% | 15,9% | 6,4% |
| Net profit | (201) | 2 565 | 771 |
| Net margin | (1,1%) | 14,8% | 5,5% |
| Balance sheet (31.12) |
|||
| Total assets | 15 471 | 15 950 | 9 115 |
| Return on assets | (1,3%) | 16,1% | 8,5% |
| Equity | 7 482 | 7 693 | 5 331 |
| Return on equity | (2,7%) | 33,3% | 14,5% |
| Debt-to-equity ratio | 51,6% | 51,8% | 41,5% |
| Share (31.12) | |||
| Closing price | 1,24 | 1,62 | 1,44 |
| Earnings per share | (0,04) | 0,57 | 0,17 |
| Price-earnings ratio | (31) | 2,84 | 8,47 |
| Book value of a share | 1,66 | 1,71 | 1,18 |
| Market to book ratio | 0,75 | 0,95 | 1,22 |
| Market capitalization | 5 579 | 7 288 | 6 479 |
EBITDA = Earnings before interest, taxes, deprecation 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 | 31.12.2012 | 31.12.2011 |
| Cash and bank | 158 | 206 |
| Receivables and prepayments (Note 1) | 1 792 | 1 674 |
| Inventories (Note 2) | 3 303 | 3 177 |
| Total current assets | 5 253 | 5057 |
| Investment property (Note 3) | 185 | 185 |
| Tangible fixed assets (Note 4) | 10 010 | 10 692 |
| Intangible fixed assets (Note 5) | 23 | 16 |
| Total fixed assets | 10 218 | 10893 |
| TOTAL ASSETS |
15 471 | 15950 |
| Debt obligations (Note 6) | 1 845 | 1 380 |
| Payables and prepayments (Note 7) | 1 923 | 2 137 |
| Short-term provisions (Note 8) | 12 | 11 |
| Total current liabilities | 3 780 | 3 528 |
| Non-current debt obligations (Note 6) | 3 973 | 4 490 |
| Non-current provisions (Note 8) | 236 | 239 |
| Total non-current liabilities | 4 209 | 4729 |
| Total liabilities | 7 989 | 8257 |
| Share capital at nominal value (Note 9) | 2 699 | 2 699 |
| Issue premium | 364 | 364 |
| Statutory capital reserve | 288 | 288 |
| Currency translation | (21) | (11) |
| Retained profits | 4 353 | 1 788 |
| Net profit (loss) for the year (Note 10) | (201) | 2 565 |
| Total equity | 7 482 | 7693 |
| PASSIVA (kohustused ja omakapital) KOKKU | 15 471 | 15 950 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| th EUR | Q4 2012 | Q4 2011 | 2012 | 2011 |
| RETURN ON SALES (Note 11) | 4 931 | 4 816 | 19 080 | 17 330 |
| Cost of production sold | (4 148) | (4 097) | (16 050) | (14 119) |
| Gross profit | 783 | 719 | 3 030 | 3 211 |
| Marketing expenses | (638) | (683) | (2 389) | (2 383) |
| General administrative expenses | (161) | (184) | (546) | (532) |
| Other income | 32 | 60 | 163 | 2621* |
| Other expenses | (62) | (46) | (184) | (158) |
| Operating profit (loss) (Note 11) | (46) | (134) | 74 | 2 759 |
| Financial income and financial expenses | (61) | (73) | (258) | (187) |
| Profit (loss) before taxes | (107) | (207) | (184) | 2 572 |
| Prepaid income tax | (3) | (3) | (17) | (7) |
| NET PROFIT (LOSS) FOR THE PERIOD | (110) | (210) | (201) | 2 565 |
|
Currency translation differences |
(10) | (18) | (10) | (27) |
| Basic earnings per share (Note 10) | (0,02) | 0,05 | (0,04) | 0,57 |
|
Diluted earnings per share (Note 10) |
(0,02) | 0,05 | (0,04) | 0,57 |
| TOTAL COMPREHENSIVE INCOME | (120) | (228) | (211) | 2 538 |
* The other income 2011 includes the gain from a bargain purchase 2,455 th.
euros.
The planned time of publishing of iterim report of the first quarter 2013 is week 20 (13.-17. May 2013).
MartinKalle
CFO
+372 447 8331
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.skano.com