Skano Group Quarterly report 17.08.2012
Financial result, 6 months 2012
Pärnu, Estonia, 2012-08-17 08:00 CEST (GLOBE NEWSWIRE) --
SECOND QUARTER IN SHORT
Consolidated net sales of second quarter 2012 was 4.9 mil. euros, representing
a 13% increase on the second quarter compared to the same period 2011. At the
same time, consolidated EBITDA amounted to 364 thousand euros (459 thousand
euros in Q2 2011).
The increase in sales resulted mainly from the sales of the products of Püssi
natural fibreboard factory and furniture but the results were still affected by
instability in foreign markets.
The sales in Pärnu fibreboard factory and of Isotex internal finishing boards
decreased as compared to the respective period last year by 22%. The decrease
came mainly from the Finnish market where the issue of building permits and
thus the volume of construction decreased considerably in the beginning of the
current year. In the second quarter last year sales to Finnish market made up
40% of the total sales of the group but there was a sudden sharp decrease in
demand in the Finnish market during the first months of the current year and
sales to Finland have fallen down to 32% of the turnover of the group.
As a result of the decrease of sales to Finland the operating profit of similar
units (Pärnu production units) decreased by 7% and was 311 thousand euros. At
the same time sales to Russia have increased more than 45%, and sales to Great
Britain in the amount of ca 300 thousand euros have been added; in principle,
sales of building materials to other markets have not decreased either.
The turnover of Püssi fibreboard factory was 709 thousand euros and the
operating loss was 203 thousand euros. Due to low sales volume Püssi factory
operated at half of its capacity in the second quarter. The sales in Püssi
factory have not reached the expected level and it has been clearly the only
unprofitable business unit of the group up till now. In the second half of the
current year the situation will probably improve as we have started sales of
the products of the factory to Asia. Currently considerable amount of products
is on the way to clients but as the transportation takes six weeks on average
those volumes are not immediately reflected in the sales of the group. We are
also implementing a project where we plan to increase the maximum production
speed of Püssi factory production line by ca 30% in the third quarter of the
current year and lower the cost price of the product. Decrease of the cost
price helps Püssi factory to overcome the breakeven point in case of a
considerably low production volume and considerably increase the profit when
the factory is operating near its maximum capacity. The priority of the
management of the company is to secure the sales of the products of Püssi
factory when operating in maximum capacity and the management works constantly
on it.
The turnover of the furniture factory increased by 13% and the operating profit
by 26% as compared to the same period last year, and the operating profit was
238 thousand euros. The furniture factory is efficient and profitable; the
operating profit margin of the second quarter was 11.5%.
The turnover of furniture retail chain increased by 14% as compared to the same
period last year being 569 thousand euros and the operating profit was 63
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 retail
chain.
INCOME STATEMENT
Consolidated net sales of second quarter 2012 was 4.9 mil. euros (4.3 mil.
euros in same period of 2011) representing a 13% increase on the second quarter
compared to Q2 2011. The Group’s gross margin in the second quarter of 2012 was
17.9% compared to 24.2% in the second quarter of 2011. Consolidated operating
profit amounted to 0.1 mil. euros (0.1 mil. euros in same period 2011). The
consolidated operating margin of net sales was 2.2% (6.9% in Q2 2011).
Consolidated EBITDA amounted to 364 thousand euros, compared to 459 thousand
euros in Q2 2011. Consolidated net profit amounted to 39 thousand euros,
compared to 273 thousand euros in Q2 2011, and the net margin was 0.8% (6.3% in
Q2 2011).
POSITION OF FINANCIAL STATEMENT
As of 30.6.2012 the total assets of Skano Group AS amounted to 16.1 mil. euros
(31.12.2011: 16.0 mil. euros). The liabilities of the company accounted for
53.1% (31.12.2011: 51.8%) thereof, i.e. 8.5 mil. euros (31.12.2011: 8.3 mil.
euros).
Receivables and prepayments have increased by 0.4 mil. euros i.e. 26% increase
with 6 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 30.6.2012.
(31.12.2011: 3.2 mil. euros). Property, plant and intangibles decreased by 0.4
mil. euros mainly as a result of depreciation.
Short-term loans decreased by 0.1 mil. euros and amounted to 1.3 mil. euros in
30.6.2012 (31.12.2011: 1.4 mil. euros). Supplier payables, tax liabilities,
other payables, including payables to employees, and provisions amounted to 2.5
mil. euros (31.12.2011: 2.1 mil. euros). Current and non-current liabilities
increased by 0.2 mil. euros to 8.5 mil. euros (31.12.2011: 8.3 mil. euros).
DIVISIONAL REVIEW
NET SALES BY BUSINESS SEGMENTS
| th EUR | % of net sales | |||
| Q2 2012 | Q2 2011 | Q2 2012 | Q2 2011 | |
| Building Materials Division | 2,621 | 2,206 | 53.7% | 51.2% |
| Furniture Factory | 2,070 | 1,830 | 42.4% | 42.4% |
| Retail sales of furniture | 569 | 497 | 11.7% | 11.5% |
| Elimination | (379) | (221) | (7.8%) | (5.1)% |
| TOTAL | 4,881 | 4,312 | 100.0% | 100.0% |
NET SALES BY GEOGRAPHICAL SEGMENTS
| th EUR | % of net sales | |||
| Q2 2012 | Q2 2011 | Q2 2012 | Q2 2011 | |
| Finland | 1,569 | 1,723 | 32.1% | 40.0% |
| Russia | 1,480 | 1,141 | 30.3% | 26.5% |
| Estonia | 676 | 708 | 13.8% | 16.4% |
| Great Britain | 312 | 13 | 6.4% | 0.3% |
| Ukraine | 188 | 199 | 3.9% | 4.6% |
| Latvia | 154 | 91 | 3.2% | 2.1% |
| Nederland | 124 | 0 | 2.5% | 0.0% |
| Sweden | 128 | 128 | 2.6% | 3.0% |
| Lithuania | 86 | 111 | 1.8% | 2.6% |
| Kazakhstan | 40 | 42 | 0.8% | 1.0% |
| Denmark | 31 | 39 | 0.6% | 0.9% |
| Germany | 23 | 31 | 0.5% | 0.7% |
| India | 15 | 8 | 0.3% | 0.2% |
| China | 8 | 22 | 0.2% | 0.5% |
| Other countries | 47 | 56 | 1.0% | 1.3% |
| TOTAL | 4,881 | 4,312 | 100.0% | 100.0% |
Regarding the markets, turnover has increased in Russia UK, Latvia and Nederland. The percentage of turnover has decreased in most in Finland.
PROFIT BY BUSINESS SEGMENTS
| th EUR | Q2 2012 | Q2 2011 |
| Furniture Factory | 238 | 189 |
| Retail sales of furniture | 63 | (39) |
| Building Materials Division | (167) | 142 |
| Elimination | (26) | 6 |
| TOTAL | 108 | 298 |
| Net financial costs | (67) | (25) |
| Income tax | (2) | (2) |
| NET PROFIT | 39 | 271 |
BUILDING MATERIALS DIVISION
The net sales of the Building Materials Division in the second quarter of 2012 amounted to 2.6 mil. euros and loss to 167 thousand euros. In the same period last year, the turnover of the division totalled to 2.2 mil. euros and the profit 142 thousand euros. As compared to the previous year the turnover of the division has increased by 415 thousand euros (19%). The growth of sales came from production of Püssi softboard factory.
NET SALES BY GEOGRAPHICAL SEGMENTS
| th EUR | % of net sales | |||
| Q2 2012 | Q2 2011 | Q2 2012 | Q2 2011 | |
| Finland | 734 | 983 | 29.0% | 44.6% |
| Russia | 598 | 343 | 23.6% | 15.5% |
| Estonia | 405 | 540 | 16.0% | 24.5% |
| Great Britain | 312 | 13 | 12.3% | 0.6% |
| Sweden | 128 | 128 | 5.1% | 5.8% |
| Nederland | 124 | 0 | 4.9% | 0.0% |
| Latvia | 72 | 36 | 2.8% | 1.6% |
| Denmark | 31 | 39 | 1.2% | 1.8% |
| Ukraine | 26 | 8 | 1.0% | 0.4% |
| Germany | 23 | 31 | 0.9% | 1.4% |
| Lithuania | 22 | 11 | 0.9% | 0.5% |
| India | 15 | 8 | 0.6% | 0.4% |
| China | 8 | 22 | 0.3% | 1.0% |
| Other countries | 33 | 44 | 1.3% | 2.0% |
| TOTAL | 2,531 | 2,206 | 100.0% | 100.0% |
The biggest growth has been in sales to Great Britain, Russia and Nederland. The percentage of sales into Finland and Estonia decreased remarkably. 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 | ||
| Q2 2012 | Q2 2011 | Q2 2012 | Q2 2011 | |
| Pärnu softboard factory | 1,190 | 1,638 | (24) | 118 |
| Pärnu interior boards factory | 486 | 505 | 24 | 49 |
| Püssi softboard factory | 709 | - | (203) | (38) |
| Not allocated | 146 | 63 | 36 | 13 |
| TOTAL | 2,531 | 2,206 | (167) | 142 |
The net sales of the Pärnu softboard factory and interiors boards line
decreased 27% in the second quarter of 2012 compared to the same quarter of
2011 and amounted to 1.2 mil. euros. The loss is connected with the decreasing
sales volumes, mainly in Finland, where the issue of building permits and thus
the volume of construction decreased considerably in the beginning of the
current year. The priority of the company is to expand sales outside today’s
domestic markets to compensate lower demand in neighbouring countries and
diversify market risks.
The turnover of Püssi fibreboard factory amounted to 709 thousand euros and
operating loss to 203thousand euros. The sales of products of Püssi factory
have been smaller than expected. Company succeeded in concluding delivery
contracts with several big clients, but sales volumes are not sufficient to run
the Püssi factory at full load. The company continues negotiations with several
clients, but unfortunately the sales activity is inert and the conclusion of
larger delivery contracts and reaching higher sales volumes takes time.
Although in the fourth quarter of the previous year Püssi factory reached a
position to guarantee a sufficient volume, security of supply and quality for
corporate clients without taking big risks, the attainment of actual greater
amounts of supplies has 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 Skano Group AS prefers keeping of low level
reserves in the today’s environment and in the today’s environment we do not
expect a great increase in the number of orders from the same clients, then
practically a total production volume of Püssi factory shall be sold to new
clients.
Today Püssi factory is operating at approximately of 70% of its capacity and it
is difficult to make exact prognosis about the increase of production volume
due to instability in the world. On the other hand it is good that in Püssi
factory we make products for Asian markets and currently considerable amount of
products is already on the way to clients, but as container transportation
takes six weeks on average those volumes are not immediately reflected in the
present report as sales of the group. In addition we have started sales to
Brazil and Australia.
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 in the
factory we succeed in reducing the cost price more than we had expected before
the purchase of the factory.
FURNITURE DIVISION
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 second quarter.
RETAIL SALES BY COUNTRIES
| th EUR | % of net sales | Number of stores | ||||
| Q2 2012 | Q2 2011 | Q2 2012 | Q2 2011 | 30.06.12 | 30.06.11 | |
| Estonia | 261 | 152 | 45.9% | 30.6% | 3 | 3 |
| Latvia | 82 | 55 | 14.4% | 11.1% | 1 | 1 |
| Lithuania | 64 | 100 | 11.2% | 20.1% | 1 | 2 |
| Ukraine | 162 | 190 | 28.5% | 38.2% | 4 | 7 |
| TOTAL | 569 | 497 | 100.0% | 100.0% | 9 | 13 |
The furniture retail sales has reached to the profitable sales level, and it results with profit 63 thousand euros in second quarter 2012. Profit from currency exchange rate of hryvnia was 50 thousand euros.
FURNITURE PRODUCTION
The net sales of the Furniture Factory in the second quarter amounted to 2.1 mil. euros and profit to 238 thousand euros. In the same period last year, the turnover of the factory totalled to 1.8 mil. euros and the profit 189 thousand euros. As compared to the previous year the turnover of the factory has increased by 240 thousand euros and the profit has increased 49 thousand euros.
FURNITURE FACTORY SALES BY COUNTRIES
| th EUR | % of net sales | |||
| Q2 2012 | Q2 2011 | Q2 2012 | Q2 2011 | |
| Russia | 882 | 798 | 42.6% | 43.6% |
| Finland | 835 | 740 | 40.3% | 40.4% |
| Kazakhstan | 40 | 42 | 1.9% | 2.3% |
| Estonia | 10 | 17 | 0.5% | 0.9% |
| Other countries | 14 | 12 | 0.7% | 0.7% |
| Subsidiaries | 289 | 221 | 14.0% | 12.1% |
| TOTAL | 2,070 | 1,830 | 100.0% | 100.0% |
FORECAST AND DEVELOPMENT
BUILDING MATERIALS DIVISION. The main production line of Pärnu fibreboard
factory is operating at reduced capacity in the third quarter. 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 70% of its capacity
in the third quarter of the year 2012. In addition we plan to increase the
maximum production speed of Püssi factory production line by ca 30% in the
third quarter of the current year and lower the cost price of the product.
Decrease of the cost price helps Püssi factory to overcome the breakeven point
even in case of a considerably low production volume.
We expect the sales of building material sector in August to be more than 1
million euros which is ca 40% of the sales of the second quarter and it shows
that sales volumes are slightly increasing again.
FURNITURE RETAIL SALES. We expect small growth of retail sale in the third
quarter of 2012. If we shall get good contract conditions, we shall open one
store in Kiev.
FURNITURE FACTORY.In the third quarter of 2012 we do not plan any increase in
turnover of the furniture factory as compared to the second quarter since the
period includes the collective vacation of the factory. Sales volumes are also
negatively affected by insecurity among customers in Finland and thus the
production volume stays lower than possible production capacity would allow.
FINANCIAL HIGHLIGHTS
| th EUR | 6 m 2012 | 6 m 2011 | 6 m 2010 |
| Income statement | |||
| Revenue | 9,440 | 8,336 | 6,360 |
| EBITDA | 511 | 719 | 680 |
| EBITDA margin | 5.4% | 8.6% | 10.7% |
| Operating profit | 10 | 427 | 443 |
| Operating margin | 0.1% | 5.1% | 7.0% |
| Net profit | (134) | 373 | 390 |
| Net margin | (1.4%) | 4.5% | 6.1% |
| Balance sheet (30.6) | |||
| Total assets | 16,050 | 13,467 | 9,115 |
| Return on assets | (0.8%) | 2.8% | 4.3% |
| Equity | 7,532 | 5,716 | 5,331 |
| Return on equity | (1.8%) | 6.5% | 7.3% |
| Debt-to-equity ratio | 53.1% | 57.6% | 41.5% |
| Share (30.6) | |||
| Closing price | 1.31 | 1.74 | 0.95 |
| Earnings per share | (0.03) | 0.08 | 0.09 |
| Price-earnings ratio | - | 21.75 | 10.56 |
| Book value of a share | 1.67 | 1.27 | 1.18 |
| Market to book ratio | 0.78 | 1.37 | 0.81 |
| Market capitalization | 5,894 | 7,828 | 4,274 |
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 | 30.6.2012 | 31.12.2011 | 30.6.2011 |
| Cash and bank | 174 | 206 | 276 |
| Receivables and prepayments | 2,116 | 1,674 | 1,927 |
| Inventories | 3,268 | 3,177 | 2,850 |
| Total current assets | 5,558 | 5,057 | 5,053 |
| Investment property | 185 | 185 | 185 |
| Tangible fixed assets | 10,294 | 10,692 | 8,211 |
| Intangible fixed assets | 13 | 16 | 18 |
| Total fixed assets | 10,492 | 10,893 | 8,414 |
| TOTAL ASSETS | 16,050 | 15,950 | 13,467 |
| Debt obligations | 1,277 | 1,380 | 662 |
| Payables and prepayments | 2,507 | 2,137 | 1,904 |
| Short-term provisions | 5 | 11 | 3 |
| Total current liabilities | 3,789 | 3,528 | 2,569 |
| Non-current debt obligations | 4,490 | 4,490 | 4,984 |
| Non-current provisions | 239 | 239 | 198 |
| Total non-current liabilities | 4,729 | 4,729 | 5,182 |
| Total liabilities | 8,518 | 8,257 | 7,751 |
| Share capital at nominal value | 2,699 | 2,699 | 2,875 |
| Issue premium | 364 | 364 | 364 |
| Statutory capital reserve | 288 | 288 | 288 |
| Currency translation | (38) | (11) | 28 |
| Retained profits | 4,353 | 1,788 | 1,788 |
| Net profit (loss) for the year | (134) | 2,565 | 373 |
| Total equity | 7,532 | 7,693 | 5,716 |
| TOTAL LIABILITIES AND EQUITY | 16,050 | 15,950 | 13,467 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| th EUR | 2nd q 2012 | 2nd q 2011 | 6 m 2012 | 6 m 2011 |
| RETURN ON SALES | 4,881 | 4,313 | 9,440 | 8,336 |
| Cost of production sold | (4,007) | (3,270) | (7,941) | (6,448) |
| Gross profit | 874 | 1,043 | 1,499 | 1,888 |
| Marketing expenses | (592) | (603) | (1,192) | (1,184) |
| General administrative expenses | (199) | (147) | (309) | (246) |
| Other income | 54 | 58 | 91 | 62 |
| Other expenses | (29) | (53) | (79) | (93) |
| Operating profit (loss) | 108 | 298 | 10 | 427 |
| Financial income and financial expenses | (67) | (25) | (134) | (50) |
| Profit before taxes | 41 | 273 | (124) | 377 |
| Prepaid income tax | (2) | (2) | (10) | (4) |
| NET PROFIT(LOSS) FOR THE PERIOD | 39 | 271 | (134) | 373 |
| Basic earnings per share | 0.01 | 0.06 | (0.03) | 0.08 |
| Diluted earnings per share | 0.01 | 0.06 | (0.03) | 0.08 |
| Currency translation differences | (36) | (3) | (27) | 12 |
| TOTAL COMPREHENSIVE INCOME | 3 | 268 | (161) | 385
|
The planned time of publishing of interim report of third quarter 2012 is week
46 (12. - 16. November 2012).
Einar Pähkel
CFO
+372 447 8331
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.skano.com
1. Skano 2012 Q2 vahearuanne ENG.pdf
(https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=400919)