Stock exchange release
August 11, 2003
FISKARS CORPORATION INTERIM REPORT JANUA
FISKARS CORPORATION INTERIM REPORT JANUARYJUNE 2003 (Unaudited) DIFFICULT SECOND QUARTER FOR FISKARS - CASH FLOW STABLE Consolidated, AprilJune (3 months) - Net sales EUR 180 million (232) - Operating profit EUR 9.0 million (23.7) - Pre-tax profit EUR 6.8 million (19.6) Consolidated, JanuaryJune (6 months) - Corporate net sales EUR 354 million (432) - Operating profit EUR 18.9 million (22.0) - Investment income EUR 27.7 million (58.4) - Pre-tax profit EUR 39.4 million (71.0) - Earnings per share EUR 0.51 (0.83) - Operational cash flow EUR 47 million (55) - Average US dollar rate weakened by 23% against euro OPERATIONAL RESULTS Fiskars Brands Inc. AprilJune Fiskars Brands Inc. net sales in the second quarter totaled EUR 171 million (222), which is a decrease of 23% compared to the previous year. Calculated at unchanged currency rates the decrease in net sales was 8%, in North America the decrease was 11% and in Europe 5%. In US dollars, the companys net sales totaled USD 194 million (204). Fiskars Brands operating profit in the second quarter was EUR 8.8 million (21.8), non-recurring costs totaling EUR 5.7 million (3.3). Most of the non-recurring costs were attributable to write-downs of fixed assets within the restructuring program for the pottery product line. JanuaryJune Fiskars Brands net sales for the first six months was EUR 336 million, or 19% less than the previous year (413); calculated at unchanged currency rates the decrease was 5%. In US dollars, the companys net sales were USD 371 million (372), i.e. they remained almost unchanged. Fiskars Brands operating profit for the first six months of the year was EUR 19.0 million (20.6) after non-recurring costs of EUR 8.7 million (19.0). The market was good for garden tools sold in North America under the FISKARS brand. There was a continued strong growth in sales of GERBER products. School, office and craft products are still an important part of the economic backbone of Fiskars Brands, even though the markets have become more challenging in the United States. The difficult market situation for plastic flowerpots and outdoor furniture was reflected in both net sales and profitability in North America. A decrease in sales volumes and the high costs of raw materials weakened results despite the restructuring measures taken adjustments made to accommodate the market situation. In Finland sales of consumer products remained on a good level, but on all other main European markets the economic situation in Europe was reflected as a decrease in sales. Inha Works Inha Works net sales for the second quarter totaled EUR 7.3 million, a decrease of 7% from the previous year (7.8). Net sales for the first six months of the year however increased to EUR 14.8 million (14.0). Demand for Buster boats has continued to be good in both the domestic and the export markets. The domestic demand for hinges was good. Inha Works operating profit during the second quarter was EUR 1.1 million (1.2). For the first six months the operating profit was EUR 2.1 million (1.6). The Real Estate operations continued to post a stable performance. Income from investment operations totaled EUR 27.7 million (58.4) and mainly consisted of dividends received from Wärtsilä in the first quarter. NEW CORPORATE PRESIDENT AND CEO Mr. Heikki Allonen, M.Sc. (Eng.), was appointed CEO of Fiskars and Corporate President in April and assumed his post on June 16, 2003. Mr. Bertel Langenskiöld resigned as CEO on May 15, 2003, and Mr. Ingmar Lindberg, Corporate Executive Vice President, acted as President during the May 16June 15 interim. CORPORATE MANAGEMENT Mr. Johan Landsdorff, LL.M., was appointed Corporate Vice President and Legal Counsel as from April 1, 2003. Mr. Jukka Suonperä, M.Sc. (Eng.) assumed his post as new President of Inha Works on April 1, 2003, when Mr. Vesa Koivula resigned as President. PERSONNEL The corporate workforce totaled 4,272 people at the end of June (4,601); 2,328 of these worked in North America and 1,006 in Finland. CAPITAL EXPENDITURE AND INVESTMENTS In the first half of the year, investments in industrial fixed assets totaled EUR 15.1 million (15.4) and EUR 10.9 million (1.0) was placed in long-term investments, mainly in the holdings of Wärtsilä. At the end of the period, Fiskars holds 19.2% of Wärtsiläs share capital and 24.4% of votes. At the end of June, the market value of Fiskars portfolio of Wärtsilä shares was EUR 126 million. In addition, Fiskars has other long-term holdings of EUR 25 million in capital investment funds. BALANCE SHEET AND FINANCING The balance sheet total was EUR 792 million, which is a decrease of 11% from June 2002 (889). The cash flow from operations continued to be strong and amounted to EUR 47 million (55). The equity ratio was 52% (48) and gearing 58% (76). The Corporations liquidity is good. Net financing costs decreased to a total of EUR 7.2 million (9.4). ANNUAL GENERAL MEETING 2003 The Fiskars Corporation Annual General Meeting, held on March 13, 2003, decided to declare a dividend of EUR 0.70/A-share and EUR 0.68/K- share, in total EUR 38.4 million. The Articles of Association were amended to provide that the minimum number of Board members shall be five and the maximum number nine, and the maximum number of deputy members shall be three. Their term of office will be from their election to the end of the following Annual General Meeting. The retiring members Mr. Göran J. Ehrnrooth and Dr. Thomas Tallberg and the deputy members, Mr. Paul Ehrnrooth and Mr. Alexander Ehrnrooth were reelected. The term of all Board members and deputy members will end at the close of the Annual General Meeting in 2004. KPMG Wideri Oy Ab was appointed auditor. The Annual General Meeting authorized the Board of Directors to acquire and dispose of not more than 1,962,303 A-shares and not more than 805,918 K-shares in the company. The corresponding previous authorizations were revoked. The authorization has not been exercised. SHARE PRICES At the end of June, the price of one Fiskars A-series share on the Helsinki Exchange was EUR 8.20, compared to 7.80 at the beginning of the year, and the price of one K-series share was EUR 9.00 (8.10). The market capitalization of the company was EUR 467 million (437). OUTLOOK The outlook for retail marketssales is uncertain both in the US and in Europe. Despite successful launches of new FISKARS and GERBER products, the corporate net sales for the whole year will be clearly below the previous years level. However, the operating profit for the whole year is expected to remain at the same level as the previous year, due among other things to the restructuring programs in process. Should theIf demand continues to further weaken it is possible that the present programs will prove insufficient. The net results for the whole year will remain below the level of the previous year, mainly because the income from investments is ca EUR 20 million euros lower than in 2002. NEXT INTERIM REPORT Fiskars Corporation will publish its interim report for JanuarySeptember on November 11, 2003. Heikki Allonen President and CEO CONSOLIDATED 4-6 4-6 1-6 1-6 change 1-12 INCOME STATEMENT 2003 2002 2003 2002 % 2002 MEUR MEUR MEUR MEUR MEUR NET SALES 180.4 232.1 354.0 432.0 -18 725.5 Cost of goods sold -124.0 -159.7 -242.2 -298.2 -19 -501.5 GROSS PROFIT 56.4 72.4 111.8 133.9 -16 224.0 Other operating costs -41.7 -45.4 -84.2 -92.9 -9 -176.6 RESULT BEFORE RESTRUCTURING ITEMS 14.7 27.0 27.6 41.0 -33 47.4 Restructuring cost -5.7 -3.3 -8.7 -19.0 -54 -19.5 OPERATING PROFIT 9.0 23.7 18.9 22.0 -14 27.9 Income from investments 1.2 0.0 27.7 58.4 -53 59.0 Other financial income 0.3 0.1 0.4 0.2 163 1.5 Financial expense -3.6 -4.2 -7.6 -9.6 -21 -16.3 RESULT BEFORE TAX 6.8 19.6 39.4 71.0 -44 72.1 Taxes for the period -1.0 -7.9 -11.2 -24.8 -55 -22.5 PROFIT FOR THE PERIOD 5.9 11.7 28.2 46.2 -39 49.6 Earnings per share, euro 0.11 0.21 0.51 0.83 0.90 CONSOLIDATED BALANCE SHEET 6/03 6/02 change 12/02 MEUR MEUR % MEUR ASSETS Fixed assets 255.3 301.5 -15 280.1 Long-term investments 219.6 209.4 5 211.4 Inventories 136.7 166.0 -18 160.2 Financial assets 180.8 212.3 -15 157.6 TOTAL 792.4 889.2 -11 809.3 EQUITY AND LIABILITIES EQUITY Share capital 55.4 55.4 0 55.4 Other equity 360.3 372.8 -3 373.7 PROVISIONS 7.7 10.0 -24 5.5 LIABILITIES Long-term 135.4 229.9 -41 183.5 Short-term 233.7 221.1 6 191.3 TOTAL 792.4 889.2 -11 809.3 Diluted equity /share, euro 7.51 7.73 -3 7.75 Equity ratio 52% 48% 9 53% Net gearing 58% 76% -24 57% GROSS INVESTMENTS 26.0 16.4 59 35.2 AVERAGE NUMBER OF EMPLOYEES 3987 4527 -12 4095 4-6 4-6 1-6 1-6 change 1-12 2003 2002 2003 2002 % 2002 Currency rates: USD average rate (I/S) 1.14 0.92 1.10 0.90 23 0.95 USD end-of-period (B/S) 1.14 1.00 1.14 1.00 15 1.05 CONSOLIDATED STATEMENT 4-6 4-6 1-6 1-6 1-12 OF CASH FLOWS 2003 2002 2003 2002 2002 MEUR MEUR MEUR MEUR MEUR From oper. activities 35.9 23.5 46.5 54.7 130.0 From investm. activities -7.9 -8.4 -22.6 -15.3 -29.6 From financing -28.3 -23.4 -27.0 -48.6 -89.6 CHANGE IN CASH -0.3 -8.3 -3.0 -9.2 10.9 Cash at beginning of period 16.5 8.7 19.5 9.5 9.5 Currency transaction adjustm 0.3 -0.4 0.0 -0.3 -0.8 CASH AT END OF PERIOD 16.4 0.0 16.4 0.0 19.5 NET SALES BY BUSINESS AREA 4-6 4-6 1-6 1-6 change 1-12 2003 2002 2003 2002 % 2002 MEUR MEUR MEUR MEUR MEUR Fiskars Brands 171 222 336 413 -19 693 Inha Works 7 8 15 14 5 23 INDUSTRY TOTAL 179 230 351 427 -18 717 Corporate & real estate 3 3 5 6 -18 12 Eliminations -1 -1 -1 -1 9 -3 CORPORATE TOTAL 180 232 354 432 -18 725 RESULT BY BUSINESS SEGMENT 4-6 4-6 1-6 1-6 change 1-12 2003 2002 2003 2002 % 2002 MEUR MEUR MEUR MEUR MEUR Fiskars Brands 8.8 21.8 19.0 20.6 -8 27.3 Inha Works 1.1 1.2 2.1 1.6 32 2.5 INDUSTRY TOTAL 9.9 22.9 21.1 22.2 -5 29.8 Corporate & real estate -0.9 0.8 -2.2 -0.2 -1033 -1.9 OPERATING PROFIT 9.0 23.7 18.9 22.0 -14 27.9 Income from investments 1.2 0.0 27.7 58.4 -53 59.0 CONSOLIDATED SEGMENTAL RESUL 10.2 23.7 46.6 80.4 -42 86.9 NET SALES BY MARKET AREA 4-6 4-6 1-6 1-6 change 1-12 2003 2002 2003 2002 % 2002 MEUR MEUR MEUR MEUR MEUR Finland 11 11 21 22 -1 37 Scandinavia 15 17 31 34 -9 63 Other Europe 37 41 75 82 -9 130 North America 114 157 219 284 -23 473 Other 4 5 8 10 -22 23 CORPORATE TOTAL 180 232 354 432 -18 725 Export from Finland 14 14 32 28 12 51 Short delivery times are a prerequisite in Fiskars' fields of operations. Therefore, the backlog of orders and changes in it are not of significant importance. CONTINGENCIES 6/03 6/02 12/02 MEUR MEUR MEUR FOR THE COMPANY'S OWN COMMITMENTS Real estate mortgages 1 3 1 Pledged assets 0 0 0 Bills of exchange 0 0 1 Lease contingencies 61 71 70 Other contingencies 1 0 1 TOTAL CONTINGENCIES 63 75 72 NOMINAL VALUES OF DERIVATIVE INSTRUMENTS Forward exch. contracts 178 213 167 Interest rate swaps 88 110 105 FRA's 9 70 29 MARKET VALUES OF DERIVATIVE INSTRUMENTS COMPARED TO NOMINAL VALUES Interest rate swaps -7 -8 -10 FRA's 0 0 0 Nominal values also include closed contracts.