Stock exchange release
May 9, 2003
FISKARS CORPORATION INTERIM REPORT JANUA
FISKARS CORPORATION INTERIM REPORT JANUARY MARCH 2003 (Unaudited) FISKARS NET SALES DECLINED AND OPERATINS PROFIT IMPROVED - Corporate net sales EUR 173.6 million (199.9) - Operating profit EUR 9.9 million (-1.7) - Investment income EUR 26.5 million (58.4) - Pre-tax profit EUR 32.6 million (51.4) - Earnings per share EUR 0.40 (0.62) - Average dollar rate weakened by 22 % against euro OPERATIONAL RESULTS Fiskars Brands Inc.s net sales declined by 14 % from the previous year to EUR 165 million (191). EUR 24 million of this decrease was attributable to the weakening in the value of the US dollar. Sales of school, office and craft products marketed in the USA under the FISKARS brand increased, and sales of GERBER products also grew significantly. The difficult market situation of plastic garden products (flowerpots and outdoor furniture) continued. In Europe, Nordic sales remained on the same level as previous year but total European sales declined slightly because of the depressed German market. Strong demand for Finnish and US made garden tools prevailed both in the USA and Europe. The spring marketing season of garden products has been slightly delayed due to the exceptionally cold weather. Fiskars Brands operating profit for the first quarter was EUR 10.2 million (-1.2), and non-recurring costs totaled EUR 3.0 million (15.6). These costs mainly consist of relocations and closings of factories in Germany and Mexico. Inha Works net sales grew by 21 % from the previous year to EUR 8 million (6). Demand for boats was good, and the strong sales growth in the first quarter compared with the previous year is partly explained by the earlier time of boat deliveries. Demand for hinges continued to be good. Inha Works operating profit was EUR 1.0 million (0.4). The radiator operations were divested in March, allowing Inha Works to focus even more clearly on its core business. The deal will have little impact on Inha Works net sales and operating profit. The Real Estate operations posted a stable performance. Income from investment operations totaled EUR 26.5 million (58.4) in the first quarter and mainly consisted of dividends received from Wärtsilä. NEW CORPORATE PRESIDENT AND CEO Mr. Heikki Allonen, M.Sc. (Eng.), was appointed the new Corporate President and CEO in April. He will assume his new duties on June 16, 2003. Fiskars present President and CEO, Mr. Bertel Langenskiöld will resign on 15 May 2003, and Mr. Ingmar Lindberg, Corporate Executive Vice President, will act as interim President. PERSONNEL Mr. Johan Landsdorff, LL.M., was appointed Corporate Vice President and Legal Counsel as from April 1, 2003. On April 1, 2003, Mr. Jukka Suonperä, M.Sc. (Eng.) assumed his post as new President of Inha Works. The corporate workforce totaled 4,385 persons at the end of March (4,206 at the year-end); 2,469 of these worked in North America and 938 in Finland. CAPITAL EXPENDITURE; INVESTMENTS In the first quarter, investments in industrial fixed assets totaled EUR 7 million (8) and EUR 10 million (0) was invested in the strategic holding of Wärtsilä. BALANCE SHEET; FINANCING The Corporations liquidity was good. The balance sheet total decreased by 15 % from March 2002 to EUR 824 million (970); this is attributable to a strong cash flow and partly to a change in the value of the US dollar. Equity ratio is 50 % (44) and gearing 68 % (91). Net financing costs decreased significantly from previous year and totaled EUR 3.8 million (5.3). ANNUAL GENERAL MEETING 2003 Fiskars Corporations Annual General 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 5 and the maximum number 9, and the maximum number of deputy members shall be 3. 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 of the company. The corresponding previous authorizations were revoked. The authorization has not been exercised. The Annual General Meeting decided to increase the share capital by not less than EUR 100 and not more than EUR 525,000 under a rights issue to holders of the 1998 option warrants. SHARE PRICES At the end of March, the price of Fiskars share of series A on the Helsinki Exchanges was EUR 7.50 (7.80 at the end of 2002), and the price of the share of series K was EUR 8.25 (8.10). The market capitalization of the company was EUR 427 million (437). OUTLOOK The development of retail sales has been weak during the first quarter both in the USA and Europe and it is not expected to improve during the next few months. Due to the weak dollar in relation to the euro, corporate net sales will decrease this year although new product launches are expected to boost particularly the sales of FISKARS branded garden tools and GERBER products towards the end of the year. The restructuring program for the pottery product line, which was approved in May, which comprises the consolidation of production units and a partial outsourcing of the production will cause non- recurring costs that will be booked in their entirety in the second quarter. Due to the above-mentioned factors, the result for the second quarter will be below the previous years level. It is estimated, however, that the possibilities for improving the operating profit for the whole year still remain good. No major income from long-term investments is expected towards the end of the year, and thus the result for the year will be below the previous years level. NEXT INTERIM REPORT Fiskars Corporation will publish its interim report for January June on August 12, 2003. Bertel Langenskiöld President and CEO CONSOLIDATED 1-3 1-3 change 1-12 INCOME STATEMENT 2003 2002 % 2002 MEUR MEUR MEUR NET SALES 173.6 199.9 -13 725.5 Cost of goods sold -118.2 -138.5 -15 -501.5 GROSS PROFIT 55.4 61.4 -10 224.0 Other operating costs -42.5 -47.5 -10 -176.6 RESULT BEFORE RESTRUCTURING ITEMS 12.9 13.9 -8 47.4 Restructuring cost -3.0 -15.6 -81 -19.5 OPERATING PROFIT 9.9 -1.7 685 27.9 Income from investments 26.5 58.4 -55 59.0 Other financial income 0.1 0.1 92 1.5 Financial expense -3.9 -5.4 -26 -16.3 RESULT BEFORE TAX 32.6 51.4 -37 72.1 Taxes for the period -10.2 -16.9 -40 -22.5 PROFIT FOR THE PERIOD 22.4 34.5 -35 49.6 Earnings per share, euro 0.40 0.62 0.90 CONSOLIDATED BALANCE SHEET 3/03 3/02 change 12/02 MEUR MEUR % MEUR ASSETS Fixed assets 269.5 333.5 -19 280.1 Long-term investments 219.5 209.0 5 211.4 Inventories 151.8 205.8 -26 160.2 Financial assets 183.3 221.6 -17 157.6 TOTAL 824.2 969.9 -15 809.3 EQUITY AND LIABILITIES EQUITY Share capital 55.4 55.4 0 55.4 Other equity 355.8 369.9 -4 373.7 PROVISIONS 7.0 10.3 -32 5.5 LIABILITIES Long-term 146.7 287.4 -49 183.5 Short-term 259.4 246.8 5 191.3 TOTAL 824.2 969.9 -15 809.3 Diluted equity /share, euro 7.43 7.68 -3 7.75 Equity ratio 50% 44% 14 53% Net gearing 68% 91% -26 57% GROSS INVESTMENTS 17.3 7.9 119 35.2 AVERAGE NUMBER OF EMPLOYEES 4127 4600 -10 4095 1-3 1-3 change 1-12 2003 2002 % 2002 Currency rates: USD average rate (I/S) 1.07 0.88 22 0.95 USD end-of-period (B/S) 1.09 0.87 25 1.05 CONSOLIDATED STATEMENT 1-3 1-3 1-12 OF CASH FLOWS 2003 2002 2002 MEUR MEUR MEUR From oper. activities 10.7 31.2 130.0 From investm. activities -14.7 -6.9 -29.6 From financing 1.3 -25.2 -89.6 CHANGE IN CASH -2.7 -0.9 10.9 Cash at beginning of period 19.5 9.5 9.5 Currency transaction adjustm -0.3 0.1 -0.8 CASH AT END OF PERIOD 16.5 8.7 19.5 NET SALES BY BUSINESS AREA 1-3 1-3 change 1-12 2003 2002 % 2002 MEUR MEUR MEUR Fiskars Brands 165 191 -14 693 Inha Works 8 6 21 23 INDUSTRY TOTAL 172 197 -13 717 Corporate & real estate 2 3 -28 12 Eliminations -1 -1 5 -3 CORPORATE TOTAL 174 200 -13 725 RESULT BY BUSINESS SEGMENT 1-3 1-3 change 1-12 2003 2002 % 2002 MEUR MEUR MEUR Fiskars Brands 10.2 -1.2 969 27.3 Inha Works 1.0 0.4 125 2.5 INDUSTRY TOTAL 11.2 -0.7 1620 29.8 Corporate & real estate -1.3 -1.0 -32 -1.9 OPERATING PROFIT 9.9 -1.7 685 27.9 Income from investments 26.5 58.4 -55 59.0 CONSOLIDATED SEGMENTAL RESUL 36.4 56.7 -36 86.9 NET SALES BY MARKET AREA 1-3 1-3 change 1-12 2003 2002 % 2002 MEUR MEUR MEUR Finland 11 10 4 37 Scandinavia 16 17 -3 63 Other Europe 37 41 -10 130 North America 105 127 -17 473 Other 4 5 -16 23 CORPORATE TOTAL 174 200 -13 725 Export from Finland 18 14 26 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 3/03 3/02 12/02 MEUR MEUR MEUR FOR THE COMPANY'S OWN COMMITMENTS Real estate mortgages 1 3 1 Pledged assets 0 29 0 Bills of exchange 0 0 1 Lease contingencies 61 82 70 Other contingencies 1 0 1 TOTAL CONTINGENCIES 63 114 72 NOMINAL VALUES OF DERIVATIVE INSTRUMENTS Forward exch. contracts 193 211 167 Interest rate swaps 92 126 105 FRA's 46 69 29 MARKET VALUES OF DERIVATIVE INSTRUMENTS COMPARED TO NOMINAL VALUES Interest rate swaps -9 -7 -10 FRA's 0 0 0 Nominal values also include closed contracts.