Stock exchange release
November 1, 2007
FISKARS CORPORATION INTERIM REPORT JANUARY-SEPTEMBER 2007
FISKARS CORPORATION INTERIM REPORT JANUARY-SEPTEMBER 2007
(Unaudited)
Fiskars profitability improved and growth continued and was enhanced by Iittala
acquisition
Third quarter highlights
- Net sales were EUR 148.3 million (119.4)
- Operating profit for wholly-owned businesses was EUR 16.7 million (6.0)
- Iittala Group Plc was purchased at the end of August and has been consolidated
from the beginning of September
- Iittala's net sales in September were EUR 16.0 million and operating profit
after EUR 1.1 million purchase price allocation was EUR 0.3 million
- Income from Wärtsilä was EUR 11.1 million (6.9)
- Sale and purchase of Wärtsilä shares yielded a gain of EUR 16.8 million
FISKARS CORPORATION IN BRIEF
EUR, million Q3/2007 Q3/2006 1-9/2007 1-9/2006 2006
Net sales 148.3 119.4 465.7 409.8 534.9
Operating profit from 16.7 6.0 52.2 25.0 27.2
wholly-owned
businesses
Income from associate 11.1 6.9 26.6 40.8 58.6
Operating profit 27.8 13.0 78.8 65.8 85.8
Pre-tax profit 41.4 10.6 88.4 58.1 76.7
Net profit for the period 38.2 9.8 78.1 72.5 82.0
Earnings/share from 0.49 0.10 1.01 0.74 0.86
continuing operations,
EUR
Earnings/share, total, 0.49 0.13 1.01 0.94 1.06
EUR
Cash from operations 21.8 30.5 52.1 72.0 99.0
FISKARS CORPORATION
Third quarter, July-September 2007
In the third quarter Fiskars net sales increased by 24.2% compared to the
year before, totaling EUR 148.3 million (119.4). The increase in net sales
generated by recent acquisitions was EUR 22.0 million or 18.4%.
The Corporation's operating profit was EUR 27.8 million (13.0). Operating
profit for the wholly-owned businesses was EUR 16.7 million (6.0) or
11.3% of net sales (5.1). Income from Wärtsilä that is included in the
operating profit was EUR 11.1 million (6.9).
Net financial costs were EUR 3.1 million (2.4) and the pre-tax profit was
EUR 41.4 million (10.6). During the third quarter, the Corporation sold
Wärtsilä B-shares and bought shares of series A on the stock exchange.
The gross number of shares traded was 452,008 shares at a value of EUR
20.7 million. The sale yielded a gain of EUR 16.8 million. Fiskars
ownership of Wärtsilä shares remained unchanged and the number of votes
increased.
Income taxes for continuing operations were EUR 3.2 million (2.7).
The net profit for the quarter was EUR 38.2 million (9.8) and earnings per
share were EUR 0.49 (0.13).
Changes in corporate structure
The acquisition of Iittala Group Plc was closed on the last day of August.
Iittala Group is a leading homeware design company and a pioneer of
modern Scandinavian design. Iittala Group's home markets are Finland,
Sweden, and Norway, and the company's strong brands in these markets
are Iittala, Arabia, Hackman, BodaNova, Höganäs Keramik, Rörstrand,
and Höyang-Polaris. In addition to the parent company in Finland,
subsidiaries in Sweden, Norway, Denmark, the Netherlands, the US,
Germany, and Estonia are part of the Iittala Group. The company has
production facilities in Helsinki, Nuutajärvi, Iittala, Sorsakoski, and
Vähäkyrö in Finland; in Höganäs in Sweden; and in Moss in Norway.
Iittala sells products both to retailers and directly to consumers through its
chain of Iittala Shops and factory outlets. Iittala had a total of 38 factory
outlets in Finland, Sweden, and Norway, in addition to which there were
26 Iittala Shops in six countries at the end of August.
Iittala Group's net sales in 2006 totaled EUR 189.8 million, with an
operating profit of EUR 17.0 million and a staff of 1,353. Wholesales
comprised 73% of sales the remaining part being Iittala's own retail sales.
Total assets for the Iittala Group at the end of August were EUR 161.6
million. The EUR 119.4 million in loans included in the assets at the time
of purchase were refinanced. The management of the company stayed on
as minority shareholders of Iittala Group Ltd. with a combined ownership
of 2.28% of the shares. Fiskars Corporations investment in Iittala was EUR
219.6 million. The preliminary purchase price allocation is disclosed under
"Impact of acquisitions on the consolidated balance sheet".
Iittala has been consolidated in Fiskars Corporation from the beginning of
September. Iittala forms a new reporting segment within Fiskars
Corporation. Iittala's operations are quite seasonal, with most of the profits
being generated in the last quarter. This will even out the seasonal
fluctuations of Fiskars operations.
January-September 2007 review period
Fiskars net sales increased by 13.6% in the review period, totaling EUR
465.7 million (409.8). The acquisitions made in the past twelve months
have generated a considerable share of the growth; the Silva Group
represented EUR 24.0 million, Leborgne S.A. EUR 6.8 million and Iittala
EUR 16.0 million in growth, totaling 11.4%. The discontinuation of floor-
mat and watering product lines in the United States at the end of 2006
represented a decrease in the period's net sales of EUR 16.7 million. The
weakening of the US dollar decreases both the percentage of sales in the
US as well as the consolidated net sales figures. With constant exchange
rates, then increase in sales would have been 17.2%. During the review
period, 55.1% of net sales were generated in Europe (47.0%) and 38.7% in
the USA (45.2%).
Operating profit was EUR 78.8 million (65.8). The operating profit for the
Corporation's wholly-owned operations was EUR 52.2 million
representing 11.2% of net sales. Profitability of the industrial operations
improved and an increase in the value of standing timber of EUR 10.2
million (2.6) further contributed to improved operating profits. The
operating profit for the review period includes non-recurring gains from
fixed assets totaling EUR 1.4 million and the operating profit for the
corresponding period last year included EUR 6.4 million non-recurring
restructuring costs.
The net financial costs of EUR 7.2 million (7.6) were slightly lower than
the previous year as they include some gains on investment. The EUR 16.8
million gain from the trade in Wärtsilä stock improves the pre-tax result,
which was EUR 88.4 million (58.1). The net profit for the review period
was EUR 78.1million (72.5). The profit for the corresponding period last
year includes profits and gain on sale from discontinued operations totaling
EUR 14.9 million.
Personnel totaled 4,484, having been 3,003 at the end of 2006. The number
of staff increased due to the 1,382 people working at Iittala and the 120
people at Leborgne S.A.
FISKARS BRANDS
Third quarter, July-September 2007
Fiskars Brands' net sales increased by 9.5% and were EUR 121.0 million
(110.5). The operating profit improved significantly and was EUR 12.1
million (3.3). The operating profit percentage was 10.0% (3.0). The
operating profit for the corresponding period last year included non-
recurring restructuring costs of EUR 1.4 million.
The profitability of Fiskars Brands' operations improved from last year.
Discontinuation of the the less profitable product lines as part of the
restructuring measures implemented in the United States has improved the
operating profit. The restructuring project begun in 2005 has now been
completed and the bulk of the products sold in the US are now outsourced.
This has also contributed on the profitability. In Europe, increased sales
volumes have contributed to an improved capacity utilization, which in
turn has improved profitability. An increase in the share of new products
sold has also improved profitability.
January-September 2007 review period
Fiskars Brands net sales increased by 7.1% and was EUR 403.6 million
(376.9). The operating profit was EUR 41.9 million (21.1). Operating
profit for the review period included a EUR 1.4 million non-recurring gain
on sale of fixed assets. The corresponding period last year included
restructuring costs of EUR 6.4 million. Thus the comparable profitability
was 10.0% (7.3%).
Net sales increased in particular through acquisitions. The acquisition of
Silva Group in 2006 increased sales of outdoor recreation products by
EUR 24.0 million in Europe and the US. The acquisition in May this year
of Leborgne S.A., the French company manufacturing and marketing
garden hand tools, increased net sales in Europe by EUR 6.8 million.
Integration of Leborgne to Fiskars' European garden business has
progressed according to plan and will be finalized during the last quarter.
The weakening dollar had a negative impact on sales, as did the
discontinuation of the floor-mat and watering product lines in the USA in
the Fall of last year.
Gerber's net sales in Outdoor Recreation categories increased clearly from
last year in the US.Gerber has gained more shelf space in some large retail
chain stores in the US and earlier this year also signed a significant
agreement to deliver products for government and military use.
New products were launched in all product categories and in all markets
and their share of sales has increased. The one-off marketing effort to
increase the sales of Fiskars Brands' garden tools in the US has proved a
success. The large retail chains make their product and Stock-Keeping-
Unit selections based on annual decision making schedules and major
changes are always possible.
Investments during the review period totaled EUR 22.0 million (32.4).
They include the EUR 13.2 million acquisition cost for Leborgne S.A.,
while the investments in the corresponding period last year included the
acquisition of Silva Group.
Fiskars Brands personnel numbered 2,739 at the end of the review period,
an increase of 80 people since the beginning of the year. The increase was
due to the acquisition of Leborgne, and an increase in the capacity of
Gerber's outdoor recreation production line to meet a large delivery
contract. In the company's other US operations, the number of personnel
has continued to decrease.
IITTALA
Iittala has been consolidated in Fiskars Corporation from the beginning of
September. In September Iittala's net sales were EUR 16.0 million and the
operating profit before the impact of the purchase price allocation was
EUR 1.4 million. The operating profit after purchase price allocation was
EUR 0.3 million.
There are some market and product overlaps between Iittala and the
Housewares product category of Fiskars Brands. Synergy benefits are
expected from combining operations, more efficient administration and
wider use of distribution channels; these synergy benefits are expected to
materialize from the beginning of the next year.
Iittala's personnel numbered 1,382 at the end of September.
INHA WORKS
In the review period, net sales for Inha Works increased by 18.7%
compared to last year, totaling EUR 33.3 million (28.1). Operating profit
was EUR 3.4 million (2.9). Profitability was at last year's level and the
operating profit percentage was 10.1 (10.4). The increase in the cost of raw
materials has cut into the profit margin. The third quarter is typically less
profitable, as the main sales period ends with the ending of the boating
season and the new model season has yet to begin.
Boat sales increased again this year in all the most important markets for
Buster boats. Investments in production have made it possible to respond
to increased demand, but once again the factory worked to its full capacity.
The new Buster X has become one of the most popular boat models.
The forged products operations developed according to plan; a downturn in
the demand for hinges has caused preparations to adapt production
accordingly.
During the review period, the company has invested considerably more
than before in product development. The boat range will be complemented
with new boats that respond to market expectations and fit into the
company's long-term strategy. For the next boating season, the Buster
range is supplemented by the new XXL model, which was launched in
September. In early 2008, the new XXL will be joined by it's sister boat, a
completely new type of Buster, the AWC - All Weather Cruiser -
featuring a covered cockpit.
Investments during the review period were EUR 2.6 million (0.6).
Personnel totaled 310 at the end of the review period (301 at the beginning
of the year).
REAL ESTATE
Net sales for the Real Estate Group during the review period was EUR
14.6 million (6.7). The operating profit was EUR 11.4 million (5.2). The
price of standing timber has been increasing for a year, resulting in an
increase of EUR 10.2 million (2.6) in net sales and operating profit . The
total value of the Fiskars Corporation standing timber at the end of the
review period was EUR 45.6 million (35.4).
No major real estate deals were made during the review period and the
renting business developed according to plan and the operating cash flow
was close to zero.
Investments by the Real Estate operations totaled EUR 1.3 million (1.5).
The number of staff at the end of the summer period was still 36 (27 at the
beginning of the year).
ASSOCIATED COMPANY WÄRTSILÄ
Fiskars' income from associate Wärtsilä for the review period was EUR
26.6 million (40.8). Wärtsilä's net profit for the corresponding period last
year included a significant gain from the divestment of shares in Assa
Abloy and a share in the associate Ovako's net profits.
Fiskars' share of Wärtsilä equity and votes was 16.5% (16.8%) and 32.6%
(30.6%) respectively. The change in the votes was due to a trade of shares
of series B for shares of series A during the third quarter.
The book value of Fiskars' investment in the associate was EUR 256.5
million (239.1 at the beginning of the year). Dividends paid to Fiskars in
the review period totaled EUR 27.7 million (23.7). Some EUR 54.3 million
of the book value of Fiskars' holding in Wärtsilä was goodwill (37.7 at the
beginning of the year).
The market value of Fiskars shares in Wärtsilä was EUR 765 million (price
of A share EUR 48.60 and B share EUR 48.05) at the end of the review
period.
PROFITS AND TAXES
Net financial costs for the review period were EUR 7.2 million (7.6). The
financial income for the review period was slightly higher than during the
corresponding period last year.
Profit before taxes totaled EUR 88.4million (58.1). Income taxes for the
review period have been calculated on the basis of the local accumulated
income and the enacted tax rates while taking into consideration the
potential use of deferred tax assets and the estimated whole-year effective
tax rate. Taxes totaled EUR 10.3 million; the taxes for the corresponding
period last year were EUR 0.5 million, less due to the tax treatment of
discontinued operations.
The net profit for the period derived from continuing operations was EUR
78.1 million (57.6). The Power Sentry division, divested in the summer of
2006, was reclassified in 2006 as discontinued operations and its net profit
for last year's first quarter is reported accordingly.
The net profit for the review period was EUR 78.1 million (72.5). The
earnings per share attributable to equity holders of the company was EUR
1.01 (0.94).
BALANCE SHEET AND FINANCING
Total assets were EUR 1,027.9 million (707.2 at the beginning of the year).
The acquisition of the Iittala Group resulted in a significant growth in
assets. The transaction resulted in an increase in inventories by EUR 60.6
million and trade receivables by EUR 18.2 million and in long-term assets
by EUR 218.8 million of which EUR 139.8 million comes from purchase
price allocation. Growth in business further increased trade receivables,
inventories and trade payables. Net working capital was EUR 166.0
million, or EUR 61.3 million more than at the end of the year; of this,
growth in business created EUR 5.6 million while Iittala's share of
increase was EUR 47.3 million and Leborgne's EUR 8.4 million. The
Corporation's interest-bearing net debt was EUR 345.7 million, or EUR
243.8 million more than at year-end.
Net cash flow from operating activities was EUR 52.1 million (72.0). Net
cash used in investing activities totaled EUR 250.3 million. In the
corresponding period last year, the cash used in investing activities was
EUR 5.8 million, as investments were financed through divestments.
The equity to assets ratio was 44% (60 at the beginning of the year). Net
gearing was 76% (24 at the beginning of the year). The significant changes
in these key figures are primarily caused by the acquisition of Iittala and
Leborgne.
The Corporation's financial situation and liquidity remain strong. In
addition to cash and cash equivalents, the Corporation has significant
credit facilities available.
MANAGEMENT OF RISKS AND UNCERTAINTIES
Fiskars' most important operational risks relate to supply-chain control, the
potential structural changes in the retail environment in various markets
and also partly to the development of the prices of raw materials and
energy. Efforts are made in particular to improve supply chain
management and build ties to subcontractors, as outsourcing is increased in
accordance with the Corporation's strategy. In order to mitigate possible
problems with subcontractors and logistics, the Corporation has also
increased inventories.
The potential structural changes in distribution channels are seen to
represent a risk mainly in the US, and operations are required to increase
flexibility and the ability to think ahead.
The nature of most of the company's industrial operations is such that they
pose no significant environmental risks. Changes in environmental
directives and changes in production capacity or structure may cause
additional costs at some older production facilities. The company is
committed to complying with legislation and statutes for the protection of
the environment and strives to develop its production and mode of
operation in ways that minimize the burden on the environment.
The Fiskars Corporation Board of Directors regularly reviews the
principles for the management of financial risks and in accordance with the
Corporation's investment policies, liquid assets are only invested in low-
risk entities. Trade receivables are relatively widely spread geographically
and between customers, and major customers generally have a high credit
rating. No significant credit losses have materialized during the review
period.
The Corporation has hedged a certain part of its most significant foreign
currency net investments in its subsidiaries against exchange rate
fluctuations and as from January 1, 2007 it has applied hedge accounting in
accordance with the IAS 39 standard. A portion of the company's
electricity purchases have also been hedged against fluctuations in the
energy market and hedge accounting in accordance with the IAS 39
standard is also applied to these instruments.
REPURCHASE AND TRANSFER OF OWN SHARES
Until the Annual General Meeting held March 21, 2007, the Board of
Directors had an authorization to repurchase and decide on the distribution
of the Corporation's shares provided that the total nominal value of such
shares and the votes carried by them did not exceed ten percent (10%) of
the share capital and the total votes in the company. At the Annual General
meeting on March 21, 2007 the authorization was renewed unchanged. The
Board has not exercised its authorization during the review period.
As at September 30, 2007, the company held in total 127,512 of its own A
shares and 420 K shares. The holding has not changed during the review
period, and the number of shares equals 0.2% of the entire share capital of
the company. The EUR 0.9 million repurchase cost of the Corporation's
own shares decreases the Corporation's equity.
SHARE PRICES
Fiskars shares are traded on the Nordic list of the Helsinki Exchange. The
shares were moved to the Large Cap Helsinki segment on July 1, 2007. At
the end of September, the price of the Fiskars A share was EUR 13.38
(12.29 at the beginning of the year) and the price of the K share EUR 14.20
(12.11). The market value of the Corporation's share capital was EUR
1,054 million at the end of the review period.
CHANGES IN OWNERSHIP
On September 4. 2007 Fiskars Corporation was informed that Virala Oy
Ab had increased its holdings to more than 1/5 of the voting rights in
Fiskars Corporation. Holdings of share capital are still more than 1/10. The
shares of votes and shares were on September 4. 2007 20,2% and 11.1%
respectively.
On September 4. 2007 Fiskars Corporation was informed that Varma
Mutual Pension Insurance Company had decreased its holdings to less than
1/20 of the voting rights in Fiskars Corporation. The shares of votes and
shares were on September 4. 2007 2.7% and 4.3% respectively.
ANNUAL GENERAL MEETING 2007
The Annual General Meeting of shareholders on March 21, 2007 decided
to pay a dividend of EUR 0.60 per share for A shares, totaling EUR
32,890,188, and EUR 0.58 per share for K shares, totaling EUR
13,087,867, the sum total for both series of shares being EUR 45,978,055.
It was decided that the number of Board members be nine. Mr. Kaj-Gustaf
Bergh, Mr. Alexander Ehrnrooth, Mr. Paul Ehrnrooth, Mr. Ralf Böer, Mr.
David Drury, Ms. Ilona Ervasti-Vaintola, Mr. Gustaf Gripenberg, Mr. Karl
Grotenfelt, and Mr. Clas Thelin were elected to the Board. The term of the
Board members will expire at the end of the Annual General Meeting in
2008.
KPMG Oy Ab was elected auditor.
The Annual General Meeting decided to authorize the Board to repurchase,
of the company's own shares, no more than 5,366,937 of series A and no
more than 2,256,150 of series K shares in a proportion other than that of
the shareholders' proportional shareholdings. The share price will be no
higher than the highest price paid for Fiskars Corporation shares in public
trading at the time of repurchase. This authorization shall remain in force
until the end of the next Annual General Meeting.
The Annual General Meeting authorized the Board to decide on the
distribution of the company's repurchased shares up to a maximum of
5,494,449 series A shares and up to a maximum of 2,256,570 series K
shares. The Board may decide on the distribution of the shares otherwise
than in proportion to the shareholders' existing pre-emptive subscription
rights. This authorization shall remain in force until the end of the next
Annual General Meeting.
In its organization meeting the Board elected Kaj-Gustaf Bergh its
chairman and Alexander Ehrnrooth and Paul Ehrnrooth vice chairmen. The
Board decided to establish an Audit Committee, a Compensation
Committee, and a Nomination Committee.
The Board appointed Gustaf Gripenberg chairman of the Audit Committee,
and David Drury, Ilona Ervasti-Vaintola, Alexander Ehrnrooth and Paul
Ehrnrooth as its other members.
The Board appointed Kaj-Gustaf Bergh chairman of the Compensation
Committee and Ralf Böer, Karl Grotenfelt and Clas Thelin as its other
members.
The Board appointed Kaj-Gustaf Bergh chairman of the Nomination
Committee and Alexander Ehrnrooth and Paul Ehrnrooth its other
members.
CHANGE IN CORPORATE MANAGEMENT
On August 13, the Fiskars Board of Directors appointed Mr Kari
Kauniskangas, M.Sc (Econ), President and CEO of Fiskars Corporation
from the beginning of 2008.Mr Heikki Allonen will continue as President
and CEO until the end of 2007.
OUTLOOK
Fiskars Corporation net sales are estimated to grow by around 20% in 2007
compared to the previous year largely as a result of the made acquisitions.
Operating profits from the operations wholly owned by Fiskars are also
estimated to increase from last year, driven by both improvements in
Fiskars Brands, standing timber and by the consolidation of Iittala which is
estimated to generate the bulk of its profits during the last months of the
year.
Due to the general uncertainty on the markets it is becoming more difficult
to forecast the development of the consumer markets, especially in the
United States.
The share of profits from the associated company Wärtsilä is again
estimated to form a substantial part of Fiskars' operating profit in 2007.
Heikki Allonen
President and CEO
NOTES TO THE INTERIM REPORT
This interim report has been prepared in accordance with IAS 34 Interim
Financial Reporting. Using the same accounting principles and methods of
computation as for the annual financial statements for 2006 with the
exception of hedge accounting being applied on foreign currency net
investments in subsidiaries and changes in the market price for electricity.
Use of estimates
Complying with the IFRS standards in preparing financial statements
requires the management to make estimates and assumptions. Such
estimates affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the amounts of revenues
and expenses. Although these estimates are based on the management's
best knowledge of current events and actions, actual results may differ
from these estimates.
Sale and purchase of Wärtsilä shares
Fiskars Corporation has sold Wärtsilä's A shares and acquired an equal
amount of B shares increasing Corporation's voting right in Wärtsilä by
1.3% to 32.6%. Management has assessed that there is a commercial
substance in selling A shares and buying equal amount of B shares, and,
therefore, adopted an accounting policy to recognize the transaction at fair
value.
IAS 39 Financial instruments - hedge accounting for foreign currency net
investments in subsidiaries
Significant equity investments in subsidiaries situated outside the Euro
zone have largely been hedged against foreign currency exchange rate
fluctuations through foreign currency loans and derivatives using the hedge
accounting to reduce the effect of exchange rate fluctuations on the
consolidated equity. When a foreign subsidiary is sold, these translation
differences are included in the gain or loss on disposal reported in the
income statement. Application of hedge accounting resulted in an increase
in the review period's equity of EUR 4.5 million.
Discontinued operations
The Power Sentry division was divested in the summer of 2006 and is
reported under discontinued operations. The gain from the sale and the
division's net operating profit for the corresponding period last year is
reported as a separate item under discontinued operations.
Formulas for calculation of key ratios
The key ratios presented in the interim reports have been calculated using
the same formulas as the corresponding ratios in the latest financial
statements. The formulas for calculation of ratios are available on page 36
of the Annual Report.
As of January 1, 2007, Fiskars has applied the following new or amended
IFRS standards:
IFRS 7 Financial Instruments: Disclosures. IFRS 7 requires additional
disclosures about the influence of financial instruments on the entity's
financial situation and results. Implementation will mainly influence future
Notes to the Consolidated Financial Statements and does not have any
significant impact on the interim report.
Amendment to the IAS 1 standard: Presentation of Financial Statements -
Capital Disclosures. Implementation of the amendment will mainly
influence future Notes to the Consolidated Financial Statements and does
not have any significant impact on the interim report.
IFRIC 9 Reassessment of Embedded Derivatives. The Corporation
estimates that this interpretation will not influence its consolidated
financial statements or the interim report, as no company within the
Corporation has changed contract stipulations as indicated by the
interpretation.
IFRIC 10 Interim Financial Reporting and Impairment. IFRIC 10 states
that an entity shall not reverse an impairment loss recognized in a previous
interim period in respect of goodwill or an investment in either an equity
instrument or a financial asset carried at cost. The Corporation estimates
that this interpretation will not influence its consolidated financial
statements or its interim report.
CONSOLIDATED INCOME STATEMENT 7-9 7-9 chg 1-9 1-9 chg 1-12
2007 2006 % 2007 2006 % 2006
MEUR MEUR MEUR MEUR MEUR
NET SALES 148.3 119.4 24 465.7 409.8 14 534.9
Cost of goods sold -96.9 -85.0 14 -309.8 -289.1 7 -376.8
GROSS PROFIT 51.4 34.4 49 155.9 120.7 29 158.1
Other operating income 1.3 0.6 111 2.1 2.1 -1 1.3
Sales and marketing expenses -23.0 -16.5 39 -63.8 -52.9 21 -71.9
Administration expenses -12.6 -9.9 27 -38.0 -34.1 12 -45.3
Research and development costs -1.6 -1.5 10 -4.6 -4.3 7 -6.1
Other operating expenses 1.3 -1.1 0.7 -6.6 -9.0
Income from associate 11.1 6.9 60 26.6 40.8 -35 58.6
OPERATING PROFIT 27.8 13.0 115 78.8 65.8 20 85.8
Gain on sale of Wärtsilä shares 16.8 16.8
Financial income 0.9 0.2 2.7 0.8 1.8
Financial expenses -4.0 -2.6 58 -9.8 -8.4 17 -10.9
PROFIT BEFORE TAXES 41.4 10.6 289 88.4 58.1 52 76.7
Income taxes -3.2 -2.7 18 -10.3 -0.5 -9.8
PROFIT FROM CONTINUING OPERATIO 38.2 7.9 382 78.1 57.6 35 66.9
Profit from discontinued oper. 1.8 14.9 15.2
PROFIT (LOSS) FOR THE PERIOD 38.2 9.8 292 78.1 72.5 8 82.0
Minority share 0.0 0.0 0.0 0.0 0.0
PROFIT FOR ORDINARY SHAREHOLDER 38.2 9.8 291 78.1 72.5 8 82.0
Earnings for ordinary shareholders
per share, euro 0.49 0.13 1.01 0.94 1.06
continuing operations 0.49 0.10 1.01 0.74 0.86
discontinued operations 0.02 0.19 0.20
Earnings per share is undiluted. The company has no open option programs or
other earnings diluting financial instruments.
CURRENCY RATES 1-9 1-9 chg 1-12
2007 2006 % 2006
USD average rate (I/S) 1.34 1.24 8 1.26
USD end-of-period (B/S) 1.42 1.27 12 1.32
CONSOLIDATED BALANCE SHEET 9/07 9/06 chg 12/06
MEUR MEUR % MEUR
ASSETS
NON-CURRENT ASSETS
Intangible assets 137.9 20.0 589 19.2
Goodwill 100.8 22.1 356 22.4
Tangible assets 122.8 104.3 18 98.7
Biological assets 45.6 32.8 39 35.0
Investment property 8.4 9.0 -6 8.7
Investment in associate 256.5 241.4 6 239.1
Other shares 3.3 4.8 -31 5.0
Other investments 2.5 1.5 72 1.5
Other long-term tax receivables 1.6 7.6 -79 5.5
Deferred tax assets 24.3 30.7 -21 24.9
NON-CURRENT ASSETS TOTAL 703.7 474.1 48 460.0
CURRENT ASSETS TOTAL
Inventories 186.4 112.8 65 114.6
Trade receivables 117.6 90.8 29 82.7
Other receivables 10.7 2.4 338 5.0
Cash in hand and at bank 9.4 43.6 -78 44.9
CURRENT ASSETS TOTAL 324.2 249.7 30 247.2
ASSETS TOTAL 1027.9 723.8 42 707.2
EQUITY AND LIABILITIES
EQUITY 453.7 431.8 5 421.8
NON-CURRENT LIABILITIES
Interest bearing debt 132.8 125.6 6 120.7
Non-interest bearing debt 2.0 2.6 -26 2.6
Deferred tax liabilities 54.7 21.1 159 20.8
Pension liability 12.7 14.8 -14 12.8
Provisions 5.4 5.0 7 4.2
NON-CURRENT LIABILITIES TOTAL 207.5 169.1 23 161.1
CURRENT LIABILITIES
Interest bearing debt 222.3 23.4 848 26.1
Trade payable and
other non-interest bearing debt 136.6 93.6 46 92.6
Income tax payable 7.8 5.8 33 5.7
CURRENT LIABILITIES TOTAL 366.7 122.9 198 124.4
EQUITY AND LIABILITIES TOTAL 1027.9 723.8 42 707.2
CONSOLIDATED STATEMENT 1-9 1-9 1-12
OF CASH FLOWS 2007 2006 2006
MEUR MEUR MEUR
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit before taxes 88.4 58.1 76.7
Adjustments for
Depreciation 16.1 18.6 28.6
Income from associate -26.6 -40.8 -58.6
Investment income -18.4 -0.3 -0.8
Interest expense 8.8 7.9 9.9
Chg in value of biological assets -10.7 -2.9 -5.0
Cash generated before working capital 57.7 40.7 50.8
Change in working capital
Change in interest free assets -12.1 -9.2 -5.4
Change in inventories -15.6 12.3 7.6
Change in interest free liabilities 6.9 9.9 7.6
Cash generated before financing and ta 36.9 53.7 60.6
Dividends from associate 27.7 23.7 47.5
Dividends received, other 0.1 3.6 3.6
Financial costs paid (net) -6.1 -6.5 -7.4
Taxes paid -6.5 -2.5 -5.1
NET CASH FROM OPERATING ACTIVITIES A 52.1 72.0 99.0
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions -240.7 -25.5 -26.0
Net change in shares in associate -0.1
Capital expenditure -12.9 -12.2 -19.3
Proceeds from sale of fixed assets 0.2 2.5 5.4
Sale of other l/t investments 3.2 1.8 2.2
Purchase of other l/t investments -5.2 -5.3
Cash flow from discontinued operations 32.9 33.0
NET CASH USED IN INVESTING ACTIVITIES -250.3 -5.8 -10.1
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from l/t borrowings 14.3 15.0
Repayment of l/t borrowings -0.5 -3.1 -4.6
Proceeds from (payment) of) s/t borrow 209.6 -22.7 -21.4
Payment of financial leases liabilitie -2.2 -2.2 -2.8
Cash flows from other financing items -1.1 0.1 0.1
Dividends paid -46.0 -34.4 -57.1
NET CASH USED IN FINANCING ACTIVITIES 159.8 -48.0 -70.8
CHANGE IN CASH (A+B+C) -38.4 18.3 18.2
Cash at beginning of period 44.9 21.7 21.7
Translation difference 2.9 3.6 5.0
Cash at end of period 9.4 43.6 44.9
STATEMENT OF CHANGES IN Equity holders of the parent companMinorit Total
SHAREHOLDERS' EQUITY Other interest
Share Own reser-Transl.Retain.
capital shares vesadjustm earn.
MEUR MEUR MEUR MEUR MEUR MEUR MEUR
Dec 31, 2005 77.5 -0.9 24.7 1.2 300.3 0.0 402.7
Translation differences -1.4 -1.4
Change in fair value reserve, associate -7.4 -7.4
Other changes in associate -0.2 0.0 -0.2
NET INCOME RECOGNISED DIRECTLY IN EQUITY -7.4 -1.7 0.0 0.0 -9.1
Net profit for the period 72.5 0.0 72.5
TOTAL RECOGNISED INCOME AND
EXPENSE FOR THE PERIOD -7.4 -1.7 72.5 0.0 63.5
Dividend distribution -34.4 -34.4
Sep 30, 2006 77.5 -0.9 17.3 -0.5 338.4 0.0 431.8
Translation differences -0.6 -0.6
Change in fair value reserve, associate 4.3 4.3
Other changes in associate -0.4 -0.1 -0.5
Other changes 0.0 0.0
NET INCOME RECOGNISED DIRECTLY IN EQUITY 4.3 -1.0 -0.1 0.0 3.2
Net profit for the period 9.5 0.0 9.5
TOTAL RECOGNISED INCOME AND
EXPENSE FOR THE PERIOD 4.3 -1.0 9.4 0.0 12.7
Dividend distribution -22.8 -22.8
Dec 31, 2006 77.5 -0.9 21.6 -1.5 325.0 0.0 421.8
Translation differences -6.2 -6.2
Change in fair value reserve, associate 1.5 1.5
Other changes in associate -0.2 -0.2
Equity net investment hedges 4.5 4.5
Other changes 0.1 0.1
NET INCOME RECOGNISED DIRECTLY IN EQUITY 6.0 -6.3 0.0 0.1 -0.2
Net profit for the period 78.1 0.0 78.1
TOTAL RECOGNISED INCOME AND
EXPENSE FOR THE PERIOD 6.0 -6.3 78.1 0.2 77.9
Dividend distribution -46.0 -46.0
Sep 30, 2007 77.5 -0.9 27.5 -7.8 357.1 0.2 453.7
KEY FIGURES 9/07 9/06 chg 12/06
%
Equity/share, euro 5.86 5.58 5 5.45
Equity ratio 44% 60% 60%
Net gearing 76% 24% 24%
Equity, meur 453.7 431.8 5 421.8
Net interest bear.debt, meur 345.7 105.4 228 101.9
Average number of employees 3279 3200 2 3167
Number of employees eop 4484 3195 40 3003
SEGMENT INFORMATION 7-9 7-9 chg 1-9 1-9 chg 1-12
NET SALES 2007 2006 % 2007 2006 % 2006
MEUR MEUR MEUR MEUR MEUR
Fiskars Brands 121.0 110.5 10 403.6 376.9 7 489.9
Iittala 16.0 16.0
Inha Works 5.5 5.6 0 33.3 28.1 19 37.2
Real Estate 6.5 3.9 66 14.6 6.7 117 10.3
Unallocated and eliminations -0.7 -0.5 37 -1.7 -1.8 -9 -2.4
CORPORATE TOTAL 148.3 119.4 24 465.7 409.8 14 534.9
Export from Finland 14.1 10.0 41 52.7 43.2 22 58.9
SEGMENT INFORMATION 7-9 7-9 1-9 1-9 1-12
OPERATING PROFIT 2007 2006 2007 2006 2006
MEUR MEUR MEUR MEUR MEUR
Fiskars Brands 12.1 3.3 41.9 21.1 21.1
Iittala 0.3 0.3
Inha Works -0.2 0.2 3.4 2.9 3.7
Real Estate 5.4 3.2 11.4 5.2 7.6
Associate Wärtsilä 11.1 6.9 26.6 40.8 58.6
Unallocated and eliminations -0.8 -0.7 -4.7 -4.2 -5.2
CORPORATE TOTAL 27.8 13.0 78.8 65.8 85.8
SEGMENT INFORMATION 7-9 7-9 1-9 1-9 1-12
DEPRECIATIONS 2007 2006 2007 2006 2006
MEUR MEUR MEUR MEUR MEUR
Fiskars Brands 4.3 5.4 13.2 16.6 25.8
Iittala 0.6 0.6
Inha Works 0.4 0.3 1.0 0.9 1.2
Real Estate 0.4 0.3 1.1 1.0 1.4
Unallocated and eliminations 0.1 0.0 0.2 0.1 0.1
CORPORATE TOTAL 5.7 6.0 16.1 18.6 28.6
SEGMENT INFORMATION 7-9 7-9 1-9 1-9 1-12
CAPITAL EXPENDITURE 2007 2006 2007 2006 2006
MEUR MEUR MEUR MEUR MEUR
Fiskars Brands 2.5 26.4 22.0 32.4 37.5
Iittala *) 228.4 228.4
Inha Works 1.0 0.0 2.6 0.6 1.2
Real Estate 0.7 0.2 1.3 1.5 1.9
Associate Wärtsilä 20.7 20.7
Unallocated and eliminations 0.9 1.2 0.0 0.3
CORPORATE TOTAL 254.1 26.6 276.2 34.5 40.8
*) The Group's investment in the segment is included here
GEOGRAPHICAL SEGMENT 7-9 7-9 chg 1-9 1-9 chg 1-12
NET SALES BASED ON CUSTOMER 2007 2006 % 2007 2006 % 2006
LOCATION MEUR MEUR MEUR MEUR MEUR
Europe 79.2 52.1 52 256.4 192.5 33 257.1
USA 59.2 58.1 2 180.0 185.4 -3 235.2
Rest of the world 10.0 9.3 7 29.3 31.9 -8 42.6
CORPORATE TOTAL 148.3 119.4 24 465.7 409.8 14 534.9
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.
IMPACT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
MEUR
Fiskars acquired Iittala Group Plc. on August 31. Iittala designs,
produces and sells homeware, its home markets are Finland, Sweden and
Norway and in addition Iittala has sales companies in United States,
Denmark, Estonia, The Netherlands, Germany and Poland.
Iittala's net sales in 2006 were EUR 189.8 million, operating profit was
EUR 17.0 million and net profit was EUR 7.4 million.
Total assets were EUR 160.5 million and personnel 1 353 at the end of 2006.
Iittala forms a new segment within Fiskars and the consolidated
net sales for the review period was EUR 16.0 million and the operating
profit before eliminations from purchase price allocation was EUR 1.4
million. Iittala and Fiskars have not had any business relations
before the acquisition.
If Iittala had been consolidated from the beginning of the year
the proforma consolidated net sales and operating profit for Fiskars
would have been EUR 579 million and EUR 84 million respectively.
Purchase price has been allocated to the intangible assets in Iittala,
valuation of the trademarks was based on their qualities and significance.
Customer relationships and franchising business have also been included
in immaterial assets. Trademarks are not depreciated annually as no
economical lifetime can be established. Customer relationships and
franchising business related assets are depreciated during their estimated
economical lifetime of 15 years. Additionally part of the purchase price
was allocated to inventory, this will be realized during 2007.
The goodwill from the acquisition relates mostly to the synergies
that will be gained from integrating the businesses.
IITTALA ACQUISITION COST, PRELIMINARY SPECIFICATION MEUR
Purchase price paid in cash 115.6
Acquisition related costs 1.7
Capital loans from previous owners included in the transact 44.7
Fair value of acquired assets 90.1
Minority share 0.1
GOODWILL 72.0
sellers
book fair
ACQUIRED ASSETS AND LIABILITIES values values
Fixed non-current assets 26.0 26.0
Intangible and other immaterial non-current assets 3.8 118.9
Inventories 56.7 60.6
Receivables 19.6 19.6
Cash and bank 6.3 6.3
Deferred tax liability -1.2 -32.1
Capital loans -44.7 0.0
Non-current liabilities -8.9 -8.9
Current liabilities -100.3 -100.3
TOTAL -42.6 90.1
IMPACT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
MEUR
Fiskars acquired the French company Leborgne S.A. in May.
The company produces garden tools in France and in addition to the French
market sells them in Spain, Belgium and Italy.
The net sales for Leborgne in 2006 was EUR 16 million.
The purchase price has been allocated to trademark Leborgne,
customer relationships and inventory.
The remaining goodwill relates to synergies within the garden
business in Europe and the acquired product program.
LEBORGNE ACQUISITION COST, PRELIMINARY SPECIFICATION
Purchase price paid in cash 12.8
Acquisition related costs 0.4
Fair value of acquired assets 6.5
GOODWILL 6.7
sellers
book fair
ACQUIRED ASSETS AND LIABILITIES values values
Non-current assets 0.9 3.2
Inventories 3.2 3.3
Receivables 6.1 6.1
Cash and bank 0.1 0.1
Deferred tax liability 0.0 -0.8
Non-current liabilities -0.9 -0.9
Current liabilities -4.5 -4.5
TOTAL 4.9 6.5
CONTINGENCIES AND PLEDGED ASSETS 9/07 9/06 12/06
MEUR MEUR MEUR
AS SECURITY FOR OWN COMMITMENTS
Discounted bills of exchange 0 0
Lease commitments 60 20 19
Other contingencies 7 9 9
TOTAL 67 29 28
GUARANTEES AS SECURITY FOR
THIRD-PARTY COMMITMENTS
Real estate mortgages 2 2 2
TOTAL PLEDGED ASSETS AND CONTINGENCIES 68 31 30
Iittala Group has long-term lease commitments for several facilities
in Finland and abroad.
NOMINAL AMOUNTS OF DERIVATIVES
Forward exchange contracts 56 46 94
Interest rate swaps 16
Forward interest rate agreements 75
Electricity forward agreements 1
MARKET VALUE VS. NOMINAL AMOUNTS
OF DERIVATIVES
Forward exchange contracts 0 0 0
Interest rate swaps 0
Forward interest rate agreements 0
Electricity forward agreements 0
Forward exchange contracts have been valued at market in the
financial statements.
RELATED PARTY TRANSACTIONS
The foundation of Bergsrådinnan Sophie von Julins stiftelse had a deposit
totaling EUR 0.1 million (1.3) in the Financial Services Office
on September, 30 2007. An interest of base rate + 0.5 was paid on the deposit.
Fiskars Corporation has in total booked legal fee invoices from Foley & Lardner
for which Ralf Böer is an associate, for EUR 1.1 million