Stock exchange release
May 11, 2006
FISKARS CORPORATION INTERIM REPORT JANUARY?MARCH 2006
FISKARS CORPORATION INTERIM REPORT JANUARYMARCH 2006
(Unaudited)
Fiskars net sales increased; profitability at the same level as last year
- Net sales grew by 14% and was EUR 149.5 million (131.5)
- Operating profit of EUR 16.3 million (15.1) includes Fiskars'
income from associate Wärtsilä
- Fiskars Brands production restructuring project continues as planned
FISKARS CORPORATION IN BRIEF
EUR million Q1 2006 Q1 2005 2005
Net sales 149.5 131.5 551.1
Income from 8.8 6.2 28.6
associate Wärtsilä
Operating profit 16.3 15.1 26.6
Operating profit, % 10.9% 11.5% 4.8%
Profit before taxes 14.6 13.0 69.4
Earnings per share, EUR 0.16 0.13 0.80
Net cash from 13.2 8.2 62.7
operating activities
FISKARS CORPORATION
Fiskars net sales for the first quarter increased by 14% from last year to
EUR 149.5 million (131.5). Around a third of the growth was due to
exchange rate changes. The operating profit was EUR 16.3 million (15.1).
This number incorporates the income from the associate Wärtsilä, which
was EUR 8.8 million (6.2).
The restructuring of production capacity and streamlining of operations at
Fiskars Brands, Inc. continues according to plan. EUR 0.6 million in costs
associated with the project were booked for the first quarter, as the costs
associated with redundancies in the US, announced at the beginning of May,
will be booked in the second quarter.
Net financial items were EUR 1.7 million (2.1) and the profit before taxes
was EUR 14.6 million (13.0). The profit for the period improved from last
year, totaling EUR 12.5 million (10.4).
Investments during the period were EUR 3.1 million (12.3). No acquisitions
were made in the first quarter.
FISKARS BRANDS, INC.
Fiskars Brands net sales increased to EUR 138.5 million (121.1). Sales
increased in all markets, and most of all in Europe. The operating profit,
which includes EUR 0.6 million restructuring costs, was EUR 8.0 million or
5.8% (8.5 and 7.0%, respectively).
In the US market, sales of School, Office and Craft products as well as
Outdoor Recreation products and Consumer Electronics took an upward
turn, whereas sales of floor mats and watering products in the Garden and
Outdoor Living product category decreased from the previous year. In
Europe, sales of gardening products grew significantly. Compared to the
past few years, the resources spent in sales and marketing were increased
particularly in the United States. Due to that spending and increased
competition, the operating profit was on last year's levels despite the
improved sales.
The restructuring program, begun in the fall of 2005 to streamline the
production structure and increase sourcing of labour-intensive products, has
continued throughout the period. The total costs of the program are expected
to stay within the projected EUR 50 million, of which some EUR 10 million
will be booked during the current financial year. Development of the supply
chain has progressed as planned.
Capital expenditure during the first quarter is mostly related to investments
in tools necessary to manufacture new products and product development.
The investments totaled EUR 2.2 million (10.4).
INHA WORKS
Net sales for Inha Works increased by 21% from the previous year and
totaled EUR 10.3 million (8.6). The operating profit was EUR 1.1 million
(1.0). The boat market continued to grow in Buster's market areas and the
plant is working at full capacity. The company is responding to the increase
in demand by using more contract manufacturing. The rise in the cost of raw
materials, particularly aluminum, increased the manufacturing costs. No
significant investments were made during the period.
REAL ESTATE GROUP
Net sales for the Real Estate Group were EUR 1.1 million (2.6) and the
operating profit EUR 0.1 million (0.7). No significant real estate deals were
made during the period. The fair value of the standing timber increased
during the first quarter by EUR 0.1 million (0.7).
Investments by the Real Estate Group totaled EUR 0.7 million (0.8).
WÄRTSILÄ
Profits for the period for associate Wärtsilä improved from last year, with
Fiskars' income from associate for the period totaling EUR 8.8 million
(6.2). As the participation in Wärtsilä is reported as one of the business
segments in Fiskars' IFRS-compliant financial statements, the income from
associate Wärtsilä is reported as part of the operating profit.
Fiskars' share of Wärtsilä stock remained unchanged throughout the first
quarter and was 16.8% (20.5) with the share of votes being 30.6% (28.1).
The book value of Fiskars' investment in the associate was EUR 223.7
million (238.3), of which EUR 38.1 million was goodwill. The market value
of Fiskars share of Wärtsilä was EUR 484 million at the end of the period.
Fiskars' shareholders' equity includes Fiskars' share of the fair value
reserve calculated in accordance with the IAS 39 standard included in
Wärtsilä's consolidated shareholders' equity. The value of the reserve was
EUR 31.3 million at the end of the review period (37.9).
PERSONNEL
The number of Fiskars personnel was 3,312 (3,559) at the end of the period,
having been 3,284 at the beginning of the period. The number of personnel
at Fiskars Brands, Inc. was 2,986, which is a decrease of 223 staff since the
end of March 2005. Changes in personnel were caused by seasonal
fluctuation and the production restructuring measures already implemented.
PROFITS AND TAXES
Net financial items during the period decreased somewhat from that of the
previous year, totaling EUR 1.7 million (2.1). The profit before taxes was
EUR 14.6 million (13.0). Taxes have been calculated on the basis of the
local accumulated income and the enacted tax rates while taking into
consideration the estimated impact of deferred tax assets. Taxes of EUR 2.1
million (2.7) have been booked on year-to-date accumulated profit. The
profit for the period totaled EUR 12.5 million (10.4). Earnings per share
were EUR 0.16 (0.13).
BALANCE SHEET AND FINANCING
The total assets were EUR 702.4 million (702.7 at the beginning of the
period). The changes from the beginning of the period in balance sheet items
were minor, investment in the associate decreased because of dividends
paid, and the seasonal nature of operations increased trade receivables at the
beginning of the sales period. The Corporation's interest-bearing net debt
increased from the beginning of the period by EUR 26.2 million to EUR
166.2 million (140.0 at the beginning of the period). The increase in debt
was mainly due to dividend payout during the period.
Net cash from operating activities was EUR 13.2 million (8.2) and net cash
used in investing activities was EUR 8.1 million (11.6).
The end-of-period equity to assets ratio was 55% (57% at the beginning of
the period) and the net gearing ratio was 43% (35% at the beginning of the
period). The Corporation's financial situation and liquidity remain strong. In
addition to cash and cash equivalents, the Corporation has significant credit
facilities available.
PURCHASE AND TRANSFER OF OWN SHARES
During the period and until the Annual General Meeting, the Board of
Directors had an authorization to purchase and sell the Corporation's shares
provided that the total nominal value of such shares and the votes carried by
them did not exceed five percent (5%) of the share capital and the total votes
in the company.
The Board did not exercise its authorization during the year.
At March 31, 2006, 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.
ANNUAL GENERAL MEETING 2006
The Fiskars Corporation Annual General Meeting held on March 20, 2006
decided to pay a dividend of EUR 0.45 per share of Series A, totaling EUR
24,667,641, and EUR 0.43 per share of Series K, totaling EUR
9,703,073.84, for a total of EUR 34,370,714.84.
It was decided that the number of Board members be seven. Mr. Kaj-Gustaf
Bergh, Mr. Alexander Ehrnrooth, Mr. Paul Ehrnrooth, Ms. Ilona Ervasti-
Vaintola, Mr. Gustaf Gripenberg, Mr. Karl Grotenfelt, and Mr. Olli Riikkala
were re-elected. The term of the Board members will expire at the end of the
Annual General Meeting in 2007.
KPMG Oy Ab was elected auditor.
The Annual General Meeting decided to authorize the Board of Directors to
acquire or divest a number of the company's own shares at the Helsinki
Exchanges in a proportion deviating from the shareholders' existing
proportionate holdings at share prices quoted on the Helsinki Exchanges at
the time of such acquisition or divestment, provided that the total nominal
value of such shares and the votes carried by them do not exceed ten percent
(10%) of the share capital and the total votes in the company, whereby the
authorization concerns a maximum of 5,494,449 of the company's own
shares of Series A and a maximum of 2,256,570 of Series K. The
authorization is valid for a period of one year from March 20, 2006.
Convening after the Annual General Meeting, the Board elected Olli
Riikkala its Chairman, and Alexander Ehrnrooth and Paul Ehrnrooth as Vice
Chairmen. The Board appointed Gustaf Gripenberg Chairman of the Audit
Committee and Alexander Ehrnrooth, Paul Ehrnrooth and Ilona Ervasti-
Vaintola its other members. The Board appointed Olli Riikkala chairman of
the Compensation Committee and Kaj-Gustaf Bergh and Karl Grotenfelt its
other members.
SHARE PRICES
At the end of March 2006, the price of the Fiskars A share at the Helsinki
Exchanges was EUR 10.16 (9.60 at the start of the year) and the price of the
K share EUR 10.79 (9.90). The market value of the Corporation's share
capital was EUR 802 million at the end of the review period.
SUBSEQUENT EVENTS SINCE THE END OF THE QUARTER
In October 2005, Fiskars announced that there would be a reorganization of
the company's production capacity in the United States. Notification of the
project's progress was given on May 3, 2006. As planned, Fiskars Brands,
Inc. is expanding its sourcing activities and will discontinue manufacturing
at four of its industrial locations in the US during the current financial year.
These measures are targeted to create cost savings so as to improve
competitiveness and profitability. Fiskars Brands will also continue
implementing its strategy of concentrating on core products by
discontinuing two minor non-core product categories. These decisions will
reduce the number of employees in the US by approximately 430 people
during the financial year.
Two manufacturing facilities will be closed in Wisconsin and in future the
products will be outsourced. One of the facilities will continue as a
distribution center. Personnel reduction in this area will be around 300. The
facilities have been manufacturing mainly cutting tools such as scissors and
other craft products.
Other measures will be taken in Georgia, where manufacturing and
marketing of rubber floor-mats will be discontinued; and in Arizona, where
the soaker hose business will be discontinued. Personnel reductions in these
businesses will total 130 and they have an annual net sales level of
approximately EUR 20 million.
These restructuring measures will have little effect on this year's corporate
net sales or operating results before restructuring costs. Due to these
measures, preliminary estimates suggest that the second quarter results will
include personnel and other costs related to the reorganization of some EUR
4.5 million.
OUTLOOK
As stated earlier, Fiskars' net sales and operating profit for the last year
before the Corporation's income from associate Wärtsilä and before planned
and announced restructuring costs are expected to be at last year's level.
Comparing the first quarter of this year to last year and before income from
associate Wärtsilä, Fiskars had a strong start even though unseasonably cold
weather hit Europe towards the end of the period, influencing sales
unfavorably. The positive impact of the structural measures is expected to
take effect gradually during the latter part of the year and predominantly
during 2007. Fiskars' income from associate Wärtsilä forms a significant
part of the Corporation's operating profit.
Heikki Allonen
President and CEO
NOTES TO THE INTERIM REPORT
This interim report has been prepared in accordance with International
Accounting Standard 34 (IAS 34) Interim Financial Reporting.
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.
Income from associate
The Fiskars Corporation participation in the associate Wärtsilä is one of the
Corporation's reported business segments. The income from the associate is
included in the operating profits as of January 1, 2006 and the figures for the
corresponding periods have been adjusted accordingly.
As of January 1, 2006, Fiskars complies with the following amended and
new IFRS standards:
IAS 39 Financial instruments: Recognition and Measurement:
Amendments after March 31, 2004:
- Cash flow hedges of forecast intragroup transactions, issued April
14, 2005; effective from January 1, 2006
- Financial guarantee contracts; issued August 18, 2005; effective
from January 1, 2006
The adoption of these amendments has not had any significant impact on
the Corporation's first quarter financial statements.
IAS 19 Employee benefits: amendment of actuarial gains and losses,
group plans and disclosures; issued December 16, 2004; effective from
January 1, 2006.
- The amendment introduces an alternative option regarding the
recognition of actuarial gains and losses for defined benefit pension
plans and also adds new disclosure requirements.
As the Corporation does not intend to change the accounting policy
adopted for recognition of actuarial gains and losses, adoption of this
amendment will only impact the format and extent of disclosures
presented in the annual financial statements.
IFRIC 4 interpretation: Determining whether an arrangement contains a
lease; issued December 2, 2004; effective from January 1, 2006.
- The adoption of this interpretation has no significant impact on the
Corporation's first quarter financial statements.
CONSOLIDATED 1-3 1-3 chg 1-12
INCOME STATEMENT 2006 2005 % 2005
MEUR MEUR MEUR
NET SALES 149.5 131.5 14 551.1
Cost of goods sold -105.9 -91.8 15 -397.0
GROSS PROFIT 43.5 39.8 9 154.1
Other operating income 0.1 0.1 9 2.3
Sales and marketing expenses -20.5 -16.7 23 -68.9
Administration expenses -13.4 -12.8 4 -46.5
Research and development costs -1.6 -1.3 18 -5.6
Other operating expenses -0.6 -0.1 -37.4
Income from associate 8.8 6.2 42 28.6
OPERATING PROFIT 16.3 15.1 8 26.6
Gain on sale of Wärtsilä shares 49.8
Financial income and expenses -1.7 -2.1 -18 -7.1
PROFIT BEFORE TAXES 14.6 13.0 12 69.4
Taxes -2.1 -2.7 -22 -7.3
PROFIT (LOSS) FOR THE PERIOD 12.5 10.4 21 62.1
Earnings per share, euro 0.16 0.13 0.80
Earnings per share is undiluted. The company has no open option programs.
CURRENCY RATES 1-3 1-3 chg 1-12
2006 2005 % 2005
USD average rate (I/S) 1.20 1.31 -8 1.24
USD end-of-period (B/S) 1.21 1.30 -7 1.18
CONSOLIDATED BALANCE SHEET 3/06 3/05 chg 12/05
MEUR MEUR % MEUR
ASSETS
Intangible assets 12.9 11.5 12 13.5
Goodwill 12.5 30.2 -59 12.8
Tangible assets 106.6 122.2 -13 110.9
Biological assets 29.9 31.0 -4 29.9
Investment property 9.2 15.0 -39 9.4
Investments in associates 223.7 238.3 -6 231.9
Other shares 5.5 4.3 27 4.8
Other investments 1.3 1.3 4 1.3
Long-term tax receivables 9.1 10.1 -10 9.0
Deferred tax assets 34.4 36.6 -6 35.0
LONG-TERM TOTAL 445.0 500.6 -11 458.5
Inventories 126.7 124.3 2 129.3
Trade receivables 115.6 107.9 7 86.9
Other receivables 8.9 23.9 -63 6.4
Cash in hand and at bank 6.1 6.4 -5 21.7
CURRENT TOTAL 257.4 262.4 -2 244.2
ASSETS TOTAL 702.4 763.0 -8 702.7
EQUITY AND LIABILITIES
Equity 387.0 354.8 9 402.7
L/t interest bear.debt 139.4 157.8 -12 124.5
L/t non-interest bear.debt 2.7 3.3 -20 2.7
Deferred tax liabilities 17.8 20.6 -14 17.6
Pension liability 15.2 13.3 15 15.5
Provisions 2.6 2.7 -3 2.9
LONG-TERM LIABILITY TOTAL 177.7 197.8 -10 163.1
S/t interest bear.debt 32.9 88.6 -63 37.2
Trade payable and
other non-interest bearing debt 99.7 115.3 -14 94.6
Income tax payable 5.1 6.5 -22 5.1
CURRENT LIABILITY TOTAL 137.7 210.4 -35 136.9
EQUITY AND LIABILITIES TOTAL 702.4 763.0 -8 702.7
CONSOLIDATED STATEMENT 1-3 1-3 1-12
OF CASH FLOW 2006 2005 2005
MEUR MEUR MEUR
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxes 14.6 13.0 69.4
Adjustments for
Depreciation 6.5 5.7 58.7
Income from associate -8.8 -6.2 -28.6
Investment income (net) -0.6 -0.8 -52.3
Interest expense (net) 2.3 2.9 9.5
Chg in value of biological assets 0.1 0.1 0.5
Dividends from assoc.comp. 23.7 17.1 17.1
Dividends received, other 0.0 0.0 0.1
Financial costs paid (net) -1.5 -2.1 -8.3
Taxes paid -1.8 -2.0 -6.7
Change in interest free assets -27.8 -36.4 8.1
Change in inventories 0.5 -11.5 -7.8
Change in interest free liability 6.0 28.4 3.0
NET CASH FROM OPERATING ACTIVITIES(A) 13.2 8.2 62.7
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions -5.9 -11.9
Transact. in assoc. comp. shares 74.4
Capital expenditure -3.1 -6.2 -19.0
Proceeds from sale of fixed asset 0.0 0.2 2.9
Sale of other l/t investments 0.1 0.6 1.7
Purchase of other l/t investments -5.2 -0.3 -0.2
NET CASH USED IN INVESTING ACTIVITIES(B) -8.1 -11.6 47.9
CASH FLOWS FROM FINANCING ACTIVITIES
New long-term loans 15.0 5.0
Amortization of l/t loans -4.2 0.0 -32.8
Changes in short-term loans 0.8 16.7 -39.8
Financial leases, payments -0.7 -0.7 -3.7
Other financing items 0.1 -2.2 -3.1
Dividends paid -34.4 -22.8 -22.8
NET CASH FLOW FROM FINANC. ACTIVITIES(C) -23.4 -3.9 -102.3
Translation difference (D) 2.8 -1.9 -2.3
CHANGE IN CASH (A+B+C+D) -15.6 -9.2 6.1
Cash at beginning of period 21.7 15.6 15.6
Cash at end of period 6.1 6.4 21.7
STATEMENT OF CHANGES IN Other
CONSOLIDATED EQUITY ATTRIBUTABLE Share Own reser-Transl.Retain.
TO EQUITY HOLDERS OF THE PARENT capital shares vesadjustm earn. Total
MEUR MEUR MEUR MEUR MEUR MEUR
Dec.31,2004 IFRS 77.5 -0.9 0.0 -1.4 260.5 335.8
Adoption of IAS 39
Fiskars Corporation -0.4 0.4 0.1
Associated company Wärtsilä 37.8 37.8
Jan.1,2005 IFRS 77.5 -0.9 37.5 -1.4 261.0 373.7
Translation differences 1.1 1.1
Other changes in assoc. company 0.1 -7.7 -7.5
NET INCOME RECOGNISED DIRECTLY
IN EQUITY 0.1 1.1 -7.7 -6.5
Net profit for the period 10.4 10.4
TOTAL RECOGNISED INCOME AND
EXPENSE FOR THE PERIOD 0.1 1.1 2.7 3.9
Dividend distribution -22.8 -22.8
Mar.31,2005 IFRS 77.5 -0.9 37.6 -0.3 240.9 354.8
Translation differences 0.3 0.3
Change in fair value reserve 0.4 0.4
Chg in investment in associates -6.9 -6.9
Other changes in assoc. company -6.4 1.2 7.6 2.4
NET INCOME RECOGNISED DIRECTLY IN EQUITY -12.9 1.4 7.6 -3.8
Net profit for the period 51.8 51.8
TOTAL RECOGNISED INCOME AND
EXPENSE FOR THE PERIOD -12.9 1.4 59.4 47.9
Dec.31,2005 IFRS 77.5 -0.9 24.7 1.2 300.3 402.7
Translation differences -0.6 -0.6
Change in fair value reserve, associate 6.6 6.6
Other changes in assoc. company 0.1 0.0 0.1
NET INCOME RECOGNISED DIRECTLY IN EQUITY 6.6 -0.5 0.0 6.1
Net profit for the period 12.5 12.5
TOTAL RECOGNISED INCOME AND
EXPENSE FOR THE PERIOD 6.6 -0.5 12.5 18.6
Dividend distribution -34.4 -34.4
Mar.31,2006 IFRS 77.5 -0.9 31.3 0.7 278.4 387.0
Fiskars shares of associated company Wärtsilä's fair value reserve and its
changes are specified in the other reserves above.
KEYFIGURES 3/06 3/05 chg 12/05
%
Equity/share, euro 5.00 4.59 9 5.20
Equity ratio 55% 46% 57%
Net gearing 43% 68% 35%
Equity, meur 387.0 354.8 9 402.7
Net interest bear.debt, meur 166.2 240.0 -31 140.0
Average number of employees 3293 3539 -7 3476
SEGMENTINFORMATION 1-3 1-3 chg 1-12
NET SALES 2006 2005 % 2005
MEUR MEUR MEUR
Fiskars Brands 138.5 121.1 14 513.3
Inha Works 10.3 8.6 21 32.4
Real Estate 1.1 2.6 -55 8.9
Unallocated and eliminations -0.5 -0.7 -33 -3.5
CORPORATE TOTAL 149.5 131.5 14 551.1
Export from Finland 17.8 18.9 -6 55.5
SEGMENTINFORMATION 1-3 1-3 1-12
RESULT 2006 2005 2005
MEUR MEUR MEUR
Fiskars Brands 8.0 8.5 -1.6
Inha Works 1.1 1.0 3.5
Real Estate 0.1 0.7 2.0
Associate Wärtsilä 8.8 6.2 28.6
Unallocated and eliminations -1.7 -1.2 -5.8
OPERATING PROFIT 16.3 15.1 26.6
SEGMENTINFORMATION 1-3 1-3 1-12
DEPRECIATION AND AMORTIZATION 2006 2005 2005
ACCORDING TO PLAN MEUR MEUR MEUR
Fiskars Brands 5.8 5.1 55.9
Inha Works 0.3 0.2 1.0
Real Estate 0.3 0.3 1.3
Unallocated and eliminations 0.0 0.1 0.5
CORPORATE TOTAL 6.5 5.7 58.7
SEGMENTINFORMATION 1-3 1-3 1-12
INVESTMENTS 2006 2005 2005
MEUR MEUR MEUR
Fiskars Brands 2.2 10.4 24.1
Inha Works 0.2 0.7 3.4
Real Estate 0.7 0.8 2.9
Associate Wärtsilä 30.2
Unallocated and eliminations 0.0 0.3 0.4
CORPORATE TOTAL 3.1 12.3 60.9
GEOGRAPHICAL SEGMENT 1-3 1-3 chg 1-12
NET SALES BASED ON CUSTOMER 2006 2005 % 2005
LOCATION MEUR MEUR MEUR
Europe 68.9 60.0 15 220.1
USA 70.9 64.3 10 292.9
Rest of the world 9.7 7.2 34 38.1
CORPORATE TOTAL 149.5 131.5 14 551.1
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 3/06 3/05 12/05
MEUR MEUR MEUR
FOR THE COMPANY'S OWN COMMITMENTS
Real estate mortgages 0
Pledged assets 1
Bills of exchange 0 0 0
Lease contingencies 21 18 23
Other contingencies 1 0 1
TOTAL 22 20 24
GUARANTEES AS SECURITY FOR
OTHER PARTIES' COMMITMENTS
Real estate mortgages 2
TOTAL CONTINGENCIES 24 20 24
NOMINAL AMOUNTS OF DERIVATIVES
Forward exch. contracts 111 138 145
Currency options 4 4
Interest rate swaps 23
FRA's 31 59
MARKET VALUE VS. NOMINAL AMOUNTS
OF DERIVATIVES
Forward exch. contracts 1 -1 -2
Currency options 0 0
Interest rate swaps 0
FRA's 0 0
Nominal values also include closed contracts.