Stock exchange release
November 11, 2003
FISKARS CORPORATION INTERIM REPORT
FISKARS CORPORATION INTERIM REPORT
JANUARY-SEPTEMBER 2003
(Unaudited)
FISKARS SALES ON PREVIOUS YEARS LEVEL IN LOCAL CURRENCIES IN THE
US AND THE EURO ZONE. CASH FLOW CONTINUES STABLE
Consolidated, July-September (3 months)
- Net sales EUR 134.1 million (150.5)
- Operating profit EUR 4.9 million (6.2)
- Pre-tax profit EUR 5.9 million (3.5)
Consolidated, January-September (9 months)
- Corporate net sales EUR 488.0 million (582.5)
- Operating profit EUR 23.8 million (28.2)
- Investment income EUR 31.0 million (59.1)
- Pre-tax profit EUR 45.3 million (74.5)
- Earnings per share EUR 0.56 (0.87)
- Operational cash flow EUR 85.5 million (116.1)
- Average US dollar rate weakened by 20% against euro
FISKARS CORPORATION
JulySeptember
Developments in the United States, the main market area of Fiskars
Corporation, were twofold during the period.
In the most important product areas scissors-related
operations and garden products the market leveled out, with
signs of a slight upturn. In the third quarter, as earlier in the
year, leisure products show the most promising developments, with
a growth of about 35%.
Plastic products, i.e. outdoor furniture and flowerpots,
continued to underperform compared to the previous year, and these
product lines were run at a loss.
In Europe, sales in the UK did not reach the forecast figures,
whereas in Germany sales picked up after a difficult first half of
the year and fulfilled projections. In Scandinavia, sales
continued to develop favorably.
Inha Works domestic deliveries declined slightly.
Net sales from the real estate operations remained on the same
level as in the previous year, 2002.
OPERATIONAL RESULTS
Fiskars Brands, Inc.
JulySeptember
Fiskars Brands Inc. net sales for the third quarter in US dollars
increased to USD 144 million (141). In euros, the net sales for
the period was EUR 128 million (144) or 11% less than the previous
year. Calculated in euros, sales in North America decreased by 14%
and in Europe by 1%.
Fiskars Brands operating profit was EUR 4.8 million (6.2) in the
third quarter, with no non-recurring costs booked.
JanuarySeptember
In US dollars, Fiskars Brands net sales for the first three
quarters were USD 515 million (513) or as in 2002. In euros, net
sales for the period was EUR 464 million, a decrease of 17%
compared to the previous year (557).
Fiskars Brands operating profit for the first nine months was
EUR 23.8 million (26.8), with non-recurring costs totaling EUR 8.7
million (19.3).
The market for school, office and craft products has turned more
difficult in the United States and sales volumes decreased
slightly compared to the previous year.
North American sales of FISKARS branded garden tools were at a
good level.
Sales of GERBER products continued to grow strongly, partly due
to Gerber products being featured in the film Terminator 3.
The poor market situation for plastic flowerpots and furniture
was reflected in both net sales and profitability in North
America. Low demand for these products and the high costs of raw
material continued to weaken results despite the restructuring
made to accommodate the market situation. As a result of these
measures, the number of employees in the US has decreased by some
250 in the past year.
In Europe, sales varied from country to country. The poor
economic situation continued to be reflected in decreased sales in
some key markets, primarily UK and Germany. In Finland, sales
continued to grow in the third quarter, but taken as a whole, the
European sales for the first nine months of 2003 stayed a bit
below the previous years level.
Inha Works
Net sales for Inha Works in the third quarter was EUR 4.2 million,
a decrease of 11% compared to the previous year (4.7). However,
due to the strong performance in the beginning of the year net
sales for the first nine months increased to EUR 19.0 million
(18.7).
Sales of Buster boats have continued to be good, both in the
domestic and export markets. The domestic demand for hinges has
also been good.
Inha Works operating profit for the third quarter was EUR
0.3 million (0.4). For the first nine months the operating profit
was EUR 2.4 million (2.0).
The real estate operations continued to post a stable performance.
Income from investment operations during the first nine months
totaled EUR 31.0 million (59.1) and mainly consisted of dividends
received from Wärtsilä in the first quarter and EUR 3 million from
investments in funds.
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.
CORPORATE MANAGEMENT
Ms. Maija Kutvonen, B.Sc. (Econ.), was appointed Vice President,
Corporate Control from November 17, 2003. Mr. Johan Landsdorff,
LL.M., was appointed Vice President, Legal Counsel as from April
1, 2003. Mr. Jukka Suonperä, M.Sc. (Eng.) assumed his post as the
new President of Inha Works on April 1, 2003.
PERSONNEL
The corporate workforce totaled 3,789 people at the end of
September (4,139). The decrease in personnel is mainly due to
rationalization of production in the United States. In North
America, the corporation employed 1,986 (2,307) people, while the
number of employees in Finland was 893 (893).
CAPITAL EXPENDITURE AND INVESTMENTS
In the first three quarters of the year, investments in industrial
fixed assets totaled EUR 21.1 million (22.9), and EUR 10.9 million
(3.2) was placed in long-term investments, mainly in the holdings
of Wärtsilä. At the end of the period, Fiskars holds 19.2% of the
Wärtsilä share capital and 24.4% of the votes.
At the end of September, the market value of Fiskars' portfolio
of Wärtsilä shares was EUR 141.9 million.
Fiskars also has long-term holdings in capital investment funds.
At the end of September, the market value of these holdings was
EUR 27.7 million.
BALANCE SHEET AND FINANCING
The balance sheet total was EUR 758 million, which is a decrease
of 11% from September 2002 (848). The cash flow from operations
continued to be strong and amounted to EUR 86 million (116). The
equity ratio was 55% (51) and gearing 47% (63). The Corporation's
liquidity is good. Net financing costs decreased to a total of EUR
9.5 million (12.9) in the first nine months.
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 September, the price of one Fiskars A-series share
on the Helsinki Exchange was EUR 9.20, compared to 7.80 at the
beginning of the year, and the price of one K-series share was EUR
9.89 (8.10). The market capitalization of the company was EUR 520
million (437).
OUTLOOK
Predicting the development of sales for the end of the year is yet
again difficult. However, there are signs that indicate that the
United States economy is heading for recovery. In Europe, the
outlook continues to be uncertain. The corporate net sales in
euros will be considerably lower than the previous year.
Fiskars announced on October 10, 2003 that it is preparing to
book a goodwill and fixed asset impairment of EUR 75 million in
the final quarter. The write-downs are almost entirely associated
with flower-pot and garden furniture businesses acquired during
the latter part of the 1990s.
The operating profit for the whole year 2003 without the planned
impairment measures is expected to be at the same level as the
previous year. The full-year net profit is further influenced by
the fact that the profits from investment operations will fall
short from that of the previous year. Due to the write-downs, the
net profit for the period will be negative.
The financial position of the Fiskars Corporation remains
however stable.
Helsinki, 11.11.2003
Heikki Allonen
President and CEO
CONSOLIDATED 7-9 7-9 1-9 1-9 change 1-12
INCOME STATEMENT 2003 2002 2003 2002 % 2002
MEUR MEUR MEUR MEUR MEUR
NET SALES 134.1 150.5 488.0 582.5 -16 725.5
Cost of goods sold -92.1 -104.3 -334.4 -402.4 -17 -501.5
GROSS PROFIT 41.9 46.2 153.7 180.1 -15 224.0
Other operating costs -37.0 -39.7 -121.2 -132.5 -9 -176.6
RESULT BEFORE
RESTRUCTURING ITEMS 4.9 6.6 32.5 47.5 -32 47.4
Restructuring cost 0.0 -0.3 -8.7 -19.3 -55 -19.5
OPERATING PROFIT 4.9 6.2 23.8 28.2 -16 27.9
Income from investments 3.3 0.7 31.0 59.1 -48 59.0
Other financial income 0.4 0.2 0.5 0.3 57 1.5
Financial expense -2.7 -3.7 -10.0 -13.3 -24 -16.3
RESULT BEFORE TAX 5.9 3.5 45.3 74.5 -39 72.1
Taxes for the period -3.1 -1.6 -14.3 -26.4 -46 -22.5
PROFIT FOR THE PERIOD 2.8 1.8 31.1 48.0 -35 49.6
Earnings per share, euro 0.05 0.03 0.56 0.87 0.90
CONSOLIDATED BALANCE SHEET 9/03 9/02 change 12/02
MEUR MEUR % MEUR
ASSETS
Fixed assets 249.1 299.3 -17 280.1
Long-term investments 218.5 210.4 4 211.4
Inventories 139.0 161.1 -14 160.2
Financial assets 151.0 176.7 -15 157.6
TOTAL 757.7 847.5 -11 809.3
EQUITY AND LIABILITIES
EQUITY
Share capital 55.4 55.4 0 55.4
Other equity 362.9 375.4 -3 373.7
PROVISIONS 6.7 10.4 -35 5.5
LIABILITIES
Long-term 124.3 224.8 -45 183.5
Short-term 208.4 181.6 15 191.3
TOTAL 757.7 847.5 -11 809.3
Diluted equity /share, euro 7.55 7.78 -3 7.75
Equity ratio 55% 51% 9 53%
Net gearing 47% 63% -26 57%
GROSS INVESTMENTS 32.0 26.1 23 35.2
AVERAGE NUMBER OF EMPLOYEES 3660 4058 -10 4095
7-9 7-9 1-9 1-9 change 1-12
2003 2002 2003 2002 % 2002
Currency rates:
USD average rate (I/S) 1.12 0.98 1.11 0.93 20 0.95
USD end-of-period (B/S) 1.17 0.99 1.17 0.99 18 1.05
CONSOLIDATED STATEMENT 7-9 7-9 1-9 1-9 1-12
OF CASH FLOWS 2003 2002 2003 2002 2002
MEUR MEUR MEUR MEUR MEUR
From oper. activities 39.0 61.4 85.5 116.1 130.0
From investm. activities -0.7 -5.2 -23.2 -20.5 -29.6
From financing -31.4 -42.5 -58.4 -91.1 -89.6
CHANGE IN CASH 6.9 13.7 3.9 4.5 10.9
Cash at beginning of period 16.4 0.0 19.5 9.5 9.5
Currency transaction adjustm -0.1 -0.3 -0.1 -0.6 -0.8
CASH AT END OF PERIOD 23.2 13.4 23.2 13.4 19.5
NET SALES BY BUSINESS AREA 7-9 7-9 1-9 1-9 change 1-12
2003 2002 2003 2002 % 2002
MEUR MEUR MEUR MEUR MEUR
Fiskars Brands 128 144 464 557 -17 693
Inha Works 4 5 19 19 1 23
INDUSTRY TOTAL 132 148 483 576 -16 717
Corporate & real estate 2 3 7 9 -19 12
Eliminations -1 -1 -2 -2 5 -3
CORPORATE TOTAL 134 150 488 583 -16 725
RESULT BY BUSINESS SEGMENT 7-9 7-9 1-9 1-9 change 1-12
2003 2002 2003 2002 % 2002
MEUR MEUR MEUR MEUR MEUR
Fiskars Brands 4.8 6.2 23.8 26.8 -11 27.3
Inha Works 0.3 0.4 2.4 2.0 21 2.5
INDUSTRY TOTAL 5.1 6.6 26.2 28.8 -9 29.8
Corporate & real estate -0.2 -0.3 -2.4 -0.5 -354 -1.9
OPERATING PROFIT 4.9 6.2 23.8 28.2 -16 27.9
Income from investments 3.3 0.7 31.0 59.1 -48 59.0
CONSOLIDATED SEGMENTAL RESUL 8.2 6.9 54.8 87.4 -37 86.9
NET SALES BY MARKET AREA 7-9 7-9 1-9 1-9 change 1-12
2003 2002 2003 2002 % 2002
MEUR MEUR MEUR MEUR MEUR
Finland 7 7 29 29 0 37
Scandinavia 11 12 42 46 -9 63
Other Europe 24 26 98 108 -9 130
North America 88 99 307 383 -20 473
Other 4 6 12 16 -29 23
CORPORATE TOTAL 134 150 488 583 -16 725
Export from Finland 9 10 41 38 8 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 9/03 9/02 12/02
MEUR MEUR MEUR
FOR THE COMPANY'S OWN
COMMITMENTS
Real estate mortgages 1 1 1
Pledged assets 0 0 0
Bills of exchange 0 0 1
Lease contingencies 61 69 70
Other contingencies 1 0 1
TOTAL CONTINGENCIES 63 70 72
NOMINAL VALUES OF DERIVATIVE
INSTRUMENTS
Forward exch. contracts 154 188 167
Interest rate swaps 94 112 105
FRA's 39 51 29
MARKET VALUES OF DERIVATIVE INSTRUMENTS
COMPARED TO NOMINAL VALUES
Interest rate swaps -6 -11 -10
FRA's 0 0 0
Nominal values also include closed contracts.