Stock exchange release
February 13, 2004
FISKARS CORPORATION RESULTS 2003
FISKARS CORPORATION RESULTS 2003
FINANCIALS FOR THE FOURTH QUARTER YEAR 2003
Corporate Net Sales in the last quarter of the year totalled EUR
132 million (143), which was 8 percent less than in the previous
year. Calculated in comparable currency rates, sales increased.
Compared to the previous year, the average rate of the euro was 19
per cent higher against the dollar.
In the last quarter, Fiskars Corporation booked non-recurring
items in form of impairments of goodwill and write-downs of
tangible fixed assets associated mainly with the pottery and
outdoor furniture businesses as well as restructuring reserves to
a total of EUR 75.6 million. The parent company correspondingly
booked devaluations in subsidiary shares and receivables. In part,
these have been approved as tax deductible. A deferred tax asset
of EUR 24.2 million was thus generated and has correspondingly
improved the net profit.
The quarterly operating results before restructuring expenses were
on level with those of the previous year, EUR 0.1 million (0.1).
After non-recurring items, operating results were EUR 75.7
million (0.3).
Net financial items including investment income were EUR 0.4
million positive compared to (1.9) in the previous year.
Corporate profit before taxes was EUR 75.3 million (2.3) and
taxes for the period totalled an income of EUR 31.5 million (3.9).
Therefore, the net result for the last quarter showed a loss of
EUR 43.9 million (1.6).
CORPORATION YEAR 2003
Corporate net sales were EUR 620 million (725), a decline of 14
percent compared to the previous year. The decline was partly due
to structural changes within the corporation, but mainly a
consequence of the dollar weakening against the euro.
Operating profits from the corporations industrial operations
were EUR 48.9 million (29.8), burdened by the impairments of
goodwill and devaluations of tangible fixed assets totalling EUR
84.2 million (19.5).
The Real Estate Group operating results were positive.
The Corporations operating profit was EUR 51.9 million (27.9).
Income from long-term investments totalled EUR 31.3 million
(59.0). Net financial items were reduced from the previous year to
EUR 9.4 million (14.8) and the profit before taxes was EUR 30.0
million (72.1).
A substantial part of the parent companys devaluation of
investments in subsidiaries will be tax deductible and therefore a
deferred tax asset totalling EUR 24.2 million has been booked.
This resulted in a positive net tax of EUR 17.2 million for the
financial period, when taxes for the previous period were expenses
totalling EUR 22.5.
The net profit for the year was EUR 12.8 million (49.6) and
earnings per share EUR 0.23 (0.90).
The Board of Directors proposes a dividend of EUR 0.31 per share
of series A and EUR 0.29 per share of series K for the year 2003.
Thus the 2003 dividend distribution would be EUR 16.8 million. In
March 2003, a dividend for the year 2002 was paid in the amount of
EUR 0.70 per share of series A and EUR 0.68 per share of series K
and in December an extra dividend of EUR 0.40 per A share and EUR
0.38 per K share was paid. Thus the dividend distribution for the
year 2002 was EUR 60.3 million.
OPERATIONS
Fiskars Brands, Inc.
Price pressure in consumer products increased - particularly for
resin based products in the United States. Manufacturing in Asia
continued to increase its price competitiveness compared to
producing goods in the West. This had a negative influence on both
net sales and profitability and in part caused the impairment in
the balance-sheet values of assets. Net sales of Fiskars Brands,
the corporations overwhelmingly largest division, were EUR 589
million (693), a decline of 15 percent compared to the previous
year. Calculated at comparable currency rates the decline was 3.5
percent.
Of the sales 63 percent (68) were generated in North America and
although the North American share of total net sales was lower
than in the previous year, in dollars the amount was at the level
of 2002. Europes share of total net sales was 31 percent (29).
In North America, a decline of 6 percent in sales of FISKARS-
branded school, office and crafts products was partly due to
structural changes. However, profitability remained good.
Sales volumes and profitability increased in garden products, most
of which sell under the FISKARS brand. The range and sales volume
of products made in Billnäs, Finland, increased also in the US.
Sales of outdoor recreation products, most of which are GERBER
branded, increased by 41 percent in dollars, and the level of
profitability remained good.
Sales of home leisure products, mainly plastic flower pots,
developed very unsatisfactorily, and profitability was further
deteriorated by higher raw-material costs and the low utilization
level of production capacity.
Sales of outdoor resin furniture fell, and the business showed a
loss.
Sales of consumer electronics declined by approximately 17
percent, but profitability was maintained.
Houseware products which together with garden products form the
core of European sales, developed favourably. Sales in Finland
continued to grow, whereas weakening of the markets in Germany and
Britain were reflected in the sales figures. Increased production
volumes at the factory in Billnäs and the reorganization of
European marketing channels improved profitability, despite a fall
of 4 percent in total net sales in Europe.
Operations were extended into Asia by founding subsidiaries in
Japan and China: in Japan to manage local sales and marketing and
in China to further develop outsourcing. During the year the
Bucket Boss product line was divested, and in January 2004 Fiskars
Brands. acquired CMG Equipment, a US manufacturer of camping
lights and flashlights, to be included in the Gerber operations.
The operating profit of Fiskars Brands was EUR 51.4 million
(27.3) including non-recurring items totalling EUR 84.2 million
(19.5).
Inha Works
Inha Works net sales were EUR 24,2 million (23,3), an increase of
4 percent. Boat sales increased both in Finland and the export
markets. Sales and production of new products began well; the
Buster M and the new Buster XL are being produced in series. The
demand for other products remained level with that of the previous
year. The operating profit was EUR 2.5 million (2.5).
Real Estate Operations
Operating profit from the real estate operations was slightly
lower to those of the previous year, but were clearly positive.
Fiskars Village is a major part of the real estate operations and
in latter years its significant development has increasingly
generated positive recognition for the corporation. Historical
values have been preserved in the more than 350 years old
ironworks village. New activities have replaced its original
industries.
PERSONNEL
At the end of the year, the total number of personnel was 3,877
(4,206). The decrease was due to rationalization of both
production and distribution in the US and in Europe. The
Corporation employed a total of 2,096 (2,330) people in North
America, and 873 (908) in Finland.
CAPITAL EXPENDITURE AND INVESTMENTS
Capital expenditure in industrial fixed assets totalled EUR 26.7
million (31.0). Long-term investments counted for EUR 11.0 million
(4.2), mostly in form of Wärtsilä shares.
Fiskars ownership of Wärtsilä shares at the end of the year was
19.2 percent of the capital and 24.4 percent of the votes. At the
end of December the market value of Fiskars Wärtsilä shares was
EUR 175 million. On February 9, Wärtsiläs market value exceeded
the book value of the shares.
Fiskars has long-term investments in private equity funds with a
market value of some EUR 27 million, according to estimates from
the funds.
The long-term investment yield of EUR 31.3 million (59.0) mostly
consists of Wärtsilä dividends. Returns from the equity funds were
higher than those for the previous year.
BALANCE SHEET, FINANCING
The Corporations cash flow continued to be positive, amounting to
EUR 83.6 million (130.0). As in the previous year working capital
was released, with EUR 11.9 million (21.4) being released from
inventories. Net gearing remained low at 57 percent (57). The
Corporations interest-bearing liabilities decreased to EUR 216
million from EUR 266 million in the previous year.
Solvency was good. In addition to significant unused available
credit limits, the corporation had liquid assets totalling EUR
16.9 million (19.5) at the end of the year.
Net financial costs continued to decline strongly to EUR 9.4
million (14.8). This was due to a decrease in interest-bearing
debt and to lower average interest rates.
Shareholders equity at the end of the financial period was EUR
348 million (429). Even after restructuring expenses and
distribution of substantial dividends, the equity ratio remained
good at 51 percent (53).
The balance sheet total was EUR 678.4 million. That is 16 percent
less than the total of EUR 809.3 million for the previous
financial year. After the deduction of the impairment during the
financial period, the remaining goodwill associated with Fiskars
Brands operations is EUR 33.0 million (102.2). The deductions will
further more reduce the amount of future annual amortization of
goodwill. The dollar weakened 20 percent against the euro. This
reduced the balance sheet value of industrial fixed assets by
approximately EUR 20 million. As in previous years, long-term
investments in fixed assets are shown at cost; Wärtsilä shares at
EUR 192 million or 16.72 per share and investments in private
equity funds at EUR 21 million.
MANAGEMENT
Mr. Heikki Allonen, M.Sc. (Eng.), was appointed Chief Executive
Officer and Corporate President in April. He assumed his post on
June 16, 2003. Mr. Bertel Langenskiöld resigned as CEO on May 15,
2003. In the interim, Mr. Ingmar Lindberg, Corporate Executive
Vice-President, acted as President.
Mr. William J. Denton was President and CEO of Fiskars Brands,
Inc. throughout the year.
Mr. Jukka Suonperä, M.Sc. (Eng.) assumed his post as President of
Inha Works on April 1, 2003.
Mr. Johan Landsdorff, LL.M., was appointed Corporate Vice-
President and Legal Counsel on April 1, 2003, and Ms. Maija
Kutvonen, B.Sc. (Econ.) was appointed Vice-President, Corporate
Control, as from November 17, 2003.
ANNUAL GENERAL MEETING 2003
The Fiskars Corporation Annual General Meeting, held on March 13,
2003, decided to declare a dividend of EUR 0.70 per A share and
EUR 0.68 per 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 six, 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 Board decided to exercise the authorization for share
repurchase and during the period December 1031, 2003, the
corporation purchased 62,219 A shares and 300 K shares. The
average price per A share was EUR 9.83 and per K share EUR 10.50.
The total purchase price for the shares was EUR 615,007.05 and
their nominal value a total of EUR 62,519.00. The percentage of
equity capital held in the shares is 0.11 percent with 0.02
percent of the number of votes. Share repurchase continued in the
present financial period: between January 2 and January 16, the
corporation purchased a total of 30,281 A shares.
EXTRAORDINARY GENERAL MEETING 2003
On December 9, 2003, the Fiskars Corporation Extraordinary General
Meeting approved a proposal to distribute an extra dividend for
the financial period ending December 31, 2002. The extra dividend
distributed was EUR 0.40 per A share and EUR 0.38 per K share, in
total EUR 21.8 million.
SHARE PRICES
The price of the Fiskars A share on the Helsinki Stock Exchange
was EUR 9.40 at the end of December, compared to EUR 7.80 at the
beginning of the year. Correspondingly, the price of the K series
share was EUR 10.45 (8.10). The market value of Fiskars shares
increased by 23 percent over the year to EUR 537 million (437). A
total number of 4.5 million A shares (3.9) and 0.5 million K
shares (1.3) were traded for a total value of EUR 44 million (45).
This represented 8.9 percent of the entire share capital (9.5).
OUTLOOK
The outlook for Fiskars Brands was modestly brighter during the
last quarter of 2003 compared with the previous year. Though the
change is not big, it bodes well for the financial year started.
As restructuring and rationalization continue in the problematic
area of plastic products, the negative effects on the results will
gradually diminish. Outsourcing will increase in these product
groups, and rationalization projects will go forward.
The outlook for Inha Works is positive, particularly for the boat
operations. The Real Estate Group will continue its stable
development.
Investment income will consist of dividends from Wärtsilä the
proposed dividend at EUR 0.75 per share would result in a
distribution of EUR 8.6 million for Fiskars stake in the company
and possible returns from fund investments.
Continuing strength of the balance sheet provides a solid base and
liquidity will remain good given the positive cash flow.
Heikki Allonen
President&CEO
CONSOLIDATED 10-12 10-12 1-12 1-12 change
INCOME STATEMENT 2003 2002 2003 2002 %
MEUR MEUR MEUR MEUR
NET SALES 132.2 142.9 620.3 725.5 -14
Cost of goods sold -91.6 -99.0 -426.0 -501.5 -15
GROSS PROFIT 40.6 43.9 194.3 224.0 -13
Other operating costs -40.7 -44.1 -161.9 -176.6 -8
EARNINGS BEFORE
RESTRUCTURING ITEMS -0.1 -0.1 32.4 47.4 -32
Restructuring cost -75.6 -0.2 -84.2 -19.5 332
EARNINGS BEFORE
INTEREST AND TAXES -75.7 -0.3 -51.9 27.9 -286
Income from investments 0.3 -0.1 31.3 59.0 -47
Other financial income 2.7 1.1 2.1 1.5 47
Financial expense -2.6 -3.0 -11.5 -16.3 -29
EARNINGS BEFORE TAXES -75.3 -2.3 -30.0 72.1 -142
Taxes for the period 31.5 3.9 17.2 -22.5 -176
PROFIT (LOSS) FOR THE PERIOD -43.9 1.6 -12.8 49.6 -126
Earnings per share, euro -0.79 0.03 -0.23 0.90
CONSOLIDATED BALANCE SHEET 12/03 12/02 change
MEUR MEUR %
ASSETS
Fixed assets 173.6 280.1 -38
Long-term investments 215.9 211.4 2
Inventories 124.4 160.2 -22
Financial assets 164.6 157.6 4
TOTAL 678.4 809.3 -16
EQUITY AND LIABILITIES
EQUITY
Share capital 55.4 55.4 0
Other equity 293.0 373.7 -22
PROVISIONS 8.9 5.5 61
LIABILITIES
Long-term 123.4 183.5 -33
Short-term 197.8 191.3 3
TOTAL 678.4 809.3 -16
Diluted equity /share, euro 6.29 7.75 -19
Equity ratio 51% 53% -3
Net gearing 57% 57% 0
GROSS INVESTMENTS 37.8 35.2 7
AVERAGE NUMBER OF EMPLOYEES 3633 4095 -11
10-12 10-12 1-12 1-12 change
2003 2002 2003 2002 %
Currency rates:
USD average rate (I/S) 1.19 1.00 1.13 0.95 20
USD end-of-period (B/S) 1.26 1.05 1.26 1.05 20
CONSOLIDATED STATEMENT 10-12 10-12 1-12 1-12
OF CASH FLOWS 2003 2002 2003 2002
MEUR MEUR MEUR MEUR
From oper. activities -1.9 13.9 83.6 130.0
From investm. activities 0.8 -9.1 -22.4 -29.6
From financing -5.4 1.5 -63.8 -89.6
CHANGE IN CASH -6.4 6.4 -2.6 10.9
Cash at beginning of period 23.2 13.4 19.5 9.5
Currency transaction adjustm 0.0 -0.2 -0.1 -0.8
CASH AT END OF PERIOD 16.9 19.5 16.9 19.5
NET SALES BY BUSINESS AREA 10-12 10-12 1-12 1-12 change
2003 2002 2003 2002 %
MEUR MEUR MEUR MEUR
Fiskars Brands 125 136 589 693 -15
Inha Works 5 5 24 23 4
INDUSTRY TOTAL 131 141 613 717 -14
Corporate & real estate 3 3 10 12 -17
Eliminations -1 -1 -3 -3 3
CORPORATE TOTAL 132 143 620 725 -14
RESULT BY BUSINESS SEGMENT 10-12 10-12 1-12 1-12
2003 2002 2003 2002
MEUR MEUR MEUR MEUR
Fiskars Brands -75.2 0.5 -51.4 27.3
Inha Works 0.1 0.5 2.5 2.5
INDUSTRY TOTAL -75.1 1.0 -48.9 29.8
Corporate & real estate -0.6 -1.4 -3.0 -1.9
EARNINGS BEFORE
INTEREST AND TAXES -75.7 -0.3 -51.9 27.9
Income from investments 0.2 -0.1 31.2 59.0
CONSOLIDATED SEGMENTAL RESUL -75.5 -0.4 -20.7 86.9
NET SALES BY MARKET AREA 10-12 10-12 1-12 1-12 change
2003 2002 2003 2002 %
MEUR MEUR MEUR MEUR
Finland 9 8 38 37 1
Scandinavia 15 17 57 63 -10
Other Europe 21 21 119 130 -8
North America 82 90 389 473 -18
Other 6 6 18 23 -23
CORPORATE TOTAL 132 143 620 725 -14
Export from Finland 12 13 53 51 5
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 12/03 12/02
MEUR MEUR
FOR THE COMPANY'S OWN
COMMITMENTS
Real estate mortgages 1 1
Pledged assets 0 0
Bills of exchange 1 1
Lease contingencies 54 70
Other contingencies 8 1
TOTAL CONTINGENCIES 64 72
NOMINAL VALUES OF DERIVATIVE
INSTRUMENTS
Forward exch. contracts 91 167
Interest rate swaps 87 105
FRA's 36 29
MARKET VALUES OF DERIVATIVE INSTRUMENTS
COMPARED TO NOMINAL VALUES
Interest rate swaps -5 -10
FRA's 0 0
Nominal values also include closed contracts.