Stock exchange release
February 14, 2003
FISKARS CORPORATION?S RESULTS 2002
FISKARS CORPORATIONS RESULTS 2002 FINANCIALS FOR THE FOURTH QUARTER (OCTOBER-DECEMBER, 3 MONTHS) Corporate Net Sales decreased by 6 % from the previous corresponding period to EUR 143 million (151). Most of the sales decrease was attributable to the weakening dollar rate in relation to the euro. Operating profit was EUR 0.3 million (+1.3). The result for the period includes an extra goodwill depreciation of EUR 3.2 million related to the restructuring of certain businesses. Exeptional items during the same period previous year amounted to EUR 0.8 million. The comparable operating profit was thus EUR 3.0 million (2.1), which is slightly better than previous year. Corporate result after financial items in October-December was EUR 2.3 million (-2.5). The corporate result after taxes was EUR 1.6 million (-4.5). The result was clearly better than during the corresponding period last year, even though modest due to the cyclical nature of business. The improvement was significantly enhanced by lower taxes EUR 3.9 million (-2.0) and net financial costs, EUR -2.0 million (-3.8). CORPORATION 2002 Both in the United States and Europe the market situation was strained in the consumer products sector. Corporate net sales declined by 5 % from the previous year and totaled EUR 725 million (762). Most of the sales decrease was attributable to the weakening dollar against the euro. Operating profit from the corporations industrial operations improved significantly and amounted to EUR 28 million (12). Income from investments increased to EUR 59 million (51). Result after financial items was EUR 72 million (36). Profit for the year was EUR 50 million (23) and earnings per share amounted to EUR 0.90 (0.41). The Board of Directors proposes an increase of dividend to EUR 0.70 (0.31) per share of series A and EUR 0.68 (0.29) per share of series K. Thus the dividend distribution would be EUR 38.4 million (16.8). OPERATIONS Fiskars Brands Inc. Net sales from consumer products, which is the Corporations overwhelmingly largest industrial operation, decreased by 5 % to EUR 693 million (731). Dollar denominated sales remained unchanged. Most of the sales of consumer products, i.e. 68 % of total net sales, were generated in North America; Europe accounted for 29 % of the total figure. In North America, dollar denominated sales of school, office and craft products sold mainly under the FISKARS brand increased by nearly 6 %, which was a good result in the prevailing difficult market conditions. The sales trend of leisure products, which mainly consisted of Gerber branded products, was also positive while the heterogeneous development of garden products continued. Sales of Fiskars branded hand tools grew as much as 8 % supported by innovative new products and it is noteworthy that the production volume in Billnäs plant in Finland grew with 20 %. However, the garden sectors total sales growth remained negative due to continued weak demand for volume products such as flower pots, rubber mats, outdoor furniture and plastics products. In the European marketplace, sales of consumer products increased over the previous year to EUR 214 million (206). Fiskars retained its strong position in the Nordic countries and increased its market share. Sales in the Central European euro area and UK remained unchanged from the previous year despite of the particularly difficult market situation. Growth in new areas such as Poland and Russia exceeded 10 %; however, for the time being, they represent a small share of the total market. The non-recurring costs of programs aimed at improving profitability remained high at EUR 20 million (34). The biggest cost items relate to restructuring measures taken in the UK and Germany, where operations were closed and activities were focused on the strongest Fiskars Brands products. Amortization of goodwill increased to EUR 14 million (11); the figure includes an extraordinary write-down of EUR 3.2 million in connection with the above-mentioned restructuring measures. Fiskars Brands operating profit was EUR 27 million (11). Inha Works Inha Works net sales grew by 7 % to EUR 23 million (22), mainly thanks to boat sales that increased both in Finland and export markets. Especially the renewed Buster Magnum gained great popularity. Demand for hinges remained on the previous years level. Inha Works operating profit was EUR 2.5 million (2.6). Result from the Real Estate Operations improved clearly from the previous year and was good. Income from Long-term Investments totaled EUR 59 million (51) and mainly consisted of extra dividends from Wärtsilä. PERSONNEL In North America, the number of personnel decreased by 342 and in Europe by 12. The total number of corporate personnel decreased by 8 % from the previous year and was 4,206 at the year-end (4,556). CAPITAL EXPENDITURE AND INVESTMENT OPERATIONS Investments in industrial operations amounted to EUR 31 million (31). The most significant single capital expenditure item was the resource planning system (ERP), currently being installed in the United States; implementation of the system will continue in 2003. Investments made in capital investment funds totaled EUR 4 million (5). BALANCE SHEET; FINANCING Measures aimed at improving management of working capital continued during the year, and EUR 21 million (56) was released from working capital. Fiskars Corporations cash flow was good at EUR 130 million (100). Thanks to the strong cash flow and weaker dollar rates, the corporations interest-bearing liabilities decreased to EUR 266 million (400). The balance sheet total decreased by 13 %; the decrease in working capital was attributable to the positive cash flow and the weaker dollar rates. Fixed assets, expressed in euros, decreased correspondingly. Like in previous years, long-term investments in fixed assets, mainly Wärtsilä shares, are shown at cost. Solvency was good, and the corporation had significant unused available credit limits as well as liquid assets totaling EUR 20 million. Finance net decreased considerably, thanks to lower average interest rates and a significantly lower amount of interest- bearing capital, and totaled EUR 15 million (28). Gearing improved to 57 % (96). Equity ratio increased to 53 % (44) of the balance sheet total. MANAGEMENT In January, Fiskars Corporations President and CEO, Mr. Bertel Langenskiöld, announced his resignation in order to join another company during the spring of 2003. Mr. Vesa Koivula, Inha Works President, will join another company in May 2003. Fiskars Brands Management Team led by CEO Mr. William J. Denton has during the year successfully restructured the business and the organization of the consumer products operations. CORPORATE GOVERNANCE Responsibilities of the Board of Directors The duties and responsibilities of the Board of Directors are governed by the Finnish Companies Act and the Corporations Articles of Association. The Board of Directors is responsible for the corporate administration and proper organization of the affairs of the corporation. The Board also appoints the President and a sufficient number of other managers and determines their remuneration. The Board of Directors convened eleven times during 2002. Composition of the Board of Directors The Board of Directors comprised six ordinary members and two deputy members. None of the ordinary or deputy members are employed in the company. Remuneration of the Board members The Annual General Meeting determines the remuneration of the Board of Directors. The fees paid to the Board Chairman in 2002 totaled EUR 45,420 and the fees paid to the Vice Chairman EUR 34,065; fees of ordinary members were EUR 22,710 and those of deputy members EUR 11,355 during the year. In addition, Board members and deputy members are paid an attendance fee of EUR 510 per meeting, and receive compensation for their travel expenses and other expenses incurred due to their activities in the interest of the company. Board committees The Board of Directors has appointed three committees among its members: Audit Committee, Compensation Committee and Planning Committee. 1. The Audit Committee supervises and controls corporate income reporting and auditing. The members of the Audit Committee were Mr. Göran J. Ehrnrooth, Mr. Thomas Tallberg, Mr. Gustaf Gripenberg and Mr. Paul Ehrnrooth. 2. The Compensation Committee prepares matters connected with corporate remuneration and award systems. Its members were Mr. Göran J. Ehrnrooth, Mr. Mikael von Frenckell and Mr. Olli Riikkala. 3. The Planning Committee prepares matters associated with the future operations and strategy of the corporation. Its members were Mr. Göran J. Ehrnrooth, Mr. Mikael von Frenckell and Mr. Robert G. Ehrnrooth. Insiders of the corporation Fiskars has been applied the insider regulations approved by the Helsinki Exchanges since 1 January 2000. On the basis of the Finnish Securities Markets Act, the permanent insiders include the Board members, the corporate President and CEO, Executive Vice President and the auditors. In addition, the extended insiders include the Vice President, Corporate Control; the Vice President, Corporate Finance; the Vice President, Legal Councel; the Vice President, Corporate Communications; the members of the Board of Fiskars Brands, Inc., The President and SEO of Fiskars Brands, Inc. and the members of the Corporate Board of Management. Fiskars maintains a list of its insiders in the SIRE system of the Finnish Central Securities Depository Ltd. Audit The corporate auditor is KPMG Wideri Oy Ab, Corporation of Authorized Public Accountants, with Mr. Sixten Nyman, APA, as auditor with main responsibility. Fiskars Brands, Inc.s auditor is PriceWaterhouseCoopers, with Mr. Douglas C. Calvin as auditor with main responsibility. ANNUAL GENERAL MEETING 2002 Fiskars Corporations Annual General Meeting held on 14 March 2002 decided to distribute a dividend of EUR 0.31 per share of series A and EUR 0.29 per share of series K, in total EUR 16.8 million. The resigning Board members Mr. Robert G. Ehrnrooth and Mr. Mikael von Frenckell were reelected for a term expiring in 2005. Board members Mr. Stig Stendahl and Mr. Juha Toivola announced their desire to resign as Board members. Mr. Olli Riikkala was elected as a new member for a term expiring in 2004. KPMG Wideri Oy Ab was reelected auditor of the corporation. The Board of Directors was granted authorization to purchase and convey not more than 1,962,303 A-shares and not more than 805,918 K-shares of the corporation. The previous corresponding authorizations were canceled. The granted authorization has not been used. SHARE PRICES The price of Fiskars A-share at the year-end was EUR 7.80 (8.50) and the price of K-share EUR 8.10 (8.00). The market value of Fiskars shares decreased by 5.6 % from the previous year and was EUR 436.7 million (462.5). A total number of 3.9 million A-shares and 1.3 million K-shares were traded for a total value of EUR 45 million (10) during the year. This represented 9.5 % of the entire share capital (2.4). OUTLOOK The profitability improvement measures implemented in the corporation in recent years will enhance the possibilities to improve operating profit also this year. However, in the uncertain market situation the efforts continue to be focused on profitability. Net sales is expected to be lower than in 2002 due to the weakening of the US dollar. The global uncertanity makes it difficult to estimate the result reliably. Significant income from investments is anticipated also this year in the form of extra dividends from Wärtsilä. The financial structure of the corporation will remain stable. Bertel Langenskiöld President & CEO CONSOLIDATED 10-12 10-12 1-12 1-12 change INCOME STATEMENT 2002 2001 2002 2001 % MEUR MEUR MEUR MEUR NET SALES 142.9 151.4 725.5 762.3 -5 Cost of goods sold -99.0 -105.5 -501.5 -538.1 -7 GROSS PROFIT 43.9 45.9 224.0 224.2 0 Other operating costs -44.1 -40.9 -176.6 -178.4 -1 RESULT BEFORE RESTRUCTURING ITEMS -0.1 4.9 47.4 45.7 4 Restructuring cost -0.2 -3.6 -19.5 -33.6 -42 OPERATING PROFIT -0.3 1.3 27.9 12.1 130 Income from investments -0.1 0.8 59.0 51.1 16 Other financial income 1.1 0.0 1.5 1.1 28 Financial expense -3.0 -4.6 -16.3 -28.6 -43 RESULT BEFORE TAX -2.3 -2.5 72.1 35.7 102 Taxes for the period 3.9 -2.0 -22.5 -13.1 71 PROFIT FOR THE PERIOD 1.6 -4.5 49.6 22.6 120 Earnings per share, euro 0.03 -0.08 0.90 0.41 CONSOLIDATED BALANCE SHEET 12/02 12/01 change MEUR MEUR % ASSETS Fixed assets 280.1 335.0 -16 Long-term investments 211.4 208.7 1 Inventories 160.2 214.3 -25 Financial assets 157.6 170.6 -8 TOTAL 809.3 928.7 -13 EQUITY AND LIABILITIES EQUITY Share capital 55.4 55.4 0 Other equity 373.7 351.4 6 PROVISIONS 5.5 3.8 44 LIABILITIES Long-term 183.5 274.5 -33 Short-term 191.3 243.6 -21 TOTAL 809.3 928.7 -13 Diluted equity /share, euro 7.75 7.35 5 Equity ratio 53% 44% 21 Net gearing 57% 96% -40 GROSS INVESTMENTS 35.2 39.6 -11 AVERAGE NUMBER OF EMPLOYEES 4095 4489 -9 10-12 10-12 1-12 1-12 change 2002 2001 2002 2001 % Currency rates: USD average rate (I/S) 1.00 0.90 0.95 0.90 6 USD end-of-period (B/S) 1.05 0.88 1.05 0.88 19 CONSOLIDATED STATEMENT 10-12 10-12 1-12 1-12 OF CASH FLOWS 2002 2001 2002 2001 MEUR MEUR MEUR MEUR From oper. activities 13.9 2.7 130.0 99.9 From investm. activities -9.1 -9.0 -29.6 30.1 From financing 1.5 -3.6 -89.6 -129.9 CHANGE IN CASH 6.4 -9.9 10.9 0.1 Cash at beginning of period 13.4 19.3 9.5 9.3 Currency transaction adjustm -0.2 0.1 -0.8 0.1 CASH AT END OF PERIOD 19.5 9.5 19.5 9.5 NET SALES BY BUSINESS AREA Consumer Products 136 145 693 731 -5 Inha Works 5 4 23 22 7 INDUSTRY TOTAL 141 149 717 753 -5 Corporate & real estate 3 4 12 12 -4 Eliminations -1 -1 -3 -3 3 CORPORATE TOTAL 143 151 725 762 -5 RESULT BY BUSINESS SEGMENT Consumer Products 0.5 1.6 27.3 11.0 148 Inha Works 0.5 0.0 2.5 2.6 -4 INDUSTRY TOTAL 1.0 1.6 29.8 13.6 119 Corporate & real estate -1.4 -0.3 -1.9 -1.5 -29 OPERATING PROFIT -0.3 1.3 27.9 12.1 130 Income from investments -0.1 0.8 59.0 51.1 16 CONSOLIDATED SEGMENTAL RESUL -0.4 2.1 86.9 63.2 37 NET SALES BY MARKET AREA Finland 8 6 37 36 2 Scandinavia 17 18 63 62 1 Other Europe 21 23 130 132 -1 North America 90 99 473 508 -7 Other 6 6 23 23 -2 CORPORATE TOTAL 143 151 725 762 -5 Export from Finland 13 11 51 40 27 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 12/02 12/01 MEUR MEUR FOR THE COMPANY'S OWN COMMITMENTS Real estate mortgages 1 3 Pledged assets 0 32 Bills of exchange 1 0 Lease contingencies 70 92 Other contingencies 1 0 TOTAL 72 128 GUARANTEES FOR OTHER PARTIES' COMMITMENTS 0 1 TOTAL CONTINGENCIES 72 129 NOMINAL VALUES OF DERIVATIVE INSTRUMENTS Forward exch. contracts 167 218 Interest rate swaps 105 136 FRA's 29 119 MARKET VALUES OF DERIVATIVE INSTRUMENTS COMPARED TO NOMINAL VALUES Interest rate swaps -10 -9 FRA's 0 0 Nominal values also include closed contracts.