FISKARS INTERIM REPORT JANUARY-SEPTEMBER 2019: Decrease in comparable net sales, comparable EBITA and cash flow
Fiskars Corporation
Interim report
October 31, 2019 at 8:30 a.m. EET
INTERIM REPORT JANUARY-SEPTEMBER 2019: Decrease in comparable net sales, comparable EBITA and cash flow
This release is a summary of the Fiskars Corporation’s third quarter of 2019 and January-September 2019 interim report published today. The complete interim report with tables is attached to this release as a pdf-file. It is also available at http://fiskarsgroup.com/investors/reports-presentations/interim-reports and on the company website at www.fiskarsgroup.com. Investors should not rely on summaries of the reports only but should review the complete interim report with tables.
Third quarter 2019 in brief:
- Net sales decreased by 2.8% to EUR 248.7 million (Q3 2018: 255.8)
- Comparable net sales1 decreased by 3.5% to EUR 248.7 million (257.7)
- EBITA decreased by 73.0% to EUR 7.2 million (26.7)
- Comparable2 EBITA decreased by 50.2% to EUR 13.4 million (27.0)
- Cash flow from operating activities before financial items and taxes decreased to EUR 10.5 million (41.1)
- Earnings per share (EPS) were EUR 0.04 (0.34)
January–September 2019 in brief:
- Net sales decreased by 1.5% to EUR 782.4 million (Q1-Q3 2018: 794.5)
- Comparable net sales1 decreased by 3.3% to EUR 778.6 million (805.4)
- EBITA decreased by 40.6% to EUR 40.9 million (68.9)
- Comparable2 EBITA decreased by 23.8% to EUR 55.5 million (72.9)
- Cash flow from operating activities before financial items and taxes decreased to EUR 32.8 million (44.6)
- Earnings per share (EPS) were EUR 0.37 (0.67)
Outlook for comparable net sales 2019 updated (October 16, 2019):
In 2019, Fiskars expects the comparable net sales1 and comparable2 EBITA to be below the previous year’s level.
The outlook is influenced by the company’s investments in growth initiatives that are expected to add sustainable value in the long-term. In addition, there are continued material risks relating to changes in the operating environment, e.g. Brexit and potential further increases to the U.S. tariffs. An unfavorable outcome of these risks might have a significant impact on the comparable net sales and comparable EBITA. Furthermore, fluctuations in currency rates might also have a considerable impact on comparable EBITA.
Previous outlook for 2019 (May 17, 2019):
Previously, Fiskars expected the Group’s comparable net sales1 to be at the same level as in 2018 and comparable2 EBITA to be below the previous year’s level.
The outlook is influenced by the company’s investments in growth initiatives that are expected to add sustainable value in the long-term. In addition, there are continued material risks relating to changes in the operating environment, e.g. Brexit and potential further increases to the U.S. tariffs. An unfavorable outcome of these risks might have a significant impact on the comparable net sales and comparable EBITA. Furthermore, fluctuations in currency rates might also have a considerable impact on comparable EBITA.
President and CEO, Fiskars, Jaana Tuominen:
“Our performance during the third quarter entailed challenges as well as some highlights. Earlier in October, we lowered our guidance for comparable net sales for the full year 2019, as the sales performance of the Functional business in the U.S. was weaker than expected.
The quarter was burdened by a soft performance in the back-to-school season, which is typically a strong sales period for the school, office and craft category in the U.S. The softness in sales was translated to our results, which was additionally impacted by tariffs as well as inventory and logistics costs.
While I was disappointed with the performance in the Functional business, we did see some positive development in the Living business. We can see that our actions to transform the Living business are showing results, in particular through increased net sales in certain focus countries, as well as through increased efficiency across the business. The transformation program, launched one year ago, is proceeding well in the Living business, and our team is determined to make progress.
We are seeing good momentum in our strategic priority area of exciting consumers, driven by direct e-commerce channel. We are investing in further developing our e-commerce capabilities, and have reached important milestones during the quarter. The improved capabilities bring greater efficiency to our operations and support our growth plans going forward.
Additionally, China is a key growth market for the Living business. We have already seen good progress, as the Wedgwood brand is gaining momentum in China. While China today is still a relatively small market for us, I am convinced that we have good opportunities there. Our growth plan will require commitment, focus and investments in the coming years.
The last quarter of the year is the most important season for us, in particular for the Living business. We are focused on driving sales together with our trade partners and making good progress in our own sales channels.”
1) Comparable net sales excludes the impact of exchange rates, acquisitions and divestments
2) Items affecting comparability in EBITA include items such as restructuring costs, impairment or provisions charges and releases, integration-related costs, and gain and loss from the sale of businesses
Group key figures
| EUR million | Q3 2019 | Q3 2018 | Change | Q1‒Q3 2019 | Q1‒Q3 2018 | Change | 2018 | ||
| Net sales | 248.7 | 255.8 | -2.8% | 782.4 | 794.5 | -1.5% | 1,118.5 | ||
| Comparable net sales1) | 248.7 | 257.7 | -3.5% | 778.6 | 805.4 | -3.3% | 1,106.6 | ||
| EBITA | 7.2 | 26.7 | -73.0% | 40.9 | 68.9 | -40.6% | 112.5 | ||
| Items affecting comparability in EBITA2) | -6.2 | -0.3 | -14.6 | -4.0 | -9.2 | ||||
| Comparable EBITA | 13.4 | 27.0 | -50.2% | 55.5 | 72.9 | -23.8% | 121.7 | ||
| Operating profit (EBIT) | 4.1 | 23.3 | -82.3% | 31.5 | 59.1 | -46.6% | 91.6 | ||
| Profit before taxes | 2.3 | 31.0 | 36.8 | 73.1 | 103.0 | ||||
| Profit for the period | 3.7 | 27.7 | 31.2 | 55.0 | 81.7 | ||||
| Net change in the fair value of investment portfolio | -0.1 | -1.3 | -20.4 | -24.3 | -118.8 | ||||
| Earnings/share, EUR | 0.04 | 0.34 | 0.37 | 0.67 | 1.00 | ||||
| Equity per share, EUR | 9.18 | 15.40 | -40.4% | 14.80 | |||||
| Cash flow from operating activities before financial items and taxes | 10.5 | 41.1 | -74.4% | 32.8 | 44.6 | -26.5% | 136.8 | ||
| Equity ratio, %3) | 55% | 69% | 70% | ||||||
| Net gearing, %3) | 42% | 16% | 11% | ||||||
| Capital expenditure | 8.9 | 12.2 | -27.2% | 27.4 | 32.0 | -14.5% | 46.2 | ||
| Personnel (FTE), average | 6,930 | 7,313 | -5.2% | 6,978 | 7,374 | -5.4% | 7,304 | ||
1) Using comparable exchange rates and excluding Leborgne divestment
2) In Q3 2019, items affecting comparability consisted mainly of items related to the Living transformation program.
3) Figures impacted by the application of the IFRS 16 accounting standard and the distribution of the Wärtsilä share dividend. Excluding these, the equity ratio in Q3 2019 would have been 70% and the net gearing 18%. The IFRS 16 accounting change had a positive impact of EUR 6.1 million on the cash flow from operating activities before financial items and taxes.
CHANGES IN FISKARS REPORTING IN 2019
On January 1, 2019, the Group adopted IFRS 16 Leases. All the lessees’ lease agreements are booked as right-of-use assets and liabilities in the balance sheet. Exceptions are short-term contracts with a duration of less than 12 months and lease contracts for which the underlying asset has a low value. The Group adopted the standard with a cumulative catch-up transition method, without restating prior periods.
For the full year 2019, the positive impact to EBIT/EBITA will be approximately EUR 1 million, resulting from the decrease of lease expenses and increase of depreciation from the right-of-use assets. EBITDA is affected in addition with the amount of depreciation, increasing by about EUR 22 million. Interest expenses will be increased by approximately EUR 3 million. Total estimated impact to the profit for the period is EUR -1 million.
More information on reporting changes is provided in the accounting principles section of this interim report.
FISKARS CORPORATION
Jaana Tuominen
President and CEO
Further information:
– President and CEO Jaana Tuominen, tel. +358 204 39 5500
– CFO Sari Pohjonen, tel. +358 204 39 5773
– Corporate Communications, tel. +358 204 39 5031, communications@fiskars.com
Analyst and media conference
A combined live webcast and presentation for analysts and media on the third quarter results will be held on October 31, 2019 at 11:00 a.m. at the company’s headquarters, Fiskars Campus, Hämeentie 135 A, Helsinki. Presentation materials will be available at www.fiskarsgroup.com.
The event will be held in English and can be followed as a live webcast at: https://fiskars.videosync.fi/2019-q3-results
An on-demand version of the webcast will be available on the company website. Personal details gathered during the event will not be used for any other purpose.
Media and investor contacts:
Corporate Communications. tel. +358 204 39 5031. communications@fiskars.com
Making the everyday extraordinary
Fiskars Group’s purpose is to make the everyday extraordinary. With our family of lifestyle brands including Fiskars. Gerber. Iittala. Royal Copenhagen. Waterford. and Wedgwood. we want to create a positive. lasting impact on our quality of life. Our products are available in more than 100 countries and we employ around 7.900 people in 30 countries. Please visit us at www.fiskarsgroup.com for more information.