Skano Group Quarterly report 28.02.2014
Financial results, 12 months 2013
Pärnu, 2014-02-28 15:42 CET (GLOBE NEWSWIRE)
THE FOURTH QUARTER IN SHORT
Consolidated net sales of the fourth quarter of 2013 was 4.86 mil. euros, representing a 1.5% decrease on the fourth quarter compared to the same period in 2012. At the same time, consolidated EBITDA amounted to -2 thousand euros
(+178 thousand euros in Q4 2012).
The sales in Skano Fibreboard OÜ Pärnu factory (incl. Isotex) was 1.7 mil. euros, decreased as compared to the respective period last year by 4%, the operating loss of the fourth quarter was 143 thousand euros compared with the operating loss 80 thousand euros last year.
The turnover of Skano Fibreboard OÜ Püssi factory was 1.1 mil. euros, representing 37% increase in the fourth quarter compared to the same period in 2012. Operating loss amounted to 180 thousand euros compared with the operating
loss 139 thousand euros last year.
Sales growth came from Finland but despite of that other foreign markets remained weak due to general economic situation in Europe. We have continuously expanded list of our target markets and made considerable efforts in product
development to obtain certificates necessary for different markets. Profitability has suffered also due to higher sales costs in Finland. On the fourth quarter we also conducted product testing and tuning of production process in both factories in order to achieve a lower production cost.
The priority of the management of the company is continuously to ensure the sales of the production of both factories in order to guarantee the maximum production capacity and efforts are taken in this direction on an on-going basis.
The turnover of Skano Furniture Factory OÜ factory in Pärnu decreased in the fourth quarter by 11% and amounted to 1,7 mil. euros. The operating profit of the fourth quarter was 93 thousand euros as in 2012 the operating profit of the
same period was 120 thousand euros. Sales in the fourth quarter of 2013 decreased in Finland by 32% as compared to 2012 but sales to the Baltics (through the subsidiary) grew. The company is seeking new sale’s possibilities in the current markets but going into totally new markets is a substantial direction for us.
The turnover of Skano Furniture OÜ retail chain decreased 9,5% as compared to the same period last year being 640 thousand euros, operating profit was 5 thousand euros compared with the sales 707 thousand and operating profit 34
thousand euros in the fourth quarter of 2012. Current year operating loss contains also loss from currency exchange rate of hryvnia 20 thousand euros in the fourth quarter (loss from currency exchange rate 31 thousand euros in the
same period of 2012). Retail sale increased in Estonia but decreased in Lithuania and Ukraine. In Lithuania sales were impacted by new IKEA shop opened in Vilnius. Sales in Ukraine suffered due to weak political and economic situation. The sales of Skano Furniture Factory OÜ own furniture still forms a considerable part of the retail sale and it enables the furniture factory to operate much more profitably than it would be possible without its own retail chain.
INCOME STATEMENT
Consolidated net sales of the fourth quarter in 2013 was 4.86 mil. euros (4.93 mil. euros in same period of 2012) representing a 1.5% decrease compared to Q4 2012. The Group’s gross margin in the fourth quarter of 2013 was 14.8% compared to 15.9% in the fourth quarter of 2012. Consolidated operating loss amounted to 225 thousand euros (operating loss 46 thousand euros from main activities in same period 2012). The consolidated operating margin of net sales was -2.8% (+0.4% from main activities in Q4 2012).
Consolidated net loss amounted to 291 thousand euros (compared to net loss 110 thousand euros in Q4 2012), and the net margin was -3.7% (-1.1% in Q4 2012).
POSITION OF FINANCIAL STATEMENT
As of 31.12.2013 the total assets of Skano Group AS amounted to 14.7 mil. euros (31.12.2012: 15.4 mil. euros). The liabilities of the company accounted for 53.8% (31.12.2012: 51.6%) thereof, i.e. 7.9 mil. euros (31.12.2012: 8.0 mil.
euros).
Receivables and prepayments have decreased by 0.4 mil. euros i.e. 24% decrease with 12 months. The reason of decrease of receivables was implementation of factoring instrument.
Inventories have decreased by 0.2 mil. euros compared to last year, amounting to 3.1 mil. euros on 31.12.2013. (31.12.2012: 3.3 mil. euros). Property, plant and intangibles decreased by 0.5 mil. euros mainly as a result of depreciation.
Short-term loans have increased by 0.1 mil. euros and amounted to 1.9 mil. euros in 31.12.2013 (31.12.2012: 1.8 mil. euros). Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 2.3 mil. euros (31.12.2012: 1.9 mil. euros).
Long-term loans have decreased by 0.6 mil euros and amounted to 3.4 mil. euros in 31.12.2013 (31.12.2012: 4.0 mil. euros).
Current and non-current liabilities decreased by 0.1 mil. euros to 7.9 mil.euros (31.12.2012: 8.0 mil. euros).
DIVISIONAL REVIEW
NET SALES BY BUSINESS SEGMENTS
| th EUR | % of net sales | |||
| Q4 2013 | Q4 2012 | Q4 2013 | Q4 2012 | |
| Skano Fibreboard OÜ | 2,826 | 2,606 | 58.2% | 52.8% |
| Skano Furniture Factory OÜ | 1,708 | 1,930 | 35.2% | 39.1% |
| Skano Furniture OÜ retail | 640 | 707 | 13.2% | 14.3% |
| Elimination | (317) | (311) | (6.6%) | (6.2%) |
| TOTAL | 4,857 | 4,931 | 100.0% | 100.0% |
NET SALES BY GEOGRAPHICAL SEGMENTS
| th EUR | % of net sales | |||
| Q4 2013 | Q4 2012 | Q4 2013 | Q4 2012 | |
| Russia | 1,342 | 1,444 | 27.6% | 29.3% |
| Finland | 1,311 | 1,174 | 27.0% | 23.8% |
| Estonia | 771 | 674 | 15.9% | 13.7% |
| Great Britain | 369 | 456 | 7.6% | 9.2% |
| Ukraine | 222 | 257 | 4.6% | 5.2% |
| Latvia | 170 | 134 | 3.5% | 2.7% |
| Sweden | 153 | 116 | 3.2% | 2.4% |
| Netherlands | 85 | 279 | 1.8% | 5.7% |
| Germany | 84 | 16 | 1.7% | 0.3% |
| Lithuania | 82 | 108 | 1.7% | 2.2% |
| Greece | 46 | 28 | 0.9% | 0.8% |
| Kazakhstan | 44 | 38 | 0.9% | 0.8% |
| Denmark | 7 | 39 | 0.1% | 0.8% |
| Other countries | 171 | 169 | 3.5% | 3.4% |
| TOTAL | 4,857 | 4,931 | 100.0% | 100.0% |
Regarding the markets, turnover has increased in Finland, Sweden and Estonia.
The percentage of turnover has decreased in most in the Great Britain and the Netherlands.
PROFIT BY BUSINESS SEGMENTS
| th EUR | Q4 2013 | Q4 2012 |
| Skano Furniture factory | 93 | 120 |
| Skano Furniture retail | 5 | 34 |
| Skano Fibreboard | (327) | (220) |
| Elimination | 4 | 22 |
| TOTAL | (225) | (44) |
| Net financial costs | (61) | (61) |
| Income tax | (5) | (5) |
| NET PROFIT | (291) | (110) |
SKANO FIBREBOARD
The net sales of Skano Fibreboard in the fourth quarter of 2013 amounted to 2.8 mil. euros and operating loss to 327 thousand euros. In the same period last year, the turnover of Skano Fibreboard totaled to 2.6 mil. euros and the
operating loss from main activities 220 thousand euros. Due to a new distribution partner in Finland we have managed to increase sales considerably. Sales to Finland grew by 78%. Implementing the new sales structure in Finland has and will cause higher sales costs that is optimal during 6-9 months period. Due to that increased sales to Finland have brought along bigger costs and
profitability hasn’t improved yet.
The biggest drop in sales in the third quarter compare to last year took place in the Great Britain and the Netherlands, 12% and 68% respectively.
NET SALES BY GEOGRAPHICAL SEGMENTS
| th EUR | % of net sales | |||
| Q4 2013 | Q4 2012 | Q4 2013 | Q4 2012 | |
| Finland | 826 | 463 | 29.2% | 17.8% |
| Russia | 537 | 594 | 19.0% | 22.8% |
| Estonia | 432 | 366 | 15.3% | 14.0% |
| Great Britain | 400 | 456 | 14.2% | 17.5% |
| Sweden | 153 | 116 | 5.4% | 4.5% |
| Latvia | 85 | 46 | 3.0% | 1.8% |
| Netherlands | 85 | 268 | 3.0% | 10.3% |
| Germany | 84 | 17 | 3.0% | 0.7% |
| Ukraine | 37 | 39 | 1.3% | 1.5% |
| Lithuania | 20 | 0 | 0.7% | 0.0% |
| Denmark | 5 | 39 | 0.2% | 1.5% |
| Other countries | 150 | 181 | 5.3% | 6.9% |
| Intragroup | 12 | 21 | 0.4% | 0.8% |
| TOTAL | 2,826 | 2,606 | 100.0% | 100.0% |
| th EUR | Net sales | Profit | ||
| Q4 2013 | Q4 2012 | Q4 2013 | Q4 2012 | |
| Pärnu Fibreborad factory | 1,099 | 1,285 | (116) | (74) |
| Püssi Fibreboard factory | 1,128 | 823 | (180) | (139) |
| Pärnu interior boards factory (Isotex) | 587 | 477 | (27) | (6) |
| Not allocated | 12 | 21 | (4) | (1) |
| TOTAL | 2,826 | 2,964 | (327) | (220) |
The net sales of the Pärnu fibreboard factory and interior board’s line decreased 4.5% in the fourth quarter of 2013 compared to the same quarter of 2012 and amounted to 1.7 mil. euros. Due to higher sales cost in Finland,
production testing and too fragmented production portfolio the production efficiency was very low in the fourth quarter.
The turnover of Püssi fibreboard factory amounted to 1.1 mil. euros growing 37% compared to the same quarter in 2012 and operating loss amounted to 180 thousand euros (turnover 0.8 mil. euros and operating loss 139 thousand euros
in Q4 2012). Output of Püssi Fibreboard factory grew in the fourth quarter but the main challenge is still to secure Püssi Fibreboard factory with sufficient sales volumes and optimizing production portfolio.
It is also important to note that due to high fixed costs, the factory must be, for a profitable outcome, operated at as high capacity as possible, which shall ensure a lower average cost of the product. Too fragmented production portfolio
could increase the production cost by 10-20%.
SKANO FURNITURE
FURNITURE RETAIL SALES
Skano Group AS retail business is operated by a private limited company Skano Furniture OÜ and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has totally 10 stores in Tallinn (2), Tartu, Pärnu, Riga, Vilnius, Kiev (2), Kharkiv and Dnipropetrovs’k at the end of the fourth quarter in 2013.
RETAIL SALES BY COUNTRIES
| th EUR | % of net sales | Number of stores | ||||
| Q4 2013 | Q4 2012 | Q4 2013 | Q4 2013 | 31.12.13 | 31.12.12 | |
| Estonia | 308 | 292 | 48.1% | 41.3% | 4 | 3 |
| Latvia | 85 | 88 | 13.3% | 12.4% | 1 | 1 |
| Lithuania | 62 | 109 | 9.7% | 15.4% | 1 | 1 |
| Ukraine | 185 | 218 | 28.9% | 30.8% | 4 | 4 |
| TOTAL | 640 | 707 | 100.0% | 100.0% | 10 | 9 |
The furniture retail sale amounted to 640 thousand euros in the fourth quarter of 2013 and operating profit 5 thousand euros (sales 707 thousand euros and operating profit 34 thousand euros in Q4 2012). The 4th quarter operating loss
contains also loss from currency exchange rate of hryvnia 20 thousand euros (loss from currency exchange rate 31 thousand euros in the same period last year. Retail sale increased in Estonia, remained the same in Latvia and
decreased in Lithuania and Ukraine.
FURNITURE PRODUCTION
The net sales of the Skano Furniture Factory in the fourth quarter amounted to 1.7 mil. euros and operating profit to 93 thousand euros. In the same period last year, the turnover of the factory amounted to 1.9 mil. euros and the
profit to 120 thousand euros. As compared to the previous year the turnover of the factory has decreased 11.5% and the operating profit has decreased by 27 thousand euros. Sales in the fourth quarter of 2013 increased to our
subsidiary. In the fourth quarter the sales decreased especially in Finland due to weak demand.
FURNITURE FACTORY SALES BY COUNTRIES
| th EUR | % of net sales | |||
| Q4 2013 | Q4 2012 | Q4 2013 | Q4 2012 | |
| Russia | 805 | 850 | 47.1% | 44.0% |
| Finland | 485 | 711 | 28.4% | 36.8% |
| Kazakhstan | 44 | 38 | 2.6% | 2.0% |
| Estonia | 31 | 16 | 1.8% | 0.8% |
| Other countries | 36 | 25 | 2.1% | 1.3% |
| Subsidiaries | 307 | 290 | 18.0% | 15.0% |
| TOTAL | 1,708 | 1,930 | 100.0% | 100.0% |
FORECAST AND DEVELOPMENT
SKANO FIBREBOARD. Sales of Skano Fibreboard in Q1 2014 will exceed sales of the same period last year. In Q1 2014 production costs will remain high due to high energy cost in winter season and too fragmented production portfolio. Those
factors will impact negatively Fibreboard Q1 results.
In spite of weak demand of foreign markets and economic situation in Europe we are moderately optimistic about sales growth in 2014, mostly from Finland. We predict that the strategic agreement with a new distribution partner in Finland
allows us to increase our production capacity in 2014.
SKANO FURNITURE RETAIL SALES. We expect retail sale in the first quarter of 2014 to be the same or slightly decrease compare to the sale of the same period last year. In spite of predictable sale growth in the Baltics, we negative
impact to our sales and profitability in Ukarine due to recent events.
SKANO FURNITURE FACTORY. In the first quarter of 2014 we expect the same or slightly smaller sales of the furniture factory compared to the same period in 2013 because of the deteriorated economic situation in the near region and
especially in Finland. Sales to new markets are not yet exceeding the lag from our main markets
FINANCIAL HIGHLIGHTS
| th EUR | 12 m 2013 | 12 m 2012 | 12 m 2011 |
| Income statement | |||
| Revenue | 19,186 | 19,080 | 17,330 |
| EBITDA | 438 | 1,040 | 3,436 |
| EBITDA margin | 2.3% | 5.5% | 19.8% |
| Operating profit | (467) | 74 | 2,759 |
| Operating margin | (2.4%) | 0.4% | 15.9% |
| Net profit | (706) | (201) | 2,759 |
| Net margin | (3.7%) | (1.1%) | 14.8% |
| Balance sheet (31.12) | |||
| Total assets | 14,722 | 15,471 | 15,950 |
| Return on assets | (4.8%) | (1.3%) | 16.1% |
| Equity | 6,805 | 7,482 | 7,482 |
| Return on equity | (10.4%) | (2.7%) | 33.3% |
| Debt-to-equity ratio | 53.8% | 51.6% | 51.8% |
| Share (31.12) | |||
| Closing price | 1.22 | 1.24 | 1.62 |
| Earnings per share | (0.16) | (0.04) | 0.57 |
| Price-earnings ratio | (7.6) | (31.0) | 2.84 |
| Book value of a share | 1.51 | 1.66 | 1.71 |
| Market to book ratio | 0.81 | 0.75 | 0.95 |
| Market capitalization | 5,489 | 5,579 | 7,288 |
EBITDA = Earnings before interest, taxes, depreciation and amortization
EBITDA margin = EBITDA / Revenue
Operating margin = Operating profit / Revenue
Net margin = Net profit / Revenue
Return on assets = Net profit / Total assets
Return on equity = Net profit / Equity
Debt-to-equity ratio = Liabilities / Total assets
Earnings per share = Net profit / Total shares
Price-earnings ratio = Closing price / Earnings per share
Book value of a share = Equity / Total shares
Market to book ratio = Closing price / Book value of a share
Market capitalization = Closing price * Total shares
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| th EUR | 31.12.2013 | 31.12.2012 |
| Cash and bank | 355 | 158 |
| Receivables and prepayments (Note 1) | 1,368 | 1,792 |
| Inventories (Note 2) | 3,060 | 3,303 |
| Total current assets | 4,783 | 5,253 |
| Investment property (Note 3) | 408 | 185 |
| Tangible fixed assets (Note 4) | 9,505 | 10,010 |
| Intangible fixed assets (Note 5) | 26 | 23 |
| Total fixed assets | 9,939 | 10,218 |
| TOTAL ASSETS | 14,722 | 15,471 |
| Debt obligations (Note 6) | 1,919 | 1,845 |
| Payables and prepayments (Note 7) | 2,341 | 1,923 |
| Short-term provisions (Note 8) | 14 | 12 |
| Total current liabilities | 4,274 | 3,780 |
| Non-current debt obligations (Note 6) | 14 | 12 |
| Total current liabilities | 4,274 | 3,780 |
| Non-current debt obligations (Note 6) | 3,413 | 3,973 |
| Non-current provisions (Note 8) | 230 | 236 |
| Total non-current liabilities | 3,643 | 4,209 |
| Total liabilities | 7,917 | 7,989 |
| Share capital at nominal value (Note 9) | 2,699 | 2,699 |
| Issue premium | 364 | 364 |
| Statutory capital reserve | 288 | 288 |
| Currency translation | 8 | (21) |
| Retained profits | 4,152 | 4,353 |
| Net profit (loss) for the year (Note 10) | (706) | (201) |
| Total equity | 6,805 | 7,482 |
| TOTAL LIABILITIES AND EQUITY | 14,722 | 15,471 |
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
| th EUR | 4th Q 2013 | 4th Q 2012 | 2013 | 2012 |
| RETURN ON SALES (Note 11) | 4,857 | 4,931 | 19,186 | 19,080 |
| Cost of production sold | (4,140) | (4,148) | (16,204) | (16,050) |
| Gross profit | 717 | 783 | 2,982 | 3,030 |
| Marketing expenses | (723) | (638) | (2,612) | (2,389) |
| General administrative expenses | (208) | (161) | (763) | (546) |
| Other income | 54 | 32 | 152 | 163 |
| Other expenses | (65) | (62) | (226) | (184) |
| Operating profit (loss) (Note 11) | (225) | (46) | (467) | 74 |
| Financial income and financial expenses | (61) | (61) | (233) | (258) |
| Profit (loss) before taxes | (286) | (107) | (700) | (184) |
| Prepaid income tax | (5) | (3) | (6) | (17) |
| NET PROFIT (LOSS) FOR THE PERIOD | (291) | (110) | (706) | (201) |
| Basic earnings per share (Note 10) | (0.06) | (0.02) | (0.15) | (0.04) |
| Diluted earnings per share (Note 10) | (0.06) | (0.02) | (0.15) | (0.04) |
| Other comprehensive income: | ||||
| Currency translation differences | 6 | (10) | 29 | (10) |
| TOTAL COMPREHENSIVE INCOME | (285) | (120) | (677) | (211) |
The planned time of publishing of interim report of the first quarter of 2014 is week 22 (26-30 May 2014)
Martin Kalle
CEO
+372 4478 331
martin.kalle@skano.com
Skano 2013 4Q interim report ENG.pdf