CORRECTION: Bullets: Future outlook: … and the result before taxes to be profitable – deleted Chapter: Future outlook: ….and the result before taxes to be profitable – deleted Financial statement release 8 February, 2013 at 15.45 – The Tulikivi Group’s fourth-quarter net sales totalled EUR 14.2 million (EUR 15.5 million Q4/2011), the operating result was EUR 0.5 million (-1.0) and the profit before taxes was EUR 0.3 million (-1.2). The result was adversely affected by the restructuring provision of EUR 1.0 million for adjustment measures. – Net sales in 2012 totalled EUR 51.2 million (EUR 58.8 million in 2011), the operating result was EUR 0.1 million (-2.4) and the result before taxes was EUR -0.8 million (-3.1). The comparable figures for 2011 were adversely affected by non-recurring expenses of EUR 1.6 million caused by the centralisation and adjustment measures. Earnings per share amounted to EUR -0.02 (-0.07). – Year-end order books were at EUR 4.6 (5.7) million. – Cash flow from operating activities before investments was EUR 0.1 (1.4) million. – The Group’s equity ratio at the end of the year was 35.2 per cent (33.3). – The Board will propose to the Annual General Meeting that no dividend be paid. – Future outlook: The sales of Tulikivi products will depend on the development of demand. No significant growth on the previous year is anticipated for net sales in 2013. As a result of improvements to operating efficiency, operating profit is expected to improve and the result before taxes to be profitable.
Summary of the financial statement release 01-12/2012. The full financial statement release is attached to this release.
Managing Director Heikki Vauhkonen The financial situation was very challenging at the start of 2012. The European financial crisis, which intensified in October 2011, weakened consumer confidence and decreased fireplace demand in the main markets. The strongest impact was on domestic net sales fireplace business that decreased by approximately 15 per cent despite the positive development in market share. At the start of the year, fireplace demand already remained below the previous year’s level. In September 2012, domestic consumer demand decreased further. Performance in fireplace exports was more stable, and net sales grew by around 2 per cent. The most positive development took place in the United States, Russia, Germany and the new East European export countries. As a whole, there was satisfactory performance in exports to Central Europe despite the dire financial situation. Demand for lining stone products was low in early 2012, due to the cautious behaviour of heater manufacturers as regards their stocks. Net sales of lining stone products decreased by 18 per cent. Net sales of sauna products are not yet significant regarding the whole figure. The net sales and result of interior stone products were as expected.
In spite of the decrease in net sales, the operating result of the Tulikivi Group became profitable in 2012. This was the result of the three million euro savings project that was implemented successfully. The savings boosted production efficiency and decreased fixed costs, as was the target.
Net sales and result The Tulikivi Group’s fourth-quarter net sales totalled EUR 14.2 million (EUR 15.5 million in Q4/2011), the operating profit was EUR 0.5 (-1.0) million and the profit before taxes was EUR 0.3 (-1.2) million. The comparable figures for 2011 were adversely affected by the restructuring provision of EUR 1.0 million for adjustment measures.
Group net sales in 2012 totalled EUR 51.2 million (EUR 58.8 million in 2011). The net sales of the Fireplaces Segment amounted to EUR 47.1 (53.5) million and the net sales of the Interior Stone Segment were EUR 4.1 (5.3) million. The 2011 figures included net sales of discontinued operations, which amounted to EUR 1.6 million in the Fireplaces Business and EUR 1.4 million in the Interior Stone Business.
Net sales in Finland totalled EUR 24.9 (31.6) million, or 48.5 (53.7) per cent of the total net sales. Exports accounted for more than a half of the net sales total, i.e. EUR 26.3 (27.2) million. The principal export countries were Sweden, France, Germany, Belgium and Russia. In exports, net sales of fireplaces and lining stone products were as expected. The consolidated operating result was EUR 0.1 (-2.4) million. The Fireplaces Segment’s operating profit was EUR 1.8 (0.2) million and the operating result for the Interior Stone Segment was a loss of EUR -0.1 (-0.6) million, while Other Items’ expenses were EUR -2.0 (-2.0) million. Other Items include expenses of the Group administration and expenses pertaining to financial administration. The operating result for 2011 was adversely affected by non-recurring expenses of EUR 1.6 million net caused by the centralisation and adjustment measures. Of these expenses, EUR 1.4 million is allocated to the Fireplaces Segment and EUR 0.2 million net to the Interior Stone Segment. The consolidated result before taxes was EUR -0.8 (-3.1) million and comprehensive income was EUR -0.6 (-2.4) million. The consolidated return on investment was 0.3 (-4.9) per cent. Earnings per share amounted to EUR -0.02 (-0.07).
Financing and investments Cash flow from operating activities before investments was EUR 0.1 (1.4) million. Working capital increased by EUR 3.0 million during the financial year and came to EUR 9.9 million. This was the result of the decrease in accrued expenses, the cancellation of the restructuring provision and the increase in boulder stocks. Interest-bearing debt was EUR 23.9 (24.9) million, and net financial expenses were EUR 0.8 (0.7) million. The current ratio was 1.7 (1.5). The equity ratio was 35.233.3) per cent. The ratio of interest-bearing net debt to equity, or gearing, was 112.9 (96.5) per cent. The equity per share amounted to EUR 0.49 (0.51).
Tulikivi completed negotiations to change the loan instalment schedule for the next three years. This includes covenants which are tied to the increase of the Group’s profitability.
At the end of the financial year, the Group’s cash and other liquid assets came to EUR 3.3 (6.8) million, and the total of undrawn credit facilities and unused credit limits amounted to EUR 4.0 (4.1) million. The Group’s debt financing, totalling EUR 18.4 (14.5) million, includes covenants which are tied to the Group’s equity. Furthermore, a covenant condition tied to the ratio between the interest-bearing debt and EBITDA is applied on a share of EUR 8.4 (0.0) million of debt financing. All covenant conditions were met on the balance sheet date, and the Group’s financing resources are sufficient for the implementation of business plans.
The Group´s investments in production, quarrying and development came to total of EUR 2.7 (4.9) million. The new ERP system was introduced at the beginning of 2012. The new system will harmonise Tulikivi’s internal processes in the various production plants and businesses. It will also make the management of the partner network and the entire delivery chain more efficient. Other major investments included replacement investments in the production plants and quarry investments.
Research and development expenses totalled EUR 1.6 (2.1) million, and their relative share of net sales was 3.1 (3.8) per cent. A total of EUR 0.6 (0.6) million of this figure, after deduction of subsidies, was capitalised.
Significant investments were made in the commercialisation, launch and product approvals of the modular Hiisi collection. The modular design of the products allows the growth of component-specific volumes in order to boost production and acquisitions. This will accelerate and intensify product development in future.
Tulikivi Figure and Tulikivi Color coating materials were launched at the same time as the Hiisi collection. They will enable the use of new designs and colours in soapstone fireplaces.
The Tulikivi Nuoska sauna heater received a Fennia Prize design award and the Hiisi collection received an award for its design at the Habitare Fair. The Tulikivi Harmaja fireplace received a Vesta Award for its technical features at the HBPA Expo in the USA.
Personnel The Group employed an average of 351 (427) people during the financial year. The average was calculated according to the period of employment, taking account of the impact of layoffs. The number of personnel at the end of the year was 377 (436) people. Of these employees, 341(395) were employed by the Fireplaces Segment, 21 (25) by the Interior Stones Segment and 15 (16) in activities not allocated to a segment. The number of personnel decreased during the year by 54 people as a result of the centralisation measures and attrition.
In all, 97.6 per cent of the employment relationships were permanent and 2.4 per cent were temporary. Salaries and bonuses during the year totalled EUR 13.9 (17.4) million.
Resolutions of the Annual General Meeting
Dividends Tulikivi Corporation’s Annual General Meeting, held on 12 April 2012, resolved not to pay a dividend on the 2011 financial year.
Decision-making bodies The following persons were elected to the Board of Directors of the parent company and domestic business subsidiaries: Olli Pohjanvirta, Markku Rönkkö, Pasi Saarinen, Maarit Toivanen-Koivisto, Heikki Vauhkonen and Matti Virtaala. The Board of Directors elected from among its members Matti Virtaala as Chairman. KPMG Oy Ab, Authorized Public Accountants, was elected as the auditor.
Major business risks In 2012, the relative profitability of Tulikivi operations was significantly improved. Efficient operations will be further intensified with the renewed enterprise resource planning system that enables faster and more reliable reporting.
Any major downturn that might be caused by the euro area crisis could decrease the demand for the company’s products and the company’s profitability and equity. The company’s balance sheet assets include goodwill, intangible assets and deferred tax assets, the value of which is based on the management’s estimates. If these estimates fail to materialise, it is possible that impairment losses would have to be recognised in connection with the impairment testing processes. Meeting the covenant conditions on the Group’s bank loans will require the improvement of the company’s profitability in future.
Events following the end of the financial year On 21 January 2013, the company began codetermination negotiations covering all of the Group’s personnel. The current estimate is that any reorganisation of work would mean up to 10 people being made redundant in the Group’s Finnish operations, in sales, customer service and production, and up to 40 production staff being laid off until further notice. In addition to this, temporary layoffs of a maximum of 90 days are being negotiated. Tulikivi’s negotiations concerning implementation of the layoffs will take account of the demand situation during 2013.
Future outlook The demand for Tulikivi products depends on the development of consumer confidence. New products will enable the growth of market share, but no significant growth is anticipated for net sales in 2013. As a result of improvements to operating efficiency, operating profit is expected to improve and the result before taxes to be profitable. Order books at the end of the year amounted to EUR 4.6 (5.7) million.
Board of Directors’ proposal on use of distributable equity There is no distributable equity. The reserve for invested unrestricted equity has a total of EUR 5,835 thousand of returnable funds.
The Board will propose to the Annual General Meeting that no dividend be paid.
Corporate Governance Statement Tulikivi Corporation will issue its Corporate Governance Statement for 2012 separately from the Annual Report. The Corporate Governance Statement has been prepared in accordance with Recommendation 54 of the Finnish Corporate Governance Code and Chapter 2, section 6 of the Securities Markets Act. Information on corporate governance can be found on Tulikivi’s website, at http://www.tulikivi.com/en/tulikivi/Corporate_governance_and_management.
TULIKIVI CORPORATION
Board of Directors
Matti Virtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358 403 063 100, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala – Managing Director Heikki Vauhkonen
Financial Statement Release Jan-Dec 2012 (pdf)
An annual Summary of Tulikivi Corporation´s stock exchange releases 2012 is available on company´s web-site at the address www.tulikivi.com/Investors/Stock Exchange Releases/Annual Summary 2012.
Some of the information included in the releases and announcements might be out of date.
Heikki Vauhkonen Managing Director
Attachment An Annual Summary of Tulikivi Corporation´s Stock Exchange Releases 2012
Distribution NASDAQ OMX Helsinki Ltd, Central Media
For additional information Tulikivi Corporation, 83900 Juuka, tel. +358 403 063 176, www.tulikivi.com – CFO Risto Vidgren
Kivia Oy to merge with Tulikivi Corporation
Tulikivi Corporation´s and Kivia Oy’s Boards of Directors decided on June 21, 2012 to merge Kivia Oy into Tulikivi Corporation by absorption. The implementation of the merger was registered on December 31, 2012. The merger aims to clarify the Group structure.
Tulikivi Corporation
Heikki Vauhkonen, Managing Director
Distribution: NASDAQ OMX Helsinki Ltd Central Media
www.tulikivi.com
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000, www.tulikivi.com – Managing Director Heikki Vauhkonen
Tulikivi Corporation´s Financial Statements Release for 2012 will be published on February , 2013. Annual Report will come out on Tulikivi’s website week 12. Annual General meeting will be held on April 16, 2013.
The following interim reports will be published in 2013: – January – March April 24 – January – June August 8 – January – September October 24
Tulikivi Corporation Heikki Vauhkonen Managing Director
Distribution: NASDAQ OMX Helsinki Key media www.tulikivi.com
Tulikivi comprises the Tulikivi Corporation, which is a listed family enterprise, and its subsidiaries. Tulikivi is the world’s largest manufacturer of heat-retaining fireplaces. The company has three product groups: Fireplaces, Sauna and Interior. Tulikivi and its customers value wellbeing, interior design and the benefits of bioenergy. Tulikivi’s net sales are approximately EUR 60 million, of which exports account for about half. Tulikivi employs over 400 people.
Interim report, 1 January – 30 September 2012
– The Tulikivi Group’s third-quarter net sales were EUR 13.1 million (1 July – 30 September 2011: EUR 15.1 million), the operating result was EUR 0.4 (0.5) million and the result before taxes was EUR 0.2 (0.3) million. – The Group’s net sales for 1 January – 30 September 2012 were EUR 37.0 million (1 January – 30 September 2011: EUR 43.3 million), the operating result was EUR -0.4 (-1.3) million and the result before taxes was EUR -1.1 (-1.9) million. – Earnings per share amounted to EUR -0.02 (-0.04) for 1 July – 30 September 2012, and EUR 0.00 (0.00) for the third quarter. – Net cash flow from operating activities during the reporting period was EUR -3.7 (-1.5) million. – Order books at the end of the period were at EUR 5.9 million (30 September 2011: EUR 6.7million). – Future outlook: Like-for-like net sales in 2012 are expected to remain about 5 per cent lower than the previous year. The company has carried out centralisation and adjustment measures, and these will create significant savings during 2012. The full-year operating result is expected to be profitable.
Summary of the interim report 01-09/2012. The full interim report is attached to this release.
Key financial ratios
2012
2011
%
Managing Director’s comments:
“The demand for Tulikivi products in the third quarter was about the same as in the first quarter.
The demand for fireplaces on the Finnish market was down on the previous year, due to the decrease in new housing construction and the caution shown by consumers. Particularly in recent weeks, demand has been weaker than before.
Despite the challenging economic situation, the volume of fireplace exports was higher than predicted. The trends in fireplace exports were most favourable in Germany, Russia and the USA. In Germany, demand for fireplaces is being boosted by an increase in the price of electricity resulting from subsidies for renewable energies.
The Hiisi fireplace range and design fireplaces that were launched on the market were also positively received in Central Europe.
Lining stone product customers continued to be cautious and to keep their stocks low. The demand for sauna products continued as planned.
The Group’s measures to achieve cost savings of EUR 3 million in 2012 have proceeded as planned. These measures include the discontinuing of unprofitable operations, making savings in fixed costs, and taking measures to improve production efficiency.”
Net sales and result
The Group’s net sales amounted to EUR 37.0 million (1 January – 30 September 2011: EUR 43.3 million). Net sales of the Fireplaces Business were EUR 33.8 (39.1) million, and net sales of the Interior Stone Products Business were EUR 3.2 (4.2) million. The 2011 figures include net sales in discontinued operations, which amounted to EUR 1.2 million in the Fireplaces Business and EUR 1.4 million in the Interior Stone Products Business.
Net sales in Finland accounted for EUR 18.7 (23.5) million, or 51.2 (54.4) per cent, of total net sales. Exports amounted to EUR 18.3 (19.8) million in net sales. The principal export countries were France, Sweden, Germany, Belgium and Russia.
The consolidated operating result was EUR -0.4 (-1.3) million. In the segment reporting, the corresponding operating result for the Fireplaces Business was EUR 1.1 (0.6) million, and for the Interior Stone Products Business EUR -0.1 (-0.5) million. The expenses under ‘Other items’ were EUR -1.4 (-1.4) million. The third-quarter operating non-recurring items from restructuring, amounting to a net total of EUR -0.6 million. EUR -0.4 million of these items was allocated to the Fireplaces Business and EUR -0.2 million to the Interior Stone Products Business.
The consolidated result before taxes was EUR -1.1 (-1.9) million, and the result for the reporting period was EUR -0.8 (-1.4) million. Earnings per share amounted to EUR -0.02 (-0.04).
The Group’s third-quarter net sales were EUR 13.1 million (1 July – 30 September 2011: EUR 15.1 million), the operating result was EUR 0.4 (-0.5) million and profit before taxes was EUR 0.2 (0.3) million. Earnings per share amounted to EUR 0.00 (0.00).
Financing and investments
Cash flow from operating activities before investments was EUR -3.7 (-1.5) million.
Working capital increased by EUR 5.5 million in the period and came to EUR 11.0 million (30 September 2011: EUR 9.3 million). Interest-bearing debt was EUR 26.0 (27.7 million, and the Group’s net financial expenses were EUR 0.7 (0.6) million. The equity ratio was 33.2 per cent (30 September 2011: 33.3 per cent). The ratio of interest-bearing net debt to equity, or gearing, was 130.3 (101.0) per cent. The current ratio was 1.6 (1.7). The equity per share amounted to EUR 0.49 (0.53).
At the end of the reporting period, the Group’s cash assets were EUR 2.6 (7.7) million and unused credit limits amounted to EUR 1.0 (1.0) million. The Group’s interest-bearing debt includes covenants which are tied to the Group’s equity. The covenant conditions were met at the close of the reporting period. In addition, the Group has an annual covenant condition that is tied to the ratio between its interest-bearing debt and EBITDA.
The Group’s investments in production, quarrying and development were EUR 1.9 (3.3) million in the reporting period. Research and development expenditure was EUR 1.2 (1.8) million, i.e. 3.3 (4.1) per cent of net sales. EUR 0.4 (0.5) million of this was capitalised in the balance sheet.
A new range of woodburning stoves was launched in the first half of 2012, along with the new Hiisi fireplaces, which are well-suited to modern, low-energy construction projects. The design fireplace collection was updated.
Personnel
The Group employed an average of 370 (437) people during the reporting period. Salaries and bonuses during the period totalled EUR 10.3 (12.3) million.
Near-term risks and uncertainties
Unexpected fluctuations in the economy which could weaken demand are seen as near-term risks for the Group. Consumer demand in the final part of the year is uncertain in Finland in particular.
More information on risks can be found in the Board of Directors’ report on 2011 and the notes to the financial statements.
Future outlook
Consumers in the company’s main markets are still cautious and are considering their investment decisions carefully.
Like-for-like net sales in 2012 are expected to remain about 5 per cent lower than the previous year. The company has carried out centralisation and adjustment measures, and these will create significant savings during 2012. The full-year operating result is expected to be profitable.
Order books at the end of the reporting period amounted to EUR 5.9 million (30 September 2011: EUR 6.7 million).
TULKIVI CORPORATION
Matti Virtaala, Chairman of the Board
Additional information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com -Chairman of Board of Directors Matti Virtaala, +358 207 636 666 -Managing Director Heikki Vauhkonen, +358 207 636 555
The codetermination negotiations concerning fixed-term layoffs for personnel in Tulikivi Corporation’s soapstone production, quarrying and related support functions were concluded today.
The layoff requirement varies from one production plant to another according to the level of demand for products.
Layoffs will take place at Juuka and Suomussalmi in the form of fixed-term layoffs of no more than 90 days. The layoffs will affect a maximum of 245 people.
The layoffs are expected to take place between the current autumn and summer 2013.
According to Tulikivi’s Managing Director, Heikki Vauhkonen, no significant growth is forecast in the demand for soapstone fireplaces during the coming winter. The need for layoffs varies considerably from one production plant to another. The codetermination negotiations did not concern Tulikivi’s ceramic fireplaces, interior stone products or the sauna business.
Further information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala, tel. +358 (0)207 636 666 – Managing Director Heikki Vauhkonen, tel. +358 (0)207 636 555
Tulikivi Corporation’s current Managing Director, Heikki Vauhkonen, is to become chairman of Tulikivi’s Board of Directors on a full-time basis.
Tulikivi Corporation’s Board of Directors has begun the search for a new Managing Director. The company’s Board of Directors has decided that it will select Heikki Vauhkonen as chairman from among its members once the company’s new Managing Director has taken up his or her duties. These new positions are expected to take effect in the first half of 2013.
Managing Director Heikki Vauhkonen: “Transferring to the position of full-time chairman of the Board is a natural part of the generational change process at Tulikivi. In the past few years, Tulikivi’s operations have seen a considerable amount of reshaping, as we have discontinued unprofitable businesses and harmonised core business processes. The renewed fireplace collection, our Green products ideal for low-energy construction, and our modern sauna heaters all provide a strong foundation for building the company on the domestic and international markets.”
Tulikivi Corporation Board of Directors Matti Virtaala Chairman of the Board
Further information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala, tel. +358 (0)207 636 666 – Managing Director Heikki Vauhkonen, tel. +358 (0)207 636 555 Tulikivi comprises the Tulikivi Corporation, which is a listed family enterprise, and its subsidiaries. Tulikivi is the world’s largest manufacturer of heat-retaining fireplaces. The company has three product groups: Fireplaces, Sauna and Interior. Tulikivi and its customers value wellbeing, interior design and the benefits of bioenergy. Tulikivi’s net sales are approximately EUR 60 million, of which exports account for about half. Tulikivi employs over 400 people.
For production-related and economic reasons, Tulikivi Corporation is to begin co-determination negotiations on temporary layoffs of no more that 90 days in its soapstone production.
The temporary layoffs of no more than 90 days would affect soapstone production and quarrying and the support activities for these at Juuka and Suomussalmi. The co-determination negotiations concern approximately 250 persons. Tulikivi will negotiate on the implementation of layoffs in accordance with the demand situa-tion during this fall and summer 2013.
Managing Director Heikki Vauhkonen says that no significant growth is forecast in the demand for soapstone fireplaces during the coming winter. For this reason the plan is to continue the layoff measures in order to safeguard profitability. The co-determination negotiations do not concern ceramic fireplaces, interior stone products or the sauna business.
Distribution: NASDAQ OMX Helsinki Ltd Key media www.tulikivi.com
Further information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com – Chairman of Board of Directors Matti Virtaala, tel. +358 (0)207 636 666 – Managing Director Heikki Vauhkonen, tel. +358 (0)207 636 555
ATTACHEMENT: Interim Report 01-06/2012
Tulikivi Corporation and Kivia Oy’s Boards of Directors have today decided to merge Kermansavi Oy into Tulikivi Corporation by absorption. The merger aims to clarify the Group structure. The draft terms of merger will be registered in the Trade Register within a month. The planned registration date for consummation of the merger is December 31, 2012.
Kivia Oy is dormant. The merger will not affect the figures in the Group’s financial statements. Tulikivi Corporation
Board of Directors Matti Virtaala, Chairman of the Board
Additional information: Tulikivi Corporation, 83900 Juuka, +358 403 063 100, www.tulikivi.com -Chairman of the Board Matti Virtaala -Managing Director Heikki Vauhkonen
The Tulikivi Group comprises the Tulikivi Corporation, which is a listed family enterprise, and its subsidiaries. The Tulikivi Group is the world´s largest manufacturer of heat retaining fireplaces. Tulikivi has three products groups: Fireplaces, Saunas and Interior & Design. Tulikivi and its customers value wellbeing, interior design and the benefits of bioenergy. Tulikivi´s net sales are roughly EUR 60 million, of which exports account for about half. Tulikivi employs over 400 people.