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
Board of Directors
Matti Virtaala, Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd Central Media
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.
Tulikivi Corporation Heikki Vauhkonen Managing Director
Distribution: NASDAQ OMX Helsinki Key media www.tulikivi.com
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.
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.
TULIKIVI CORPORATION
Heikki Vauhkonen Managing Director
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
Distribution: NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
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.
The Annual General Meeting of the Tulikivi Corporation held on April 12, 2012 approved the financial statement for the financial year 2011 and discharged the members of the Board of Directors and the Managing Director from liability. It was resolved that the dividend will not be paid.. The Annual General Meeting accepted the proposals of the Board of Directors, to authorise the Board of Directors to acquire the company’s own shares, to decide upon an issue of shares, to dispose of the company’s own shares and to issue special rights related to the shares.
1. Dividend The Annual General Meeting resolved, in accordance with the Board’s proposal that the dividend will not be paid.
2. Remuneration of Board members and auditor’s fees The annual remuneration of a Board member is EUR 18 000. In accordance with the resolution of the Annual General Meeting, each Board member will receive 40 per cent of the annual remuneration in the form of Tulikivi Corporation Series A shares. In addition, the Chairman of the Board of Directors will be paid a EUR 6 500 monthly fee and the director serving as secretary to the Board of Directors a EUR 1 400 monthly fee. The members of committees of the Board will receive a EUR 330 remuneration per each meeting. The fees for the auditor are paid according to the relevant invoice.
3. Board members The number of Board members was set at six. Mr. Olli Pohjanvirta, Mr. Markku Rönkkö, Mr. Pasi Saarinen, Mrs. Maarit Toivanen-Koivisto, Mr. Heikki Vauhkonen and Mr. Matti Virtaala were re-relected as the members of the Board of Directors for the new term.
4. The Nomination Board and its composition The Annual General Meeting resolved to establish the Nomination Board, to which Olli Pohjanvirta, Reijo Vauhkonen and Matti Virtaala were elected.
5. Auditor The firm of independent public accountants KPMG Oy Ab was elected the auditor of Tulikivi Corporation, with Mr. Ari Eskelinen, Authorized Public Accountant, acting as the chief auditor.
6. Authorisation to acquire the company’s own shares The Annual General Meeting granted the Board authorisation to acquire the company’s own shares as proposed by the Board. The company’s own shares are acquired to develop the company’s capital structure and to be used as consideration in business and company acquisitions and other structural arrangements, the manner and scope of which will be determined at the discretion of the Board of Directors. In addition the shares will be acquired for the use in share-based incentive arrangement, for payment of share-based remuneration or otherwise to be transferred or cancelled. No more than a total of 2 760 397 Series A shares of the company shall be acquired and no more than a total of 954 000 Series K shares of the company shall be acquired, taking into account that the company may not hold more than 10 per cent of all shares. The authorisation is in force until the Annual General Meeting to be held in 2013 but, however, not for a longer period than 18 months as of the resolution by the General Meeting.
7. The authorisation of the Board of Directors to decide on an issue of shares and the company´s own shares in possession of the company and the right to issue special rights which give entitlement to shares as defined in Chapter 10 Article 1 of the Companies´ Act The Annual General Meeting authorised the Board of Directors to decide on the issue of new shares or the company´s own shares in possession of the company as proposed by the Board. The new shares and the company´s own shares in possession of the company will be issued in the following amounts: A total of no more than 5 520 794 A series and no more than 1 908 000 K series shares. The authorisation also includes the right to carry out share capital increase deviating from the shareholders´ pre-emptive subscription right provided there is a weighty financial reason from the company´s point of view for the deviation. The authorisation includes the right to issue cost-free shares to the company, provided that the number of shares issued to the company would not exceed one tenth of all shares of the company. The authorisation also includes the right to issue special rights, as defined in Chapter 10 Article 1 of the Companies´ Act, which entitle to subscribe for shares against payment or by setting off the receivable. The authorisation also includes the right to pay remuneration in the form of shares. The Board of Directors is entitled to decide on other issues related to the share issues. The authorisation to repurchase shares is in force until the Annual General Meeting to be held in 2013.
8. Organisation of the Board At its organisational meeting following the Annual General Meeting the Board elected Matti Virtaala as its chairman and Markku Rönkkö as its secretary. Markku Rönkkö was elected as chairman of the Audit Committee and Pasi Saarinen and Matti Virtaala as its members.
Matti Virtaala Chairman of the Board
Additional Information: Tulikivi Corporation, 83900 Juuka, Tel. +358 403 033 100 Matti Virtaala, Chairman of the Board Heikki Vauhkonen, Managing Director Distribution: NASDAQ OMX Helsinki Ltd, key media www.tulikivi.com
Tulikivi Coporation´s Corporate Governance Statement for 2011 is enclosed and it can be viewed on the company´s website, at www.tulikivi.com/Investors/Corporate Governance and Management.
TULIKIVI CORPORATION Heikki Vauhkonen Managing Director
For additional information, contact: – Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 403 063 100, www.tulikivi.com – Managing Director Heikki Vauhkonen Attachment: Corporate Governance Statement 2011 Distribution: NASDAQ OMX Helsinki Ltd, Central Media
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 about EUR 60 million, of which exports account for about half. Tulikivi employs over 400 people.