Tulikivi Corporation supplements its interim report release published on October 20, 2011 by adding the future outlook published previously in the interim report of August 4, 2011 to the future outlook presented on October 20, 2011.

The future outlook presented in the interim report are as follows:
Changes in consumer confidence will have an effect on demand for Tulikivi products in the near future. In Finland and the rest of Northern Europe, demand is expected to remain comparatively good. Moreover, sales in Finland will be supported by the new sauna and fireplace products and an expanding distribution network.

In Central Europe, the economic crisis will have a greater effect on consumers’ decision-making, and thus on fireplace demand.

Despite the uncertainty caused by the economic crisis, the company’s full year like-for-like net sales will be up by slightly under 10 per cent, and the operating profit before non-recurring items is expected to improve on the previous year. The full-year operating result taking into account the non-recurring expenses is expected to be negative, however, and at the same level as the previous year.

The paragraph of the future outlook previously presented in the interim report on August 4, 2011 was as follows:
In Finland, the outlook for fireplace products is good as a result of active new construction and rising consumer energy prices. Likewise, in exports, the revival of new construction and the rising costs of energy will improve the demand for fireplaces during 2011. The demand for lining stone products will remain good.

The new sauna and fireplace products and expanding distribution network will also increase net sales.

The comparable net sales for 2011 are expected to increase by about 10 per cent. Due to the seasonal nature of the industry, profit is mostly accumulated in the second half of the year. As a result of improved cost efficiency and despite the expenses caused by concentration, the operating profit for the year is expected to improve and to be positive.

TULIKIVI CORPORATION

Heikki Vauhkonen
Managing Director

 

Distribution: NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com

Additional information: Tulikivi Corporation, 83900 Juuka,
www.tulikivi.com
– Chairman of the Board of Directors Matti Virtaala, +358 207 636 666
– Managing Director Heikki Vauhkonen, +358 207 636 555

– The Tulikivi Group’s third-quarter net sales were EUR 15.1 million (EUR 13.9 million, Q3/2010), the operating profit was EUR 0.5 (0.2) million and the profit before taxes was EUR 0.3 (0.1) million.
– The Group’s net sales during the reporting period were EUR 43.3 million (EUR 39.3 million, Jan-Sep 2010), the operating result was a loss of EUR -1.3 (-1.1) million and the result before taxes a loss of EUR -1.9 (-1.6) million. The operating result before expenses caused by concentration was a loss of EUR -0.7 (-1.1) million.
– Earnings per share amounted to EUR -0.04 (-0.03), and in the third quarter EUR 0.00 (0.00).
– Cash flow from operating activities was EUR -1.5 (-1.0) million.
– Order books at the end of the period were at EUR 6.7 (the comparable order books at Sept. 30, 2010 were 7.6) million.
– Despite the uncertainty caused by the economic crisis, the company’s full year like-for-like net sales will be up by slightly under 10 per cent, and the operating profit before non-recurring items is expected to improve on the previous year. The full-year operating result taking into account the non-recurring expenses is expected to be negative, however, and at the same level as the previous year.
Summary of the interim report 1-6/2011. The full interim report is attached to this release.
Key financial ratios

 
1-9/
2011
1-9/
2010
Change,
%
1-12/
2010
7-9
2011
7-9/
2010
Change,
%
Sales,
MEUR
43.3
39.3
10.3
55.9
15.1
13.9
9.1
Operating profit/loss,
MEUR
-1.3
-1.1
-25.6
-0.3
0.5
0.2
143.3
Profit before tax,
MEUR
-1.9
-1.6
-15.4
-1.0
0.3
0.1
309.9
Total comprehensive income for the period,
MEUR
-1.4
-1.2
-19.3
-0.7
0.3
0.1
70.1
Earnings per share/
Euro
-0.04
-0.03
-21.2
-0.02
0.00
0.00
139.9
Net cash flow from operating activities,
MEUR
-1.5
-1.0
2.9
Equity ratio,
%
33.3
36.9
37.0
Net indebtness
ratio, %
101.0
82.9
68.1
Return on investments,
%
-3.5
-2.5
-0.1
0.9
0.5

 

Managing Director’s comments:
“Net sales in the third quarter grew in line with expectations.The strongest growth was in fireplace sales in Finland and fireplace exports.Demand in Finland is supported by the rising price of consumer energy and building projects in progress.Nevertheless, the decline in consumer confidence caused by the financial crisis will reduce demand for fireplaces compared with the outlook at the beginning of the year.
The expansion of the distribution channel carried out in Finland and the new fireplace and sauna products will support sales in the final part of the year.In the sauna business, the focus is on expanding the product range and the distribution channel.
In exports, growth was generated by the improved demand in the Baltic countries, Sweden and Russia.The market situation for exports has weakened since the summer.In Central Europe, consumers continue to be interested in purchasing fireplaces, but the significant weakening of consumer confidence is  delaying purchasing decisions.The changed market situation is also likely to be reflected in the demand for lining stone.
The plan to focus on core business areas announced in the spring has been implemented.The loss-making product groups that did not belong to the core business were discontinued, and the Heinävesi plant can now be made into a more efficient fireplace factory.Concentrating kitchen countertop production in Espoo will improve the profitability of the Natural Stone Products Business.Measures to improve profitability will continue.”
Focusing on core businesses
The Group’s core businesses are the manufacture of fireplaces and sauna and interior stone products, development of product concepts and their marketing to consumers.Tulikivi will discontinue the manufacture of utility ceramics by the end of the year.The building stone business in Taivassalo has been sold, and manufacture of natural stone products has been concentrated at the Espoo factory.The negotiations regarding the outsourcing of machine work in quarrying have been completed.In the future, external contractors will carry out a substantial part of the machine work in quarrying.
As a result of the centralisation of functions, the number of employees in the Group is reduced by 55, of whom 43 people have been made redundant.12 people transferred to another employer as a result of the divestment of businesses.Net sales for the reporting period include EUR 0.4 million in net sales resulting from the sale of the building stone business’s inventories, and the result includes the non-recurring expenses from the arrangement, amounting to approximately EUR 0.6 million net.Of these expenses, the restructuring provision accounts for approximately EUR 0.5 million, impairment losses, other expenses and expense reserves account for EUR 0.3 million, and sales gains EUR 0.2 million.Of the net expenses, EUR 0.4 million is from the Fireplaces Business and EUR 0.2 million from the Natural Stone Products Business.The effect of the sale of the building stone business on net sales for 2011 is EUR -0.6 million, but this will not have a substantial impact on the result for the final part of the year.
Focusing on core businesses will enable improvement of the Group’s profitability in the 2012 financial year and beyond.The arrangement reduces annual net sales by slightly under EUR 3.0 million.
Net sales and result
Consolidated net sales were EUR 43.3 million (EUR 39.3 million in January-September 2010).The net sales of the Fireplaces Business were EUR 39.1 (35.3) million and of the Natural Stone Products Business EUR 4.2 (4.0) million.The like-for-like net sales of the Natural Stone Products Business were EUR 3.8 million.
Net sales in Finland accounted for EUR 23.5 (20.8) million, or 54.4 (53.0) per cent, of total net sales.Exports amounted to EUR 19.8 (18.5) million in net sales.The principal export countries were Sweden, France and Germany.The growth in export net sales was from increased lining stone sales.Fireplace exports have not developed according to plan due to the lower demand.
The Group’s operating result after the above-mentioned expenses from centralisation was a loss of EUR -1.3 (-1.1) million and the operating result before expenses caused by concentration was EUR -0.7 (-1.1) million.

The Fireplaces Business had an operating profit of EUR 0.6 (0.6) million, and the Natural Stone Products Business had an operating loss of EUR -0.5 (-0.3) million, while expenses under other items were EUR -1.4 (-1.4) million.In addition to the expenses from the centralisation of functions, the operating profit during the reporting period was burdened by non-recurring expenses of EUR 0.8 million from the launch of electric sauna heaters,  expansion of the Finnish distribution channel, the redesign of the corporate image and the introduction of a new information system.

The consolidated result before taxes was a loss of EUR -1.9 (-1.6) million and the consolidated result before expenses caused by concentration was EUR -1.3 (-1.6) million. The result for the reporting period was a loss of EUR -1.4 (-1.2) million and earnings per share amounted to EUR -0.04 (-0.03).
The Group’s third-quarter net sales totalled EUR 15.1 (13.9) million, the operating profit was EUR 0.5 (0.2) million and the profit before taxes EUR 0.3 (0.1) million.Earnings per share amounted to EUR 0.00 (0.00).
Financing and investments
Cash flow from operating activities before investments was EUR -1.5 (-1.0) million.Working capital increased by EUR 2.0 (3.1) million in the period and came to EUR 9.3 million (EUR 9.5 million on 30 September 2010). Interest-bearing debt was EUR 27.7 (25.8) million and net financial expenses were EUR 0.6 (0.6) million.The equity ratio was 33.3 (36.9) per cent. The ratio of interest-bearing net debt to equity, or gearing, was 101.0 (82.9) per cent.The current ratio was 1.7 (1.8). Equity per share was EUR 0.53 (0.59).
The Group has a solid financial position.At the end of the reporting period, the Group’s cash assets were EUR 7.7 (7.8) million and unused credit limits amounted to EUR 1.0 (4.0) million.The Group’s debt financing, totalling EUR 16.0 (12.5) million, includes covenants which are tied to the Group’s equity.All covenant conditions were met at the close of the reporting period.
The Group’s investments in production, quarrying and development were EUR 3.3 (2.0) million in the reporting period.Research and development costs were up, to a total of EUR 1.8 (1.4) million, i.e. 4.1 (3.4) per cent of net sales.EUR 0.5 (0.3) million of development costs was capitalised in the balance sheet.
In September, the new modular design fireplace Suvas was launched as well as ceramic fireplace models decorated with nature-themed decals.The development of the Green products has continued.In February, the Group launched its range of electric sauna heaters.  Development of the heaters and sauna products is continuing, and new products will be introduced later in the year.Other major development projects include development of the Group’s processes and renewal of the enterprise resource planning system.
Personnel
The Group employed 481 (488) people at the end of the reporting period.As a result of the centralisation of functions, the number of employees in the Group is reduced by 55, of whom 43 people were made redundant.12 people transferred to another employer as a result of the divestment of businesses.Salaries and bonuses during the reporting period totalled EUR 12.3 (11.2) million.The Group employed an average of 437 (389) people during the reporting period.
Annual General Meeting
Tulikivi Corporation’s Annual General Meeting, held on 14 April 2011, resolved to pay a dividend of EUR 0.0250 on A shares and EUR 0.0233 on K shares.The dividend payout date was 28 April 2011. The other decisions of the general meeting can be found in the separate release published on the date of the meeting.
Near-term risks and uncertainties
The probability of an economic downturn in Europe has increased.The Group’s risks in the near future include negative fluctuations in the economy.Another risk is that consumer demand may be driven solely by price and not by the qualities of the product.
The renewal of the ERP system is in progress.Timetable and cost risks are often associated with such projects.
More information on risks can be found in the 2010 Board of Directors’ report and the notes to the financial statements.
Future outlook
Changes in consumer confidence will have an effect on demand for Tulikivi products in the near future.In Finland and the rest of Northern Europe, demand is expected to remain comparatively good.Moreover, sales in Finland will be supported by the new sauna and fireplace products and an expanding distribution network.
In Central Europe, the economic crisis will have a greater effect on consumers’ decision-making, and thus on fireplace demand.
Despite the uncertainty caused by the economic crisis, the company’s full year like-for-like net sales will be up by slightly under 10 per cent, and the operating profit before non-recurring items is expected to improve on the previous year. The full-year operating result taking into account the non-recurring expenses is expected to be negative, however, and at the same level as the previous year.
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, www.tulikivi.com
– Chairman of the Board of Directors Matti Virtaala, +358 207 636 666
– Managing Director Heikki Vauhkonen, +358 207 636 555

Tulikivi Corporation´s Financial Statements Release for 2011 will be published on February 10, 2012. Annual Report will come out on Tulikivi’s website week 12. Annual General meeting will be held on April 12, 2012.

The following interim reports will be published in 2012:
– January – March April 24
– January – June August 8
– January – September October 26

TULIKIVI CORPORATION

Heikki Vauhkonen
Managing Director

Distribution:
NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com

– The Tulikivi Group’s second-quarter net sales were EUR 15.6 million (EUR 14.7. million, 04-06/2010), the operating loss EUR -0.3 (+0.5) million and the loss before taxes EUR -0.5 (+0.2) million.
– The operating profit before the expenses caused by a concentration on core businesses was EUR +0.3 million. The Group’s comparable net sales, adjusted for the effect of selling the building stone business’s inventories, were EUR 15.2 million.
– The Group’s net sales for the reporting period were EUR 28.2. million (EUR 25.4 million, 01-06/2010), the operating loss EUR -1.8 (-1.3) million and the loss before taxes EUR -2.2 (-1.7) million. The operating loss before expenses caused by concentration was EUR -1.2 million.
– Earnings per share were EUR -0.04 (-0.04) for the reporting period and EUR -0.01 (0.00)for the second quarter.
– Cash flow from operating activities was EUR -2.3 (-2.1) million.
– The order books at the end of the reporting period were EUR 8.5 (6.7) million.
– Future outlook: The comparable net sales for 2011 are expected to increase by approximately 10 per cent. Due to the seasonal nature of the industry, profit is mostly accumulated in the second half of the year.  As a result of improved cost efficiency and despite the expenses caused by concentration, the operating profit for 2011 is expected to improve and to be positive.
Summary of the interim report 1-6/2011. The full interim report is attached to this release.
Key financial ratios

 
1-6/
2011
1-6/
2010
Change,
%
1-12/
2010
4-6/
2011
4-6/
2010
Change,
%
Sales,
MEUR
28.2
25.4
11.0
55.9
15.6
14.7
6.1
Operating
profit/loss,
MEUR
-1.8
-1.3
-38.5
-0.3
-0.3
0.5
-160.0
Profit before
tax, MEUR
-2.2
-1.7
29.4
-1.0
-0.5
0.2
-350.0
Total
comprehensive
income for
the period,
MEUR
-1.7
-1.3
-30.8
-0.7
-0.3
0.1
-400.0
Earnings per
share/Euro
-0.04
-0.04
-0.02
-0.01
0.00
Net cash flow
from operating
activities,
MEUR
-2.3
-2.1
2.9
Equity ratio,
%
33.3
35.8
37.0
Net indebt-
ness ratio, %
100.5
84.4
68.1
Return on
investments,
%
-7.5
-4.7
-0.1
-2.2
4.4

 

Managing Director’s comments:
”Tulikivi Corporation’s net sales growth in the second quarter was lower than anticipated. Deliveries are scheduled more in the early autumn, than in the early summer as they were in the previous year.
In Finland, despite increased general economic uncertainty, demand remains rather strong. The expansion of the distribution channel carried out early in the year will support sales growth in the autumn.
In fireplace exports, the demand is strongest in Germany, Russia, Sweden and the Baltic countries.
The energy decisions made in Germany are likely to be reflected positively in lining stone demand during the autumn. Net sales in lining stone products will also remain good in the second half of 2011.
Efforts to expand the product range of the sauna business and to develop distribution have continued as planned, and this has squeezed profitability. Product distribution is in the launch phase.
The project to focus on core businesses has progressed according to plan.
The efficiency improvement measures taken will create a good basis for higher profitability, if product demand continues to grow at the same rate as now.”
Concentration on core businesses
The Group’s core businesses are the manufacture of fireplace, sauna and interior stone products, the development of product concepts and their marketing to consumers. Tulikivi will discontinue the manufacture of ceramic utensils by the end of the year. At the end of the review period, the building stone business in Taivassalo was also sold, and a decision was made to focus on the manufacture of natural stone products at the Espoo factory.
As a result of this concentration, the Group’s personnel was reduced by about 50 people, 38 of whom were made redundant. Second-quarter net sales include income of EUR 0.4 million from the sale of the building stone business’s inventories, while profit was affected by non-recurring net expenses of some EUR 0.6 million due to restructuring. These comprise a restructuring provision of approximately EUR 0.5 million, impairment losses and other expenses and provisions of EUR 0.3 million, offset by sales gains of EUR 0.2 million. EUR -0.4 million of these net expenses relate to the Fireplaces Business and EUR -0.2 million to the Natural Stone Products Business.  The impact of the sale of building stone business on Tulikivi Corporation´s net sales of year 2011 will be about EUR -0.6 million, but do not have significant impact on the Group´s financial result in the latter part of year 2011.
The concentration on core businesses will enable a further improvement in the Group’s profitability in the 2012 financial year. The restructuring will reduce annual net sales by slightly under EUR 3 million.
Net sales and profit
Consolidated net sales amounted to EUR 28.2 million (EUR 25.4 million in 01-06/2010). The net sales of the Fireplaces Business were EUR 24.9 (22.5) million and of the Natural Stone Products Business EUR 3.3 (2.9) million. The comparable net sales of the Natural Stone Products Business were EUR 2.9 million.
Net sales in Finland accounted for EUR 15.1 (13.3) million, or 53.4 (52.2) per cent, of consolidated net sales. Exports accounted for EUR 13.1 (12.1) million of net sales. The principal export countries were Sweden, France and Germany. The growth in exports was from increased sales of lining stone.
The Group’s operating loss after the above-mentioned expenses of concentration was EUR -1.8 (-1.3) million. Reporting by segment, the Fireplaces Business had an operating loss of EUR -0.6 (-0.3) million, and the Natural Stone Products Business an operating loss of EUR -0.3 (-0.1) million. The expenses recognized under ‘Other items’ totalled EUR -0.9 (-0.9) million. During the reporting period the operating profit was affected not only by the costs of concentration on core businesses, but also by EUR 0.6 million in expenses caused by the launch of electric sauna heaters, the expansion of the Finnish distribution channel and the renewal of the corporate image.
The consolidated loss before taxes was EUR -2.2 (-1.7) million and the net loss was EUR -1.7 million (-1.3) million. Earnings per share amounted to EUR -0.04 (-0.04).
The Group’s second quarter sales totalled EUR 15.6 million (EUR 14.7. million in 04-06/2010), the operating loss was EUR -0.3 (+0.5) million and the loss before taxes EUR -0.5 (+0.2) million. Without the concentration measures, the second quarter net sales would have been EUR 15.2 million and the operating profit EUR +0.3 million. Earnings per share were EUR -0.01 (-0.00).
Financing and investments
Cash flow from operating activities before investments was EUR -2.3 (-2.1) million. Working capital increased by EUR 1.5 million during the reporting period and stood at EUR 8.7 (9.4 on 30.6.2010) million. Interest-bearing debt was EUR 26.5 (26.7) million and net financial expenses EUR 0.4 (0.5) million. The equity ratio was 33.3 (35.8% on 30.6.2010) per cent. The gearing ratio was 100.5 (84.4) per cent. The current ratio was 1.6 (1.8). Equity per share was EUR 0.53 (0.58).
The Group’s financial position is solid. At the end of the period, the Group’s cash and cash equivalents were EUR 6.9 (8.4) million, and the amount of undrawn credit facilities was EUR 3.0 (1.0) million.
The Group’s capital expenditure on production, quarrying and development totalled EUR 2.3 (1.2) million. Research and development costs increased and stood at EUR 1.2 (0.9) million, i.e. 4.3 (3.6) per cent of net sales. EUR 0.3 (0.2) million of this figure was capitalized.
Personnel
The Group employed  510 (498) people at the end of the reporting period. As a result of the concentration of operations, the number of employees in the Group was reduced by 49 people, 38 of whom were made redundant. After these reductions, the number of employees is 461. Salaries and bonuses during the reporting period totalled EUR 8.9 (7.8) million. The Group employed an average of 421 (374) people during the reporting period.
Resolutions of the Annual General Meeting
Tulikivi Corporation’s Annual General Meeting, held on 14 April 2011, resolved to pay a dividend of EUR 0.0250 on A shares and EUR 0.0233 on K shares. The dividend payout date was 28 April 2011. The other decisions of the general meeting can be found in the separate release published on the date of the meeting.
Near-term risks and uncertainties
Financial uncertainty has increased in Europe. The Group’s near-term risks include unexpected negative fluctuations in the economy. Another risk is that consumer demand may be driven solely by price and not by the qualities of the product. The renewal of the ERP system is in the start-up phase. Schedule and cost risks are often associated with such projects. More information on risks can be found in the 2010 Board of Directors’ report and the notes to the financial statements.
Future outlook
In Finland, the outlook for fireplace products is good as a result of active new construction and rising consumer energy prices. Likewise, in exports, the revival of new construction and the rising costs of energy will improve the demand for fireplaces during 2011. The demand for lining stone products will remain good.
The new sauna and fireplace products and expanding distribution network will also increase net sales.
The comparable net sales for 2011 are expected to increase by about 10 per cent.Due to the seasonal nature of the industry, profit is mostly accumulated in the second half of the year. As a result of improved cost efficiency and despite the expenses caused by concentration, the operating profit for the year is expected to improve and to be positive.
TULIKIVI 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 the Board of Directors Matti Virtaala, +358 207 636 666
– Managing Director Heikki Vauhkonen, +358 207 636 555
Risto Vidgren, M.Sc. (Econ.), born 1968, has been appointed Financial Director of Tulikivi Corporation as of 29 August. He has nearly 20 years’ experience in general and financial administration duties in Finland and Russia.
Vidgren transfers to his new post from Itella Corporation, where he was OOO NLC’s business development VP in Moscow. Previously, he had served as Financial Director of Itella Corporation’s Logistics Unit. He also has experience of general and financial administration duties in the Veho Group, Nokia Corporation and Huhtamäki Corporation.
Vidgren, who will report directly to Heikki Vauhkonen, Managing Director, will be responsible for financial and economic administration, IT and personnel administration.
TULIKIVI CORPORATION
Heikki Vauhkonen
Managing Director
Distribution: – NASDAQ OMX Helsinki Ltd
– Central media
Additional information
– Matti Virtaala, Chairman of the Board, tel. +358 (0)207 636 666
– Heikki Vauhkonen, Managing Director, tel. +358 (0)207 636 555

Initiated in May, the Tulikivi Group’s codetermination negotiations on discontinuing its building stone manufacturing and on centralising and reorganising production were concluded today.

The negotiations were part of the Tulikivi Group’s profitability programme. The company wants to focus on its core business in the future: fireplaces, saunas and interior stone products.

As a result of the codetermination negotiations, Tulikivi will discontinue its building stone business in Taivassalo and focus its natural stone products business on interior stone production at the Espoo factory. At the same time the production of counter tops in Taivassalo will end.

It was decided that at the most 15 people will be made redundant at the Taivassalo factory. The building stone personnel will continue their employment as existing employees under the new owner. Tulikivi sold its Taivassalo-based building stone business to Vientikivi Oy Finland on 30 June 2011. A separate release on the sale has been published today.

By centralising its operations, the Tulikivi Group is divesting its smaller, clearly unprofitable businesses that are outside its core business, thus releasing a significant amount of working capital for its core businesses. The divestment of the utility ceramics business and the Taivassalo building stone business will result in extra expenses of EUR 0.5 million during the current financial year, including a restructuring provision of EUR -0.4 million, impairment losses and other expense reserves of EUR -0.3 million, and sales profits of EUR 0.2 million. Due to the centralisation measures, the Group´s personnel diminished by 50 persons.

TULIKIVI CORPORATION

Heikki Vauhkonen
Managing Director

Distribution: NASDAQ OMX Helsinki Ltd, key media, www.tulikivi.com

Further information: Tulikivi Corporation, FIN-83900 Juuka, Finland, tel. +358 (0)207 636 000, www.tulikivi.com
– Managing Director Heikki Vauhkonen

Tulikivi Corporation has today, 30 June 2011, signed an agreement with Vientikivi Oy Finland on the sale of Tulikivi’s Taivassalo-based building stone business. The agreement covers Tulikivi Corporation’s building stone business at its Taivassalo factory, comprising building stones, environmental stones and semi-finished products.

The impact of this transaction on Tulikivi Corporation’s net sales in the latter part of year 2011 will be about EUR -0.6 million. Otherwise the transaction and other arrangements attached to it do not have significant impact on the Group’s financial result for the year 2011. The net sales of Tulikivi Corporation’s building stone business in 2010 amounted to EUR 1.2 million, and the business posted a loss for the year.

A part of the personnel at the Taivassalo factory will be employed by the new owner as existing employees.

“The transaction is part of Tulikivi Group’s profitability programme. In line with our strategy, the aim is to concentrate on our core business: fireplaces, saunas and interior stone products,” says Heikki Vauhkonen, Managing Director of Tulikivi Corporation.

Tulikivi Group’s natural stone products business will focus on interior stone production at the Espoo factory. Tulikivi manufactures and markets products such as countertops and tiling for homes as well as paving stones. Soapstone interior and building stones will also play a significant role in the company’s portfolio in the future.

Vientikivi Oy Finland is a stone company established in 1932 and based in southwest Finland.

TULIKIVI CORPORATION

Heikki Vauhkonen
Managing Director

Distribution: NASDAQ OMX Helsinki Ltd, key media, www.tulikivi.com
Further information: Tulikivi Corporation, FIN-83900 Juuka, Finland, tel. +358 (0)207 636 000, www.tulikivi.com
– Managing Director Heikki Vauhkonen

The Tulikivi Group’s codetermination negotiations at the Heinävesi plant, which began in May, were concluded today. The negotiations are part of Tulikivi Corporation’s profitability programme, as the company wants to focus on its core business in the future.

As a result of the negotiations, 24 people were made redundant, of whom 8 are office staff.

Tulikivi will discontinue its Utility Ceramics Business by the end of 2011, but ceramics manufacturing operations will continue at Heinävesi until the end of the year. Under the profitability and concentration programme the Heinävesi plant will be integrated into the company’s Fireplaces Business and in the future the plant will focus solely on the production of ceramic fireplaces, tiles and fireplace components.

The next stage of Tulikivi’s codetermination negotiations will involve centralising the production of the Natural Stone Products Business and discontinuing the Building Stone Business.

The plan to focus on core businesses will create non-recurring expenses during the current financial year. The total amount of these expenses will become evident and be reported when the above-mentioned codetermination negotiations in building stone production and the Natural Stone Products Business are concluded.

TULIKIVI CORPORATION

Heikki Vauhkonen
Managing Director

Distribution: NASDAQ OMX Helsinki Ltd, key media, www.tulikivi.com

Further information: Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 606 000,
www.tulikivi.com
– Managing Director Heikki Vauhkonen

– The Tulikivi Group’s net sales were EUR 12.6 million (EUR 10.7 million, 01-03/2010).
– The Group posted an operating loss of EUR -1.5 million (-1.7).  Earnings per share amounted to EUR -0.04(-0.04).The result was lowered by EUR 0.5 million in non-recurring additional expenses arising from product launches in the new Sauna Business and the expansion of the distribution channel in Finland.The distribution channel was expanded in Finland by opening 35 new sales points.
– Cash flow from operating activities before investments was EUR -2.2 (-2.4) million.
– Order books were at EUR 9.7 million (EUR 8.2 million 31 March 2010) on 31 March.
– Future outlook:The full-year consolidated net sales are expected to increase over 10 per cent. As a result of improved cost efficiency the operating result for the year is expected to improve significantly and to be profitable.
– The project concentrating on core businesses will allow improvement of Group profitability as of the 2012 financial year, but it will also cause non-recurring expenses during the current financial year, the amount of which will become known once codetermination negotiations are concluded.
Summary of the interim report 1-3/2011
Key financial ratios
1-3/
2011
1-3/
2010
Change,
%
1-12/
2010
Sales, MEUR
12.6
10.7
17.1
55.9
Operating profit/loss, MEUR
-1.5
-1.7
11.7
-0.3
Profit before tax
-1,7
-1.9
10.4
-1.0
Total comprehensive income for the
period, MEUR
-1.3
-1.4
11.9
-0.8
Earnings per share Euro
-0.04
-0.04
0.0
-0.2
Net cash flow from operating activities
MEUR
-2.2
-2.4
8.3
2.9
Equity ratio, %
35.6
37.3
37,0
Net indebtness ratio, %
88.6
76.5
68,1
Return on investments, %
-12.7
-13.8
-0,1
Managing Director’s comments:
“During the first quarter, there was favourable development in demand for Tulikivi products.
In fireplace exports demand has improved on last year.Improving consumer confidence and higher energy prices have increased demand for fireplaces in Central Europe.In the case of Lining Stones, demand has remained good but growth in net sales will be more moderate than before during the remainder of the year.Demand for lining stone is boosted by heater manufacturers’ increasing interest in improving the heat retention capacity of their products.
In the Sauna Business, sales have been launched in Tulikivi showrooms andsales points.In the next few months, our goal is to expand distribution and launch new products on the market.Investments in launching the Sauna Business were made as planned.
We also set up more than 50 new service points in Finland and the neighbouring countries during the first half of the year,which decreased profitability during the early months of the year.
Stronger order books in all business areas will improve net sales and profitability in the next few months.Thanks to the expanded distribution channel, brisk new construction and our new products, demand will be high in the remaining part of the year.
By concentrating on our core businesses we will improve profitability and streamline our operations in the long term.”
Net sales and result
The Group’s net sales were EUR 12.6 million (Jan-March/2010: EUR 10.7 million). The net sales of the Fireplaces Business were EUR 11.4 (9.5) million and of the Natural Stone Products Business EUR 1.2 (1.2) million.
Net sales in Finland accounted for EUR 6.8 (5.3) million, or 54.0 (49.9) per cent, of total net sales.Exports amounted to EUR 5.8 (5.4) million in net sales.The principal export countries were Sweden, Germany and France.The growth in export net sales was from increased lining stone sales.
The consolidated operating result was EUR -1.5 (-1.7) million.In accordance with the Group’s segment reporting, the Fireplaces Business had an operating loss of EUR -0.9 (-1.1) million, and the Natural Stone Products Business an operating loss of EUR -0.2 (-0.2) million, while other items’ expenses were EUR -0.4 (-0.4) million.The result was lowered by non-recurring additional costs from market launches of electric sauna heaters, the expansion of the distribution channel in Finland and the new corporate image, amounting to EUR 0.5 million in total.
Consolidated result before taxes was EUR -1.7 (-1.9) million and net losses were EUR 1.3 million (1.4) million.Earnings per share amounted to EUR -0.04 (-0.04).
Expansion of the Finnish distribution channel
A network of 35 Tulikivi showrooms forms the framework for Tulikivi’s Finnish distribution channel which provides consumers with Tulikivi’s full product range and comprehensive services.This network is complemented by a network of Tulikivi sales points in hardware stores that operate in cooperation with the Tulikivi showrooms.
During the first quarter, distribution was expanded with 35 new sales points, taking the number of sales points up to 150.Fireplace sales through the S Group will be launched during the second quarter.
Sauna product sales will be launched first in the Tulikivi showroom and sales point network.Tulikivi is also in the process of starting a new method of distribution of sauna products to professional builders following the signing of distribution agreements with Onninen and Elektroskandia.
Financing and investments
Cash flow from operating activities before investments was EUR -2.2 (-2.4) million.Working capital increased by EUR 1.5 million in the period and came to EUR 8.8 (7.2 on March, 31 2010) million.Interest-bearing debt was EUR 25.9 (26.1) million.Net financial expenses were EUR 0.2 (0.2) million.
The Group’s investments in production, quarrying and development were EUR 1.0 (0.7) million.Research and development costs were EUR 0.7 (0.5) million, i.e. 5.2 (4.2) per cent of net sales.A total of EUR 0.2 (0.1) million of this figure after subsidies had been deducted was capitalized.In March, the Group launched its range of electric sauna heaters.
Near-term risks and uncertainties
The Group’s risks in the near future include unexpected negative fluctuations in the economy in some market areas.Consumer demand driven solely by price and not the qualities of the product is also a risk.
The renewal of the enterprise resource planning system is being launched.A schedule and cost risk is often associated with such projects.More information on risks can be found in the 2010 Board of Directors’ report and the notes to the financial statements.
Events following the end of the period
Tulikivi has issued its plan to concentrate on its core business to improve profitability.  Under the plan, the utility ceramics business and building stone manufacturing will be divested by the end of 2011.Also, the aim is to divest the earth-moving and loading equipment used in soapstone quarrying and to increase outsourcing in quarrying.The goal is also to concentrate the production of the Natural Stone Products Business.  The focus of the Group’s growth strategy is in the manufacture of fireplaces and sauna and interior stone products, development of related product concepts and their marketing to consumers.  By concentrating on the core business, we can increase our investment in growth in new product groups and in distribution in accordance with our strategy.
The effect on personnel will involve roughly 50 persons.Because of the arrangements, Tulikivi will initiate codetermination negotiations in the Natural Stone Products Business, quarrying and at the Heinävesi factory.
Resolutions of the Annual General Meeting
Tulikivi Corporation’s Annual General Meeting, held on 14 April 2011, resolved to pay a dividend of EUR 0.0250 on Series A shares and EUR 0.0233 on Series K shares.The dividend will be paid out on 28 April 2011.The other decisions of the general meeting can be found in the separate release published in the date of the meeting.
Future outlook
In Finland, the outlook for fireplace products is good as a result of increasing new construction and rising consumer energy prices.In exports, the revival in new construction and increasing consumer confidence will improve the demand for fireplaces during the financial year.The demand for lining stone products will remain good.
The new sauna and fireplace products and expanding distribution network will all increase net sales.
The full-year consolidated net sales are expected to increase over 10 per cent. As a result of improved cost efficiency the operating result for the year is expected to improve significantly and to be profitable.
Due to the seasonal nature of the industry, profit is mostly accumulated in the second half of the year.
The project concentrating on core businesses will allow improvement of Group profitability as of the 2012 financial year, but it will also cause non-recurring expenses during the current financial year, the amount of which will become known once codetermination negotiations are concluded.
TULIKIVI CORPORATION
Board of Directors
MattiVirtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd
Central Media
Additional information: Tulikivi Corporation, 83900 Juuka,
– Chairman of the Board of Directors MattiVirtaala, +358 207 636 666
– Managing Director HeikkiVauhkonen, +358 207 636 555

Tulikivi Corporation will publish its Interim Report for January-March on Wednesday, 20 April 2011; i.e. one day earlier than was announced in the release of 13 October 2010 concerning the schedule for financial reporting.
After the financial results have been announced, the release will be available for all to read on the company’s internet pages at www.tulikivi.com.

TULIKIVI CORPORATION

Heikki Vauhkonen
Managing Director

Distribution: NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com

Further information: Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com
-Arja Lehikoinen, Financing Director

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. Tulikivi has four product groups: Fireplaces, Saunas, Interior & Design and Utility Ceramics. Tulikivi and its customers val-ue wellbeing, interior design and the benefits of bioenergy. Tulikivi’s net sales are slightly under EUR 60 million, of which exports account for about half. Tulikivi employs approximately 500 people.