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Interim report 1-3/2011
– 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
Operating profit/loss, MEUR
Profit before tax
Total comprehensive income for the
Earnings per share Euro
Net cash flow from operating activities
Equity ratio, %
Net indebtness ratio, %
Return on investments, %
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.
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.
Board of Directors
MattiVirtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd
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 Corportion´s Interim report Jan-March 2011
Tulikivi Corporation to publish its Interim Report for January-March on 20 April 2011
Tulikivi Group has concluded codetermination negotiations at its Heinävesi plant
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