Slide 1: Q3 Interim Report 2007
Q3 Interim Report 2007 October 25, 2007 Slide 1
Slide 2: Agenda
AGENDA • Business Organisation – Latest Changes • Q3 and 9-month 2007 in Brief • Sales Analysis • Profitability and Analysis • Cashflow & Working Capital • Strategy Implementation • Outlook for 2007 • Rapala share performance and owners Slide 2
Slide 3: Group Organization & Cornerstones of Our Strategy
Group Organization & Cornerstones of Our Strategy USA FINLAND ESTONIA CANADA SWEDEN POLAND Distribution RUSSIA (50/50) ITALY REST OF EUROPE JAPAN DENMARK LITHUANIA MALAYSIA BRAZIL GERMANY NORWAY LATVIA REST OF WORLD UKRAINE (50/50) NETHERLAND AUSTRALIA FRANCE CZECH REPUBLIC S CHINA HUNGARY (57/33/10
Slide 4: Location of Business Operations – Latest Updates
Location of Business Operations – Latest Updates Latest additions (07): - Lure factory in Russia - Terminator lures in USA - LJS painting shop in US - New sales co in S-Korea - Shimano sales in S-EE 2006 additions: - Shimano 33,4% in S-EE - T&P sales co in S-Africa - Rapala-Shimano 50/50 JV - Tortue
Slide 5: Restructuring of European Operations
Restructuringof EuropeanOperations Marttiini z Knife manufacturing z Consolidation of French operations z 80 employees in - Move from Bretagne in progress Rovaniemi & Pärnu - Move from Central France next summer - New leased premises ready in Morvillars Vääksy z Development of lure manufacturing - S
Slide 6: Enhancement of Chinese Manufacturing Operations
Enhancementof ChinezeManuafcturingOperations z Major operational changes and improvements to enhance production efficiencies and shorten lead times z International task force established to support the development of manufacturing and supply chain management in China Guangzhou Shenzhen z Rapala sour
Slide 7: Competition and Major Players in the Industry
Competition and Major Players in the Industry Company Worldwide Major product categories Comments sales MUSD* Jarden 450 Rods, reels, combos, line, soft plastics US sales ca. 60% of sales Pure Fishing + Shakespeare Daiwa 450 Rods, reels, lures Japan ca. 80% of total sales Shimano 380 Rods, reels, ac
Slide 8: Financial Position Healthy – Fuelled for Growth
Financial Position Healthy – Fuelled for Growth ¾ Rapid growth in last few years from €100m to ca. € 230m ¾ Healthy profitability together with strong balance sheet and cash flow ¾ Management promised to turnaround the declining trend in margins in 2007 250 25 % 140 800 % 120 700 % 200 20 % 600 % 10
Slide 9: Q3 and 9-Month 2007 in Brief
Q3 AND 9-MONTH 2007 IN BRIEF EUR million III/07 III/06 I-III/07 I-III/06 2006 Sales 52.0 49.8 188.8 177.4 226.6 EBITDA 4.6 4.4 29.5 25.6 28.0 Operating Profit (EBIT) 2.9 2.8 25.9 21.0 21.7 Profit Before Taxes 1.4 1.0 22.2 14.9 14.6 Net Profit for the Period 1.1 0.4 15.5 10.5 11.0 EPS (basic), EUR 0.
Slide 10: Sales Analysis
SALES ANALYSIS Q3 sales increased to 52.0 MEUR (49.8). Net sales Net sales for 9 months were up 6% to 60 188.8 MEUR (177.4). 50 Weakening of USD & other currencies 40 decreased 9-month net sales 8.0 MEUR. 30 20 With comparable exchange rates, 9-month 10 net sales were up 11%. 0 1 %-point fro
Slide 11: Profitability Analysis (1)
PROFITABILITY ANALYSIS (1) • Q3 operating profit up to 2.9 MEUR (2.8). Op e ra tin g Pro fit • Restructuring provision related to French 3,5 3 consolidation cannot yet be booked but 2,5 2 Q3 includes 0.1 MEUR related costs. 1,5 1 • Q3 includes 0.4 MEUR provision for down- 0,5 0 sizing of lure manufa
Slide 12: Profitability Analysis (2)
PROFITABILITY ANALYSIS (2) • 9-month operating margin increased to III III I-III I-III 13.7% (11.8) and ROCE to 19.1% (15.9). MEUR 2007 2006 2007 2006 • Comparable operating profit & operating Operating profit - reported 2.9 2.8 25.9 21.0 margin, excluding non-recurring items and Terminator acquisit
Slide 13: Cashflow and Working Capital
CASHFLOW AND WORKING CAPITAL STATEMENT OF CASH FLOWS III III I-III I-III I-IV EUR million 2007 2006 2007 2006 2006 Net profit for the period 1.1 0.4 15.5 10.5 11.0 Adjustments -0.1 -0.4 6.1 7.8 7.1 Change in working capital 11.2 10.2 -3.2 -8.3 -8.1 Net cash from operating activities 12.2 10.2 18.4 1
Slide 14: Strategy Implementation – Partnership with Shimano
STRATEGY IMPLEMENTATION – Partnership with Shimano ¾ Rapala’s strategic objective is profitable growth. ¾ During Q3, management continued discussions and negotiations regarding acquisitions and business combinations to further implement the strategy for profitable growth. ¾ These discussions resulte
Slide 15: Strategy Implementation – Other Initiatives
STRATEGY IMPLEMENTATION – Other Initiatives ¾ In Q3, focus on performance improvement initiatives continued with the target to turn around the declining trend in operating profit margin. ¾ Consolidation of French operation into one location is proceeding on plan. New premis- es have been prepared an
Slide 16: Share Issue to Shimano
SHARE ISSUE TO SHIMANO ¾ As part of the strengthening of the long-term distribution alliance, Rapala issued 889 680 new shares to Shimano in October. ¾ Subscription price was 5.62 EUR per share, which represents a three-month weighted average trading price for the share. ¾ These new shares will not
Slide 17: Outlook for 2007
OUTLOOK FOR 2007 – Shipments of the new fishing tackle products for 2008 season are about to start. Fishing tackle market in 2008 is expected to remain quite stable in North America and Western Europe while the markets continue to grow in East Europe, Asia and Africa. Distribution of winter sports e
Slide 18: Share Price Performance
Share Price Performance Share Related Data (October 2007) Share price performance for last 3 months ¾ Market Cap 225 MEUR ¾ 12-month high 6.39 EUR ¾ 12-month low 5.40 EUR ¾ All-time high 8.40 (2/99) ¾ All-time low 2.50 (11/01) Major Shareholders Share price performance for 2002-2006 (5 years) ¾ VMC
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