Skano Group
Financial results, 3 months 2014

DGAP-News: Skano Group /

30.05.2014 / 15:49

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Pärnu, 2014-05-30 15:49 CEST (GLOBE NEWSWIRE) -- THE FIRST QUARTER IN SHORT

Consolidated net sales of the first quarter of 2014 was 5.35 mil. euros,
representing a 23% increase on the first quarter compared to the same period in
2013. At the same time, consolidated EBITDA amounted to 100 thousand euros
(EBITDA -37 thousand euros in Q1 2013). 

The sales in Skano Fibreboard OÜ Pärnu factory (incl. Isotex) was 2.2 mil.
euros, increased as compared to the respective period last year by 22%, the
operating loss of the first quarter was 54 thousand euros compared with the
operating loss 135 thousand euros last year. 

The turnover of Skano Fibreboard OÜ Püssi factory was 1.2 mil. euros,
representing 100% increase in the first quarter compared to the same period in
2013. Operating loss amounted to 204 thousand euros compared with the operating
loss 212 thousand euros last year. 

Sales growth came from Finland and Asia but despite of that other foreign
markets remained weak due to general economic situation in Europe. We have
continuously expanded list of our target markets and made considerable efforts
in product development to obtain certificates necessary for different markets.
Profitability has suffered also due to higher sales costs in Finland and higher
production cost resulting from bigger energy consumption during winter season.
On the first quarter we also conducted product testing and tuning of production
process in both factories in order to achieve a lower production cost. 

The priority of the management of the company is continuously to ensure the
sales of the production of both factories in order to guarantee the maximum
production capacity and efforts are taken in this direction on an on-going
basis. 

The turnover of Skano Furniture Factory OÜ factory in Pärnu increased in the
first quarter by 2,4% and amounted to 1,7 mil. euros. The operating profit of
the first quarter was 122 thousand euros as in 2013 the operating profit of the
same period was 33 thousand euros. Sales in the first quarter of 2014 decreased
in Finland by 11% as compared to 2013 but sales to the Baltics (through the
subsidiary) and Russia grew. The company is seeking new sale's possibilities in
the current markets but going into totally new markets is a substantial
direction for us. 

The turnover of Skano Furniture OÜ retail chain increased 11% as compared to
the same period last year being 608 thousand euros, operating loss was 245
thousand euros compared with the sales 549 thousand and operating profit 59
thousand euros in the first quarter of 2013. Current year first quarter
operating loss 245 thousand euros contains also loss from steep drop of
currency exchange rate of hryvnia 256 thousand euros due to revaluation of
intragroup loans as in separate subsidiary but which will be eliminated out on
group level and will not affect Skano Group end result (profit from currency
exchange rate 45 thousand euros in the same period of 2013). Retail sale
increased in Estonia but decreased in Lithuania and Ukraine. Sales in Ukraine
suffered due to instable political and economic situation. The sales of Skano
Furniture Factory OÜ own furniture still forms a considerable part of the
retail sale and it enables the furniture factory to operate much more
profitably than it would be possible without its own retail chain. 

INCOME STATEMENT

Consolidated net sales of the first quarter in 2014 was 5.35 mil. euros (4.36
mil. euros in same period of 2013) representing a 23% increase compared to Q1
2013. The Group's gross margin in the first quarter of 2014 was 15.2% compared
to 11.9% in the first quarter of 2013. Consolidated operating loss amounted to
125 thousand euros (operating loss 266 thousand euros from main activities in
same period 2013). The consolidated operating margin of net sales was -2.3%
(-6% from main activities in Q1 2013). 

Consolidated net loss amounted to 186 thousand euros (compared to net loss 322
thousand euros in Q1 2013), and the net margin was -3.5% (-7% in Q1 2013). 

POSITION OF FINANCIAL STATEMENT

As of 31.03.2014 the total assets of Skano Group AS amounted to 15.0 mil. euros
(31.03.2013: 15.5 mil. euros). The liabilities of the company accounted for
56.1% (31.03.2013: 53.8%) thereof, i.e. 8.4 mil. euros (31.03.2013: 8.3 mil.
euros). 

Receivables and prepayments have decreased by 0.5 mil. euros i.e. 23% decrease
with 12 months. The reason of decrease of receivables was implementation of
factoring instrument. 

Inventories have remained at the same level compared to last year, amounting to
3.3 mil. euros on 31.03.2014. (31.03.2013: 3.3 mil. euros). Property, plant and
intangibles decreased by 0.3 mil. euros mainly as a result of depreciation. 

Short-term loans have increased by 0.5 mil. euros and amounted to 1.9 mil.
euros in 31.03.2014 which was result of restructuring of loan payments
(31.03.2013: 1.4 mil. euros). Supplier payables, tax liabilities, other
payables, including payables to employees, and provisions amounted to 2.8 mil.
euros (31.03.2013: 2.3 mil. euros). 

Long-term loans have decreased by 0.9 mil euros and amounted to 3.4 mil. euros
in 31.03.2014 (31.03.2013: 4.3 mil. euros). The decrease was due to principal
payments mounted to 0.4 mil. euros and loan restructuring 0.5 mil. euros. 

Current and non-current liabilities decreased by 0.1 mil. euros to 8.4 mil.
euros (31.03.2013: 8.3 mil. euros). 

DIVISIONAL REVIEW

NET SALES BY BUSINESS SEGMENTS

                                 th EUR        % of net sales 
--------------------------------------------------------------
                            Q1 2014  Q1 2013  Q1 2014  Q1 2013
--------------------------------------------------------------
Skano Fibreboard OÜ           3,388    2,462    63.4%    56.5%
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Skano Furniture Factory OÜ    1,717    1,676    32.1%    38.4%
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Skano Furniture OÜ retail       608      549    11.4%    12.6%
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Elimination                   (362)    (326)   (6.8%)   (7.5%)
--------------------------------------------------------------
TOTAL                         5,351    4,361   100.0%   100.0%
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NET SALES BY GEOGRAPHICAL SEGMENTS

                      th EUR        % of net sales 
---------------------------------------------------
                 Q1 2014  Q1 2013  Q1 2014  Q1 2013
---------------------------------------------------
Finalnd            2,181    1,242    40.8%    28.5%
---------------------------------------------------
Russia             1,275    1,230    23.8%    28.2%
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Estonia              679      621    12.7%    14.2%
---------------------------------------------------
Great Britain        241      373     4.5%     8.6%
---------------------------------------------------
Sweden               176       96     3.3%     2.2%
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Ukraine              165      185     3.1%     4.2%
---------------------------------------------------
Latvia               142      120     2.7%     2.8%
---------------------------------------------------
Taiwan               135        0     2.5%     0.0%
---------------------------------------------------
Netherlands           93      215     1.7%     4.9%
---------------------------------------------------
Lithuania             89       95     1.7%     2.2%
---------------------------------------------------
Australia             23        0     0.4%     0.0%
---------------------------------------------------
Japan                 21        0     0.4%     0.0%
---------------------------------------------------
Other countries      131      184     2.4%     4.2%
---------------------------------------------------
TOTAL              5,351    4,361   100.0%   100.0%
---------------------------------------------------

Regarding the markets, turnover has increased in Finland, Russia and Estonia.
The percentage of turnover has decreased in most in the Great Britain and the
Netherlands. 

PROFIT BY BUSINESS SEGMENTS

th EUR                   Q1 2014  Q1 2013
-----------------------------------------
Skano Furniture factory      122       33
-----------------------------------------
Skano Furniture retail     (245)       59
-----------------------------------------
Skano Fibreboard           (258)    (347)
-----------------------------------------
Elimination                  256     (11)
-----------------------------------------
TOTAL                      (125)    (266)
-----------------------------------------
Net financial costs         (61)     (55)
-----------------------------------------
Income tax                     0      (1)
-----------------------------------------
NET PROFIT                 (186)    (322)
-----------------------------------------

SKANO FIBREBOARD

The net sales of Skano Fibreboard in the first quarter of 2014 amounted to 3.4
mil. euros and operating loss to 258 thousand euros. In the same period last
year, the turnover of Skano Fibreboard totaled to 2.5 mil. euros and the
operating loss from main activities 347 thousand euros. Due to a new
distribution partner in Finland we have managed to increase sales considerably.
Sales to Finland grew by 159%. Implementing the new sales structure in Finland
has and will cause higher sales costs that is optimal during 6-9 months period.
Due to that increased sales to Finland have brought along bigger costs and
profitability hasn't improved yet. As production of fibreboard is very
energy-intensive the production cost is higher compare to average production
cost in winter season. Production cost differs between summer and winter season
up to 20%. 

The biggest drop in sales in the first quarter compare to last year took place
in the Great Britain and the Netherlands, 38% and 57% respectively due to
optimization of production portfolio for efficiency's sake. 

NET SALES BY GEOGRAPHICAL SEGMENTS

                      th EUR        % of net sales 
---------------------------------------------------
                 Q1 2014  Q1 2013  Q1 2014  Q1 2013
---------------------------------------------------
Finland            1,639      632    48.4%    25.7%
---------------------------------------------------
Russia               437      472    12.9%    19.2%
---------------------------------------------------
Estonia              326      354     9.6%    14.4%
---------------------------------------------------
Great Britain        231      373     6.8%    15.2%
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Sweden               176       96     5.2%     3.9%
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Taiwan               135        0     4.0%     0.0%
---------------------------------------------------
Netherlands           93      215     2.7%     8.7%
---------------------------------------------------
Latvia                64       64     1.9%     2.6%
---------------------------------------------------
Ukraine               37       19     1.1%     0.8%
---------------------------------------------------
Australia             23        0     0.7%     0.0%
---------------------------------------------------
Japan                 21        0     0.6%     0.0%
---------------------------------------------------
Other countries      141      162     4.2%     6.5%
---------------------------------------------------
Intragroup            65       75     1.9%     3.0%
---------------------------------------------------
TOTAL              3,388    2,462   100.0%   100.0%
---------------------------------------------------



th EUR                                     Net sales      Operating Profit
--------------------------------------------------------------------------
                                        Q1 2014  Q1 2013  Q1 2014  Q1 2013
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Pärnu Fibreborad factory                  1,633    1,235     (25)    (193)
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Püssi Fibreboard factory                  1,197      591    (204)    (212)
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Pärnu interior boards factory (Isotex)      493      561     (29)       58
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Not allocated                                65       75        0        0
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TOTAL                                     3,388    2,462    (258)    (347)
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The net sales of the Pärnu fibreboard factory and interior board's line
increased 18% in the first quarter of 2014 compared to the same quarter of 2013
and amounted to 2.1 mil. euros. Due to higher energy consumption in winter
season and higher sales cost in Finland, production testing and too fragmented
production portfolio the production efficiency was very low in the first
quarter. 

The turnover of Püssi fibreboard factory amounted to 1.2 mil. euros growing
100% compared to the same quarter in 2013 and operating loss amounted to 204
thousand euros (turnover 591 thousand euros and operating loss 212 thousand
euros in Q1 2013). Output of Püssi Fibreboard factory grew in the first quarter
but the main challenge is still to secure Püssi Fibreboard factory with
sufficient sales volumes and optimizing production portfolio. 

SKANO FURNITURE

FURNITURE RETAIL SALES

Skano Group AS retail business is operated by a private limited company Skano
Furniture OÜ and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has
totally 10 stores in Tallinn (2), Tartu, Pärnu, Riga, Vilnius, Kiev (2),
Kharkiv and Dnipropetrovs'k at the end of the first quarter in 2014. 

RETAIL SALES BY COUNTRIES

                th EUR        % of net sales    Number of stores 
-----------------------------------------------------------------
           Q1 2014  Q1 2013  Q1 2014  Q1 2013  31.03.14  31.03.13
-----------------------------------------------------------------
Estonia        329      251    54.1%    45.8%         4         3
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Latvia          78       56    12.8%    10.2%         1         1
-----------------------------------------------------------------
Lithuania       73       76    12.0%    13.8%         1         1
-----------------------------------------------------------------
Ukraine        128      166    21.1%    30.2%         4         4
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TOTAL          608      549   100.0%   100.0%        10         9
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The furniture retail sale amounted to 608 thousand euros in the first quarter
of 2014 and operating loss 245 thousand euros (sales 549 thousand euros and
operating profit 59 thousand euros in Q1 2013). Current year first quarter
operating loss 245 thousand euros contains also loss from steep drop of
currency exchange rate of hryvnia 256 thousand euros due to revaluation of
intragroup loans as in separate subsidiary but which will be eliminated out on
group level and will not affect Skano Group end result (on the contrary profit
from currency exchange rate 45 thousand euros in the same period last year).
Retail sale increased in Estonia and in Latvia, remained the same in Lithuania
and decreased in Ukraine. 

FURNITURE PRODUCTION

The net sales of the Skano Furniture Factory in the first quarter amounted to
1.7 mil. euros and operating profit to 122 thousand euros. In the same period
last year, the turnover of the factory amounted to 1.7 mil. euros and the
profit to 33 thousand euros. As compared to the previous year the turnover of
the factory has increased 2.4% and the operating profit has increased by 89
thousand euros. Sales in the first quarter of 2014 increased to our subsidiary
and to Russia. In the first quarter the sales decreased especially in Finland
due to weak demand. 

FURNITURE FACTORY SALES BY COUNTRIES

                      th EUR        % of net sales 
---------------------------------------------------
                 Q1 2014  Q1 2013  Q1 2014  Q1 2013
---------------------------------------------------
Russia               838      758    48.8%    45.2%
---------------------------------------------------
Finland              542      610    31.6%    36.4%
---------------------------------------------------
Kazakhstan             0       41     0.0%     2.4%
---------------------------------------------------
Estonia               24       16     1.4%     1.0%
---------------------------------------------------
Other countries       16        0     0.9%     0.0%
---------------------------------------------------
Subsidiaries         297      251    17.3%    15.0%
---------------------------------------------------
TOTAL              1,717    1,676   100.0%   100.0%
---------------------------------------------------



FORECAST AND DEVELOPMENT

SKANO FIBREBOARD. Sales of Skano Fibreboard in Q2 2014 will exceed sales of the
same period last year. In Q2 2014 we hope to improve production efficiency and
profitability. In addition to production portfolio the management's priority is
to improve also energy efficiency in production process, where 2014 1H
investment program is aimed to. 

In spite of weak demand of foreign markets and economic situation in Europe we
are moderately optimistic about sales growth in 2014. Sales growth is expected
mostly from Finland, where the strategic agreement with a new distribution
partner is starting to pay off. 

SKANO FURNITURE RETAIL SALES. We expect retail sale in the second quarter of
2014 to decrease compare to the sale of the same period last year. We expect
bigger negative impact to sales from Ukraine due to political and economic
instability. 

SKANO FURNITURE FACTORY. In the second quarter of 2014 we expect smaller sales
of the furniture factory compared to the same period in 2013 because of the
deteriorated economic situation in the near region and especially in Finland.
Sales to new markets are not yet exceeding the lag from our main markets 



FINANCIAL HIGHLIGHTS

th EUR                 3 m 2014  3 m 2013  3 m 2012
---------------------------------------------------
Income statement                                   
---------------------------------------------------
Revenue                   5,351     4,361     4,559
---------------------------------------------------
EBITDA                      100      (37)       147
---------------------------------------------------
EBITDA margin              1.9%    (0.8%)      3.2%
---------------------------------------------------
Operating profit          (125)     (266)      (99)
---------------------------------------------------
Operating margin         (2.3%)    (6.1%)    (2.2%)
---------------------------------------------------
Net profit                (186)     (322)     (173)
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Net margin               (3.5%)    (7.4%)    (3.8%)
---------------------------------------------------
                                                   
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Balance sheet (31.03)                              
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Total assets             14,980    15,511    16,337
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Return on assets         (1.2%)    (2.1%)    (1.1%)
---------------------------------------------------
Equity                    6,574     7,170     7,529
---------------------------------------------------
Return on equity         (2.8%)    (4.5%)    (2.3%)
---------------------------------------------------
Debt-to-equity ratio      56.1%     53.8%     53.9%
---------------------------------------------------
                                                   
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Share (31.03)                                      
---------------------------------------------------
Closing price             0.995      1.19      1.55
---------------------------------------------------
Earnings per share       (0.04)    (0.07)      0.04
---------------------------------------------------
Price-earnings ratio    (24.88)   (17.00)   (39.25)
---------------------------------------------------
Book value of a share      1.46      1.59      1.67
---------------------------------------------------
Market to book ratio       0.68      0.75      0.94
---------------------------------------------------
Market capitalization     4,477     5,354     7,064
---------------------------------------------------

EBITDA = Earnings before interest, taxes, depreciation and amortization

EBITDA margin = EBITDA / Revenue

Operating margin = Operating profit / Revenue

Net margin = Net profit / Revenue

Return on assets = Net profit / Total assets

Return on equity = Net profit / Equity

Debt-to-equity ratio = Liabilities / Total assets

Earnings per share = Net profit / Total shares

Price-earnings ratio = Closing price / Earnings per share

Book value of a share = Equity / Total shares

Market to book ratio = Closing price / Book value of a share

Market capitalization = Closing price * Total shares



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

th EUR                                    31.03.2014  31.12.2013  31.03.2013
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Cash and bank                                    392         355         137
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Receivables and prepayments (Note 1)           1,477       1,368       1,925
----------------------------------------------------------------------------
Inventories (Note 2)                           3,301       2,974       3,347
----------------------------------------------------------------------------
Total current assets                           5,170       4,697       5,409
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Investment property (Note 3)                     408         408         185
----------------------------------------------------------------------------
Tangible fixed assets (Note 4)                 9,374       9,505       9,896
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Intangible fixed assets (Note 5)                  28          26          21
----------------------------------------------------------------------------
Total fixed assets                             9,810       9,939      10,102
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TOTAL ASSETS                                  14,980      14,636      15,511
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Debt obligations (Note 6)                      1,931       1,919       1,444
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Payables and prepayments (Note 7)              2,822       2,255       2,324
----------------------------------------------------------------------------
Short-term provisions (Note 8)                    10          14           9
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Total current liabilities                      4,763       4,188       3,777
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Non-current debt obligations (Note 6)          3,413       3,413       4,328
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Non-current provisions (Note 8)                  230         230         236
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Total non-current liabilities                  3,643       3,643       4,564
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Total liabilities                              8,406       7,831       8,341
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Share capital at nominal value (Note 9)        2,699       2,699       2,699
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Issue premium                                    364         364         364
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Statutory capital reserve                        288         288         288
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Currency translation                            (37)           8        (11)
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Retained profits                               3,446       4,152       4,152
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Net profit (loss) for the year (Note 10)       (186)       (706)       (322)
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Total equity                                   6,574       6,805       7,170
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TOTAL LIABILITIES AND EQUITY                  14,980      14,636      15,511
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CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

th EUR                                   1st Q 2014  1st Q 2013
---------------------------------------------------------------
                                                               
---------------------------------------------------------------
                                                               
---------------------------------------------------------------
RETURN ON SALES (Note 11)                     5,351       4,361
---------------------------------------------------------------
                                                               
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Cost of production sold                     (4,538)     (3,841)
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Gross profit                                    813         520
---------------------------------------------------------------
                                                               
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Marketing expenses                            (722)       (580)
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General administrative expenses               (173)       (207)
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Other income                                     27          42
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Other expenses                                 (60)        (41)
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Operating profit (loss) (Note 11)             (125)       (266)
---------------------------------------------------------------
Financial income and financial expenses        (61)        (55)
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Profit (loss) before taxes                    (186)       (321)
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Prepaid income tax                                0         (1)
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NET PROFIT (LOSS)  FOR THE PERIOD             (186)       (322)
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Basic earnings per share (Note 10)        (0.04)         (0.07)
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Diluted earnings per share (Note 10)         (0.04)      (0.07)
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Other comprehensive income:                                    
---------------------------------------------------------------
Currency translation differences               (45)          10
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TOTAL COMPREHENSIVE INCOME                    (231)       (312)
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The planned time of publishing of interim report of the second quarter of 2014
is week 35 (25-29 August 2014) 


         Martin Kalle
         CEO
         +372 4478 331
         martin.kalle@skano.com
News Source: NASDAQ OMX


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Language:    English       
Company:     Skano Group   
 
 
             Estonia       
ISIN:        EE3100092503  
 
 
End of News    DGAP News-Service  
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271479 30.05.2014