Skano Group
Financial results, 9 months 2014

DGAP-News: Skano Group

28.11.2014 / 15:39

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Pärnu, 2014-11-28 15:39 CET (GLOBE NEWSWIRE) -- 

THE THIRD QUARTER IN SHORT

Consolidated net sales of the third quarter of 2014 was 4.97 mil. euros,
representing a 5% decrease on the third quarter compared to the same period in
2013. At the same time, consolidated EBITDA amounted to 165 thousand euros
(EBITDA 354 thousand euros in Q3 2013). 

The sales in Skano Fibreboard OÜ Pärnu factory (incl. Isotex) was 2.0 mil.
euros, decreased as compared to the respective period last year by 17%, the
operating profit of the third quarter was 48 thousand euros compared with the
operating profit 134 thousand euros last year. 

The turnover of Skano Fibreboard OÜ Püssi factory was 1.4 mil. euros,
representing 27% increase in the third quarter compared to the same period in
2013. Operating loss amounted to 24 thousand euros compared with the operating
loss 118 thousand euros last year. 

Sales mainly decreased in Russia by 26% due to deteriorated economic and
political situation. Our main foreign markets are still weak due to the general
economic situation in Europe. We have continuously expanded the list of our
target markets and made considerable efforts in product development to obtain
certificates necessary for different markets. In the third 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. 

In July 2014 Skano Fibreboard OÜ acquired full control over Suomen Tuulileijona
OY. Suomen Tuulieleijona OY is the wholesaler of Skano fibreboard products in
Finland. The acquisition has no significant impact to our position in the
Finnish wholesale market but was done to secure our ongoing sales in Finland. 

The turnover of Skano Furniture Factory OÜ in Pärnu decreased in the third
quarter by 21% and amounted to 1,1 mil. euros. The operating loss of the third
quarter was 65 thousand euros as in 2013 the operating profit of the same
period was 112 thousand euros. Profitability was impacted by low sales volumes.
Sales in the third quarter of 2014 decreased mostly in Russia due to weak
demand by 34% as compared to 2013, also sales to Finland decreased 7%. Sales to
the subsidiary (Baltics and Ukraine) increased by 14% as compared to the same
period in 2013. In addition to seeking new sales possibilities in the current
markets the company has made considerable effort to enter into totally new
markets. Today sale in new markets is not covering the gap from our main
markets. 

The turnover of Skano Furniture OÜ retail chain increased 2% as compared to the
same period last year being 556 thousand euros, operating loss was 14 thousand
euros compared with the sales 547 thousand and operating loss 24 thousand euros
in the third quarter of 2013. Current year third quarter operating loss
contains also a loss from a drop of currency exchange rate of hryvnia 20
thousand euros (realized loss from currency exchange rate 32 thousand euros in
the same period of 2013). Retail sale increased everywhere in Baltics but
decreased in Ukraine due to escalated conflict. 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 third quarter in 2014 was 4.97 mil. euros (5.23
mil. euros in same period of 2013) representing a 5% decrease compared to Q3
2013. The Group's gross margin in the third quarter of 2014 was 18.4% compared
to 19.3% in the third quarter of 2013. Consolidated operating loss amounted to
58 thousand euros (operating profit 128 thousand euros from main activities in
same period 2013). The consolidated operating margin of net sales was -1.2%
(2.4% from main activities in Q3 2013). 

Consolidated net loss amounted to 135 thousand euros (compared to net profit 71
thousand euros in Q3 2013), and the net margin was -2.7% (1.4% in Q3 2013). 

POSITION OF FINANCIAL STATEMENT

As of 30.09.2014 the total assets of Skano Group AS amounted to 15.5 mil. euros
(30.09.2013: 14.9 mil. euros). The liabilities of the company accounted for
57.5% (30.09.2013: 53.1%) thereof, i.e. 8.9 mil. euros (30.09.2013: 7.8 mil.
euros). 

Receivables and prepayments have increased by 0.1 mil. euros i.e. 6% increase
with 12 months. 

Inventories have increased with 12 months by 0,2 mil. euros compared to last
year, amounting to 3.5 mil. euros on 30.09.2014. (30.09.2013: 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 0.95 mil. euros and amounted to 1.65 mil.
euros in 30.09.2014 which was result of increase of factoring liabilities of
Suomen Tuulileijona OY recently acquired and usage of bank overdraft
(30.09.2013: 0.7 mil. euros). Supplier payables, tax liabilities, other
payables, including payables to employees, and provisions amounted to 2.9 mil.
euros (30.09.2013: 2.6 mil. euros). 

Long-term loans have decreased by 0.2 mil euros and amounted to 4.1 mil. euros
in 30.09.2014 (30.09.2013: 4.3 mil. euros). The decrease was due to principal
payments mounted to 0.2 mil. euros. 

Current and non-current liabilities increased by 1.1 mil. euros to 8.9 mil.
euros (30.09.2013: 7.8 mil. euros). 



DIVISIONAL REVIEW

NET SALES BY BUSINESS SEGMENTS

                                 th EUR        % of net sales 
--------------------------------------------------------------
                            Q3 2014  Q3 2013  Q3 2014  Q3 2013
--------------------------------------------------------------
Skano Fibreboard OÜ           3,369    3,514    67.8%    67.2%
--------------------------------------------------------------
Skano Furniture Factory OÜ    1,119    1,419    22.5%    27.1%
--------------------------------------------------------------
Skano Furniture OÜ retail       556      547    11.2%    10.5%
--------------------------------------------------------------
Suomen Tuulileijona OY        1,376        0    27.7%     0.0%
--------------------------------------------------------------
Elimination                 (1,452)    (249)  (29.2%)   (4.8%)
--------------------------------------------------------------
TOTAL                         4,986    5,231   100.0%   100.0%
--------------------------------------------------------------



NET SALES BY GEOGRAPHICAL SEGMENTS

                           th EUR        % of net sales 
--------------------------------------------------------
                      Q3 2014  Q3 2013  Q3 2014  Q3 2013
--------------------------------------------------------
Finland                 1,867    1,730    37.5%    33.1%
--------------------------------------------------------
Russia                  1,061    1,506    21.4%    28.8%
--------------------------------------------------------
Estonia                   806      841    16.2%    16.1%
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Great Britain             286      219     5.8%     4.2%
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Latvia                    168      179     3.4%     3.4%
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Sweden                    158      110     3.2%     2.1%
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Lithuania                 143       96     2.9%     1.8%
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Ukraine                    92      201     1.9%     3.8%
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SAR                        62        0     1.2%     0.0%
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United Arab Emirates       45        0     0.9%     0.0%
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Singapore                  42        0     0.8%     0.0%
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Saudi Arabia               34        0     0.7%     0.0%
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Other countries           204      349     4.1%     6.7%
--------------------------------------------------------
TOTAL                   4,968    5,231   100.0%   100.0%
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Regarding the markets, turnover has increased in Finland, Great Britain, Sweden
and Lithuania. The turnover has decreased in most in Russia and Ukraine. 



PROFIT BY BUSINESS SEGMENTS

th EUR                   Q3 2014  Q3 2013
-----------------------------------------
Skano Furniture factory     (65)      112
-----------------------------------------
Skano Furniture retail      (14)     (24)
-----------------------------------------
Skano Fibreboard              24       16
-----------------------------------------
Suomen Tuulileijona OY      (12)        0
-----------------------------------------
Elimination                    9       24
-----------------------------------------
TOTAL                       (58)      128
-----------------------------------------
Net financial costs         (77)     (57)
-----------------------------------------
Income tax                     0        0
-----------------------------------------
NET PROFIT                 (135)       71
-----------------------------------------



SKANO FIBREBOARD

The net sales of Skano Fibreboard in the third quarter of 2014 amounted to 3.4
mil. euros and operating profit to 24 thousand euros. In the same period last
year, the turnover of Skano Fibreboard totaled to 3.5 mil. euros and the
operating profit from main activities 16 thousand euros. The aim of acquisition
of Suomen Tuulileijona OY (distributer of our production in Finland) was to
secure our position in Finland, which is one of our core markets. 

The biggest drop in sales in the third quarter compare to last year took place
in Russia, 26% respectively due to general political situation and weakened
purchase power in Russia for import goods. 

NET SALES BY GEOGRAPHICAL SEGMENTS

                                                th EUR        % of net sales 
-----------------------------------------------------------------------------
                                           Q3 2014  Q3 2013  Q3 2014  Q3 2013
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Finland (incl. to Suomen Tuulileijona OY)    1,298    1,339    38.5%    38.2%
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Russia                                         623      841    18.5%    23.9%
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Estonia                                        476      581    14.2%    16.5%
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Great Britain                                  250      194     7.4%     5.5%
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Sweden                                         158      110     4.7%     3.1%
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Latvia                                          83      100     2.5%     2.8%
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SAR                                             62        0     1.8%     0.0%
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Lithuania                                       45       17     1.3%     0.5%
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United Arab Emirates                            45        0     1.3%     0.0%
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Ukraine                                         42       46     1.2%     1.3%
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Singapore                                       42        0     1.2%     0.0%
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Other countries                                245      286     7.4%     8.2%
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TOTAL                                        3,369    3,514   100.0%   100.0%
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th EUR                                     Net sales      Operating Profit
--------------------------------------------------------------------------
                                        Q3 2014  Q3 2013  Q3 2014  Q3 2013
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Pärnu Fibreborad factory                  1,421    1,685       36       63
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Püssi Fibreboard factory                  1,395    1,104     (24)    (118)
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Pärnu interior boards factory (Isotex)      553      725       12       71
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Not allocated                                 0        0        0        0
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TOTAL                                     3,369    3,514       24       16
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The net sales of the Pärnu fibreboard factory and interior board's line
decreased 17% in the third quarter of 2014 compared to the same quarter of 2013
and amounted to 2.0 mil. euros. 

The turnover of Püssi fibreboard factory amounted to 1.4 mil. euros growing 27%
compared to the same quarter in 2013 and operating loss amounted to 24 thousand
euros (turnover 1.1 mil. euros and operating loss 118 thousand euros in Q3
2013). Output of Püssi Fibreboard factory grew in the third quarter but the
main challenge is still to secure Püssi Fibreboard factory with sufficient
sales volumes and optimizing production portfolio and efficiency. 



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 third quarter in 2014. 

RETAIL SALES BY COUNTRIES

                th EUR        % of net sales    Number of stores 
-----------------------------------------------------------------
           Q3 2014  Q3 2013  Q3 2014  Q3 2013  30.09.14  30.09.13
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Estonia        323      234    58.1%    42.8%         4         4
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Latvia          85       79    15.3%    14.4%         1         1
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Lithuania       98       79    17.6%    14.4%         1         1
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Ukraine         50      155     9.0%    28.4%         4         4
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TOTAL          556      547   100.0%   100.0%        10        10
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The furniture retail sale amounted to 556 thousand euros in the third quarter
of 2014 and operating loss 14 thousand euros (sales 547 thousand euros and
operating loss 24 thousand euros in Q3 2013). Current year third quarter
operating loss 14 thousand euros contains also loss from drop of currency
exchange rate of hryvnia 20 thousand euros (realized loss from currency
exchange rate 32 thousand euros in the same period of 2013). 

FURNITURE PRODUCTION

The net sales of the Skano Furniture Factory in the third quarter amounted to
1.1 mil. euros and operating loss to 65 thousand euros. In the same period last
year, the turnover of the factory amounted to 1.4 mil. euros and the profit to
112 thousand euros. As compared to the previous year the turnover of the
factory has decreased 21%. In the third quarter the sales decreased especially
in Russia by 34% and in Finland by 7% due to colder economic and political
environment and weaker demand for durable goods. 

FURNITURE FACTORY SALES BY COUNTRIES

                      th EUR        % of net sales 
---------------------------------------------------
                 Q3 2014  Q3 2013  Q3 2014  Q3 2013
---------------------------------------------------
Russia               438      665    39.1%    46.9%
---------------------------------------------------
Finland              362      391    32.4%    27.6%
---------------------------------------------------
Other countries       35      114     3.1%     8.0%
---------------------------------------------------
Subsidiaries         284      249    25.4%    17.5%
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TOTAL              1,119    1,419   100.0%   100.0%
---------------------------------------------------



FORECAST AND DEVELOPMENT

SKANO FIBREBOARD. Sales of Skano Fibreboard in Q4 2014 will slightly decrease
compared to sales of the same period last year. The main reason behind decrease
is a fire in Pärnu fibreboard factory on the 17th of November, which we can
restart at the beginning of January 2015. Current production break will cause a
partial deficit in sale of Pärnu factory's production.  Total direct fire
damage to buildings and equipment is estimated to amount less than 100 thousand
euros but exact damage report for insurance company is being prepared.
According to our insurance agreement our own responsibility is 10% but 10
thousand euros as minimum. 

In addition to production portfolio the management's priority is to improve
energy efficiency in the production process, where 2014 last quarter investment
and improvement program is aimed. 

Further escalation of conflict in Ukraine impacts negatively to fibreboard
sales in our main markets Finland and Russia. Despite of geopolitical
developments we are taking actions to enter into new export markets. 

SKANO FURNITURE RETAIL SALES. We expect total retail sale in Q4 2014 to
decrease slightly compared to the sale of the same period last year as we
expect bigger negative impact to sales from Ukraine due to political and
economic instability. 

SKANO FURNITURE FACTORY. In the fourth quarter of 2014 we expect significantly
smaller sales of the furniture factory compared to the same period in 2013
because of the deteriorated economic situation in the near regions, in Finland
due to general economic situation and in Russia due to conflict in Ukraine,
which has material impact on local purchasing power and general trade with EU. 

Sales to new markets in Q4 2014 are not covering the lag from our main markets.
In 2015 our goal is to compensate with sales in new markets the gap from our
main markets in Russia and Finland. In addition to seeking sales possibilities
in new markets, we are refreshing our furniture series and developing
alternative sales channels. 



FINANCIAL HIGHLIGHTS

th EUR                 9 m 2014  9 m 2013  9 m 2012
---------------------------------------------------
Income statement                                   
---------------------------------------------------
Revenue                  15,669    14,329    14,148
---------------------------------------------------
EBITDA                      696       440       862
---------------------------------------------------
EBITDA margin              4.4%      3.1%      6.1%
---------------------------------------------------
Operating profit             29     (242)       119
---------------------------------------------------
Operating margin           0.2%    (1.7%)      0.8%
---------------------------------------------------
Net profit                (179)     (415)      (90)
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Net margin               (1.1%)    (2.9%)    (0.6%)
---------------------------------------------------
                                                   
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Balance sheet (30.09)                              
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Total assets             15,503    14,916    16,201
---------------------------------------------------
Return on assets         (1.2%)    (2.8%)    (0.6%)
---------------------------------------------------
Equity                    6 586     7 090     7 602
---------------------------------------------------
Return on equity         (2.7%)    (5.9%)    (1.2%)
---------------------------------------------------
Debt-to-equity ratio      57.5%     52.5%     53.1%
---------------------------------------------------
                                                   
----------------------------------------------------
Share (30.09)                                      
---------------------------------------------------
Closing price              0.93      1.30      1.37
---------------------------------------------------
Earnings per share       (0.04)    (0.09)    (0.02)
---------------------------------------------------
Price-earnings ratio    (23.25)   (14.44)   (68.50)
---------------------------------------------------
Book value of a share      1.46      1.58      1.69
---------------------------------------------------
Market to book ratio       0.64      0.82      0.81
---------------------------------------------------
Market capitalization     4 184     5 849     6 164
---------------------------------------------------

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                                    30.09.2014  31.12.2013  30.09.2013
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Cash and bank                                    509         355         165
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Receivables and prepayments (Note 1)           1,761       1,368       1,672
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Inventories (Note 2)                           3,487       2,974       3,249
----------------------------------------------------------------------------
Total current assets                           5,757       4,697       5,086
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Investment property (Note 3)                     407         408         185
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Tangible fixed assets (Note 4)                 9,309       9,505       9,627
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Intangible fixed assets (Note 5)                  30          26          18
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Total fixed assets                             9,746       9,939       9,830
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TOTAL ASSETS                                  15,503      14,636      14,916
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Debt obligations (Note 6)                      1,651       1,919         694
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Payables and prepayments (Note 7)              2,897       2,255       2,557
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Short-term provisions (Note 8)                     3          14           3
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Total current liabilities                      4,551       4,188       3,254
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Non-current debt obligations (Note 6)          4,127       3,413       4,328
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Non-current provisions (Note 8)                  239         230         244
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Total non-current liabilities                  4,366       3,643       4,572
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Total liabilities                              8,917       7,831       7,826
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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                            (32)           8           2
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Retained profits                               3,446       4,152       4,152
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Net profit (loss) for the year (Note 10)       (179)       (706)       (415)
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Total equity                                   6,586       6,805       7,090
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TOTAL LIABILITIES AND EQUITY                  15,503      14,636      14,916
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CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

th EUR                                    3rd Q  3rd Q 2013   9 m 2014  9 m 2013
                                           2014                                 
--------------------------------------------------------------------------------
                                                                                
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RETURN ON SALES (Note 11)                 4,968       5,231     15,669    14,329
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Cost of production sold                 (4,053)     (4,223)   (12,772)  (12,064)
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--------------------------------------------------------------------------------
Gross profit                                915       1,008      2,897     2,265
--------------------------------------------------------------------------------
                                                                                
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Marketing expenses                        (785)       (660)    (2,237)   (1,889)
--------------------------------------------------------------------------------
General administrative expenses           (141)       (169)      (472)     (556)
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Other income                                 21          37         44        98
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Other expenses                             (68)        (88)      (203)     (160)
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Operating profit (loss) (Note 11)          (58)         128         29     (242)
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Financial income and financial             (77)        (57)      (208)     (172)
 expenses                                                                       
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Profit (loss) before taxes                (135)          71      (179)     (414)
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Prepaid income tax                            0           0          0       (1)
--------------------------------------------------------------------------------
                                                                                
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NET PROFIT (LOSS)  FOR THE PERIOD         (135)          71      (179)     (415)
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Basic earnings per share (Note 10)    (0.03)           0.02  (0.04)       (0.09)
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Diluted earnings per share (Note 10)     (0.03)        0.02     (0.04)    (0.09)
--------------------------------------------------------------------------------
                                                                                
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Other comprehensive income:                                                     
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Currency translation differences           (16)          10       (40)        23
--------------------------------------------------------------------------------
                                                                                
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TOTAL COMPREHENSIVE INCOME                (151)          81      (219)     (392)
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The planned time of publishing of interim report of the fourth quarter of 2014
is week 9 (23-27 February 2015) 


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



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28.11.2014 Dissemination of a Corporate News, transmitted by DGAP - a
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Language:    English       
Company:     Skano Group   
 
 
             Estonia       
ISIN:        EE3100092503  
 
 
End of News    DGAP News-Service  
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300737 28.11.2014