Rapala VMC Corporation reports drop in sales and profits
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Rapala VMC Corporation has reported a drop in sales and profits for the first half of the year.
The Finnish tackle giant, which last week announced the acquisition of 49% of US fishing rod and reel manufacturer, 13 Fishing, saw its net sales decrease by one per cent compared to last year to €141.2m (2018: €142.5m) and an operating profit fall of 25% to €11.4m (€15.3m).
President and CEO, Jussi Ristimäki: “Our topline for the first six months of the year developed for the most part according to expectations. However, some of the sales in North America will be shifted from the first half to the second half of the year and Third Party Products sales declined in Nordic and western European countries.
“Consequently our net sales decreased by one per cent from last year. The positive highlights for the first half were good sales development in the winter sports business as well as growing sales and profitability in Russia after many years of turmoil in the market.
“Furthermore, cash flow from operations increased from the previous year as a result of increased focus on working capital management. We keep our guidance unchanged for the full year and expect to increase comparable operating profit from last year.
“Our position with major customers in North America remains strong and we have solid underlying consumer demand and a record strong order book for our products in the market. Increased profitability for the second half of the year will be driven mostly by postponed sales to certain key accounts as well as better profitability from the lure factory in Indonesia.
“Execution of our strategy of improving profitability, lightening the balance sheet and improving operational performance is continuing and will be intensified during the second half of the year to get us back on the growth track.
“The acquisition of 49% of 13 Fishing enables us to enter the worldwide rod and reel segment in fishing and we are confident in creating value in this business.
“One of our key near term strategic priorities is to create full scale direct access to sell Rapala products in large European fishing tackle markets in Germany, the United Kingdom, Italy and Benelux after the Shimano distribution agreements were terminated. Group sales organizations in these countries are being strengthened and completed during 2019.
“Furthermore, we will manage rigorously fixed costs, drive decisively down inventory to release capital and generate a turnaround to lure manufacturing operations in Indonesia.”