Rapala VMC Corporation warns of drop in 2014 profits
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Tackle giant Rapala VMC Corporation has warned that its operating profit for 2014 is expected to be below that of 2013 levels.
The Helsinki-based operation has reported its fifth quarter decrease in sales as it continues to battle with fluctuating currency movements, poor sales performances across its biggest markets and bad weather . It added that the ramping up of production at its new factory in Batam Island, Indonesia, was also burdening its second quarter profitability, which was down 5% on the same period last year.
For the year to date, Rapala, owner of top brands that include VMC, Sufix and Dynamite Baits, saw its operating profit down by 36% and net sales 5%.
President and CEO, Jorma Kasslin, told investors: ”In several European and overseas markets our sales are growing well, taking advantage of an early start to the season. However, at the same time in some of our biggest markets, like USA and Russia, sales are behind last year, impacted by the slow-down in consumer demand, unfavourable currency movements and the weather.
“Our own manufacturing operations in China have now practically ceased and that will start to show positive results towards the end of this year and give us a totally new start to 2015.”
In its report to investors Rapala also highlighted its award winning performance at EFTTEX with its Interface Rain Suit and Dynamite Baits’ Trout Nuggets, which picked up prizes in the Angling International sponsored Best New Product Awards.
Rapala: 2014 sales story so far:
Currencies cut sales compared to last year with comparable rates down 5%. Extreme winter and late start to the season delayed sales, but conversely supported the performance of ice fishing products during the 2013/14 winter season.
Down 3% on comparable rates. The region suffered from late and exceptionally mild and snowless winter, impacting on winter sports and ice fishing products, particularly in Finland. Norway developing positively.
Rest of Europe
Political and economic turbulence in Russia and Ukraine adversely affected sales. Excluding those regions, sales in local currency terms improved 2% on last year, supported by growth in Poland, Hungary, Spain and the UK.
Rest of the World
Weakening of several currencies affected sales, but judged on comparable rates, sales were slightly higher. Local currency sales developed well in several Asian and Latin American countries, while Australia suffered. Transfer of production from China to Batam had negative impact on external sales of the Asia manufacturing unit.
Rapala 2014 so far in numbers:
- Q2 North America sales: €19.8m (€21.9m) down 10%
- Q2 Net sales: €77.7m (2013: €81.4) down 5%;
- Q2 Nordic sales: €19.5m (€19.8m) down 2%
- Q2 Rest of Europe sales: €30.7m (€31.9m) down 4%
- Q2 Rest of the world: €7.6m (€7.8m) down 3%
- Q2 Total sales: €77.7m (€81.4m) down 5%
- Q2 Operating profit: €8.6m (€13.4) down 36%
- Year to date (YtD) North America sales €39.2m (€43.7m) down 10%
- YtD Nordic sales: €32.7m (€34.9m) down 6%
- YtD Rest of Europe sales: €57.3m (€61.4m) down 7%
- YtD Rest of world sales: €14.7m (€16.6m) down 11%
- YtD Total sales: €143.9m (€156.7m) down 8%
- YtD Operating profit: €16.3m (€21.2m)