Marimekko Corporation STOCK EXCHANGE BULLETIN 1 (11)
25 January 2007 at 8:30
MARIMEKKO CORPORATION'S FINANCIAL STATEMENT BULLETIN
1 JANUARY - 31 DECEMBER 2006
BRISK GROWTH CONTINUES IN EXPORTS
In 2006, the Marimekko Group's net sales rose by 6% to EUR 71.4 million (EUR 67.2
million). Operating profit fell by 5% to EUR 10.9 million (EUR 11.4 million).
Profit after taxes for the financial year decreased by 5% to EUR 8.0 million (EUR
8.4 million). Earnings per share were EUR 1.00 (EUR 1.05). The Board of Directors
will propose to the Annual General Meeting that a dividend of EUR 0.65 per share
be paid for 2006. Net sales growth in 2007 is expected to be at the same level as
in 2006. Profitability is estimated to remain good.
ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENT BULLETIN
The 2006 financial statement bulletin has been prepared in accordance with IFRS
recognition and measurement principles, and applying the same accounting policy
as for the 2005 financial statements. The figures presented in this financial
statement bulletin have not been audited.
MARKET SITUATION
The boom in the global economy continued in 2006. Economic trends were favourable
in all of Marimekko's key market areas. In Finland, consumers' confidence in the
development of their own finances remained good and consumption demand
strengthened. Growth in the retail trade continued in Finland in 2006, although
it slowed towards the end of the year. December sales fell noticeably short of
growth targets, and slower price increases weakened retail profitability. In the
January-November period of 2006, retail sales of clothing in Finland grew by 3.7%
(Association of Textile and Footwear Importers and Wholesalers). Sales of
womenswear rose by 3.4%, menswear by 4.5%, and childrenswear by 3.3%. Bag sales
grew by 12.4%.
NET SALES
In 2006, the Marimekko Group's net sales increased by 6.3% to EUR 71,424 thousand
(EUR 67,219 thousand). In Finland, net sales fell by 0.7% to EUR 53,826 thousand
(EUR 54,180 thousand). Exports and income from international operations rose by
35.0% and totalled EUR 17,598 thousand (EUR 13,039 thousand). In all key export
countries, growth was brisk in all product lines. Exports and income from
international operations accounted for an increased percentage of the Group's net
sales at 24.6% (19.4%).
The breakdown of the Group's net sales by product line was as follows: clothing,
42.4%, interior decoration, 43.0%, and bags, 14.6%. Net sales by market area
were: Finland, 75.4%, the other Nordic countries, 10.3%, the rest of Europe,
5.1%, North America, 4.8%, and other countries (Japan and other regions outside
Europe and North America), 4.4%.
In 2006, sales in Marimekko's own retail shops totalled EUR 29,209 thousand (EUR
28,008 thousand). Sales in the company's own shops in Finland rose by 2.5%
(7.1%). Sales to retailers in Finland declined by 2.8% (+7.2%).
2 (11)
NET SALES AND EARNINGS IN Q4
In the October-December period of 2006, the Marimekko Group's net sales rose by
7.4% to EUR 20,142 thousand (EUR 18,753 thousand). Net sales in Finland fell by
1.7% to EUR 15,373 thousand (EUR 15,644 thousand). Exports and income from
international operations grew by 53.4% and totalled EUR 4,769 thousand (EUR 3,108
thousand). The Group's operating profit improved by 9.9% to EUR 3,776 thousand
(EUR 3,435 thousand). Earnings per share rose to EUR 0.35 (EUR 0.32). The
improved earnings were attributable to the strong growth in export sales and
increased royalty income from Finland and abroad.
REVIEWS BY BUSINESS UNIT
Clothing
In 2006, net sales of clothing rose by 3.1% to EUR 30,309 thousand (EUR 29,411
thousand). Sales in Finland fell slightly, but trends were extremely favourable
in exports and sales increased well in all key markets. The briskest growth was
seen in the United States and the market area referred to as "other countries". A
notable pick-up in growth on the previous year was also seen in the market area
referred to as "the rest of Europe". Exports and income from international
operations accounted for 19.8% of net sales of clothing.
Interior decoration
Net sales of interior decoration products rose by 8.0% in 2006 and amounted to
EUR 30,716 thousand (EUR 28,434 thousand). Sales declined somewhat in Finland,
while buoyant growth continued in all main export markets. Exports and income
from international operations accounted for 28.3% of net sales of interior
decoration products.
Bags
In 2006, net sales of bags increased by 10.9% to EUR 10,399 thousand (EUR 9,374
thousand). Sales in Finland rose only slightly, but growth was very buoyant in
all key export markets. Exports and income from international operations
accounted for 28.0% of net sales of bags.
Business gifts and contract sales
Sales of business gifts and contract sales fell by 17.0%.
Exports and international operations
In 2006, the Group's exports and income from international operations increased
by 35.0% to EUR 17,598 thousand (EUR 13,039 thousand). Growth was extremely
vigorous in all main market areas. The major export countries were Sweden, the
United States, Japan, Germany, Denmark and Norway. High demand for Marimekko
products coupled with the opening up of new distribution channels provided a
boost to growth. A total of seventeen Marimekko concept stores and shop-in-shops
established by retailers opened during the financial year: in Antwerp, Belgium;
Girona, Spain; Bergen, Bodø and Oslo, Norway; Lisbon, Portugal; Haparanda and
Gothenburg, Sweden; Tokyo (two stores), Osaka, Kyoto, Hakata, Kumamoto and Kobe
in Japan; and Cambridge and Miami in the United States.
Strong growth continued in the market area referred to as "other Nordic
countries". Net sales rose by 21.4% to EUR 7,373 thousand (EUR 6,074 thousand).
In relative terms, the greatest increase was seen in sales of interior decoration
products and bags. Sales of clothing also grew well.
3 (11)
In the market area referred to as "the rest of Europe", growth was significantly
up on the previous year in all product lines. Net sales rose by 36.7% to EUR
3,655 thousand (EUR 2,674 thousand). Growth noticeably quickened in all
countries, with extremely vigorous growth seen in sales of interior decoration
products and bags.
Growth in North America was extremely buoyant in all product lines. Net sales
rose by 43.6% to EUR 3,410 thousand (EUR 2,375 thousand). Growth was bolstered by
an increase in dealers and the new concept stores established by retailers in the
United States during the financial year.
Vigorous growth was seen in sales of all product lines in the market area
referred to as "other countries", where Japan is the major export country. Net
sales rose by 64.9% to EUR 3,160 thousand (EUR 1,916 thousand). The opening of a
total of seven new Marimekko concept stores and shop-in-shops in Japan during
2006 played a large role in this rapid growth. The opening of the new concept
stores is part of the co-operation begun in 2005 with the Japanese companies
Mitsubishi Corporation and Look Inc. By the agreement, from the beginning of
2006, Mitsubishi Corporation was granted the exclusive right to import Marimekko
products into Japan and Look Inc. was granted wholesale and retail rights. Look
Inc. aims to set up several Marimekko concept stores and shop-in-shops in Japan
during the next few years.
Licensing
Royalty earnings from sales of licensed products rose significantly in 2006.
Growth was good in all licensing countries, with the greatest increase seen in
the United States. At the beginning of November, licensing co-operation with KONE
Corporation began with patterns to decorate elevator car interiors. Licensing co-
operation with the Japanese company Nishikawa Sangyo Co. Ltd. ceased at the end
of 2006.
Production
The production volume of the Herttoniemi textile-printing factory increased by
20% during the 2006 financial year. Production volumes at the clothing factory in
Kitee and the bag factory in Sulkava remained at the same level as in the
previous year. In autumn 2006, switching to a double shift system raised the
utilisation rate of the new printing machine at the Herttoniemi textile-printing
factory. The major investments of 2006 were the renovation of the clothing
factory in Kitee and renewal of the textile steamer and colour kitchen at the
Herttoniemi textile-printing factory.
EARNINGS
In 2006, the Group's operating profit fell by 4.8% to EUR 10,864 thousand
(EUR 11,413 thousand). Operating profit as a percentage of net sales amounted to
15.2% (17.0%). The Group's marketing expenses for 2006 totalled EUR 3,705
thousand (EUR 3,619 thousand), or 5.2% (5.4%) of net sales.
The Group's depreciation amounted to EUR 1,158 thousand (EUR 919 thousand),
representing 1.6% (1.4%) of the Group's net sales. Net financial expenses
totalled EUR 68 thousand (EUR 66 thousand), or 0.1% (0.1%) of the Group's net
sales.
The Group's profit after taxes fell by 5.2% to EUR 7,990 thousand (EUR 8,424
thousand), representing 11.2% (12.5%) of the Group's net sales. Earnings per
share were EUR 1.00 (EUR 1.05).
4 (11)
Earnings for the 2006 financial year were weakened by a fall in sales in Finland,
higher fixed costs, as well as the decline in the average clothing sales margin
in the second quarter. In addition, earnings were burdened by expenses associated
with the opening of the shops in the Kamppi Centre in Helsinki and in Frankfurt,
Germany.
INVESTMENTS
The Group's gross investments during the financial year amounted to EUR 2,455
thousand (EUR 1,361 thousand), representing 3.4% (2.0%) of consolidated net
sales. The major investments focused on the interior decoration and furnishing of
the new shops in the Kamppi Centre in Helsinki and at Ideapark in Lempäälä,
renovation of the Kitee factory, and the renewal of both the cash register
systems in shops and textile printing production equipment.
EQUITY RATIO AND FINANCING
At the end of the financial period, the equity ratio was 70.5% (66.5% on 31
December 2005). The ratio of interest-bearing liabilities minus financial assets
to shareholders' equity (gearing) was -11.7%, while it was -15.6% at the end of
the previous year.
At the end of the financial year, the Group's interest-bearing liabilities
amounted to EUR 2,642 thousand (EUR 3,738 thousand). The Group's financing from
operations was EUR 9,147 thousand (EUR 9,343 thousand). At the end of the
financial year, the Group's financial assets amounted to EUR 5,789 thousand (EUR
7,515 thousand).
SHARES AND SHARE PERFORMANCE
At the end of the 2006 financial year, the company's paid-in share capital, as
recorded in the Trade Register, amounted to EUR 8,040,000 and the number of
shares totalled 8,040,000. The accounting countervalue of a share is one (1)
euro.
According to the book-entry register, the company had 5,465 (4,834) registered
shareholders at the end of the financial period. 16.8% of the shares were
registered in a nominee's name and 2.2% were in foreign ownership. The number of
shares owned either directly or indirectly by members of the Board of Directors
and the president of the company was 1,657,500, representing 20.6% of the total
votes conferred by the company's shares.
Flagging notifications
Threadneedle Asset Management Holdings Ltd's share of Marimekko Corporation's
share capital and voting rights rose to 5.05%, or 405,824 shares, as a result of
a transaction made on 18 May 2006; and then fell to 4.42%, or 355,624 shares, as
a result of a transaction made on 28 July 2006.
The total share of Marimekko Corporation's share capital and voting rights held
by the investment funds administered by Nordea Investment Fund Company Finland
Ltd (Nordea Nordic Small Cap Fund, Nordea Fennia Fund, Nordea Pro Finland Fund,
Nordea Stable Return Fund) rose to 7.47%, or a total of 600,500 shares, as a
result of transactions made on 17 August 2006; and then fell to 4.98%, or 400,500
shares, as a result of the sale of 200,000 Marimekko shares by the Nordea Nordic
Small Cap Fund on 18 August 2006.
At the end of the report year, the Board of Directors had no valid authorisations
to carry out share issues or issue convertible bonds or bonds with warrants, or
to acquire or transfer Marimekko shares.
5 (11)
During the financial year, a total of 3,470,027 Marimekko shares were traded,
representing 43.2% of the shares outstanding. The total value of Marimekko's
share turnover was EUR 52,224,311. In 2006, the lowest price of the Marimekko
share was EUR 12.52, the highest was EUR 18.70, and the average price was
EUR 15.56. At the end of the financial year, the final price of the share was EUR
14.65. The company's market capitalisation at the end of 2006 was
EUR 117,768,000. At the end of 2005, the company's market capitalisation was EUR
130,569,600.
PERSONNEL
During the financial year, the number of employees averaged 393 (371). At the end
of the year, the Group employed 396 (377) people, of whom 14 (10) worked abroad.
BOARD OF DIRECTORS AND AUDITORS
The Annual General Meeting of 6 April 2006 resolved that the company's Board of
Directors shall have three members. Mr Kari Miettinen, B.Sc. (Econ.), Authorised
Public Accountant, Mr Matti Kavetvuo, M.Sc. (Eng.), B.Sc. (Econ.), and Mrs Kirsti
Paakkanen, President, were re-elected as members of the Board of Directors until
the end of the next Annual General Meeting. At its organisation meeting held
after the Annual General Meeting, the Board of Directors elected Kari Miettinen
as Chairman of the Board.
The Annual General Meeting also confirmed that Nexia Tilintarkastus Oy,
Authorised Public Accountants, will continue as the company's regular auditor,
with Mr Seppo Tervo, Authorised Public Accountant, as chief auditor and Mr Matti
Hartikainen, Authorised Public Accountant, as deputy auditor.
THE BOARD OF DIRECTORS' PROPOSAL FOR THE DIVIDEND FOR THE 2006 FINANCIAL YEAR
A dividend of EUR 0.65 per share was paid for 2005 to a total of
EUR 5,226,000.00. The Board of Directors will propose to the Annual General
Meeting that a dividend of EUR 0.65 per share be paid for 2006. The proposed
dividends represent 65.0% of the Group's earnings per share for the financial
year. On 31 December 2006, the parent company's distributable funds amounted to
EUR 15,785,611.09. The Board will propose 17 April 2007 as the dividend record
date and 24 April 2007 as the dividend payout date.
6 (11)
OUTLOOK FOR 2007
Growth in the world economy is expected to continue in 2007, although it will
slacken slightly compared to 2006. Increased total production and high
consumption demand will also maintain good growth in Finland during 2007.
Economic growth is expected to slow slightly in the United States. In Japan,
favourable economic trends are forecast to continue. A pick-up in exports and
consumption demand is expected to boost growth in the euro zone. Based on the
business climate outlook and the market situation, growth in the Marimekko
Group's net sales in 2007 is forecast to remain at the same level as in 2006.
Exports are anticipated to continue to grow vigorously. The Group's profitability
is expected to remain at a good level.
NET SALES BY MARKET AREA
(EUR 1,000) 2006 2005 Change, %
Finland 53,826 54,180 -0.7
Other Nordic countries 7,373 6,074 21.4
Rest of Europe 3,655 2,674 36.7
North America 3 410 2,375 43.6
Other countries 3,160 1,916 64.9
TOTAL 71,424 67,219 6.3
NET SALES BY PRODUCT LINE
(EUR 1,000) 2006 2005 Change, %
Clothing 30,309 29,411 3.1
Interior decoration 30,716 28,434 8.0
Bags 10,399 9,374 10.9
TOTAL 71,424 67,219 6.3
7 (11)
CASH FLOW STATEMENT
(EUR 1,000) 2006 2005
Cash flow from operations:
Profit for the period 7,990 8,424
Adjustments:
Depreciation according to plan 1,158 919
Financial income and expenses 68 66
Taxes 2,806 2,923
Other adjustments - 27
Cash flow before
change in working capital 12,022 12,359
Change in working capital -2,069 -2,714
Cash flow from operations before
financial items and taxes 9,953 9,645
Paid interest and payments on other
operational financial expenses -194 -167
Dividends received from operations - -
Interest received from operations 101 97
Direct taxes paid -2,958 -3,151
Cash flow from operations 6,902 6,424
Cash flow from investments:
Investments in tangible and
intangible assets -2,301 -1,361
Cash flow from investments -2,301 -1,361
Cash flow from financing:
Short-term loans drawn down 3,000 200
Short-term loans repaid -3,100 -
Long-term loans drawn down - -
Long-term loans repaid -946 -1,323
Finance leasing debts paid -55 -51
Dividends paid and other
distribution of profit -5,226 -4,020
Cash flow from financing -6,327 -5,194
Change in financial assets -1,726 -131
Financial assets at the
beginning of the period 7,515 7,646
Financial assets at the
end of the period 5,789 7,515
8 (11)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Equity attributable to equity holders of the parent company
Share-
Fair value holders'
Share Translation and other Retained equity,
(EUR 1,000) capital differences reserves earnings total
Shareholders'
equity
1 Jan. 2005 8,040 11,693 19,733
Net profit
for the period 8,424
Dividends paid -4,020
Shareholders'
equity
31 Dec. 2005 8,040 16,097 24,137
Equity attributable to equity holders of the parent company
Share-
Fair value holders'
Share Translation and other Retained equity,
(EUR 1,000) capital differences reserves earnings total
Shareholders'
equity
1 Jan. 2006 8,040 16,097 24,137
Net profit
for the period 7,990
Dividends paid -5,226
Shareholders'
equity
31 Dec. 2006 8,040 18,861 26,901
CONSOLIDATED INCOME STATEMENT
(EUR 1,000) 10-12/ 10-12/ 1-12/ 1-12/
2006 2005 2006 2005
NET SALES 20,142 18,753 71,424 67,219
Operating expenses 16,054 15,077 59,402 54,887
Depreciation 312 241 1,158 919
OPERATING PROFIT 3,776 3,435 10,864 11,413
Financial income 36 28 124 87
Financial expenses -50 -23 -192 -153
PROFIT BEFORE TAXES 3,762 3,440 10,796 11,347
Income taxes 983 905 2 806 2,923
NET PROFIT FOR THE PERIOD 2,779 2,535 7,990 8,424
EARNINGS PER SHARE, EUR 0.35 0.32 1.00 1.05
9 (11)
CONSOLIDATED BALANCE SHEET
(EUR 1,000) 31.12.2006 31.12.2005
ASSETS
NON-CURRENT ASSETS
Tangible assets 9,992 8,683
Intangible assets 348 359
Available-for-sale investments 20 20
10,360 9,062
CURRENT ASSETS
Inventories 16,304 15,598
Trade and other receivables 5,717 4,127
Cash in hand and at banks 5,789 7,515
27,810 27,240
ASSETS, TOTAL 38,170 36,302
SHAREHOLDERS' EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT COMPANY
Share capital 8,040 8,040
Retained earnings 18,861 16,097
26,901 24,137
NON-CURRENT LIABILITIES
Deferred tax liabilities 614 567
Interest-bearing liabilities 841 1,842
1,455 2,409
CURRENT LIABILITIES
Trade and other payables 7,803 7,502
Tax liabilities 210 358
Interest-bearing liabilities 1,801 1,896
9,814 9,756
LIABILITIES, TOTAL 11,269 12,165
SHAREHOLDERS' EQUITY
AND LIABILITIES, TOTAL 38,170 36,302
The Group has no liabilities resulting from derivative contracts, and there are
no outstanding guarantees or any other contingent liabilities which have been
granted on behalf of the management of the company or its shareholders.
10 (11)
KEY INDICATORS
2006 2005 Change, %
Earnings per share, EUR 1.00 1.05 -4.8
Equity per share, EUR 3.35 3.00 11.7
Share of exports and
international operations,
% of net sales 24.6 19.4
Return on equity (ROE), % 31.3 38.4
Return on investment (ROI), % 38.2 43.9
Equity ratio, % 70.5 66.5
Gross investments,
EUR 1,000 2,455 1,361 80.3
Gross investments,
% of net sales 3.4 2.0
Contingent liabilities,
EUR 1,000 14,513 16,383 -11.4
Average personnel 393 371 5.9
Personnel at the
end of the period 396 377 5.0
Number of shares at the end
of the period (1,000) 8,040 8,040
Number of shares
outstanding (average, 1,000) 8,040 8,040
SEGMENT INFORMATION
2006 2005
Net sales
Finland 53,826 54,180
Other countries 17,598 13,039
Total 71,424 67,219
Assets
Finland 36,662 34,799
Other countries 2,228 1,616
Eliminations -720 -113
Total 38,170 36,302
Investments
Finland 2,365 1,361
Other countries 90 -
Total 2,455 1,361
QUARTERLY TREND IN NET SALES AND EARNINGS
(EUR 1,000) IV/2006 III/2006 II/2006 I/2006
Net sales 20,142 18,357 16,751 16,174
Operating profit 3,776 3,492 2,144 1,452
Earnings per share, EUR 0.35 0.32 0.20 0.13
(EUR 1,000) IV/2005 III/2005 II/2005 I/2005
Net sales 18,753 17,136 16,713 14,617
Operating profit 3,435 3,031 3,295 1,652
Earnings per share, EUR 0.32 0.27 0.30 0.16
11 (11)
All information released by Marimekko regarding the 2006 financial year is
available on the company's web site www.marimekko.com under Investors/Stock
Exchange Releases.
The company's Annual Report for the 2006 financial year will be published during
week 11, the interim report for the January-March period of 2007 on 9 May, the
interim report for the January-June period on 16 August and the interim report
for the January-September period on 31 October. Marimekko Corporation's Annual
General Meeting will be held on Thursday, 12 April 2007.
MARIMEKKO CORPORATION
Board of Directors
Distribution:
Helsinki Stock Exchange
Principal media
Marimekko's web site www.marimekko.com
For additional information, contact:
Kirsti Paakkanen, President, tel. +358 9 758 71
Thomas Ekström, Chief Financial Officer, tel. +358 9 758 7261
MARIMEKKO CORPORATION
Corporate Communications
Marja Korkeela
Tel. +358 9 758 7238
Fax +358 9 759 1676
Email: marja.korkeela@marimekko.fi