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Skano Group Interim Report 2st Quarter 2018 (2)

 

Skano Group Interim Report 2nd Quarter 2018

 

Management report

SKANO GROUP AS unaudited second quarter 2018 results

Consolidated net sales for Q2 2018 were € 3.95 million, being a 2% decrease compared to the same period in 2017. Skano Group recorded EBITDA of positive € 238 thousand for Q2 2018, which is 19% down compared to Q2 2017. Main reasons for lower EBITDA in Q2 2018 were lower sales revenue as well as higher prices of raw material woodchip in the fibreboard division. Net loss for Q2 2018 was € 22 thousand (Q2 2017: profit of € 15 thousand).

divisional review of second quarter 2018

Fibreboard sales in Q2 2018 were € 2.96 million, which is 4% more than same period in 2017. Most significant increase was from Portugal, Russia and Thailand. EBITDA for Fibreboard Q2 2018 was € 171 thousand (Q2 2017 EBITDA was € 186 thousand).

Furniture wholesale sales in Q2 2018 were € 778 thousand, 15% down on same period last year. Both Russia and Finland experienced sales slowdown, while sales in other markets such as Kazakhstan and Ukraine showed an increase. Skano’s own retail chain sales decreased by 14% compared to same period last year (Q2 2017: € 248 thousand). Despite the sales slowdown, EBITDA for furniture wholesale for Q2 2018 was positive € 78 thousand (Q2 2017 EBITDA was positive € 75 thousand), reflecting the increased profitability achieved by ending our own kiln operations and instead source dried and cut material.

Furniture retail sales in Q2 2018 were € 430 thousand, down 18% from same period last year. EBITDA for furniture retail for Q2 2018 was negative € 11 thousand (Q2 2017 EBITDA was positive € 40 thousand), reflecting the weak sales in Q2.

Total Furniture operations of Skano (wholesale and retail) EBITDA for 2018 second quarter were positive € 67 thousand.

Balance Sheet

As of 30.06.2018 the total assets of Skano Group AS were € 11.3 million (30.06.2017: € 12.2 million). The liabilities of the company as of 30.06.2018 were € 7.9 million (30.06.2017: € 8.2 million), of which Skano has borrowings of € 5.1 million as at 30.06.2018 (30.06.2017: € 5.5 million).

Receivables and prepayments amounted to € 1.7 million as at 30.06.2018 (30.06.2017: € 1.4 million). Inventories were € 2.6 million as of 30.06.2018 (30.06.2017: € 2.9 million). Property, plant and intangibles were € 6.9 million as of 30.06.2018 (€ 7.6 million as of 30.06.2017).

Outlook

Despite slow start for 2018 we have experienced good improvement in demand for fibreboard during second quarter, as also reflected in higher sales in July month compared to July last year. However, the recent woodchip price increase is causing some concern. Sales and marketing activities are focusing more on the various product applications of our fibreboards, such as the positive health and environmental benefits of using wood fibre boards compared to competing synthetic materials. 

In Furniture, we expect improved retail performance linked to the forthcoming launch of new shop concept for our best selling shop in Järve centre, the recent launch of Skano web-shop, and the scheduled opening of a new shop in Decco centre in Riga. We also see positive wholesale development in the UK market with our collections.

Divisional review

Net Revenue by business segments

 

  € thousand € thousand
  Q2 2018 Q2 2017 6M 2018 6M 2017
Fibreboards production and sales 2,957   2,848   5,680   6,113  
Furniture production and sales 778   917   1,578   1,876  
Furniture retail 430   522   762   1,071  
  incl. furniture retail Ukraine 0   0   0   64  
Group transactions (215 ) (261 ) (360 ) (573 )
TOTAL 3,949   4,025   7,660   8,487  

 

Net Profit by business segments

€ thousand Q2 2018 Q2 2017 6M 2018 6M 2017
EBITDA by business units:        
Fibreboards production and sales 171   186   208   500  
Furniture production and wholesale 78   75   45   70  
Furniture retail (11 ) 40   (30 ) 103  
  incl. furniture retail Ukraine 0   0   0   1  
Group transactions (0 ) (7 ) (8 ) (12 )
TOTAL EBITDA 238   295   214   661  
Depreciation 182   209   373   417  
TOTAL OPERATING PROFIT/ LOSS 55   86   (159 ) 244  
Net financial costs (77 ) (72 ) (138 ) (142 )
Income tax 0   0   0   0  
NET PROFIT/ LOSS (22 ) 15   (297 ) 103  

 

FIBREBOARD sales

The total sales of fibreboards for Q2 2018 were € 2.96 million, which are 4% up from Q2 2017 sales level (€ 2.85 million). We recorded solid sales increase in markets such as Portugal, Russia and Thailand while sales were dropping in Finland and South Africa.

FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS

  € thousand € thousand
  Q2 2018 Q2 2017 6M 2018 6M 2017
European Union 2,165 2,078 4,363 4,709
Russia 423 360 721 619
Asia 143 55 190 173
Middle East 100 28 173 110
Other 93 96 158 139
Africa 33 231 75 363
TOTAL 2,957 2,848 5,680 6,113

FURNITURE wholesale sales

Sales dropped to € 778 thousand in Q2 2018, down from € 917 thousand in Q2 2017. Russian consumer confidence is still negatively influenced by the sanctions imposed on Russia while in Finland our exclusive distributor is continuing with their restructuring. Skano’s retail shops in the Baltics recovered slightly from a very weak Q1, however still less sales compared to Q2 2017. Good news is the orders received from Kazakhstan and Ukraine.

FURNITURE WHOLESALE SALES BY COUNTRIES

  € thousand € thousand
  Q2 2018 Q2 2017 6M 2018 6M 2017
Russia 277 320 638 635
Finland 213 316 448 582
Skano Retail 213 248 354 507
Other countries 75 33 139 151
TOTAL 778 917 1,578 1,876

 

FURNITURE RETAIL SALES

Skano Group retail business recorded sales of € 430 thousand in Q2 2018, which is 18% decline from Q2 2017. Estonian sales have been sluggish and more marketing efforts as well as the recent opening of a web shop should help improve Estonian sales performance. The new sales manager in Lithuania has with her good activities managed to raise sales in Lithuania with sales more than doubling in Q2 2018 compared to same period last year. Latvia sales were poor in Q2, and Skano will open a new shop in Riga in September which will help improve the Latvian sales.  

RETAIL SALES BY COUNTRIES

  € thousand € thousand Number of stores
  Q2 2018 Q2 2017 6M 2018 6M 2017 30.06.2018 30.06.2017
Estonia 263 367 467 689 4 4
Latvia 65 111 139 198 1 1
Lithuania 102 44 155 119 1 1
Ukraine* 0 0 0 64 0 0
  430 522 762 1,071 6 6

 

*Ukraine retail operations divested in March 2017.

PEOPLE

On the 30th of June 2018, the Group employed 214 people (compared to 218 people as of 30.06.2017). The average number of personnel in Q2 2018 was 210 (Q2 2017: 219).

During first six months of 2018, wages and salaries with taxes amounted to € 1.8 million (first six months 2017: € 2.0 million). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 84 thousand in six months 2018 and € 128 thousand in six months 2017.

FINANCIAL HIGHLIGHTS

€ thousand        
Income statement Q2 2018 Q2 2017 6M 2018 6M 2017
Revenue 3,949   4,025   7,660   8,487  
EBITDA 238   295   214   661  
EBITDA margin 6 % 7 % 3 % 8 %
Operating profit 55   86   (159 ) 244  
Operating margin 1 % 2 % (2 %) 3 %
Net profit (22 ) 15   (297 ) 103  
Net margin (1 %) 0 % (4 %) 1 %
         
Statement of financial position 30.06.2018   31.12.2017   30.06.2017   31.12.2016  
Total assets 11,331   10,937   12,205   11,965  
Return on assets (0 %) 0 % (2 %) 1 %
Equity 3,475   3,753   3,963   3,901  
Return on equity (0 %) 0 % (7 %) 3 %
Debt-to-equity ratio 69 % 66 % 68 % 67 %
         
Share 30.06.2018   31.12.2017   30.06.2017   31.12.2016  
Last Price* 0.49   0.62   0.58   0.46  
Earnings per share (0 %) 0 % (7 %) 2 %
Price-earnings ratio (100.81 ) 190.60   (8.85 ) 20.18  
Book value of a share 0.77   0.83   0.88   0.87  
Market to book ratio 0.63   0.74   0.66   0.53  
Market capitalization, € thousand 2,205   2,771   2,627   2,070  
Number of shares, piece 4,499,061   4,499,061   4,499,061   4,499,061  

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 = Last price / Earnings per share 
Book value of a share = Equity / Total shares
Market to book ratio = Last price / Book value of a share
Market capitalization = Last price * Total shares
*http://www.nasdaqbaltic.com/

Consolidated statement of financial positions

€ thousand 30.06.2018 31.12.2017 30.06.2017
Cash and cash equivalents (Note 2) 54 74 190
Receivables and prepayments (Note 3) 1,736 1,215 1,448
Inventories (Note 4) 2,595 2,336 2,903
Total current assets 4,385 3,624 4,541
       
Investment property (Note 5) 170 170 405
Available-for-sale financial assets (Note 8) 177 182 0
Other shares and issues 0 6 0
Property, plant and equipment (Note 6) 6,560 6,908 7,202
Intangible assets (Note 7) 39 47 56
Total non-current assets 6,946 7,313 7,663
       
TOTAL ASSETS 11,331 10,937 12,205
       
Borrowings (Notes 9) 653 593 651
Payables and prepayments (Notes 10) 2,576 1,956 2,556
Short-term provisions (Note 11) 6 13 8
Total current liabilities 3,235 2,562 3,215
       
Long-term borrowings (Notes 9) 4,421 4,422 4,813
Long-term provisions (Note 11) 200 200 213
Total non-current liabilities 4,621 4,622 5,026
Total liabilities 7,856 7,184 8,241
       
Share capital (at nominal value) (Note 12) 2,699 2,699 2,699
Share premium 364 364 364
Statutory reserve capital 288 288 288
Other reserves (Notes 8; 12) 28 9 2
Unrealised currency differences 0 0 0
Retained earnings 96 393 610
Total equity (Note 13) 3,475 3,753 3,963
       
TOTAL LIABILITIES AND EQUITY 11,331 10,937 12,205

Consolidated statement of profit or loss and other comprehensive income

€ thousand Q2 2018 Q2 2017 6M 2018 6M 2017
Revenue (Note 14) 3,949   4,025   7,660   8,487  
Cost of goods sold (Note 15) 3,183   3,218   6,477   6,643  
Gross profit 766   808   1,183   1,844  
         
Distribution costs (Note 16) 527   471   981   1,073  
Administrative expenses (Note 17) 144   186   294   421  
Other operating income (Note 19) 9   0   12   51  
Other operating expenses (Note 19) 49   64   78   157  
Operating profit (loss) (Note 11) 55   86   (159 ) 244  
         
Finance income (Note 20) 0   0   1   4  
Finance costs (Note 20) 77   72   139   145  
LOSS BEFORE INCOME TAX (22 ) 15   (297 ) 103  
Corporate income tax 0   0   0   0  
         
NET LOSS FOR THE FINANCIAL YEAR (22 ) 15   (297 ) 103  
         
Other comprehensive income (loss)        
Other comprehensive income (loss) 
that can in certain cases be reclassified
 to the income statement
       
Currency translation differences  0   0   0   (40 )
TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR (22 ) 15   (297 ) 63  
         
Basic earnings per share (Note 13) (0 %) 0 % (7 %) 2 %
Diluted earnings per share (Note 13) (0 %) 0 % (7 %) 1 %

Torfinn Losvik

Member of the Management Board

+372 569 90 988

This email address is being protected from spambots. You need JavaScript enabled to view it.


Skano interim report 2018 Q2_ENG.pdf