FINANCIAL STATEMENT BULLETIN 2002
STOCKMANN plc STOCK EXCHANGE BULLETIN FEBRUARY 12, 2003, 12.45 p.m
FINANCIAL STATEMENT BULLETIN 2002
SALES GREW, EARNINGS IMPROVED MARKEDLY
The Stockmann Group’s sales grew by 2.9% to EUR 1 582.3 million. Profit
before extraordinary items grew by 34.0% and was EUR 68.6 million. The
Seppälä Division, Vehicle Division and Department Store Division improved
their earnings significantly. The Hobby Hall Division’s result was down on
the previous year. Earnings per share were EUR 0.97, as against EUR 0.68 a
year ago. Return on capital employed grew by 2.8 percentage points to
12.6%. The Board of Directors is proposing the payment of a dividend of
EUR 0.70 per share for the 2002 financial year and additionally a 140-year
jubilee dividend of EUR 0.20 per share, or a total of EUR 0.90 per share.
Sales up 2.9 per cent
The Stockmann Group’s sales grew by 2.9 per cent, or EUR 44.7 million, to
EUR 1 582.3 million. Net turnover increased by EUR 33.4 million, or 2.6
per cent, to EUR 1 315.3 million. The net turnover figures by division are
shown in the accompanying table.
The relative gross margin on Stockmann’s operations grew by 1.3 percentage
points and was 33.4 per cent. The Group’s aggregate gross margin on
operations was EUR 438.9 million, an increase of EUR 27.0 million on the
previous year. Operating expenses grew by EUR 12.9 million and
depreciation by EUR 0.4 million.
Operating profit was up EUR 15.6 million to EUR 61.9 million. Operating
profit represented 4.7 per cent of net turnover, as against 3.6 per cent
of net turnover a year ago.
Other operating income consisted of capital gains on the sale of real
estate and shares amounting to EUR 8.8 million. The figure a year ago was
EUR 7.0 million.
Net financial income grew by EUR 1.8 million from the previous year and
was EUR 6.7 million.
Profit before extraordinary items grew by EUR 17.4 million and was EUR
68.6 million. Because there were no extraordinary items, pre-tax profit
was the same in amount.
Higher profits meant that direct taxes increased by EUR 2.5 million to EUR
Net profit for the financial year was EUR 49.7 million, compared with EUR
34.8 million a year earlier.
Earnings per share increased by 43 per cent and were EUR 0.97. The figure
a year ago was EUR 0.68.
Thanks to a quickening in the capital turnover rate and the improvement in
net profit, the return on capital employed increased by 2.8 percentage
points to 12.6 per cent and the return on equity was up 2.7 percentage
points to 9.6 per cent.
Equity per share was EUR 10.21, compared with EUR 9.85 a year earlier.
The company’s market capitalization grew by EUR 14.1 million from the
previous year and was EUR 710.1 million.
Sales and profitability trend of the divisions
The Department Store Division’s sales grew by 7 per cent to EUR 811.1
million. International Operations accounted for 15 per cent of the
division’s sales. Factors contributing to the increase in sales were the
Oulu department store that was opened in September 2001 and the Zara store
that opened in Helsinki in April 2002. The further improvement in the
relative gross margin coupled with good cost management increased the
Department Store Division’s earnings both in Finland and abroad. Operating
profit grew by a total of EUR 5.6 million and was EUR 39.7 million. The
result was again the division’s all-time best. The return on capital
employed was 21.0 per cent, an improvement of 2.0 percentage points on the
figure a year earlier.
The Vehicle Division too reported its best-ever profits.
The Vehicle Division’s operating profit increased by EUR 2.1 million on
the previous year and was EUR 5.4 million, though sales diminished by 3
per cent to EUR 398.9 million. The decrease in sales was attributable to
the disposal of the Mitsubishi-Skoda units in Turku and the Greater
Helsinki area in 2001 and 2002. The increase in operating profit was
driven by the good trend in the gross margin and by reduced costs. The
return on capital employed was 13.5 per cent, up 8.1 percentage points on
the figure a year earlier.
The Hobby Hall Division’s sales totalled EUR 237.1 million, on a par with
the figure a year earlier. The division’s operating profit fell by EUR 3.9
million to EUR 0.5 million. The decrease in operating profit was
attributable mainly to the EUR 2.6 million retroactive VAT refund that was
included in the previous year’s operating profit. Thanks to the change in
the composition of sales, the comparable gross margin improved. Although
credit losses increased markedly, the growth in total costs was moderate.
The return on capital employed was 0.5 per cent, against 4.7 per cent a
In October 2002 the Hobby Hall Division launched a cost savings programme
with the objective of improving its profitability by achieving cost
savings of about 6 million euros during 2003. To accomplish this,
operations will be streamlined and efficiency stepped up. In accordance
with the savings programme, the staff was downsized by 80 employees,
involving 59 redundancies. In addition, the employment status of 34
employees was changed to a part-time basis. The measures concerning the
personnel were carried out for the most part at the beginning of 2003.
The Seppälä Division’s sales grew both in Finland and Estonia. As a
consequence of winding up operations in Sweden, aggregate sales
nevertheless fell by 2 per cent on the previous year and totalled EUR
132.7 million. The division’s operating profit grew by EUR 8.6 million to
EUR 10.4 million. The relative gross margin improved significantly. The
operating profit figure a year earlier included EUR 5.2 million of losses
on operations in Sweden, which were wound up in February 2002. The return
on capital employed was 52.4 per cent, an improvement of 44.9 percentage
points on the figure a year earlier.
The trend in operating profit and return on capital employed by division
are shown in the accompanying table.
The amount of liquid funds at the end of the financial year was EUR 70.5
million, as against EUR 25.6 million a year earlier.
During the year loan repayments totalled EUR 7.9 million. No new long-term
loans were drawn down. The amount of long-term loans at the end of the
year was EUR 35.8 million. Gross capital expenditures during the year came
to EUR 25.8 million.
Two properties occupied by Hobby Hall were sold in June to Nordea Life
Assurance Finland Ltd for EUR 32.2 million. Stockmann-owned shares in the
real-estate management company Pitäjänmäen Kiinteistöt Oy, representing
19.5 per cent of the company’s entire shares outstanding, were sold to
Varma-Sampo Mutual Pension Insurance Company for EUR 10.8 million in
December. Hobby Hall and Stockmann are continuing operations as tenants in
the sold premises. The capital freed up from the disposal was used to pay
down both short-term and long-term liabilities.
Dividend payouts total EUR 30.6 million.
The equity ratio at the end of the year was 69.7 per cent (69.5 per cent
at the end of 2001).
Total contingent liabilities grew by EUR 3.7 million from the end of 2001
and were EUR 68.4 million.
Changes in Group management
The director of the Department Store Division, Jukka Hienonen, M.Sc.
(Econ.), was appointed Group Executive Vice President effective January 1,
2003. Mr Hienonen’s operational responsibility as director of the
Department Store Division remained unchanged.
The other of Stockmann’s two executive vice presidents and the CEO’s
alternate under the Companies Act is Mr Henri Bucht, M.Sc. (Econ.), who
will continue in his previous position as managing director of Hobby Hall.
A dividend of EUR 0.60 per share was paid for the 2001 financial year, or
a total of EUR 30.6 million.
The Board of Directors is proposing to the Annual General Meeting that a
dividend of EUR 0.70 per share be paid for the 2002 financial year as well
as a bonus dividend of EUR 0.20 per share in honour of the company’s 140-
year jubilee, or a total of EUR 0.90 per share. The aggregate amount of
these dividends is 92.8 per cent of Stockmann’s earnings per share.
Capital expenditures amounted to EUR 25.8 million, or EUR 5.3 million less
than in the previous year.
The most important expenditure item in 2002 was the Riga department store,
for which construction works got under way in the spring. The site
required an outlay during the year of EUR 4.9 million and Stockmann’s
total capital expenditure will be about 24.0 million euros. The building
will be completed on schedule in autumn 2003.
The Department Store Division’s capital expenditures came to EUR 10.1
The Moscow department store was enlarged in the spring by 1 500 square
metres of retail space by leasing one additional floor in the department
store building. After the enlargement the department store had a total of
6 500 square metres of retail space. The Academic Bookstore in the centre
of Helsinki was enlarged in the summer. The enlargement comprises one
additional floor, adding about 500 square metres of new retail space.
A Zara franchise store was opened in Helsinki in leased premises at the
beginning of April. The first stores of the Stockmann Beauty cosmetics
chain were opened in October 2002 in the Jumbo Shopping Centre in Vantaa
and in the Trio Shopping Centre in Lahti.
The Vehicle Division’s capital expenditures amounted to EUR 0.6 million.
The Hobby Hall Division’s capital expenditures totalled EUR 3.2 million.
They went for developing the information systems, the new stores in
Helsinki’s Herttoniemi district and Rocca al Mare in Tallinn, Estonia, as
well as for expanding the store in Vantaa’s Tammisto district.
The Seppälä Division invested a total of EUR 0.6 million, which went
mostly for refurbishing the store network.
In August, Stockmann signed a Letter of Intent on opening a department
store with about 11 000 square metres of retail space in rented premises
in the new section of the Jumbo Shopping Centre in Vantaa. According to
plans, the department store will be completed in 2005.
Likewise, in August Stockmann signed a preliminary agreement on opening a
full-size department store with about 8 000 square metres of floor space
in rented premises in the centre of St. Petersburg in 2005.
In September Stockmann’s Board of Directors approved a plan for
enlargement and modification works on the Helsinki department store.
According to the plan, the department store’s commercial premises will be
expanded by about 10 000 square metres by converting existing premises to
commercial use and by building new retail space. In addition, completely
new goods handling and servicing areas will be built for the department
store as well as access passages to the new customer car park. After the
enlargement the Helsinki department store will have about 50 000 square
metres of retail space. The capital expenditure will amount to about 90
million euros. According to a preliminary estimate, the works are
scheduled for completion in their entirety in 2007. The plan is part of a
more extensive development project for the centre of Helsinki. Among the
project’s aims is to convert Keskuskatu into a pedestrian precinct.
Carrying out the project calls for a town-plan modification, which has
already been initiated. In 2003 the outlays for the project will consist
mainly of planning and design expenses totalling about 2 million euros.
In October 2002 the Inditex Group of Spain and Stockmann signed an
agreement whereby Stockmann obtained Zara franchising rights in the
territory of the Russian Federation.
The Riga department store remains the most important capital expenditure
in 2003. Construction works at the site got under way in spring 2002. The
project will require an outlay of about EUR 15 million during 2003.
Other capital expenditures by the Department Store Division include the
opening, during the spring, of Zara stores at the Mega Shopping Centre in
Moscow, Helsinki’s Itäkeskus Shopping Centre and adjacent to the Turku
department store as well as the opening of new Stockmann Beauty stores.
Towards the end of 2002 Hobby Hall carried out pilot marketing for mail
order sales in Lithuania, and operations in the country got started in
Seppälä’s first stores in Latvia will be opened in autumn 2003.
Capital expenditures in 2003 will total about EUR 43 million.
Share capital and shares
The number of the company’s shares outstanding at the end of 2002 was
51 384 061, of which 24 868 893 were Series A shares and 26 515 168 were
Series B shares.
At the end of 2002 Stockmann held 163 000 of its own Series A shares and
250 000 of its own Series B shares. The nominal value of these shares is a
total of EUR 826 000, and they represent 0.8 per cent of all the shares
outstanding as well as 0.7 per cent of the total votes. The shares were
purchased during 2000.
The Board of Directors does not have valid authorizations to increase the
share capital or to float issues of convertible bonds or bonds with
warrants or to buy back its own shares.
Stockmann’s 1997 Series C share options, totalling 180 000 options, were
admitted to the Main List of Helsinki Exchanges as from April 11, 2002.
A total of 1 084 Stockmann plc Series B shares with a nominal value of 2
euros was subscribed for with Stockmann Loyal Customer share options
during the subscription period from May 2, 2002, to May 31, 2002. As a
consequence of the subscriptions the share capital was increased by EUR
2 168. Following the increase the share capital is 102 768 122 euros. The
shares were entered in the Trade Register on June 18, 2002 and they became
available for trading on Helsinki Exchanges on June 19, 2002.
Stockmann’s payroll at the end of December 2002 was 8 917 employees, or
134 employees more than at the end of the previous year.
In 2002 Stockmann employed an average of 8 313 people, or 229 more than in
the previous year, when the average payroll was 8 084. Converted to full-
time staff, the average number of employees increased by 171 and was
6 752. In the parent company, the average number of employees converted to
full-time staff increased by 52 and was 4 256.
At the end of 2002 the number of staff working at units abroad was 1 387
employees, or 16 per cent of the entire personnel. At the end of the
previous year, 1 281 employees, or 15 per cent of the personnel, were
employed at units abroad.
Outlook for 2003
Retail sales excluding the motor trade are estimated to increase by about
3 per cent in Finland in 2003. Sales by the motor trade are also expected
to grow as a consequence of the tax reduction decisions that have been
taken. It is estimated that the markets in Russia and the Baltic countries
will grow faster than the Finnish market. Stockmann’s consolidated sales
are estimated to grow faster than the market average.
Sales in 2003 are estimated to top EUR 1.7 billion. Stockmann’s target is
for profit before extraordinary items in 2003 to be higher than the figure
reported for 2002.
Helsinki, February 12, 2003
BOARD OF DIRECTORS
1-12/02 1-12/01 Change Change
EUR mill. EUR mill. % EUR mill.
Department Store Division
Operations in Finland 579.4 545.0 6 34.4
International operations 99.9 88.5 13 11.4
Department Store Division 679.3 633.5 7 45.8
Vehicle Division 328.3 337.2 -3 -8.9
Hobby Hall Division 198.1 200.2 -1 -2.1
Seppälä Division 109.2 111.1 -2 -1.9
Real Estate + others 24.2 24.0 1 0.3
Eliminations -23.7 -23.9 0.2
Group 1 315.3 1 281.9 3 33.4
Profit and loss account
EUR mill. EUR mill.
Net turnover 1 315.3 1 281.9
Other operating income 8.8 7.0
Raw materials and services 876.4 870.1
Staff expenses 184.9 179.0
Depreciation and reduction in value 28.9 28.5
Other operating expenses 172.0 165.0
Operating profit 61.9 46.3
Financial income and expenses 6.7 4.9
Profit before extraordinary items 68.6 51.2
Profit before taxes 68.6 51.2
Income taxes, total 18.9 16.4
Minority interest 0.0 0.0
Profit for the financial year 49.7 34.8
Gross investments 25.8 31.1
Per cent of net turnover 2.0 2.4
Profit and loss account, Group quarterly, EUR mill.
Q1/02 Q2/02 Q3/02 Q4/02
Net turnover 297.6 319.2 306.7 391.8
Other operating income 1.7 7.1 0.0 0.0
Raw materials and services 207.5 212.1 207.6 249.2
Staff expenses 43.7 45.4 40.7 55.1
Depreciation 7.2 7.3 7.1 7.3
Other operating expenses 41.6 41.3 41.5 47.6
Operating profit -0.7 20.2 9.7 32.7
Financial income and expenses, 2.0 1.0 1.5 2.2
Profit before extraordinary items 1.4 21.2 11.2 34.8
Extraordinary items 0.0 0.0 0.0 0.0
Profit before taxes 1.4 21.2 11.2 34.8
Direct taxes (corresponding to 0.4 6.1 3.3 9.1
profit before taxes)
Minority interest 0.0 0.0 0.0 0.0
Profit for the period 1.0 15.0 7.9 25.7
Earnings trend of the divisions
1-12/02 1-12/01 Change ROCE % ROCE %
EUR mill. EUR mill. EUR mill. 2002 2001
Department Store 39.7 34.1 5.6 21.0 19.0
Vehicle Division 5.4 3.2 2.1 13.5 5.4
Hobby Hall Division 0.5 4.4 -3.9 0.5 4.7
Seppälä Division 10.4 1.7 8.6 52.4 7.5
Real-estate 16.4 16.2 0.2 11.2 10.7
Other operating 8.8 7.0 1.8
Eliminations + -19.3 -20.4 1.1
Group 61.9 46.3 15.7 12.6 9.8
The operating profit figures of the commercial units are presented
according to management accounting.
A good financial position
Security pledged, contingent liabilities and other commitments
Group Parent company
2002 2001 2002 2001
Liabilities for which
mortgages on real-estate
have been lodged as
Pension loans 31.12 1.0 1.3 1.0 1.3
Mortgages given 1.8 1.8 1.8 1.8
Mortgages pledged as 1.8 1.8 1.8 1.8
Other security pledged for
loans of the company
Mortgages given 1.7 1.7 1.7
Securities pledged 0.1 0.1 0.1 0.1
Total 1.8 1.8 1.8 0.1
Security pledged on behalf
of Group undertakings
Guarantees 1.4 0.6
Total 1.4 0.6
Security pledged on behalf
of associated companies
Guarantees 0.5 0.5
Total 0.5 0.5
Payable during the 2003 0.6 0.4 0.2 0.3
Payable at a later date 0.8 0.5 0.3 0.4
Total 1.4 1.0 0.6 0.7
Other own commitments
Repurchase commitments 63.5 59.7 63.5 59.7
for transferred leasing
and hire purchase
Total 63.5 59.7 63.5 59.7
Mortgages 3.4 3.4 3.4 1.8
Pledges 0.1 0.1 0.1 0.1
Guarantees 0.5 1.4 0.6
Other commitments 64.9 60.7 64.0 60.4
Total 68.4 64.7 69.0 63.3
Derivative instruments of the Group
Foreign exchange derivatives 11.4 30.3
Interest rate derivatives 80.0 70.0
Foreign exchange derivatives 0.0 -0.3
Interest rate derivatives -0.8 0.3
Average number of employees, converted to full-time staff
1-12/02 1-12/01 Change
Department Store Division 4 459 4 263 196
Vehicle Division 741 790 -49
Hobby Hall Division 755 688 67
Seppälä Division 705 749 -44
Management and administration 92 91 1
Group 6 752 6 581 171
BALANCE SHEET Dec.31,2002 Dec.31,2001
ASSETS EUR mill. EUR mill.
Intangible rights 9.8 10.9
Goodwill arising on consolidation 0.0 0.2
Goodwill 0.1 0.1
Other capitalized long-term expenses 24.8 22.9
Advance payments and projects in progress 1.6 1.8
Intangible assets, total 36.3 35.9
Land and water 20.2 24.9
Buildings and constructions 146.9 169.6
Machinery and equipment 63.1 72.5
Other tangible assets 0.1 0.1
Advance payments and construction in progress 6.1 0.7
Tangible assets, total 236.4 267.8
Own shares 6.2 6.2
Other shares and participations 22.5 35.6
Investments, total 28.7 41.8
NON-CURRENT ASSETS, TOTAL 301.4 345.5
Raw materials and consumables 188.9 165.6
Stocks, total 188.9 165.6
Trade debtors 0.5 0.4
Loan receivables 0.2 0.9
Other debtors 0.5
Non-current debtors, total 0.7 1.9
Trade debtors 169.1 169.0
Other debtors 11.7 13.2
Prepayments and accrued income 10.3 7.4
Current debtors, total 191.2 189.6
Debtors, total 191.8 191.5
Securities held in current assets 56.6 6.2
Cash in hand and at banks 13.9 19.5
CURRENT ASSETS, TOTAL 451.2 382.7
TOTAL 752.7 728.2
BALANCE SHEET Dec.31,2002 Dec.31,2001
LIABILITIES EUR mill. EUR mill.
CAPITAL AND RESERVES
Share capital 102.8 102.8
Premium fund 133.1 133.1
Fund for own shares 6.2 6.2
Reserve fund 0.1 0.1
Other funds 43.7 43.7
Retained earnings 189.2 185.2
Net profit for the financial year 49.7 34.8
CAPITAL AND RESERVES, TOTAL 524.8 505.9
Minority interest 0.0 0.2
Deferred tax liability 23.3 25.9
Loans from credit institutions 35.0 42.7
Pension loans 0.8 1.0
Non-current creditors, total 35.8 43.7
Pension loans 0.3 0.2
Trade creditors 81.7 62.8
Other creditors 41.3 53.1
Accruals and prepaid income 45.5 34.6
Current creditors, total 168.7 150.7
CREDITORS, TOTAL 227.8 220.3
TOTAL 752.7 728.2
Helsinki, February 12, 2003
A press and analysts conference will be held today, February 12, 2003, at
2.30 p.m. at the World Trade Center, Aleksanterinkatu 17, Helsinki.