STOCKMANN plc INTERIM REPORT January 1 - March 31, 2005
STOCKMANN plc STOCK EXCHANGE RELEASE April 21, 2005, at 11.45
STOCKMANN plc INTERIM REPORT January 1 - March 31, 2005
The Stockmann Group's sales were on a par with the comparison period: EUR 400.6 million (EUR 402.9 million in 2004). Sales abroad were up 42 per cent. Sales in Finland fell by 6 per cent. The reduction was due to the gap in sales resulting from the transfer of a car dealership to the importer in July 2004 as well as to running the department stores' Crazy Days campaign in April. Profit before taxes declined and was EUR 1.7 million (EUR 4.5 million in 2004). Hobby Hall's result moved into the black and Seppälä's operating profit rose substantially, whereas the operating profit figures for the Department Store Division and Stockmann Auto decreased. The earnings estimate for 2005 is unchanged.
Stockmann adopted International Financial Reporting Standards (IFRS) on January 1, 2005. The comparative information used in the Interim Report is the 2004 figures according to IFRS, which were published at the annual level on February 15, 2005, and at the quarterly level on April 18, 2005. The accounting policies presented in the stock exchange release of April 18, 2005, have been observed in this Interim Report. The Interim Report is unaudited.
Sales and result
Stockmann's consolidated sales in the first quarter of 2005 were EUR 400.6 million, on a par with the comparison period (EUR 402.9 in 2004). If the sales by the Herttoniemi car dealership that was transferred to Kesko Corporation on July 1, 2004, is eliminated from the comparative sales figures, the growth in consolidated sales was 6 per cent. The Group's sales abroad amounted to EUR 69.4 million, an increase of 42 per cent. Sales in Finland were down 6 per cent to EUR 331.2 million. Sales abroad accounted for an increased share of consolidated sales, rising from 12 per cent to 17 per cent. Net turnover was EUR 334.1 million, as against EUR 336.0 million in the comparison period.
The gross margin on the Group's operations rose by EUR 2.9 million to EUR 106.0 million and the relative gross margin was 31.7 per cent (30.7 per cent). The relative gross margin on operations improved further for the Department Store Division and Seppälä, but in the other divisions it was slightly below the comparison period. Operating costs increased by EUR 4.3 million and depreciation by EUR 1.1 million. Operating profit diminished and was EUR 1.6 million (EUR 4.0 million).
Net financial income diminished as a consequence of the dividends paid in 2004 and amounted to EUR 0.1 million (EUR 0.5 million).
Profit before taxes was EUR 1.7 million, down EUR 2.8 million on the figure a year earlier. Direct taxes were EUR 0.5 million, decreasing by EUR 0.7 million on the year-ago figure. Net profit for the report period was EUR 1.2 million, compared with EUR 3.2 million a year earlier.
Earnings per share were EUR 0.02 (EUR 0.05). Equity per share was EUR 7.81 (EUR 8.71).
Sales and earnings trend by business segment
The Department Store Division's sales grew by 7 per cent to EUR 213.4 million. Sales in Finland were down 3 per cent. The decrease in sales was due to the timing of the spring Crazy Days campaign. In spring 2005 the Crazy Days campaign was run in April, whereas a year earlier the campaign started on the last day of March. Sales by International Operations were boosted principally by the new department stores that were opened in Moscow in April and December 2004 as well as by good same-store sales growth at the department stores in the Baltic countries. Sales by International Operations grew by 51 per cent and its share of the Group's sales rose to 24 per cent (18 per cent). The Department Store Division's operating profit was down EUR 2.8 million to EUR 0.6 million (EUR 3.4 million). The lower earnings figure was attributable to the start-up costs of new department stores as well as the timing of the Crazy Days campaign in Finland.
Stockmann Auto's sales were down 18 per cent to EUR 96.5 million. Unit sales of new vehicles fell by 23 per cent and those of used vehicles by 17 per cent. The division's operating profit decreased by EUR 1.9 million to EUR 0.2 million (EUR 2.1 million). The decrease in both sales and operating profit is attributable in large measure to the transfer of the Herttoniemi car dealership to the importer as from July 1, 2004.
Hobby Hall reported sales growth of 7 per cent to EUR 60.5 million (EUR 56.6 million). Distance retailing grew by 10 per cent in Finland. Online sales again showed particularly strong growth. Hobby Hall's sales in the Baltic countries grew by 10 per cent even though distance sales in Lithuania were wound up during the first part of the year. Hobby Hall's result moved into the black: the operating result improved by EUR 1.3 million and was EUR 0.7 million (a loss of EUR 0.7 million).
Seppälä's sales increased by 5 per cent on the same period of last year and were EUR 30.0 million. Sales growth was particularly robust in the Baltic area, where they were lifted by the stores that were opened in Estonia and Latvia towards the end of 2004 as well as by the good trend in like-for-like sales. In Russia too, the three stores opened in 2004 boosted Seppälä's sales. Thanks to higher sales and an improved relative gross margin, Seppälä's operating result increased by a hefty EUR 1.9 million and was EUR 1.3 million (a loss of EUR 0.6 million). The profitable first-quarter result was the best-ever reported by Seppälä.
Financing and invested capital
The amount of liquid assets has been lowered as planned. Liquid assets amounted to EUR 16.2 million at the end of the report period, as against EUR 88.6 million a year earlier and EUR 41.4 million at the end of 2004.
Loan repayments were not made during the report period, nor have new long- term loans been drawn down. The amount of long-term loans at the end of March was EUR 14.9 million. Capital expenditures amounted to EUR 8.9 million. Net working capital totalled EUR 200.0 million and decreased by EUR 13.5 million from the beginning of the year. The dividend for 2004 according to the resolution of the Annual General Meeting on March 29, 2005, totalling EUR 53.0 million, was paid out on April 8. During both the report period and the comparison period, the dividend has been treated as a payout of distributable funds and a liability to shareholders. The lower equity ratio in the first quarter compared with other quarters is largely attributable to this factor. The equity ratio was 54.8 per cent (57.5 per cent) in the report period. The equity ratio at the end of 2004 was 62.5 per cent.
The return on capital employed over the past 12 months improved in line with the decrease in invested capital and was 15.7 per cent (14.8 per cent at the end of 2004). The Group's invested capital diminished by EUR 25.6 million from March a year ago and amounted to EUR 496.9 million towards the end of the report period (EUR 535.9 million at the end of 2004). Invested capital was reduced notably by the extra dividend that was paid in December 2004.
Capital expenditures during the report period totalled EUR 8.9 million (EUR 17.6 million).
The biggest capital expenditure for the Department Store Division in 2005 is the department store that is being built in leased premises in the new section of the Jumbo Shopping Centre in Vantaa. The department store will have about 11 000 square metres of retail space and its opening is planned for October 2005. Stockmann's share of the cost estimate for the project is about EUR 10 million.
A large-scale project for enlargement and modification works on the department store in the centre of Helsinki is pending. Implementation of the project will call for modifying the town plan, which has already been initiated. 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 maintenance 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 a total of about 50 000 square metres of retail space. The total cost estimate for the project is approximately EUR 115 million. The works are estimated to be completed phase by phase by the end of 2009.
Moscow's first Bestseller store operating on the franchising principle was opened in February at the Mega North Shopping Centre. In addition, further two to three new Bestseller stores will be opened in Russia during 2005. A flagship Zara store is being built in the heart of Moscow as well as a fifth Zara store at the Rio Shopping Centre. As plans now stand, these stores will be opened in May-June. In addition to these, agreements have been made in Russia for opening two new Zara stores in Moscow.
The Department Store Division's capital expenditures totalled EUR 6.7 million.
Stockmann Auto's capital expenditures came to EUR 1.3 million and Hobby Hall's to EUR 0.3 million.
Seppälä's capital expenditures came to EUR 0.2 million. Seppälä opened its first store in Lithuania in Vilnius at the beginning of April. Seppälä is aiming to open new stores in Moscow and to expand its operations to St Petersburg in autumn 2005. In addition, Seppälä is moving to expand its operations in both Latvia and Lithuania during 2005.
Other capital expenditures came to EUR 0.4 million.
Annual General Meeting
The Annual General Meeting held on March 29 resolved that a dividend of EUR 1.00 per share, or a total of EUR 53.0 million, be paid for the 2004 financial year.
Article 2 of the Articles of Association was amended such that the company can also carry on restaurant business. Article 11 was amended in line with the revised provisions of the Companies Act such that a notice of a general meeting must be published no later than 17 days before the meeting. Article 12 was also amended in line with the revised provisions of the Companies Act such that shareholders must register for a general meeting no later than on the day mentioned in the notice of meeting, which can be 10 days before the meeting at the earliest.
The Annual General Meeting resolved, in accordance with the proposal of the Board's Appointments and Compensation Committee, that seven members be elected to seats on the Board and re-elected the incumbent directors, Lasse Koivu, managing director, Föreningen Konstsamfundet r.f.; Erkki Etola, managing director, Oy Etola Ab; Professor Eva Liljeblom; Kari Niemistö, managing director, Oy Selective Investor Ab; Christoffer Taxell, LL.M.; Carola Teir-Lehtinen, senior vice president, Corporate Communications, Fortum Corporation; and Henry Wiklund, managing director, Svenska litteratursällskapet i Finland r.f.; for a term of office up to the end of the next Annual General Meeting.
At its organization meeting on March 29, 2005, the Board of Directors re- elected Lasse Koivu as its chairman and Erkki Etola as its vice chairman. The Board of Directors re-elected Lasse Koivu chairman of the Appointments and Compensation Committee and re-elected as the other members of the committee Erkki Etola and Henry Wiklund.
Re-elected as regular auditors were Wilhelm Holmberg, Authorized Public Accountant, and Henrik Holmbom, Authorized Public Accountant. KPMG Oy Ab will continue as the deputy auditor.
The Annual General Meeting authorized the Board of Directors to decide on transferring a maximum of 401 172 of the company's own Series B shares (treasury shares) in one or more instalments. The authorization will be valid for one year.
Shares and shareholders
The company's market capitalization at the end of March was EUR 1 378.8 million (EUR 941.1 million). At the end of 2004 the market capitalization was EUR 1 140.8 million.
Stockmann's shares outperformed both the HEX General Index and the HEX Portfolio Index during the report period. At the end of March the stock exchange price of the Series A share was EUR 25.76, compared with EUR 21.10 at the end of 2004, and the Series B share was selling at EUR 25.85, as against EUR 21.70 at the end of 2004.
The 4 900 Stockmann shares subscribed for in December 2004 with the share options for 2000 were entered in the Trade Register on March 16, 2005 and they were admitted for public trading on the Helsinki Stock Exchange together with existing shares on March 17, 2005. As a consequence of the subscriptions the share capital was increased by EUR 9 800. Following the increase, the share capital is EUR 106 849 920.
Stockmann held 401 172 of its own Series B shares (treasury shares) at the end of March 2005 and they represented 0.8 per cent of all the shares outstanding as well as 0.1 per cent of the total votes. The shares were bought back at a total price of EUR 6.1 million.
The company's 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.
During the report period the Stockmann Group had an average payroll of 9 781 employees, or 1 129 more than in the comparison period. The growth in the number of employees was attributable mainly to the new department stores as well as the Zara stores in Moscow. Converted to a full-time basis, the average number of personnel increased by 862 employees and was 7 954.
At the end of March 2005, Stockmann had 3 016 employees working abroad. At the end of March 2004, Stockmann had 2 073 people working abroad.
Retail sales excluding the motor trade are estimated to increase by about 2-3 per cent in Finland in 2005. The volume of new vehicle sales is expected to decrease compared with 2004. The economies of Russia and the Baltic countries are anticipated to continue growing at a faster rate than the Finnish market. Sales in 2005 are expected to come in at about EUR 1.9 billion.
The Group's second-quarter earnings are anticipated to improve on the previous year's figure. The operating profit figures for the Department Store Division, Seppälä and Hobby Hall are estimated to increase from the second quarter of 2004, with Stockmann Auto's operating profit falling from the level of the comparison period. The earnings estimate for 2005, which was stated in the Annual Report, is unchanged. Stockmann's target is to post even better earnings in 2005 than in 2004.
Helsinki, April 21, 2005 STOCKMANN plc
|Balance sheet, Group EUR millions||March 31,||March 31,||Dec. 31,|
|Property, plant and equipment||268.8||236.1||268.4|
|Deferred tax assets||2.4||1.4||2.0|
|Total non-current assets||309.7||288.0||310.3|
|Securities held in current||1.6||71.3||28.7|
|Cash and cash equivalents||14.6||17.4||12.7|
|Total current assets||445.6||503.1||438.7|
|EQUITY AND LIABILITIES|
|Deferred tax liabilities||29.0||33.6||29.2|
|Interest-bearing short-term debt||67.8||16.3||52.7|
|Non interest-bearing short-term||229.4||234.9||183.8|
|Total current liabilities||297.1||251.2||236.6|
|Total equity and liabilities||755.3||791.1||749.0|
|Equity ratio, per cent||54.8||57.5||62.5|
|Gearing, per cent||16.0||-4.6||5.7|
|Cash flow from operations per||-0.57||-0.27||1.62|
Funds statement, Group 1-03/2005 1-03/2004 1-12/2004 EUR millions Cash flow from operations -30.3 -14.3 86.4 Cash flow into and from investments
|Cash from non-current assets||0.1||0.0||2.4|
|Cash flow into and from||-9.6||-18.1||-54.7|
|Subscriptions with options||0.3||9.5|
|Change in short-term loans,||15.0||-0.5||1.8|
|Financial cash flow, total||14.7||-0.2||-111.7|
|Change in cash funds||-25.2||-32.7||-79.9|
|Cash funds at start of the period||41.4||121.3||121.3|
|Cash funds at end of the period||16.2||88.6||41.4|
|Income statement, Group, EUR||1-03/||1-03/||Change||1-12/|
|Other operating income||0.0||0.0||4||2.4|
|Materials and consumables||-228.1||-232.9||-2||-951.5|
|Salaries and employee||-51.0||-47.8||7||-202.2|
|Other operating expenses||-45.0||-43.9||3||-183.3|
|Finance income and costs||0.1||0.5||-74||-0.9|
|Profit before tax||1.7||4.5||-61||78.9|
|Profit for the period||1.2||3.2||-63||59.3|
|Net profit for the period||1.2||3.2||-63||59.3|
|Earnings per share, EUR||0.02||0.05||-55||1.13|
|Earnings per share, diluted,||0.02||0.05||-56||1.11|
|Operating profit, per cent||0.48||1.19||-60||5.52|
|Equity per share, EUR||7.81||8.71||-10||8.83|
|Return on equity, per cent,||13.2||*||12.2|
* No information according to IFRS for the year 2003
Segments Sales, EUR millions
|Department Store Division||213.4||199.6||7||938.8|
|Eliminations + shared||0.2||0.2||0.9|
|Revenue, EUR millions|
|Department Store Division||179.8||167.8||7||789.3|
|Eliminations + shared||0.2||0.5||1.5|
|Operating profit, EUR|
|Department Store Division||0.6||3.4||-81||63.7|
|Investments, gross, EUR|
|Department Store Division||6.7||15.1||-55||48.8|
|Assets, EUR millions||1-03/||1-03/||Change||1-12/|
|Department Store Division||461.8||444.2||4||443.1|
|Department Store Division||89.0||83.8||295||96.5|
|Sales, EUR millions|
|Finland 1)||331.2||354.1||-6||1 492.9|
|Baltic states 2)||32.7||27.1||21||119.5|
|Finland, per cent||82.7||87.9||86.0|
|Finland 1)||274.9||294.0||-7||1 237.9|
|Baltic states 2)||27.8||23.3||19||102.0|
|Finland, per cent||82.3||87.5||85.7|
|Baltic states 2)||-0.2||-2.0||-91||0.2|
|Baltic states 2)||0.3||1.6||-81||3.1|
|Finland, per cent||60.7||27.3||37.8|
|Baltic states 2)||74.2||80.7||-8||70.9|
|Finland, per cent||79.4||83.5||80.4|
1) Department Store Divisions, Stockmann Auto, Hobby Hall and Seppälä 2) Department Store Divisions, Stockmann Auto, Hobby Hall and Seppälä 3) Department Store Divisions and Seppälä
Statement of changes in
|Group, EUR millions||Equity||fund||fund||reserve||funds|
|Equity December 31, 2003||105.3||147.1||6.2||0.2||43.7|
|Transfer to other funds||0.1|
|Cash flow hedges||-0.9|
|Profit for the period|
|Equity March 31, 2004||105.3||147.3||0.0||0.2||43.6|
|Equity December 31, 2004||106.8||154.8||0.0||0.2||44.4|
|Transfer to other funds||0.0|
|Cash flow hedges||-2.0|
|Profit for the period|
|Equity March 31, 2005||106.8||154.8||0.0||0.2||42.4|
Statement of changes in equity Trans-
|Group, EUR millions||interest||reserve||earnings||Total|
|Equity December 31, 2003||0.0||-0.1||244.7||547.1|
|Deferred tax liabilities/assets||-7.5||-7.5|
|Adjusted equity January 1, 2004||0.0||0.0||225.4||522.0|
|Transfer to other funds||-0.1||0.0|
|Cash flow hedges||-0.9|
|Profit for the period||0.0||3.2||3.2|
|Equity March 31, 2004||0.0||0.1||158.2||454.8|
|Equity December 31, 2004||0.0||0.2||161.9||467.9|
|Transfer to other funds||0.1||0.1|
|Cash flow hedges||-2.0|
|Profit for the period||0.0||1.2||1.2|
|Equity March 31, 2005||0.0||0.2||110.1||414.3|
Contingent liabilities, Group 31/3/05 31/3/04 31/12/04 EUR millions
|Mortgages on land and buildings||1.7||1.7||1.7|
|Lease agreements on business|
|Within one year||60.0||60.1||59.3|
|After one year||363.5||405.6||397.5|
|Foreign exchange derivatives||177.0||72.8||86.9|
|Interest rate derivatives||35.0||35.0||35.0|
|Country||Currency||March 31, March||Dec. 31,|
Income statement, Group,
|quarterly, EUR millions||2005||2004||2004||2004||2004|
|Other operating income||0.0||0.1||0.0||2.3||0.0|
|Materials and consumables||-228.1||-266.6||-221.8||-230.2||-232.9|
|Salaries and employee||-51.0||-58.9||-44.2||-51.2||-47.8|
|Other operating expenses||-45.0||-54.0||-42.1||-43.3||-43.9|
|Finance income and costs||0.1||-0.1||-0.8||-0.4||0.5|
|Profit before tax||1.7||42.2||13.9||18.2||4.5|
|Profit for the period||1.2||29.7||10.0||16.4||3.2|
|Net profit for the period||1.2||29.7||10.0||16.4||3.2|
|Earnings per share, EUR|
|Sales, EUR millions|
|Department Store Division||213.4||310.2||216.6||212.4||199.6|
|Eliminations + shared||0.2||0.2||0.2||0.3||0.2|
|Revenue, EUR millions|
|Department Store Division||179.8||260.8||182.4||178.4||167.8|
|Eliminations + shared||0.2||0.2||0.4||0.5||0.5|
|Department Store Division||0.6||37.1||11.7||11.5||3.4|
Reconciliation of shareholders' equity in the comparative period
|Balance Sheet, IFRS March 1, 2004,||FAS||Adjust-||IFRS|
|Group, EUR millions||ments|
|Property, plant and equipment||229.9||6.2||236.1|
|Deferred tax assets||0.8||0.5||1.4|
|Total non-current assets||301.0||-13.1||288.0|
|Non interest-bearing receivables||85.8||1.4||87.2|
|Securities held in current assets||71.3||71.3|
|Cash and cash equivalents||17.4||17.4|
|Total current assets||500.7||2.4||503.1|
|EQUITY AND LIABILITIES|
|Deferred tax liabilities||25.9||7.7||33.6|
|Interest-bearing short-term debt||16.3||16.3|
|Non interest-bearing short-term debt||229.8||5.1||234.9|
|Total current liabilities||246.1||5.1||251.2|
|Total equity and liabilities||801.7||-10.6||791.1|
Income statement, Group, EUR millions Income statement 1 January-31 March 2004 FAS Adjust- IFRS ments
|Other operating income||0.0||0.0||0.0|
|Materials and consumables||-232.9||0.0||-232.9|
|Salaries and employee benefits||-47.8||0.0||-47.8|
|Other operating expenses||-46.3||2.5||-43.9|
|Finance income and costs||3.1||-2.6||0.5|
|Profit before tax||4.8||-0.3||4.5|
|Profit for the period||3.4||-0.2||3.2|
|Net profit for the period||3.4||-0.2||3.2|
Hannu Penttilä CEO
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