Tulikivi Corporation Financial Statement 10 February 2012 at
14.50
FINANCIAL STATEMENT RELEASE Jan -Dec 2011
- The Tulikivi Group's fourth-quarter net sales were EUR 15.5 million (EUR 16.6 million, Q4/2010), the operating result was EUR -1.0 (0.8) million and the result before taxes was EUR.
-1.2 (0.7) million. The result was adversely affected by the restructuring provision of EUR 1.0 million for adjustment measures.
- For the full year 2011, net sales amounted to EUR 58.8 million (EUR 55.9 million in 2010), the operating result was EUR -2.4 (-0.3) million and the result before taxes EUR -3.1 (-1.0) million. The result was adversely affected by non-recurring expenses of EUR 1.6 million caused by the centralisation and adjustment measures. Earnings per share amounted to EUR -0.07 (-0.02).
- Year-end order books were at EUR 5.7 (6.3) million.
- Cash flow from operating activities before investments was EUR 1.4 (2.9) million.
- The Board will propose to the Annual General Meeting that no dividend be paid.
- Future outlook: 2012 net sales are expected to be at the same level as 2011 The company has carried out centralisation and adjustment measures, which will bring significant savings and enable a positive operating profit to be posted.
Summary of the financial statement release 01-12/2011. The full financial statement release is attached to this release.
Key financial ratios
1-12/ 1-12/ Change, 1-12/ 10-12 Change, 2011 2010 % 2011 2010 % --------------------------------------------------------- Sales, 58.8 55.9 5.2 15.5 16.6 -6.6 MEUR --------------------------------------------------------- Operating -2.4 -0.3 -700.0 -1.0 0.8 -225.0 profit/ loss, MEUR --------------------------------------------------------- Profit -3.1 -1.0 -210.0 -1.2 0.7 -271.4 before tax, MEUR --------------------------------------------------------- Total -2.4 -0.7 -242.9 -1.0 0.5 -280.0 compre- hensive income for the period, MEUR --------------------------------------------------------- Earnings -0.07 -0.02 -250.0 -0.03 0.01 -400.0 per share/ Euro --------------------------------------------------------- Net cash 1.4 2.9 flow from operating activities, MEUR --------------------------------------------------------- Equity 33.3 37.0 ratio, % --------------------------------------------------------- Net 96.5 68.1 indebt- ness ratio, % --------------------------------------------------------- Return -4.8 -0.1 -8.6 7.3 on invest- ments,% ---------------------------------------------------------
Managing Director Heikki Vauhkonen
"2011 began in positive spirits. Strengthened consumer confidence increased demand for our products both in Finland and abroad. In the early part of the year, demand for fireplaces was also boosted by continuously rising consumer energy prices and the cold winter.
Due to the euro crisis, consumer confidence weakened substantially, and this began to show in the order flows for Tulikivi products in the autumn. As a result of the economic uncertainties, it was not possible to achieve the net sales growth and profitability targets. Net sales of Tulikivi's interior stone products and fireplaces in Finland performed positively for the year as a whole. Fireplace exports and sales of lining stone products were at the previous year's level.
At the beginning of the final quarter, consumer confidence weakened significantly, and at the same time the flow of fireplace orders decreased both on the domestic market and in exports. In the subcontracted lining stone business, demand weakened substantially in late autumn, due to the euro crisis and the exceptionally warm autumn weather.
Despite the challenges in the operating environment, however, a number of strategically significant actions were taken during the year. Tulikivi decided to divest the loss-making utility ceramics and building stone businesses. The new enterprise resource planning (ERP) system introduced at the start of 2012 will improve the efficiency of operations in Tulikivi's various processes. With the adjustment measures carried out in 2011, the company is seeking around EUR 3 million in structural savings for 2012.
The sauna business and the Tulikivi Green products, which are well-suited to low-energy construction, were developed considerably during the year and are important for the company's growth targets.
At Tulikivi's core there is now a uniform product range: fireplaces, sauna products and interior stone products. The redesign of the corporate image also reflects the renewal of the company and its products as well as a consistent approach.
In addition to the expanded product range, the distribution network has also been enlarged. In exports, a number of new distribution outlets have been opened and imports to the Czech Republic and Slovakia were begun. In Finland, the number of Tulikivi Service Points has grown. Tulikivi Corporation signed a chain agreement with Rautakesko Oy, effective on 1 March 2012, concerning the distribution of fireplaces, sauna heaters, design fireplaces and interior stone products in Finland.
Demand during the past few weeks has been higher than in the autumn, but there are still many uncertainties related to demand. The actions taken to boost sales and profitability will enable the pursuit of a positive result in 2012."
Focusing on core businesses and need for adjustment measures
The corporate cost structure was streamlined during the year by eliminating sections outside the core business and adjusting the number of staff.
In June Tulikivi decided to concentrate on its core business. The Group's core businesses are now the manufacture of fireplaces and sauna and interior stone products, development of product concepts and their marketing to consumers.
At the end of the year, Tulikivi divested the loss-making utility ceramics and building stone businesses. As a result, the building stone business in Taivassalo was sold, and manufacture of natural stone products was concentrated at the Espoo factory. A major share of the machine work in quarrying was outsourced. As a result of these arrangements, the number of employees in the Group was reduced by 55 people, of whom 43 people were made redundant. The net cost impact of these arrangements was EUR 0.6 million. The arrangement will reduce annual net sales by slightly under EUR 3.0 million.
Towards the end of the year, Tulikivi decided to carry out adjustment measures as the sales outlook in Tulikivi's principal markets deteriorated due to the on-going economic crisis. As a result of the codetermination negotiations, 51 employees are to be made redundant. It was also agreed that the company may need to implement layoffs of a maximum of 90 days in 2012. Owing to the adjustment decision, a restructuring provision was recognised which decreased the year's result by approximately EUR 1 million.
Thanks to the centralisation and adjusting measures, the corporate cost structure in 2012 will be substantially lighter than last year. With the actions taken, the company is seeking around EUR 3 million in savings for 2012.
Net sales and result
The Tulikivi Group's fourth-quarter net sales were EUR 15.5 million (EUR 16.6 million in Q4/2010), the operating result was EUR -1.0 (0.8) million and the result before taxes EUR -1.2 (0.7) million. The fourth-quarter result was adversely affected by the restructuring provision of EUR 1.0 million for adjustment measures.
The full year net sales of the Tulikivi Group totalled EUR 58.8 million (EUR 55.9 million in 2010). The net sales of the Fireplaces Segment amounted to EUR 53.5 (50.8) million, and those of the Natural Stone Segment were EUR 5.3 (5.1) million. Towards the end of the year, weakening consumer confidence resulted in lower demand and the target for net sales was not achieved. Net sales of the Natural Stone Segment include EUR 0.4 million in net sales resulting from the sale of the building stone business's inventories. Otherwise the effect of the sale of the building stone business on net sales for 2011 was EUR -0.6 million. The like-for-like net sales of the Natural Stone Segment remained at the previous year's level.
Net sales in Finland totalled EUR 31.6 (29.2) million or 53.7 (52.3) per cent. Exports accounted for EUR 27.2 (26.7) million of the net sales total. The principal export countries were Sweden, France, Germany, Belgium and Russia. The net sales of fireplaces and lining stone products remained at the previous year's level. Demand decreased towards the end of the year, in lining stone products in particular.
The consolidated operating result was EUR -2.4 (-0.3) million. The Fireplaces Segment's operating profit was EUR 0.2 (2.2) million, while the operating result for the Natural Stone Products Segment was EUR -0.6 (-0.5) million, and the expenses not allocated to segments were EUR
-2.0 (-2.0) million. The operating result was adversely affected by non-recurring expenses of EUR 1.6 million net caused by the centralisation and adjustment measures. Of these expenses, EUR 1.4 million is allocated to the Fireplaces Segment and EUR 0.2 million net to the Natural Stone Products Segment. In addition to these non-recurring expenses, the operating result for the financial year was burdened by expenses of EUR 0.8 million from the launch of electric sauna heaters, the expansion of the Finnish sales network, the redesign of the corporate image and the introduction of the new ERP system.
The consolidated result before taxes was EUR -3.1 (-1.0) million and comprehensive income was EUR -2.4 (-0.7) million. The consolidated return on investment was -4.9 (-0.1) per cent. Earnings per share amounted to EUR -0.07
(-0.02).
Financing and investments
Cash flow from operating activities before investments was EUR 1.4 (2.9) million. Working capital decreased by EUR 1.1 million during the financial year and came to EUR 6.9 million. Interest-bearing debt was EUR 24.9 (25.3) million, and net financial expenses were EUR 0.7 (0.7) million. The current ratio was 1.5 per cent (1.9). The equity ratio was 33.3 (37.0) per cent and the ratio of interest-bearing net debt to equity, or gearing, was 96.5 (68.1) per cent. The equity per share amounted to EUR 0.51 (0.60). In the consolidated balance sheet the soapstone reserves owned or controlled by the company have been recognized at cost.
At the end of the financial year, the Group's cash and other liquid assets came to EUR 6.8 (10.2) million, and the total of undrawn credit facilities and unused credit limits amounted to EUR 4.1 (2.5) million. The Group's debt financing, totalling EUR 14.5 (13.9) million, includes covenant conditions which are tied to the Group's equity. All covenant conditions were met on the balance sheet date.
The Group's investments in production, quarrying and development came to total of EUR 4.9 (3.4) million. The most significant investment in 2011 was the renewal of the ERP system. The new ERP (Enterprise resource planning) system was introduced on 2 January 2012. It will harmonise Tulikivi's internal processes in the various production plants and businesses. It will also make the management of the partner network and the entire delivery chain more efficient. Other major investments included replacement investments in the production plants and quarry investments.
Research and development expenses totalled EUR 2.1 (2.2) million, and their relative share of net sales was 3.8 (3.9) per cent. A total of EUR 0.6 (0.5) million of this figure, after deduction of subsidies, was capitalized. A Tulikivi range of electric sauna heaters was launched during the year, and development of a range of wood-fired sauna heaters was started. Representing a new generation of fireplaces, the new modular design Suvas fireplace was launched during 2011, as well as a range of decorated ceramic linings for fireplaces. Development of the Green products continued. With the Green products Tulikivi seeks to meet the energy efficiency and environmental requirements for future buildings.
Personnel
The Group employed an average of 427 (404) people during the financial year. The average was calculated according to the period of employment, taking account of the impact of layoffs. The number of personnel at the end of the year was 436 (497) people. Of these employees, 389 (426) were employed by the Fireplaces Segment, 24 (48) by the Natural Stone Products Segment and 23 (23) in activities not allocated to a segment. The number of personnel decreased during the year by 55 people as a result of the centralisation measures and will further increase by 51 people in 2012 as a result of the adjustment measures decided upon in December.
In all, 98.5 per cent of the employment relationships were permanent and 1.5 per cent were temporary. Salaries and bonuses during the year totalled EUR 17.4 (15.7) million. The figure includes EUR 0.9 million in restructuring costs.
Resolutions of the Annual General Meeting
Dividends
Tulikivi Corporation's Annual General Meeting, held on 14 April 2011, resolved to pay a dividend of EUR 0.0250 on A shares and EUR 0.0233 on K shares. The dividend was paid out on 28 April 2011.
Decision-making bodies
The following persons were elected to the Board of Directors of the parent company and domestic business subsidiaries: Juhani Erma, Olli Pohjanvirta, Markku Rönkkö, Pasi Saarinen, Maarit Toivanen-Koivisto, Heikki Vauhkonen and Matti Virtaala. The Board of Directors elected from among its members Matti Virtaala as Chairman. KPMG Oy Ab, Authorized Public Accountants, was elected as the auditor.
Major business risks
During the financial year, the actions taken to improve profitability will substantially streamline the corporate cost structure. Other development projects to enhance risk management were also continued. As a result, new product lines were launched to complement Tulikivi's core products. In addition to the expanded product range, the distribution network has also been enlarged on the domestic market and in exports.
Any major downturn that might be caused by the euro area crisis could decrease the demand for the company's products and the company's profitability and equity. The company's balance sheet assets include goodwill, the value of which is based on the management's estimates. If these estimates fail to materialise, it is possible that impairment losses would have to be recognised in connection with the impairment testing processes. Weakened profitability and a drop in equity could lead to a deterioration the company's financial position.
Events following the end of the financial year
The Group's new ERP system was introduced on 2 January 2012. The implementation has progressed as planned.
Tulikivi Corporation signed a chain agreement with Rautakesko Oy, effective on 1 March 2012, concerning the distribution of fireplaces, sauna heaters, design fireplaces and interior stone products in Finland. This will further strengthen the sales channel for fireplaces while establishing appropriate conditions for the efficient distribution of sauna heaters and interior stone products in the domestic market.
Future outlook
The substantial weakening of consumer confidence seen in the principal markets has ceased, and during the past few weeks demand has been higher than last autumn, although the outlook continues to be uncertain.
2012 net sales are expected to be at the same level as 2011. The company has carried out centralisation and adjustment measures, which will bring significant savings and enable a positive operating profit to be posted.
Order books at the end of the year amounted to EUR 5.7 (6.3) million, part of which concerns end-of-year deliveries.
Board of Directors' proposal on use of distributable equity
The parent company's distributable equity amounts to EUR 6 377 000. The Board will propose to the Annual General Meeting that no dividend be paid.
TULIKIVI CORPORATION
Board of Directors Matti Virtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
Additional information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com
- Chairman of the Board of Directors Matti Virtaala, +358 207 636 666 - Managing Director Heikki Vauhkonen, +358 207 636 555
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FINANCIAL STATEMENT RELEASE Jan -Dec 2011
- The Tulikivi Group's fourth-quarter net sales were EUR 15.5 million (EUR 16.6 million, Q4/2010), the operating result was EUR -1.0 (0.8) million and the result before taxes was EUR.
-1.2 (0.7) million. The result was adversely affected by the restructuring provision of EUR 1.0 million for adjustment measures.
- For the full year 2011, net sales amounted to EUR 58.8 million (EUR 55.9 million in 2010), the operating result was EUR -2.4 (-0.3) million and the result before taxes EUR -3.1 (-1.0) million. The result was adversely affected by non-recurring expenses of EUR 1.6 million caused by the centralisation and adjustment measures. Earnings per share amounted to EUR -0.07 (-0.02).
- Year-end order books were at EUR 5.7 (6.3) million.
- Cash flow from operating activities before investments was EUR 1.4 (2.9) million.
- The Board will propose to the Annual General Meeting that no dividend be paid.
- Future outlook: 2012 net sales are expected to be at the same level as 2011 The company has carried out centralisation and adjustment measures, which will bring significant savings and enable a positive operating profit to be posted.
Summary of the financial statement release 01-12/2011. The full financial statement release is attached to this release.
Key financial ratios
1-12/ 1-12/ Change, 1-12/ 10-12 Change, 2011 2010 % 2011 2010 % --------------------------------------------------------- Sales, 58.8 55.9 5.2 15.5 16.6 -6.6 MEUR --------------------------------------------------------- Operating -2.4 -0.3 -700.0 -1.0 0.8 -225.0 profit/ loss, MEUR --------------------------------------------------------- Profit -3.1 -1.0 -210.0 -1.2 0.7 -271.4 before tax, MEUR --------------------------------------------------------- Total -2.4 -0.7 -242.9 -1.0 0.5 -280.0 compre- hensive income for the period, MEUR --------------------------------------------------------- Earnings -0.07 -0.02 -250.0 -0.03 0.01 -400.0 per share/ Euro --------------------------------------------------------- Net cash 1.4 2.9 flow from operating activities, MEUR --------------------------------------------------------- Equity 33.3 37.0 ratio, % --------------------------------------------------------- Net 96.5 68.1 indebt- ness ratio, % --------------------------------------------------------- Return -4.8 -0.1 -8.6 7.3 on invest- ments,% ---------------------------------------------------------
Managing Director Heikki Vauhkonen
"2011 began in positive spirits. Strengthened consumer confidence increased demand for our products both in Finland and abroad. In the early part of the year, demand for fireplaces was also boosted by continuously rising consumer energy prices and the cold winter.
Due to the euro crisis, consumer confidence weakened substantially, and this began to show in the order flows for Tulikivi products in the autumn. As a result of the economic uncertainties, it was not possible to achieve the net sales growth and profitability targets. Net sales of Tulikivi's interior stone products and fireplaces in Finland performed positively for the year as a whole. Fireplace exports and sales of lining stone products were at the previous year's level.
At the beginning of the final quarter, consumer confidence weakened significantly, and at the same time the flow of fireplace orders decreased both on the domestic market and in exports. In the subcontracted lining stone business, demand weakened substantially in late autumn, due to the euro crisis and the exceptionally warm autumn weather.
Despite the challenges in the operating environment, however, a number of strategically significant actions were taken during the year. Tulikivi decided to divest the loss-making utility ceramics and building stone businesses. The new enterprise resource planning (ERP) system introduced at the start of 2012 will improve the efficiency of operations in Tulikivi's various processes. With the adjustment measures carried out in 2011, the company is seeking around EUR 3 million in structural savings for 2012.
The sauna business and the Tulikivi Green products, which are well-suited to low-energy construction, were developed considerably during the year and are important for the company's growth targets.
At Tulikivi's core there is now a uniform product range: fireplaces, sauna products and interior stone products. The redesign of the corporate image also reflects the renewal of the company and its products as well as a consistent approach.
In addition to the expanded product range, the distribution network has also been enlarged. In exports, a number of new distribution outlets have been opened and imports to the Czech Republic and Slovakia were begun. In Finland, the number of Tulikivi Service Points has grown. Tulikivi Corporation signed a chain agreement with Rautakesko Oy, effective on 1 March 2012, concerning the distribution of fireplaces, sauna heaters, design fireplaces and interior stone products in Finland.
Demand during the past few weeks has been higher than in the autumn, but there are still many uncertainties related to demand. The actions taken to boost sales and profitability will enable the pursuit of a positive result in 2012."
Focusing on core businesses and need for adjustment measures
The corporate cost structure was streamlined during the year by eliminating sections outside the core business and adjusting the number of staff.
In June Tulikivi decided to concentrate on its core business. The Group's core businesses are now the manufacture of fireplaces and sauna and interior stone products, development of product concepts and their marketing to consumers.
At the end of the year, Tulikivi divested the loss-making utility ceramics and building stone businesses. As a result, the building stone business in Taivassalo was sold, and manufacture of natural stone products was concentrated at the Espoo factory. A major share of the machine work in quarrying was outsourced. As a result of these arrangements, the number of employees in the Group was reduced by 55 people, of whom 43 people were made redundant. The net cost impact of these arrangements was EUR 0.6 million. The arrangement will reduce annual net sales by slightly under EUR 3.0 million.
Towards the end of the year, Tulikivi decided to carry out adjustment measures as the sales outlook in Tulikivi's principal markets deteriorated due to the on-going economic crisis. As a result of the codetermination negotiations, 51 employees are to be made redundant. It was also agreed that the company may need to implement layoffs of a maximum of 90 days in 2012. Owing to the adjustment decision, a restructuring provision was recognised which decreased the year's result by approximately EUR 1 million.
Thanks to the centralisation and adjusting measures, the corporate cost structure in 2012 will be substantially lighter than last year. With the actions taken, the company is seeking around EUR 3 million in savings for 2012.
Net sales and result
The Tulikivi Group's fourth-quarter net sales were EUR 15.5 million (EUR 16.6 million in Q4/2010), the operating result was EUR -1.0 (0.8) million and the result before taxes EUR -1.2 (0.7) million. The fourth-quarter result was adversely affected by the restructuring provision of EUR 1.0 million for adjustment measures.
The full year net sales of the Tulikivi Group totalled EUR 58.8 million (EUR 55.9 million in 2010). The net sales of the Fireplaces Segment amounted to EUR 53.5 (50.8) million, and those of the Natural Stone Segment were EUR 5.3 (5.1) million. Towards the end of the year, weakening consumer confidence resulted in lower demand and the target for net sales was not achieved. Net sales of the Natural Stone Segment include EUR 0.4 million in net sales resulting from the sale of the building stone business's inventories. Otherwise the effect of the sale of the building stone business on net sales for 2011 was EUR -0.6 million. The like-for-like net sales of the Natural Stone Segment remained at the previous year's level.
Net sales in Finland totalled EUR 31.6 (29.2) million or 53.7 (52.3) per cent. Exports accounted for EUR 27.2 (26.7) million of the net sales total. The principal export countries were Sweden, France, Germany, Belgium and Russia. The net sales of fireplaces and lining stone products remained at the previous year's level. Demand decreased towards the end of the year, in lining stone products in particular.
The consolidated operating result was EUR -2.4 (-0.3) million. The Fireplaces Segment's operating profit was EUR 0.2 (2.2) million, while the operating result for the Natural Stone Products Segment was EUR -0.6 (-0.5) million, and the expenses not allocated to segments were EUR
-2.0 (-2.0) million. The operating result was adversely affected by non-recurring expenses of EUR 1.6 million net caused by the centralisation and adjustment measures. Of these expenses, EUR 1.4 million is allocated to the Fireplaces Segment and EUR 0.2 million net to the Natural Stone Products Segment. In addition to these non-recurring expenses, the operating result for the financial year was burdened by expenses of EUR 0.8 million from the launch of electric sauna heaters, the expansion of the Finnish sales network, the redesign of the corporate image and the introduction of the new ERP system.
The consolidated result before taxes was EUR -3.1 (-1.0) million and comprehensive income was EUR -2.4 (-0.7) million. The consolidated return on investment was -4.9 (-0.1) per cent. Earnings per share amounted to EUR -0.07
(-0.02).
Financing and investments
Cash flow from operating activities before investments was EUR 1.4 (2.9) million. Working capital decreased by EUR 1.1 million during the financial year and came to EUR 6.9 million. Interest-bearing debt was EUR 24.9 (25.3) million, and net financial expenses were EUR 0.7 (0.7) million. The current ratio was 1.5 per cent (1.9). The equity ratio was 33.3 (37.0) per cent and the ratio of interest-bearing net debt to equity, or gearing, was 96.5 (68.1) per cent. The equity per share amounted to EUR 0.51 (0.60). In the consolidated balance sheet the soapstone reserves owned or controlled by the company have been recognized at cost.
At the end of the financial year, the Group's cash and other liquid assets came to EUR 6.8 (10.2) million, and the total of undrawn credit facilities and unused credit limits amounted to EUR 4.1 (2.5) million. The Group's debt financing, totalling EUR 14.5 (13.9) million, includes covenant conditions which are tied to the Group's equity. All covenant conditions were met on the balance sheet date.
The Group's investments in production, quarrying and development came to total of EUR 4.9 (3.4) million. The most significant investment in 2011 was the renewal of the ERP system. The new ERP (Enterprise resource planning) system was introduced on 2 January 2012. It will harmonise Tulikivi's internal processes in the various production plants and businesses. It will also make the management of the partner network and the entire delivery chain more efficient. Other major investments included replacement investments in the production plants and quarry investments.
Research and development expenses totalled EUR 2.1 (2.2) million, and their relative share of net sales was 3.8 (3.9) per cent. A total of EUR 0.6 (0.5) million of this figure, after deduction of subsidies, was capitalized. A Tulikivi range of electric sauna heaters was launched during the year, and development of a range of wood-fired sauna heaters was started. Representing a new generation of fireplaces, the new modular design Suvas fireplace was launched during 2011, as well as a range of decorated ceramic linings for fireplaces. Development of the Green products continued. With the Green products Tulikivi seeks to meet the energy efficiency and environmental requirements for future buildings.
Personnel
The Group employed an average of 427 (404) people during the financial year. The average was calculated according to the period of employment, taking account of the impact of layoffs. The number of personnel at the end of the year was 436 (497) people. Of these employees, 389 (426) were employed by the Fireplaces Segment, 24 (48) by the Natural Stone Products Segment and 23 (23) in activities not allocated to a segment. The number of personnel decreased during the year by 55 people as a result of the centralisation measures and will further increase by 51 people in 2012 as a result of the adjustment measures decided upon in December.
In all, 98.5 per cent of the employment relationships were permanent and 1.5 per cent were temporary. Salaries and bonuses during the year totalled EUR 17.4 (15.7) million. The figure includes EUR 0.9 million in restructuring costs.
Resolutions of the Annual General Meeting
Dividends
Tulikivi Corporation's Annual General Meeting, held on 14 April 2011, resolved to pay a dividend of EUR 0.0250 on A shares and EUR 0.0233 on K shares. The dividend was paid out on 28 April 2011.
Decision-making bodies
The following persons were elected to the Board of Directors of the parent company and domestic business subsidiaries: Juhani Erma, Olli Pohjanvirta, Markku Rönkkö, Pasi Saarinen, Maarit Toivanen-Koivisto, Heikki Vauhkonen and Matti Virtaala. The Board of Directors elected from among its members Matti Virtaala as Chairman. KPMG Oy Ab, Authorized Public Accountants, was elected as the auditor.
Major business risks
During the financial year, the actions taken to improve profitability will substantially streamline the corporate cost structure. Other development projects to enhance risk management were also continued. As a result, new product lines were launched to complement Tulikivi's core products. In addition to the expanded product range, the distribution network has also been enlarged on the domestic market and in exports.
Any major downturn that might be caused by the euro area crisis could decrease the demand for the company's products and the company's profitability and equity. The company's balance sheet assets include goodwill, the value of which is based on the management's estimates. If these estimates fail to materialise, it is possible that impairment losses would have to be recognised in connection with the impairment testing processes. Weakened profitability and a drop in equity could lead to a deterioration the company's financial position.
Events following the end of the financial year
The Group's new ERP system was introduced on 2 January 2012. The implementation has progressed as planned.
Tulikivi Corporation signed a chain agreement with Rautakesko Oy, effective on 1 March 2012, concerning the distribution of fireplaces, sauna heaters, design fireplaces and interior stone products in Finland. This will further strengthen the sales channel for fireplaces while establishing appropriate conditions for the efficient distribution of sauna heaters and interior stone products in the domestic market.
Future outlook
The substantial weakening of consumer confidence seen in the principal markets has ceased, and during the past few weeks demand has been higher than last autumn, although the outlook continues to be uncertain.
2012 net sales are expected to be at the same level as 2011. The company has carried out centralisation and adjustment measures, which will bring significant savings and enable a positive operating profit to be posted.
Order books at the end of the year amounted to EUR 5.7 (6.3) million, part of which concerns end-of-year deliveries.
Board of Directors' proposal on use of distributable equity
The parent company's distributable equity amounts to EUR 6 377 000. The Board will propose to the Annual General Meeting that no dividend be paid.
TULIKIVI CORPORATION
Board of Directors Matti Virtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
Additional information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com
- Chairman of the Board of Directors Matti Virtaala, +358 207 636 666 - Managing Director Heikki Vauhkonen, +358 207 636 555
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