CEO’s Review from Annual Accounts 2022
The market environment and trading conditions in the fishing tackle business were very challenging in 2022. We witnessed a sharp market contraction in the post-covid world, which was aggravated by strong destocking at retail level. Additionally, colder and prolonged winter 21/22 in the northern hemisphere shortened the open water fishing season in the first half of 2022. High inflation, low consumer confidence and the war in Ukraine had further adverse impacts on business performance. As a result, our net sales decreased by 7% to 274.4 MEUR in 2022 and a reduction of comparable EBIT for the full year to 15.3 MEUR.
Supply chain was impacted during the year by COVID in China as well as fluctuating freight prices. However, several inventory management initiatives were successfully executed in the second half of 2022, which resulted in 17.8 MEUR decrease in inventory from June to December and the year-end inventory was 99.9 MEUR. One of the highlights of the year was the successful launch of Okuma rods and reels in Europe, which exceeded internal sales targets for the first full year.
Execution of our strategy progressed well during the year. We have successfully centralized Northern European warehouses to the Rapala VMC campus in Pärnu, Estonia. At the same time, we have built new production capacity in Estonia as a result of ramping down the production facility in Russia. Ramping down of production in Russia will be completed during H1 2023. Warehouse operations were also consolidated in the USA from two locations to one site in Eagan, Minnesota, to drive operational efficiencies.
High focus was also put on product development & innovations, and the future product pipeline is strong for the years ahead. Market conditions are expected to stay challenging still in 2023 as a result of continued high retail inventories and lower than expected retail sales of winter products both in North America and Nordics due to adverse winter conditions this season. Additionally, the global macroeconomic situation also affects purchase behaviour at retail and consumer level. Consequently, the Group expects comparable EBIT to decrease from 2022. Despite the headwinds in 2023, we are in a strong position in the business for the future with several growth projects in all key categories and improved supply chain management capabilities.
CHAIRMAN OF THE BOARD, PRESIDENT and CEO