The Rapala Group's strategic objective is profitable growth.
The objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and to maximize shareholder value. The Group's objective for capital management is to keep:
- Gearing ratio below 150% and
- Net interest-bearing debt to EBITDA (rolling 12 months) below 3.8.
Objectives are in line with the financial covenants associated with the Group's loan arrangement.
Stock Exchange Release, November 16, 2020
On March 26, Rapala VMC Corporation withdrew its guidance on the outlook for 2020 due to the impact of the COVID-19 pandemic. Rapala VMC Corporation now reinstates its guidance on the outlook for 2020 and expects net sales to decrease from 2019, reported operating profit to decrease or stay at same levels as in 2019 and comparable operating profit to increase from 2019.
Items affecting comparability were 4.4 MEUR in the full-year of 2019 and are expected to be in the region of 10 MEUR in 2020 mainly driven by ramp-down of Asian lure manufacturing operations as well as by the ongoing restructuring program published in October 2019.
The consumer demand of group products has continued at good level. Uncertainties remain for the rest of the year and the COVID-19 pandemic continues to pose some risks for the full-year performance. The pandemic can impact the operating environment of the company in various ways, including lockdowns, store closures, social distancing and an overall change in consumer confidence. Example of risk quantification until the end of the year: Total warehouse closures and full lockdowns in Central Europe and North America would generate up to 4 MEUR negative impact on full-year operating profit.
A more detailed review of possible risks and uncertainties, particularly relating to the pandemic, can be found on the company’s website www.rapalavmc.com and in the Risks and business uncertainties -section of the half-year financial report released on July 16, 2020.
Outlook for 2020:
In 2020, Rapala VMC Corporation expects net sales to decrease from 2019, reported operating profit to decrease or stay at same levels as in 2019 and comparable operating profit to increase from 2019.
Half Year Financial Report H1/2020, published on July 16, 2020
The Group withdrew its guidance for 2020 on March 26, 2020 due to lack of visibility caused by the COVID-19 pandemic. End-consumer demand for recreational fishing products is currently on a good level in the Group’s key markets. The Group’s supply chain, including own factories and subcontractors, is currently working robustly and fulfilling customer orders. However, there is still lack of visibility caused by direct and indirect impacts of the COVID-19 pandemic in the Group’s key markets. Furthermore, several risks have arisen from the pandemic for the second half of the year. Daily new infections of COVID-19 have lately increased in the United States and risks for a second wave in Europe and Asia have increased. Furthermore, potential lockdown measures could have a significant impact either on the Group’s operations or customers’ retail shops. As a result, it is still impossible to issue a financial guidance for 2020.
Short term risks and uncertainties and seasonality of the business are described in more detail in the end of Half Year Financial Report.
Stock Exchange Release, March 26, 2020
Due to the uncertainty caused by the worldwide COVID-19 pandemic it is impossible to estimate the impact to the Group. Consequently, the Group cancels its outlook for 2020 issued on February 12, 2020.
Financial Statement Release for 2019, published on February 12, 2020
Market outlook for Group Products in North America is positive and the Group sees continued healthy consumer demand for its products via old and new channels. Furthermore, the Group’s position with major customers in North America is strong. In Europe the execution of the restructuring program and changes in Third Party Products business affects market visibility for 2020. Furthermore, extraordinary winter weathers in Europe will affect negatively winter sports business.
The Group expects 2020 full year net sales with comparable FX rates and comparable operating profit (excluding mark-to-market valuations of operative currency derivatives and other items affecting comparability) to decline from 2019. The decline in sales is coming from the decrease in Third Party Products business, which is expected to lead to decline in the Group’s comparable EBIT. Several restructuring projects are taking place, but their financial impact will for the most part start to materialize in full year figures in 2021. Furthermore, the potential slowdown in global economic growth might have some impact on retail and consumer demand. In addition, weather changes may affect the sales of the Group.
Short term risks and uncertainties and seasonality of the business are described in more detail in the end of Financial Statement Release for 2019.