Preliminary results for 2005 suggest that Exel Oy’s sports division was considerably weaker compared with the prior year, posting a reduced net profit of €1.6 million, down from €5.9 million in 2004. The Finnish company blamed major investments being undertaken in new markets such as North America, the Far East and Europe, combined with clearance of excess stock by retailers in Central Europe.
The sports division also suffered a drop in sales from €35.5 million to €34.3 million. The management points to weak sales of Nordic walking products in Central Europe in the 2nd half due to the growing competition in this sector, which is expected to remain high. Exel is reacting now by moving all of its Nordic walking and floorball surface treatment, assembly and packaging operations from Finland to China. The transfer will take place in increments throughout 2006, and will be accompanied by 60-70 job eliminations at the Finnish factory, located in Mäntyharju. The entire phase is expected to be completed by the beginning of 2007.
As a whole, Exel’s net sales in 2005 grew by 8.8 percent to €91.3 million. The growth was driven by the company’s key industry division, whose sales increased by 17.9 percent to €57.0 million. Group operating profit fell from €13.7 million to €12.3 million, while the industry division’s profit rose from €7.8 million to €10.7 million thanks to increased volumes, improved efficiency and stringent cost controls.
