While noting a slight recovery in the German Nordic Walking market, the Finnish group says it has decided to place all its sports-related production activities into its profitable industry division, a move which, we believe, could facilitate a possible strategic alliance or an outright sale for its struggling sports division. This measure, which has been made retroactive to last Jan. 1, concerns in particular Exel’s Mänthyharju operations in Finland, whose building has been sold.
Taking account of this change, the sports division’s operating loss declined to €2.5 million for the first half of 2007, down from €3.5 million in the year-ago period, and it amounted to only €1.8 million in the 2nd quarter. Besides a sharp fall in revenues, additional factors for the loss were transportation and quality problems related to the production in China. Corrective action has been taken to improve deliveries and to reinforce quality assurance routines.
The delays in deliveries from China, combined with a mild winter, led the sports division to book a 40 percent drop in sales to €9.8 million for the first half. They fell by 44.6 percent in the latest quarter to only €2.2 million. Besides the improving situation in the German Nordic Walking market, the company noted that sales of floorball products developed well during the period.
Instead the industry division, which focuses on composite materials for the telecommunication and construction sectors, doubled its operating profit to €4.2 million on sales of €50.0 million in the first half, leading the group to increase its net income to €4.3 million and to raise its overall sales by 7.5 percent to €53.5 million. For the 2nd quarter, it turned around to a net profit of €1.9 million, compared with flat results in the same period a year ago, on a 2.9 percent increase in revenues to €28.7 million.