Rapala, which controls Peltonen and is a major distribution partner of Shimano in the European market, reported a 2 percent drop in its revenues to €73.5 million for the first quarter, partly due to a later and short winter in the Nordic countries that led to a drop in its sales of winter sports equipment.
Excluding its former gift business, which it recently divested, net sales inched up by 1 percent. Excluding the distribution of other brands, sales of group products rose by 4 percent. Excluding winter sports, sales of third-party products went up by 1 percent.
The challenging winter business conditions, especially in Finland, and the reorganization of its business in Norway caused the Finnish company to record a sales decline of 16 percent during the quarter. In the rest of Europe, sales increased by 3 percent, but the group's strong performance in Eastern Europe and France was offset by declines in Hungary, Spain and Switzerland. Sales increased by 8 percent in North America, but they declined by 9 percent in the rest of the world because of the disposal of its gift business.
The management predicts that its sales and operating earnings will increase in the course of this year. The company pointed out that early warm spring weather advanced the spring selling season in major European and North American markets, and that pre-sales for the summer season have been good in several markets.
The U.S. economy is showing signs of improvement. Sales continued to grow strongly in Eastern Europe during the first quarter. They grew in Asia and in the Southern Hemisphere.
On a comparable basis, the operating margin declined to 14.0 percent in the first quarter from 16.2 percent in the same period a year ago. It was affected by charges related to the divestiture, stock clearance campaigns, the startup of new manufacturing units and foreign exchange rates. The quarterly net profit dropped to €7.5 million from €7.9 million.
During the quarter, Rapala took the leadership of the ice fishing market through three major strategic initiatives. It bought the assets of Strike Master Corporation in the U.S. as well as the Mora Ice brand in Sweden, and it struck an exclusive supply agreement with Marcum Electronics in the U.S.
The company developed its new distribution units in Mexico, Indonesia and Kazakhstan during the quarter. It also started up its new manufacturing facilities for lures and hooks on Batam Island in Indonesia. Their size will be tripled during the next 12 months.
Furthermore, Rapala refinanced its bank loans and extended its commercial paper program last month.
