Rapala reported improved profits for the first three quarters of its financial year, with margins slightly on the increase from previous years. This was attributed to strong sales in the third quarter from the recent introduction of its products to ripe markets in the Southern Hemisphere. The Finnish group has also launched several initiatives it claims will coax profit margins higher.
The summer season this year was shorter than usual because of bad weather, but Rapala saw its net sales grow by 4 percent to a record €52 million in the third quarter, ended on Sept. 30, compared with the year-ago period. Sales of fishing tackle tend to be low in the summer across the Northern Hemisphere, but expanding business to new markets in Malaysia, Thailand, China and South Korea has enabled the company to compensate for these seasonal lows.
Problems with the dollar had some effect on company sales in September, down by €8 million compared with the same month the previous year. Despite this sales loss, net profit for the quarter was €1.1 million, up from €0.4 million the previous year, but the operating margin (EBIT) went down slightly to 5.6 percent from 5.7 percent the previous year because of restructuring charges of €500,000.
The provision was related to its restructuring efforts in Europe, notably in France and Ireland. The group is consolidating its French operations into one location in Brittany and down-sizing lure manufacturing in Ireland. More such costs will be borne in the fourth quarter and in the next financial year.
During the three months, company sales of fishing tackle grew slightly in Australia and South Africa, and remained stable in Scandinavia. They grew a lot more in Europe, up by 21 percent, and dropped sharply in North America, down by 15 percent. The drop in sales on the American market can be explained by a weak dollar, bad weather and trouble with deliveries.
The company expects fishing tackle markets to remain stable in the next quarter in America and Europe, and to grow strongly in Eastern Europe, Asia and Africa. A joint venture with Shimano in Russia and the Ukraine (reported in SGI Europe Vol. 18 - N°35 & 36) is expected to boost sales by more than €10 million in the next financial year.
For the first nine months, the operating profit was up by 23 percent to €25.9 million, and net profit of €15.5 million was made on 6 percent higher net sales, up to €188.8 million, and 1 percentage point of the sales growth was attributed to the acquisition of Terminator in the USA. On a comparable basis and without exchange rate effects, sales were up by 11 percent in the period, and the operating margin grew to 13.4 percent from 11.8 percent. The group expects net sales to grow by 7 to 12 percent for the full financial year.
