Jussi Ristimäki, the former chief financial officer of Rapala VMC who was recently appointed president and chief executive of the Finnish manufacturing and distribution group, is working on a new strategy and a new action plan to restore sales growth and profitability after a further sales decline in the third quarter ended Sept. 30.
Without commenting on the bottom line for the quarter, the company admitted that its net sales and comparable operating earnings will fall below 2015 levels this year. It also admitted that the ratio of net debt to Ebitda continues to be high, but said the group is taking measures to reduce the leverage, although it expects to be compliant with its loan agreements by the end of the year.
In the third quarter, Rapala's total revenues went down by 8 percent to €59.4 million from the year-ago period, with a drop of 7 percent on a comparable basis. Sales of group products fell by 8 percent to €27.9 million, while those of third-party products were off by 9 percent to €21.5 million.
The core fishing tackle segment of the group was affected by tightened competition and reserved consumer sentiment in France and other markets. Favorable weather conditions in late summer and early autumn were not enough to offset weaker early summer sales. Furthermore, last winter's poor sales left large inventories of winter fishing and winter sports equipment at retail, negatively affecting winter fishing and winter sports pre-sales.
The situation improved during the third quarter in the U.S., the largest market for the group, but the weak economic situation in Canada caused the turnover in North America to decline by 2 percent to €21.3 million. Sales went down by 4 percent to €10.9 million in the Nordic countries, and they fell by steeper rates of 14 percent in the rest of Europe and 12 percent in the rest of the world.
Big drops occurred in Russia and Ukraine. Excluding these two markets, sales would have fallen by 6 percent in the rest of Europe, with a drop in France offsetting improvements in Spain and Poland. Sales improved also in South Africa and Chile.