As part of a “strategic update,” Rapala VMC has announced a series of measures intended to improve its operational performance and profitability, after a year in which its sales fell by 6 percent to €260.6 million, with a 5 percent drop in constant currencies, and its comparable operating profit margin declined to 7.2 percent from 9.1 percent in the previous year.
The Finnish company's board of directors decided on Feb. 15 to start consultations for the elimination of between 55 and 63 jobs among the 200 employees of Rapala and its Marttiini subsidiary in Finland, partly through pension arrangements, resulting in annual savings of about €1.5 million from 2018. Temporary employment contracts will not be continued.
Accordingly, between 41 and 45 production workers at its Finnish lure factory in Vääksy are set to lose their jobs, as their functions will be transferred to the company's other plants in Russia and Estonia. The reorganization of the Marttiini factory, which makes knives, will affect a maximum of ten other employees.
Rapala's new management also wants to develop a more responsive supply chain and optimize the end-to-end flow of products to achieve a permanent reduction in inventory levels and improve service to customers.
The company's inventories were already trimmed last year, resulting in record cash flow from operations of €20.5 million, 71 percent above the level of 2015. However, the group turned in a net loss of €2.0 million against net income of €8.1 million in the previous year.
While sales of fishing products were off by 7 percent to €172.1 million, sales of third-party products declined by 5 percent to €88.5 million, with a drop especially in the fishing sector. The group's own fishing products were negatively impacted by lower sales of fishing lures, lines and accessories, especially in North America. Sales of VMC hooks went up in North America but declined in the rest of Europe. Sales of fishing lures improved in North America during the second half of the year.
In general, the group encountered challenging conditions in the big markets of the U.S., Russia and France. The situation in Russia started to improve in the last quarter of the year thanks to a more stable ruble. In the Nordic countries, sales were slightly down for the year but began to pick up toward the year-end.
Favorable weather conditions in the late summer and the early autumn were good for sales of fishing tackle products, but not enough to offset the effect of unfavorable winter weather conditions on sales of winter sports equipment and winter fishing products.
The group sold a joint venture in the U.K. last year. It also reorganized its distribution operations in the Middle East and Africa. It is now restructuring the distribution in Southeast Asia after a year in which it struggled in Asia generally. Sales were stronger than in the previous year in China, South Africa, Chile and Mexico.
