The situation in Russia and Ukraine continued to be very difficult for Rapala VMC in the second quarter ended June 30. Based on comparable exchange rates, the Finnish fishing tackle specialist's European sales outside the Nordic countries were off by 5 percent during the period, dragged down especially by lower sales of third-party products, including those sold in behalf of Shimano. Excluding Russia and Ukraine, the group's total revenues increased by 6 percent, with particularly strong growth in France.
Rapala's sales in the Nordic countries declined by 8 percent in local currencies because of a cold and rainy summer and an earlier start of the fishing season, which advanced sales to the first quarter. North American sales continued to grow, rising by 11 percent in constant currencies, although business conditions in Canada were tougher. Sales in the rest of the world went up by 6 percent.
The end result was a sales increase of one percent in constant currencies and 3 percent in euros, for a total of €80.1 million for the quarter. For the first six months of the year, sales went up by 7 percent to €154.0 million. In local currencies, they grew by 4 percent, with increases of 7 percent in the Nordic countries, 10 percent in North America and 4 percent in the rest of the world, partly offset by a 2 percent drop in the rest of Europe.
The operating margin declined to 10.4 percent for the quarter, but grew by 11.3 percent for the first half. Assuming constant exchange rates, the margin would have been flat at 12.4 percent for the quarter and up sharply to 13.4 percent for the six months. Rapala continued to benefit from the growing profitability of its new lure manufacturing facility in Bantam, Indonesia.
While Rapala's sales of group products increased in euros by 12 percent to €52.7 million in the second quarter, sales of third-party products declined by 11 percent to €27.3 million. Operating earnings grew by 40 percent to €6.6 million for group products, but fell by 56 percent to €1.7 million for third-party products.
At €4.0 million the quarterly net earnings were down by 2 percent to €4.0 million. A first-half net profit of €10.2 million included a positive tax impact of €1.0 million from a settlement with the Finnish tax authorities.
The management expects higher sales and profits for the full year. The biggest concern remains the development of the situation in Russia, where the situation is said to be very challenging.
