Yahoo Finance Unaudited financial results of Nordic Fibreboard AS for the third quarter of 2020
Management report
Consolidated net sales for Q3 2020 were € 2.51 million from continuing operations (Q3 2019: € 3.34 million from continuing operations). The sales revenue of the Group`s main business segment, fibreboard, for Q3 2020 were € 2.48 million (Q3 2019: € 3.06 million). The main reason for this drop in sales was due to the closure of the Püssi factory in March 2020, which came about as a result of the loss of orders from customers within the display board industry caused by the COVID-19 pandemic. Furniture retail sales revenue for Q3 2020 were € 0 thousand, the decrease in sales (compared to Q3 2019: € 265 thousand) was due to the Group exiting the furniture retail segment earlier this year, with some remaining stock sales taking place during Q1 and Q2 2020. Rental and property development sales, includes the resale of utilities, in Q3 2020 were € 36 thousand (Q3 2019: € 32 thousand). Revenue from rental and property development increased due to more tenants being secured for the premises in Suur-Jõe 48, Pärnu.
Group EBITDA for Q3 2020 was positive € 366 thousand from continuing operations (Q3 2019: € 120 thousand from continuing operations), of which the fibreboard division EBITDA was positive € 370 thousand (Q3 2019: positive € 152 thousand). After depreciation and interest, group net profit for Q3 2020 was € 183 thousand from continuing operations (Q3 2019 net loss of € 671 thousand from continuing operations). The main reason for the loss in the Q3 2019 was the extraordinary loss of € 540 thousand received from the sale of the subsidiary Skano Furniture Factory OÜ.
The Group`s consolidated EBITDA has improved compared to the same period last year, the main reason being the much improved performance of the fibreboard division. The closure of the Püssi fibreboard factory enabled us to switch the Püssi factory construction sector orders to our Pärnu factory, and we started a 4th shift in Pärnu in April 2020 as a result thereof. The Pärnu factory is now running all the time, except for a one-shift maintenance stop every month. This has led to increased machine utilisation, and gross margin for Nordic Fibreboard Ltd OÜ has therefore increased substantially, being 29% in Q3 2020 (from being 18% in Q3 2019).
Divisional review
Revenue by business segments
€ thousand | € thousand | |||
Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 | |
Continued operations | ||||
Fibreboards production and sales | 2,477 | 3,064 | 7,994 | 8,970 |
Furniture retail | 0 | 265 | 55 | 1,126 |
Real Estate Management | 36 | 32 | 148 | 48 |
Group transactions | 0 | (17) | 0 | (37) |
TOTAL from continued operations | 2,512 | 3,344 | 8,197 | 10,108 |
Discontinued operations | 0 | 262 | 0 | 1,215 |
TOTAL | 2,512 | 3,606 | 8,197 | 11,323 |
Profit by business segments
€ thousand | € thousand | |||
Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 | |
EBITDA by business units: | ||||
Fibreboards production and sales | 370 | 152 | 458 | 188 |
Furniture retail | (0) | (95) | (39) | (134) |
Real Estate Management | 1 | 14 | (2) | 30 |
Group transactions | (5) | 49 | (13) | 100 |
TOTAL EBITDA | 366 | 120 | 403 | 184 |
Depreciation | 135 | 176 | 422 | 492 |
TOTAL OPERATING PROFIT/ LOSS | 231 | (57) | (19) | (308) |
Net financial costs | 49 | 615 | 139 | 744 |
NET PROFIT/ LOSS | 183 | (671) | (158) | (1,052) |
Discontinued operations | 0 | (29) | 0 | (271) |
TOTAL | 183 | (700) | (158) | (1,324) |
NORDIC FIBREBOARD Ltd: Fibreboard sales
Fibreboard sales in Q3 2020 were € 2.48 million, which are 19% lower than in the same period last year (2019: € 3.06 million). We sold our products to customers in 19 countries during Q3 2020. The main reason for the drop in sales was the loss of display board customers, boards for this sector was produced in the Püssi factory, which we closed in March 2020. However, sales to our customers within the construction sector in our main northern European markets have been stable. Finland, our largest market accounted for 27% of total fibreboard sales this year (up from being 26% of total sales in 9M in 2019).In the Q3 2020 compared to the Q3 2019, we recorded sales growth in the next large markets for us, these being Denmark and Estonia, while we recorded sales decline in markets further afield mainly due to the negative effect in many such markets caused by the corona virus.
By adding a 4th shift in our Pärnu production, and thus achieving full machine utilisation, has led to a strong increase in Fibreboard’s gross margin from being 18% in Q3 2019 to now reaching 29% in Q3 2020. Overhead costs for Q3 2020 was down 16% compared to Q3 2019, and EBITDA for Q3 2020 was thus positive € 370 thousand (15% of sales in Q3 2020), compared to Q3 2019 EBITDA positive € 152 thousand.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
€ thousand | € thousand | |||
Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 | |
European Union | 2,003 | 2,291 | 6,693 | 6,620 |
Russia | 360 | 417 | 934 | 1,169 |
Asia | 62 | 157 | 140 | 400 |
Middle East | 10 | 34 | 55 | 160 |
Africa | 8 | 122 | 96 | 421 |
Other | 32 | 43 | 77 | 200 |
TOTAL | 2,477 | 3,064 | 7,994 | 8,970 |
SKANO FURNITURE: retail sales
There was no retail sales revenue of furniture in the Q3 2020 (2019 Q3 € 265 thousand). However, this business has been closed down, as earlier informed, and the sales recorded in 9 months 2020 was from some remaining stock.
RETAIL SALES BY COUNTRIES
€ thousand | € thousand | Number of stores | ||||
Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 | 30.09.2020 | 30.09.2019 | |
Estonia | 0 | 162 | 55 | 783 | 0 | 3 |
Latvia* | 0 | 40 | 0 | 125 | 0 | 0 |
Lithuania* | 0 | 63 | 0 | 218 | 0 | 0 |
TOTAL | 0 | 265 | 55 | 1,126 | 0 | 3 |
* Latvian and Lithuanian stores were closed on 30.09.2019
PÄRNU RIVERSIDE DEVELOPMENT: real estate management
Rental income, including the resale of utilities, was € 36 thousand in Q3 2020 (2019 Q3 € 32 thousand). The company’s expenses consist of operating expenses and expenses related to the ongoing detail plan project, which resulted in positive EBITDA of € 1 thousand for Q3 2020 (2019 Q3 positive € 14 thousand). Real Estate Management net profit in Q3 2020 were € 1 thousand (2019 Q3: loss € 8 thousand).
The reason for the change in EBITDA and net profit/loss is the change in the accounting policies for investment properties adopted at the end of 2019, where instead of the measured cost, investment properties were recognized in the balance sheet at fair value.
OUTLOOK
Nordic Fibreboard Ltd
The order book from our traditional customers in our largest markets in northern Europe remains strong, although it is very difficult to predict what will happen in the future due to the continuing uncertainty surrounding the COVID-19 pandemic.
Nordic Fibreboard Ltd recorded net loss in October 2020 of € 27 thousand, such loss was mainly the result of the factory’s planned 2 week stoppages in early October. The production workers did not take their annual 2 week holiday during summer due to large order backlog we had at that time, instead it was moved to the early part of October. Thus, Pärnu factory’s output in October was reduced as a result thereof, which impacted sales negatively, and thus resulted in the aforementioned net loss of € 27 thousand.
Next planned production holiday will take place in latter part of December which will also affect negatively compared to the results achieved during Q3 when there were no production holiday.
Pärnu Riverside Development
We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu.
PEOPLE
On the 30th of September 2020, the Group employed 99 people (compared to 128 people as of 30.09.2019 from continuing operations). The average number of personnel in Q3 2020 was 94 (Q3 2019: 123 from continuing operations). The reason for the decline in the number of employees compared to the same quarter last year is the closure of a factory in Püssi in March this year.
For nine months of 2020, wages and salaries with taxes amounted to € 1.6 million from continuing operations (nine months 2019: € 1.9 million from continuing operations). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 158 thousand during 9M 2020 and € 148 thousand during 9M 2019.
FINANCIAL HIGHLIGHTS
€ thousand | ||||
Income statement | Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 |
Revenue | 2,512 | 3,344 | 8,197 | 10,108 |
EBITDA | 366 | 120 | 403 | 184 |
EBITDA margin | 15% | 4% | 5% | 2% |
Operating profit | 231 | (57) | (19) | (308) |
Operating margin | 9% | (2%) | (0%) | (3%) |
Net profit | 183 | (671) | (158) | (1,052) |
Net margin | 7% | (20%) | (2%) | (10%) |
Discontinued operations | 0 | (29) | 0 | (271) |
TOTAL NET PROFIT | 183 | (700) | (158) | (1,324) |
Statement of financial position | 30.09.2020 | 31.12.2019 | 30.09.2019 | 31.12.2018 |
Total assets | 7,753 | 9,045 | 9,418 | 10,307 |
Return on assets | (2%) | (12%) | (11%) | (3%) |
Equity | 1,414 | 1,542 | 1,606 | 2,901 |
Return on equity | (11%) | (73%) | (66%) | (12%) |
Debt-to-equity ratio | 82% | 83% | 83% | 72% |
Share | 30.09.2020 | 31.12.2019 | 30.09.2019 | 31.12.2018 |
Last Price* | 0.40 | 0.41 | 0.41 | 0.36 |
Earnings per share | (0.04) | (0.31) | (0.23) | (0.20) |
Price-earnings ratio | (11.48) | (1.32) | (1.74) | (1.81) |
Book value of a share | 0.31 | 0.34 | 0.36 | 0.64 |
Market to book ratio | 1.28 | 1.20 | 1.14 | 0.56 |
Market capitalization, € thousand | 1,809 | 1,845 | 1,845 | 1,620 |
Number of shares, piece | 4,499,061 | 4,499,061 | 4,499,061 | 4,499,061 |
EBITDA = Earnings before interest, taxes, depreciation and amortization
EBITDA margin = EBITDA / Revenue
Operating margin = Operating profit / Revenue
Net margin = Net profit / Revenue
Return on assets = Net profit / Total assets
Return on equity = Net profit / Equity
Debt-to-equity ratio = Liabilities / Total assets
Earnings per share = Net profit / Total shares
Price-earnings ratio = Last price / Earnings per share
Book value of a share = Equity / Total shares
Market to book ratio = Last price / Book value of a share
Market capitalization = Last price * Total shares
*http://www.nasdaqbaltic.com/
Consolidated statement of financial positions
€ thousand | 30.09.2020 | 31.12.2019 | 30.09.2019 |
Cash and cash equivalents (Note 2) | 4 | 7 | 44 |
Receivables and prepayments (Note 3) | 1,008 | 1,394 | 1,781 |
Inventories (Note 4) | 410 | 894 | 1,068 |
Total current assets | 1,423 | 2,296 | 2,893 |
Investment property (Note 5) | 1,126 | 1,121 | 816 |
Available-for-sale financial assets (Note 8) | 418 | 397 | 378 |
Property, plant and equipment (Note 6) | 4,777 | 5,212 | 5,306 |
Intangible assets (Note 7) | 10 | 19 | 24 |
Total non-current assets | 6,331 | 6,749 | 6,525 |
TOTAL ASSETS | 7,753 | 9,045 | 9,418 |
Borrowings (Notes 9) | 4,436 | 4,547 | 531 |
Payables and prepayments (Notes 10) | 1,674 | 2,665 | 2,789 |
Short-term provisions (Note 11) | 4 | 20 | 5 |
Total current liabilities | 6,114 | 7,232 | 3,325 |
Long-term borrowings (Notes 9) | 47 | 92 | 4,277 |
Long-term provisions (Note 11) | 179 | 179 | 210 |
Total non-current liabilities | 226 | 271 | 4,486 |
Total liabilities | 6,340 | 7,503 | 7,811 |
Share capital (at nominal value) (Note 12) | 450 | 2,699 | 2,699 |
Share premium | 0 | 364 | 364 |
Statutory reserve capital | 0 | 288 | 288 |
Other reserves | 114 | 84 | 75 |
Retained earnings (loss) | 850 | (1,894) | (1,819) |
Total equity | 1,414 | 1,542 | 1,606 |
TOTAL LIABILITIES AND EQUITY | 7,753 | 9,045 | 9,418 |
*The notes to the financial statements presented on pages 15 to 32 are an integral part of these consolidated financial statements
Consolidated statement of profit or loss and other comprehensive income
€ thousand | Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 |
Continued operations | ||||
Revenue (Note 14) | 2,512 | 3,344 | 8,197 | 10,108 |
Cost of goods sold (Note 15) | 1,892 | 2,764 | 6,508 | 8,610 |
Gross profit | 620 | 581 | 1,689 | 1,498 |
Distribution costs (Note 16) | 282 | 460 | 1,015 | 1,317 |
Administrative expenses (Note 17) | 126 | 156 | 430 | 410 |
Other operating income (Note 19) | 22 | 2 | 24 | 24 |
Other operating expenses (Note 19) | 3 | 23 | 287 | 103 |
Operating profit (loss) | 231 | (57) | (19) | (308) |
Finance income (Note 20) | 4 | 0 | 41 | 0 |
Finance costs (Note 20) | 53 | 614 | 179 | 744 |
Loss before income tax | 183 | (671) | (158) | (1,052) |
Corporate income tax | 0 | 0 | 0 | 0 |
Net profit (loss) for the financial period from continuing operations | 183 | (671) | (158) | (1,052) |
Net profit (loss) for the period from discontinuing operations | 0 | (29) | 0 | (271) |
Net profit (loss) for the financial period | 183 | (700) | (158) | (1,324) |
Basic earnings per share (Note 13) | 0.04 | (0.16) | (0.04) | (0.29) |
Diluted earnings per share (Note 13) | 0.04 | (0.16) | (0.04) | (0.29) |
*The notes to the financial statements presented on pages 15 to 32 are an integral part of these consolidated financial statements.
Consolidated statement of cash flows
€ thousand | 9M 2020 | 9M 2019 |
Cash flows from operating activities | ||
Operating profit (loss) | (19) | (308) |
Adjustments: | ||
Depreciation charge (Notes 5;6;7) | 424 | 492 |
Profit/loss from disposal of fixed assets (Note 19) | (21) | 0 |
Write down of fixed assets (Note 6) | 0 | (747) |
Currency translation differences | (1) | 0 |
Profit/loss from disposal of available-for-sale financial assets (Notes 8) | (21) | 44 |
Non-monetary transactions: reserve for share option (Note 12) | 29 | 29 |
Change in trade and other receivables (Note 3) | 387 | (1,038) |
Change in inventories (Note 4) | 484 | 406 |
Change in trade and other payables (Note 10) | (991) | 741 |
Discontinued operations | 0 | 933 |
Cash generated from operations | 271 | 552 |
Interest payments (Note 20) | (155) | (167) |
Net other financial income and expense | (1) | (50) |
Net cash generated from operating activities | 115 | 335 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment and intangible assets (Notes 6;7) | (58) | (87) |
Disposal of property, plant and equipment and intangible assets (Note 6;7) | 24 | 0 |
Purchase of investment property | (5) | (20) |
Net cash used in investing activities | (39) | (107) |
Cash flows from financing activities | ||
Repayment of loans received (Note 9) | (4) | (223) |
Loans received from related parties (Note 9) | 475 | 223 |
Repayment of loans received from related parties (Note 9) | (495) | (193) |
Finance lease payments (Note 9) | (50) | (67) |
Change in overdraft (Note 9) | (5) | 22 |
Net cash (used in)/from financing activities | (79) | (238) |
NET CHANGE IN CASH | (3) | (10) |
OPENING BALANCE OF CASH (Note 2) | 7 | 54 |
CLOSING BALANCE OF CASH (Note 2) | 4 | 44 |
*The notes to the financial statements presented on pages 15 to 32 are an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
€ thousand | Share capital | Share premium | Statutory reserve capital | Other reserves | Retained earnings | Total |
Balance at 31.12.2018 | 2,699 | 364 | 288 | 45 | (496) | 2,901 |
Share options 9M 2019 | 0 | 0 | 0 | 29 | 0 | 29 |
Net profit/loss for 9M 2019 | 0 | 0 | 0 | 0 | (1,324) | (1,324) |
Other comprehensive income for 9M 2019 | 0 | 0 | 0 | 0 | 0 | 0 |
Total comprehensive profit/loss for 9M 2019 | 0 | 0 | 0 | 0 | (1,324) | (1,324) |
Balance at 30.09.2019 | 2,699 | 364 | 288 | 75 | (1,819) | 1,606 |
Balance at 31.12.2019 | 2,699 | 364 | 288 | 84 | (1,894) | 1,542 |
Share options 9M 2020 | 0 | 0 | 0 | 29 | 0 | 29 |
Retained earnings | (2,250) | (364) | (288) | 0 | 2,902 | 0 |
Net profit/loss for 9M 2020 | 0 | 0 | 0 | 0 | (158) | (158) |
Other comprehensive income for 9M 2020 | 0 | 0 | 0 | 0 | 0 | 0 |
Total comprehensive profit/loss for 9M 2020 | 0 | 0 | 0 | 0 | (158) | (158) |
Balance at 30.09.2020 | 450 | 0 | 0 | 114 | 850 | 1,414 |
*The notes to the financial statements presented on pages 15 to 32 are an integral part of these consolidated financial statements.
TORFINN LOSVIK
Chairman of the board
Phone: +372 56 99 0988
torfinn.losvik@nordicfibreboard.com
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