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Martela results for 2103 – sales down 7.3%; operating loss €2.9m

Tuesday 4 February 2014

The Finnish office furniture manufacturer Martela, has published its annual results for 2013 showing sales of €132.3m, 7.3% lower than 2012 , and an operating loss of EUR 2.9 million compared with 2012's loss of EUR 0.9 million.
The loss before tax was EUR -4.4 million (2012: EUR -1.8 million), and after tax was EUR -3.9 million (2012: EUR -2.0 million).
The results for the year were adversely affected by EUR 0.6 million of financial expenses being a provision for the crystallisation of a loan guarantee given to Martela’s associated company P.O. Korhonen Oy, which filed for bankruptcy last week.
4th quarter sales were EUR 36.9 million (40.8), a decrease of 9.7 per cent on the previous year.
The difficult market conditions in Finland were reflected in lower sales in Finland and Poland, both cumulatively and in the final quarter of the year.
By contrast, full-year sales in Sweden was at the previous year’s level, although revenue in the fourth quarter showed a year-on-year decrease.
In other markets, the transfer of the Danish business at the end of 2012 from the Martela subsidiary to a dealer slightly reduced (2.2%) consolidated revenue for the review period. Revenue in Russia grew once again, but is still relatively low compared with the Group’s overall revenue.
Despite a reduction in costs, the full-year operating result was down from the previous year due to the fall in sales. Nevertheless, margins stabilised in the fourth quarter of the year, having been falling during the previous quarters.
Martela’s fixed costs gradually fell during the year as a result of the measures already taken. In the third quarter, Martela began to plan further measures to reduce its costs, targeting an annual cost saving of about EUR 6 million.
The savings programme will be implemented by the end of 2014, after which the full impact of the savings will be felt. It is estimated that due to the timing of the measures the cost reduction impact of the savings programme in 2014 will be equivalent to about one third of the total savings target. The measures being put in place allow Martela to adjust its cost structure to correspond to the changed operating environment.
Martela will be investing resources in improving its ability to offer even better comprehensive solutions and services, especially to meet the growing customer need for Activity-Based Office solutions. Martela’s aim is to strengthen its pioneering position as a supplier of comprehensive solutions and as the leading service provider for offices and other working environments.
Martela’s financial position weakened but remains stable. Cash flow from operating activities in January-December was only slightly negative, at EUR -0.1 million (2012: EUR 0.0 million), despite posting a loss. Martela is continuing to focus attention on more efficient use of its working capital.
Interest-bearing liabilities at the end of the year were EUR 16.0 million (2012: EUR 16.2 million) and net interest-bearing liabilities were EUR 11.2 million (2012: EUR 8.7 million). The gearing ratio at the end of the year was 51.2% (2012: 32.8%), and the equity ratio was 37.6% (2012: 41.4%).
Net financial expenses were EUR -1.2 million (2012: EUR -0.6 million). Financial expenses included a provision of EUR 0.6 million for the realisation of the loan guarantee given to Martela’s associated company P.O. Korhonen Oy. The current financing arrangements do not include any covenant obligations.
Martela employed an average of 770 (2012: 806) persons, which is a year-on-year decrease of 4.5%.
Martela anticipates that its revenue in 2014 will be at the 2013 level, and that its operating result will show a year-on-year improvement. Due to normal seasonal variation, Martela’s operating result is weighted towards the second half of the year.

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