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Skano Group (0GWU)

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Thursday 31 May, 2018

Skano Group

Skano Group Interim Report 1st Quarter 2018

Skano Group Interim Report 1st Quarter 2018

Management report

Skano Group AS unaudited first quarter 2018 results and second quarter outlook

Consolidated net sales for Q1 2018 were € 3.71 million, being a 17% decrease compared to the same period in 2017 (Q1 2017: € 4.46 million). Skano Group recorded EBITDA of negative € 17 thousand for Q1 2018, which compare poorly with EBITDA of € 366 thousand for Q1 2017. Main reasons for negative EBITDA in Q1 2018 were lower sales revenue as well as higher prices of raw material woodchip in the fibreboard division. It should be noted that Q1 2017 results were positively influenced by one-off gains of € 48 thousand due to the disposal of Skano’s Ukrainian retail subsidiary in Q1 2017. Net loss for 1Q 2018 was € 274 thousand (Q1 2017: profit of € 88 thousand).

Already in April 2018 the trend turned, with Fibreboard sales ahead of April 2017 sales, and Furniture profitability greatly strengthened due to the change in the production process implemented in Q1. Group EBITDA for April 2018 of € 110 thousand was thus ahead of April 2017 EBITDA (€ 96 thousand). Sales and order development in May, and outlook for rest of Q2, is looking good.

Divisional review of first quarter 2018

Fibreboard sales in Q1 2018 were € 2.72 million, which is 17% less than same period in 2017. Most significant drop was from Finland (subdued demand for fibreboards) but also slow start in other regions. EBITDA for Fibreboard Q1 2018 was € 30 thousand (Q1 2017 EBITDA was € 313 thousand).

Furniture wholesale sales in Q1 2018 were € 800 thousand, 17% down on same period last year. Russia, who overtook Finland last year in total sales revenue has continued it´s good trend and increased revenues compared to last year same period by 14% (Q1 2018 € 361 thousand). In Finland our sole importer recorded sales drop of 12% during Q1 2018 (€ 234 thousand) compared to Q1 2017. Largest sales decline however came from Skano’s own retail chain, sale from Skano furniture wholesale to Skano furniture retail dropped by 46% in Q1 2018 compared to same period last year. EBITDA for furniture wholesale for Q1 2018 was negative € 32 thousand (Q1 2017 EBITDA was negative € 5 thousand).

Furniture retail sales in Q1 2018 were € 332 thousand (Q1 2017 € 549 thousand). EBITDA for furniture retail for Q1 2018 was negative € 20 thousand (Q1 2017 EBITDA was positive € 63 thousand). Q1 2017 EBITDA results include 48 thousand one-off gains from disposal of Ukraine retail store chain.

Total Furniture operations of Skano (wholesale and retail) EBITDA for 2018 first quarter were negative € 52 thousand (2017 first quarter result was positive EBITDA of € 57 thousand).

Balance Sheet

As of 31.03.2018 the total assets of Skano Group AS were € 11.9 million (31.03.2017: € 12.7 million). The liabilities of the company as of 31.03.2018 were € 8.4 million (31.12.2017: € 8.8 million), of which Skano has borrowings of € 5.7 million (31.03.2017: € 5.8 million).

Receivables and prepayments amounted to € 2.3 million (31.03.2017: € 2.1 million). Inventories were € 2.4 million as of 31.03.2018 (31.03.2017: € 2.6 million). Property, plant and intangibles were € 7.1 million as of 31.03.2018 (€ 7.9 million as of 31.03.2017).


Despite slow start for 2018 we see improved demand for fibreboard and we expect sales revenue as well as EBITDA to recover during Q2. In addition, more focused sales and marketing activities have been started where we focus on the various product applications of our fibreboards, such as expansion joint filler boards, pin and notice boards, sound insulation and other. 

In Furniture, we expect both sales revenue and EBITDA to recover somewhat, this being linked to better performance of Skano’s retail unit as well as lower costing in production as a result of ending our kiln operations and instead buying in dried and cut material for our production.

Divisional review

Net Revenue by business segments

 € thousand % of net sales
 Q1 2018Q1 2017Q1 2018Q1 2017
Fibreboards production and sales2,723 3,265 73%73%
Furniture production and sales800 959 22%22%
Furniture retail332 549 9%12%
  incl. furniture retail Ukraine0 64 0%1%
Group transactions(144)(311)(4%)(7%)
TOTAL3,711 4,462 100%100%

Net Profit by business segments

€ thousandQ1 2018Q1 2017
EBITDA by business units:  
Fibreboards production and sales30 313 
Furniture production and wholesale(32)(5)
Furniture retail(20)63 
  incl. furniture retail Ukraine0 1 
Group transactions(1)(5)
Depreciation191 208 
Net financial costs(66)(70)
Income tax0 0 

Fibreboard sales

The total sales of fibreboards for Q1 2018 were € 2.72 million, which are 17% down from Q1 2017 sales level (€ 3.27 million). All regions (see table below) showed decline, the only exception was our sales to Russia which showed some increase. Apart from the structural changes in the Finnish construction sector, we expect the other markets to somewhat recover during Q2.

Fibreboard sales by geographical segment 

 € thousand% of net sales 
 Q1 2018Q1 2017Q1 2018Q1 2017
European Union (including Suomen Tuulileijona sales)2,1982,63081%81%
Middle East73823%3%

Furniture wholesale sales

Sales dropped to € 800 thousand in Q1 2018, down from € 959 thousand in Q1 2017. However, our largest market Russia experienced sales growth of 14% in Q1 2018 compared to Q1 2017, while our sole importer in Finland recorded sales decline of 12% for same period. Sales to Skano retail units decreased in first quarter compared to same period last year, however more marketing activities should yield better performance in Q2. Other countries sales were negatively influenced by the delay of the usual Q1 order from our Kazakhstan importer.

Furniture wholesale sales by countries 

 € thousand% of net sales
 Q1 2018Q1 2017Q1 2018Q1 2017
Skano Retail14125918%27%
Other countries641188%12%

Furniture retail sales 

Skano Group retail business recorded sales of € 332 thousand in Q1 2018, which is 46% decline from Q1 2017. The recent appointment of a marketing specialist into our retail unit will result in more focused marketing and sales campaigns which should help improve sales.

Reteail sales by country

 € thousand% of net salesNumber of stores 
 Q1 2018Q1 2017Q1 2018Q1 201731.03.201831.03.2017
TOTAL (ongoing shops)332549100%100%69


On the 31st of March 2018, the group employed 221 people (down from 237 people as of 31.03.2017). The average number of personnel in Q1 2018 was 222 (Q1 2017: 244).

During first three months of 2018, wages and salaries with taxes amounted to € 0.90 million (first three months 2017: € 1.03 million). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 40 thousand in Q1 2018 and € 103 thousand in Q1 2017.

Financial highlights

€ thousandQ1 2018Q1 2017
Income statement  
Revenue3,711 4,462 
EBITDA margin(1%)8%
Operating profit(214)158 
Operating margin(6%)4%
Net profit(281)88 
Net margin(8%)2%
Statement of financial position31.03.2018 31.03.2017 
Total assets11,846 12,705 
Return on assets(2%)1%
Equity3,487 3,949 
Return on equity(8%)2%
Debt-to-equity ratio71%69%
Share 31.03.2018 31.03.2017 
Last Price*0.54 0.57 
Earnings per share(6%)2%
Price-earnings ratio(8.66)29.09 
Book value of a share0.78 0.88 
Market to book ratio0.70 0.65 
Market capitalization, € thousand2,429 2,429 
Number of shares4,499,061 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

Consolidated statement of financial positions

€ thousand31.03.201831.12.201731.03.2017
Cash and cash equivalents (Note 2)6074152
Receivables and prepayments (Note 3)2,3181,2152,068
Inventories (Note 4)2,3432,3362,627
Total current assets4,7213,6244,847
Investment property (Note 5)170170405
Available-for-sale financial assets (Note 8)1871820
Other shares and issues070
Property, plant and equipment (Note 6)6,7246,9087,391
Intangible assets (Note 7)434761
Total non-current assets7,1247,3137,858
TOTAL ASSETS11,84510,93712,705
Borrowings (Notes 9)1,2405931,638
Payables and prepayments (Notes 10)2,4861,9562,729
Short-term provisions (Note 11)101313
Total current liabilities3,7362,5624,380
Long-term borrowings (Notes 9)4,4214,4224,163
Long-term provisions (Note 11)200200213
Total non-current liabilities4,6214,6224,376
Total liabilities8,3587,1848,756
Share capital (at nominal value) (Note 12)2,6992,6992,699
Share premium364364364
Statutory reserve capital288288288
Other reserves2492
Unrealised currency differences000
Retained earnings113393596
Total equity 3,4873,7533,949

Consolidated statement of profit or loss and other comprehensive income

€ thousandQ1 2018Q1 2017
Revenue (Note 14)3,711 4,462 
Cost of goods sold (Note 15)3,294 3,425 
Gross profit416 1,036 
Distribution costs (Note 16)454 602 
Administrative expenses (Note 17)150 235 
Other operating income (Note 19)3 51 
Other operating expenses (Note 19)30 93 
Operating profit (loss)(214)158 
Finance income (Note 20)1 4 
Finance costs (Note 20)67 73 
Corporate income tax0 0 
Other comprehensive income (loss)  
Other comprehensive income (loss) that can in certain cases be reclassified to the income statement  
Currency translation differences 0 (40)
Basic earnings per share (Note 13)(0.06)(0.02)
Diluted earnings per share (Note 13)(0.06)(0.01)

Torfinn Losvik

Member of the Management Board

+372 569 90 988

[email protected]

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