Lars Ollbergin led by Rapala VMC,’s comparable operating profit rose to 6.2 million euros in the first half of the year from 5.3 million euros a year earlier.
Earnings per share rose to 0.07 euros from -0.03 euros in the comparison period.
Rapala VMC’s turnover rose to 120.5 million euros in January-June from 117.9 million euros in the comparison period last year.
The comparable operating profit margin was 5.1 percent, while it was 4.5 percent in the comparison period.
“The background of the improved profitability was higher turnover in the open water fishing market. The sales margin decreased slightly, but the focus on making operations more efficient enabled lower business expenses.”
The six-million-euro savings program continued and was expanded, as the face of costs caused by inflation ate up part of the savings.
“The measures included bringing decision-making closer to the local market and defining clear responsibilities. As a result, the number of members of the global management team was reduced to eight.”
Rapala next analysis house Inderes expected an adjusted operating profit of 11.5 million euros, a turnover of 129 million euros and an adjusted operating profit margin of 9.0 percent.
According to the company, market conditions were quite good during the first half of the year.
“Inflation began to ease and the operating conditions of the retail trade improved from the previous year. Consumers’ interest in cheaper consumer products improved, but the market for more expensive products is still recovering.”
“The caution of both consumers and retailers to acquire more expensive products is still evident, but the market saw an increase in demand towards the end of the first half of the year.”
According to the company, the change in retailers’ ordering practices from advance orders towards seasonal stock replenishment was favorable for those who were able to respond to demand quickly due to stock availability.
According to Ollberg, the year 2024 started with “fairly good” market conditions and destocking is easing in most markets.
“During the first half of the year, we focused especially on selected product groups that bring the best returns, both in terms of inventory and sales. As a result of these measures, sales and comparable operating profit increased.”
The inventory value decreased at the same time.
The economic situation in the United States is stable and, according to the CEO, the cheaper products in particular sell well.
“Our sales in North America exceeded expectations in the category of open water fishing brands and the growth compared to the previous year is promising. Recent launches of Rapala-branded hard lures have been successful.”
Entering the jigging market with Rapala CrushCity proved, according to Ollberg, that the Rapala brand exceeds all expectations.
“The central strategy has been a locally-led approach combined with a strong global brand, as well as consideration of local characteristics in our products in all the most important market areas.”
According to the CEO, the combination of the best soft lures and hooks that match them is “very synergistic”.
“Excessive demand for the new CrushCity products caused momentary supply chain challenges, which were however resolved, and margins are expected to normalize after a period of significant air transport deliveries.”
Ollberg says in the report that he is pleased to see that the Okuma business is back on track for growth and that the integration of 13 Fishing and plans to cut overhead costs have been completed, resulting in increased efficiency and profitability for both brands.
“On the other hand, the advance sales of our winter business for the coming season have fallen short of expectations. In the previous season, ice and snow conditions in North America and Northern Europe were poor, and thus dealer inventory levels remained high.”
According to Ollberg, the market position in North America, which covers more than half of the turnover, is “very strong”.
The sales growth in North America was significantly influenced by the launch of the new Rapala CrushCity jig lures.
“CrushCity also boosted sales of VMC jig hooks. Sales increased in almost all product categories except for hard lures. The background to this was a change in fishing trends as the popularity of jig lures increased at the expense of hard lures.”
Sales on the Nordic market increased. Retail stocks returned to a “healthy level”, but the general economic situation negatively affected sales. Sales in the rest of Europe increased. The market remained “challenging” in Europe, but sales exceeded the previous year’s level.
“This was influenced by such successful product launches as CrushCity, Dynamite Baits’ strong marketing and Okuma’s positive vibe.”
In terms of manufacturing operations and supply chains, the company has completed the production transfers, and efficiency has increased to a “sufficient level”.
Instructions unchanged
Rapala keeps its instructions unchanged.
The group expects the comparable operating profit for the entire year 2024 to increase from 2023.
According to the company’s assessment, the market prospects for 2024 are quite good, as the destocking slows down in most markets.
“The US economy is still stable and there are signs of growth. The market for more expensive consumer durables is also recovering, surpassing the growth in sales of inexpensive products. In Europe, the results of the first half of the year are very encouraging despite the difficult market environment. The work to improve profitability and efficiency continues.”
The company’s “One More Turn” strategy for the years 2024–2026 began in autumn 2023 and its goal is to improve profitability and working capital management, while emphasizing the importance of sales, customers and consumers.
In addition to Rapala, the group’s brand portfolio includes other brands such as VMC, Sufix, Storm, Blue Fox, Luhr Jensen, Williamson, Dynamite Baits, Mora Ice, StrikeMaster, Marttiini, Peltonen and 13 Fishing and Okuma in Europe.
Rapala’s share price was up 7.5 percent at 2.87 euros Wednesday evening on the Helsinki Stock Exchange.
Source: www.arvopaperi.fi
