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Good day, ladies and gentlemen. Welcome here to Helsinki Fiskars' Q4 2019 and Full Year Results Presentation. We have today released the results and are going to have a presentation first by our CEO, Jaana Tuominen; and then after that, our CFO, Sari Pohjonen. If you have any questions, we have a Q&A session at the end. So you can start already typing in questions online as well. If you have any -- and further -- without further ado, just please have a look at the disclaimer here, and then I'll hand over to Jaana.
Thank you, Kristian. Well, for the first, welcome. Good morning. Nice to see you again. And other than that, so I think most of you have read the release already this morning, and you can join me in saying that it could have been better when it comes to the Q4 and the full year 2019. At the same time, Q4 was pretty much in line with what had happened before.So the main news or title is the same that 3 things that we follow, and the first line here is the net sales, the comparable EBITA and the cash flow all decreased. Pretty much as looking at some of your expectations, that's it. However, nothing is always only bad, there's quite a few nice highlights that we're going to show you during this coming minutes and an hour.So Functional, for example, had quite a few improvements areas. I'm really happy to tell a little bit more about them in a minute. Living continued the way that you've seen before, but it's good to remember still that the gifting is an important part of the business, and it does work for those brands.So outlook, we have released that also this morning. Outlook for 2020, we do expect the comparable EBITA to increase from 2019. And then the dividend, I'm sure you've seen that already, EUR 0.02 more than the year before, and that will be paid in 2 installments as has been our habit of doing. So EUR 0.56 per share. The numbers in Q4, so here is both the net sales in absolute numbers, and then how the bridge looks like from the year before in Q4.And you can see that -- if you look at the Q4, so it is pretty much about the same year-over-year in several years in a row. And these are now -- the comparable change in -- is less than the reported change as this time the foreign exchange rate actually help to drive the reported sales.You can see in the bridge that the real difference come from the SBU Living. We had a good year in 2018 Q4. So that's also the comparison point -- starting point was high.Similar for the comparable EBITA. So you can see the decline, but I'd like to point the fact that we are in the 2017 level. 2018 full year has been the best in the history of the company.Welcome to [ join us ]. And also 2017 was the next best in the history of the company. So we are in kind of in the level of the next best year in the history of the company. And you can see the same in the percentages. So we are in the 11-plus percent EBITA compared to the sales, the margin.So those are the kind of the numbers. I'm sorry, we'll give you details behind it. A couple of the highlights that I wanted to mention is that we have quite a few growth initiatives ongoing and some nice progress in them as well. You may remember, we talked about growing the core and Germany being one of the key markets for us, especially the SBU Functional and that sales increased in 2019. So we do like the progress that we are making in Germany. The same way gardening within the Functional increased the sales, both in U.S. and in Europe.So this is now the gardening tools pruners, loppers, shovels, rakes those types of things. Partly the U.S. increase is because of the tariff increases, most of it is actually organic growth and Europe as well. We're investing in a couple of more longer-term future things like China and also e-commerce. Both of them did grow as we had expected. So that's also good news. So the investments for the future growth are there, and we start to see the results. However, they are small compared to the total volume. So it doesn't move the needle yet on the top level, but you can -- we can really see that it's happening where it should be.Also, we continue to launch new business models. You've heard about the Vintage quite a few times. Now it's everywhere in Finland in all Iittala stores, and we're going to take that further. But then also, we have now started to pilot tableware as a service. So you can actually subscribe the Arabia service and decide for a monthly fee, what kind of service you would like to have, and what kind of tableware, and you can change it as your life situation changes or as your taste changes, or if you don't need it anymore, or if you need more.So that's a new service that we have piloted or are piloting at the moment, have launched it in Finland. And there will be more to come. So clearly, the future growth is still based on growing the core. The new ideas like China and e-commerce and then totally new, new ways of making business, new models for reaching the top line growth and reaching the consumers because that's really the point here that the consumer is changing and so are we.A few words about the restructuring program that we announced in December, and I'm sure all of you remember it. So you could say, to simplify it, this is now in the creating the company into one Fiskars Group after all those acquisitions that has been made since 2007.So we will have one common global sales team. We will have one common consumer experience and growth team. So these are going across the different world -- part of the world and also the different business areas. Instead of having the SBU Functional and SBU Living, we're going to have 3 business areas, and those areas won't have sales or marketing in them as those are global functions.The 3 business areas: Terra for gardening; watering, Outdoor; Crea for scissors, for cooking, for creating tools; and then Vita for the tableware, drinkware and interior design. And that's where the savings program was also launched that we expect to find about EUR 20 million savings in the next 2 years.Some of the consumer-facing things. What are we doing that consumers see. So we've been continuing the 100% happiness campaign with the Fiskars brand, and that's now expanding in several things. The big thing for us was last -- in Q4 that we expanded the Fiskars workshop. So now it's available in Finland and in U.S. and in Canada, and we will be adding countries to come. So that's a good thing. As typical, I would say, we continue to receive awards for our design and product. So that also happened in Q4. So that's a good thing. Also Gerber has made a similar thing like the Fiskars' 100% Happiness, Gerber's campaign Easy Doesn't. So it's also launched.From the Living side, I already mentioned Arabia tableware service that we launched now to pilot. The Vintage continued to expand. And maybe one of the things that we would like to say is the Times Square, New York, the ball that's coming down, counting the days or the hours actually minutes. So it's Waterford, and we had it this year, again, with a lot of success. China and e-commerce, we already mentioned, and if I combine them, so to which would both as physical store sales, but online in China did have some nice progress and success in Q4.Q4, the kind of the critical word here, and I give it to Sari to tell you more about it, the details.
Thank you, Jaana. If we start with SBU Functional. And you can see the numbers here on the left-hand side, comparable basis, the net sales did decrease a bit for this quarter, and the same applies for the full year. So on a full year, the comparable change was 1.3% negative.However, it's important to make a little bit of distinction between different categories where we operate. And also in this quarter, we did see some nice growth here in Europe related both to gardening as well as the snowtools. At the same time, in North America, we were able to increase the sales for gardening category. And just as a reminder, gardening generally is the biggest category which we have for Functional. So that's good to bear in mind. In the U.S., we also gained some new distribution that was reflected in the -- some of the category numbers for the quarter.At the same time, however, we did see a decrease for the Outdoor business that was related mainly to government orders, which tend to be a bit seasonal and some of the more promotional campaigns that we had the year before, they didn't repeat this year.Looking then on the comparable EBITA, that did increase from the previous year. And it was obviously supported by the increased efficiencies that we have implemented. I would like to remind, for instance, that we did some changes in our distribution in Europe the previous year. That is one example. And then the product mix plays a role here as well.We've been talking a lot about tariffs all the way through 2019, especially after the spring time. For this quarter, we started to see that the impact of the tariffs, or one should say, the negative impact of the tariffs started to decrease. As we have been discussing earlier, there is always a timing type of difference in this type of a situation. And that was also part of the development for the Q4.Obviously, then the Outdoor situation, not reaching the previous year's sales that had a negative impact on the other hand on the EBITA development.Then if I move on to Living. It's a little bit of a mixed picture in the sense that we did see some challenges in many areas, for instance, in Denmark, for Scandinavian Living and at the same time for English & Crystal Living. Some of our key markets were a bit challenging also during this quarter.Generally, we could say that we are obviously not happy on how the holiday season sales for us went, but there are some good things happening at the same time, for instance, the growth in China, which Jaana mentioned here. And generally, in certain countries, in the Asia Pacific region, which has been our focus. We also see some nice growth there.In terms of EBITA, it remained below the previous year, we had some differences in the product mix that weighs on the EBITA development and obviously then the lower volumes for the English & Crystal Living business had an impact as well. And generally, it's always good to remember not only for this quarter, but typically, for this business, the timing of different types of campaigns, different types of spending that can fluctuate quite a bit from one quarter to the other.Then a reminder of the 2 ongoing transformation programs. Living transformation that we announced in October 2018, that is ongoing, and it's expected to continue until the end of '21. And here, you can see the current situation that costs so far have been EUR 19.5 million. We are expecting the total cost to be approximately EUR 40 million in the time span that we have been announcing. And now more recently, in December, we announced shaping our future Restructuring Program. It's obviously in the very early phases now that it was started only in December, but it's focusing on, as we already heard earlier today, simplifying the structures, continuing the integration to really make Fiskars one company. In terms of the geographies, I would probably rather look at the full year situation here. On a comparable basis, one could say that Europe and the Asia Pacific region, they were flattish. Whereas, in the U.S., we saw quite some decrease. You remember, especially in the first half of the year, we had challenges with watering in the U.S. due to the weather. We were not too happy with our sales for the back-to-school season. And now for the Q4, talking about Outdoor there. And at the same time, also the ECL in the U.S.So it's a little bit mixed picture also thinking about the geographies. China, Japan, those are countries we have been talking about during the earlier quarters, and the overall situation is as seen here, so that -- the Americas having the biggest change compared to the previous year.In terms of improving the efficiencies the portfolio of our products has been huge, at some point, nearly 40,000 SKUs after the most recent acquisition in 2015. We are continuing to reduce the number of SKUs, making the portfolio more efficient, at the same time, improving the average sales per SKU.What we have said, and it's mentioned also here that our target is to reach the previous level of the sales per SKU. We are going to the right direction. But as you can see, there's still plenty to be done on that front going forward.Earnings per share here by quarter, obviously, reflecting the development of the result in the quarters. And then if we move on for the cash flow and working capital development here, the result development was reflected in the cash flow also. However, on this one slide, I would like to point out one thing. Looking at the working capital development there, I can be pleased with -- there is some currency impact, obviously, in this picture. But despite that, we were able to reduce the total working capital. So that is something we are constantly working on going forward as well seeking efficiencies on those elements.Looking at the net debt and equity ratio and gearing. There were plenty kind of changes during the year, which are little bit blur comparability. But if we look at the equity ratio and net gearing, excluding the changes that have taken place either due to the IFRS 16 implementation or later during the year when we shared the Wärtsilä shares were distributed as dividend. If we look at the ratios, excluding those, actually gearing went from 11% to 12% and an equity ratio from 70% to 71%.So one could say that on a comparable basis, these ratios were more or less on the same level as year before. And the same goes for the net debt that there's quite a big impact on the IFRS 16, but then the underlying, one could say, more operational development is visible there as well.Then in terms of our outlook, we are expecting the comparable EBITA to increase from the previous year. And of course, fluctuations in currency might have an impact on our comparable EBITA because we are not excluding the currencies from that one. We continue to invest in growth, and we have these 2 major transformation programs going on. So clearly, our focus is on improving the profitability. The transformation programs are expected to be completed by end of next year, end of '21, and we are not providing now an outlook for the net sales or the comparable net sales for 2020.It's good to remember, though, that the fundamentals remain unchanged. Our categories typically grow globally in low single digits, the categories themselves. There's a little bit variation between the categories. There's a little bit variation between the regions, but that remains, that is kind of the fundamentals for our net sales.We also see that there's quite some uncertainties in plenty of places, one could even say, globally. Last year, we were commenting fairly often on the tariff situations. Whatever might happen to the tariffs this year, we are obviously not able to even speculate on that. But if there will be some changes, if there would be new tariffs levied or if some of the existing tariffs would be removed or changed, that might impact, of course, our development.And most recently, now the very new situation, especially in China, about the coronavirus, I think we everyday start now seeing comments about how that might be generally talking about not only us, but companies generally. It could impact either the sales development or then it could impact your supply chain, and that's the ability to deliver goods when expected.Then a reminder of our long-term financial targets, no changes there. So the sales target or the growth target remains, the profitability target we changed in November '18, that remains. The capital structure target is there, and the dividend policy or the dividend target remains unchanged compared to the previous year.And then if we look at the dividend, the proposed dividend, as I mentioned already earlier today is EUR 0.56 per share to be distributed in 2 installments. And just as a reminder here that the kind of the baseline of the dividend was adjusted last year when we distributed the Wärtsilä shares out, and we'll no longer ourselves receive a dividend from Wärtsilä.Then a final reminder, what was already mentioned here, we are in the planning phase of our new structure. But as a reminder, so starting from this year, we are looking at primary reporting segments for the business area, so Vita, Terra and Crea and then we have the other segment, as we have had earlier. And then the secondary reporting segments, those continue to be the geographical ones: Americas, Europe and Asia Pacific as earlier.
All right. Then we have time for some questions, and I think we'll start, as usual, here from the audience. So do we have any questions here? Okay. If not, then we can start from online. Regarding Functional, could you please clarify what role did the price increases have on the margin improvement? And when do you expect the impact of prices increase to be fully visible?
I guess the question is related to the tariffs. And if I take it from that point of view, so as we've been discussing during '19 in several occasions, this -- kind of the price increases related to tariffs, they happen gradually. Whereas, the price increases related to our purchases when the tariffs were levied, they happened in most cases immediately.Now we already, in Q4, started to see that the impact of the tariffs or the negative impact of tariffs that started to decrease. And going forward, if there are no changes to the current tariffs, we do believe that we have mitigated them now for the time being. But as said, if there will be other changes then that apparently will impact our situation.
Right. Continuing on the tariffs, how are you seeing competitors behaving? Are they pushing? Or have they done similar increases as we have?
I think generally, it's the same for all of the companies. So ultimately, it's the consumer who pays the increased tariffs, but there might be some timing differences in that one.
And are we expecting any impact on volumes from our demand?
That is not something that we at least have seen so far. Obviously, there are also news that for some products, which might mean more like investment type of commodities, for those ones the consumers might have already reacted.
Yes. Right. Then moving on to Living regarding the savings programs, Sari. Could you please share how much of the savings have you already achieved so far?
I would say that the transformation program is proceeding as planned, and we have certain savings targets, which we expect to be completed by the end of '21 when the program is to be completed.
Right. And then regarding transformation program, about half of the costs are still to come. Are there going to be cash impact from those?
Yes, most of the costs are -- they do have a cash impact also.
Okay. And then our new organizational program, I guess, are you able to be more specific about the measures at this point?
And what does measures mean in this case? But -- so we are changing the organizational structure. And we are, at the moment, in the consultation period in several countries where the impact will be seen. So we're looking at the global sales organization, global consumer experience and growth and the 3 business areas. So there will be impact in different parts of the Fiskars Group. And those measures that will be taken are now under planning and under consultation with the employee representatives.
Right. And then what kind of supply chain measures are you expecting from these programs?
Supply chain, we will be looking at the efficiencies and ways of working and what is the optimal structure for us. And as said, the planning is now proceeding. So it's too early to say anything specific. We'll get back to that when the plans are a little bit further ahead and the consultations are completed.
Right. That was from online. Do we have any questions from the audience?Right. If not, I guess, we are then finished for today. So if you still do have any questions, please let us know and reach out to us, and then we'll talk more. If not, then thank you for your time, and we'll get back to you on the next quarter as well.
Thanks for joining.
Thank you.