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MANAGEMENT REPORT
Nordic Fibreboard AS unaudited results for first quarter of 2022
Consolidated net sales for Q1 2022 were € 2.60 million (down 8% compared to Q1 2021). The main business area is the production and wholesale of fibreboard, which recorded sales in Q1 2022 of € 2.59 million (down 6% compared to Q1 2021). The remaining business area is real estate management of the property owned in Suur-Jõe street in Pärnu, who recorded sales of € 0.01 million in Q1 2022 (down from sales of € 0.08 million in Q1 2021).
Sales from production of fibreboards in Q1 2022 experienced a decline from Q1 2021 due to less volume sold as a consequence of more stoppages on the production line. Demand for our fibreboards during Q1 2022 was very strong, and production was running at full capacity. Delivery times to our key customers was on average 3 months, which has been the norm during the last 2 years. Operating profit, ie EBITDA, for Q1 2022 was € 279 thousand (ie 11% of sales), down from being € 496 thousand in Q1 2021 (ie 18% of sales). The main reason for this reduction in profitability is due to the sharp increase in raw material costs, ie woodchips and energy, experienced during Q1 2022.
Real estate management lost its largest tenant end of last year, which thus resulted in less sales in Q1 2022 compared to Q1 2021 (€ 9 thousand compared to € 89 thousand). This resulted in an operating loss of € 10 thousand in Q1 2022 (Q1 2021: € 8 thousand operating profit).
Financial income in Q1 2022 was positively affected by an increase of € 52 thousand in value of the shares owned by Nordic Fibreboard in the real estate company Trigon Property Development (TPD), listed on the stock exchange Nasdaq Tallinn. The shares were valued at € 644 thousand at start of Q1 2022, and ended up being valued at € 696 thousand at end of Q1 2022 (in Q1 2021, the shares value increased with € 255 thousand).
Group`s consolidated net profit therefore for Q1 2022 was € 152 thousand (Q1 2021: profit € 550 thousand).
DIVISIONAL REVIEW
Revenue by business segments
| € thousand | Q1 2022 | Q1 2021 |
| Fibreboards production and sales | 2,591 | 2,757 |
| Real Estate Management | 9 | 89 |
| TOTAL | 2,600 | 2,846 |
Profit by business segments
| € thousand | Q1 2022 | Q1 2021 |
| EBITDA by business units: | ||
| Fibreboards production and sales | 279 | 496 |
| Real Estate Management | (10) | 8 |
| Group transactions | (14) | (20) |
| TOTAL EBITDA | 255 | 484 |
| Depreciation | (121) | (133) |
| TOTAL OPERATING PROFIT/ LOSS | 134 | 351 |
| Net financial costs | 18* | 199* |
| NET PROFIT/ LOSS | 152 | 550 |
* Includes upward value adjustment from Fibreboard’s shareholding in real estate development company TPD due to its share price appreciation during Q1 2022 and Q1 2021. TPD owns a business park development area in Pärnu.
Nordic Fibreboard Ltd: Fibreboard productions and sales
Fibreboard sales for Q1 2022 were 2.59 € million. The order backlog remained strong throughout Q1 2022, which led us to prioritise our key customers in the nearby markets. EBITDA of € 279 thousand was 11% of sales in Q1 2022, down from 18% of sales in Q1 2021, such decrease being mainly due to the rapid rise during Q1 2022 in the cost of our main raw material, ie woodchips, as well as heating costs.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | Q1 2022 | Q1 2021 |
| European Union | 2,259 | 2,159 |
| Russia | 269 | 433 |
| Asia | 41 | 102 |
| Middle East | 13 | 0 |
| Other | 9 | 16 |
| Africa | 0 | 47 |
| TOTAL | 2,591 | 2,757 |
Pärnu Riverside Development: Real estate management
Pärnu Riverside Development owns the property located at Suur-Jõe 48 in Pärnu. The property has some rental tenants and rental income from real estate management was € 9 thousand in Q1 2022, (Q1 2021: € 89 thousand). The reason for the decrease in sales revenue was caused by the loss of the largest tenant at the end of 2021.
The real estate management EBITDA for Q1 2022 were negative € 10 thousand (Q1 2021: positive € 8 thousand).
STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 31.03.2022 the total assets of Nordic Fibreboard AS were € 8.6 million (31.03.2021: € 7.8 million). The liabilities of the company as of 31.03.2022 were € 4.6 million (31.03.2021: also € 4.6 million), of which Group has payables of € 0.8 million as at 31.03.2022 (31.03.2021: € 0.9 million) and borrowings of € 3.2 million as at 31.03.2022 (31.03.2021: also € 3.2 million).
Receivables and prepayments amounted to € 1.4 million as at 31.03.2022 (31.03.2021: € 1.0 million). Inventories were € 0.4 million as of 31.03.2022 (31.03.2021: € 0.3 million). Fixed assets were € 6.7 million as of 31.03.2022 (€ 6.4 million as of 31.03.2021).
During 2022 Q1, the Group’s cash flows from operating activities totalled € 78 thousand (2021 Q1: € 196 thousand). Investment activities resulted in cash outflows in amount of € 98 thousand in 2022 Q1, which was mainly due to improvements in production machinery (2021 Q1: outflow € 27 thousand). Financing activities also resulted in cash outflows of € 35 thousand in Q1 2022 (2021 Q1: cash outflow € 64 thousand). Net cash effect during 2022 Q1 cash outflow of € 55 thousand (2021 Q1: cash inflow € 105 thousand).
OUTLOOK
Nordic Fibreboard Ltd
Demand for fibreboards continue to be strong. The increase in our raw materials costing led us to implement price increases during Q2 2022, which should largely offset the cost increases.
Management is working on preparing the Pärnu factory’s boiler house to meet the new emission requirements coming into force in 01.01.2025. Our second factory, located in Püssi, is using gas as its main energy source and the current high gas prices is currently making it untenable to consider restarting this factory in the near future.
The ongoing war in Ukraine has resulted in us ending our sales of fibreboards to our Russian customers, and our Ukrainian customers is understandably still unable to restart their business. However, the current strong demand picture is resulting in a strong order book, thus the loss of sales to Russian and Ukrainian customers is not having any negative impact on our total sales.
Pärnu Riverside Development
We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu.
People
On the 31.03.2022, the Group employed 95 people (compared to 97 people as of 31.03.2021). The average number of personnel in Q1 2022 was 93 (Q1 2021: 95).
For three months of 2022, wages and salaries with taxes amounted to € 484 thousand (three months 2021: € 460 thousand). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 65 thousand in Q1 2022 and € 55 thousand in Q1 2021.
FINANCIAL HIGHLIGHTS
| € thousand | ||
| Income statement | Q1 2022 | Q1 2021 |
| Revenue | 2,600 | 2,846 |
| EBITDA | 255 | 484 |
| EBITDA margin | 10% | 17% |
| Operating profit | 134 | 351 |
| Operating margin | 5% | 12% |
| Net profit | 152 | 550 |
| Net margin | 6% | 19% |
| Statement of financial position | 31.03.2022 | 31.03.2021 |
| Total assets | 8,580 | 7,839 |
| Return on assets | 2% | 7% |
| Equity | 4,002 | 3,199 |
| Return on equity | 4% | 17% |
| Debt-to-equity ratio | 53% | 59% |
| Share | 31.03.2022 | 31.03.2021 |
| Last Price (€)* | 1.83 | 0.71 |
| Earnings per share (€) | 0.18 | 0.48 |
| Price-earnings ratio | 10.25 | 1.48 |
| Book value of a share (€) | 0.89 | 0.71 |
| Market to book ratio | 2.06 | 1.00 |
| Market capitalization (€ thousand) | 8,233 | 3,194 |
| Number of shares (piece) | 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 = Trailing twelve months (TTM) 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 number of shares
*http://www.nasdaqbaltic.com/
Consolidated statement of financial positions
| € thousand | 31.03.2022 | 31.12.2021 | 31.03.2021 | 31.12.2020 |
| Cash and cash equivalents | 2 | 57 | 131 | 26 |
| Receivables and prepayments (Note 2) | 1,401 | 902 | 975 | 794 |
| Inventories (Note 3) | 436 | 390 | 329 | 544 |
| Total current assets | 1,839 | 1,349 | 1,435 | 1,364 |
| Investment property (Note 4) | 1,152 | 1,152 | 1,134 | 1,134 |
| Financial assets at fair value through profit or loss (Note 7) | 696 | 644 | 676 | 451 |
| Property, plant and equipment (Note 5) | 4,890 | 4,915 | 4,591 | 4,695 |
| Intangible assets (Note 6) | 3 | 3 | 3 | 6 |
| Total non-current assets | 6,741 | 6,714 | 6,404 | 6,286 |
| TOTAL ASSETS | 8,580 | 8,063 | 7,839 | 7,650 |
| Borrowings (Note 8) | 114 | 146 | 691 | 756 |
| Payables and prepayments (Note 9) | 1,234 | 829 | 1,282 | 1,574 |
| Short-term provisions (Note 10) | 14 | 19 | 13 | 18 |
| Total current liabilities | 1,362 | 994 | 1,986 | 2,348 |
| Long-term borrowings (Note 8) | 3,071 | 3,074 | 2,493 | 2,493 |
| Long-term provisions (Note 10) | 145 | 145 | 161 | 161 |
| Total non-current liabilities | 3,216 | 3,219 | 2,654 | 2,654 |
| Total liabilities | 4,578 | 4,213 | 4,640 | 5,002 |
| Share capital (at nominal value) (Note 11) | 450 | 450 | 450 | 450 |
| Retained earnings (loss) | 3,552 | 3,400 | 2,749 | 2,198 |
| Total equity | 4,002 | 3,850 | 3,199 | 2,648 |
| TOTAL LIABILITIES AND EQUITY | 8,580 | 8,063 | 7,839 | 7,650 |
*The notes to the financial statements presented on pages 14 to 25 are an integral part of these consolidated financial statements.
Consolidated statement of profit or loss and other comprehensive income
| € thousand | Q1 2022 | Q1 2021 |
| Revenue (Note 13) | 2 600 | 2,846 |
| Cost of goods sold (Note 14) | 2 060 | 1,979 |
| Gross profit | 540 | 867 |
| Distribution costs (Note 15) | 284 | 342 |
| Administrative expenses (Note 16) | 121 | 172 |
| Other operating income (Note 18) | 0 | 2 |
| Other operating expenses (Note 18) | 1 | 4 |
| Operating profit | 134 | 351 |
| Finance income (Note 19) | 52 | … |
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Read More: Unaudited financial results of Nordic Fibreboard AS for the first quarter of 2022