From the President & CEO

Interim Report, 9 May 2018

“In the first quarter of 2018, our net sales grew by 7 percent and our international sales by 14 percent, mainly thanks to wholesale sales and royalties in the Asia-Pacific region.

“In the January-March period of 2018, our operating profit grew to EUR 1.2 million (0.9). The result was boosted by growth in net sales, which was generated primarily by wholesale sales in Finland as well as wholesale sales and royalties in the Asia-Pacific region. The growth in Finnish wholesale sales was accounted for by nonrecurring promotional deliveries. Retail sales declined in Finland, which was due to a change in the timing of our annual spring sales promotion. This year, the promotion took place entirely within the second quarter, whereas it was held last year at the turn of March and April. A drag was exerted on results by a decline in relative sales margin; this was mainly due to wholesale sales accounting for a larger share of net sales than in the comparison period.

“The present year started in style. The period under review saw the worldwide launch of two limited-edition collaboration collections, one of which was created together with the Japanese clothing brand Uniqlo and the other with the cosmetics brand Clinique. Both are renowned and prestigious global operators, and partnerships of this kind are particularly valuable for us as they enable us to raise our international profile and to reach new target groups. The exceptionally broad international visibility conferred by these brand collaborations was complemented by the positive reception we received at Paris Fashion Week in March.

“In the past few years, we have focused in particular on improving our profitability and our international competitiveness. In the current strategy period 2018–2022, we are continuing our long-term work and seeking markedly stronger growth than before. Expanding the customer base, enhancing operational efficiency and utilising the new opportunities afforded by digitisation play a central role in this work. The key drivers of our growth are e-commerce, partner-led retail in Asia, and boosting sales per square metre in Marimekko stores. It is gratifying that in the first quarter of 2018, we are already able to report positive news about the trend in our international sales, particularly in the Asia-Pacific region.

“After the end of the period under review, we announced that we have sold our head office building in the Herttoniemi district of Helsinki to a fund of OP Financial Group. At the same juncture, we signed a long-term lease and we will continue to operate in our current premises. We are pleased with this arrangement as the sale and leaseback of the head office building increases our financial flexibility and provides us with the opportunity to focus fully on building growth in the years ahead. The cash and debt free selling price of the building was EUR 10.4 million. We will book a nonrecurring taxable capital gain on this transaction in the amount of roughly EUR 6 million for the second quarter of 2018; the estimated cash flow impact before taxes will be about EUR 9 million. OP has also pledged to invest in renovating the building. As a result of the transaction, our expenses are forecast to grow by roughly EUR 1 million and depreciation is estimated to decline by about EUR 0.5 million annually.”

Tiina Alahuhta-Kasko