Unaudited financial report of Nordic Fibreboard AS for the fourth quarter and 12 months of 2022
MANAGEMENT REPORT
Consolidated net sales for Q4 2022 were € 2.03 million (down from € 2.34 million in Q4 2021). The main business area of production and wholesale of fibreboard recorded sales in Q4 2022 of € 2.02 million, 12% down from sales in Q4 2021. The remaining business area is real estate management of the property owned in Suur-Jõe Street in Pärnu, who recorded sales of € 11 thousand in Q4 2022 (Q4 2021: 36 thousand).
Consolidated sales for the full year 2022 was € 11.07 million, which is an increase of 10% compared to 2021 full year sales of € 10.10 million. The reason for such sales increase is due to increased sales of fibreboards in our key markets such as Finland, Denmark, Estonia and Latvia. However, the Group’s gross margin fell from 33% for full year 2021 to becoming 23% for full year 2022, the main reasons being the increased prices of raw materials in the fibreboard production, these being woodchips and energy.
The consolidated EBITDA of Nordic Fibreboard AS was € 661 thousand for Q4 2022 (Q4 2021: EBITDA € 215 thousand). The increase in EBITDA in Q4 2022 was due to the revaluation of the fair value of the investment property in the real estate management segment, adding € 697 thousand to EBITDA and thus increasing EBITDA margin in Q4 2022 compared to Q4 2021 from 9% to 33%. The Fibreboard segment reported negative EBITDA of € 23 thousand in Q4 2022 (Q4 2021: € 218 thousand) due to higher woodchip prices and less output due to slowdown in demand at the end of the year. The consolidated EBITDA for the full year 2022 was € 1.73 million, which is an increase of 11% compared to full year 2021.
Consolidated net profit for Q4 2022 was € 386 thousand, which includes dividend income of € 24 thousand from the fibreboard division’s 20% ownership stake in Trigon Property Development AS (TPD). In Q4 2021, we recorded a loss € 27 thousand on the revaluation of this shareholding. Net profit for full year 2022 was € 1.23 million, which includes total year 2022 dividend income from TPD shares of € 129 thousand (full year 2021: profit € 1.20 million).
DIVISIONAL REVIEW
Revenue by business segments
| € thousand | Q4 2022 | Q4 2021 | 12M 2022 | 12M 2021 |
| Fibreboards production and sales | 2,020 | 2,304 | 11,035 | 9,842 |
| Real Estate Management | 11 | 36 | 39 | 254 |
| TOTAL | 2,031 | 2,339 | 11,074 | 10,096 |
Profit by business segments
| € thousand | Q4 2022 | Q4 2021 | 12M 2022 | 12M 2021 |
| EBITDA by business units: | ||||
| Fibreboards production and sales | (23) | 218 | 1,092 | 1,555 |
| Real Estate Management | 690 | 5 | 672 | 15 |
| Group transactions | (6) | (8) | (32) | (13) |
| TOTAL EBITDA | 661 | 215 | 1,732 | 1,557 |
| Depreciation | (125) | (118) | (497) | (498) |
| TOTAL OPERATING PROFIT/ LOSS | 536 | 97 | 1,235 | 1,059 |
| Net financial costs | (150) | (124) | (1) | 143 |
| NET PROFIT/ LOSS | 386 | (27) | 1,234 | 1,202 |
NORDIC FIBREBOARD LTD: Fibreboard production and sales
Fibreboard sales in Q4 2022 were € 2.02 million (Q4 2021: € 2.30 million). The decrease in sales in Q4 2022 was due to a substantial reduction in demand in our main local markets, such drop being a reflection of the uncertainty created by the war in Ukraine, increased interest rates, and higher energy prices.
The operating profitability, ie EBITDA, of the Nordic Fibreboard Ltd activities in Q4 2022 was negative € 23 thousand (Q4 2021: positive € 218 thousand). This being caused by increased cost prices for woodchips, company´s main raw material, as well as higher electricity prices in the second half of 2022.
The EBITDA of fibreboard for the full year in 2021 was € 1.09 million (full year in 2021: € 1.55 million).
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | € thousand | |||
| Q4 2022 | Q4 2021 | 12M 2022 | 12M 2021 | |
| European Union | 1,871 | 1,992 | 10,297 | 8,225 |
| Middle East | 82 | 0 | 154 | 13 |
| Russia | 0 | 273 | 427 | 1,356 |
| Asia | 0 | 23 | 69 | 147 |
| Africa | 0 | 0 | 0 | 46 |
| Other | 67 | 16 | 88 | 55 |
| TOTAL | 2,020 | 2,304 | 11,035 | 9,842 |
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 € 11 thousand in Q4 2022, (Q4 2021: € 36 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 Q4 2022 were € 690 thousand (Q4 2021: € 5 thousand). The reason for such a large change in EBITDA is the income received from the fair value revaluation of the real estate investment object located at Suur-Jõe Street 48 in Pärnu in the amount of € 697 thousand at the end of 20222
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 31.12.2022 the total assets of Nordic Fibreboard AS were € 9.4 million (31.12.2021: 8.1 million). The liabilities of the company as of 31.12.2022 were € 4.3 million (31.12.2021: € 4.2 million), of which the Group has payables of € 0.5 million as at 31.012.2022 (31.12.2021: € 0.4 million) and borrowings of € 3.2 million as at 31.12.2022 (31.12.2021: also € 3.2 million).
Receivables and prepayments amounted to € 0.6 million as at 31.12.2022 (31.12.2021: € 0.9 million). Inventories were € 1.7 million as of 31.12.2022 (31.12.2021: € 0.4 million). Fixed assets were € 7.2 million as of 31.12.2022 (€ 6.7 million as of 31.12.2021).
During 2022 twelve months, the Group’s cash flows from operating activities totalled € 152 thousand (2021 twelve months: € 730 thousand). Cash outflows due to investment activities was € 129 thousand during 2022, mainly consisting of investments into production assets of € 254 thousand and dividend received from TPD shares of € 129 thousand (2021: cash outflow € 587 thousand). Financing activities also resulted in cash outflows of € 78 thousand during 2022 (2021: cash outflow € 112 thousand). Net cash effect during 2022 twelve months cash outflow of € 55 thousand, (2021: cash inflow € 31 thousand).
OUTLOOK
NORDIC FIBREBOARD LTD
As a result of the declining demand during Q4 2022, company decided to undertake major maintenance work of the factory at the start of 2023, thus delaying reopening of the production line until 20 February 2023. This also gave the opportunity to sell off excessive inventory. During the last few weeks, before the release of the report, we have observed an increase in demand, which we attribute to more market macro certainties, such as less unpredictable energy prices and a downturn in inflation. The pricing of the company´s main raw material, woodchips, seem to be easing somewhat from end of last year while pricing of second largest input cost, electricity, is fixed at a high price. The company´s previous electricity contract ended 31.12.2022, and a new contract was concluded for period 1.1.2023 to 30.6.2024, at a higher price than the old contract (see further notes in Financial Risks section below).
The company had a longer maintenance period at start of year 2023, from mid-December 2022 to 19th February 2023. Production was restarted only on 20th February. With no output during this period, while having to carry the normal costing during the maintenance period, the company expect 2023 Q1 financial results to be poor. That being said, the building materials market tend to be more active during the Spring months (ie Q2) and at this stage it does look like this will be case also this year.
PÄRNU RIVERSIDE DEVELOPMENT
The company will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu. A detail plan for the property is ongoing (expected to be approved this Spring), with the intention of converting the property into a private residential property.
FINANCIAL HIGHLIGHTS
| € thousand | ||||
| Income statement | Q4 2022 | Q4 2021 | 12M 2022 | 12M 2021 |
| Revenue | 2,031 | 2,339 | 11,074 | 10,096 |
| EBITDA | 661 | 215 | 1,732 | 1,557 |
| EBITDA margin | 33% | 9% | 16% | 15% |
| Operating profit/-loss | 536 | 97 | 1,235 | 1,059 |
| Operating margin | 26% | 4% | 11% | 10% |
| Net profit/-loss | 386 | (27) | 1,234 | 1,202 |
| Net margin | 19% | (1%) | 11% | 12% |
| Statement of financial position | 31.12.2022 | 31.12.2021 |
| Total assets | 9,408 | 8,063 |
| Return on assets | 13% | 15% |
| Equity | 5,084 | 3,850 |
| Return on equity | 24% | 31% |
| Debt-to-equity ratio | 46% | 52% |
| Share | 31.12.2022 | 31.12.2021 |
| Last Price* | 1.60 | 1.95 |
| Earnings per share | 0.27 | 0.27 |
| Price-earnings ratio | 5.83 | 7.30 |
| Book value of a share | 1.13 | 0.86 |
| Market to book ratio | 1.42 | 2.28 |
| Market capitalization, € thousand | 7,198 | 8,773 |
| 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 shares
*http://www.nasdaqbaltic.com/
Consolidated statement of financial positions
| € thousand | 31.12.2022 | 31.12.2021 | 31.12.2020 |
| Cash and cash equivalents | 2 | 57 | 26 |
| Receivables and prepayments (Note 2) | 559 | 902 | 794 |
| Inventories (Note 3) | 1,672 | 390 | 544 |
| Total current assets | 2,233 | 1,349 | 1,364 |
| Investment property (Note 4) | 1,859 | 1,152 | 1,134 |
| Financial assets at fair value through profit or loss (Note 7) | 644 | 644 | 451 |
| Property, plant, equipment and right-of-use assets (Note 5) | 4,670 | 4,915 | 4,695 |
| Intangible assets (Note 6) | 2 | 3 | 6 |
| Total non-current assets | 7,175 | 6,714 | 6,286 |
| TOTAL ASSETS | 9,408 | 8,063 | 7,650 |
| Borrowings (Notes 8) | 290 | 146 | 756 |
| Payables and prepayments (Notes 9) | 1,014 | 829 | 1,574 |
| Short-term provisions (Note 10) | 18 | 19 | 18 |
| Total current liabilities | 1,322 | 994 | 2,348 |
| Long-term borrowings (Notes 8) | 2,875 | 3,074 | 2,493 |
| Long-term provisions (Note 10) | 127 | 145 | 161 |
| Total non-current liabilities | 3,002 | 3,219 | 2,654 |
| Total liabilities | 4,324 | 4,213 | 5,002 |
| Share capital (at nominal value) (Note 11) | 450 | 450 | 450 |
| Statutory reserve capital | 45 | 0 | 0 |
| Retained earnings (loss) | 4,589 | 3,400 | 2,198 |
| Total equity | 5,084 | 3,850 | 2,648 |
| TOTAL LIABILITIES AND EQUITY | 9,408 | 8,063 | 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 | Q4 2022 | Q4 2021 | 12M 2022 | 12M 2021 |
| Revenue (Note 13) | 2,031 | 2,339 | 11,074 | 10,096 |
| Cost of goods sold (Note 14) | 1,890 | 1,843 | 9,024 | 7,294 |
| Gross profit | 141 | 496 | 2,050 | 2,802 |
| Distribution costs (Note 15) | 193 | 277 | 1,112 | 1,168 |
| Administrative expenses (Note 16) | 109 | 120 | 424 | 565 |
| Other operating income (Note 18) | 697 | 0 | 730 | 5 |
| Other operating expenses (Note 18) | 0 | 2 | 9 | 15 |
| Operating profit (loss) | 536 | 97 | 1,235 | 1,059 |
| Finance income (Note 19) | 24 | 0 | 129 | 265 |
| Finance costs (Note 19) | 174 | 124 | 130 | 122 |
| PROFIT (LOSS) BEFORE INCOME TAX | 386 | (27) | 1,234 | 1,202 |
| NET PROFIT (LOSS) FOR THE PERIOD | 386 | (27) | 1,234 | 1,202 |
| Basic earnings per share (Note 12) | 0.09 | (0.01) | 0.27 | 0.27 |
| Diluted earnings per share (Note 12) | 0.09 | (0.01) | 0.27 | 0.27 |
*The notes to the financial statements presented on pages 14 to 25 are an integral part of these consolidated financial statements.
TORFINN LOSVIK
Chairman of the board
Phone: +372 56 99 0988
torfinn.losvik@nordicfibreboard.com
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