MANAGEMENT REPORT
Consolidated net sales for Q1 2023 were € 2.60 million, which remained at the same level compared to the same period last year (Q1 2022: € 2.60 million). The main business area is the production and wholesale of fibreboard, which recorded sales in Q1 2023 of € 2.59 million (Q1 2022: also € 2.59 million). 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 2023 (Q1 2022: also € 0.01 million).
The consolidated EBITDA of Nordic Fibreboard AS for Q1 2023 was negative € 94 thousand (Q1 2022: positive € 255 thousand). EBITDA margin was negative 4% in Q1 2023 (Q1 2022: positive 10%). However, the Group’s gross margin fell from 25% for Q1 2022 to being 11% in Q1 2022, the main reason for the decrease in the gross margin was the substantial increase in pricing of woodchips and energy, the company`s main input costs.
In the first quarter of 2023, demand in the fibreboard business was lower than expected, which led Nordic Fibreboard Ltd to postpone the restart of the production with 7 weeks after its usual year-end maintenance period. This prolonged stoppage period led to EBITDA being negative in both January and February, while finally turning positive in March month. Due to the company’s volume commitment to its electricity supplier, the long stoppage of the factory resulted in having to resell volume commitment back to the electricity supplier, resulting in an extraordinary loss of € 407 thousand. The electricity contract was cancelled on 31.3.2023, and a new less onerous electricity contract came into force on 01.04.2023.
The consolidated operating loss of Nordic Fibreboard AS for Q1 2023 was € 623 thousand, which includes the one-time extraordinary loss from the resale of electricity (Q1 2022: operating profit € 255 thousand).
Financial income in Q1 2023 was positively affected by an increase of € 74 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 2023, and ended up being valued at € 718 thousand at end of Q1 2023 (in Q1 2022, the shares value increased with € 52 thousand).
Group`s consolidated net loss therefore for Q1 2023 was € 597 thousand (Q1 2022: profit € 152 thousand).
DIVISIONAL REVIEW
REVENUE BY BUSINESS SEGMENTS
| € thousand | Q1 2023 | Q1 2022 |
| Fibreboards production and sales | 2,585 | 2,591 |
| Real Estate Management | 12 | 9 |
| TOTAL | 2,597 | 2,600 |
PROFIT BY BUSINESS SEGMENTS
| € thousand | Q1 2023 | Q1 2022 |
| EBITDA by business units: | ||
| Fibreboards production and sales | (76) | 279 |
| Real Estate Management | (13) | (10) |
| Group transactions | (5) | (14) |
| TOTAL EBITDA | (94) | 255 |
| Depreciation | (122) | (121) |
| Extraordinary other operating expense | (407)* | 0 |
| TOTAL OPERATING PROFIT/ LOSS | (623) | 134 |
| Net financial costs | 26 | 18 |
| NET PROFIT/ LOSS | (597) | 152 |
* consists of the one-time loss received from the resale of electricity to the electricity company.
NORDIC FIBREBOARD LTD: FIBREBOARD PRODUCTIONS AND SALES
Fibreboard sales for Q1 2023 were € 2.59 million (Q1 2022: also € 2.59 thousand). Sales did improve during the 3 months, up from being € 792 thousand in January, to € 836 thousand in February, and to € 957 thousand in March. The inventory build-up at end of 2022 enabled sales during Q1 2023 to reflect orders received despite the production standstill period. Sales to the company’s main markets in European Union increased during Q1 with € 196 thousand compared to one year earlier, negating the impact of ending sales to Russia customer, as a result of sanctions against Russia for their unlawful war in Ukraine.
The consolidated EBITDA of Nordic Fibreboard Ltd OÜ for Q1 2023 was negative € 76 thousand (Q1 2023: positive € 279 thousand). The reason for the drop in EBITDA is mainly more expensive raw material prices in the Q1 2023 compared to the Q1 2022.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | Q1 2023 | Q1 2022 |
| European Union | 2,455 | 2,259 |
| Africa | 53 | 0 |
| Asia | 31 | 41 |
| Russia | 0 | 269 |
| Middle East | 0 | 13 |
| Other | 46 | 9 |
| TOTAL | 2,585 | 2,591 |
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 € 12 thousand in Q1 2023, (Q1 2022: € 9 thousand).
The real estate management EBITDA for Q1 2023 were negative € 13 thousand (Q1 2022: negative € 10 thousand).
STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 31.03.2023 the total assets of Nordic Fibreboard AS were € 9.4 million (31.03.2022: € 8.6 million). The liabilities of the company as of 31.03.2023 were € 4.9 million (31.03.2022: € 4.6 million), of which Group has payables of € 1.2 million as at 31.03.2023 (31.03.2022: € 0.8 million) and borrowings of € 3.1 million as at 31.03.2023 (31.03.2022: € 3.2 million).
Receivables and prepayments amounted to € 1.3 million as at 31.03.2023 (31.03.2022: € 1.4 million). Inventories were € 0.8 million as of 31.03.2023 (31.03.2022: € 0.4 million). Fixed assets were € 7.2 million as of 31.03.2023 (€ 6.7 million as of 31.03.2022).
During 2023 Q1, the Group’s cash flows from operating activities totalled € 166 thousand (2022 Q1: € 78 thousand). Investment activities resulted in cash outflows in amount of € 80 thousand in 2023 Q1, which was due to improvements in production machinery (2022 Q1: outflow € 98 thousand). Financing activities also resulted in cash outflows of € 41 thousand in Q1 2023 (2022 Q1: cash outflow € 35 thousand). Net cash effect during 2023 Q1 cash inflow of € 45 thousand (2022 Q1: cash outflow € 55 thousand).
OUTLOOK
NORDIC FIBREBOARD LTD
The overall demand picture appears subdued, and the outlook remain uncertain. Increasing interest rates, global economic uncertainty and the ongoing war in Ukraine all have led to lack of confidence among end users of building materials, including the company’s fibreboards.
Main operation issue remains the ongoing preparation of upgrading the company’s wood-based boiler house in Pärnu so to meet the new emission requirements coming into force in 01.01.2025
PÄRNU RIVERSIDE DEVELOPMENT
We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu. A detail plan for the property is ongoing, with the intention of converting the property into a private residential property.
FINANCIAL HIGHLIGHTS
| € thousand | ||
| Income statement | Q1 2023 | Q1 2022 |
| Revenue | 2,597 | 2,600 |
| EBITDA | (94) | 255 |
| EBITDA margin | (4%) | 10% |
| Operating profit | (623) | 134 |
| Operating margin | (24%) | 5% |
| Net profit | (597) | 152 |
| Net margin | (23%) | 6% |
| Statement of financial position | 31.03.2023 | 31.03.2022 |
| Total assets | 9,368 | 8,580 |
| Return on assets | (6%) | 2% |
| Equity | 4,487 | 4,002 |
| Return on equity | (13%) | 4% |
| Debt-to-assets ratio | 52% | 53% |
| Share | 31.03.2023 | 31.03.2022 |
| Last Price (€)* | 1.52 | 1.83 |
| Earnings per share (€) | 0.11 | 0.18 |
| Price-earnings ratio | 14.05 | 10.25 |
| Book value of a share (€) | 1.00 | 0.89 |
| Market to book ratio | 1.52 | 2.06 |
| Market capitalization (€ thousand) | 6,816 | 8,233 |
| 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-assets 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 | 31.03.2023 | 31.12.2022 | 31.03.2022 | 31.12.2021 |
| Cash and cash equivalents | 47 | 2 | 2 | 57 |
| Receivables and prepayments (Note 2) | 1,272 | 559 | 1,401 | 902 |
| Inventories (Note 3) | 842 | 1 672 | 436 | 390 |
| Total current assets | 2,161 | 2,233 | 1,839 | 1,349 |
| Investment property (Note 4) | 1,859 | 1,859 | 1,152 | 1,152 |
| Financial assets at fair value through profit or loss (Note 7) | 718 | 644 | 696 | 644 |
| Property, plant and equipment (Note 5) | 4,628 | 4,670 | 4,890 | 4,915 |
| Intangible assets (Note 6) | 2 | 2 | 3 | 3 |
| Total non-current assets | 7,207 | 7,175 | 6,741 | 6,714 |
| TOTAL ASSETS | 9,368 | 9,408 | 8,580 | 8,063 |
| Borrowings (Note 8) | 477 | 290 | 114 | 146 |
| Payables and prepayments (Note 9) | 1,617 | 1,014 | 1,234 | 829 |
| Short-term provisions (Note 10) | 13 | 18 | 14 | 19 |
| Total current liabilities | 2,107 | 1,322 | 1,363 | 994 |
| Long-term borrowings (Note 8) | 2,647 | 2,875 | 3,071 | 3,074 |
| Long-term provisions (Note 10) | 127 | 127 | 145 | 145 |
| Total non-current liabilities | 2,774 | 3,002 | 3,216 | 3,219 |
| Total liabilities | 4,881 | 4,324 | 4,578 | 4,213 |
| Share capital (at nominal value) (Note 11) | 450 | 450 | 450 | 450 |
| Statutory reserve capital | 45 | 45 | 0 | 0 |
| Retained earnings (loss) | 3,992 | 4,589 | 3,552 | 3,400 |
| Total equity | 4,487 | 5,084 | 4,002 | 3,850 |
| TOTAL LIABILITIES AND EQUITY | 9,368 | 9,408 | 8,580 | 8,063 |
*The notes to the financial statements presented on pages 14 to 24 are an integral part of these consolidated financial statements.
Consolidated statement of profit or loss and other comprehensive income
| € thousand | Q1 2023 | Q1 2022 |
| Revenue (Note 13) | 2,597 | 2,600 |
| Cost of goods sold (Note 14) | 2,435 | 2,060 |
| Gross profit | 162 | 540 |
| Distribution costs (Note 15) | 233 | 284 |
| Administrative expenses (Note 16) | 139 | 121 |
| Other operating income (Note 18) | 0 | 0 |
| Other operating expenses (Note 18) | 413 | 1 |
| Operating profit (loss) | (623) | 134 |
| Finance income (Note 19) | 74 | 52 |
| Finance costs (Note 19) | 48 | 34 |
| PROFIT (LOSS) BEFORE INCOME TAX | (597) | 152 |
| NET PROFIT (LOSS) FOR THE PERIOD | (597) | 152 |
| Basic earnings per share (Note 12) | (0.13) | 0.03 |
| Diluted earnings per share (Note 12) | (0.13) | 0,03 |
*The notes to the financial statements presented on pages 14 to 24 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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