Rapala VMC Corporation’s Half Year Report H1/2024: Profitability Improved in a Recovering Market

RAPALA VMC CORPORATION, Half year financial report, July 24, 2024 at 5:00 p.m. EET

January-June (H1) in brief:

Net sales were 120.5 MEUR, up 2% from previous year (117.9). With comparable exchange rates sales were 3% up from previous year.
Operating profit was 11.2 MEUR (4.4).
Comparable operating profit* was 6.2 MEUR (5.3).
Earnings per share (non-diluted) was 0.07 EUR (-0.03).
Cash flow from operations was 18.2 MEUR (18.6).
Inventories were 84.7 MEUR (98.5).
Short-term outlook: The Group expects 2024 full year comparable operating profit* to increase from 2023.

President and CEO Lars Ollberg: “Our strong brands and trusted position as a best partner for our customers form the cornerstones of our competitive advantages. Our most valuable brand is Rapala, and Rapala sales profitability has remained historically stable due to high brand integrity despite market turbulences.
Our largest and most important market area is North America, which accounts for approximately half of our sales. In North America, where fishing is one of the most popular outdoor sports, our market position is very strong. Big Box Retailers continue to dominate the retail markets. Strengthening relationships and fulfilling weekly replenishment service level requirements underpins our long-term partnerships. This strategy drives the mission and strategy to grow North American business and become the most trusted partner within the sport fishing sector.
Our second largest market area is Europe. The most significant countries in the region are Finland, France, Germany and UK. European distribution operations are engaged in improving profitability and efficiency. The results are very encouraging despite a challenging market environment in most countries.
On manufacturing and supply chain side, the production transfers are concluded, and efficiencies have increased to satisfactory levels. Product and production quality has remained high despite the transfers. The new products were successfully completed on schedule. Our key Asian manufacturing partners also delivered solid performance.
The focused “One More Turn" strategy for 2024–2026 began in autumn 2023 and its clear goal is to improve profitability and working capital management while emphasizing the importance of sales, customers and consumers. The key strategic actions focus on profitability and working capital management, as well as supporting sales growth in a sustainable manner.
Year 2024 started off with reasonable trading conditions as destocking is tapering down in most markets. During the first half of the year, we placed a special attention on inventory healthiness and focused sales. As a result, our sales improved to 120.5 MEUR (117.9), our comparable operating profit improved to 6.2 MEUR (5.3). Inventories decreased by 13.8 MEUR to 84.7 MEUR (98.5).
The US economy is holding, especially in the lower cost consumable type products. Our North American sales exceeded expectations in the open water brands and the growth from previous year is promising. The recent Rapala hard bait introductions have proven successful. Entering the soft plastic market segment with Rapala CrushCity evidenced the Rapala brand outperforming all expectations. A key strategy has been a locally driven approach of a strong global brand, and adding local flavour in the products in all key market regions. The combination of the best baits and VMC hooks will be very synergistic. Over-demand of the new CrushCity products caused supply chain issues which were solved, and margins are expected to normalize after a period of extensive air shipping.
I am also happy to see Okuma coming back to growth path and similarly happy that the 13 Fishing integration and overhead reduction plan has been completed which will drive efficiency and profitability for both brands.
Pre-sales of our winter businesses for the upcoming season have fallen short of expectations. Unfavourable ice and snow conditions in the North American and North European markets in the previous season left the retailers with high inventories.”

Key figures

	H1	H1	Change	FY
MEUR	2024	2023	%	2023
Net sales	120.5	117.9	2%	221.6
Operating profit	11.2	4.4	155%	4.0
% of net sales	9.3%	3.7%		1.8%
Comparable operating profit *	6.2	5.3	17%	5.6
% of net sales	5.1%	4.5%		2.5%
Cash flow from operations	18.2	18.6	-2%	20.6
Gearing %	36.9%	73.4%		51.8%
EPS, EUR	0.07	-0.03		-0.20

* Excluding mark-to-market valuations of operative currency derivatives and other items affecting comparability. Other items affecting comparability include material restructuring costs, impairments, gains and losses on business combinations and disposals, insurance compensations and other non-operational items.
Rapala Group presents alternative performance measures to reflect the underlying business performance and to enhance comparability between financial periods. Alternative performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS. Definitions and reconciliation of key figures are presented in the financial section of the release.

Market Environment

During the first half of the year, operating environment was reasonable. Inflation started to ease and retail activity improved from prior year. Consumer appetite for lower cost consumables improved while higher value item sales are on a path to recovery. There is still cautiousness among consumers and retailers for high-ticket items but market showed improved demand towards the end of the first half of the year. Shift in retailers’ ordering pattern from pre-orders towards in-season replenishment favored those with readily available inventory.

Business Review January–June 2024

The Group’s net sales for the year were 2% above the comparison period with reported translation exchange rates. With comparable translation exchange rates, net sales were organically up by 3% from the comparison period.

North America

Sales in North America increased by 5% from the comparison period. With comparable translation exchange rates sales were up by 6%. Newly launched Rapala CrushCity soft plastic lures contributed significantly to the increase in sales. CrushCity boosted also the VMC jigging hook sales. Sales grew in almost all categories except for hard baits, which was impacted by the trend shift in fishing technique which favored soft plastics over hard baits. Replenishment sales remained robust with big box retailers dominating the market. 13 Fishing contributed positively but was held back by existing retail inventories. The ice fishing sales landed slightly higher than prior year despite the second consecutive poor ice season which held retailer inventories on a high level.

Nordic

Sales in the Nordic market increased by 1% from the comparison period with reported and comparable translation exchange rates.
Retailers’ inventories returned to healthy levels but general economic condition impacted sales negatively. Demand for consumables improved. Focus on operational excellence started to show results and focus on core consumables products such as Rapala increased the sales in these categories. North Europe have been catching up to previous year thanks to better availability and a strong focus on core products.
Winter season sales remained at last year’s level.

Rest of Europe

Sales in the Rest of Europe market increased by 2% from the comparison period. With comparable translation exchange rates, sales were up 3%.
Market remained challenging but sales is above previous year driven by successful new product introductions including CrushCity, a strong push on Dynamite Baits and a positive momentum on Okuma following a slow 2023 on investment products. Per country, France sales have been supported by novelties and early seasonal order deliveries that have compensated poor weather conditions in many areas in France. Germany has continued its strong growth recovery becoming one of the largest European markets. Weak consumer sentiment in Iberia resulted in a challenging start of the year. Other Central Europe has a contrasted situation with Poland and Romania increasing sales whereas Hungary and Czech republic are below previous year.
Termination of Third Party distributorships decreased the sales and without the impact of these, sales of the region increased by 6%.

Rest of the World

With reported translation exchange rates, sales in the Rest of the World market decreased by 10% from the comparison period. With comparable translation exchange rates, sales decreased by 5% compared to the previous year. Sales were down in most of the markets following the macroeconomic headwind and low discretionary spending. Asian markets suffered from weak currencies which favored locally produced products over imported goods. In Latin American markets sales were partially postponed to second half of the year due to late deliveries from third party suppliers. Successful Okuma launch in Korea provided incremental growth in addition to strong boost from CrushCity especially in Australia.

External net sales by area

	H1	H1	Change	Comparable	FY
MEUR	2024	2023	%	change %	2023
North America	61.4	58.3	5%	6%	110.6
Nordic	13.5	13.4	1%	1%	27.8
Rest of Europe	33.5	32.8	2%	3%	57.1
Rest of the World	12.1	13.4	-10%	-5%	26.1
Total	120.5	117.9	2%	3%	221.6

Financial Results and Profitability

Comparable (excluding mark-to-market valuations of operative currency derivatives and other items affecting comparability) operating profit increased by 0.9 MEUR from the comparison period. Reported operating profit increased by 6.8 MEUR from the comparison period and the items affecting comparability had a positive impact of 5.0 MEUR (-0.9) on reported operating profit.
Comparable operating profit margin was 5.1% (4.5) for the first half of 2024. The improved profitability was driven by higher sales in the open water market. Sales margin decreased slightly but the focus on operational efficiency enabled lower operating expenses. The 6 MEUR savings program continued and was expanded as part of the savings was offset by inflationary cost increases. Among the measures was bringing decision making closer to the local markets and defining clear accountabilities. Following this, the size of the Global Management Team was reduced to eight members.
Reported operating profit margin was 9.3% (3.7) for the first half. Reported operating profit included impact of mark-to-market valuation of operative currency derivatives of -0.2 MEUR (0.0). Other items affecting comparability included in the reported operating profit were 5,0 MEUR, which includes gain from the sale and lease back transaction of the Canadian real estate. Majority of the expenses relate to the restructuring of the Global Management Team and other restructuring expenses arising from the 6 MEUR savings program.
Total financial (net) expenses were 4.3 MEUR (4.9) for the first half of the year. Net interest and other financing expenses were 4.5 MEUR (4.3) and (net) foreign exchange gains were 0.2 MEUR (-0.6).
Net profit for the first half of the year increased by 5.8 MEUR and was 4.7 MEUR (-1.1) and earnings per share was 0.07 EUR (-0.03).

Key figures

	H1	H1	Change	FY
MEUR	2024	2023	%	2023
Net sales	120.5	117.9	2%	221.6
Operating profit / loss	11.2	4.4	155%	4.0
Comparable operating profit *	6.2	5.3	17%	5.6
Net profit / loss	4.7	-1.1		-7.3

Bridge calculation of comparable operating profit

	H1	H1	Change	FY
MEUR	2024	2023	%	2023
Operating profit / loss	11.2	4.4	155%	4.0
Mark-to-market valuations of operative currency derivatives	0.2	0.0		-0.2
Other items affecting comparability	-5.2	0.9		1.9
Comparable operating profit	6.2	5.3	17%	5.6

More detailed bridge of comparable operating profit and definitions and reconciliation of key figures are presented in the financial section of the release.

Segment Review

Group Products

With comparable translation exchange rates, Group Products sales increased by 7.4 MEUR from the comparison period. Largest sales increase came from successful launch of CrushCity soft plastic lures which also supported the sales of hooks. Hard bait sales saw a temporary drop following a shift in some new fishing techniques mainly in the North American market. Excluding hard baits, sales grew in almost all open water consumables categories. In rod and reel category, Okuma sales returned to growth path after the European market being flooded with rods and reels in the prior year. Acquisition of DQC International (13 Fishing USA) in 2023 increased the rod and reel sales in the US, although the impact was not significant as the market remained challenging, and focus was in the integration of the operations.
In ice fishing, sales increased from prior year despite challenging ice conditions. Ski category replenishment sales remained at prior year level despite the difficult macroeconomic conditions in the Nordic market.

Third Party Products

With comparable translation exchange rates, Third Party Products sales were 3.6 MEUR below the comparison period. Half of the sales decline is attributed to termination of distributorships. The other half of the decline comes from a late delivery of a third party supplier. Ski business replenishment sales landed close to prior year level despite the market remaining difficult.

Net sales by segment

	H1	H1	Change	Comparable	FY
MEUR	2024	2023	%	change %	2023
Group Products	116.1	109.8	6%	7%	208.1
Third Party Products	4.4	8.1	-46%	-45%	13.6
Total	120.5	117.9	2%	3%	221.6

Comparable operating profit by segment

	H1	H1	Change	FY
MEUR	2024	2023	%	2023
Group Products	5.7	5.1	12%	5.1
Third Party Products	0.5	0.2	126%	0.6
Comparable operating profit	6.2	5.3	16%	5.6
Items affecting comparability	5.0	-0.9	526%	-1.6
Operating profit / loss	11.2	4.4	155%	4.0

Financial Position

Cash flow from operations remained at prior year level and landed at 18.2 MEUR (18.6). Good results follow strong focus on cash and working capital management and as a result non-interest-bearing liabilities landed at a higher level. Compared to the previous year, the net change of working capital increased by 2.0 MEUR and was 12.5 MEUR (10.5).
End of the period inventory was 84.7 MEUR (98.5). The change in obsolescence allowance remained at prior year level, and changes in translation exchange rates didn’t impact inventory value. Inventory landed 2.8 MEUR below year-end level and 13.8 MEUR below last year as prior year was impacted by resolving supply chain disruption and retail level destocking. Acquisition of DQC International increased inventory by some 3 MEUR. Controlled inventory reduction is taking place and manufacturing capacity was adjusted to accommodate current demand.
Net cash generated from investing activities was 5.7 MEUR. Capital expenditure was 2.7 MEUR (4.8) and disposals 8.7 MEUR (0.4). Expenditure was kept to a lower level and consisted mainly of maintenance of manufacturing capacity and investments to new products. Prior year expenditure include expenses relate to the production transfers from Russia and from Finland to the Rapala VMC campus in Pärnu, Estonia. Disposals include the sale and lease back of the Canadian real estate.
Liquidity position of the Group was good. Undrawn committed long-term credit facilities amounted to 41.0 MEUR at the end of the reporting period. Gearing ratio decreased and equity-to-assets ratio increased from last year following the issuance of the 30 MEUR hybrid capital bond.
The Group’s 106 MEUR senior secured term and revolving credit facilities agreement includes financial covenants based on the available liquidity (minimum 22.5 MEUR), 12m rolling EBITDA (minimum 10 MEUR), net debt to consolidated equity (maximum 100%), absolute net debt, and net debt to EBITDA (“leverage ratio”). The absolute net debt covenant for Q1/2024 was 90 MEUR, for Q2/2024 80 MEUR and for Q3/2024 is 80 MEUR. The financial leverage ratio covenant level for Q1/2024 was 5.50, for Q2/2024 4.25 and for Q3/2024 and onwards 3.80. Covenants are regularly tested, either quarterly or on the last date of each month. The risk of breaching the covenants would trigger negotiations between the Group and lending banks to resolve the potential covenant breach, and to agree on actions to rectify the situation. In the unlikely event of unresolved covenant breach, the lending banks would have the right to call all or any part of the loans and related interest.
On Q1/2024 and Q2/2024 testing dates, net debt landed at 81.0 MEUR and 59.5 MEUR, respectively. Leverage ratio for the same testing dates landed at 5.30 and 3.33. Calculation of the covenants include customary adjustments mainly related to items affecting comparability and asset disposals, and therefore deviate from the reported figures elsewhere in this report. The Group is currently compliant with all financial covenants and expects to comply with future bank requirements as well. The Group’s liquidity position remains good, and cash and cash equivalents amounted to 27.6 MEUR at June 30, 2024.
During the reporting period, the Group agreed with the lending banks to extend the term of the 106 MEUR facilities by six months, subject to two extension options. First extension option is for 6 months and the second is for 12 months.

Key figures

	H1	H1	Change	FY
MEUR	2024	2023	%	2023
Cash flow from operations	18.2	18.6	-2%	20.6
Net interest-bearing debt at end of period	59.9	98.0	-39%	80.9
Gearing %	36.9%	73.4%		51.8%
Equity-to-assets ratio at end of period, %	52.6%	41.7%		52.1%

Definitions and reconciliation of key figures are presented in the financial section of the release.

Strategy Implementation

The strategic objective of the company is to be a unified, brand and innovation-focused leader in the fishing tackle industry. The current strategy focuses on fully realizing the growth potential of Rapala VMC in the future. The core of the Group's strategy is based on six strategic pillars, which are all interlinked and aligned across all business units. The strategic actions are based on leveraging the brand portfolio, the manufacturing and sourcing model, R&D capabilities, the extensive sales network, and a strong local presence in markets around the world. Despite the challenging market conditions and global uncertainty, the execution of the strategy is progressing as planned.
People/Culture - The first strategic focus area is based on the idea that all the Group's business units strive to operate as one strong and successful entity. This enables a unified, collaborative, dynamic, and growth-oriented corporate culture. During the first half of the year, changes were implemented to bring decision-making closer to local markets and by defining clear country-specific and regional responsibilities. As a result, the size of the global management team was reduced from eleven to eight members. The simpler organizational structure and agile management model have made the Group better prepared to continue the strong execution of its strategy.
Customers - Key customer relationships and local market leadership are essential, as well as a strong understanding of customers and markets, and continuous investments in all sales channels. Investments in best-in-class customer service continue, and during the first half of the year the Group completed the first phase of a new B2B tool in the Nordic countries. The Group is also focused on strengthening the "Winning in the stores" concept as part of its customer-centric strategy.
Consumer - A focus on the end-user is an important part of the strategy. Our aim is to be the market leader and bring the latest trends to the fishing tackle market by offering innovative and exciting products. The Group is continuously developing its e-commerce business to enable the best possible customer experience for the constantly growing digitally-aware consumer group, emphasizing the company's goal of being more directly engaged with consumers. Harmonizing the product portfolio, stock-keeping units and brands remains one of the Group's key priorities, which was continued during the first half of the year in line with the Group's own-brand focused strategy. Consumer understanding is continuously enhanced through various market-specific analyses.
Sustainability - We are working together to ensure that future generations also have the opportunity to enjoy sustainable fishing and outdoor activities. We want to be the industry's trendsetter and require concrete responsible actions from all our team members to ensure that we achieve sustainable, long-term changes. Our sustainability initiatives have progressed steadily across all major product categories. In May 2024, the Group strengthened its sustainability commitment by joining the United Nations Global Compact network.
Product Development/Innovation - The Research & Development and Product Development & Innovation units continue to strengthen their position as a competitive advantage for the Group in a market where anglers around the world demand new innovations to catch better catches. The Group's Product Development & Innovation unit is ready to listen to the needs of customers and consumers and serve them globally. The organizational changes made during the first half of the year brought the product development and innovation functions closer to consumers and markets by seamlessly integrating these functions into the sales regional organizations. This ensures full leverage of local presence and the promotion of new products and innovations globally.
Operations/Finance - The Group continues to invest in its operations to achieve operational excellence and improve working capital efficiency. We are currently developing an integrated business planning model and a global S&OP process, which will improve working capital efficiency and availability of key products. The new tool has already been successfully implemented in the United States and Canada, and its rollout will continue in a phased manner over the coming years. The "One More Turn" plan to reduce inventory levels by 25% is also progressing, despite challenging market conditions. Cash flow management, fixed cost optimization, and inventory level reduction remain among the Group's key short- and medium-term priorities in 2024.

Product Development

Following the successful global trade launch of Rapala’s CrushCity soft plastics the industry was taken by storm with a number of major tournament wins on the new product line, propelling the new product line to stardom among consumers and Rapala dealer alike. Leading the charge was the “Freeloader” a lure designed, among its other features, to be fished as a trailer behind various types of VMC terminal tackle used in conjunction with the newest forward facing sonar techniques. Sell-in performance and consumer demand of the new product line far exceeded all expectations and has become one of Rapala’s most successful product launches of all time.
The CrushCity Soft Plastics program was designed to be regionally relevant in many different fisheries around the world, and it has been successful not only in the US but also in the Nordic Region, Central Europe, Australia and Canada. Sales have continued to be incredibly strong throughout the first half of 2024 with strong customer adoption and retail pull through. Following the initial trade launch in mid-2023 the next round of new shapes was launched around the world in the beginning of second quarter of 2024. Product and line extensions have been strongly received by the customer base during initial presentations and the new models will be landing in stores in the latter half of 2024, depending on the region. The soft plastic lures are generally considered as the largest single category within the fishing lures. With the success of CrushCity, Rapala continues to aggressively gain market share in it.
Aside from the success of CrushCity there were several new product launches within the core brands that continue to make waves in the industry. These new launches, such as new Mavrik 110 jerkbait, VMC Tungsten Mooneye Jig and critically acclaimed VMC Redline series additions are perfectly suited to the newest techniques utilizing forward facing sonar. Also in fishing lines the introductions are also being driven by forward facing sonar trend; Sufix being right there to deliver all new Revolve braid, designed specifically for spinning reels.
Upon the full acquisition of 13 Fishing the product line was fully rationalized and optimized to perform better with the retail partners. A new marketing approach will be much more effective focusing on the core of 13 Fishing products. With a more streamlined approach the brand had two strong launches with the all new Myth and Oath rod series. Both product lines aggressively attack the mid-level volume price points with high-end specifications and finishing that provide the highest level of value to the consumer in the marketplace. An exciting new Combo product line was also launched, offering strong value to the consumer. This new offering, which was very well received by the customer base, will propel 13 Fishing back into the combo business with major customers in the US allowing even new and entry level anglers access to the 13 Fishing brand.
Rapala VMC’s product development pipeline for the next three years continues to be strong and well planned for the coming years. Many of our strongest retail partners confirm that Rapala’s new product introductions are some of the best in the industry and that our brands have incredibly strong momentum right now. This supported with world class marketing ensures our newest launches sell through at high velocity and that our core consumer continues to catch fish and enjoy the outdoors in new and innovative ways with our products.

Sustainability

At the start of 2024, several significant developments have advanced the Group’s sustainability efforts. Guided by the Strategy of Constant Improvement, launched in 2023, we have achieved notable milestones. One key achievement was Rapala VMC Corporation’s acceptance as a participant in the United Nations Global Compact. This alignment with global standards enhances our commitment to environmental stewardship and social responsibility, allowing us to leverage the expertise and resources of the initiative to further our sustainability agenda.
To ensure robust monitoring of our redefined sustainability targets and comply with the EU Corporate Sustainability Reporting Directive (CSRD), we conducted a GAP analysis to identify gaps between our existing ESG data collection and reporting processes and the CSRD disclosure requirements. Subsequently, we enhanced our ESG CSM system, Tofuture, to capture all relevant data and maintain a clear audit trail for external assurance purposes. We have established a comprehensive reporting process, aiming to collect the first set of data from all Group entities in H2/2024. A dedicated reporting team with representatives from all Group entities has been formed, and all key personnel involved in the reporting have been trained.
At the Annual General Meeting, Deloitte Ltd. was appointed to provide assurance for our sustainability reporting for the 2024 financial year. The assurance process began with a review of the double materiality analysis conducted in H2/2023, forming the basis for our selected ESRS (European Sustainability Reporting Standards) standards. Our 2024 sustainability report will adhere to the standards ESRS 2 General Disclosures, ESRS E1 Climate Change, ESRS E4 Biodiversity and Ecosystems, ESRS E5 Resource Use and Circular Economy, and ESRS S1 Own Workforce.
On the product sustainability front, we have focused on renewing our Rapala branded accessories packaging, consisting of over 300 different types of packaging. The new packaging, to be launched in 2025, aims to minimize plastic use and reduce cardboard consumption. We are also ensuring compliance with all relevant local and regional packaging labeling legislations, striving for a globally compliant package to reduce waste and improve supply chain efficiency.
We have also dedicated significant efforts to enhancing our product compliance processes and explored various software solutions to support these initiatives. The product compliance landscape is rapidly evolving, with numerous new reporting requirements and legislation introduced in recent years and more anticipated in the future. One key development is the implementation of extended producer responsibility for fishing gear, as mandated by the EU directive aimed at reducing the environmental impact of certain plastic products. This responsibility will be enacted in EU countries over the next few years, with varying implementation solutions across different nations. Our local subsidiaries are actively monitoring legislative developments and diligently fulfilling their producer responsibility obligations. In Finland, we have engaged in discussions with the Finnish SUP Producer Association (Suomen SUP-Tuottajayhteisö Oy) to comprehensively address these obligations.
In 2023, we conducted our first round of supplier audits, focusing on human rights, employee rights, safety, environment, and business practices as outlined in our Group Supplier Code of Conduct. These audits, conducted by an external assurance partner, will continue in the second half of 2024, with plans to increase the number of suppliers audited. We have also established a follow-up process to ensure the implementation of action plans generated from audit findings.
Our sustainability efforts extend to our personnel, identified as a critical success factor in our strategy and double materiality analysis. To enhance communication, focus development work, and harmonize HR processes, we launched our first Global Employee Survey in the spring. Additionally, we conducted our inaugural Diversity, Equity, and Inclusion training sessions for employees in Finland. Employee training is a strategic priority, leading to the global launch of the LinkedIn Learning platform and the allocation of adequate resources to training.
Beyond internal initiatives, we engage in sustainability efforts within local communities. The Rapala Do Good initiative encourages each unit within the Rapala VMC Group to adopt projects related to waterway conservation, fishing access for special needs groups, or similar themes. In Finland, we organized a river restoration day for our employees in collaboration with The Association for Stream Restoration – Virho ry, with plans for further collaboration with both Virho ry and Keep the Archipelago Tidy Association in the second half of the year.

Personnel and Organization

Average number of personnel was 1 345 (1 491) for the first half of the year. At the end of June, the number of personnel was 1 358 (1 434).
There were changes in the global management team during the spring. Rapala VMC announced on March 30, 2024, that Stanislas de Castelnau, Executive Vice President, Head of Operations, retired at the end of March. Rapala VMC also announced on June 14, 2024, that Päivi Ohvo, Enrico Ravenni, and Joni Tuominen (each Executive Vice President) have decided to seek new career opportunities outside the Rapala VMC Group. Also, David Neill (Executive Vice President) left the global management team June 16, 2024, and returned to his former position as President of Rapala Canada. The group is not seeking replacements for the departing members of the global management team, and the number of members in the management team decreased from eleven to eight. The responsibilities of the departing members have been distributed among the remaining eight management team members or otherwise reorganized.
Rapala VMC announced on April 15, 2024, that a long-time member of Rapala's board passed away on April 14, 2024. Kasslin served as a member of Rapala VMC's board since 1998, as the chairman of the board from 2016 to 2018, and as the CEO from 1998 to 2016.

Short-term Outlook and Risks

Trading outlook for 2024 is reasonable as destocking is tapering down in most markets. The US economy is holding and entering into a modest growth mode. Higher value durable items have also started recovering in North America surpassing the sales growth of lower cost consumer goods. In Europe, first half of the year results are very encouraging despite challenging market environment. The work continues to improve profitability and efficiency.
Pre-sales of our winter businesses for the upcoming season are somewhat behind expectations as retailers rely on in-season replenishment and supplier inventories. Unfavourable ice conditions in the North American market in the previous season left the retailers with high inventories.
On manufacturing and supply chain side, the production transfers are concluded, and efficiencies have increased to satisfactory levels. Product and production quality has remained high despite the transfers.
Consequently, the Group expects 2024 full year comparable operating profit (excluding mark-to-market valuations of operative currency derivatives and other items affecting comparability) to increase from 2023.
Short term risks and uncertainties and seasonality of the business are described in more detail in the end of this report.

Annual General Meeting

The AGM approved the Board of Director’s proposal, according to which no dividend be paid based on the adopted balance sheet for the financial year 2023. The AGM approved that the Board of Directors consists of six members. Emmanuel Viellard, Julia Aubertin, Vesa Luhtanen and Alexander Rosenlew were re-elected as members of the Board of Directors and Pascal Lebard and Johan Berg were elected as new members. A separate stock exchange release on the decisions of the AGM has been given, and up to date information on the Board’s authorizations and other decisions of the AGM are available also on the corporate website.
Authorised Public Accountants Firm Deloitte Ltd was elected as the Company’s auditor. Deloitte Ltd will also carry out the assurance of the company’s sustainability reporting for the financial year 2024 in accordance with the transitional provision of the act amending the Limited Liability Companies Act (1252/2023) and will be imbursed for this task as per its invoice approved by the company.

Helsinki, July 24, 2024
Board of Directors of Rapala VMC Corporation

For further information, please contact:
Lars Ollberg, President and Chief Executive Officer, +358 9 7562 540
Miikka Tarna, Chief Financial Officer, +358 9 7562 540
Tuomo Leino, Investor Relations, +358 9 7562 540

An audiocast and conference call on the first half year result will be arranged on Thursday July 25, 2024, at 11:00 a.m. EET.

Please join the audiocast by registering using the following link: https://rapala.videosync.fi/2024-h1-results. Alternatively please join the teleconference by registering using the following link: https://palvelu.flik.fi/teleconference/?id=5008687. After the registration you will be provided with phone numbers, a conference ID and user ID to access the conference call. To ask a question, please dial #5 on your telephone keypad to enter the queue.

Financial information and recording of the audiocast will be available at www.rapalavmc.com.

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