Annual Report Ekornes 2018 2 Annual Report Ekornes 2018 Annual Report Ekornes 2018 3
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Annual report Ekornes 2018 2 Annual report Ekornes 2018 Annual report Ekornes 2018 3 ANNUAL REPORT & FINANCIAL COMPANY CORPORATE GOVERNANCE STATEMENTS 2018 This is Ekornes 4 Code of Conduct 22 - 23 Board of directors 32 - 33 Key figures 4 - 5 Intangible assets and competence 24 Board of directors’ report 34 - 40 Environmental and social Ekornes worldwide 6 - 7 25 - 28 Consolidated Financial Statements 41 - 47 responsibility Message from the CEO 8 - 11 HSE 29 - 30 Notes 48 - 78 Group management 12 Ekornes AS – Financial Statements 79 - 83 PRODUCT SEGMENTS Ekornes AS - Notes 84 - 97 Stressless® 14 - 17 Auditor’s report 98 - 100 IMG 18 - 19 History 101- 105 Svane® 20 - 21 4 Annual report Ekornes 2018 KEY FIGURES THIS IS EKORNES Ekornes is the largest furniture producer in Norway and owns the brand names Ekornes®, Stressless®, Svane® and IMG. Stressless® is one of the world’s most well-known furniture brands, while Ekornes®, Stressless® and Svane® are the best known in the Norwegian furniture sector. IMG is best known in Australia and the USA. Production takes place at the Group’s nine (soon ten) factories, five of which are in Norway, one in the USA, one in Thailand and two in Vietnam. Ekornes is also on course to open a new factory in Lithuania 2019. Ekornes sells its products over large parts of the world, either through its own sales companies or via importers. Ekornes’s business idea is to develop and manufacture products which offer outstanding comfort and functionality, and whose design and price appeal to a wide audience. Ekornes is headquartered at the company’s factory at Ikornnes in Sykkylven, on the west coast of Norway. Ekornes AS is the Group’s parent company. The Group’s factories are organised according to product segment: Stressless®, Svane® and IMG. Ekornes was founded in 1934 when Jens E. Ekornes started producing furniture springs at the J.E. Ekornes Fjærfabrikk in Sykkylven. The first Stressless® chairs were launched onto the Norwegian market in 1971. A more complete presentation of the company’s history can be found on pages 101–105 in this annual report. Key figures 2018 2017 2016 2015 2014 Gross operating revenues NOK million 3 166.1 3 078.9 3 143.4 3 171.8 2 757,5 (consolidated) Operating earnings NOK million 391.2 309.4 444.3 301.3 266.0 Earnings before tax NOK million 394.8 288.9 446.1 278.2 248.8 Net profit for the year NOK million 298.2 200.5 320.3 184.1 160.5 Investments (net) NOK million 119.3 238.1 49.7 117.8 496.1 Depreciation and write downs NOK million 114.5 120.4 160.4 146.7 132.6 Equity ratio % 50,4% 47.3% 70.1% 52.3% 56.9% No. of employees # 2 147 2 140 2 146 2 324 2 388 No. of shareholders # 1 2 695 2 348 2 405 2 516 Earnings per share NOK 8.08 5.43 8.70 5.00 4.36 Dividend per share NOK 5.50 6.81* 25.00 4.00 4.00 Dividend ratio % 68.0 % 125.4 % 287.4% 80.0% 91.7% Share price 31.12 NOK N/A 118.50 106.50 99.50 95.00 20 % Market capitalisation 31.12 NOK million N/A 4 371.8 3 922.0 3 664.3 3 498.5 15 % * In December 2018, a general meeting of shareholders decided to pay out a supplementary dividend of NOK 30 million. The10 % total dividend paid for 2017 therefore came to NOK 6.81 per share. 5 % Revenues in NOK million: EBIT margin: Earnings per share in i NOK: 0 3 166.1 12.4% 8.08 EBIT-margin and Adjusted EBIT-margin 20 % Adjusted EBIT % EBIT % 19.3% 18.6% 14.1% 14.1% 15 % 12.8% 14.0% 14.4% 11.7% 10.1% 13.8% 10 % 12.0% 12.4% 9.6% 9.5% 10.0% 5 % 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 % KEY FIGURES Annual report Ekornes 2018 5 Stressless® IMG Svane® Gross operating Gross operating Gross operating revenues in NOK mill. revenues in NOK mill. revenues in NOK mill. 2 462.6 500.8 202.8 EBIT in NOK mill. EBIT in NOK mill. EBIT in NOK mill. 282.1 124.8 -15.6 No. of employees No. of employees No. of employees 1 289 773 85 With effect from 2018, Ekornes Contract is included in the Stressless® product segment. Comparable figures have been restated accordingly. Figures in NOK mill. Gross operating revenues 2009-2018 3500 3000 3 172 3 143 3 166 3 079 2 869 2 758 2 763 2 758 2500 2 588 2 611 2000 1500 1000 500 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 Sales revenues by market Sales revenues by segment 6.4% Norway 11% 14% Stressless® 3500 Other Nordic countries 4% IMG 15.8% 3000 6% Central Europe Svane® 2500Southern Europe UK/Ireland With effect from 2000 2018, Ekornes 18% USA/Canada/Mexico Contract is included 1500 in the Stressless® Japan 33% product segment. 77.8% 1000Other markets 7% 7% 500 0 6 Annual report Ekornes 2018 EKORNES WORLDWIDE EKORNES SALES COMPANIES SKANDINAVIA EKORNES BEDS AS Ekornes Skandinavia AS Managing Director: Pål Aage Nordahl (Norway, Sweden) Director: Norway: Eldar Blindheim EKORNES BEDS GMBH Managing Director: Pål Aage Nordahl Director, Sweden: Johannes Liivrand IMG SKANDINAVIA AS J.E. Ekornes Aps (Denmark) Director: Renate Karlsen Director: Peter Hjelmholm IMG USA Inc. FINLAND Director: Peter Bjerregaard Oy Ekornes Ab (Finland/Baltics) Director: Toni Juutilainen IMG AUSTRALIA PTY LTD Director: Sam Joukadjian UK/IRLAND Ekornes Ltd. IMG NEW ZEALAND LTD Director: James Thompson Managing Director: Brian Preston CENTRAL EUROPE IMGC PTY LTD Ekornes Möbelvertriebs GmbH Managing Director: Jacques Chan (Germany, The Netherlands, Chin Luxembourg, Switzerland, Slovenia, Austria, Poland) Director: Ralf Arp SOUTHERN EUROPE Ekornes S.A.R.L. (France, Belgium, Spain, Italy) Director: Bernard Lafond J.E. Ekornes USA, INC. Ekornes Iberica S.L. Dept. Morganton Director: Bernard Lafond FACTORIES USA/CANADA/MEXICO Ekornes Inc. Director: Peter Bjerregaard J.E. EKORNES AS SVP Production Stressless®: ASIA Ola Arne Ramstad Ekornes Asia Pte Ltd. (Hong Kong, Taiwan, Korea, DEPT. AURE Singapore, Malaysia, Indonesia, India) Factory Manager: Ole André Småge Director: Mark Kelsey DEPT. TYNES Ekornes China Co Ltd. Factory Manager: Per Jarle Tynes Director: Chris Wang DEPT. GRODÅS JAPAN Factory Manager: Knut Ove Rygg Ekornes KK Director: Kenji Oyama EKORNES BEDS AS Managing Director: Pål Aage Nordahl AUSTRALIA/NEW ZEALAND Ekornes Pty. Limited J.E. EKORNES USA, INC. Director: John Candi Factory Manager: Rolf Aarseth EXPORT (OTHER MARKETS) IMG THAILAND Ekornes AS Factory Manager: Kampon Petakew SVP Marketing and R&D Stressless®: Marianne Strand IMG VIETNAM Factory Manager: Nguyen Kim Long EKORNES CONTRACT AS It has been decided to merge this company with Ekornes Skandinavia AS with effect from 1 January 2019. EKORNES WORLDWIDE Annual report Ekornes 2018 7 J.E. Ekornes AS J.E. Ekornes AS Dept. Ikornnes (Sykkylven) Dept. Grodås J.E. Ekornes AS Dept. Tynes (Sykkylven) J.E. Ekornes AS Dept. Aure (Sykkylven) IMG Litauen under construction Completion in second quarter 2019 Ekornes Beds AS Fetsund IMG Vietnam IMG Thailand Sales companies Factories 8 Annual report Ekornes 2018 MESSAGE FROM THE CEO MESSAGE FROM THE CEO Annual report Ekornes 2018 MESSAGE FROM THE CEO Annual report Ekornes 2018 9 MESSAGE FROM THE CEO Meaningful purpose At Ekornes, we serve a basic human need, the need everyone shares for rest and relaxation. Every day, our comfortable, high-quality furniture gives people’s bodies, minds and hearts a chance to relax and recharge. Across the world, from big cities in the US, Asia and Australia to the countryside in Germany and France, or in small towns in the Nordic countries, people experience how Ekornes’s furniture brands make their lives more comfortable. And that is why we, in 2018, introduced our new Ekornes slogan: “We improve everyday living”. Making quality furniture is not something we take lightly. We have a long history of challenging the conventional way of making furniture. Understanding the science of comfort and movement has fuelled our innovative spirit and desire to design some of the most comfortable and unique pieces of furniture in the world. This has made the Stressless® brand a global leader. And our other brands, IMG and Svane®, share the same dedication to making comfortable, high-quality furniture and mattresses. At Ekornes we live for our brands and products, their relevance and the experiences they create. Strong heritage I am proud to be a part of Ekornes, a company with great brands, products, customers and partners, and a truly amazing workforce. Ekornes is built on a strong heritage of furniture manufacture and innovation. This heritage, and our skilled and hard-working employees, have taken us far. Stressless® is one of the world’s best-known furniture brands. IMG is a challenger in markets across Asia, Europe and North America. And our products are marketed around the world by a network of well-reputed and loyal retailers. To support this network, products are manufactured at five highly automated production facilities in Norway (Stressless® and Svane®), one factory in the US (Stressless®), and three factories in Asia (IMG). In 2018, we started building a fourth IMG factory in Lithuania, which will open in 2019. 10 Annual report Ekornes 2018 MESSAGE FROM THE CEO Welcoming new ownership and new growth opportunities Ekornes’s strong position has attracted attention, not least from China’s Qumei Home Furnishings Group. In May 2018, Qumei, a leading Chinese furniture group, together with the financial institution Huatai Securities, made an offer for Ekornes that was supported by the board and accepted by the shareholders.