This was somewhat expected. Distributing other manufacturers’ products is not a core business for a brand company. This long-standing close cooperation has certainly been the biggest obstacle in Rapala’s path to the reel and rod markets with its own brands.
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It would be desirable for Rapala’s management to learn a bit from the playbooks of companies like Amer and Fiskars. They should acquire regionally successful brands that fit their product range and bring them to global markets through their existing distribution network. For example, Eumer’s spintubes would surely find buying potential outside of Finland (and Europe).
Do you see that a prolonged government shutdown could have an impact on US sales? Customers have been financially squeezed before and have ended up in bankruptcies - what kind of shadow does the decline in purchasing power caused by the government shutdown cast on the survival of the rest, and on Rapala, on the one hand through retailers, and on the other hand through early year sales? And what about the rise in interest rates in the US, is a noticeable effect on purchasing power and thus on companies like Rapala to be expected?
The latest estimate is that 380,000 US government employees are furloughed, cutting 0.08 percentage points off the country’s GDP every week. I don’t think there’s any reason to worry about Rapala; the cut in GDP growth is of course negative, but maybe government employees now have more time to go fishing? 
Naturally, rising interest rates could accelerate bankruptcies among struggling retailers. However, Rapala has managed to compensate for lost volume through channels like Amazon, so as long as consumers want to order Rapala brands, the situation is okay. Still, their own distribution companies could suffer if the volume through them decreased.
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Thanks for the quick reply. I understood that due to the government shutdown, 800,000 people are without pay. There will also be knock-on effects when a large number of people only spend money on necessities, which will take away income from many others and likely cause layoffs elsewhere. National parks, etc., are closed. I figured that if the situation persists, it might cause a clear decrease in spending for both the affected employees and the businesses and individuals dependent on their consumption, which in turn could affect the situation of Rapala’s retailers (especially if they are already on the brink) and generally the sales of Rapala products (these are easy things to cut first). Perhaps, however, this is only marginal on a country scale, and my thoughts are just focusing on a fly’s buzzing
Regarding the interest rate issue, I also meant private consumption, as mortgage and other interest rates rise and available money decreases. My understanding is that the salaries of basic employees have not really grown despite good employment figures and economic tailwinds – though I could be badly mistaken, of course.
That was probably a direct quote from Talouselämä magazine. You can’t cut 0.08 percentage points from GDP, but you can cut it from GDP growth. Be more precise when quoting articles written by evening newspapers as a side job! 
Edit: I’d be very interested in getting a better understanding of Amazon’s significance and potential for the business and the new strategy.
Hopefully, Rapala will shed some light on its future steps in connection with the earnings release. The question is hardly whether an “independent” Rapala will enter the rod and reel market more strongly, but rather how it will happen. Will it be (1) with its own brand, (2) through acquisitions, or (3) with a partner?
Option (1) Implementation with its own brand is, in my opinion, a viable option considering Rapala’s strong brand and excellent recognition.
Option (2) Acquisitions are an interesting option in that they can start big through the so-called mainstream (e.g., Okuma) or through a niche (e.g., Guideline). Acquired technology can also be expanded (different types of fishing) or utilized under its own name.
Option (3) Finding a new partner is, in my opinion, a very unlikely option. It would only be a return to the past, and with an even weaker brand than Shimano.
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This message isn’t useful to anyone, but I’ll post a longer-term chart here anyway. We are practically at or even below financial crisis levels… hopefully the strategy change progresses well.
Time for some ice fishing 
Currently, Rapala sells its own products to Amazon in the USA using the traditional model, where Amazon buys the products from Rapala and resells them. Rapala could also sell its own products directly to consumers by utilizing Amazon’s platform (3rd party), which I believe could hold good opportunities.
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I spotted on the KL forum (apologies @Masse for my deviation from the straight and narrow) that Rapala has its own branded mobile game, at least for Apple iOS and Android.
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Tomorrow brings an interesting earnings release, where the financial information itself might take a back seat if Rapala delves more into future strategic steps.
Distribution and Inventories:
- What kind of efficiency measures or reorganizations are planned due to the termination of the Shimano cooperation?
- How will distribution be organized in regions where the agreement ends?
- Will unit costs be reduced (after Shimano’s volume exits) by streamlining the distribution network or by growing our own volume (expanding the brand portfolio)?
- What will be the future of the distribution companies jointly owned by Rapala and Shimano?
- Plans for utilizing Amazon and other platforms in the future? (Especially in regions where distribution agreements cease and where, based on volumes, it is not profitable to build our own local distribution network)
Production:
- Batam’s development
- Possible investments in new, smaller units.
Brand Portfolio:
- Reels and rods. More strongly with our own brand, through acquisitions, or with a new partner (least likely)
- Expanding the product portfolio into niches not yet found in the portfolio, e.g., fly fishing, casting flies, etc., where margins are attractive.
Potential Corporate Restructurings:
- Concerns both distribution companies and the brand portfolio (e.g., Guideline, Eumer, Okuma, etc.)
- After the termination of the Shimano cooperation, Rapala’s attractiveness as an acquisition target will likely increase. For example, compatibility with Pure Fishing’s portfolio further increased. (Of course, the main owners’ willingness to sell can only be speculated upon)
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Busy now, no time to compare to expectations…
Some excerpts
Rods and Reels:
Accelerating the global development of the rod and reel category is one of the Group’s key strategic projects in the near future. Additionally, building a comprehensive and direct sales channel for the Group’s products into major European fishing markets such as Germany, the UK, Italy, and the Benelux countries from the beginning of April 2019 is one of the Group’s most important projects following the end of the Shimano distribution agreement.
The Group currently sells rods and reels under its own brands in certain countries, and the Group will strengthen and accelerate the development of these product categories in the future.
Production
One of the Group’s main projects is to achieve a permanent turnaround in its Indonesian lure operations. Certain product categories with low profitability are currently being completely outsourced from the factory. Additionally, the unit’s management has been strengthened, production will be simplified, and some non-core processes will be outsourced.
Strong sales growth in North America and successful operational development projects in European lure manufacturing and certain other units supported profitability. On the other hand, our results were still negatively affected by the Indonesian lure factory, where we are implementing new operational changes and improvements. The unit has clear potential for improved results, which will gradually materialize starting from 2019 and 2020.
Sales Channels
Consumers are increasingly purchasing the Group’s products through digital channels, either through pure online stores, the online stores of traditional retailers, or the Group’s own digital consumer store. A content-driven Rapala online store targeted at consumers in the European Union was opened in May 2018, leveraging a platform built in the United States. The store aims to improve customer service and increase brand awareness.
Potential acquisitions / product portfolio
The long-term goal is to return to a faster growth trajectory and actively seek synergistic growth opportunities also outside the fishing tackle business.
Cash flow and increased year-end inventories are minor concerns.
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OP updated Rapala’s recommendation today (€3.80 / add). I won’t post it here, but here’s a link to the Arvopaperi article:
There was also an article about Rapala in Kauppalehti today:
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How about you, @Rauta, are you on the same page as Rajala from OP and Kauppalehti? I sold everything as soon as the 2018 results were published. Now I’m back as an owner again.
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OP’s report was very generic and did not take into account, for example, the effects of the termination of the Shimano agreement on Rapala’s business (positive/negative). I have followed Rapala for a long time (from the side) and have been waiting for signals of a turnaround. I have considered Rapala a static, rigid organization and a poorly managed company that has not been able to realize its own potential. The new strategy and the termination of the Shimano cooperation, which I consider positive, are in my opinion good first steps in utilizing this unrealized potential. I acquired an initial position during Q1 (avg. price €3.06), which I intend to increase if/when I feel the company is moving in the right direction and the valuation remains reasonable. As a case, it’s quite attractive, as the company is emerging from an earnings slump and the stock is quite modestly valued.
Although Rapala’s production problems could be considered almost chronic, these are still internal company problems that management should be able to solve.
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