This is some company. They only report twice a year, and even then they can’t tell us when. Last year the results came out at four, but this year there’s no sign of them. This fits their governance, as they drove the company into a cash crisis and gave an expensive hybrid to the main owners 
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Guaranteed Rapala quality 
: Rapala VMC Oyj:n tilinpäätös 2024: Parantunut kannattavuus ja vahva kassavirta haastavana vuonna | Kauppalehti
January–December (FY) in brief:
- Net sales were 220.9 MEUR, on par with the comparison period (221.6). Measured at comparable exchange rates, net sales increased by 1% from the previous year.
- Operating profit was 8.6 MEUR (4.0).
- Comparable operating profit* was 6.2 MEUR (5.6).
- Net cash flow from operating activities was 23.4 MEUR (20.6).
- Inventory value was 84.2 MEUR (87.5).
- Profit for the financial period was 0.4 MEUR (-7.3).
- Earnings per share were -0.07 EUR (-0.20).
- Dividend proposal is 0.00 EUR per share (0.00).
- Guidance for 2025: Full-year comparable operating profit* is expected to grow from the previous year.
July–December (H2) in brief:
- Net sales were 100.4 MEUR, which was 3% lower than the previous year (103.7). Net sales at comparable exchange rates were 3% lower than the previous year.
- Operating profit was -2.6 MEUR (-0.4).
- Comparable operating profit* was 0.0 MEUR (0.3).
- Net cash flow from operating activities was 5.2 MEUR (2.0).
- Loss for the financial period was -4.2 MEUR (-6.2).
- Earnings per share were -0.14 EUR (-0.17).
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Here’s @Thomas_Westerholm’s quick comment on the results; the report will follow later, as the earnings call (Rapala VMC Oyj, Q4'24 - Inderes) is only today at 11:00 AM: Rapala H2’24 -pikakommentti: Tuloskäänne jäi piippuun - Inderes
This comment gives cause for caution: “The net debt of EUR 61.8 million at the end of 2024 is approximately 4.2 times the 2024 EBITDA and 6.2 times if the hybrid bond is considered part of the net debt. Both levels are high in the context of the manufacturing industry, although the company has unused financing limits of EUR 41 million.”
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It’s truly an incredible disappointment to follow Rapala’s operations. There’s potential to spare, but direction is completely lacking. Peculiar capital allocation to unsuitable acquisitions; Marttiini and Peltonen, and I also wouldn’t be very surprised if other brands like Blue Fox, Storm, Dynamite haven’t been very profitable. It’s a peculiar situation, when holding the most valuable lure brand, that more hasn’t been done to build a story around the brand itself, but instead, other brands have been acquired in a panic, which has confused operations to the point that all money from high-margin products flows to middle management, suppliers, and operations administration…
Hopefully, the incoming CEO Vielllard will truly make things happen and that perhaps the world’s most complex and inefficient distribution network can be changed, so that charity towards banks in the form of expensive hybrid loans doesn’t continue in the future.
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Thomas chatted with Lars Ollberg, the retiring CEO of Rapala, after H2.
A difficult market was reflected in Rapala’s figures at the end of the year, as revenue turned to a decline and profitability left something to be desired. Lars Ollberg, the retiring CEO of Rapala, commented in an interview with analyst Thomas Westerholm on his last working day.
Topics:
00:00 Start
00:12 Key highlights of the year-end
04:31 Factors behind the year-end difficulties
05:30 Major differences in product categories
08:01 Decline in North American revenue
09:07 Guidance
10:20 Impact of tariffs
12:20 Production facilities
14:24 Distribution of third-party products
16:03 Key observations from recent years
19:09 CEO change
22:44 Lars Ollberg’s plans for retirement
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OP’s Joonas Häyhä shared his thoughts on Rapala’s current situation and future.
Rapala’s H2 result clearly fell short of our expectations, with comparable operating profit remaining at zero. In line with our expectations, Rapala will not distribute a dividend for 2024. However, the company guides that comparable operating profit for 2025 will strengthen from the 2024 level. Senior Analyst Joonas Häyhä elaborates further in the video on the company’s past year and future outlook.
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Thomas’s comments following H2/2024
Rapala’s H2 report was a disappointment, as the initiated turnaround in earnings was interrupted, and the guidance given for the current year remained more cautious than our expectations. In addition to the forecasts for the coming years, we have revised downwards our view on the company’s normalized earnings capacity. The current valuation is not challenging based on balance sheet or revenue, but without visibility into a significant improvement in earnings and the strengthening of the weak balance sheet position, the stock’s return/risk ratio remains subdued at the current share price level. We lower our recommendation to Reduce (previously Add) and revise our target price to EUR 1.7 (previously EUR 2.2).
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One certainly cannot be satisfied with Rapala’s performance 
But how is the financing side doing right now? An expensive hybrid had to be taken, but we just have to live with it now.
Rapala has hardly ever been at a loss at the IFRS or adjusted operating profit level.
Operating cash flow is clearly positive. This year, adjusted EBIT should improve.
The net gearing ratio and equity ratio are at quite tolerable levels.
I can’t be particularly worried about Rapala’s financing… except:
There are the covenant terms listed. Does this mean, in layman’s terms, that
a) net debt can be absolutely max 90 MEUR
b) net debt / EBITDA max 5.5 (is this R12M EBITDA?)
We are significantly below those now, but net debt must not increase by 29 million in any case, and above all, R12M EBITDA must not drop so that the covenants don’t break and we are again forced into some ridiculously expensive financing solutions?
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Hi! Difficult question, but below is a bit of a free flow of thoughts.
Regarding profit improvement, there are many moving parts, such as the tail ends of efficiency programs and the elimination of associated costs, replacing air freight with sea freight for the new soft lure model, and costs related to terminating some 3rd party contracts in 2024. However, based on the H2 report, with the setback in the profit turnaround and soft guidance, my confidence in the profit turnaround weakened, which was sharply reflected in forecast changes.
The impact of tariffs is multifaceted, and they naturally reduce predictability. If tariffs are widely imposed, they will likely, at least to some extent, be passed on to the prices of finished products, which could put American consumers under pressure from several directions (fishing tackle more broadly), negatively affecting the entire industry. In the fishing tackle market, besides Pure Fishing, there are no major players with local production in the United States. Pure Fishing would thus be a relative winner from broad tariffs. From Rapala’s perspective, the key points in the tariff discussions are, in my opinion, what happens with China, Europe, and Taiwan. A lot of goods competing with Rapala come from China, so Rapala could be a relative winner if high tariffs are imposed on China. Europe is now being threatened with 25% tariffs, which would particularly hit Rapala’s hooks and hard lures manufactured in Estonia. The tariff discussion regarding Taiwan, to my understanding, has not escalated yet, apart from chips. Rapala would naturally benefit if Taiwan and the rods and soft lures manufactured there remained outside the tariffs. However, the situation is evolving, and the United States is a significant export partner for Taiwan, so tariffs could well be threatened in that direction in the next wave, and this would naturally be negative. Generally, Rapala’s globally diversified sourcing provides a certain degree of flexibility compared to smaller players in terms of the tariff situation, but not more than that.
This also mainly considers direct effects on the US market, but looking further ahead, tariffs could tighten competition in other market areas if weakened US demand drives demand and supply out of balance elsewhere.
In the CEO’s interview linked by @Sijoittaja-alokas, the company’s own thoughts can be found from 10:20 onwards.
I interpret the covenant level to mean that the covenant terms have tightened over time, and the latest was an absolute maximum of 80 MEUR net debt and 3.8x net debt/EBITDA (R12M). This gives the lender a guarantee that the company aims to lower the loan’s risk profile. We are within the covenants, but without an improving earnings level, redeeming the expensive hybrid loan on the loan review date at the end of 2026 will be difficult.
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Insiders, at least, seem to be keen, with 60,000 units purchased.
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Digging through the Helsinki Stock Exchange’s ‘trash can’: case Rapala.
Rapala is perhaps the best-known “eternal promise” of the Helsinki Stock Exchange. Listed in the late 90s, for years its share price hovered between 3 and 5 euros. During the COVID-19 dip, it went below that for the first time, followed by a huge boost during the COVID years and then a really tough hangover. Now the share price is clearly at an all-time low. Of course, there’s so much debt that the EV (Enterprise Value) might have been lower at some point in history.
As a fishing enthusiast, Rapala hasn’t seemed like a very relevant player to me for years, but on the other hand, the brand is incredibly strong, and as far as I understand, anglers globally are quite familiar with Rapala.
As an enthusiast, I didn’t like the divestment of Shimano distribution, the Okuma cooperation, and the 13Fishing acquisition. I wrote about these here a long time ago, and they don’t seem to have been very successful.
Looking at the share price chart, one can only wonder how such a good brand has only had one good period in 25 years, and even then, external factors drove all outdoor-related products through the roof. On the other hand, a strong brand likely provides protection, ensuring that the company still exists, despite generally perceived poor management, and generates over 200 M€ in international revenue.
I listened to the interview with the outgoing CEO, and despite the sluggish figures, he was very positive about many things and emphasized that the foundations are now in place. Time will tell.
Pricing an ‘eternal turnaround company’ is exceptionally challenging. The potential is still there, but if it hasn’t been realized in 25 years, why would it succeed this year? On the other hand, the share price doesn’t expect much if there are no balance sheet issues.
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@Thomas_Westerholm Question about Rapala’s brands. How do you see the benefits and synergies of Rapala’s massive brand portfolio?
I personally see that strike Master, Sufix, and VMC are excellent and good complementary acquisitions, but what about, for example, Storm, Dynamite, Luhr Jensen, Blue Fox, and Terminator – have they been smart acquisitions? Aren’t Rapala’s own brand accessories and lures unparalleled? Nike doesn’t buy all its competitors’ shoe brands to reduce competition, does it?
What about Marttiini and Peltonen? Marttiini, in light of customer data figures, is in a really bad state, and Peltonen, on the other hand, is in reasonable condition, but quite unsuitable for Rapala’s overall portfolio, in my opinion.
Am I completely wrong with my thoughts, or has Rapala been guilty of needlessly acquiring brands and burning cash and forgotten that it owns the most valuable lure brand?
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In my opinion, you are not wrong in your thoughts at all, and I also believe that the market would accept a higher valuation multiple for Rapala if all brand revenue came specifically from the Rapala brand (however, by this I do not mean that bringing all brands under Rapala would be a sensible solution in the current situation). The Helsinki stock exchange also includes, for example, Fiskars, which has narrowed its broad brand portfolio in recent years. Sometimes maintaining several brands can be sensible so as not to dilute the purpose of the main brand in the eyes of consumers. In Harvia’s case, this multi-brand strategy seems to work well, but it remains to be seen how broadly they are willing to expand their own brand portfolio. In Rapala’s case, in the current situation, I would believe that the costs of managing such a broad brand portfolio outweigh the benefits, and here I am only talking about fishing tackle. In my opinion, expanding the Rapala brand into soft lures seemed like a good solution, as I do not believe it dilutes the brand’s value, and I believe the brand brings customers from, for example, hard lures (cf. clothing/accessories at one time, where this risk was, in my opinion, greater).
I agree about Peltonen that distribution synergies are likely to remain limited, and in my opinion, it is quite justified to ask if this business would be more valuable under someone else’s ownership? I do not believe that divesting this business is completely out of the question, if only a price can be agreed upon. Regarding capital allocation, it is clear to me that corporate arrangements have not been successful, as the amount of invested capital has increased since the early 2000s, revenue has grown to a larger scale, but profit has not followed suit.
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It is worth remembering (or at least I grudgingly keep in mind) that the company’s main owner VMC subscribed to a hybrid loan for EUR 7.2 million. From this share, VMC will apparently collect EUR 2.7 million in interest over three years, while other owners will probably struggle for years without dividends.
So “charity” is not directed only towards banks.
It’s nice, however, to see Rosenlew’s recent share acquisition of almost EUR 100,000. Perhaps the development of the share price and business interests the management, board, and even the main owner a little.
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This is a contradictory company.
On the one hand, there’s a world-class brand, global presence, etc. There’s so much potential, yet performance is dismal year after year.
There should be stable consumer demand worldwide, yet the business is not very stable.
Rapala makes a profit year after year, yet without any grandiose investments or acquisitions, they managed to drive themselves into a cash crisis
Rapala’s investor pages are good in many ways, with lots of data and nice pages
And yet, they only report twice a year and very slowly
The new CEO is among the main owners and has their own money at stake… and then again, the main owner hasn’t gotten things under control for years, acting as an obstacle so Rapala can never be bought out. The new CEO might be good and competent. Or if they are bad, they can never be gotten rid of because of the main owner 
Both of these have pretty good information about acquisitions
On the one hand, Rapala is the brand. And then the group’s millstone is some ski manufacturing
I don’t know how precisely those product categories have been opened up before. I need to examine the annual report once it comes out. But for example, in a video interview, the CEO mentioned that the rod/reel businesses have been incurring loss after loss, and only now have the losses been stopped?!
I was thinking a bit about trade wars, tariffs, geopolitics, etc.
I tried searching Google, Rapala’s website, and AI for Rapala’s operating locations and manufacturing sites. The answers were quite meager.
This can be found in Inderes’ extensive report:
At least something is made in Estonia and France, and something is shipped from Taiwan…
In light of the forecasts, Rapala is not particularly cheap in the short term. Capital is not generating returns, the brand is not selling profitably, and all money made goes to financing costs 
Performance seems to be dismal. However, I made a move and caught a falling knife. I console myself with the thought that the shares I acquired are cheaper than anyone has ever had Rapala at a price tag of 1.52 euros. Tomorrow or in the future, the stock might, of course, be available even cheaper again.
In part, this investment case is a bit of a ‘hope for the best’ situation.
But positive options can be conceived:
- Market recovery. Interest rate cuts, economic revival, consumer buying enthusiasm.
- Distributor inventories are depleted? It’s unlikely that inventories are being significantly replenished, but inventories are no longer being emptied?
- New management. Business turnaround. Perhaps even good strategic moves.
- Rapala’s performance vs. market (analyst) expectations; e.g., Inderes significantly lowered its forecasts and expects Rapala to continue its semi-weak performance. At the same time, however, Rapala faced headwinds, such as the destocking by distributors in 2024 and air freight costs, etc. Also, the positive effects of Rapala’s own actions will only gradually become apparent as costs have been cut, Crushcity will be sold throughout 2025, etc.
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I’ve been buying Rapala shares from the bottom. History shows that a surge in demand and results will eventually come.
The main reason, however, was the name “Rapala,” which every serious angler knows around the world. You don’t often get brands like these so cheaply on the stock market in Finland.
Hopefully, they won’t truly mess up the business further now. One would think that restructuring would make it more profitable, but do they have the expertise?
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I believe that the new CEO will at least bring continuity to the company, which from a management perspective has certainly been difficult to maintain due to the regular game of musical chairs among CEOs. In my opinion, Lars returned from retirement to a very challenging position to lead the company, and it seems to me that Cyrille has been planned as a successor from the beginning, which strengthens continuity. However, a CEO coming from within the company is unlikely to make particularly big or fast moves, so a quick improvement in profitability will probably require external assistance as well.
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Something about these (eternal) turnaround companies clearly interests me, as I’ve spent hours researching and thinking about scenarios for this one too. It was interesting to scroll through the thread from the depths of despair to the undervaluation of the share price (e.g., €3.8/share) and the euphoria of the corona boom, followed by the market’s quiet period.
There was also talk of a possible takeover bid, perhaps at a multiple of 2x EV/S. That would mean a reasonable premium to the current share price, as a company with a MCAP of €58M would hit the next owner for €440M, even if it’s a debt-free price.
While researching the company, some questions arose for me, on which I would appreciate thoughts from @Thomas_Westerholm or other experts.
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How much of the North American revenue comes from Canada and how much from the USA? The outgoing CEO was not overly concerned about tariffs, but they do cast a shadow over the company’s North American sales. On the other hand, if American products are boycotted in Canada, there could be good growth there.
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Has the company been able to explain the outright collapsed sales in the Nordics? 2020 FY €56.6M → 2024 FY €25.8M. Declines elsewhere could perhaps be explained by just the post-corona market slowdown, but there must also be market share loss there? Or is it explained by the end of Shimano distribution?
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How does the company plan to arrange financing for the next round? Based on my own deliberation, an improving EBITDA could sufficiently reduce the company’s indebtedness, but the market seems to disagree when observing the share price development.
The outgoing CEO seemed confident in the company’s situation and outlook, but I have even less insight into the new CEO.
Is the new CEO coming for an Inderes interview, or is there any plan for them to introduce themselves more broadly?
As Rapala develops according to its outlook, I could imagine that quarterly reporting and active IR activities would promote the new management’s goal of being a good company from the perspective of a minority shareholder as well.
For example, the development of revenue and profitability of different brands would certainly be interesting information from an investment perspective and would facilitate monitoring of the company.
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While history is no guarantee of the future, a strong indicator of a company’s quality is that it hasn’t been able to create shareholder value throughout the 2000s, so why would it be able to do so in the future? The stock market is also full of well-managed and value-creating companies, with reasonable valuations, so it’s difficult to justify investing specifically in this one. In addition to the company failing to create shareholder value, its profit has fallen to a third of what it was in 2000 (consider what has happened to the value of money in the same period). So, I wouldn’t classify this as a turnaround company because what turnaround and from where? The company’s absolute business has slowly declined over the last 20 years.
The hype during the corona era was precisely a result of this bloated underperformer finally putting a person in charge who seemed to be taking the actions investors had longed for. That’s why it was a huge disappointment and another demonstration of the company’s “quality” when Warchalowski had to leave and Ollberg was lured out of retirement to replace him. It’s telling that Ollberg himself said in an interview that he refused the position several times before taking on the challenge. One might somehow hope for a CEO to have a burning desire to lead a company.
This is, in my opinion, a textbook “bull trap” that one falls into if one doesn’t have strict investment criteria or at least doesn’t follow the ones one has decided on. It’s hard to imagine otherwise that anyone would have listed any criteria for themselves that this company would meet, other than “strong brand.” I myself have paid these tuition fees many times over. I would gladly invest in the company when there is clear evidence again that the interests of the main owner and minority shareholders are aligned and that the 20-year struggle in the business has ended. At the moment, however, I don’t consider this a investable company, especially since the new management is again the same old guard as always.
Of course, the slope for the share price is tremendous if this ship can ever be turned around, but still, this is purely an investment case based on “faith and hope.” The aforementioned are not necessarily the best criteria for a stock picker.
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Inderes company-specific tariff comments; Rapala’s share: Case: Yhdysvaltain tuontitullien mahdollisia vaikutuksia Helsingin pörssin yhtiöihin - Inderes
Rapala
North America accounted for 51% of Rapala’s revenue in 2024, the majority of which we estimate came from the United States. On the scale of the Helsinki Stock Exchange, Rapala’s exposure to the United States is therefore significant. Rapala’s manufacturing is mainly located in Europe and Taiwan, so the 20% tariff planned for the EU and the 32% tariff planned for Taiwan will negatively affect the business. Our understanding is that most fishing tackle sold in the United States is manufactured outside the country, so Rapala’s relative position should not initially change significantly compared to competitors. The 34% tariffs imposed on China may even slightly strengthen the company’s relative position in the US market due to the significant China exposure of the fishing tackle market. Due to import dependency, the proposed tariffs broadly create cost pressure in the US fishing tackle market, which would presumably weigh on the profitability of the entire category in the country.
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