Let’s discuss Rapala in this thread.
Based on the recent Inderes company comment, I’m considering jumping on board. Consumer goods have quite a small weight in my portfolio, so this would provide a rather defensive and traditional company at a reasonable price (historically speaking).
Is anyone else considering the same?
Edit: It’s interesting that according to 4-traders, such a well-known brand is followed by only two analysts.
I’ve been following the company a bit because of my fishing hobby. The company has a strong brand, but indeed, their supply chain is hurting their results. They are trying to reduce their inventory and achieve better results at the moment, and that turnaround is currently happening. The latest result was already a small proof of that turnaround. I’d say it might be time to jump on board, especially before the large crowd reacts to the turnaround.
Addition: When the company’s own online stores are fully operational, costs will decrease and support profit generation. Now that the company has woken up to this digitalization, it will greatly support the company’s value in the years to come.
Also, that Amazon EU partnership seemed really interesting…
Heikkilä-Vilen’s Q2 earnings season in a nutshell also discusses Rapala VMC. We may be seeing a long-awaited turnaround, and there is a lot of room for growth to the potential peak.
Rapala is interesting in the current market situation because it is a truly defensive company. I’ve been mulling over this case for less than a week, and I have a few questions if @Sauli_Vilen or @Olli2 can and are willing to share their views:
How likely do you think it is that Rapala will repay its hybrid bond next spring? It was taken out after a covenant related to the ratio of interest-bearing net debt to EBITDA was breached, and there has been some improvement in that ratio since the hybrid’s issuance. Has Rapala disclosed what this covenant level is? It didn’t catch my eye in the reports, although “the ratio of interest-bearing net debt to EBITDA (rolling 12 months) below 3.8” has been given in the company’s financial targets, and it is stated to be “in line with the Group’s financial package’s financial covenants.”
How low can inventory levels be brought down? This is probably quite difficult to guess, but what do you think Rapala should be able to achieve, and on the other hand, what do you believe it can achieve? The direction, at least, has been quite right.
Hey
Really good thoughts. We’ll be releasing a major update to Rapala (Rapala) that addresses these questions.
I got on board about a year ago with a small amount of “awakening interest” capital. I have to say, it’s such a loosely managed company that I couldn’t bear to keep following it. This includes the main French owners, whose goal seems to be a gentle decline in their stock price over the long term. How can a brand like this achieve such a result? If the main owner were to change to someone I’d expect to bring a sharp attitude and demands into the company, I’d be in immediately. I was disappointed when they kept the same faces in leadership positions (with a little musical chairs) – executing the strategy would have been better done by dusting off their own shelves first and bringing in new blood.
Despite all this, I have a tiny bit of faith that the French owners have awakened from their slumber and something might actually happen in the coming years. At the right moment, I might repeat my earlier mistake, i.e., buy ;D Hopefully and probably only when I see (clearer than performance-based stock bonus schemes) next signs that something is truly happening.
This is actually the only reason why I haven’t bought this yet, meaning there’s a bit too big of a question mark as to how much the company truly has the will to start creating shareholder value. There have been indications that problems are recognized, steps in the right direction are being taken, etc., but somehow it still doesn’t convey that they are up to their elbows in the dirt. I think it’s an essential risk that in this case, the management is quite easily satisfied with even a small improvement, even though there’s potential for a much greater leap in performance.
It’s frustrating how world-class products, an iconic brand, and market leadership seem to be taken for granted. If we were in a different industry (e.g., mobile phones 
), I doubt such lazy operations would have been forgiven for so long. At the same time, what’s good and bad for Rapala is that the entire industry seems to be a bit lazy and boring, not living in constant aggressive change. Good, because partly because of that, Rapala’s head stays above water even with the current pace. But on the other hand, the company doesn’t have a compelling need to fully exploit its potential, which easily leads to such chronic underperformance.
As an investment, I consider defensive Rapala good in the current market, because at this price (€3.56) it is by no means expensive even with such incomplete performance, though not laughably cheap either. But at this relatively neutral price, you do get the simmering potential beneath the surface. If someone decides, or comes and decides, to make Rapala even a few notches better operationally, the current price will quickly look cheap. Rapala doesn’t need to prove its products’ functionality or make itself known; it already has all the basic ingredients. What’s missing is the grip capable of fully exploiting all that.
Even though this was a somewhat negative-toned post, I might still buy Rapala soon.
In my opinion, the upcoming Amazon collaboration is one indication from management that concrete improvements are being made. I am eagerly awaiting to see if it will have an impact on Rapala’s actual figures (for example, now Amazon.de offers free shipping to Finland for orders over 39€, even though Finland is just a tiny EU country).
I also hope that the optimization of the Indonesian factory doesn’t remain solely in the planning stages.
I am greatly looking forward to the upcoming comprehensive report.
Kasslin out? The chairman of the board changed. Thoughts on this, and on Louis Audemard d’Alançon?
Good pick, Iiks, I’ll make this an early morning comment 
Hey, but give us something small, preliminary, informal to mull over here, so we don’t have to wait until the morning report Just a little teaser/bonus for these discussion forums 
Let’s just say reforms are a good thing.
The new company report seems to have been published now. Thank you, it was a very good information package.
That was a suitably comprehensive report, so it’s open for everyone to read.
Will Rapala release a Q3 Business Review? I couldn’t find a date for it right away, at least.
@otoo84 I believe Rapala reports twice a year, so the next results will probably come in the spring as part of their financial statement release.
@Olli2 had updated Rapala’s outlook and there would be a question regarding that.
You lowered revenue forecasts by 1% and EBIT forecasts by 6% for 2019-2020 due to weakening global economic growth data.
The question is, will the weakening of the economy be seen specifically in consumer products already this year or next year? For example, Rapala has promising growth in the USA, and the country has reported good employment figures, and a layman might imagine that purchasing power is not immediately weakening, although interest rates have also risen.
Another question is whether there are possibilities to get the management in front of the camera during the 2018 earnings release, or even better, if the entire event could be videotaped. This, of course, depends on the company’s will, but an alternative could be suggested to the company to bring investor communications into the 2010s.
Hi. The sport fishing market roughly follows GDP growth and is very defensive. GDP growth forecasts have recently been revised downwards globally, especially for next year, so because of this, I took Rapala’s sales forecasts down by about 1% for 2019-2020. We still forecast revenue growth, as Rapala’s own actions are the main driver for growth, e.g., solving production problems in Batam (previously lost sales) and new organic growth potential in new market niches (R&D activities are more systematic than before).
North America is likely to perform well in the earnings report, as last year, the bankruptcies of important customers led to write-downs of accounts receivable and the liquidation of their inventories to the market.
Let’s see if we can get earnings info for our webcast, Rapala’s current audiocast is indeed a bit old-fashioned