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Fireplace Business, Finland

Fireplace Business, Finland. Single-family housing construction and renovation continued at an active pace The fireplace market grew 3-5% in Finland Tulikivi’s fireplace sales in Finland grew 12% Growth came from Kivia Oy The Group preserved its market position

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Fireplace Business, Finland

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  1. Fireplace Business, Finland • Single-family housing construction and renovation continued at an active pace • The fireplace market grew 3-5% in Finland • Tulikivi’s fireplace sales in Finland grew 12% • Growth came from Kivia Oy • The Group preserved its market position • Tulikivi market share -1%, Kivia market share +1% • Focusing on Tulikivi: Mittakivi brand dropped at the beginning of 2005 • New manufacturers and importers appear; the market is becoming “Europeanized” • Aggressive new players (e.g. Vuoluerkkeri) with good reputations in the fireplace market

  2. Fireplace Business, Germany • The focus of the German fireplace market has shifted to cheaper products • Distribution channels changing • Hardware store channel gains in importance • Many fireplace stores are in financial difficulty • Sales fell 15% • Importance of German fireplace market in fireplace exports fell to 30%, and to 17% of all exports • Tulikivi needs to revamp its distribution channel strategy • Two-step import model has come to the end of the road • Goal to significantly increase reseller network

  3. Fireplace Business, other countries • Fireplace exports grew 10% (not counting Germany) • Increases: Russia 36%, France 23%, Belgium 22%, Switzerland 18%, Norway 18%, USA & Canada 7%, Estonia +5%, Italy +2%, • Decreases: Germany -15%, Sweden -10%, Austria -6% • Russia is a new focus area • New law in France subsidizes funds for heat-retaining fireplace purchases by 35% of the purchase price (list of qualifying products in preparation) • Belgian importer has worked with its eye on the long term • New growth in Switzerland after a decline • Last year’s boom in Sweden and Norway (fueled by high electricity prices) has not continued

  4. Fireplace Business, Russia • Focus of investment on exports • Tulikivi organization is in good shape (market trailblazer, delivery process, products) • Operations are in the start-up stage and a reseller network is actively being built • Focus on St. Petersburg and Moscow, resellers in other big cities • Target groups: • Building firms and building supply businesses • Makers of traditional log houses • Wealthy private homebuilders and their architects • Market research has been done in Moscow, St. Petersburg and Karelia • Tulikivi name recognition in its business area is in the 40-50% range, among contractors and designers 10-20%

  5. Fireplace Business, lining stone • Soapstone is a highly sought-after material for heater lining in central Europe and Scandinavia • Tulikivi market share is over 50% • Growth is approximately 15% • This area is a significant part of Tulikivi’s business • Profitability is equivalent to the average for the fireplace business • Tulikivi has strengths in quality, delivery record, and handling difficult tooling jobs as well as in service • Customers are the top manufacturers in Europe, for example Nibe and Hark

  6. Fireplace Business, Kivia Oy • Net sales EUR 3.0 million, result clearly in the black • Approximately 25 staff • Tulikivi becoming an owner has helped the reputation of the company and its products • Manufactures products under the Kivia brand and new products such as Salla for the Tulikivi brand • Successful test quarrying at Juurikkaniemi

  7. Architectural Stone Business • Net sales EUR 6.3 million (8.3), on target with goal • Income EUR -0.1 million (-0.9); last six months slightly positive • Unprofitablefunctions pruned from contract work • Fixed costs -40% • Interior decoration stone business as a share of net sales is approximately 50% (30%, 2003) • Result of the interior decoration stone business is in the black • Total market for interior decoration stones is approximately EUR 15 million and is growing >15 per cent annually. • Tough price competition in deliveries to construction sites. The arrival of Chinese stone in Finland has intensified the struggle for contracts.

  8. Development projects • Research & development expenditures EUR 1.5 million (1.3) • New product generation, “On Stone’s Terms” project • Assessment of the use of small blocks, decision on an investment in a small stone sawing line at the beginning of 2005 • Changing over to the use of stone from a new quarry • Change in finishing procedures in October • Choice of stones by test viewing, further development • Coaching for the Tulikivi Way of Working • Launching and certification of quality systems for customized product factory and lining stones

  9. Investments • Investments EUR 3.9 million (2.9) • Test quarrying in Kuhmo • Preparations for quarrying in Koskela • Test drilling • Quarrying equipment • Contouring • Finishing

  10. Soapstone reserves • Foundation of Tulikivi business • Company controls an approximately 65-year supply in • Juuka • Suomussalmi • Kuhmo • Paltamo • Long-term investment of about EUR 500 000 per year in prospecting • Drilling 3000-5000 running metres • Test quarrying • Stone testing

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