Double-digit sales drop for Rapala VMC in difficult 2023

Rapala VMC’s end of year report reveals that the Finnish company – one of the industry’s big four players – endured a difficult 2023.

The company’s net sales for the full year dropped 19% year-on-year, from €274.4m to €221.6m. With comparable exchange rates, net sales were down by 17%. Net loss was €6.9m compared to net income of €3.7m in the previous year.

However, in its 2024 guidance, Rapala VMC anticipates comparable operating profit will increase as the trading outlook is improving following a better operational performance in the second half of 2023.

In announcing the figures, Rapala VMC President and CEO Lars Ollberg (pictured) pointed to an environment in which a global economic slowdown and high inflation caused retailers to focus on managing their inventories, resulting in unpredictable order patterns. This has particularly impacted sales of higher ticket items.

“The year started off with difficult trading conditions as destocking continued,” said Ollberg. “We focused on executing our €6m cost savings programme and started to witness positive development in the second half of the year, both in our own operations and in the trading environment.

“As a result, our profitability improved in the second half of the year and our inventories decreased from the end of June by €11.0m to €87.5m. This is €30.2m lower than 18 months ago. We placed a special focus on strong cash flow generation and accelerated inventory turnover with our ‘One More Turn’ strategy. This strategy offers us flexibility to react quickly to market changes, while optimising the financial performance of our business.”

High points of the year included exceptional consumer purchasing levels of the new CrushCity soft baits following a North American launch, along with strong retailer re-ordering. Initial sales and orders in Europe have also gone well, with all leading retailers supporting the category.

“The soft bait market provides a platform for incremental growth in a market that is generally considered larger than the hard bait market,” added Ollberg.

Last year saw Rapala fully enter the US rod and reel market through the acquisition of the 13 Fishing business and its integration into the company’s strong nationwide sales network. “This cool, lifestyle brand has great long-term prospects,” said Ollberg.

This year, Rapala’s North American business is entering the tackle storage segment.

“All these initiatives will further strengthen our relationships with our key retailers, and the strategy will in turn drive our mission to grow our North American business and become the most trusted partner within the recreational fishing sector.”

To accelerate its transformation journey, Rapala last year appointed an enhanced global management team. Together with key managers across the world, it will focus on implementing the strategic plan for 2024 to 2026, focused on improving profitability and working capital management.