Brio reports worse-than-expected Q1

Restructuring costs and weak Swedish currency hit firm?s first quarter results.
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Restructuring costs and weak Swedish currency hit firm?s first quarter results.

Net sales for the period amounted to SEK 203.5 million. The operating loss excluding capital gains amounted to SEK 57.8 million.

The firm reported a loss after tax of SEK 63.6 million and earnings per share were SEK -6.85.

Brio said it found itself in a ‘tough liquidity situation’ during the period, which affected its ability to meet its commitments towards suppliers.

In conjunction with the financial reconstruction, negotiations took place with suppliers, resulting in improved payment terms.

The sale of obsolete stock took place, boosting revenues but also had a negative effect on the gross results.

During quarter one, the company continued with its rationalization scheme to cut costs by around SEK 80 million per year, which will achieve full effect in 2011.

One-off costs of SEK 6.2 million for initiating the rationalization scheme impacted negatively on the results, which is SEK 18.3 million less than expected.

This deviation was due to a delay in final rationalization initiatives and means future reporting periods during 2009 will also be hit by one-off costs.

The group has been divided into two divisions during the period, Brio Toy and Brio Baby. In addition, Brio Partner runs operations in an independent subsidiary.

Also during quarter one, Andreas Sbrodiglia was appointed as president and CEO. CFO Håkan Johansson was appointed as deputy CEO at the same time and Eva Brike took over as HR Director during the reporting period.

The new management team has developed an action plan to create the foundation of a long-term, profitable company.

The overall theme of the action plan is to focus on the company’s core and key markets and to increase customer and consumer focus.

Andreas Sbrodiglia, president and CEO commented: “Q1 was negatively affected by one-off costs for the rationalization measures started, clearance sales of obsolete stock and the weak Swedish currency.

“Results are not satisfactory. In the immediate future we will focus on rationalizing costs, cutting tied-up capital and improve cash flow. We are now working intensively to develop the business with two clear divisions.”