Tiimari Group ceases its non-profitable operations in Poland
.....The company has decided to cease its operations in Poland as the operations are unprofitable. The closing activities will commence immediately and the target is to finalise the project during the first quarter. The retirement from Poland results in non-recurring balance sheet item write-downs, which are expected to have an EUR -1.4 million effect on the 2009 financial year result.
Additionally, this is estimated to result in an EUR -0.3 million closing cost impacting 2010 result and cash flow. The operating profit for the Polish company in 2009 was about EUR -0.6 million. In Sweden, in alignment with the strategy, the company will focus on the profitable core operations by developing the Gallerix chain and consolidating Tiimari Sweden's profitable operations into Gallerix and closing the non-profitable shops. To improve profitability in the company's Baltic operations, their operational efficiency will be further enhanced.
In addition to the costs relating to the closing of the Polish operations, the non-recurring costs related to inventory revaluation due to the optimisation of the product offering and closing of shops and the Tiimari Sweden non-current asset valuation costs are estimated to amount to EUR 2-3 million.
Improving the company's operational efficiency is a key factor in ensuring our long term success. With the efficiency measures we will achieve planned annual savings of about EUR 3 million, of which a majority is expected to be realised this year. Additionally, the optimisation of the shop network in Finland will gradually lead to increased operational profitability and cash flow during the next two years. Our investments focus mainly on shop operations and efficiency improvements in logistics. Simultaneously, efforts will be made to continuously develop our product offering to ensure long term growth. In the short term our aim is to increase operational cash flow. The current decisions enable the company to focus on growing its profitable core operations, improve profitability as well as ensure the competitiveness of the company in the long term, states CEO Hannu Krook.
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