Rapala VMC Oyj — Earnings Release 2017

Apr 28, 2017

RAPALA VMC CORPORATION'S TRADING REPORT JANUARY TO MARCH 2017: SALES AT LAST YEAR'S LEVEL, OUTLOOK REVISED FOLLOWING CHANGES IN THE US RETAIL ENVIRONMENT

RAPALA VMC CORPORATION'S TRADING REPORT JANUARY TO MARCH 2017: SALES AT LAST YEAR'S LEVEL, OUTLOOK REVISED FOLLOWING CHANGES IN THE US RETAIL ENVIRONMENT

Rapala VMC Corporation
Trading report
April 28, 2017 at 9:00 a.m.
RAPALA VMC CORPORATION'S TRADING REPORT JANUARY TO MARCH 2017: SALES AT LAST
YEAR'S LEVEL, OUTLOOK REVISED FOLLOWING CHANGES IN THE US RETAIL ENVIRONMENT
January-March (Q1) in brief:
* First quarter net sales were 69.5 MEUR, at last year's level (69.7). With
comparable exchange rates sales down 4%.
* Following the recent changes in the US retail environment, the Group's 2017
full year outlook has been updated: Full year net sales are now expected to
be above last year's level and comparable operating profit below last year
level. Outlook will be specified as the season progresses.
* The leverage ratio (net debt to EBITDA) continues to be high and the Group
has agreed with its lenders on higher covenant levels covering also first
quarter of 2017.
* Various initiatives relating to execution of the Group's updated strategy
are proceeding and progress will be communicated in more detail later during
the year.

President and CEO Jussi Ristimäki: "With support of favorable exchange rates,
the first quarter sales were at last year's level and quite well in line with
expectations in many respects. The positive highlights of the period included
good sales of ice fishing and winter sport products as well as Marttiini knives
and Dynamite Baits' products. Sales developed well in Canada, Norway and
Portugal, among others.

Simultaneously, the beginning of the year was shadowed by the rapid changes in
the retail environment in the US. The US retail scene is disrupted by
digitalization and these changes were now showing fast-increasing effects also
on the fishing tackle business. Some major retailers' and distributors'
financial challenges are causing significant turbulence in the market and
affected the sales negatively. The year also started slower than expected in
Europe's big markets. In France sales were burdened by tough competition and
continuing depressed market sentiment. In Russia, the strengthening of the ruble
did not give the anticipated boost to the consumer demand.

Especially the US market development is causing increasing uncertainties
concerning the outlook for this year and the future visibility is quite limited
at the moment. These market challenges further encourage the Group to proceed
swiftly with the various strategic initiatives to boost the organic growth and
to improve the cost and capital efficiency as well as the operational
performance.

Also in the future, the capability to create products that appeal to both fish
and fishermen and to introduce these products to the global market will be the
Group's key competitive advantages. An illustration of this strength are
International Game Fish Association's latest records showing that again more
world-record fish were caught last year on Rapala lures than on any other brand
of baits in the world. And the most recent example of the Group's innovations is
the new Storm 360GT soft plastic lure, the sales of which are now exceeding the
expectations in the US."

Helsinki, April 28, 2017

Board of Directors of Rapala VMC Corporation

For further information, please contact:

Jussi Ristimäki, President and Chief Executive Officer, +358 9 7562 540
Olli Aho, Investor Relations, +358 9 7562 540

Market environment

The fishing tackle retail business is under turmoil and structural changes,
especially in the Group's biggest market, the US, as consumers are increasingly
shifting into digital channels. Several big players, including some of the
Group's biggest customers, are in financial distress, several bankruptcies have
been filed and this development has accelerated in past months. The changes have
a negative effect both on sales and the price competition in the marketplace.
Similar uncertainties in the trade have also to some extent been witnessed in
Europe. However, the underlying consumer demand seems to remain at earlier
levels in most big markets.

Business Review January-March 2017

The Group's net sales for the first quarter were at last year's level. Changes
in translation exchange rates increased sales by approximately 2.3 MEUR as the
US dollar and the Russian ruble strengthened. With comparable translation
exchange rates, quarterly net sales were down 4% from last year.

North America

With comparable exchange rates, sales in North America were below last year's
level due to slower sales in the US. North American ice fishing sales were above
last year's level. The sales in Canada recovered and were above last year's
level, as the economic and market situation in Canada was gradually improving.
The retail landscape in the US is going through a structural change as
traditional retail business is giving way to e-commerce and this development has
accelerated recently. This has resulted in many big retailers and distributors
facing financial challenges or even closing business, among them some of the
main customers in the US. Despite these changes, there is no sign that the Group
has lost market share as the whole fishing tackle business is hit by the same
challenges. Strengthening of the US dollar had a positive impact on the regions
sales.

Nordic

In the Nordic countries, the sales grew from last year, driven by good sales in
Norway and the Group's Marttiini knife unit. The sales in Finland were slightly
behind last year's strong level. The sales in Denmark fell behind last year's
level, due to lower hunting sales and tightening price competition. The sales in
Sweden were slightly above last year's level, even though impacted negatively by
late deliveries of third party products.

Rest of Europe

The first quarter sales were below last year's level, hurt by the continuing
challenges in the region's biggest markets, Russia and France. While the Russian
ruble has strengthened, having a positive impact on the regions EUR-nominated
sales, it has not materialized into higher consumer demand and the market was
still volatile. In France the sales were below last year's level, impacted by
tightening competition and general consumer uncertainties. In Poland, the sales
fell below last year's level as expected following changes in product portfolio.
In the UK, supported by change in the business model, and in Portugal the
business showed positive growth trends.

Rest of the World

With comparable exchange rates, the sales for the region were below last year's
level, mainly affected by a decrease in sales in Thailand, where the market is
suffering. Sales to non-Group distribution channels were also down. Low consumer
demand and economic uncertainties affected the sales in Asia, especially in
Japan and Korea. The sales in South Africa were above last year's level,
supported by new hunting and outdoor business and sales to Middle East-North
Africa.

External Net Sales by Area

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Q1 Q1 change comparable FY

MEUR  2017  2016 % change %  2016

North America 23.6 23.5 +0% -3% 91.3

Nordic 15.8 14.9 +6% +6% 55.3

Rest of Europe 22.5 24.1 -7% -10% 81.3

Rest of the World 7.5 7.2 +4% -4% 32.7

Total 69.5 69.7 0% -4% 260.6

Segment Review

Group Products

Group fishing products sales were down, partly offset by increase in other group
product sales.

Lure sales were below last year's level in North America, but increased in some
other areas, including Portugal and Latin America. The sales of fishing tools
and accessories were also below last year's level. Winter fishing product sales
benefited from good winter conditions and were higher than last year, especially
in the US. Carp fishing product sales increased from last year.

Sales of other group products were up. The sales of hunting products were
supported by increased Marttiini knife sales, especially good sales of the
Finland 100 Years jubilee knife. More favorable winter weathers boosted the
sales of winter sport products.

Third Party Products

Third party fishing product sales were behind last year, reduced by the loss of
a product category in Poland as well as the challenging market situation
affecting the sales especially in France and Russia. Good winter fishing
conditions helped grow the winter fishing electronics sales in the US.

Third party hunting product sales increased slightly from last year's level.
Third party winter sport sales were also above last year.

Net Sales by Segment

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Q1 Q1 change comparable FY

MEUR  2017  2016 % change %  2016

Group Products 47.6 47.2 +1% -2% 172.1

Third Party Products 22.0 22.5 -2% -6% 88.5

Total 69.5 69.7 0% -4% 260.6

Short-term Outlook

Despite the Group's first quarter sales having been at last year's level, the
full year outlook has become more reserved due to the recent developments in the
US. Full impact of this development is difficult to predict, but it is likely to
have negative impact on Group's sales and profitability both at distribution and
manufacturing level in 2017.

The Group has launched various strategic initiatives to boost the organic growth
and improve the cost and capital efficiency as well as operational performance
in the future. These initiatives will trigger some additional expenses and
investments in 2017.

Driven by the rapidly increasing uncertainty in the US retail environment, the
Group's 2017 full year outlook has been updated. Full year net sales are now
expected to be above last year's level and comparable operating profit below
last year's level, while previously net sales were expected to be above last
year's level and comparable operating profit in the same range as in 2016.
Development in the main markets will be closely monitored as the season
progresses and the outlook will be specified after the second quarter.

Annual General Meeting

The Annual General Meeting (AGM) kept on March 30, 2017 approved the Board of
Director's proposal that a dividend of EUR 0.10 per share is paid. The dividend
will be paid in two installments, EUR 0.05 each. First dividend installment of
1.8 MEUR was paid on April 10, 2017. The Board of Directors will in its meeting
scheduled for October 26, 2017 decide on the dividend record date and the
payment date. The dividend record date for the second installment would then be
October 30, 2017 and the dividend payment date November 6, 2017. A separate
stock exchange release on the decisions of the AGM has been given, and up to
date information on the Board's authorizations and other decision of the AGM are
available also on the corporate website.

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