Varusteleka's annual report 2022Share on Facebook
The gold doubloons and squirrel pelts we managed to rake up last year have been accounted for and checked over to be sure. Here's a trip into the year 2022 from our perspective in some words and numbers. Enjoy.
Life during war economy: our turnover increased beyond expectations
Perhaps the most prominent factor of last year was the cowardly invasion of independent and sovereign Ukraine by the criminal gang, also known as the Russian Federation. It's disheartening to write about the effects of war on our business while the Ukrainian people are fighting for their existence and people are dying and suffering. Uneasy as it is, the facts are what they are, and war has nurtured some businesses throughout the history of mankind.
The war caused demand to skyrocket. A rather hefty amount of material was supplied to Ukraine via private persons, aid projects, and other channels. Purchases of combat-worthy clothes and gear were not limited to acute needs in Ukraine; reservists and ordinary citizens all over Europe were nudged to update their level of preparedness.
Our turnover overall was 23.1 million Euros, roughly 24 % more than the previous year.
The ratio of categories was heavily affected by the war. The most considerable growth was observed in the sales of brands other than our own; specifically combat medical care, personal protective equipment, camping gear, and boots. Varusteleka's house brands also got a large boost, but the supply wasn't working 100 %, so potential sales were lost. Stating the obvious, Särmä TST was the most successful of these.
One of Varusteleka's goals is to bring prosperity to Finland. Our indicator for this is the balance of trade: the difference between our purchases from abroad and our international sales.
This time, the balance of trade was negative. We have developed better accuracy in tracing the origins of products even when we buy them from a domestic supplier. After all, many companies have production facilities abroad. Thanks to our work around sustainability, we have better data at hand.
Another factor is that we have increased our buffers to improve product availability, and these purchases were not fully turned into sales at the time of cooking the books.
On a positive note, our purchases from outside the EU are significantly smaller than our sales in the other direction. We aim to increase the share of domestic purchases all the time, but the capacity of the Finnish textile industry is limited. At the same time, European factories are ready to run, so that's where we often go to.
Inflation is blowing up and supply chains are stretching
At the beginning of 2022, it looked like the world was returning to normalcy after the virus pandemic of unspecified origin. Those hopes went belly-up bas the war reserved almost all of the European manufacturers' capacity in this industry. Combined with the rising energy costs and other locust swarms, we're in a happy place of increased costs and decreased reliability of supply. If you have noticed stuff being out of stock, these are part of the reason. A large part.
Our costs of operation increased by almost 21 %. We were able to streamline things and tighten the belt to counter this. Unfortunately, we had to raise some prices, too. The most significant cost growth rates affected the products, materials, manufacturing, logistics, and other expenses such as rents and services we use. Adding to this, we compensated our emissions of the previous year with a sum of 43,000 € (1,245 carbon-equivalent tonnes).
Operating profits are up, taxes were paid, and the crew was granted a bonus
With the turnover increasing like hell and the means to limit the growth of costs taking effect, the profitability improved quite nicely. The EBIT for 2022 was 1.096 M€ / 4.74 %. Minus funding expenses and taxes, the net amount is a staggering 824,150.04 Euros.
This is an excellent result considering all the difficulties in the field. Doing well means there's more to share with the society and crew.
We paid almost 5 M€ direct and indirect taxes, the largest share being the value-added tax. Doing business internationally means paying taxes here and there, but most of it still goes to the Finnish "Tax Bear's" crate.
Varusteleka has a bonus system that depends on profit. Reaching and exceeding a certain threshold starts to increase the bonus pool, which reached 199,414 €. A sum of 43,073 € was deducted for pension expenses and such, the rest was split evenly between employees according to their hours at work; everyone gets the same slice regardless of their pay grade. The average crew individual got 2,431 euros.
So mixed feelings it is. We did well and have every reason to be proud and thankful. At the same time, last year was a harsh reminder; war and other crises tend to lift us. This is a humbling observation and gives a perspective to the state of things in our native country.
Visions of the future
Our ultimate goal remains simple: Total World Domination. Our strategy includes the following things in the near future and beyond:
Make Europe Great Again!
Global supply chains can be a drag, and we want to improve the quality of the clothes and gear we sell. This means ending the production of our house brands with cheap labor; all of the production will shift into the EU and Finland.
The turnover we get from the USA and Canada has grown so much that we're bringing out some big guns to serve the North American market better, and get our hands on some of those shiny dollars. We're setting up a base of operations (for real, this time) in the US and building an optimized distribution network over there. As it stands, we're shipping each and every parcel to you across the Atlantic, which is not really effective when it comes to the costs and emissions.
We're not world-famous quite yet and our propaganda department is working on that.
It's a wonderful world and the economic projections are hazy at best, but no matter what, we keep on working to keep the company growing, provide jobs for the crew, and do cool shit.
A gigantic thanks to the Varusteleka crew for the epic results of 2022 and all the good things we were able to achieve. A big thanks also to our old and new customers for staying with us. It's been an honor to serve you. No company can make it without suppliers and partners; a sincere thanks to all of you as well.
P.S. To keep the priorities straight, remember to support Ukraine! They are fighting Russia also for us, and will chase those terrorists off their soil. Slava Ukraini!