since it was founded in 1963 in the town of Bredebro in

Transcription

s
ince it was founded in 1963 in the town of Bredebro in southwestern Denmark,
ECCO has been owned and managed by the Toosbuy family. Today, Hanni Toosbuy Kasprzak
– the daughter of Birte and Karl Toosbuy – is the sole owner of the Company and Chairperson of the
and Mikael Thinghuus is Chief Operating Officer (COO).
ECCO Annual Report 2004
Supervisory Board. Her husband, Dieter Kasprzak, is Chief Executive Officer (CEO),
1
2
Dieter Kasprzak
people create results
Mikael Thinghuus
At ECCO we are passionate shoemakers. We constantly
In a highly competitive market, we generate results
aim to defy conventions. We strive to surprise, and we
through the proactive and conscious choices we make.
want to develop innovative designs and products –
Whereas many competitors are phasing out and subcon-
without having to compromise on the quality and comfort
tracting their production to third parties, it is essential
concept that is the heart of every ECCO product
to ECCO that our business is based on manufacturing our
and indeed of our Company.
products in-house.
ECCO develops shoes for people who lead active lives
ECCO masters the production technology better than
and require unique comfort, fit and functionality. This
anyone, and the integrated partnership between design,
philosophy has characterised ECCO right from the begin-
product development, brand development, tanneries,
ning more than 40 years ago, and it epitomises the
production and distribution is one of the keys to
qualities necessary to meet the targets for the future.
understand ECCO’s business philosophy and results.
We do not aim to be the biggest – we just want to be the
Another factor is ECCO’s decentralised organisational
best. We aim to generate profitable growth and maintain
structure: Decisions should be made where things hap-
the greatest possible degree of financial independence
pen, and the changes to our organisation with increased
and the financial strength to pursue our long-term targets
decision-making powers in our production and sales units
on our own terms.
have proven to be right already from year one.
2004 was an important step in the right direction.
ECCO’s results are created by people who believe and are
ECCO generated new growth and increased earnings,
confident that they will shape the future by doing things
not least as a result of the far-sighted plans and invest-
differently. This approach was an important part of Karl
ments we have made in recent years.
Toosbuy’s business philosophy and outlook on life, and it
has characterised ECCO since our Company’s inception.
ECCO is represented in all segments of the footwear
To build on the best of our past will help secure our future.
market – Ladies’, Men’s and Kids’ shoes – as well as in
those sports shoe categories where we can play a leading
role. Today, these categories include Golf, Outdoor,
Walking and Running. We generated growth in each of
these market segments in 2004, and selling more than 12
million pairs of shoes we increased our total sales volume
Dieter Kasprzak
Mikael Thinghuus
by some 7%. This was the highest volume growth rate in
Chief Executive Officer
Chief Operating Officer
results and earning capacity as our profit before tax rose
by more than 70%.
five years, and it translated into substantially improved
3
highlights of 2004
Result
which contribute to a growing, albeit still moderate part of
The ECCO Group’s performance in 2004 was in the
total revenues. Moreover, sales revenue reductions and
circumstances satisfactory.
discounts on sales of obsolete products showed a significant decline. On the other hand, net revenues from leather
Profit before tax increased by DKK 86.2 million or 71.7%
and rawhides were down 11% to DKK 196.6 million.
to DKK 206.4 million from DKK 120.2 million in 2003. This
good performance increased the return on assets to 7.0%
Net revenues were negatively impacted by exchange
from 4.3% in 2003.
rates,especially the USD/DKK exchange rate. Net
revenues would have increased by 9.8% had exchange
A major reason for the higher profit was a 7.3% increase
rates remained at the year-end 2003 level.
in sales to 12,045,000 pairs of shoes, a record-high
number, and the highest growth rate for the past five
Profit before financials increased by 47% to DKK 267.0
years. To this should be added sales by ECCO’s licensee
million, and the operating margin increased from 5.7% to
in Japan totalling more than 1 million pairs of shoes.
7.9%. The improvement in earnings was the result of hig-
Growth was recorded in all product groups: Ladies’,
her revenues and an improved gross margin achieved
Men’s, Kids’, Golf and Sports shoes.
through lower manufacturing costs and the efficiency
improvements and cost-saving initiatives implemented in
the Group. ECCO’s visibility and branding are important
Pairs of shoes sold (thousands)
focusareas, and marketing costs consequently rose by
Number of pairs (thousands)
14,000
22% in 2004.
12,000
10,000
Net financial expenses amounted to DKK 60.6 million,
8,000
compared to DKK 61.4 million in 2003. In 2004, net finan-
6,000
cial expenses included a positive exchange rate adjust-
4,000
ment of DKK 4.4 million, mainly relating to debt denomina-
2,000
ted in foreign currencies. The corresponding exchange
rate adjustment in 2003 was DKK 5.0 million. The interest
0
2000
2001
2002
2003
related items thus reflect a minor improvement as a result
2004
of the Group’s positive cash flow performance.
Consolidated net revenues increased by DKK 225 million
Profit for the year after tax and minority interests was DKK
or 7.1% to DKK 3,394 million up from DKK 3,169 million
150.7 million compared to DKK 61.8 million in 2003. This
in 2003. Net revenues comprise both sales of shoes and
profit should be seen in light of the fact that ECCO conti-
accessories, and of leather and rawhides.
nues to invest in the development of new markets in Asia
and Eastern Europe and in an expansion of the network of
dedicated ECCO shops.
Net revenue/Return on assets
Net revenue (DKK million)
Balance sheet
DKK million
Return on assets
3,500
3,400
3,300
3,200
3,100
3,000
2,900
2,800
2,700
2,600
2,500
12.0%
The consolidated balance sheet totalled DKK 2,945 million
10.0%
as of 31 December 2004, representing an increase of
8.0%
6.0%
5.6%.The increase was partly attributable to a DKK 68
million increase in cash, and partly to a DKK 101 million
4.0%
2.0%
0.0%
2000
2001
2002
2003
increase in receivables. Inventories were further reduced in
2004 by DKK 42 million.
2004
In recent years, ECCO has focused on reducing working
4
Net revenues from shoes and accessories increased by
capital. From year-end 2001 to year-end 2004, the value
9%, partly driven by the general growth in pairs of shoes
of ECCO’s inventories was reduced from DKK 1,345
sold and partly by strong growth in sales of accessories,
million to DKK 890 million, and trade receivables were
reduced from DKK 459 million to DKK 417 million, whilst
The net cash outflow for investing activities was DKK 213
net revenues increased by 5.5% during the same period.
million compared to DKK 229 million in 2003. The cash
outflow for investments in intangible assets totalled DKK
Fixed assets totalled DKK 1,113 million, of which property,
12 million compared to DKK 15 million in 2003, while
plant and equipment constituted DKK 948 million.
the cash outflow for investments in property, plant and
equipment was DKK 200 million in 2004 compared to
Net investments totalled DKK 213 million compared to
DKK 213 million in 2003.
DKK 229 million in 2003. The production units accounted
for DKK 98 million of this, mainly in the form of an increase
Long-term debt increased by DKK 58 million, whilst short-
in production capacity and an upgrading of existing plant
term debt was reduced by DKK 44 million. Dividend paid
and equipment. On the sales side, investments primarily
during the financial year amounted to DKK 23 million.
relate to ECCO-owned and partner-owned shops, and in
the acquisition of an administration building and distribution centre in the United States.
The solvency ratio rose from 34.1% to 35.1%, which is
in line with ECCO’s overall goal of achieving the greatest
possible financial independence.
Equity stood at DKK 1,034 million compared to DKK 951
million at year-end 2003. The proposed dividend
in respect of the financial year is DKK 30 million.
Cash flow statement
The cash flow statement for 2004 showed a cash inflow
from operating activities of DKK 273 million compared
to DKK 336 million in 2003, where a substantial reduction
of receivables and inventories was achieved. ECCO did
not plan any major inventory reductions in 2004, and
the cash flow from operating activities is consequently
considered satisfactory.
Cash flow from operating activities (DKK ‘000)
700,000
600,000
500,000
DKK ‘000
400,000
300,000
200,000
100,000
0
2000
2001
2002
2003
2004
-100,000
5
6
consolidated financial highlights and key ratios
FINANCIAL HIGHLIGHTS
2004
2003
2002
2001
2000
3,393,693
3,168,930
3,359,838
3,216,314
2,835,885
447,972
370,295
342,776
416,046
559,688
(180,937)
(188,657)
(187,215)
(166,592)
(143,475)
Profit before financials
267,035
181,638
155,561
249,454
416,213
Net financials
(60,594)
(61,394)
(73,465)
(93,134)
(111,700)
Profit before tax
206,441
120,244
82,096
156,320
304,513
Group profit
163,558
70,980
60,353
123,403
215,615
Profit for the year
150,661
61,788
51,078
115,121
208,205
1,112,597
1,073,447
1,024,182
963,957
914,484
DKK ‘000
Net revenue
Profit before amortisation and depreciation
Amortisation and depreciation
Fixed assets
Current assets
1,832,582
1,714,309
1,884,018
2,115,547
1,947,449
Assets
2,945,179
2,787,756
2,908,200
3,079,504
2,861,933
Equity
1,034,026
951,016
958,160
966,430
889,456
Other liabilities
56,877
31,257
37,413
12,285
9,674
Debt
1,854,276
1,805,483
1,912,627
2,100,789
1,962,803
Liabilities
2,945,179
2,787,756
2,908,200
3,079,504
2,861,933
Cash-flow from operating activities
272,973
336,378
594,382
(38,122)
110,820
Cash-flow from investing activities
(212,811)
(228,551)
(230,346)
(256,698)
(322,711)
Cash-flow from financing activities
(392)
(73,808)
(263,633)
206,287
275,136
12,045
11,225
10,564
10,145
9,603
9,657
9,388
8,839
9,087
8,853
Pairs of shoes sold (thousands)
Number of employees (as at 31 December)
KEY RATIOS
Operating margin
7.9%
5.7%
4.6%
7.8%
14.7%
Return on assets
7.0%
4.3%
2.8%
5.0%
10.6%
ROIC
9.1%
6.5%
5.3%
8.1%
14.5%
Investment ratio
1.2
1.2
1.2
1.5
2.2
Return on equity
15.2%
6.5%
5.3%
12.4%
25.7%
Solvency ratio
35.1%
34.1%
33.0%
31.4%
31.1%
2.0
1.9
2.0
2.1
1.9
Liquidity ratio
DEFINITIONS OF KEY RATIOS
Operating margin:
Profit before financials x 100
Net revenue
Investment ratio:
Return on assets:
Profit before tax x 100
Assets
Return on equity:
ROIC:
Profit before financials x 100
Assets
Solvency ratio:
Investments for the year
Liquidity ratio:
Current assets
Short-term debt
Profit for the year x 100
Average equity
Equity x 100
Assets
7
sales and market conditions – growth in all ECCO markets
Global growth of 7%
North America
In 2004 ECCO achieved progress in all their markets,
ECCO continues to gain market share in North America.
ECCO has chosen to operate in. Despite intensified com-
Measured by the number of shoes sold, sales in the USA
petition in nearly all markets, ECCO’s continued focus on
and Canada increased by 12% to 2.7 million pairs of
strong branding and concept sales was instrumental
shoes. ECCO’s golf division made excellent progress in
in generating the growth. Measured by the number of
the USA and is now established as the most prestigious
shoes sold, global growth was 7% in 2004 with Asia,
brand in the golf shoe market.
North America and Eastern Europe recording the strongest growth rates.
Our expectations for continued growth are based on
ECCO’s strong position, including in particular ECCO’s
Asia
model for partnership shops which was very successfully
ECCO has a very large potential in Asia. The effort in
implemented in 2004.
the region generated a substantial sales improvement
of 21% corresponding to an increase of 650,000 pairs of
Eastern Europe
shoes – due not least to significant growth in China and
Due not least to strong growth in Russia, sales in the
Hong Kong.
Eastern European region increased by 15% overall
corresponding to 1.4 million pairs of shoes. An important
8
ECCO expects to continue this favourable trend in the
element in this favourable trend is the extremely strong
region in the years ahead. In the long term, Asia has the
position enjoyed by the ECCO brand in Russia and
potential to become ECCO’s most important market. This
Ukraine in particular. ECCO has almost 100 shops in
is the reason ECCO currently makes and will continue to
Russia alone, and the potential remains great throughout
make significant investments in the region.
the region.
Western Europe
Accessories
ECCO’s Western European region consists of the Benelux
ECCO’s accessories sales, which make up 1% of Group
countries, the UK and southern Europe.
revenue, increased by 84%. Activities were streamlined
in 2004 and consolidated in Switzerland.
The region generated overall growth of 1% in terms of
pairs of shoes sold. ECCO strengthened the UK sales
Continued growth
organisation and introduced a new retail concept. Growth
The positive developments underline that the markets in
in the Italian market was highly satisfactory, primarily
North America, Eastern Europe and Asia and selected
because ECCO established its own company. ECCO also
Western European markets still have excellent growth
performed excellently in the Netherlands, in particular
potential. Our continued organic growth will be based on
within Kids’ shoes, and expect to sustain this level
the newly established regional organisations, thereby pla-
of performance in the years ahead.
cing operational responsibility as close to the customers
and the market as possible.
Central Europe
ECCO’s Central European region consists of the
German-speaking countries and Scandinavia.
Recording overall growth of 6% in terms of pairs of shoes
sold, ECCO performed remarkably well in these highly
competitive markets. The increase recorded in Germany
was highly satisfactory despite a very difficult retail
environment. Both Sweden and Norway recorded
handsome growth rates from the newly established
regional service centre based in Varberg, and ECCO
successfully retained its position as the market leader in
Scandinavia.
23%
20%
40%
5%
12%
Composition of sales volume by geography, 2004
Western Europe
Central Europe
Asia
North America
Eastern Europe
9
ECCO Arena concept
10
shop concept
It is ECCO’s aim to increase the awareness of ECCO
amongst consumers and to create reliable sales access
through concept sales. This aim will be achieved through
further expansion of ECCO’s network of partnership
ECCO Shop in Kuwait
shops.
A key element in developing ECCO’s position is to
enhance the visibility of the ECCO brand in the retail
segment. ECCO therefore focuses on improving concept
sales primarily by expanding the franchise network. As
part of this strategy, ECCO systematically works to upgrade and expand partnerships with a view to turning
retail outlets and shop-in-shops into dedicated ECCO
shops.
At year-end 2004, ECCO operated 446 concept shops
ECCO Shop in Austria
worldwide (+13% compared to 2003), 828 shop-in-shops
(+9%) and 2,067 points or retail outlets (+3%). In addition,
ECCO operates 41 factory outlets. Growth in the number
of retail outlets was primarily attributable to the growth
markets in Eastern Europe, Asia and North America, but
Germany, Sweden and Great Britain also expanded considerably.
Partnerships
Own
Total
Shops
394
52
446
Shop-in-shops
821
7
828
2,067
-
2,067
7
34
41
Points
Factory outlets
ECCO Shop in Poland
ECCO Shop in Hong Kong
ECCO Shop in Denmark
11
12
innovation and product development
Unique development ability
Men’s shoes
The core of ECCO’s product strategy is and will continue
Based on its strong position in the City segment, ECCO
to be products based on direct injected technology. This
launched its flagship, ECCO President, which set
technology is ECCO’s unique mark, and together with
new standards for design and exclusivity in the ECCO
innovative strength and functionality it represents the
collection.
philosophy behind ECCO. The year 2004 proved that the
combination of these competencies is very popular with
our customers. New, exciting products increase attention
and sales and contribute to extending the limits of the
technical capabilities of our factories.
ECCO has chosen to operate in all segments of the
footwear market (Ladies’, Men’s and Kids’ shoes) as well
as in selected segments of the sports shoe market in
which ECCO’s products can play a leading role, for
example Golf, Outdoor, Walking and Running.
ECCO’s casual collection for men underwent a revival
2004 was characterised by ECCO’s ambition to strengt-
in 2004, as exemplified by the successful innovation of the
hen its core business area, to establish a global collection
ECCO Transporter group. The success of ECCO Shark
concept and to win market share based on exciting and
inspired ECCO’s men’s division to design a corresponding
innovative products.
product for men, ECCO Gyro, which attracted new
customers. This will also be ECCO’s target for the years
Ladies’ shoes
ahead. Sales of the 2005 spring/summer collection
The successful introduction in 2003 of the ECCO Shark
already indicate good results, and the future thus seems
product concept was followed up by the launch of the
to hold the prospect for increasingly impressive growth
ECCO Shark sandal in 2004. This range has laid the foun-
rates in the men’s segment.
dation for a whole new generation of ECCO products.
Kids’ shoes
The success of ECCO Kids’ continued in 2004, and the
segment performed well in all markets.
ECCO’s interpretation of modern casual shoes, such as
the ECCO FYM sandal, ECCO Globetrotter, ECCO Shade
and ECCO Twilight, was instrumental in generating strong
Direct injected products such as ECCO Infant and the
global growth.
entire group of GORE-TEX™ membrane products
spearheaded the development of ECCO Kids’ in 2004.
The kids’ division is experiencing very strong growth, and
collection, ECCO achieved outstanding results with the
it will play an increasingly important role in ECCO’s future.
newly launched ECCO City collection. The foundation for
Following the great success of ECCO Kids’ in Scandi-
continued success in 2005 has been secured by a very
navia, USA and Eastern Europe, ECCO is now ready to
positive reception of the spring/summer 2005 collection.
launch the Kids’ products globally.
In addition to the successful modernisation of our core
13
Thomas Bjørn and Dieter Kasprzak discussing product development
14
Golf shoes and other sports shoes
The year 2004 marked the definitive breakthrough for
Thongchai Jaidee
ECCO’s golf division. ECCO’s golf shoes were the centre
of much attention on golf courses around the world in
2004 – not least because of ECCO’s sponsorship agreements with some of the very best players in the world.
ECCO currently supports world-famous players such as
Colin Montgomerie, Thongchai Jaidee, Aaron Baddeley as
well as Iben Tinning and Thomas Bjørn. These players
also contribute to the development of new, innovative
ECCO Golf products, thereby accentuating ECCO’s
unique position in the market for golf shoes.
Thomas Bjørn
The separation from the rest of the sports division ensured
Iben Tinning
total focus on ECCO Golf, and 2004 became the year
when ECCO’s ladies’ golf shoes set new standards for
comfort and design. Turning to ECCO’s men’s line, the
ECCO World Class range in particular set new standards
for design and technology. ECCO expects 2005 to
become yet another great year characterised by strong
growth in ECCO Golf.
As far as the remaining part of ECCO’s sports shoe
segment is concerned, ECCO was able to strengthen its
Colin Montgomerie
already strong position in the Outdoor and Sandal
markets. In 2005, ECCO intends to continue the development of the sales force. In terms of products, ECCO will
focus even more on the market for running shoes.
12%
30%
47%
11%
Composition of shoe sales, 2004
Men’s shoes
Kids’ shoes
Sports shoes
Ladies’ shoes
15
production and value chain – the commitment to go our own way
Bucking the trend
Portugal, 2.8 million pairs in Slovakia, 3.9 million pairs in
In 2004, ECCO once again demonstrated its commitment
Thailand and 0.2 million pairs in Indonesia in 2004.
to pursue its philosophy.
Local development centres have been set up at all ECCO
In a time when practically all competitors are phasing out
factories to ensure uniform and integrated product
in-house production, ECCO has chosen to strengthen
development.
coherence and consistency throughout ECCO’s value
chain.
ECCO in China
In August 2004, ECCO began the construction of its most
ECCO is confident that control and constant adjustment of
sophisticated production unit to date in China. The factory
the total process from idea and design over production of
is located in the growth centre of Xiamen, and ECCO
leather and shoes to marketing and sales will prove the
expects to start up production in late Q1 2005.
best way forward – both in terms of innovative strength,
development and quality, and in terms of long-term
Construction is progressing according to plan. The factory
financial performance.
is the first of five planned factories at this location. Each
factory will have the capacity to produce one million pairs
This basic philosophy drives the way ECCO structures its
of shoes annually. In addition, ECCO plans at a later time
value chain, and in 2004 formed the basis of the initiatives
to establish a tannery in connection with the shoe factory.
ECCO launched and completed.
ECCO’s investments in China are expected to total
Unique technology
between DKK 300 million and DKK 500 million over the
ECCO is a pioneer within the special direct injection
course of the next five years. After careful consideration,
technology where the upper part of the shoe is placed in a
China was chosen as the best geographic location for this
mould before the sole is sprayed-on directly under high
type of strategic commitment. Today, China produces
pressure.
more than 50% of the world’s shoes. There is significant
growth potential in the country’s own economy and last,
This unique technology, which guarantees unrivalled
but not least, China offers a highly skilled and motivated
lightness, flexibility and quality in the individual shoe, is
workforce.
ECCO’s hallmark. It will continue to form the basis of new
and innovative designs. ECCO’s own control of the use
The establishment of the business in China is to a large
and further development of the technology ensures that
extent based on knowledge transfer from Denmark,
new materials and production processes can be imple-
Thailand and Indonesia.
mented quickly and efficiently anywhere in our production.
ECCO’s tanneries
ECCO’s factories
ECCO’s tanneries in the Netherlands, Indonesia and
ECCO owns shoe factories in Slovakia, Portugal,
Thailand will continue as primary suppliers of leather to
Indonesia and Thailand.
ECCO’s factories all over the world. Retaining and developing ECCO’s competencies in this part of the value chain
In order to ensure the strongest possible focus on direct
enables the company to maintain the high quality, the
injected products, ECCO in 2004 discontinued its in-
unique production technology and the professional know-
house production of shoes which were not based on this
how upon which ECCO’s products are based.
production method.
The in-house production of leather ensures high quality
The factory in Indonesia, which previously only produced
and flexibility in ECCO’s own value chain. In addition,
uppers, has started producing shoes.
ECCO Leather is today among the world’s leading suppliers of high quality leather for manufacturers of car and air-
16
The production of shoes has been diversified with due
plane seats, bags and gloves as well as for other shoe
consideration for geographic and currency risks.
manufacturers, and ECCO expects to further strengthen
Accordingly, 2.6 million pairs of shoes were produced in
this position in the years ahead.
ECCO and the environment
ECCO gives high priority to environmental considerations
in its development and production. ECCO is focused on
optimising production methods and on developing new
and more environmentally friendly methods.
ECCO’s new factory in Xiamen, China
In 2004, ECCO’s tanneries made a dedicated effort with
Third-party suppliers
respect to environmental improvements, among other
Notwithstanding ECCO’s focus on controlling and
things through participation in international environment
strengthening all links of its value chain, ECCO needs a
projects. These innovative projects will not only benefit
wide range of strong and reliable third-party partners and
ECCO but also the entire tannery sector, and the results
suppliers now and in the future. ECCO puts high demands
may be applied in the timber, paper and textile industries
on and has great expectations of its partners in terms of
as well.
ethical conduct, environment, product specifications and
quality.
In 2004, ECCO’s shoe factories were focused on further
developing energy-saving and waste management mea-
ECCO also requires their partners to carry out specific in-
sures.
house development activities for ECCO products so that
they constantly contribute to sustaining efficiency and
For additional information on the Group’s environmental
flexibility in ECCO’s production and distribution.
performance, see the environmental statement included
with this Annual Report, which includes a presentation of a
Interaction in the value chain
number of environmental initiatives implemented at
ECCO’s efforts to control the value chain from idea and
ECCO’s tanneries and shoe factories and statements from
design over production to marketing and sales enables the
ECCO’s individual units containing environmental perfor-
company to constantly optimise the relationship between
mance indicators for 2004.
factories, tanneries and suppliers in order to minimise the
response time to changes in market requirements and to
Tangible fixed asset investments (DKK ‘000)
350,000
ECCO aims to continue this optimisation, and specific
300,000
DKK ‘000
reduce inventories and the amount of capital tied up.
initiatives for 2005 include audits of ECCO’s supply and
logistics systems. ECCO’s aim is to effect delivery directly
200,000
from factory gate to customer and to operate three major
150,000
regional distribution centres in Europe, North America and
100,000
Asia.
50,000
0
2000
2001
2002
2003
2004
250,000
17
organisation - decisions are made where things happen
ECCO bases its business on mastering three basic
functions:
The five sales units are:
· ECCO Europe West (Benelux, UK and Southern
· Brand, product and concept development
Europe) based in Rosmalen, the Netherlands
· Production
· ECCO Europe Central (German-speaking countries
· Sales
and Scandinavia) based in Tønder, Denmark
· ECCO Europe East and Middle East based in Warsaw
In 2004, ECCO made a number of radical changes to its
· ECCO Americas based in New Hampshire, USA
organisational structure to increase the ability to take
· ECCO Asia/Pacific based in Hong Kong
action and become more effective and profitable by
placing responsibilities and decision-making powers as
The five production units are:
close as possible to the day-to-day operations of our
· ECCO Portugal in Feira
units.
· ECCO Slovakia in Martin
· ECCO Indonesia in Surabaya
ECCO’s operational activities are now managed by 11
· ECCO Thailand in Ayudhthaya
strong business units: five sales units, five production units
· ECCO Xiamen in Xiamen
and one leather unit.
ECCO Sko A/S
– Group structure as of 1 January 2005
Subsidiaries, Sales
ECCO Europe West
ECCO Europe Central
ECCO Europe East and Middle East
THE NETHERLANDS
ECCO Benelux B.V.
SWEDEN
ECCO Sverige AB
UK
ECCO Shoes UK Limited
DENMARK
Salgsselskabet
ECCO Danmark A/S
POLAND
ECCO Europe East and
Middle East Sp. z o.o.
(under incorporation)
BELGIUM
ECCO Belgium N.V.
FRANCE
ECCO France Diffusion S.a.r.l.
- DENMARK
ECCO Retail A/S
NORWAY
ECCO Norge A/S
PORTUGAL
ECCO (Portugal) Sales
– Comercialização de Sapatos, Lda.
FINLAND
Oy ECCO-Suomi Ab
SPAIN
ECCO Shoes Iberica, S.L.
GERMANY
ECCO Schuhe GmbH
ITALY
ECCO Scarpe Italia S.r.l.
AUSTRIA
ECCO Trading GmbH
SWITZERLAND
ECCO Schuhe Schweiz GmbH
Accessories:
SWITZERLAND
ECCO Shoes International AG
Dormant companies have been left out
18
POLAND
ECCO Shoes Poland Sp. z o.o.
THE CZECH REPUBLIC
ECCO Boty Ceská republika s.r.o.
In addition, ECCO’s leather activities have been consolida-
supervisory board and budget and financial statements.
ted in the ECCO Leather Group, which is headquartered in
The business units have thus been given a clear and more
Dongen, the Netherlands.
direct responsibility for their day-to-day operations and
related processes as well as significantly more freedom
Headquarters
to act.
As a result of the organisational change, ECCO’s headquarters will be responsible for brand, product and concept development and for central Group functions such as
logistics, IT, treasury, taxation and legal services. In addition, the headquarters will act as a support and control
unit vis-à-vis the individual business units.
Business units
As a result of the organisational change, each of ECCO’s
11 business units now has its own management,
Subsidiaries, Production
ECCO Americas
ECCO Asia / Pacific
ECCO Shoe Factories
USA
ECCO USA, Inc.
HONG KONG
ECCO Asia Limited
PORTUGAL
Ecco’let (Portugal)
– Fábrica de Sapatos, Lda
- USA
ECCO Retail LLC
CANADA
ECCO Shoes Canada, Inc.
- HONG KONG
ECCO Shoes Hong Kong Limited
- SINGAPORE
ECCO Singapore Pte. Ltd.
- AUSTRALIA
ECCO Shoes Pacific Pty. Ltd.
- NEW ZEALAND
ECCO Shoes (NZ) Limited
- INDIA
ECCO India Trading
Private Limited
SLOVAKIA
ECCO Slovakia, a.s.
INDONESIA
P.T. ECCO Indonesia
THAILAND
ECCO (Thailand) Co., Ltd.
SINGAPORE
ECCO China Holding (Singapore) Pte.
Ltd.
- CHINA
ECCO (Xiamen) Co. Ltd.
ECCO Leather
- THE NETHERLANDS
ECCO Tannery (Holland) B.V.
THAILAND
ECCO Tannery (Thailand) Co., Ltd.
THE NETHERLANDS
ECCO Leather B.V.
19
employees – our most valuable resource
Throughout ECCO’s more than 40-year history, our
Staff
employees have played a vital role in the Company’s
ECCO’s global staff totalled 9,657 at 31 December 2004
success. Cultivating the good relationship requires a
– an increase of almost 3% over 2003. A total of 8,094
special effort on behalf of both employees and the
employees work in production, 1,010 in sales companies
Company, and therefore training and constant develop-
and 553 at Danish headquarters.
ment are key elements of being an ECCO employee.
Investments in training and upgrading our 9,500 employees continued in 2004.
No. of employees at 31 December 2004
Composition of employees according to function, 2004
9,800
No. of employees
9,600
6%
9,400
10%
84%
9,200
9,000
8,800
8,600
8,400
2000
2001
2002
2003
2004
Production companies
HQ
Training and continued development
All new employees sign up for the course ‘From cow to
Sales companies
shoe’, which is a combination of theory and practice
ending with the employees sewing a pair of shoes for
themselves. This very practical exercise provides the
employees with a clear idea of and respect for the
competencies required in sophisticated shoe production.
Composition of employees by geography, 2004
321
During the introduction process ‘Welcome to the World of
ECCO’ new employees also meet representatives of each
955
708
915
6,758
business unit who provide a thorough understanding of
the overall structure of the Group.
All ECCO’s factory units make targeted efforts to upgrade
their employees through multi-skill programmes intended
to enable employees to carry out versatile production
tasks, thereby achieving job variation.
Initiatives to strengthen in-house recruitment
ECCO offers several targeted trainee programmes which
Western Europe
Central Europe
Eastern Europe
Asia/Pacific
select, support and develop employees to take on greater
responsibility in new management or specialist positions.
In 2004, ECCO focused specifically on middle and top
management training.
20
North America
financial matters
Financial risks
Due to the international scope of ECCO’s business
activities, a number of financial matters impact the Group’s
results of operations and its equity. The approach to
handling financial risk is determined by the Supervisory
Board and the Managing Board.
Foreign exchange risks
Foreign exchange risk is managed centrally. Through
active management of purchase and selling of currencies,
ECCO aims to minimise the net positions in the main currencies, EUR and USD. Material currency positions which
are not used commercially are hedged at least 12 months
ahead. Positions cannot be hedged more than 15 months
ahead.
Credit risks
The Group has no material credit risks apart from what
has been recognised in the financial statements.
The Group collaborates with a number of suppliers and
customers none of which constitute an unusual business
risk.
21
material events after 31 December 2004
ECCO Sko A/S has exercised its right to acquire 45%
of the shares in ECCO Benelux B.V. ECCO Sko A/S now
owns the entire share capital of that company.
Management believes that no other significant events
have occurred after the end of the financial year which
would materially change the Group’s financial status.
Outlook for 2005
ECCO expects to continue the Group’s good performance
in 2005.
In 2005, ECCO in particular intends to focus on the
growth markets in Eastern Europe and Asia, on sustaining
market share growth in North America and Western
Europe, on implementing additional efficiency improvements and on generating overall growth in all of ECCO’s
business areas.
On this basis, ECCO expects earnings in 2005 to exceed
the 2004 result.
ECCO thus remains confident that the company is on the
right track to attaining the 10-year goal for 2013 of doubling the 2003 revenues and volumes, while achieving an
operating margin of 10% after tax.
22
annual accounts 2004
23
financial Statements 2004 – Statement by the Management
The Supervisory Board and Managing Board of ECCO
The Supplementary Environmental Report of ECCO Sko
Sko A/S have today considered and adopted the Annual
A/S provides a true and fair view within the framework of
Report for 2004.
generally accepted guidelines for the area.
The Annual Report is presented in accordance with the
We recommend that the Annual Report be adopted by the
Danish Financial Statements Act. We consider the
shareholders at the Annual General Meeting.
accounting policies to be appropriate to the effect that the
Annual Report provides a true and fair view of the Group’s
and the Company’s assets, liabilities and financial position
Bredebro, 9 March 2005
as of 31 December 2004 and of the results of the Group’s
and the Company’s operations and the consolidated cash
flows for the financial year ended 31 December 2004.
Managing Board
Dieter Kasprzak
Mikael Thinghuus
Chief Executive Officer
Chief Operating Officer
Jens Christian Meier
Søren Steffensen
Executive Vice President, Production
Executive Vice President, Sales & Retail
Supervisory Board
24
Hanni Toosbuy Kasprzak
Karsten Borch
Chairperson
Vice Chairman
Torsten Rasmussen
Michael Fiorini
Aage Andersen
Bernd Scheelke
Jakob Møller-Hansen
Employee representative
auditors’ report
To the shareholders of ECCO Sko A/S
policies used and significant estimates made by the
We have audited the Annual Report of ECCO Sko A/S
Supervisory Board and the Managing Board, as well as
for the financial year ended 31 December 2004, which
evaluating the overall annual report presentation. We
is presented in accordance with the Danish Financial
believe that our audit provides a reasonable basis for
Statements Act. Our audit did not include the
our opinion.
supplementary environmental report on pages 45-58,
as this is not required by Danish law.
Our audit has not resulted in any qualifications.
The Annual Report is the responsibility of the Company’s
Opinion
Supervisory Board and Managing Board. Our responsibility
In our opinion, the Annual Report gives a true and fair view
is to express an opinion on the Annual Report, on pages
of the Group’s and the Company's assets, liabilities and
1-44, based on our audit.
financial position at 31 December 2004 and of the results
of the Group’s and the Company’s operations and the
Basis of opinion
consolidated cash flows for the financial year ended 31
We conducted our audit in accordance with Danish
December 2004 in accordance with the Danish Financial
auditing standards. Those standards require that we plan
Statements Act.
and perform the audit to obtain reasonable assurance that
the Annual Report is free of material misstatement.
Bredebro, 9 March 2005
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Annual
KPMG C. Jespersen
Report. An audit also includes assessing the accounting
Statsautoriseret Revisionsinteressentskab
John Lesbo
Kenn K. Karlsen
State Authorised Public Accountant
State Authorised Public Accountant
25
accounting policies
Basis of preparation
Income statement
The financial statements of the Parent Company and
Net revenue: Sales are recognised on dispatch of pro-
the Group for 2004 are presented in accordance with
ducts, and net revenue consists of amounts invoiced
the provisions of the Danish Financial Statements Act
excluding VAT and less returned products, discounts and
applicable to class C companies.
rebates.
Raw materials and consumables: Raw materials and con-
Basis of consolidation
sumables include raw materials and consumables used for
The consolidated financial statements comprise ECCO
in-house production. Cost also includes consumption of
Sko A/S and subsidiaries in which ECCO Sko A/S has
commercial products.
a controlling influence on the company’s operations. The
consolidated financial statements are prepared on the
Other external costs: Other external costs comprise
basis of the audited financial statements of ECCO Sko
costs relating to the Company’s primary, ordinary activity,
A/S and its subsidiaries by adding items of a similar
including lasts, cutting dies, maintenance, rent of plant,
nature. The financial statements used for consolidation
premises, office expenses, sales promotion expenses,
are adapted to the accounting policies of the Group.
fees, etc.
On consolidation, intercompany income and expenses,
Staff costs: Staff costs comprise remuneration to
intercompany accounts and gains on intercompany sales
employees, including pension and social security costs.
and purchases between the consolidated companies are
eliminated. On acquisition of subsidiaries, the share of the
Profit from subsidiaries: Profit from subsidiaries
acquired company’s net asset value is determined based
comprise the proportionate share of profits before tax.
on the Group’s accounting policies. If the acquisition
The proportionate share of tax in the companies is
price deviates from the net asset value, the difference is
recognised in the line item “income taxes”.
allocated, wherever possible, to the assets and liabilities
or provisions that have a higher or lower value.
Unrealised intercompany profits: Unrealised intercompany
profits comprise profits unrealised in the Group on trading
The income statements of foreign subsidiaries are transla-
in products and fixed assets between consolidated
ted at average exchange rates, and the balance sheet is
companies.
translated at the exchange rates ruling on the balance
sheet date. Exchange differences arising on the translation
Income taxes: Estimated tax on the profit for the year is
of the opening equity of foreign subsidiaries at the
recognised in the income statement along with the year’s
exchange rates ruling on 31 December, and differences
change in deferred tax. No tax is set aside for investments
between the net profit of subsidiaries at average exchange
in subsidiaries as it is intended to hold the investments for
rates and the exchange rates ruling at 31 December are
more than three years.
recognised in equity. As in previous years, property,
machinery, plant and equipment in the production subsi-
ECCO Sko A/S is taxed jointly with a few wholly-owned
diaries in Portugal, Indonesia, Thailand and Slovakia is
subsidiaries. Income tax in respect of the jointly taxed
measured at cost in DKK less accumulated depreciation.
companies is allocated to the profit-making Danish
Currency translation of receivables from foreign
companies in proportion to their taxable income.
subsidiaries, where the receivables are part of the
total investment in the subsidiary, is recognised directly
Jointly taxed companies are registered for the Danish
in equity.
on-account tax scheme. Calculated supplements,
deductions and allowances regarding the tax payment
are recognised as part of the year’s tax charge.
Minority interests
Minority interests’ share of profits and equity of subsidiary
Deferred tax is calculated at 30% of the difference
undertakings is stated separately.
between the carrying amounts and tax values of current
assets and fixed assets. Furthermore, the tax value of
26
tax losses carried forward is recognised in the amount
When the Parent Company acquires shares at a price
at which they are expected to be used.
higher than the value determined applying the equity
method, such excess value is recognised as an intangible
If, on a net basis, there is a tax asset, the amount of future
asset and amortised over the same period as goodwill on
tax savings is recognised, provided that it is deemed more
consolidation.
likely than not that the deduction can be offset against
future taxable profits.
Property, plant, and equipment: Property, plant and
equipment is recognised at cost plus any revaluation and
less accumulated depreciation. Depreciation is charged
Balance sheet
on a straight-line basis over the expected useful lives of
Intangible assets: Intangible assets are recognised at cost
the assets.
less accumulated amortisation. Amortisation is charged on
a straight-line basis over 5-10 years.
The expected useful lives are as follows:
- Buildings
Development projects: Development projects which are
clearly defined and identifiable and which are deemed to
be marketable in the form of new products in a future
20 years
- Plant and machinery, vehicles,
fixtures and fittings
5 years
- Computer software
3 years
potential market are recognised as intangible assets.
Depreciation is not charged on land and staff housing.
Development costs are recognised at cost under
Assets with a cost of less than DKK 10 thousand per
intangible assets and are amortised over the expected
unit are charged to the income statement in the year of
useful life of the project, when the criteria for such
acquisition. Investment grants are offset against the
treatment are met.
assets that form the basis for the grants.
Development costs that do not meet the criteria for
If an asset type is revalued, this applies to all assets within
recognition in the balance sheet are recognised as
that group of assets.
costs in the income statement when incurred.
Investments: Investments in subsidiaries are recognised
Recognised development costs are measured at the
applying the equity method at the proportionate share of
lower of cost less accumulated amortisation and
the equity of the companies, determined based on the
writedowns and the recoverable amount.
Group’s accounting policies, less unrealised intercompany
profits.
Patents and trademarks: The costs of registering new
patents and trademarks are recognised and amortised
Dividend receivable in subsidiaries is recognised in the
over the term of the patent/trademark or its economic
balance sheet when adopted by the shareholders at the
life (5 years).
annual general meeting.
Costs of maintaining existing patents/trademarks are
Dividends to be paid by the Parent Company are
recognised in the income statement when incurred.
recognised as a liability in the financial statements at the
time of adoption by the shareholders at the annual general
Goodwill on consolidation: Goodwill on consolidation is
meeting. Dividend proposed in respect of the financial
determined at the date of acquisition as the difference
year is stated as a separate line item under equity.
between the cost and the net asset value of the acquired
Inventories: Raw materials are measured at cost
Consolidated goodwill acquired from and including 1
determined on the basis of the most recent purchases.
January 2002 is capitalised and amortised on a straight-
Work in progress and finished products are measured at
line basis over the expected useful economic life,
calculated cost, consisting of the cost of raw materials
determined on the basis of earnings projections for the
and consumables and manufacturing costs plus a share
individual business areas, not to exceed 20 years.
of production overheads.
company applying the Group’s accounting policies.
27
Commercial products are valued at acquisition price.
Cash flow statement
Products with a net realisable value lower than the cost or
The cash flow statement shows the Group’s cash flow
acquisition price are written down to the lower value.
during the year and liquidity position at the beginning and
end of the year. The cash flow statement is divided into
Receivables: Receivables are measured at amortised cost
three principal areas: operating, investing and financing
less provisions for anticipated losses determined based on
activities. Cash and cash equivalents in the cash flow
an individual evaluation.
statement comprise cash and securities carried as
current assets.
Securities: Securities are measured at the most recently
quoted market price.
In the statements, figures in brackets represent losses
or items deducted.
Financial instruments: Derivative financial instruments
are initially recognised in the balance sheet at cost and
subsequently remeasured at their fair value. Derivative
financial instruments are included in other receivables
and other debt.
Changes in the fair value of derivative financial instruments
that meet the criteria to be designated as fair value
hedges of a recognised asset or a recognised liability are
recognised in the income statement together with any
changes in the fair value of the hedged asset or hedged
liability.
Changes in the fair value of derivative financial instruments
that meet the conditions for hedging future assets or
liabilities are recognised in equity under retained earnings.
Income and expenses relating to such hedge transactions
are transferred from equity on realisation of the
hedged item.
Treasury shares: The cost of treasury shares is
recognised directly on the Company’s share capital and is
consequently not stated as an asset in the balance sheet.
Currency translation: Receivables and payables
denominated in foreign currencies are translated to the
exchange rate ruling at year-end.
Provisions
Provisions comprise anticipated costs of warranty
obligations, restructuring, etc. Provisions are recognised
when, as a consequence of a past event, the Company
has a legal or constructive obligation, and it is likely
that the obligation will materialise.
28
29
30
income statement for the year ended 31 December 2004
Group
Parent Company
2004
2003
2004
2003
3,393,693
3,168,930
2,314,365
2,181,919
Note DKK ‘000
1 Net revenue
Change in inventories of finished products
and work in progress
Costs of raw materials and consumables
Other external costs
(81,957)
(137,046)
(97,395)
(145,792)
(1,346,339)
(1,201,345)
(1,671,913)
(1,587,592)
(713,786)
(707,046)
(253,267)
(294,239)
(803,639)
(753,198)
(222,238)
(220,772)
5,6 Amortisation and depreciation
(180,937)
(188,657)
(56,046)
(57,105)
Profit before financials
267,035
181,638
13,506
(123,581)
2 Staff costs
3 Financial income
Financial expenses
32,256
34,274
8,064
26,863
(92,850)
(95,668)
(36,260)
(58,032)
Profit from subsidiaries
-
-
198,465
131,034
Intercompany profit
-
-
5,146
131,087
206,441
120,244
188,921
107,371
4 Income taxes
(42,883)
(49,264)
(38,260)
(45,583)
Group profit
163,558
70,980
150,661
61,788
11 Minority interests
(12,897)
(9,192)
-
-
150,661
61,788
150,661
61,788
120,720
47,249
(59)
(8,461)
30,000
23,000
150,661
61,788
Profit before tax
Profit for the year
Proposed allocation:
Revaluation reserve for undistributed
profit in subsidiaries
Retained earnings
Proposed dividend
31
balance sheet as of 31 December 2004
Group
Assets
Parent Company
2004
2003
2004
2003
51,856
49,564
9,018
6,676
51,856
49,564
9,018
6,676
Land and buildings
468,069
444,743
126,132
136,384
Plant and machinery
209,456
207,805
15,175
24,248
Other fixtures and fittings, tools and equipment
222,114
229,200
83,376
88,254
48,766
40,268
18,742
12,911
948,405
922,016
243,425
261,797
-
-
912,060
694,830
-
-
82,691
85,987
112,336
101,867
95,996
89,296
112,336
101,867
1,090,747
870,113
1,112,597
1,073,447
1,343,190
1,138,586
171,520
134,636
5,887
6,975
59,064
56,208
91
-
Finished products and commercial products
659,472
741,450
350,864
448,350
Total inventories
890,056
932,294
356,842
455,325
Trade receivables
416,659
373,894
60,905
71,388
Note DKK ‘000
FIXED ASSETS:
Intangible rights
5 Total intangible assets
Property, plant and equipment in progress
6 Total property, plant and equipment
7,8 Investments in subsidiaries
8 Receivables from subsidiaries
9 Deferred tax
Total long-term financial assets
TOTAL FIXED ASSETS
CURRENT ASSETS:
Raw materials and consumables
Work in progress
Receivables from subsidiaries
-
-
322,128
262,878
125,548
70,484
42,022
21,669
52,286
49,374
9,586
5,690
594,493
493,752
434,641
361,625
3,608
11,751
146
10,186
344,425
276,512
23,397
44,749
TOTAL CURRENT ASSETS
1,832,582
1,714,309
815,026
871,885
TOTAL ASSETS
2,945,179
2,787,756
2,158,216
2,010,471
Other receivables
Prepayments
Total receivables
Securities
Cash
32
balance sheet as of 31 December 2004
Group
Equity and liabilities
Parent Company
2004
2003
2004
2003
5,500
5,500
5,500
5,500
-
-
467,902
381,529
1,028,526
945,516
560,624
563,987
1,034,026
951,016
1,034,026
951,016
44,338
24,102
-
-
12,539
7,155
-
-
Credit institutions
954,107
895,735
648,366
570,245
12 Total long-term debt
954,107
895,735
648,366
570,245
Short-term part of long-term debt
126,176
108,835
64,831
94,454
Credit institutions
422,940
484,380
216,565
221,927
Trade payables
131,102
152,577
39,387
31,075
-
-
80,787
70,206
Note DKK ‘000
Share capital
Revaluation reserve
Retained earnings
10 Total equity
11 Minority interests
Provisions
Payables to subsidiaries
4 Income taxes
21,417
1,380
6,771
2,910
Other payables
153,253
116,026
25,853
21,779
Deferred income
45,281
46,550
41,630
46,859
900,169
909,748
475,824
489,210
Total debt
1,854,276
1,805,483
1,124,190
1,059,455
TOTAL EQUITY AND LIABILITIES
2,945,179
2,787,756
2,158,216
2,010,471
Total short-term debt
13 Contingent liabilities and collateral security
14 Fees to auditors appointed at the annual general meeting
15 Related parties
33
consolidated cash flow statement for the year ended 31 December 2004
2004
2003
206,441
120,244
180,937
188,657
Exchange rate adjustments
(42,456)
(43,735)
Income taxes
(42,883)
(49,264)
DKK ‘000
Cash flow from operating activities
Profit before tax
Adjustment for non-cash operating items:
(Increase)/Decrease in inventories
42,238
94,519
(Increase)/Decrease in receivables
(100,741)
109,209
(21,475)
(22,709)
55,997
(39,208)
Increase/(Decrease) in payables
Increase/(Decrease) in other payables
Increase/(Decrease) in provisions
(Increase)/Decrease in deferred tax
5,384
(9,756)
(10,469)
(11,579)
272,973
336,378
Cash flow from investing activities
Payments to invest in fixed assets:
Intangible assets
Property plant and equipment
(12,323)
(15,331)
(200,488)
(213,220)
(212,811)
(228,551)
Cash flow from financing activities
Change in minority interests
8,335
(5,585)
58,372
(64,946)
Increase/(Decrease) in short-term debt
(44,099)
19,723
Dividend paid
(23,000)
(23,000)
(392)
(73,808)
59,770
34,019
(Repayment of)/proceeds from new long-term debt
Cash flow from operating, investing and financing activities
Cash and cash equivalents at beginning of year
288,263
254,244
Cash and cash equivalents at year-end
348,033
288,263
Breakdown of cash and cash equivalents:
Securities
Cash
34
3,608
11,751
344,425
276,512
348,033
288,263
35
notes to the Group and Parent Company financial statements
1
Segment information
Group
2004
2003
3,132,004
2,872,171
261,689
296,759
3,393,693
3,168,930
Western Europe
1,745,262
1,609,929
Eastern Europe
342,427
295,455
North America
855,024
795,511
Asia/Pacific
175,368
144,736
13,923
26,540
3,132,004
2,872,171
DKK ‘000
Segment information
Shoes & accessories
Others
Total net revenue
Net revenue shoes & accessories
Middle East/Africa
Total shoes & accessories
2
Staff costs and management and staff information
Group
Parent Company
2004
2003
2004
2003
Salaries
723,127
682,468
209,572
208,411
Pensions
27,230
19,306
11,115
10,766
Other social security costs
53,282
51,424
1,551
1,595
803,639
753,198
222,238
220,772
Average number of employees
9,682
9,000
593
683
Number of employees at year-end
9,657
9,388
553
652
Managing Board
-
-
9,491
7,863
Supervisory Board
-
-
321
271
DKK ‘000
Staff costs
Fees to Managing Board and Supervisory Board:
36
3
Financial income
Parent Company
2004
2003
9,360
8,614
DKK ‘000
In the Parent Company, interest income from subsidiaries amounted to
4
Income taxes
Group
Parent Company
Cost
Debt
Cost
Debt
2004
2004
2004
2004
DKK ‘000
Income taxes payable as at 1 January
-
1,380
-
2,910
Income taxes paid in 2004
-
(1,380)
-
(2,234)
Prior-year adjustment
(3,408)
(676)
(3,408)
(676)
Estimated tax for 2004
56,760
56,760
9,468
9,468
of which paid
-
(34,667)
-
(2,697)
Tax in subsidiaries
-
-
37,924
-
(10,469)
-
(5,724)
-
42,883
21,417
38,260
6,771
Year’s adjustment of deferred tax
5
Intangible assets
Group
Parent Company
DKK ‘000
Cost at 1 January
Currency translation
Reclassification
Additions on acquisition
Additions
89,105
14,774
(743)
-
(1,140)
-
241
-
16,800
3,962
Disposals
(5,073)
-
Cost at 31 December
99,190
18,736
Accumulated amortisation at 1 January
39,541
8,098
Reclassification
Additions on acquisition
Amortisation
(235)
-
201
-
-
1,763
(1,695)
(143)
Accumulated amortisation at 31 December
47,334
9,718
Carrying amount at 31 December
51,856
9,018
5-10 years
5-10 years
Amortised over
9,522
Amortisation on assets sold
37
6
Property, plant and equipment
Land
and
buildings
Plant
and
machinery
Fixtures and
fittings, tools
and equipment
628,598
647,233
665,591
40,268
(410)
DKK ‘000
Property, plant
and equipment
under
construction
GROUP
Cost at 1 January
(195)
(68)
(3,804)
10,023
-
(8,883)
-
-
-
2,488
-
Additions
45,549
67,327
88,040
19,260
Disposals
(1,245)
(17,111)
(33,714)
(10,352)
682,730
697,381
709,718
48,766
-
-
-
-
Depreciation base at 31 December
682,730
697,381
709,718
48,766
Accumulated depreciation at 1 January
183,855
439,428
436,391
-
(204)
(30)
(1,559)
-
2,875
-
(3,076)
-
-
-
788
-
Reclassification
Addition on acquisition
Cost at 31 December
Revaluation
Reclassification
Addition on acquisition
Depreciation
28,783
63,561
79,071
-
(648)
(15,034)
(24,011)
-
Accumulated depreciation at 31 December
214,661
487,925
487,604
0
468,069
209,456
222,114
48,766
Depreciation on disposals
PARENT COMPANY
Cost at 1 January
227,039
96,779
206,146
12,911
Additions
2,498
1,702
33,260
10,064
Disposals
(1,024)
(2,895)
(15,498)
(4,233)
228,513
95,586
223,908
18,742
-
-
-
-
228,513
95,586
223,908
18,742
Cost at 31 December
Revaluation
Depreciation base at 31 December
Accumulated depreciation at 1 January
90,655
72,531
117,892
-
Depreciation
11,749
10,630
31,904
-
(23)
(2,750)
(9,264)
-
Accumulated depreciation at 31 December
102,381
80,411
140,532
0
126,132
15,175
83,376
18,742
Depreciated over
20 years
5 years
3-5 years
Depreciation on disposals
(The officially rated cash property value at 1 January 2004 of the Parent Company’s properties excluding additions was DKK 180,880
thousand).
38
7
Investments in subsidiaries
(in thousands)
ECCO (Thailand) Co., Ltd.
ECCO Slovakia, a.s.
Ownership interest
Share capital
95%
200,000 THB
94.78%
230,000 SKK
Ecco'let (Portugal) Fábrica de Sapatos, Lda.
100%
P.T. ECCO Indonesia
100%
2,770 EUR
43,976,000 IDR
ECCO China Holding (Singapore) Pte. Ltd.
80%
12,000 USD
ECCO (Xiamen) Co. Ltd.
80%
5,000 USD
ECCO Shoe (Xiamen) Co. Ltd. (dormant)
80%
315 USD
ECCO Tannery Holding (Singapore) Pte. Ltd. (dormant)
100%
1,100 USD
ECCO Tannery (Xiamen) Co. Ltd. (dormant)
100%
1,000 USD
ECCO Tannery (Thailand) Co. Ltd.
100%
185,000 THB
ECCO Tannery (Holland) B.V. (Netherlands)
100%
1,000 EUR
ECCO Leather B.V. (Netherlands)
100%
400 EUR
ECCO Accessories Ltd. (UK) (dormant)
100%
100 GBP
ECCO Asia Limited (Hong Kong)
100%
10,000 HKD
ECCO Belgium N.V.
100%
360 EUR
ECCO Benelux B.V. (Netherlands)
55%
23 EUR
ECCO Boty Ceska republika s.r.o. (Czech Republic)
100%
65,000 CZK
ECCO Exportadora Ltda (Brazil) (dormant)
100%
48 BRL
ECCO France Diffusion S.a.r.l.
100%
ECCO India Trading Private Limited
100%
1,000 IDR
ECCO Norge A/S
100%
15,000 NOK
ECCO (Portugal) Sales-Comercilizacão de Sapatos, Lda.
100%
800 EUR
ECCO Retail A/S (Denmark)
100%
1,000 DKK
ECCO Retail LLC (USA)
100%
300 USD
ECCO Scarpe Italia S.r.l. (Italy)
100%
150 EUR
ECCO Schuhe GmbH (Germany)
100%
1,790 EUR
8 EUR
ECCO Schuhe Schweiz GmbH (Switzerland)
100%
170 CHF
ECCO Shoes (NZ) Limited (New Zealand)
100%
100 NZD
100%
6,502 CAD
ECCO Shoes Hong Kong Ltd.
100%
1,000 HKD
ECCO Shoes International Ltd (Switzerland)
100%
2,250 CHF
ECCO Shoes Pacific Pty. Ltd. (Australia)
100%
250 AUD
ECCO Shoes Poland Sp. zo.o. (Poland)
100%
2,250 PLN
ECCO Shoes UK Limited
100%
4,000 GBP
ECCO Singapore Pte. Ltd.
100%
10 SGD
ECCO Shoes Iberica, S.L. (Spain)
100%
4 EUR
ECCO Sverige AB (Sweden)
100%
1,000 SEK
ECCO Trading GmbH (Austria)
100%
400 EUR
ECCO USA, Inc.
100%
7,500 USD
ECCO Wholesale Limited (UK) (dormant)
100%
1,200 GBP
Eccolet Portugal ApS (Denmark)
100%
200 DKK
Oy ECCO-Suomi Ab (Finland)
100%
102 EUR
Salgsselskabet ECCO Danmark A/S
100%
1,000 DKK
ECCO Shoes Canada, Inc.
39
8
Investments in subsidiaries
Investments in
subsidiaries
Receivables from
subsidiaries
2004
2003
2004
2003
Cost at 1 January
425,695
360,923
85,987
152,629
Additions
125,714
64,772
1,892
6,902
Disposals
-
-
(5,188)
(73,544)
Cost at 31 December
551,409
425,695
82,691
85,987
Accumulated revaluation at 1 January
381,478
371,175
-
-
Currency translation of foreign subsidiaries
(34,347)
(36,947)
-
-
Profit after tax of subsidiaries
155,210
94,960
-
-
Dividend
(34,490)
(47,710)
-
-
86,373
10,303
-
-
467,851
381,478
0
0
(107,200)
(112,343)
-
-
912,060
694,830
82,691
85,987
2004
2003
2004
2003
Inventories, unrealised intercompany gains
31,739
33,703
31,739
33,703
Tax loss
84,982
85,304
82,425
77,688
Other assets
(4,385)
(17,140)
(18,168)
(22,095)
112,336
101,867
95,996
89,296
(101,867)
(90,288)
(89,296)
(71,628)
10,469
11,579
6,700
17,668
975
3,724
975
3,724
DKK ‘000
Net revaluation
Accumulated revaluation at 31 December
Intercompany gains
9
Deferred tax
Group
Parent Company
DKK ‘000
Deferred tax comprises:
Recognised at 31 December
Recognised at 1 January
Total adjustment
Of which adjusted in equity
40
10
Equity
Group
Parent Company
2004
2003
2004
2003
5,500
5,500
5,500
5,500
371,227
DKK ‘000
The share capital consists of:
112 shares (in amounts from DKK 500 to DKK 1,658,200)
Total share capital
Reserve for net revaluation according to the equity method
Reserve for net revaluation at 1 January
-
-
381,529
Net revaluation
-
-
86,373
10,302
Reserve for net revaluation at 31 December
-
-
467,902
381,529
Revaluation of properties at 1 January
-
-
-
-
Revaluation
-
-
-
-
Revaluation of properties at 31 December
-
-
-
-
Total revaluation
0
0
467,902
381,529
945,516
952,660
563,987
581,433
Brought forward from prior years/revaluation reversed
Proposed dividend in respect of the financial year
30,000
23,000
30,000
23,000
Dividend paid
(23,000)
(23,000)
(23,000)
(23,000)
Exchange rate adjustment to year-end exchange rates
(34,347)
(36,947)
-
-
(2,275)
(8,651)
(2,275)
(8,651)
120,661
38,788
(59)
(8,461)
(8,029)
(334)
(8,029)
(334)
Total retained earnings
1,028,526
945,516
560,624
563,987
Total equity
1,034,026
951,016
1,034,026
951,016
Currency translation of subordinated loan capital in subsidiaries
Retained from profit for the year
Adjustment of currency hedges of future sales
The nominal value of treasury shares is DKK 550 thousand; they were acquired in 1989 at DKK 6,875 thousand. The treasury shares are
carried at DKK 0.
41
11
Minority interests
Group
2004
2003
Minority interests at 1 January
24,102
20,502
Additions
14,045
-
Disposals
(5,711)
(5,585)
Share of profit for the year
12,897
9,192
(995)
(7)
44,338
24,102
4,695
3,187
DKK ‘000
Minority interests at 31 December
Breakdown of minority interests:
Minority interests regarding ECCO (Thailand) Co., Ltd.
Minority interests regarding ECCO Shoes Pacific Pty. Ltd.
Minority interests regarding ECCO Benelux B.V.
Minority interests regarding ECCO Shoes (NZ) Limited
Minority interests regarding ECCO Slovakia, a.s.
768
19,881
15,381
-
115
6,640
4,651
13,122
-
2004
2003
2004
2003
127,227
244,123
119,888
235,341
Minority interests regarding ECCO China Holding (Singapore) Pte. Ltd.
12
-
Long-term debt
Group
Parent Company
DKK ‘000
Long-term debt due more than five years after
the end of the financial year
42
13
Contingent liabilities and collateral security
Group
Parent Company
2004
2003
2004
2003
411,389
352,191
20,444
30,233
864
1,235
864
864
16,768
34,244
10,364
25,595
DKK ‘000
CONTINGENT LIABILITIES
Rent and lease liabilities
Guarantees and letters of comfort for staff
Guarantees to suppliers
Litigation
5,088
6,940
5,088
5,093
10,115
5,087
10,115
4,887
174,084
180,068
80,000
80,000
28,582
30,242
-
-
2004
2003
2004
2003
KPMG
4,899
5,093
939
1,117
Others
307
347
-
28
5,206
5,440
939
1,145
1,459
1,789
409
600
Sponsorships
COLLATERAL SECURITY
The following assets have been lodged in security of the
Group’s loans from credit institutions and other long-term debt:
Bearer mortgages on property, plant and equipment
Guarantee for import duty
14
Fees to auditors appointed at the annual general meeting
Group
Parent Company
DKK ‘000
Total fees to auditors appointed at the annual general meeting:
Of which fees for non-audit services:
KPMG
Others
-
28
-
28
1,459
1,817
409
628
43
15
Related parties
ECCO Sko A/S has the following related party with controlling influence:
ECCO HOLDING A/S
Prilen 13, Rømø, Denmark
There have been no material transactions with the Parent Company other than the distribution of dividend.
ECCO Sko A/S' related parties with controlling influence comprise the Company’s shareholders, Supervisory Board, the Managing Board
as well as relatives of these persons. Related parties also comprise companies in which the individuals mentioned above have material
interests.
ECCO Sko A/S trades on normal market conditions with companies in which the same individuals have controlling influence. The
Company’s list pursuant to section 28b of the Danish Companies Act of shareholders with more than 5% of the votes or more than
5% of the nominal value of the share capital includes:
- ECCO HOLDING A/S, Rømø, Denmark (Parent Company)
44
environmental Statement 2004
45
ECCO and the environment
ECCO gives high priority to environmental considerations
in its development and production.
that the production equipment used at all ECCO tanneries
and factories is well-functioning and up to date.
ECCO focuses on optimising existing production methods
and on developing new and more environmentally friendly
processes.
Only the tanneries contribute actual process waste water,
whereas the shoe factories mainly produce domestic
waste water. All tanneries have sophisticated waste water
treatment plants for the treatment of tannery waste water.
ECCO thus ensures that waste water is purified to such a
degree that not only local discharge requirements are met
but so that the tanneries comply with the Best Available
Technology (BAT).
ECCO’s employees are involved in the Company’s
environmental, health and safety activities. Each
employee is responsible for making proactive efforts to
continually improve environmental, health and safety conditions.
This focus is also reflected in the Group’s in-house course
‘From cow to shoe’, which contains a presentation of
ECCO’s environmental, health and safety initiatives. This
part of the course often provokes a lively and constructive
discussion and introduces many ideas for future activities
based on the employees’ extensive experience.
The ECCO Group and harmful chemical substances
The ECCO Group uses a minimum of harmful
chemical substances. The criteria for these substances
are based, among other things, on the internationally
recognised SG list for shoes. SG is an abbreviation of the
German term Schadstoffgeprüft (tested for harmful/toxic
substances). The SG list contains threshold values for
undesirable chemical substances in leather products. The
list is based on updated knowledge concerning the effect
of chemical substances on human beings and animals.
The SG list is published by the recognised German testing
institute TÜV Produkt und Umwelt GmbH, Rheinland in
collaboration with Institut Fresius GmbH and Prüf- und
Forschungsinstitut Pirmasens. These institutes constantly
assess the effect of different substances used in the
industry.
The main environmental impact from the shoe factories
derives from energy consumption and waste production.
ECCO’s annual internal environmental audits focus on
these issues. Another important issue addressed by these
audits is the exchange of best practise among the production units.
Through a number of initiatives, some of which are
exemplified below, ECCO intends to make continued
and dedicated efforts to ensure optimum environmental
performance.
A list at the back of this environmental statement contains
information and key figures for all ECCO tanneries and
shoefactories for the past five years.
These figures are recorded on an ongoing basis to avoid
deviations and unnecessary environmental impact. The
consumption of resources by the individual tanneries and
factories in 2004 did not differ significantly from prior
years.
ENVIRONMENTAL ASPECTS AND THE ECCO GROUP
The SG list is generally far more detailed and restrictive
than the legislation in the countries in which ECCO markets products. Nevertheless, ECCO has chosen to expand
the list to include undesirable chemical substances which
ECCO considers to be critical. See ‘ECCO Supplement to
the SG-list’. Both lists are available at
www.ecco.com/environment.
Environmental aspects are considered by ECCO to be the
effect on human beings and the external environment
as a result of the production, use and disposal of ECCO
products.
External environmental aspects mean:
· The effect on immediate and distant environments (soil,
water and air, for example in the form of waste,
Consumption of resources
The production of ECCO shoes requires different kinds of
resources, including energy, water, raw materials and
components. For several years, ECCO has made dedicated efforts to reduce the consumption of resources in the
production of shoes, among other things by using the
best possible production technologies and by ensuring
46
wastewater and discharge).
Internal environmental aspects mean:
· The effect on the employees manufacturing the
products (health and safety issues such as physical,
chemical, biological, ergonomic factors, employee conditions and rights as well as social factors).
THE ECCO GROUP’S ENVIRONMENTAL, HEALTH
an important criterion in the selection of products and
AND SAFETY POLICY
suppliers. In addition, ECCO intends to constantly collaborate with the suppliers to develop increasingly environ-
External environment
mentally friendly products and production processes.
ECCO aims to be a market leader in terms of environmental performance in the shoe manufacturing industry.
Working environment
ECCO seeks to attain this goal through sustainable devel-
ECCO’s employees are the company’s most valuable
opment of the entire company and expedient develop-
resource. ECCO therefore strives to be the market leader
ment and production of all products. ECCO also aims to
in the shoe manufacturing industry in terms of the wor-
make a proactive effort to minimise the environmental im-
king environment. ECCO aims to create a good and
pact from all of the Group’s activities. ECCO intends to
heal-thy working environment for all employees by taking
achieve this through optimum utilisation of raw materials
proactive measures to prevent industrial accidents and by
and energy and by giving consideration to the external
minimising the working environment impact on all
environment and the working environment in the choice
employees.
of raw materials, production methods and finished products.
To ensure sustainable development of the working environment, each ECCO entity is required:
In terms of the environmental suitability of ECCO shoes,
the aim is to manufacture environmentally friendly pro-
· to ensure minimum working environment impact on
the individual employee;
ducts. Strenuous demands therefore apply to products
· to strive to prevent industrial accidents of all kinds;
and suppliers. For example, all raw materials and compo-
· to safeguard employee welfare at work;
nents must comply with internationally recognised requi-
· to utilise employee resources in a way that is most
rements for undesirable substances and the physical requirements defined in the SG list and by SATRA.
expedient for all parties; and
· to set up one or more organisations to handle health
and safety activities.
To ensure sustainable development of the Company,
each ECCO entity is required:
ECCO aims to collaborate openly with the authorities and
· to develop more environmentally friendly products;
to observe statutory environmental, health and safety re-
· to minimise resource consumption; and
quirements at all times.
· to minimise waste volumes.
ECCO intends to review the ECCO Group’s environmenwhenever necessary, to define new goals to ensure that
ensure that all raw materials and components meet de-
the policy adequately meets ECCO’s environmental,
fined requirements. Environmental parameters constitute
health and safety targets.
tal‘ health and safety policies on an annual basis and,
By carrying out supplier tests or audits, ECCO intends to
47
project ECCOTAN
Resource savings in tannery processes
ECCO’s Leather division’s R&D centre is situated at the
tannery in the Netherlands. This centre plays a unique role
in the development and innovation of all three ECCO tanneries, including reducing the environmental impact from
tanning processes.
The picture on the left shows the existing drums and the
one on the right shows the new drums:
The tanning process requires both energy and water. It is
therefore of crucial importance to a company such as
ECCO to be able to develop new technologies that can
reduce the consumption of these resources.
In early 2004, two new drums were installed at ECCO’s
tannery in the Netherlands – one for the liming process
and one for the actual tanning process. During the year,
the new drums were tested, and extensive studies
were carried out at the Dutch tannery to establish and
document energy and water savings compared with
the existing drums.
Why would the new drums use less energy and water?
The answer to this question lies inside the drums, as
depicted in the figure below
48
The existing drums are fitted on the inside with short,
cone-shaped pieces of wood which pick up one or two
rawhides when the drum rotates.
The new drum is fitted with four ‘wings’. One of the wings
is a plate mounted on the inside of the drum. On each
rotation, the wings pick up and process large parts of the
drum contents.
A comparison of the two techniques reveals that the new
drums operate at a lower rotational speed and use substantially less water than the old drums.
These results are achieved without impairing the quality of
the tanning process.
ECCOTAN (Eco-friendly tanning at ECCO Tannery
Holland B.V.)
The preliminary results of this three-year project, ending in
2006, are very promising. In addition to the resource
saving initiatives described above, the next stages of the
project also focus on the recycling of chromium and the
biogas potential of tanning waste.
A three-year project which is funded by the EU LIFE
programme and focuses on the reduction of energy
consumption and waste as well as energy production
of waste.
The results of the project speak for themselves:
Drum size (m)
Limning
(old drum)
Limning
(new drum)
Tanning
(old drum)
Tanning
(new drum)
4.00x4.50
4.20x3.70
3.65x3.80
4.20x3.70
Capacity (tons)
12
16.3
9
13
Engine power (kW)
55
18.5
55
18.5
Energy consumption:
Old drum
(kWh/tons of rawhides)
New Drum
(kWh/tons of rawhides)
Reduction
Limning
6.6
6.4
3%
Tanning
57.2
22.4
61 %
Total reduction:
55 %
Water consumption:
New Drum
(m /tons of rawhides)
Reduction
Limning
4.8
3.2
33 %
Tanning
8.5
5.5
35 %
Total reduction:
3
34 %
Old drum
(m /tons of rawhides)
3
49
energy-savings yielded results
Since 2000, the shoe factory in Thailand has participated in projects to save energy. The results have
been very positive – both in environmental and financial terms. The results were as follows:
Parameter
Savings
Savings
(kWh)
(Euro per year)
390,108
19,505
165,048
8,252
972,161
48,608
684,280
36,150
- Cover top fussing machine insulator
22,075
1,170
- Cover high-pressure steam machine insulator
50,820
2,693
209,993
10,980
28,641
1,518
2001:
- Reduce top fussing machine heat generator
- Close cooling water after work
- Replace back mould machine air compressor
- Balance phase electrical
- Repair air leaks and replace air compressor
- Remove fluorescent tubes from unnecessary work points
2002:
- Project normal lantern to reflector lantern
- Balance phase electrical
- Reduce heat frame
- Repair leaks
- Modify embossing machine heater
- Turn off light fan and air compressor during lunch break
2003:
- Project repair main pipe air leaks
- Cover insulator at steam machine and top fussing machine
- Turn off air pump and local ventilation system after work
- Close air pump from Desma reduction air pipe
- Maintain air-conditioning system (88 units)
- Turn off heating machine insulator
- Improve lighting system to reduce moonlight lamp
2004:
- Repair machine and main air pipe leaks
- Modify exhaust switch to joint with polishing machine
- Cover tower machine insulator
2,943
,156
- Maintain air-conditioning system (100 units)
31,236
2,185
- Close local ventilation system and cooling water after work
29,806
1,580
5,148
,257
- Set sensors on activated machine
- Balance phase electrical in training and shoe shop
14,693
,585
- Replace capacitator unit in MDB Hall 3
32,538
1,725
- Remove electrical fan from unnecessary work points
26,124
1,258
- Change to low-loss ballast (109 units)
19,314
1,023
173,127
9,176
37,822
1,844
- Set VDS (variable speed driver) to local ventilation motor in finishing shop
- Remove halogen lamp from unnecessary work points
In collaboration with the Energy Research Institute, Chulaongkorn University, Thailand, the ECCO
Thailand Energy Conservation Committee carried through an energy-saving project from August
2003 to March 2004. In addition to specific savings, the project resulted in a prize awarded by
the Thailand Ministry of Energy.
50
energy-saving programmes in Portugal
Over the past few years, ECCO’s shoe factory in Portugal has
worked intensively with energy-saving measures to achieve
ongoing improvements.
A four-year project running from 2000-2004 yielded the following
results:
Parameter
Savings
Savings
Investment
Repayment period
(EP* kg)
(EUR)
(EUR)
(Year)
29,205
6,170
12,470
2.0
6,017
1,620
1,745
1.1
60,047
4,580
17,460
3.8
Optimisation of compressed air in production
100,905
18,030
9,975
0.6
Total
196,175
30,400
41,650
-
Devices for temporary shutdown,
light saving
Insulation of steam boiler pipes
Transition from fuel to natural gas
*EP: Equivalent petrol
ECCO has decided to launch a new project for the next four
years to follow up on this project.
we are on the right track …
Index of industrial accidents at ECCO Denmark
from 2001 to 2004
The substantial drop in the number of industrial accidents and
hence in the industrial accident index during the period from 2001
to 2004 is the result of increased health and safety efforts at all
18
levels of the ECCO Denmark organisation. When an industrial
16
accident occurs, preventive measures are consistently taken to
14
prevent similar accidents.
12
10
In addition, near-miss accidents are recorded with subsequent
8
preventive measures, thereby also contributing to reducing the
6
number of industrial accidents. Moreover, the focus on health
4
and safety in the workplace has increased in general. Industrial
2
accidents are rendered visible so that all employees are informed
0
2001
2002
2003
2004
at all times about the number and type of industrial accidents
within the individual departments. Finally, production and
warehouse health and safety representatives have permanent
This chart shows the trend in ECCO Denmark’s industrial accident
items on department meeting agendas in order to ensure that
index from 2001 to 2004. Over the course of this four-year
focus is retained on health and safety in the workplace.
industrial accident index expresses the number of accidents per
In Denmark, an industrial accident is considered serious if it
1,000,000 working hours. The industrial accident index can thus
entails absence for at least one day (excluding the day the
be used for year-on-year comparisons independently of the
accident occurred). Such accidents must be reported to the
number of employees.
Danish National Working Environment Authority.
period, the industrial accident index dropped from 17 to 1.6. The
51
recycling of PU waste
However, PU waste can be recycled, and ECCO does exactly
that at its shoe factories in Portugal and Thailand. The PU
waste is granulated and mixed with granulated cork and new
PU material.
When shoes are produced, waste is generated, among other
things from the part of the process where the PU soles of the
shoes are moulded. The sole material polyurethane (PU) is a
plastic material formed by a chemical reaction of liquid polyol
and isocyanate. Since PU is formed by a chemical reaction it
cannot be remolten or reshaped in any way.
This mixture is used to make insoles for example for Cosmo
sandals – without having to compromise on quality or comfort.
waste sorting at source
Shoe production generates waste, but ECCO does not stop
at the disposal of waste in accordance with statutory requirements – ECCO sorts its waste and exploit its recycling potential.
Waste management at ECCO’s shoe factories comprises waste
sorting at the production lines, for example of plastic, cardboard
and chemical waste.
All types of waste which have a recycling potential are reused
either at ECCO’s own factories or by external, certified companies. All production units have appointed certified companies to
handle their chemical waste and other types of waste.
52
statements from ECCO units – Denmark
Production Denmark
Location
Activity
Year of incorporation:
No. of employees
Special environmental
information:
2004
Bredebro, Denmark
Shoe factory. Development and preparation of new articles and
prototype testing
1963
124
An important part of ECCO’s shoe production is the moulding of
soles, which is subject to approval according to item D11. On 14
March 2002, the production was granted environmental approval
by Sønderjyllands Amt (regional authority) covering shoe production as the main activity and production of polymer materials
(soles) as the secondary activity.
2003
2002
2001
2000
Production outputr
Uppers produced [pairs]
3,805
3,720
4,482
5,281
-
Shoes produced [pairs]
20,577
38,000
211,413
478,674
800,605
Energy and water consumption
Electricity [MWh]
2,560
2,734
2,896
3,586
4,105
132,873
139,970
118,335
139,980
169,760
2,407
3,013
3,738
4,436
5,752
23,660
21,280
174,400
306,140
544,370
5,600
8,700
17,200
31,150
11,500
0
2,800
12,810
16,650
28,290
Colour paste [kg]
30
75
3,050
2,600
6,695
Release agent [kg]
292
930
3,648
5,422
6,663
0
440
2,343
2,645
6,352
Recyclable waste [tons]
3442
4592
2662
6602
4682
Waste otherwise disposed of [tons]
198
150
164
253
350
32
36
38
44
61
12
7
16
12
11
2
3
4
11
5
Gas [m3]
Water [m3]
Consumption of sole material
Polyol and isocyanate [kg]
TPU [kg]
Hardener [kg]
Finishing products [kg]
Waste
Waste to Kommunekemi [tons]
Industrial accidents
Accidents causing less than 1 day’s absence
Accidents reported to the Danish National Working
Environment Authority
2
The amount of recyclable waste stated includes cardboard which is disposed of for recycling purposes from ECCO’s distribution warehouse, DC-Tønder, At DC-Tønder, shoes are
repacked in shoe boxes from the factories according to customer specifications, which results in the production of a certain amount of packaging material waste which is disposed of
to a recycling company.
53
statements from ECCO units – Portugal
Ecco’let (Portugal) Fábrica de Sapatos, Lda.
Location:
Activity:
No. of employees:
2004
Santa Maria da Feira, Portugal
Shoe factory. Production of uppers and shoes
1984
720
20033
2002
2001
2000
Production output
20,737
79,690
241,961
438,299
535,200
2,649,178
2,442,395
2,590,327
3,769,754
4,150,000
Electricity [MWh]
Gas [m3]
Oil [l]
Water [m3]
5,894
5,474
5,547
7,170
-
48,178
17,702
7,607
-
160,000
-
-
-
39,702
3,013
3,551
8,661
11,000
Polyol and isocyanate [kg]]
872,130
884,746
922,340
1,817,771
1,957,685
TPU [kg]
83,783
76,651
174,843
81,027
-
Hardener [kg]
42,323
68,040
18,290
14,553
-
Colour paste [kg]
19,326
18,507
20,346
38,662
-
Release agent [kg]
17,126
18,079
11,625
17,550
24,860
22,531
20,393
18,666
28,332
34,758
Waste
212
330
184
193
-
352
360
394
820
-
94
67
63
92
-
80
128
137
-
-
Accidents causing 1 or more day’s absence
23
17
18
-
-
Chemical waste [tons]
3
54
The tannery activities were permanently discontinued with effect from Q2 2003.
statements from ECCO units – Indonesia
P.T. ECCO Indonesia
Location:
Activity:
Surabaya, Indonesia
Tannery and shoe factory. Production of wetblue, crust,
leather, uppers and shoes
1991
3,554
No. of employees:
2004
2003
2002
2001
2000
Production output
Wetblue produced [ft2]
18,249,560
15,970,001
15,338,582
8,432,162
11,134,743
Leather produced [ft2]
15,098,971
14,062,152
12,048,197
15,566,070
15,104,307
5,326,300
4,664,023
4,063,840
3,968,559
3,750,000
246,018
29,119
-
-
220,000
Electricity - tannery [MWh]
14,072
9,556
6,830
7,309
Electricity - factory [MWh]
4,300
5,375
6,772
4,255
Gas - tannery [m3]
231
840
350
1,026
-
Gas - factory [m3]
14
91
427
390
-
560,000
608,000
469,000
502,615
-
Oil - tannery [l]
Oil - factory [l]
13,740
-
-
-
32,359
Water - tannery [m3]
430,738
419,263
392,178
477,787
Water - factory [m3]
81,970
106,018
162,901
58,404
Recyclable waste - tannery [tons]
966,8574
4,764
2,667
3,774
Recyclable waste - factory [tons]
24
-
229
1,225
Waste otherwise disposed of - tannery [tons]
558
1,012
398
2,922
Waste otherwise disposed of - factory [tons]
19
20
-
235
Chemical waste - tannery [tons]
4,307
4,618
-
-
-
Chemical waste - factory [tons]
4
-
-
-
-
Volume [m3]
327,367
351,808
369,471
325,349
400,000
BOD [mg/l]
19-49
50-65
40-55
45-115
70
0,05-0,17
0,03-0,13
0,03
0,04-0,10
<0,20
7,1-7,2
6,8-7,1
6,8-7,1
7,0-8,0
7,1
-
441,500
Waste
3,010
8,359
Tannery wastewater
Chromium [mg/l]
pH
17
18
15
-
Accidents causing less than 1 day’s absence - factory
57
88
103
53
-
Accidents causing 1 or more day’s absence - tannery
2
9
6
-
-
Accidents causing 1 or more day’s absence - factory
8
22
33
14
-
4
The relatively high figure is due to the replacement of various machinery.
Accidents causing less than 1 day’s absence - tannery
55
statements from ECCO units – Thailand
ECCO (Thailand) Co., Ltd & ECCO Tannery (Thailand) Co. Ltd.
Location:
Activity:
Ayudhthaya, Thailand
Tannery and shoe factory. Production of crust, leather, uppers
and shoes
1993
2,775
No. of employees:
Special environment
information:
ECCO Thailand has been certified to the ISO 14001 standard
2004
2003
2002
2001
2000
Production output
Leather produced [ft2]
10,095,425
9,138,590
8,046,037
8,291,589
5,800,000
3,237,054
2,868,227
2,708,639
2,891,591
3,150,000
3,910,382
3,319,623
3,264,747
3,102,710
3,200,000
Electricity - tannery [MWh]
5,827
5,456
5,129
4,826
3,049
Electricity - factory [MWh]
10,670,820
9,038
7,460
7,347
7,285
Oil - tannery [l]
390,000
360,000
307,350
360,000
180,000
Oil - factory [l]
13,044
4,800
4,800
-
-
Water - tannery [m3]
107,704
97,484
95,424
99,347
67,920
Water - factory [m3]
45,932
51,961
66,375
50,836
38,508
1,280,455
928,548
1,115,821
1,208,570
1,230,940
TPU [kg]
111,424
56,796
-
-
-
Hardener [kg]
104,234
236,381
99,521
109,347
-
Colour paste [kg]
28,833
24,809
34,706
39,660
-
Release agent [kg]
29,587
8,590
10,168
6,510
-
Recyclable waste - tannery [tons]
38
585
264
718
-
Recyclable waste - factory [tons]
144
168
404
95
116
Waste otherwise disposed of - tannery [tons]
75
47
104
732
568
Waste otherwise disposed of - factory [tons]
737
Waste
815
326
330
773
Chemical waste - tannery [tons]
50
158
50
-
-
Chemical waste - factory [tons]
28
408
397
-
-
Tannery wastewater
Volume [m3]
83,367
88,389
87,133
98,875
68,000
BOD [mg/l]
5,7-13,0
5,3-8,0
6,0-8,0
7,6-10,0
5,0-7,0
0,20-0,21
0,04-0,17
0,09-0,10
0,10-0,15
0,06-0,18
7,5-7,6
7,3-7,6
7,5-7,8
7,9-8,2
7,0-8,0
-
Chromium [mg/l]
pH
56
Accidents causing less than 1 day’s absence - tannery
21
7
16
90
Accidents causing less than 1 day’s absence - factory
64
46
72
83
-
Accidents causing 1 or more day’s absence - tannery
3
1
1
1
-
Accidents causing 1 or more day’s absence - factory
16
16
7
7
-
statements from ECCO units – Slovakia
ECCO Slovakia, a.s.
Location:
Activity:
No. of employees:
2004
Martin, Slovakia
Shoe factory. Production of uppers and shoes
1998
824
2003
2002
2001
2000
Production output
163,297
259,136
792,473
287,694
130,000
2,771,025
2,265,312
1,974,408
1,657,498
1,500,000
Electricity [MWh]
Gas [m3]
Oil [l]
Water [m ]
3
5,722
4,730
4,337
3,475
3,328
250,204
179,301
96,457
93,035
90,000
-
2,281
1,600
500
800
11,460
14,419
12,565
4,037
5,800
1,134,160
724,030
539,681
510,410
487,830
96,,430
TPU [kg]
158,249
150,524
140,825
133,071
Hardener [kg]
50,310
41,340
30,390
29,550
-
Colour paste [kg]
17,085
15,034
9,550
9,064
-
Release agent [kg]
12,888
8,985
6,175
5,053
-
24,958
15,662
13,309
10,548
7,554
55
44
67
91
70
220
233
194
225
188
45
40
21
-
-
23
17
24
26
-
19
18
13
8
-
Waste
57
statements from ECCO units – The Netherlands
ECCO Tannery (Holland) B.V.
Location:
Activity:
No. of employees:
Dongen, The Netherlands
Tannery. Production of wetblue. Leather development centre
Acquired by ECCO in 2001
79
2004
2003
2002
2001
19,931,818
26,704,106
30,886,062
23,686,640
Production output
Wetblue produced [ft2]
Electricity [MWh]
5,192
5,704
5,677
5,855
Gas [m3]
846,300
672,286
864,715
1,053,559
Water [m3]
244,593
273,784
287,676
286,944
Affald
4,249
9,480
11,702
9,616
141
125
182
377
430
552
650
-
Tannery wastewater
Volume [m3]
267,668
302,895
306,138
315,359
BOD [mg/l]
9,0-14,0
9,0-22,0
7,0-20,0
4,0-7,0
Chromium [mg/l]
0,2-0,3
0,10-0,20
0,20-0,30
0,20-0,30
pH
7,2-7,7
7,0-8,0
6,6-7,6
7,4-7,6
2
-
-
-
6
-
-
-
58

since it was founded in 1963 in the town of Bredebro in

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