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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),

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 ECCOs business philosophy and results.

We do not aim to be the biggest we just want to be the

Another factor is ECCOs 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.

ECCOs 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.

Toosbuys business philosophy and outlook on life, and it


has characterised ECCO since our Companys 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, Mens 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%.

ECCO Annual Report 2004

five years, and it translated into substantially improved

highlights of 2004
Result

which contribute to a growing, albeit still moderate part of

The ECCO Groups 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 ECCOs 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

Mens, Kids, Golf and Sports shoes.

through lower manufacturing costs and the efficiency


improvements and cost-saving initiatives implemented in
the Group. ECCOs 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 Groups 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

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 ECCOs 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 ECCOs 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

ECCO Annual Report 2004

-100,000

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


Amortisation and depreciation

Liquidity ratio:

Current assets
Short-term debt

Profit for the year x 100


Average equity
Equity x 100
Assets
ECCO Annual Report 2004
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, ECCOs continued focus on

and Canada increased by 12% to 2.7 million pairs of

strong branding and concept sales was instrumental

shoes. ECCOs 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


ECCOs strong position, including in particular ECCOs

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

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 ECCOs 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

ECCOs Western European region consists of the Benelux

ECCOs 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
ECCOs 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

ECCO Annual Report 2004


9

ECCO Arena concept

10

shop concept
It is ECCOs 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 ECCOs network of partnership
ECCO Shop in Kuwait

shops.
A key element in developing ECCOs 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

828

2,067

2,067

34

41

Points
Factory outlets

ECCO Shop in Poland

ECCO Shop in Hong Kong

ECCO Annual Report 2004

ECCO Shop in Denmark

11

12

innovation and product development


Unique development ability

Mens shoes

The core of ECCOs 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 ECCOs 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, Mens and Kids shoes) as well
as in selected segments of the sports shoe market in
which ECCOs products can play a leading role, for
example Golf, Outdoor, Walking and Running.
ECCOs casual collection for men underwent a revival
2004 was characterised by ECCOs 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 ECCOs mens division to design a corresponding

innovative products.

product for men, ECCO Gyro, which attracted new


customers. This will also be ECCOs 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 mens 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.

ECCOs 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 ECCOs 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.

ECCO Annual Report 2004

In addition to the successful modernisation of our core

13

Thomas Bjrn and Dieter Kasprzak discussing product development

14

Golf shoes and other sports shoes


The year 2004 marked the definitive breakthrough for
Thongchai Jaidee

ECCOs golf division. ECCOs golf shoes were the centre


of much attention on golf courses around the world in
2004 not least because of ECCOs 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 Bjrn. These players
also contribute to the development of new, innovative
ECCO Golf products, thereby accentuating ECCOs
unique position in the market for golf shoes.

Thomas Bjrn

The separation from the rest of the sports division ensured

Iben Tinning

total focus on ECCO Golf, and 2004 became the year


when ECCOs ladies golf shoes set new standards for
comfort and design. Turning to ECCOs mens 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 ECCOs 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

Mens shoes

Kids shoes

Sports shoes

ECCO Annual Report 2004

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 ECCOs 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.


ECCOs 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 worlds shoes. There is significant


growth potential in the countrys 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.

ECCOs hallmark. It will continue to form the basis of new


and innovative designs. ECCOs 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.


ECCOs tanneries
ECCOs factories

ECCOs 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.

ECCOs factories all over the world. Retaining and developing ECCOs 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 ECCOs 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 ECCOs own value chain. In addition,

uppers, has started producing shoes.

ECCO Leather is today among the worlds 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.

ECCOs new factory in Xiamen, China

In 2004, ECCOs tanneries made a dedicated effort with

Third-party suppliers

respect to environmental improvements, among other

Notwithstanding ECCOs 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, ECCOs 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 Groups environmental

flexibility in ECCOs 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

ECCOs efforts to control the value chain from idea and

ECCOs tanneries and shoe factories and statements from

design over production to marketing and sales enables the

ECCOs 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 ECCOs supply and


logistics systems. ECCOs 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

ECCO Annual Report 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 Tnder, 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

ECCOs 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
Comercializao 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 Cesk republika s.r.o.

In addition, ECCOs 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, ECCOs 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--vis the individual business units.
Business units
As a result of the organisational change, each of ECCOs
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
Eccolet (Portugal)
Fbrica 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.

ECCO Annual Report 2004

THE NETHERLANDS
ECCO Leather B.V.

19

employees our most valuable resource


Throughout ECCOs more than 40-year history, our

Staff

employees have played a vital role in the Companys

ECCOs 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 ECCOs 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 ECCOs business
activities, a number of financial matters impact the Groups
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.

ECCO Annual Report 2004


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 Groups financial status.
Outlook for 2005
ECCO expects to continue the Groups 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 ECCOs
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

ECCO Annual Report 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 Groups
and the Companys assets, liabilities and financial position
Bredebro, 9 March 2005

as of 31 December 2004 and of the results of the Groups


and the Companys 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

Sren 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 Mller-Hansen

Employee representative

Employee representative

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 Companys

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 Groups 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 Groups and the Companys 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

ECCO Annual Report 2004


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 companys 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 Companys 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 companys net asset value is determined based

comprise the proportionate share of profits before tax.

on the Groups 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 years

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 years 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.

Groups 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.

ECCO Annual Report 2004

company applying the Groups 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 Groups 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 Companys 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

ECCO Annual Report 2004

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

ECCO Annual Report 2004


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

ECCO Annual Report 2004


33

consolidated cash flow statement for the year ended 31 December 2004
2004

2003

206,441

120,244

Amortisation and depreciation

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

ECCO Annual Report 2004

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

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

notes to the Group and Parent Company financial statements


3

Financial income
Parent Company
2004

2003

9,360

8,614

DKK 000
In the Parent Company, interest income from subsidiaries amounted to

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

Years adjustment of deferred tax

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

Currency translation
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

ECCO Annual Report 2004

9,522

Amortisation on assets sold

37

notes to the Group and Parent Company financial statements


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
Currency translation

(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

Currency translation
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

Carrying amount at 31 December

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

Carrying amount at 31 December

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 Companys properties excluding additions was DKK 180,880
thousand).

38

notes to the Group and Parent Company financial statements


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) Fbrica 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-Comercilizaco 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 Annual Report 2004

ECCO Shoes Canada, Inc.

39

notes to the Group and Parent Company financial statements


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

(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
Carrying amount at 31 December

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

notes to the Group and Parent Company financial statements


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

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.

ECCO Annual Report 2004


41

notes to the Group and Parent Company financial statements


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

Currency translation
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

notes to the Group and Parent Company financial statements


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
Groups 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

ECCO Annual Report 2004


43

notes to the Group and Parent Company financial statements


15

Related parties

ECCO Sko A/S has the following related party with controlling influence:
ECCO HOLDING A/S
Prilen 13, Rm, 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 Companys 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
Companys 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, Rm, Denmark (Parent Company)

44

environmental Statement 2004

ECCO Annual Report 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).

ECCOs employees are involved in the Companys


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 Groups in-house course
From cow to shoe, which contains a presentation of
ECCOs 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 Schadstoffgeprft (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 TV Produkt und Umwelt GmbH, Rheinland in
collaboration with Institut Fresius GmbH and Prf- 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.
ECCOs 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 GROUPS 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-

ECCOs employees are the companys 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 Groups 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 Groups environmenwhenever necessary, to define new goals to ensure that

ensure that all raw materials and components meet de-

the policy adequately meets ECCOs environmental,

fined requirements. Environmental parameters constitute

health and safety targets.

ECCO Annual Report 2004

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
ECCOs Leather divisions 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 ECCOs
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

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:

34 %

ECCO Annual Report 2004

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, ECCOs 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

preventive measures, thereby also contributing to reducing the

number of industrial accidents. Moreover, the focus on health

and safety in the workplace has increased in general. Industrial

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 Denmarks 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.

ECCO Annual Report 2004

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 ECCOs 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 ECCOs 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 ECCOs 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 Snderjyllands 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

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

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

16

12

11

11

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 days 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 ECCOs distribution warehouse, DC-Tnder, At DC-Tnder, 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.

ECCO Annual Report 2004


53

statements from ECCO units Portugal


Eccolet (Portugal) Fbrica de Sapatos, Lda.
Location:
Activity:
Year of incorporation:
No. of employees:

2004

Santa Maria da Feira, Portugal


Shoe factory. Production of uppers and shoes
1984
720

20033

2002

2001

2000

Production output
Uppers produced [pairs]
Shoes produced [pairs]

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

Energy and water consumption


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

Consumption of sole material


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

Finishing products [kg]

22,531

20,393

18,666

28,332

34,758

Waste
Recyclable waste [tons]

212

330

184

193

Waste otherwise disposed of [tons]

352

360

394

820

94

67

63

92

Accidents causing less than 1 days absence

80

128

137

Accidents causing 1 or more days absence

23

17

18

Chemical waste [tons]


Industrial accidents

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

Year of incorporation:
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

Uppers produced [pairs]


Shoes produced [pairs]
Energy and water consumption

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]

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
Industrial accidents

17

18

15

Accidents causing less than 1 days absence - factory

57

88

103

53

Accidents causing 1 or more days absence - tannery

Accidents causing 1 or more days absence - factory

22

33

14

The relatively high figure is due to the replacement of various machinery.

ECCO Annual Report 2004

Accidents causing less than 1 days 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

Year of incorporation:
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

Uppers produced [pairs]

3,237,054

2,868,227

2,708,639

2,891,591

3,150,000

Shoes produced [pairs]

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

Energy and water consumption

Consumption of sole material


Polyol and isocyanate [kg]

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
Industrial accidents

56

Accidents causing less than 1 days absence - tannery

21

16

90

Accidents causing less than 1 days absence - factory

64

46

72

83

Accidents causing 1 or more days absence - tannery

Accidents causing 1 or more days absence - factory

16

16

statements from ECCO units Slovakia


ECCO Slovakia, a.s.
Location:
Activity:
Year of incorporation:
No. of employees:

2004

Martin, Slovakia
Shoe factory. Production of uppers and shoes
1998
824

2003

2002

2001

2000

Production output
Uppers produced [pairs]
Shoes produced [pairs]

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

Energy and water consumption


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

Consumption of sole material


Polyol and isocyanate [kg]
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

Finishing products [kg]

24,958

15,662

13,309

10,548

7,554

55

44

67

91

70

220

233

194

225

188

45

40

21

Accidents causing less than 1 days absence

23

17

24

26

Accidents causing 1 or more days absence

19

18

13

Waste
Recyclable waste [tons]
Waste otherwise disposed of [tons]
Chemical waste [tons]
Industrial accidents

ECCO Annual Report 2004


57

statements from ECCO units The Netherlands


ECCO Tannery (Holland) B.V.
Location:
Activity:
Year of incorporation:
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]
Energy and water consumption
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
Recyclable waste [tons]

4,249

9,480

11,702

9,616

Waste otherwise disposed of [tons]

141

125

182

377

Chemical waste [tons]

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

Accidents causing less than 1 days absence

Accidents causing 1 or more days absence

Industrial accidents

58