PRESS RELEASE – Func Food Group Q1 2018 Financial Report
Func Food Group has today published its Q1 2018 financial report. The report is available in English at http://www.funcfood.com/investors/?lang=en.
First quarter and year-to-date March 2018
- Consolidated Group revenues amounted to MEUR 8,8 (MEUR 10,5 in consolidated 2017).
- Revenues decreased by MEUR 1,7 or 16,6% in comparison to 2017.
- Consolidated Group EBITDA amounted to MEUR -0,4 (MEUR 0,7 in consolidated 2017).
- EBITDA decreased by MEUR 1,0 in comparison to 2017.
- EBITDA adjusted for items affecting comparability was MEUR -0,3 in 2018 and MEUR 0,8 in 2017 (reduction of MEUR 1,0).
In Q1 2018 the Group’s revenues declined in Sweden and Finland. The performance in Sweden was partly driven by currency exchange rates, as the Swedish Krona weakened against the Euro. The Group’s EBITDA and adjusted EBITDA were negative in Finland and Sweden. The business in Norway was still in a starting phase, as the Group invested in future growth. Revenue performance in Finland was positive for the Celsius brand while other brands declined. In Sweden, the Group achieved revenue growth in the Freddy business but the Celsius brand declined. Total net revenue for the Group was MEUR 8,8 (-16,6% vs. previous year). In order to account for seasonal imbalances and strategic decisions to exit private label manufacturing, this report includes pro forma revenue growth comparisons without Freddy Store Ab and private label sales. In Q1 2018 net revenue excluding these businesses declined in line with the overall product portfolio. Total EBITDA was MEUR -0,4 and adjusted EBITDA was MEUR -0,3. Total sales margin-% was at 32,7% vs. 39,1% in Q1 2017, as the Group invested in promotional campaigns, and as cross-sales of the Group’s brands and new launches increased the number of SKU’s held in stock. This development impacted logistics expenses.
Celsius revenues decreased by MEUR 0,5 and FAST revenues by MEUR 0,6 vs. PY. The discontinuation of private label sales had a MEUR 0,2 impact in revenue vs. PY. Revenue from the Freddy business grew by 53,6%, although from a small base.
Revenues for the Finnish market decreased notably vs. PY after a strong growth quarter in Q4 2017. The development was driven to a large extent by the FAST brand, which cycled the successful launch of the Pudix protein puddings in Q1 2017. Total revenue development for Finland was -28,3% vs. PY in the quarter. Excluding private labels the revenue growth was -25,9%. Total EBITDA in Finland amounted to MEUR -0,1 and adjusted EBITDA close to break-even in the quarter.
In Sweden, Q1 net revenues declined by 1,1% vs. previous year in local currency SEK (excluding intercompany sales), and by 7,6% in EUR. Excluding the Freddy business the quarterly net revenue in SEK was -4,1% and in EUR -10,3% vs. previous year. Total EBITDA in Sweden was MEUR -0,2 and adjusted EBITDA MEUR -0,2 in the quarter.
The Group’s commercial operations in Norway started during Q4 2017 and were still in an emerging phase in Q1 2018. The impact of the Norwegian business to the Group’s overall net revenue and EBITDA figures was at a low level.
The Celsius brand in Sweden was off to a slower start in Q1 compared to the previous year, predominantly driven by difference in launch timing of the 2018 innovations (April 2018 vs. March 2017).
The Swedish Fast business saw significant growth during Q1 2018, driven by the successful introduction of the ROX no sugar added protein bars.
In Finland both the Fast and CocoVi brands declined in Q1 vs. the same period last year as trade windows have changed and thus the business was cycling a strong contribution of new products in 2017. However, both Celsius and the core products in the protein bar category were in growth.
The retail index for both Nordic key markets showed strong continued growth in the first quarter (Sweden +5.1%, Finland +4.4%).
The bondholders of the Group approved changes to the bond terms on January 15 2018. The Group had proposed that Func Food Sweden Ab may convert up to 10.0 million euros of the originally 33.1 million, and at year-end 23.1 million euros of intra-group loan granted by Func Food Group Oyj into an equity instrument. The Group had also proposed that the planned bond repayment of 4.5 million euros can be omitted in September 2018. At the same time, the Group proposed an increase in the amount of permitted financial leasing debt and a permission to use recourse factoring arrangements with large retail customers, where the credit risk remains with the Group. The Group also proposed changes to the bond terms in relation to discontinuing the Freddy business operations and the possible merger of Finnish subsidiaries.
As a condition for the implementation of the changes, the Group arranged 3.0 million euros of additional funding from its shareholders between November 2017 and January 2018.
The Group announced a reorganisation of business activities on February 19 2018. One of the Group’s subsidiaries Func Food Finland Oy started co-operation negotiations, which ended on March 12 2018. As a result of the negotiations, the job duties of ten employees will end or change, and the Group shall close its office in Tampere by June 30 2018.
Total consolidated EBIT for the Group was MEUR -1,4 for the quarter (MEUR -0,3 in Q1 2017). The development of revenue and sales margin-% combined had a MEUR 1,2 negative impact on the EBIT line. Investments in marketing decreased by MEUR 0,2 in the quarter vs. PY while personnel and other operating expenses were at the same level as in 2017. Total depreciations and amortizations were MEUR 0,1 higher compared to Q1 2017.
Consolidated cash and cash equivalents on 31 March 2018 amounted to MEUR 0,4 (MEUR 1,3 in the beginning of the quarter). The Group’s net cash flow from operations in the quarter was MEUR 1,5 negative, mainly driven by debt service costs and negative EBITDA. Net working capital in total was at a slightly higher level as in the beginning of the year.
Net cash flow from investing activities was zero in the quarter, and the Group took further shareholder loans in the amount of MEUR 0,7. Payments relating to financial leasing liabilities amounted to MEUR 0,1.
As of Q2 2018 the Group has a new organisation structure in place, which will better support its growth strategy. Effective May 28, 2018, Jani Partanen has joined the Group as a new CFO.
The outlook of the Group remains unchanged from previous quarters.
For further information please contact:
Robin Lybeck, CEO, Func Food Group Oyj
mobile +358 40 735 2464
Jani Partanen, CFO, Func Food Group Oyj
mobile +358 40 518 3076.
The information contained in this press release is such information that Func Food Group Oyj is required to publish in accordance with the Swedish Securities Market Act (2007:528) and/or the Swedish Financial Instruments Trading Act (1991:980). The information was submitted for publication on 31 May 2018, at 6.00 CET.
Func Food Group Oyj, Mäkelänkatu 91, 00610 Helsinki, Finland. The board is resident in Helsinki. For further information about the company please visit http://www.funcfood.com/?lang=en.
Func Food Group Oyj