Interim report January - June 2014
SUMMARY FOR THE SECOND QUARTER, 1 April – 30 June, 2014
● Revenues for the quarter declined 4 per cent to SEK 1,534 M (1,591). Adjusted for currency effects and calculated on a comparable number of workdays, revenues declined 2 per cent.
● EBIT amounted to SEK 157 M (166) and the EBIT margin was 10 per cent (10). Earnings were negatively impacted by non-recurring effects of SEK 9 M (2).
● The gross margin increased to 54.5 per cent (52.9).
● Profit after financial items amounted to SEK 154 M (160). Other financial items were positively impacted by non-recurring effects of SEK 5 M (0).
● Earnings per share before and after dilution amounted to SEK 2.99 (3.24).
● The net debt at the end of the period amounted to SEK 1,848 M (1,883), compared with SEK 1,642 M at the end of the year.
● Refinancing totalling SEK 1,100 M, with a five-year maturity term, was signed during the second quarter.
● No significant events occurred during the second quarter of 2014.
Stable trend in a tough market climate
Weak market growth continues to characterise the Nordic market. The Mekonomen Group’s profitability improved in Sweden, Norway and Finland. In Denmark, where both the market and our development is weakest, further measures are required to achieve profitability.
In the second quarter of 2014, revenues for the Mekonomen Group declined 4 per cent to SEK 1,534 M (1,591) and EBIT to SEK 157 M (166). The operating margin remained at a stable level of 10 per cent (10). Non-recurring costs attributable to the action plan in Denmark had a negative impact of SEK 9 M (2) on EBIT. Excluding Denmark, EBIT rose to SEK 182 M (178). Adjusted for currency effects and calculated on the comparable number of workdays, revenues declined 2 per cent in the second quarter. The consolidation of the store network impacted sales, which declined 1 per cent in comparable units during the second quarter.
Improved profitability in Sweden and Norway
The trend in Sweden and Norway was favourable and market shares were captured, above all, by MECA and Sørensen og Balchen, which resulted in improved profitability in both Sweden and Norway during the most recent quarter.
Customers are increasingly recognising our proprietary brand ProMeister, which was launched in 2013 and is sold across the entire Group, as a high-quality brand. Increased sales of ProMeister have contributed to improved profitability.
Strong measures in Denmark
In the second quarter, EBIT in Denmark declined to a loss of SEK 26 M (loss: 12) and net sales decreased to SEK 145 M (169). EBIT was negatively impacted by non-recurring costs of SEK 9 M (2). The Danish market remains weak and this, combined with intense competition, is presenting major challenges. Our efforts to implement the action plan continue. During the quarter, this included the merging and discontinuation of seven units, and staff cuts of some 70 employees. A strong core of fewer and larger units in Denmark and a loweroverall cost base will provide more opportunities to generate profitability.
In addition, market initiatives are being implemented for our workshop chains that hold strong positions in Denmark, as well as launching ProMeister. Non-recurring costs associated with the action plan in Denmark are expected to be SEK 10 M in the third quarter of 2014.
Organic growth in focus
In 2014, organic growth is a primary focus for the Mekonomen Group. ProMeister and MECA’s strength in business-to-business are the main reasons for the improved trend in the Other workshops customer segment. Investments are being made to strengthen our position in the e-commerce area, which will be an increasingly significant sales channel.
Although the Mekonomen Group is well-prepared, is capturing market shares in a generally weak market and has a stable EBIT margin, our aims are higher. By continuing to focus on ProMeister, develop our workshop concept, increase cost-efficiency, strengthen purchasing power and implement the necessary measures in Denmark, our position in the Nordic region will be further strengthened.
President and CEO
For further information, please contact:
Håkan Lundstedt, President and CEO, Mekonomen AB, Tel: +46 (0)8-464 00 00
Per Hedblom, CFO, Mekonomen AB, Tel: +46 (0)8-464 00 00
Gunilla Spongh, Head of International Business, Mekonomen AB, Tel: +46 (0)8-464 00 00
The information in this interim report is such that Mekonomen AB (publ) is obligated to publish in accordancewith the the Securities Market Act. The information was submitted for publication on 21 August 2014 at 7:30 a.m.