Interim report January - June 2017

1 April - 30 June 2017
● Revenue increased 1 per cent to SEK 1,584 M (1,573). Adjusted for currency effects and calculated on the comparable number of workdays, revenue increased 5 per cent. Sales in comparable units were unchanged.
● EBITA increased to SEK 203 M (189) and the EBITA margin increased to 13 per cent (12).
● EBIT rose to SEK 174 M (161) and the EBIT margin rose to 11 per cent (10).
● The gross margin improved to 54.5 per cent (53.6).
● Earnings per share, before and after dilution, increased to SEK 3.22 (3.02).
● Cash flow from operating activities amounted to SEK 134 M (228).
● Net debt at the end of the period amounted to SEK 1,615 M (1,684), compared with SEK 1,437 M at year end.
● Refinancing agreement of SEK 1,650 M, SEK 1,050 M with 5 years' maturity and SEK 600 M with 4.4 years' maturity, has been signed during the second quarter.
● Åsa Källenius has been recruited as new CFO with effect from 15 August.

CEO’s comments:

Stable development in the quarter

The second quarter has been characterised by stable sales, in line with the market development. Sales increased by 1 per cent compared to the second quarter last year. Sales growth, adjusted for number of workdays and currency effects, increased by 5 per cent in the quarter. EBIT improved to SEK 174 (161) M in the second quarter and cash flow from operating activities amounted to SEK 134 (228) M.

Sales to our affiliated workshops increased by 2 per cent in the quarter, negatively affected by less number of workdays compared to the same prior year period. Sales of spare parts under our own brand ProMeister had a good development during the quarter.

Due to Norway’s ongoing transition to digital radio network, our sales of accessories in Norway were affected by increased sales of DAB products in the quarter, but with a negative impact on the gross margin. We expect continued good sales of these products for the remainder of 2017.

In the quarter, we have seen a recovery of the gross margin mainly affected by a more stable development in Mekonomen Sweden and decreased pressure on gross margin in our Norwegian businesses. The increasing share of sales to affiliated workshops and large customers, as well as increased sales of accessories, continued to affect the gross margin negatively in the quarter.

MECA and Sørensen og Balchen had a stable development in the quarter and the segments delivered sales growth and improved EBIT compared to same period last year. Mekonomen Norway presented a good growth in the quarter, but with a lower EBIT.

The sales development in Mekonomen Sweden was stabilised during the second quarter and the profitability was improved compared to the weak prior year period. Although the development was in the right direction, the work to gaining back market shares in Mekonomen Sweden is still a challenge and one of our main focus forward. The cost and efficiency program is progressing according to plan and contributed positively to the profitability in the quarter.

Market outlook
We estimate that the market was stable during the second quarter. For the full year we see potential for an increasing overall market, primarily affected by a strong sales of new cars in recent years and a growing car park in our main markets Sweden and Norway. For Mekonomen Group, the potential for a stronger market is primarily linked to an increased car park for cars three years and older.

Focus on profitable growth
The project to streamline the central warehouse structure in Sweden to one common central warehouse for MECA and Mekonomen is proceeding according to plan. The base slab has been cast for the extension of the building and will harden during the summer. Currently, our future picking stations and decanting stations are being completed in an adjacent area in the existing building. Also, the project for our new digital spare parts catalogue is proceeding according to plan and we plan to start the launch of this catalogue during 2017.

Our primary focus forward is still to drive profitable sales growth in all our segments. To assure for the future and to strengthen our position in the market, the focus is also on improving and broadening the offer to our affiliated workshops. A major challenge for the industry is the shortage of automotive engineers, a term that is more in time than the term mechanics. More cars running longer distances and fewer present workshops, have led Mekonomen Group to immediately recruit 100 new employees to our workshops. In order to facilitate for our workshops, we have also started to offer them support for recruitment.

Pehr Oscarson

President and CEO

For further information, please contact:
Pehr Oscarson, President and CEO, Mekonomen AB, tel: +46 (0)8-464 00 00
Karl Lindström, interim CFO, Mekonomen AB, tel: +46 (0)8-464 00 00

This information is information that Mekonomen AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 a.m CET on 28 July 2017.

About Us

Mekonomen group is the leading spare-part chains in the Nordic region and consists of three subgroups; Meca Scandinavia, Mekonomen Nordic and Sørensen og Balchen. We offer a broad and an easily accessible range of value-for-money and innovative solutions and products for consumers and companies. Within Mekonomen Group operates the leading. Mekonomen Group has approximately 400 stores and over 2,300 workshops.

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