Interim report January - June 2018
1 April - 30 June 2018
● Revenue amounted to SEK 1,673 M (1,560). Adjusted for currency effects and calculated on the comparable number of workdays, revenue rose 3 per cent. Sales in comparable units rose 2 per cent in local currency.
● EBITA amounted to SEK 202 M (203) and the EBITA margin was 12 per cent (13).
● EBIT totalled SEK 173 M (174) and the EBIT margin was 10 per cent (11). EBIT was negatively affected by items affecting comparability totalling SEK 25 M (0), of which SEK 19 M was attributable to costs for ongoing acquisition process and SEK 6 M to the divestment of Marinshopen.
● EBIT adjusted for items affecting comparability was SEK 198 M (174).
● The gross margin was 55.7 per cent (55.3).
● Earnings per share, before and after dilution, amounted to SEK 3.53 (3.22).
● Cash flow from operating activities amounted to SEK 234 M (134).
● Net debt was SEK 1,652 M (1,615) at the end of the period, compared with SEK 1,444 M at year-end.
● On 6 July, Mekonomen entered into an agreement to acquire FTZ in Denmark and Inter-Team in Poland for a purchase price of EUR 395 M.
Favorable sales growth and improved earnings, and towards doubling the sales through acquisition
Mekonomen Group reported favorable sales growth in the second quarter of 2018, positively impacted by a late spring - which, for example, affected timing for changing winter tyres to summer tyres - a higher number of workdays and a strengthened NOK. The Group’s total revenue rose 7 per cent compared with the second quarter of 2017. Adjusted for the number of workdays and currency effects, revenue rose 3 per cent.
MECA and Mekonomen reported favorable growth while Sørensen og Balchen’s sales did not reach the level recorded last year.
Sales to the strategically important customer group affiliated workshops increased 20 per cent in the second quarter and sales of spare parts under our proprietary brand ProMeister had a favorable development.
The sales decline of DAB products compared to 2017 affected sales negatively in the second quarter by approximately SEK 50 M, mainly in Sørensen og Balchen. As of the third quarter, our assessment is that compared to 2017, the DAB sales will have a limited impact.
Increased EBIT in the core business
EBIT for the Group amounted to SEK 173 M (174) in the second quarter, adversely impacted by items affecting comparability of SEK 25 M (0), which mainly included costs for ongoing acquisition process. EBIT adjusted for items affecting comparability rose to SEK 198 M (174). The weakening of the SEK against the EUR, which led to elevated purchasing prices at the beginning of the year, slowed down in the second quarter. The increased purchasing costs have now been compensated by higher selling prices, which helped to stabilise margins in the second quarter.
Our core business reported slightly rising growth in the second quarter, with favorable currency and calendar effects making a further positive contribution to sales and earnings. This is in contrast with the first quarter, when these factors had a corresponding negative effect. Consequently, the Group’s development over the first six months of the year provides a comparable view of its performance. For the first six months revenue rose 2 per cent and EBIT excluding items affecting comparability was SEK 277 M (299), burdened by lower sales of DAB products with an estimated effect on EBIT totalling approximately SEK 20 M in the first half of the year (approximately SEK 11 M in the second quarter).
During the second quarter, we experienced a temporary high period of activity in the market due mainly to a late and thus compressed spring season. Our impression of the market for the first six months of the year as a whole is that it was stable.
Central warehouse and new digital spare parts catalogue projects proceeding as planned
Work related to the joint central warehouse for MECA and Mekonomen in Sweden is progressing according to plan and is expected to generate cost savings of SEK 50 M as of 2020. During the summer, Mekonomen Group formally took over the automation from the technology supplier and we are currently testing the equipment. Our new digital spare parts catalogue project is also proceeding as planned. The catalogue is rolled out in Mekonomen stores and a large number of Mekonomen workshops in the Norwegian market and in the Swedish market the testing has started within Mekonomen.
Towards a doubling of our sales
On 6 July, Mekonomen Group entered into an agreement to acquire FTZ in Denmark and Inter-Team in Poland, which is aligned with our growth strategy to actively play a part in the ongoing consolidation in Europe. Through the acquisitions, Mekonomen Group’s sales will nearly double and we will strengthen our position as a leading automotive spare parts distributor in the Nordic region in parallel with taking a first step into continental Europe. FTZ and Inter-Team are two prosperous companies and our strategy for them is to continue growing within the scope of their existing corporate structures and brands as independent companies in the Group.
The acquisition is preliminarily expected to be completed during the third quarter 2018 and the intention is to partially finance the acquisition through a rights issue to Mekonomen’s shareholders. We expect the acquisitions to generate synergies of SEK 100 M annually, mainly within purchasing, with full effect from 2021.
After my first year as President and CEO, I am very confident with the management and organisation we have built during this time. All the positive energy and dedication that our employees show has paid off and given stability to our core business in the last quarters. This gives us a solid base for taking the next step in the Group's development. I am convinced that we are well prepared to execute on our strategy – profitable growth – both in our existing business and our pending acquisition of FTZ and Inter-Team.
President and CEO
For further information, please contact:
Pehr Oscarson, President and CEO, Mekonomen AB, tel +46 (0)8-464 00 00
Åsa Källenius, CFO, Mekonomen AB, tel +46 (0)8-464 00 00
Helena Effert, IRO, Mekonomen AB, tel +46 (0)8-464 00 00
This information is such information that Mekonomen AB (publ) is obliged to publish in accordance with the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contactperson set out above, at 07:30 a.m CET on 27 July 2018.