Interim report January - September 2017

1 July - 30 September 2017
● Revenue declined 1 per cent to SEK 1,414 M (1,432). Adjusted for currency effects and calculated on the    comparable number of workdays, revenue remained unchanged. Sales in comparable units declined 1 per cent, in local currency.
● EBITA improved to SEK 157 M (154) and the EBITA margin was 11 per cent (11).
● EBIT increased to SEK 127 M (125) and the EBIT margin was 9 per cent (9). EBIT was positively impacted by items affecting comparability of SEK 7 M (neg: 18).
● The gross margin was 54.4 per cent (54.5). ● Earnings per share, before and after dilution, increased to SEK 2.43 (2.20).
● Cash flow from operating activities rose to SEK 79 M (78).
● Net debt was SEK 1,625 M (1,620) at the end of the period, compared with SEK 1,437 M at year-end.

CEO’s comments

Stable sales but weak result
Mekonomen Group’s sales declined 1 per cent in the third quarter compared with the year-on-year period. Adjusted for number of workdays and currency effects the sales remained unchanged. EBIT amounted to SEK 127 M (125), positively impacted by items affecting comparability of SEK 7 M (neg: 18).

MECA, Mekonomen Norway and Sørensen og Balchen reported quarterly sales on a level with the third quarter last year, which is in line with the market trend. Sales in Mekonomen Sweden was weak compared with the third quarter of 2016. However, we see that our initiatives have stabilised the development in Mekonomen Sweden and that we have all conditions in place to gradually resume our previous levels of sales and profitability.

Sales to affiliated workshops rose 2 per cent in the third quarter, and sales of spare parts under our proprietary brand ProMeister performed well.

The ongoing transition to digital radio networks in Norway contributed positively to the sales of DAB products in our Norwegian operations, but with lower sales than expected and with negative impact on gross margin.

Earnings trend in the quarter
Adjusted for items affecting comparability, the Group’s EBIT was deteriorating compared with the year-on-year period. Except one workday less, the main factors are remained declining sales in Mekonomen Sweden, increased proportion of accessory sales in our Norwegian operations with negative effect on gross margin and higher personnel costs, substantially in Mekonomen Norway. Inititiatives have commenced to improve earnings in Mekonomen Norway.

The measures in the previous cost-reduction and efficiency programs have now been completed and had full effect on the Group’s profitability during the quarter. We are still not satisfied with the result.

Strategical projects
The central warehouse project in Strängnäs is proceeding as planned, and as previously announced, cost savings of SEK 50 M will have a full effect on EBIT from 2020. The shell of the new building has been completed and installation of the automation solution has started. The work on our new digital spare part catalogue has now reached the final phase and we are planning a first launch by the end of 2017.

We are very proud of our upper-secondary school program ProMeister Fordon which commenced this autumn in Stockholm and Lund with about thirty students. This is one of our long-term initiatives to reduce the shortage of automotive mechanics in the market with relevant and updated expertise.

Market outlook
During the quarter, we experienced a soft consumer market for car services in some regions, while other regions still had lack of capacity in the workshops due to the market shortfall of automotive mechanics.

Due to strong sales of new cars and the growing car fleet in our main markets Sweden and Norway in recent years, we see potential for a growing overall market in the future, provided that car scrapping does not exceed current levels. However, we do not expect any change in this market for the rest of the year, since the growing car fleet will not reach the aftermarket until the cars are older.

Focus ahead
Our focus ahead is on driving sales growth in all of our Group companies and the ambition is to grow faster than recent years. The growth will come from strengthening and further customise offerings to our different customer groups and also from possible acquisitions.

At the same time we are striving to be at the forefront of market trends and to secure our business for the future. As part of this objective, in October we acquired 20 per cent of the shares in Swedspot, a leading company in connected cars and digitalisation.

We consider it strategically important to continue our integration forward in the value chain by, for example, increasing the number of proprietary workshops. As the leading independent player in the aftermarket we thereby obtain major opportunities to make car life even easier for our customers and creating long-term shareholder value.

Pehr Oscarson

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 contact person set out above, at 7:30 a.m CET on 7 November 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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