Year-end report January - December 2017
1 October – 31 December 2017
● Revenue remained largely unchanged and amounted to SEK 1,507 M (1,508). Adjusted for currency effects and calculated on the comparable number of workdays, revenue rose 4 per cent. Sales in comparable units rose 2 per cent, in local currency.
● EBITA improved to SEK 134 M (103) and the EBITA margin rose to 9 per cent (7).
● EBIT increased to SEK 96 M (74) and the EBIT margin rose to 6 per cent (5). EBIT was negatively impacted by items affecting comparability of SEK 7 M (neg: 31).
● The gross margin rose to 55.2 per cent (52.0).
● Earnings per share, before and after dilution, increased to SEK 2.07 (1.83).
● Cash flow from operating activities amounted to SEK 246 M (208
CEO comments
2017 – A stable end to a challenging year of transformation
Overall, 2017 was a challenging year for Mekonomen Group during which we devoted considerable time to restoring momentum in all of our Group companies and equipping them for future growth. Our revenue rose to SEK 6 billion in 2017, which is a milestone for us.
In the fourth quarter, Mekonomen Group’s sales remained unchanged compared with the corresponding period in the preceding year. Adjusted for number of workdays and currency effects, sales increased 4 per cent. EBIT rose to SEK 96 M (74), negatively impacted by items affecting comparability of SEK 7 M (neg: 31).
MECA, Mekonomen Sweden and Mekonomen Norway reported mainly unchanged net sales in the fourth quarter compared with the year-on-year period, while net sales in Sørensen og Balchen fell 3 per cent. A weaker NOK and one less workday in the period influenced sales negatively.
Sales to our affiliated workshops rose 7 per cent in the fourth quarter, and sales of spare parts under our proprietary brand ProMeister were in line with our other sales.
The temporary growth in sales of DAB products in our Norwegian operations during 2017 slowed in the fourth quarter.
Excluding items affecting comparability, the Group reported EBIT of SEK 103 M (105) in the fourth quarter. EBIT was positively affected by increased profitability in Mekonomen Sweden, but was at the same time negatively impacted by one less workday, a weaker NOK and costs related to merging stores in Mekonomen Norway. In addition, EBIT in the fourth quarter of 2016 included operating losses of SEK 12 M, related to MECA’s former export business to Denmark, which was divested in the end of 2016.
Mekonomen Sweden – solid sales and increased EBIT
In the fourth quarter, we saw indications that our efforts to regain sales growth and increased profitability in Mekonomen Sweden have started to produce results. The quarter was characterised by stable sales as well as a slightly improved profitability. There still remains considerable work to be done, but the necessary conditions are in place to gradually improve sales and profitability.
Market development
During the quarter, we experienced a slightly soft market for car services, mainly in Norway.
The figures for 2017 show that the registration of new cars continued to grow in our main markets Sweden and Norway, where the proportion of registered new environmental friendly cars continued to grow. The increase in the share of rechargeable cars is from a low level and we do not see any significant impact on us in the next few years. It is important that we follow the changes in the aftermarket, and the increase in the proportion of rechargeable cars together with the higher degree of digitalisation in the industry are two areas we follow with extra accuracy.
Due to the growing car fleet in recent years, we see potential for a growing overall market in the future, provided that car scrapping does not exceed the current level. However, we do not expect any change in this market in the near future, since the growing car fleet will not reach the aftermarket until the cars are older.
Springboard for 2018
In 2018, we will continue to focus on driving profitable sales growth in all of our Group companies. This growth will come from strengthening and further tailoring our offerings to our various customer groups and actively seeking out acquisition opportunities in our core business and in related areas.
Our two main strategic projects – a Group-wide shared central warehouse in Strängnäs and a new digital spare parts catalogue – are proceeding according to plan.
We also want to announce that we have entered into an agreement with LKQ Corporation to seek joint purchasing agreements with key suppliers. Although the agreement is immaterial to Mekonomen Group’s result, we communicate the agreement as LKQ Corporation is a larger shareholder in the company. The agreement has been approved by the Board’s independent members.
To better reflect the company’s business, the Group management has been expanded from 1 January 2018. Toghether with me, the Group management now consists of the managing directors of the sales companies who work close to our customers, and responsible for our Group-wide functions. These organisational changes also affect the structure of our segment reporting. From the first quarter of 2018, Mekonomen Group will be presented in the segments Mekonomen, MECA, Sørensen og Balchen and Other. The Mekonomen segment will comprise Mekonomen Sweden and Mekonomen Norway. The MECA segment will consist of MECA Sweden and MECA Norway. The Sørensen og Balchen segment is unchanged. Other operations will be included in the Other segment.
As a consequence of our review of the organisational structure, we reported an impairment of goodwill in Marinshopen in the fourth quarter in an amount of SEK 9 M and we implemented efficiency measures of the store structure in Mekonomen Norway. The review also resulted in a reallocation of internal costs, which had an effect on EBIT in the individual segments, but no effect at Group level.
My ambition is that the new organisational structure will leverage the full strength of our brands and employees, and create the right conditions for continued profitable growth in the future.
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 make public persuant 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 9 February 2018.