Tokmanni Group Corporation January-March 2016 business review: revenue grew 3.3% supported by positive like for like growth - profitability improved

Tokmanni Group Corporation            Company Announcement    4.5.2016               8.30 EET

Tokmanni Group Corporation January-March 2016 business review: revenue grew 3.3% supported by positive like for like growth - profitability improved

Numbers in brackets refer to the corresponding period previous year if nothing else is mentioned. The figures in this review are unaudited.

FIRST QUARTER HIGHLIGHTS:

  • Revenue grew 3.3% to EUR 158.3 million (153.3), clearly above the non-grocery market average which decreased by 8.5% (according to the Finnish Grocery Trade Association "FGTA", PTY)
  • Like-for-like sales grew 0.3%
  • Adjusted Gross Margin improved to 33.1% (32.8)
  • Adjusted EBITDA  developed well and totaled EUR 2.2 million (1.8)

       
EVENTS AFTER THE REPORTING PERIOD:

  • Tokmanni's shares were listed on the Nasdaq Helsinki Stock Exchange on the 29th of April 2016. In connection with the IPO Tokmanni repaid the shareholder loans and refinanced its loans from financial institutions with lower interest rates than its prior outstanding debt.  As a result, Tokmanni expects that its interest expenses going forward will be significantly reduced compared to previous years. In 2015, interest expenses of shareholder loans amounted to EUR 6.9 million and interest expenses from financial institutions amounted to EUR 10.2 million.
  • On 29th of April 2016, Kati Hagros and Thérèse Cedercreutz joined as new members of the Board of Directors.

TOKMANNI'S CEO HEIKKI VÄÄNÄNEN:
"I am very pleased with our first quarter development. We continued to significantly outperform the market and I am particularly pleased that our like-for like growth was positive for the second consecutive quarter and our margins improved compared to the first quarter of 2015. Although the first quarter is always a smaller quarter due to the seasonality of the retail business we are well on track to achieve the targets we have set for 2016. Tokmanni was listed at the end of April. I was very pleased with the positive response we received and wish to thank all our shareholders for their interest".

A teleconference in Finnish will be held today at 10:30 am EET and in English at 2:30 pm EET for media, analysts and investors.

Dial in details:

From Finland:                           0200-88 200
From Norway:                          23-89 44 99
From Denmark:                        88-20 30 30
From Sweden and                    
other countries:                        +46 8-20 88 20
Meeting Code:                          533151#

For further information, please contact:

Heikki Väänänen, CEO, tel: +358 20 728 6044 heikki.vaananen@tokmanni.fi
Sixten Hjort, CFO, tel: +358 20 728 6043 sixten.hjort@tokmanni.fi
Joséphine Mickwitz, Investor Relations, tel: +358 20 728 6535 josephine.mickwitz@tokmanni.fi

KEY FIGURES

  1.1.-31.3.2016 1.1.-31.3.2015 1.1.-31.12.2015
Revenue, MEUR 158.3 153.3 755.3
Growth, % 3.3%   2.9%
Like-for-Like growth, % 0.3%   -0.6%
Gross profit, MEUR 51.7 50.8 257.5
Gross margin, % 32.7% 33.1% 34.1%
Adjusted gross profit*, MEUR 52.5 50.3 258.1
Adjusted gross margin*, % 33.1% 32.8% 34.2%
EBITDA, MEUR 1.1 0.7 53.9
EBITDA, % 0.7% 0.5% 7.1%
Adjusted EBITDA**, MEUR 2.2 1.8 58.5
Adjusted EBITDA**, % 1.4% 1.2% 7.7%
EBIT, MEUR -2.7 -2.9 39.1
Adjusted EBIT**, MEUR -1.7 -1.9 43.7
Adjusted EBIT**, % -1.0 -1.2 5.8
Net financial costs, MEUR -5.2 -5.3 -20.9
Capital expenditure, MEUR 1.3 3.9 9.0
Net cash from operating activities, MEUR -15.3 -17.8 35.0
Nr. of shares at the end of the period (1 000) 44 549 22 274 22 274
Earnings Per Share, EUR -0.14 -0.30 0.67
Personnel at the end of the quarter 3 083 3 001 3 293

*Adjusted for changes in fair value of currency derivatives
**In 2015, adjustments related to changes in fair value of currency derivatives, changes in fair value of electricity derivatives, brand harmonization costs and costs related to the offering. In Q1 2016, adjustments relate to changes in fair value of currency derivatives and changes in fair value of electricity derivatives. As of January 1st, 2016 IPO costs are reported in the balance sheet.

MARKET DEVELOPMENT
The challenges in the Finnish retail market continued during the beginning of 2016. The total sales of FTGA's member department stores and hypermarket chains decreased by 0.9% according to the Finnish Grocery Trade Association PTY (www.pty.fi) statistics due to the general weak economic situation and the weakened purchasing power of consumers. The total sales of the non-food retail market, Tokmanni Group's closest comparable market, decreased by 8.5% compared to the corresponding period in 2015. The non-food retail market was partly impacted by the timing of Easter holidays.

FIRST QUARTER FINANCIAL DEVELOPMENT

 

Seasonality
Tokmanni's business is subject to seasonality, which results in fluctuations in Tokmanni's net working capital within the financial year, and has a significant effect on Tokmanni's revenue, results of operations and cash flows. Historically, Tokmanni's revenue, profitability and cash flows have been lowest in the first quarter and highest in the fourth quarter as a result of Christmas sales.

Revenue and results
Tokmanni's revenue grew by 3.3% to EUR 158.3 million (153.3) during the review period and growth was well above the Finnish non-grocery market, which declined by 8.5% according to FGTA statistics. Tokmanni's growth was driven by the like-for-like growth of 0.3% and by revenue growth from opened new and relocated stores in 2015.  The like-for-like growth was mainly driven by an increased number of items per basket, which is in line with Tokmanni's strategy to provide a strong in-store experience to its customers. 

The adjusted gross profit for the first quarter totaled EUR 52.5 million (50.3), or 33.1% (32.8). The improvement was mainly driven by Tokmanni's improvements relating to sourcing.

January-March 2016 operating expenses totaled EUR 51.3 million (50.9). The increase in operating expenses was mainly attributable to the new stores opened in 2015.  

The first quarter adjusted EBITDA developed according to expectation and improved to EUR 2.2 million (1.8). Adjustments totaled EUR 1.1 million (1.1) relating to currency derivatives and electricity derivatives. First quarter 2015 adjustments relate to currency and electricity derivatives as well as brand harmonization costs. Adjusted operating profit totaled EUR -1.7 million (-1.9). Operating profit (EBIT) amounted to EUR -2.7 million (-2.9).

Financial expenses for the period totaled EUR -5.2 million (-5.4). In connection with the IPO Tokmanni repaid the shareholder loans, which in 2015 accrued EUR 6.9 million of interest expenses. In addition, the company has also refinanced its loans from financial institutions with lower interest rates than its prior outstanding debt. In 2015, interest expenses of loans from financial institutions amounted to EUR 10.2 million. As a result of these measures, Tokmanni expects that its financial expenses going forward will be significantly reduced compared to previous years.

Income taxes amounted to EUR +1.7 (+1.6). The net result for the financial period amounted EUR -6.2 million (-6.6). Earnings per share amounted to -0.14 euros (-0.30).

Store network development
During the first quarter 2016 no new stores were opened, which was in line with Tokmanni's plans. To date, Tokmanni has finalized the agreements for the relocation of two stores and the opening of one new store in 2016. Negotiations are on-going for five additional new or relocated stores with the target to increase the amount of net new selling area in 2016 by approximately 10,000 square metres, translating into approximately 5 new or relocated stores.

TOKMANNI'S SHORT-TERM OUTLOOK REITERATED

Tokmanni repeats its short-term outlook published in the listing prospectus:

Tokmanni expects the weak economic conditions to continue or to improve slightly in 2016 which will continue to have an effect on the retail market in Finland where the competition is expected to remain high in 2016. Tokmanni predicts its revenue to grow based on revenue of like-for-like stores, which will remain at the level of the previous year, and on the revenue growth from opened new and relocated stores in 2015 and 2016. Tokmanni will continue the focused development of its business to improve its competitiveness and profitability. Tokmanni's target in 2016 is to increase the amount of net new selling area by approximately 10,000 square metres, and from 2017 onwards by approximately 12,000 square metres annually, translating into approximately five new or relocated stores. Tokmanni's total capital expenditures are in line with previous years.

IR CALENDAR

Tokmanni publishes shorter business reviews for the first and the third quarter of the year and a comprehensive interim report for the reporting period January - June 2016. The reporting dates are:

  • January-June 2016 interim report will be published on August 10th
  • January-September 2016 Business Review will be published on October 25th

Mäntsälä, Finland 4th of May 2016

Heikki Väänänen
Tokmanni Group Corporation

Tokmanni in brief

Tokmanni is the largest general discount retailer in Finland measured by number of stores and revenue. In 2015, Tokmanni's revenue was EUR 755 million and on average it had approximately 3,200 employees. Tokmanni is the only nationwide general discount retailer in Finland, with 156 stores across Finland as at 31 December 2015.

Distribution:

NASDAQ Helsinki

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About Us

Tokmanni is the largest general discount retailer in Finland measured by number of stores and revenue. In 2017, Tokmanni’s revenue was EUR 797 million and on average it had approximately 3,200 employees. Tokmanni is the only nationwide general discount retailer in Finland, with 175 stores across Finland as at 31 December 2017.

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