Fondia Plc: Business Review July–September 2023 – challenges in growth and productivity
Fondia Plc
Company release
26.10.2023 at 8.30 a.m. EEST
The company complies with the Securities Markets Act half-yearly reporting and publishes business reviews for the first three and nine months of the year, presenting key information on the company's financial performance. The financial information presented in this Business Review is unaudited.
Financial development in July – September and in January – September 2023
| GROUP | 7–9/2023 | 7–9/2022 | 1–9/2023 | 1–9/2022 |
| Net sales, MEUR | 5.3 | 5.5 | 18.9 | 17.7 |
| Change in net sales % | –2.8% | 19.1% | 6.4% | 16.2% |
| EBITDA, MEUR | 0.1 | 0.6 | 1.3 | 1.8 |
| EBITDA % | 1.8% | 11.0% | 6.9% | 10.2% |
| Operating profit EBIT, MEUR | –0.1 | 0.4 | 0.7 | 1.3 |
| Operating profit EBIT % | –2.1% | 7.4% | 3.8% | 7.2% |
| Number of employees FTE, period average | 169 | 148 | 163 | 146 |
| Number of employees FTE, change in period average % | 14.2% | 5.7% | 11.6% | 9.8% |
Outlook for 2023 (specified 26.10.2023)
In its financial statement company release of 16 February 2023 and repeated in its Q1 result release and half-year financial report, Fondia specifies its outlook for 2023 within the previously published range.
Fondia expects growth, with net sales for 2023 of EUR 26–27 million and an operating profit of 7–8%. The market situation remains uncertain, and this has weakening impact on the ability to assess future business development and the factors affecting it.
Previous outlook for 2023 (published 16.2.2023)
Fondia expects to grow and year 2023 net sales to be in EUR 25–28 million euros range as well as the operating profit to be 7–10%. The market situation continues to be uncertain, and this has a weakening impact on the ability to assess future business developments and the factors affecting it.
CEO Harri Savolainen:
“At the beginning of the financial year, we broadened our focus beyond sales, customer work and people to include clearer operational performance management and commercial capability development. Our goal is to ensure profitable growth, in addition to good customer and employee experience. We also want to expand our customer base in all business areas to ensure growth. We have been successful in managing our customer and employee experience, but not yet successful enough in driving our performance in terms of growth and profitability.
The Group's net sales for the July–September period decreased by –2.8% compared to the comparison period. The decline in net sales was due to the poor development of net sales in Finland and Sweden. Net sales in Finland and Sweden fell by –2.6% and –5.4% respectively compared to the comparison period. The development of the Swedish krona exchange rate affected the Swedish company’s net sales, which increased by +4.8% in krona during the reporting period. Baltic net sales increased by 13.6% compared with the comparison period, to which we are pleased. The poor net sales performance was driven by a slightly higher than normal customer changes in Legal Department Service (LDaaS), as well as increased competition. It is worth noting that the comparison period’s net sales were strengthened by a few large transaction assignments.
The Group's operating profit margin (EBIT %) decreased in the July–September period and was –2.1% (7.4). The EBIT margin decrease was due to the decline in net sales and productivity as well as front-loaded recruitment and the impact of inflation on our cost structure. Our financial development for the reporting period was an unfortunate disappointment for us in an otherwise decent year.
There were many good things behind the financial results for the reporting period. Customer satisfaction and employee satisfaction remain at an excellent level. Our customer satisfaction survey (NPS) score was 61 (64) and our employee satisfaction survey (eNPS) score was 48 (50). For the third consecutive year, we were awarded the Future Workplaces certificate in recognition of our exceptionally high level of employee understanding and satisfaction. Together, these confirm the effectiveness of our proactive service concept and our employee value proposition, which are a good basis for continuing to manage our operations for results.
During the reporting period, we successfully completed our first customer projects supporting more advanced AI deployments. We also recruited additional technological capabilities to better meet the growing customer demand in the Legal Tech & Design. In addition, we complemented our tax advisory services in the real estate taxation during the reporting period. We also acquired Intels UAB, a small Lithuanian company specializing in intellectual property services, to expand our service offering and customer base, particularly in the Baltic market. In addition, the Legal Health Check and Fondia Insights functionalities previously launched on the MyFondia platform have been well received by our existing and potential customers. We will continue to develop the functionalities of the MyFondia platform and phase in new features as planned, with the aim of creating a single digital service channel and experience.
In line with our strategy, we continue to systematically improve our performance. We are also monitoring the potential impact of the fragile economic situation and the escalated geopolitical situation on the operating environment and on our own operations. We will respond to changes as appropriate, without compromising the quality of our customer service or the good customer and employee experience."
Investor communications
Fondia will publish its July–September business review on Thursday 26 October 2023 at 8.30 a.m. EEST. The business review and a video of the CEO's presentation as well as presentation material will be available later on the company's website at https://investors.fondia.com/fi/en/releases-and-publications/reports-and-presentations.
An investor call will be held on Thursday 26 October 2023 at 10.00 a.m. EEST. The investor call will be held in Finnish and can be accessed online by registering at https://fondia.videosync.fi/liiketoimintakatsaus-q3-2023/register.
For further information, please contact:
CEO Harri Savolainen
tel. +358 (0)40 502 1919
Certified Adviser Aktia Alexander Corporate Finance Oy
tel. +358 (0)50 520 4098
Fondia in brief
Fondia solves the legal needs of companies by combining the best services from internal legal departments and law firms. Fondia operates in Finland, Sweden, Estonia, and Lithuania, and the Group’s net sales in 2022 were €24.6 million. Fondia employs over 190 people.
Distribution:
Nasdaq Helsinki Ltd
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