Fondia Plc: Profitability control win despite growth challenges

Fondia Plc

Company release

22.8.2024 at 8.30 a.m. EEST

Fondia Plc Group: Half-yearly Financial Report, January 1 – June 30, 2024 (Unaudited)  

FINANCIAL DEVELOPMENT IN BRIEF

Figures in parentheses refer to the corresponding period of the previous year, unless otherwise stated.

April–June 2024 summary:

• Net sales EUR 6.7 million (6.9), a change of –3.0%
• EBITDA EUR 0.6 million (0.7)
• EBITDA-% 8.2% (9.8)
• Comparable EBITDA EUR 0.6 million (0.7) *
• Comparable EBITDA-% 9.5 (9.8) *
• Operating profit (EBIT) EUR 0.3 million (0.5)
• Operating profit-% (EBIT-%) 4.9% (7.0)
• Comparable operating profit (EBIT) EUR 0.4 million (0.5) *
• Comparable operating profit (EBIT-%) 6.1% (7.0) *
• Profit for the period EUR 0.2 million (0.4)
• Comparable profit for the period EUR 0.3 million (0.4)
• Personnel (period average FTE) 162 (163), a change of –0.9%

*Items affecting comparability of 84 thousand euros have been recorded in April–June 2024. All non-recurring expenses are related to the change of the Swedish Managing Director and organisational restructuring. No non-recurring expenses were recorded in the comparative period.

January–June 2024 summary:

• Net sales EUR 13.8 million (13.5), a change of 1.8%
• EBITDA EUR 1.3 million (1.2)
• EBITDA-% was 9.1% (8.9)
• Comparable EBITDA EUR 1.3 million (1.2) *
• Comparable EBITDA-% 9.7% (8.9) *
• Operating profit (EBIT) EUR 0.8 million (0.8)
• Operating profit-% (EBIT-%) 6.0% (6.2)
• Comparable operating profit (EBIT) EUR 0.9 million (0.8) *
• Comparable operating profit (EBIT-%) 6.6% (6.2) *
• Profit for the period EUR 0.6 million (0.6)
• Comparable profit for the period EUR 0.7 (0.6) *
• Continuous monthly invoicing accounted for 44% (46) of net sales
• Personnel (period average FTE) was 169 (160), a change of 5.6%

* Items affecting comparability of EUR 84 thousand have been recorded in January–June 2024. All non-recurring expenses relate to the change of the Swedish Managing Director and organisational restructuring. No non-recurring charges were recorded in the comparative period or in the financial year 2023.

KEY FIGURES

* Items affecting comparability of EUR 84 thousand have been recorded in January–June 2024. All non-recurring expenses relate to the change of the Swedish Managing Director and organisational restructuring. No non-recurring charges were recorded in the comparative period or in the financial year 2023.

OUTLOOK FOR 2024 (unchanged)

Fondia expects growth, with net sales for 2024 of EUR 27–29 million and an operating profit of 7–10%. The market situation remains uncertain, and this has weakening impact on the ability to assess future business development and the factors affecting it.

CEO HARRI SAVOLAINEN:

"In the first half of the year, we have continued to develop the customer experience and to manage our operations for results, in addition to providing high-quality customer service and employee well-being. Our goal is to ensure not only good customer and employee experience, but also profitable growth and the development of commercial capabilities by leveraging technology and sharpening our operations. 

In April–June, the Group’s net sales decreased by 3.0% compared to the comparison period, which was not in line with our expectations. Net sales for April–June decreased by 0.4% in Finland and 18.3% in Sweden compared to the comparison period. In the Baltics, net sales in April–June increased by 47.7% compared to the comparison period. The market situation had a weakening effect on our legal services sales and also contributed to customer churn, especially in Finland and Sweden. The Baltics continued to grow well despite the market situation.

In the January–June reporting period, the Group's net sales increased by 1.8% compared to the comparison period. In the reporting period, net sales increased by 5.5% in Finland and 46.7% in the Baltics compared to the comparison period. In our Swedish business area, net sales decreased by 15.7% compared to the comparison period. Despite the difficult market situation, demand for legal advice also increased during the reporting period, for example in the ESG area and in employment law. In the reporting period January–June, all ongoing services represented 44% (46%) of Group net sales. Total invoicing for Legal Department Service (LDaaS) customers and other ongoing services customers represented 76% (75) of total net sales. In Sweden, all ongoing services represented 45% (37) of net sales and in the Baltics 29% (27). In Finland, all ongoing services represented 43% (47) of net sales. International net sales represented 23% (25) of the Group's total net sales.

The Group's comparable operating profit percentage (EBIT%) for April­–June was 6.1% (7.0) and for January–June the comparable operating profit percentage (EBIT%) was 6.6% (6.2). At the beginning of the year, we sharpened our operational and cost management and inflation management to ensure our profitability performance. We were moderately successful in these areas, but our sales performance in the reporting period was not sufficient to support a better EBIT margin development. Even though the review period was a slight disappointment in terms of turnover, we secured the development of the operating profit with our measures.

During the first half of the year, we launched a harmonised and updated brand identity to mark the 20th anniversary of our company and to better support our visibility across all our business areas as one Fondia. In addition, during the reporting period, we introduced Microsoft Copilot (AI) while continuing to evaluate other AI applications to support our value creation for our customers. For the MyFondia platform, we focused on developing Legal Review and Legal Plan functionalities during the reporting period, which should support our customer work for the rest of the year. The MyFondia platform aims to create a single digital service channel and experience.

Monica Söderlund, Managing Director of the Group's Swedish subsidiary, left the company at the end of the reporting period and a search for a new Managing Director was launched. After the reporting period, we announced in a company release on July 3, 2024, that Emma Ridderstad has been appointed Managing Director of Fondia Plc's Swedish subsidiary and member of the Group Management Team as of August 12,2024.

We will continue to manage our operations effectively, focusing on the things and actions that are relevant to the business: legal customer work, sales, added value creation for our customers and employee well-being, and profitability improvement of the business. We will closely monitor possible changes in the market situation. When necessary, we respond quickly 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 Half-yearly Financial Report for January–June 2024 on Thursday August 22, 2024, at 8.30 a.m. EEST.

The Half-yearly Financial Report and a video of the CEO’s presentation as well as the presentation material will be available later on the company’s website https://investors.fondia.com/fi/en/releases-and-publications/reports-and-presentations

An investor call will be held on Thursday August 22, 2024, at 10.00 a.m. EEST. The investor call will be held in Finnish and can be accessed online by registering at the address https://fondia.videosync.fi/2024-h1-tulosjulkistus/register.

Helsinki, August 22, 2024

Fondia Plc

Board of Directors

For further information, please contact:

Group CEO Harri Savolainen
tel. +358 40 502 1919

Certified Adviser Aktia Alexander Corporate Finance Oy
tel. +358 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 2023 were EUR 26.1 million. Fondia employs around 190 people.

www.fondia.com

Distribution:

Nasdaq Helsinki Ltd
Key media