PRESS RELEASE–Func Food Group Q2 2018 Financial Report
Func Food Group has today published its Q2 2018 financial report. The report is available in English at http://www.funcfood.com/investors/?lang=en.
SUMMARY
Second quarter and year-to-date March 2018
- Consolidated Group revenues amounted to MEUR 9.8 (MEUR 10.0 in consolidated 2017).
- Revenues decreased by MEUR 0.3 or 2,6% in comparison to 2017.
- Consolidated Group EBITDA amounted to MEUR -0.8 (MEUR -0.1 in consolidated 2017).
- EBITDA decreased by MEUR 0.7 in comparison to 2017.
- EBITDA adjusted for items affecting comparability was MEUR -0.6 in 2018 and MEUR -0.1 in 2017 (reduction of MEUR 0.5).
In Q2 2018 the Group’s total revenue slightly decreased. However, both key brands FAST and Celsius were growing despite increased competition in pricing and new launches. In order to account for seasonal imbalances and strategic decisions to exit private label manufacturing, report also includes pro forma revenue growth comparisons without Freddy Store Ab and private label sales. In Q2 2018 pro forma net revenue was growing slightly.
Celsius revenues increased by MEUR 0.2 and FAST revenues by MEUR 0.1 vs. PY. The discontinuation of private label sales had a MEUR 0.1 impact in revenue vs. PY.
Revenue for Finland decreased 8,3% due to increased competition in puddings and higher amount of discount sales. The launch of new Muscle Series and two additional flavours for ROX bars increased sales from new launches. Finland’s revenue was still affected by exit from private labels.
In Sweden, Q2 net revenue increased by 5,1% vs. previous year in local currency SEK (excluding intercompany sales) and decreased by 0,8% in EUR. Excluding the Freddy business the quarterly net revenue in SEK was +9,8% and in EUR +3,6% vs. previous year. Sales increased despite Celsius faced increasing competition pressure.
The Group’s EBITDA and adjusted EBITDA were negative in Finland and Sweden. EBITDA decrease was result of decrease in sales and increased promotional pressure reflected in sales margin. Total sales margin-% was at 24,7% vs. 38,6% in Q2 2017, as the Group invested in promotional campaigns, and as cross-sales of the Group’s brands and new launches increased the number of SKU’s held in stock. This development impacted logistics expenses.
The Group’s commercial operations in Norway started during Q4 2017 and have been in an emerging phase in during 2018. However, the impact of the Norwegian business to the Group’s overall net revenue and EBITDA figures was at a low level.
The retail index for Sweden was negative (after a strong Q1) for Q2 with appr. -2%, bringing the 12-month rolling to +1.5%. In Finland the retail index was +4,2% including an increase of the retail price index by +2,3%).
The bondholders of the Group approved changes to the bond terms on January 15, 2018. The Group had proposed that Func Food Sweden Ab may convert up to 10.0 million euros of the originally 33.1 million, and at year-end 23.1 million euros of intra-group loan granted by Func Food Group Oyj into an equity instrument.
The Group had also proposed that the planned bond repayment of 4.5 million euros can be omitted in September 2018. At the same time, the Group proposed an increase in the amount of permitted financial leasing debt and a permission to use recourse factoring arrangements with large retail customers, where the credit risk remains with the Group.
The Group also proposed changes to the bond terms in relation to discontinuing the Freddy business operations and the possible merger of Finnish subsidiaries.
As a condition for the implementation of the changes, the Group arranged 3.0 million euros of additional funding from its shareholders between November 2017 and January 2018.
The Group is continuously evaluating options for refinancing the bond, which is due at 26thJune 2019.
The Group announced a reorganisation of business activities on February 19, 2018. One of the Group’s subsidiaries Func Food Finland Oy started co-operation negotiations, which ended on March 12, 2018. As a result of the negotiations, the job duties of ten employees will ended or changed, and the Group closed its office in Tampere at end of Q2 2018.
Total consolidated EBIT for the Group was MEUR -1.8 for the quarter (MEUR -1.1 in Q2 2017). The development of revenue and sales margin-% combined had a MEUR 0.6 negative impact on the EBIT line. Investments in marketing decreased by MEUR 0.7 and other operating expenses by MEUR 0.3, while personnel increased by MEUR 0.2 in the quarter vs. PY. Total depreciations and amortizations were in same level compared to Q2 2017.
Consolidated cash and cash equivalents on 30 June 2018 amounted to MEUR 0.4 (MEUR 1.3 in the beginning of the year). The Group’s net cash flow from operations in the quarter was MEUR 0.2 (YTD MEUR -1.3), mainly driven by aggressive inventory reduction, debt service costs and negative EBITDA. Net working capital in total was at a slightly higher level as in the beginning of the year.
Net cash flow from YTD investing activities was close to zero, and the Group had withdrawn shareholder loans in the amount of MEUR 0.7. Payments relating to financial leasing liabilities amounted to MEUR 0.2.
The outlook of the Group remains unchanged from previous quarters.
For further information please contact:
Robin Lybeck, CEO, Func Food Group Oyj
email robin.lybeck@funcfood.com
mobile +358 40 735 2464
Jani Partanen, CFO, Func Food Group Oyj
email jani.partanen@funcfood.com
mobile +358 40 518 3076.
The information contained in this press release is such information that Func Food Group Oyj is required to publish in accordance with the Swedish Securities Market Act (2007:528) and/or the Swedish Financial Instruments Trading Act (1991:980). The information was submitted for publication on 31 August 2018, at 6.00 CET.
Func Food Group Oyj, Mäkelänkatu 91, 00610 Helsinki, Finland. The board is resident in Helsinki. For further information about the company please visit http://www.funcfood.com/?lang=en.
Func Food Group Oyj