Interim report January - September 2023
Continued improvements and additional initiatives to further increase profitability
July 1 - September 30, 2023
- Net sales increased 13 percent to SEK 4,124 M (3,660). Organic growth was 8 percent. Net sales were positively impacted by 6 percent due to currency effects.
- EBIT increased to SEK 300 M (235) and the EBIT margin to 7.1 percent (6.3). EBIT was positively impacted by items affecting comparability of SEK 33 M (-22) during the quarter.
- Adjusted EBIT amounted to SEK 292 M (281) and the adjusted EBIT margin to 6.9 percent (7.5).
- Earnings per share, before and after dilution, increased to SEK 3.11 (2.23).
- Cash flow from operating activities amounted to SEK 599 M (473).
- During the period, SEK 500 M was repaid of the Group’s interest-bearing liabilities. At the end of the period, the debt/equity ratio had decreased to 2.6 compared with 3.2 on September 30, 2022.
January 1 - September 30, 2023
- Net sales increased 22 percent to SEK 12,389 M (10,172). Organic growth was 8 percent. Net sales were positively impacted by currency effects of 4 percent.
- EBIT increased to SEK 804 M (610) and the EBIT margin to 6.3 percent (5.9). EBIT was positively impacted by items affecting comparability of SEK 92 M (-48) during the period.
- Adjusted EBIT amounted to SEK 788 M (746) and the adjusted EBIT margin to 6.2 percent (7.2).
- Earnings per share, before and after dilution, increased to SEK 7.57 (6.07).
- Cash flow from operating activities amounted to SEK 1,113 M (722).
- MEKO presented adjusted financial targets and priorities in conjunction with its capital markets day on March 21, 2023.
CEO comments:
Continued improvements and additional initiatives to further increase profitability
MEKO reported a stable third quarter with a strong trend in several of our core markets. Sales grew steadily, operating profit improved and we have continued to strengthen our financial position. But we also want to increase our margins. Accordingly, we are now launching an overarching initiative to create sustained higher profitability.
Strong growth supported by robust initiatives in Sweden and Norway
Our business in Sweden and Norway grew significantly during the quarter, largely thanks to robust initiatives targeting important customer groups. It is clear that we have a firmly rooted position in a market where demand is stable regardless of economic climate. The need for functioning and safe vehicles remains constant, regardless of whether they run on electricity, petrol or diesel. Many people also understand that it is more sustainable – for the environment and the wallet – to carefully maintain their cars instead of buying a new one, considering the major climate impact caused in the manufacturing stage.
We grew organically in all markets, despite the effects of a weaker economy. Overall, net sales increased by 13 percent, with organic growth of 8 percent. The main challenges to grow organically can be seen in Poland, the Baltics and Denmark, while the trend was better in Sweden, Norway and Finland.
Increase in operating profit according to plan
MEKO has grown with favorable profitability for some time now, which forms the basis of our strategy. As planned, operating profit is continuing to improve. This is true even when adjusted for the property sale carried out in Denmark, which had a positive impact on operating profit of SEK 37 M for the quarter. The adjusted EBIT margin is, on the other hand, slightly lower year-on-year. This is partly explained by the fact that our price adjustments have not fully offset higher purchasing prices and unfavorable exchange rates. But we see potential to further improve profitability, and are now planning robust measures in addition to those already implemented in Norway and Denmark.
Initiative for a stronger and more profitable MEKO
The entire company is now ramping up through an initiative we call “Building a stronger MEKO”. The initiative will include efficiency enhancements, cost savings and strategic investments. Taken together, this will yield a clear and long-term positive effect on the adjusted EBIT margin. This initiative is a priority for us, and we will present further details at a later date. The ultimate goal is clear: to increase MEKO’s profitability and our vanguard position in the independent automotive aftermarket in northern Europe – and in parallel lead the industry’s transition to increased sustainability.
Strong cash flow and lower debt/equity ratio
We again reported strong cash flow for the quarter, which helped to further strengthen our financial position. At the end of the quarter, the debt/equity ratio had fallen to 2.6 times which is within the target range of 2-3 times. This provides us with security and flexibility.
As the market leader in Northern Europe, we have a strong position and we are well positioned to further extend our lead. I would also like to take this opportunity to thank all colleagues for their efforts during the past quarter.
Pehr Oscarson
President and CEO
This information is such information that MEKO AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above on November 9, 2023 at 07:30 CET. The interim report is published in Swedish and English. The Swedish version is the original version and has been translated into English.