Interim Report January-March 2014
Continued growth for prioritised brands
JANUARY-MARCH 2014 (FIRST QUARTER)
• Net sales amounted to SEK 241 million (242).
• The gross margin amounted to 45 percent (46).
• Operating profit amounted to SEK 16 million (16).
• Profit for the period amounted to SEK 12 million (13).
• Earnings per share, before and after dilution, amounted to SEK 0.53 (0.57).
• Cash flow from continuing operations amounted to SEK 7 million (34).
• A new financing agreement was signed with a maturity of three years.
Comment by the CEO
The first quarter of the year was in line with the corresponding quarter in 2013 in terms of both sales and operating profit. Although the Group’s prioritised brands continued to develop well. Despite this, there was no growth in the quarter. In the first quarter of 2013, Biopharma Norsk Tran was launched in Norway generating considerable sales, but this year, we had no equivalent initiative. We have also continued to trim loose ends in our portfolio entirely in line with our strategy of focusing on our prioritised brands. The weakening of the Norwegian krona (NOK) has also had a negative impact on sales.
Midsona’s prioritised brands form the foundation of the company’s operations. Friggs, our largest brand, showed two-figure growth for the quarter. New products and a strong marketing programme explain the increase. Dalblads, which was acquired at the end of 2012, continued to grow. During the autumn of 2013, the brand was launched among FMCG retailers, causing growth to accelerate. We have made significant investments in the brand, which has burdened earnings, with the ambition of establishing a strong market position. By early 2014, Dalblads had already become a market leader in the sports nutrition category among FMCG retailers. Tri Tolonen, our flagship in nutritional supplements in Finland, showed growth once more. Under the Miwana brand, we have developed and launched a number of new products. Miwana achieved two-figure growth during the quarter. We see clearly increased interest in our superfoods concept and thus in our Supernature brand, both in Norway, the brand’s principal market, and in Sweden where it was recently launched. MyggA is a seasonal product for which active sales efforts do not start until the second quarter. Consequently, comparisons are not relevant. Of our prioritised brands, the only one that did not increase its sales in the first quarter was Naturdiet. Despite increasing our market share, sales decreased. The market for weight control products remains challenging and we have invested considerable effort into making Naturdiet more relevant to consumers. In the second quarter, we will be launching an upgraded product design and a number of new products.
In the quarter, earnings improved in the Norwegian and Finnish business areas. In Norway, the volumes from the launch of Norsk Tran were compensated for by good growth in other brands with higher gross margins. In Finland, operating profit improved as a consequence of good cost control, among other things. Sweden had an unfavourable product and channel mix, considerable market investments and increased expenses for key products, causing weakened earnings. Price increases previously announced to retailers and intended to offset increased expenses are expected to have an impact effective from the third quarter. During the quarter, a decision was also made to reorganise the Swedish operations with the purpose of improving market and sales processing while cutting costs in the long term.
During 2014, the intention is to continue focusing on building our core business. The ambition is to generate growth for our prioritised brands, to assume responsibility for selected licensed brands and, hopefully, to be able to implement further acquisitions. This will enable us to achieve our new financial targets and to realise our vision of becoming the leader in health and well-being in the Nordic region.
Peter Åsberg, President and CEO
For further information:
MD and CEO Peter Åsberg, +46 (0)730 26 16 32
This is information of the type that Midsona AB is obligated to disclose in accordance with the Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act. The information was published on April 29, 2014, 8 am.
Midsona holds a strong position in the Nordic market with own strong brands within diet and health, sports nutrition, cold remedies, superfood and hygiene. Midsona also sells a number of licensed internationally established brands. Our products are sold through grocery and convenience stores, pharmacies, health stores and internet. Midsona’s priority trademarks are: DALBLADS, FRIGGS, MIWANA, MYGGA, NATURDIET, SUPERNATURE and TRI TOLONEN. Midsona has annual sales of about MSEK 916. The Midsona share (MSON) is listed on NASDAQ OMX Stockholm, Small Cap. For further information: www.midsona.com