MIDSONA - INTERIM REPORT JANUARY-SEPTEMBER 2019
Acquisition-intensive quarter with strong underlying growth
July–September 2019 (third quarter)
- Net sales amounted to SEK 765 million (773), of which the concluded Alpro sales assignment was SEK 2 million (71).
- Growth for the prioritized brands was 11.7 percent.
- EBITDA amounted to SEK 77 million (68) before items affecting comparability, corresponding to a margin of 10.1 percent (8.8).
- Profit for the period was SEK 35 million (32), corresponding to earnings per share of SEK 0.77 (0.70) before and after dilution.
- Free cash flow amounted to SEK 19 million (96).
- Midsona acquired Eisblümerl Naturkost GmbH in Germany and Ekko Gourmet AB in Sweden.
- Midsona entered an agreement to acquire Alimentation Santé SAS, with a leading position in organic and plant-based food in France and Spain.
January–September 2019 (nine months)
- Net sales amounted to SEK 2,256 million (2,097).
- EBITDA amounted to SEK 209 million (182) before items affecting comparability, corresponding to a margin of 9.3 percent (8.7).
- Profit for the period was SEK 62 million (96), corresponding to earnings per share of SEK 1.35 (2.09) before and after dilution.
- Free cash flow amounted to SEK 52 million (132).
Significant events following the end of the report period
- Midsona took possession of the acquisition of Alimentation Santé SAS on 1 October.
- The Board of Directors of Midsona decided on a new share issue with preferential rights for existing shareholders of around SEK 600 million.
- Midsona acquired 51 percent of Paradiset EMV AB, a collaborative arrangement together with the food chain Paradiset.
Comment by the CEO
A strong quarter in terms of earnings
In the third quarter, Midsona took market shares and sales for our eight prioritised brands increased by a solid 12 percent. The sales for the Group as a whole continued, however, to be impacted negatively by the concluded distribution assignment for Alpro. In total, it yielded more or less unchanged sales (–1 percent). In addition to this, there was a raw material shortage of peanuts and almonds, which mainly affected the German market and the newly acquired Eisblümerl. In terms of earnings, we had a strong quarter, despite continued headwind from the exchange rate trend. This was mainly attributable to the strong sales growth for our prioritised brands, furthermore our Nordic cost-savings programme began to provide results.
Strong growth for our prioritised brands
By focusing our resources on our strongest brands, we feel that we have the best conditions to reach our financial targets in the long term and, during the quarter, it was pleasing to see our market investments having an effect. Sales for our eight prioritised brands increased sequentially during the year, from a growth of 6 percent in the first quarter and 10 percent in the second quarter to 12 percent in the third quarter. Friggs continued to perform the best, but our organic brands also made strong contributions and improved growth from the restrained first six months.
Focus on acquisitions and integration
The third quarter was very intensive in terms of acquisitions and was dominated by the acquisition of Alimentation Santé, a leading actor in organic and plant-based food in France and Spain. The acquisition constitutes a strategically important platform for our continued European expansion at the same time that it strengthens our position in organic and plant-based food. We see major development opportunities, mainly in plant-based meat alternatives, and through this acquisition, we have gained access to production capacity for this, which we also intend to use in other parts of the Group. The acquisition was announced at the beginning of the quarter and concluded after the end of the quarter on 1 October 2019. An intensive integration effort has thereafter begun.
At the beginning of the quarter, Eisblümerl, one of Germany’s leading producers of organic nut, nougat and chocolate spreads, was also acquired. It is pleasing that we have already seen a good return for Eisblümerl in the existing structure in Davert. These companies are good examples of our strategy: an initial platform acquisition (Davert) that is then supplemented with an add-on acquisition (Eisblümerl).
The same logic applies to the acquisition of the Swedish company Ekko Gourmet, announced at the beginning of the quarter. Ekko Gourmet is specialised on organic and vegan food and can use Midsona’s strong distribution network. The integration has gone well, and the acquisition has also developed well in its new environment.
Upcoming integration work and impending new share issue
Overall, we are pleased about the underlying sales trend for our prioritised brands during the quarter and also about our Nordic cost-savings programme beginning to yield results. However, we still have the largest effects of the programme ahead of us, which bodes well for upcoming quarters. During the quarter, we devoted a lot of time to concluding the acquisitions we recently presented, and, in the current quarter, we expect considerable focus to be on integrating them into the Midsona Group.
The extensive confidence that many existing shareholders have shown for our impending new share issue, which is being done to finance the acquisition of Alimentation Santé, is also pleasing. A new long-term financing agreement that provides conditions for continued growth was also announced during the quarter.
We will continuously work further to find new platform and add-on acquisitions. Through the acquisitions made to-date, we have earnestly committed to consolidating the fragmented European market for products in health and well-being. I am confidently and inquisitively looking forward to our exciting future and would like to take this opportunity to thank colleagues, Board members and shareholders for their strong confidence in Midsona.
President and CEO
This is information of the type that Midsona AB is obligated to make public in accordance with the EU Market Abuse Regulation. The information was submitted for publication through the agency of Lennart Svensson on 23 October 2019 at 8 am CET.
For more information, please contact MD and CEO Peter Åsberg, telephone 46 (0)730 26 16 32, or CFO Lennart Svensson, telephone 46(0)767 74 33 04
Midsona develops and markets strong brands in health and well-being, with products that help people to a healthier and more sustainable life. Midsona has annual sales of about MSEK 2,852 (2018). The Midsona share (MSON) is listed on NASDAQ OMX Stockholm, Mid Cap. For further information: www.midsona.com.