Tokmanni Group Corporation: Second quarter revenue grew 1.9%
Tokmanni Group Corporation Half Year financial report 9 August 2017 8.30 am EECT
TOKMANNI GROUP: SECOND QUARTER REVENUE GREW 1.9%
This release is a summary of Tokmanni's Half Year financial report 2017. The complete report is attached to this release as a pdf-file.
SECOND QUARTER HIGHLIGHTS
- Revenue grew 1.9% to EUR 196.0 million (192.4)
- Like-for-Like revenue declined -1.9%
- According to Tokmanni's calculations the impact from the exceptionally cold spring and the delayed summer was more than -1%
- 5 net new and 1 relocated store opened, selling space increased by approximately 9,700 square meters in total
- Adjusted gross profit totaled EUR 66.8 million (67.1), an adjusted gross margin of 34.1% (34.9%). The decrease was primarily due to the sales mix and campaigning
- Adjusted EBITDA totaled EUR 11.6 million (15.2), 5.9% of revenue (7.9%)
- Adjusted EBIT totaled EUR 8.1 million (11.4), 4.1% of revenue (5.9%)
- Cash flow from operating activities amounted EUR 18.8 million (23.6)
- Earnings per share at last year's level 0.08 euros (0.08)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-JUNE 2017
- Revenue grew 0.6% to EUR 352.6 million (350.6)
- Like-for-Like revenue declined -2.7%
- 6 net new and 2 relocated stores opened, selling space increased by approximately 12,300 square meters in total
- Adjusted gross profit totaled EUR 116.0 million (119.6), an adjusted gross margin of 32.9% of revenue (34.1%)
- Adjusted EBITDA totaled EUR 10.1 million (17.4), 2.9% of (5.0%)
- Adjusted EBIT totaled EUR 2.9 million (9.8), 0.8% of revenue (2.8%)
- Cash flow from operating activities totaled EUR -19.1 (8.3)
- Earnings per share at last year's level, -0.04 euros (-0.04)
TOKMANNI'S OUTLOOK FOR 2017 REMAINS UNCHANGED
Tokmanni expects revenue growth for 2017 based on the revenue from new stores opened in 2016 and 2017. Revenue of like-for-like stores is expected to remain at the level of the previous year. Group profitability (adjusted EBITDA%) is expected to decrease from last year's level.
TOKMANNI'S INTERIM CEO HARRI SIVULA: SECOND QUARTER REVENUE GREW 1.9%
" As communicated in June, the exceptionally cold spring and the delayed summer negatively affected our sales. Even in May we had several days with snow all over Finland, but in June the weather improved. As a result, trading picked up and our second-quarter revenue grew by 1.9% on the previous year. As we predicted, our Like-for-Like sales and profitability, however, deteriorated from the previous year's high level. The weakening of profitability was partly affected also by the exceptionally high number of stores opened this year.
It is important to remember that due to the seasonal nature of our business, the sales and profitability of the second half of the year are generally stronger than the beginning of the year and that seasons are generally less weather dependent at the end of the year than at the beginning of the year. Nevertheless, we can't be satisfied with the 2017 progress so far and we further intensified our action already in the spring to improve our Like-for-Like sales and profitability, with even more emphasis on our pricing strategy, campaigning and by developing our assortment. This work continues. The seasons are very important to us and we will continue to invest heavily in them. However, we are investing more and more in the sales of less weather dependent private labels. We continue to develop our assortment to continuously provide customers with interesting products and stock lots between seasons. At the same time our strict cost control continues. The shelf availability issues, which we experienced in the spring following the implementation of the new assortment management tool, have now been solved and the tool will in the future support among others our campaigning work.
The recovery of the Finnish economy has been faster than expected in 2017 but economic growth is not yet fully reflected in the non-grocery market. In 2017, the purchasing power of consumers is not predicted to be strengthened, but the growth in private consumption will be supported by, among others increased employment and high consumer confidence, and due to that, we forecast a slight recovery in the non-grocery market as well in 2017.
I am very pleased with Mika Rautiainen's appointment as our new CEO. Mika's competence and capabilities will bring us significant added value in the implementation of our strategy and in further developing our strong market position. Tokmanni has a strong market position, a clear strategy and strategic goals. We will continue our determined work towards becoming Finland's leading, modern, omni-channel discount retailer."
KEY FIGURES
| 4-6/2017 | 4-6/2016 | Change% | 1-6/2017 | 1-6/2016 | Change% | 1-12/2016 | |
| Revenue, MEUR | 196.0 | 192.4 | 1.9% | 352.6 | 350.6 | 0.6% | 775.8 |
| Like-for-like revenue development, % | -1.9 | -2.7 | -0.1 | ||||
| Number of baskets, M | 11.7 | 11.4 | 3.1% | 21.5 | 20.8 | 3.4% | 44.7 |
| Gross profit, MEUR | 65.6 | 67.8 | -3.2% | 114.3 | 119.5 | -4.3% | 268.4 |
| Gross margin, % | 33.5 | 35.2 | 32.4 | 34.1 | 34.6 | ||
| Adjusted gross profit, MEUR | 66.8 | 67.1 | -0.5% | 116.0 | 119.6 | -3.0% | 267.9 |
| Adjusted gross margin, % | 34.1 | 34.9 | 32.9 | 34.1 | 34.5 | ||
| Operating expenses | -55.8 | -52.2 | 6.9% | -108.9 | -103.5 | 5.2% | -207.4 |
| Adjusted operating expenses | -56.0 | -52.7 | 6.3% | -107.6 | -103.7 | 3.7% | -208.5 |
| EBITDA, MEUR | 10.7 | 16.4 | -34.9% | 7.1 | 17.5 | -59.6% | 64.3 |
| EBITDA, % | 5.4 | 8.5 | 2.0 | 5.0 | 8.3 | ||
| Adjusted EBITDA, MEUR | 11.6 | 15.2 | -23.8% | 10.1 | 17.4 | -42.0% | 62.8 |
| Adjusted EBITDA, % | 5.9 | 7.9 | 2.9 | 5.0 | 8.1 | ||
| Operating profit (EBIT), MEUR | 7.2 | 12.6 | -42.8% | -0.1 | 9.9 | -100.7% | 49.2 |
| Operating profit margin EBIT, % | 3.7 | 6.6 | 0.0 | 2.8 | 6.3 | ||
| Adjusted EBIT, MEUR | 8.1 | 11.4 | -28.8% | 2.9 | 9.8 | -69.8% | 47.7 |
| Adjusted EBIT, % | 4.1 | 5.9 | 0.8 | 2.8 | 6.1 | ||
| Net financial items, MEUR | -1.4 | -7.2 | -79.9% | -2.8 | -12.3 | -77.4% | -15.2 |
| Net capital expenditure, MEUR | 0.0 | 1.6 | -99.6% | 1.5 | 3.0 | -48.5% | 9.8 |
| Net debt / adjusted EBITDA ** | 3.1 | 2.6 | 3.1 | 2.6 | 1.8 | ||
| Net cash from operating activities, MEUR | 18.8 | 23.6 | -19.1 | 8.3 | 62.5 | ||
| Return on capital employed, % | 2.2 | 3.8 | 0.0 | 3.0 | 14.5 | ||
| Return on equity, % | 3.4 | 3.4 | -1.7 | -1.6 | 18.1 | ||
| Number of shares, weighted average during the financial period (thousands)* | 58 869 | 54 095 | 58 869 | 49 322 | 54 095 | ||
| Earnings per share (EUR/share)* | 0.08 | 0.08 | -0.04 | -0.04 | 0.50 | ||
| Personnel at the end of the period | 3 534 | 3 503 | 3 534 | 3 503 | 3 224 | ||
| Personnel on average in the period | 3 312 | 3 286 | 3 184 | 3 191 | 3 209 |
* The amount of shares 2016 has been adjusted with the effects of the bonus issue ('share split') carried out 04/2016.
** Rolling 12 months adjusted EBITDA.
MARKET OUTLOOK
The Finnish economy has improved during 2017. Growth at the beginning of 2017 has been much faster than anticipated and the Ministry of Finance has raised its GDP growth forecast for 2017 to 2.4%.
The rapid increase in economic activity brought an upswing in employment during the spring of 2017 and as a consequence the unemployment rate is estimated to fall from approximately 8.8% at the end of 2016 to approximately 8.5% in 2017. The growth in the Index of wage and salary earnings is projected to remain low at around 0.2% due to the zero increase and cut in holiday pay included in the Competitiveness Pact (KiKy). Average earnings are projected to remain at the level of the previous year owing to the increase in working hours due to the Competitiveness Pact. At the same time the forecast for the current year's inflation is 1.0 per cent, calculated based on the consumer price index. Hence, the purchasing power of consumers is not predicted to increase in 2017. The private consumption is however expected to continue increasing in 2017 year boosted by rising employment and high consumer confidence.
Tokmanni expects that the Finnish non-grocery retail market will grow slightly in 2017 and that specialty stores and online stores will continue to strengthen their positions.
ANALYST AND PRESS BRIEFING
An analyst and press briefing, which will be hosted by interim CEO Harri Sivula and CFO Markku Pirskanen, will be held on the publication day at 10.00 am EEST (9.00 CET) at the Hotel Kämp, Paavo Nurmi cabinet (2nd floor), Kluuvikatu 2, Helsinki. The conference is in Finnish and will also be webcasted. An audiocast in English will be held at 11.15 am EEST (10.15 CET).
Both the live casts can be accessed via Tokmanni's website at ir.tokmanni.fi or through the link http://www.goodmood.fi/webcaster/accounts/tokmanni/live. On-demand versions of both webcasts will be available at ir.tokmanni.fi later during the same day.
The participants can also join a telephone conference that will be arranged in conjunction with the live webcasts. The participants are asked to dial in 5-10 minutes prior to starting time using the Participant Phone Number and Participant Passcodes below:
+358 (0)9 7479 0360 (Finnish callers)
+49 (0)69 2222 10763 (German callers)
+44 (0)330 336 9401 (UK callers)
+1 719 325 2238 (US callers)
Participant code: 946037
For further information, please contact:
Harri Sivula,
Chairman of the Board
Tel. +358 50 656 92
Harri.sivula@tokmanni.fi
Markku Pirskanen
CFO
Tel. +358 20 728 7390
markku.pirskanen@tokmanni.fi
Joséphine Mickwitz, Head of IR and Communications
tel. +358400784889
mail: josephine.mickwitz@tokmanni.fi
Tokmanni in brief
Tokmanni is the largest general discount retailer in Finland measured by number of stores and revenue. In 2016, Tokmanni's revenue was EUR 776 million and on average it had approximately 3,200 employees. Tokmanni is the only nationwide general discount retailer in Finland, with 162 stores across Finland as at 31 December 2016.
Distribution:
Nasdaq Helsinki
Key Media
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