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Interim Report January–September 2019

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Q3 July–September 2019

  • Net sales increased by 16 percent to SEK 1,711 (1,470) million
  • EBITDA increased to SEK 253 (152) million
  • EBITA increased to SEK 153 (123) million
  • Organic EBITA growth was 4 percent
  • Impairment of intangible assets of SEK 328 million in the Consumer business area
  • Profit after tax amounted to SEK -225 (74) million. Adjusted profit after tax, excluding impairment of intangible assets of SEK 324 million after tax, was SEK 99 million
  • Earnings per ordinary share was SEK -2.00 (0.72). Adjusted earnings per ordinary share, excluding impairment of intangible assets of SEK 328 million, was SEK 1.01 

Period January-September 2019

  • Net sales increased by 18 percent to SEK 5,032 (4,252) million
  • EBITDA increased to SEK 618 (343) million
  • EBITA increased to SEK 319 (259) million
  • Organic EBITA growth was 5 percent
  • Impairment of intangible assets of SEK 328 million in the Consumer business area
  • Profit after tax amounted to SEK -166 (153) million. Adjusted profit after tax, excluding impairment of intangible assets of SEK 324 million after tax, was SEK 159 million
  • Earnings per ordinary share was SEK -1.68 (1.28). Adjusted earnings per ordinary share, excluding impairment of intangible assets of SEK 328 million, was SEK 1.31 

Events after the reporting period

  • Andreas Stenbäck took over as CFO of Volati AB (publ) on 1 October
  • Väggmaterial i Sverige AB was consolidated with effect from 2 October
  • During October, 1 million ordinary shares held by the Company were withdrawn. In addition, shares in subsidiaries were transferred to key individuals in Volati’s business units, both in accordance with the decision of the Extraordinary General Meeting on 30 September

COMMENTS FROM THE CEO

Continuation of good growth in sales and EBITA in Q3

Net sales increased by 16 percent to SEK 1,711 million and EBITA increased by 24 percent to SEK 153 million. Behind the figures are contributions from acquired companies and continuing good development for the existing operations. Organic EBITA growth was 4 percent. It is our assessment that the medium-term profit trend for two of Consumer’s business units, NaturaMed Pharma and me&i, does not measure up to our previous expectations of improved profitability. This has unfortunately resulted in impairment of goodwill and intangible assets of SEK 328 million in Q3.

Akademibokhandeln increased sales and earnings
The Akademibokhandeln business area continued its positive trend during Q3. Both sales and earnings improved compared with the same period the previous year. The business area experienced good demand in the core range and strong development in its non-book segment during the quarter. This, together with a continued focus on costs and margins, has had a positive impact on profitability. The Bokus e-commerce channel also continued the trend from Q2, increasing its sales volume while improving margins.

Stable quarter for the Trading business area
Throughout the year, the Trading business area has been challenged by the weaker krona, as most of the companies import their products. We are very pleased with how well the business area has managed to meet the challenge by working on both costs and price adjustments. We can confirm that demand for the business area’s products has remained good during the quarter.

Sales and earnings growth for the Industry business area
We are pleased with the performance of the business area, which has increased both its sales and earnings. However, the business area’s operations are subject to natural fluctuations in demand, as we also deal with project sales and other operations affected by seasonality. These fluctuations in demand have had a negative impact on earnings.

Impairment of goodwill and intangible assets in the Consumer business area
In Q3, we recognised a total impairment loss of SEK 328 million on goodwill and intangible assets in two of Consumer’s business units – NaturaMed Pharma and me&i. This was based on our assessment that the medium-term profit trend for the business units will be lower than our previous expectations. We continue to work closely with the business units on relevant measures. Both NaturaMed Pharma and me&i are profitable.

The vehicle inspection business in the Consumer business area had a good third quarter. Besikta has handled the effects of the rule changes introduced in 2018 very efficiently. In simple terms, the rules have extended inspection intervals from 12 to 14 months, which has had an adverse effect on the customer base for the entire sector. By working on staffing, costs and pricing, the business unit is now back to profitability in line with how it was before the change, with a strong market position.

Large inflow of potential acquisitions
During the quarter, we were able to welcome Väggmaterial AB into the Volati family. The acquisition, an add-on acquisition for Trading, broadens the business area’s offering to the Swedish building materials and paint retail sector. We have seen an increased inflow of potential acquisition candidates during the quarter. We have a strong brand in the acquisition market and are a good owner of companies in a range of sectors, notably in building materials and hardware. What is more, the number of companies seeking new owners has increased in the current phase of the economic cycle. It is vital for us to strike the right balance in terms of the acquisitions we should go for and the ones we should reject. The focus is, as always, on companies’ capacity for long-term earnings and value creation.

Good financial position and scope for acquisitions
As I mentioned at the start, the operations have performed well during Q3 and we continue to show a good financial position. Net debt to EBITDA ended the quarter at 2.2x, which is well within our target of net debt to EBITDA of no more than 3.0x. Due to seasonality, it is also important to remember that Q4 is normally Volati’s strongest quarter for earnings and cash flow. In other words, we have good financial scope to make further acquisitions when the right opportunities arise.

Mårten Andersson, President and CEO

Conference call

CEO Mårten Andersson and CFO Andreas Stenbäck will present the interim report in a conference call on 24 October at 15.00. The presentation will be conducted in Swedish.

Phone number to access the conference call: +46 (0)8-566 426 92. For a webcast of the conference call, go to www.volati.se.

This information is information that Volati AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 07.45 CEST on 24 October 2019.

For more information, please contact:
Mårten Andersson, CEO, Volati AB, +46 72 735 42 84, marten.andersson@volati.se
Andreas Stenbäck, CFO, Volati AB, +46 70 889 09 60, andreas.stenback@volati.se

Volati AB (publ)
Corporate reg. no. 556555-4317
Engelbrektsplan 1, SE-114 34 Stockholm
Tel: +46 8 21 68 40
www.volati.se

About Volati

Volati is a Swedish industrial group, formed in 2003, organised in four business areas: Trading, Consumer, Akademibokhandeln and Industry. Volati mainly acquires reasonably valued companies with proven business models, leading market positions and strong cash flows and develops them with a focus on long-term value creation. The strategy is to build on the companies’ identity and entrepreneurial spirit, adding leadership, expertise, processes and financial resources. Volati has operations in 16 countries, over 2,000 employees and annual sales of approximately SEK 7 billion. Volati’s ordinary shares and preference shares are listed on Nasdaq Stockholm. Further information is available at www.volati.se.

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