Year-end report January–December 2020

Fri, Feb 19, 2021 07:45 CET

The Consumer business area was closed in Q4 2020 after the operations of the business area were divested. This means that the income statements for 2020 and 2019 in the report have been restated, in accordance with applicable financial reporting standards, and now exclude the Consumer business area. The CEO’s review and comments about the business in this report focus on continuing operations unless otherwise stated.

Quarter October–December 2020

Net sales increased by 18 percent to SEK 1,880 (1,600) million
Operating profit* (EBITA) for continuing operations increased by 5 percent to SEK 163 (155) million
Profit after tax increased by SEK 591 million to SEK 754 (163) million
Earnings per ordinary share, incl. discontinued operations, increased by SEK 7.47 to SEK 9.29 (1.82)
Decision was taken to close the Consumer Business Area

Period January–December 2020

Net sales increased by 13 percent to SEK 6,696 (5,938) million
Operating profit* (EBITA) for continuing operations increased by 26 percent to SEK 488 (388) million
Profit after tax, incl. discontinued operations, increased by SEK 980 million to SEK 977 (-2) million
Earnings per ordinary share, incl. discontinued operations, increased by SEK 11.24 to SEK 11.37 (0.13)
The Board proposes a dividend of SEK 1.20 (0.00) per share and 40 kronor per preference share with quarterly instalments of 10 kronor

Events after the reporting period

An extra dividend, total of 844 million, to ordinary and preference shareholders was adopted at the EGM held on 2 February 2021.
In a press release on 19 February, the Board of Directors announced that it is evaluating a possible distribution and stock exchange listing of Akademibokhandeln.

Comments from the CEO

Continuing high growth in the two largest business areas

Volati continued to develop strongly during Q4, with earnings growth of more than 50 percent in the Trading business area and 30 percent in Industry. The strong government recommendations to stay away from stores during the Christmas shopping period had a temporary impact on the Akademibokhandeln business area, which meant that its EBITA for the quarter did not reach the previous year’s level. In view of this year’s very special circumstances, Akademibokhandeln has delivered a good full-year result, confirming its strong position in a growing market. Volati’s total EBITA for Q4 increased by 5 percent to SEK 163 million. EBITA for the full year 2020 increased by 26 percent to SEK 488 million.

Trading goes from strength to strength
The Trading business area continued to deliver strong growth in both sales and earnings during Q4. Sales increased by 33 percent and EBITA by 55 percent. The market has remained good and Trading has been able to take advantage of this through its well-known brands and increasingly strong market positions after the excellent acquisitions of Heco and Pisla during the year. Integration of the acquisitions is progressing according to plan, consolidating the business area’s position as a leading Nordic supplier of fittings for the hardware and building materials retail sector.

Another good quarter for Industry
The Industry business area delivered another excellent quarter. Sales increased by 21 percent and EBITA increased by 31 percent. All business units are product leaders with strong market positions in their niches. Ettiketto was the highlight of the year. Integration of the year’s two acquisitions is progressing better than planned and we are delivering on the synergies we saw before us when we made the acquisitions. Since the acquisition of S:t Eriks, we have worked to ensure good basic earnings and high production efficiency for the business. We have also appointed a highly competent management team. With a strong platform in place, S:t Eriks is now ready to step up the work on add-on acquisitions as a way of accelerating its strategy implementation and increasing its growth rate. This is in line with the Industry business area’s focus on developing individual business units to eventually become independent business areas with clear industrial logic. Within the business area, we also see good opportunities to broaden operations to attractive new areas through acquisitions.

66 percent growth for Akademibokhandeln’s digital channels – stores hit by new Christmas shopping restrictions
The Akademibokhandeln business area started the quarter with its best October ever. Store visits were back at normal levels and sales in the digital channels remained very high. In other words, Akademibokhandeln was heading for a year of good sales and earnings growth – despite the pandemic having affected trade for most of the year. However, increased restrictions and stronger government recommendations not to visit physical stores had an impact on store sales during the important Christmas shopping period. In terms of volume, this was offset by strong growth in the digital channels – 66 percent growth in the quarter – which meant that sales increased by 2 percent compared with Q4 2019. The digital channels’ sales accounted for a total of 40 percent of sales. However, the shift towards digital channels had a temporary negative impact on profitability, meaning that EBITA fell by 17 percent compared with Q4 2019.

Evaluating whether Akademibokhandeln has better growth opportunities as a separate listed company
The Akademibokhandeln business area has shown highly positive development since Volati’s acquisition in 2017. Today, the business is characterised by good profitability and strong growth in the digital channels, which accounted for 44 percent of sales in 2020. Akademibokhandeln has a strong market position through successful digital channels such as the Akademibokhandeln.se and Bokus e-stores and the Bokus Play streaming service, and a nationwide network of profitable stores.

Volati sees further good development opportunities for the business area – in particular, good growth opportunities from continuing the successful digital transition initiated a number of years ago. The Board has therefore decided to evaluate whether Akademibokhandeln is better placed to accelerate its growth-oriented work as an independent publicly listed company.

Trading business area renamed Salix Group
We are now establishing a more decentralised governance structure for the Trading business area. The business area currently operates largely as a group, with clear industrial logic and common structures for logistics and administration. The business area will have its own board, which will receive an ownership directive from the Volati Board. This means that the business area’s board will have increased powers to decide on, for example, acquisitions, investments, and strategy. It is our assessment that this improves the conditions for a continuing high growth rate in this fast-growing business area. To clarify the change, the business area will also be renamed Salix Group.

Closure of Consumer business area
At the end of the quarter, we sold NaturaMed Pharma to the Belgian company Vision Healthcare, which also resulted in our closure of the Consumer business area. The first step was taken in November 2019 when Volati changed its ownership of me&i and a further step followed with the sale of Besikta Bilprovning in October 2020. The Consumer business area has generated a very good overall return with a total capital gain of SEK 335 million and a total cash flow, including acquisition and divestment consideration, of SEK 760 million.

Taking advantage of growth opportunities
In summarising the last quarter of the year, I note that Volati has put a very good year behind it, with high earnings growth and a very strong balance sheet. The changes now being evaluated and implemented are aimed at providing the best possible conditions to take advantage of growth opportunities in all business areas – and in doing so, to continue creating significant value for Volati’s shareholders.

Mårten Andersson, President and CEO

Conference call

CEO Mårten Andersson and CFO Andreas Stenbäck will present the interim report in a conference call on 19 February at 09.00. The presentation will be conducted in Swedish.

Phone number to access the conference call: +46 8-566 42 704
For a webcast of the conference go to: https://tv.streamfabriken.com/volati-q4-2020

This information is information that Volati AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (MAR). The information was submitted for publication, through the agency of the contact persons set out below, at 07.45 CET on 19 February 2021.

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, founded in 2003, consisting of the business areas Trading, Akademibokhandeln and Industry. Volati mainly acquires companies with proven business models, leading market positions and strong cash flows at reasonable valuations 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, about 2,000 employees and annual sales of approximately SEK 6.5 billion. Volati’s ordinary shares and preference shares are listed on Nasdaq Stockholm. Further information is available at www.volati.se.