Wetteri Plc interim report for 1 January to 31 March 2024: Favourable first quarter – strong growth in revenue

Wetteri Plc Interim report 21 May 2024 at 9.30 EET

Summary of the review period 1 January to 31 March 2024  

• The Group’s revenue was EUR 144.8 million (EUR 87.8 million), 65% growth  
• Adjusted EBITDA was EUR 6.1 million (EUR 5.4 million)  
• The adjusted operating profit was EUR 2.5 million (EUR 2.6 million)  
• The operating profit was EUR 1.1 million (EUR 0.7 million)  
• The revenue of the Passenger Cars segment increased by EUR 47.3 million (93%) year-on-year 
• The revenue of the Maintenance Services segment increased by EUR 11.0 million (76%) year-on-year 
• The car dealership business operations of Suur-Savo became part of Wetteri through a business acquisition on 1 January 2024 
• Suvanto Trucks Oy became part of Wetteri through a share exchange on 29 February 2024 

Financial guidance for 2024  

• Revenue EUR 660–800 million 
• Adjusted operating profit EUR 19–23 million 

The company’s medium-term (3-year) target is to achieve EUR 1,000 million in revenue and EUR 30 million in operating profit. 

Key performance indicators  

1) The adjusted EBITDA and operating profit do not take items affecting the comparability of the Group’s EBITDA and operating profit into account, such as significant non-recurring items of income and expenses and amortisation of the fair value of assets recognised on the balance sheet by means of acquisition calculations. The purpose of the adjusted EBITDA and operating profit is to improve the comparability of the Group’s EBITDA and operating profit between periods. The reconciliation of the adjusted EBITDA and operating profit is presented on page 15 of the interim report.  

2) The calculation of the number of personnel has been revised in the review period so that the number of personnel at the end of each month has been added together, and the amount thus obtained has been divided by the number of months in the review period. The comparison information has also been adjusted to correspond to this calculation method. 

Aarne Simula, CEO:  

“Considering the challenges in the operating environment, the first quarter of 2024 was favourable for Wetteri. The Group’s revenue was EUR 144.8 million, and its adjusted EBITDA increased to EUR 6.1 million. Adjusted operating profit remained at last year's level and was EUR 2.5 million. Wetteri’s operational performance during the review period was affected by the harbour strikes in particular, which shifted deliveries of new cars from the normally busy March to the following months. The impact of the strikes was also reflected in spare parts logistics and, consequently, maintenance. 

In Wetteri’s business segments, revenue growth was highest in the Passenger Cars segment, where revenue rose by 92% to EUR 98.5 million. The invoiced sales of new cars increased by around 61% year-on-year, and the order backlog for new cars at the end of the review period was EUR 47.2 million. The revenue of the Heavy Equipment segment decreased slightly from the previous year. The invoiced sales of new commercial trucks totalled 44, and 36 new orders were received. The invoiced sales of used commercial trucks totalled 52. 

The revenue of Maintenance Services increased by 76% and was nearly EUR 25.5 million, but investments in the development of maintenance operations affected performance compared to previous year. In the maintenance services, the multi-brand selection and the extensive expertise created through it is a great strength in the era of electrified motoring, as there is a strong demand for trained and importer-audited brand maintenance. The electrification of driving does not reduce the need for maintenance, but the opposite: customer loyalty is apt to create volume growth and revenue growth, and thereby support Wetteri's growth goals also in terms of maintenance. 

Wetteri is on its way to becoming the largest and most profitable player in the automotive sector by the end of 2025. Wetteri’s growth strategy is acquisition-driven, and this strategic choice is based on a megatrend shaping the automotive industry, driving the industry to focus on fewer larger players. The transformation of the automotive industry is being driven by numerous smaller changes in technology, operating models and consumer behaviour. The car trade is a business based on volumes, and economies of scale generate synergy benefits and give leverage to navigate the transformation of the operating environment.  

Wetteri’s acquisition-driven growth strategy is based on volume growth and decreasing costs as a result of synergy benefits, as well as improved margins. To improve the profitability of operations, Wetteri has started to eliminate overlaps created by acquisitions by reorganising the administration and regional business management, for example. The efficient use of facilities is being assessed. In business acquisitions, the focus will continue to be on well-managed companies with strong development potential, whose culture is close to Wetteri's. This helps ensure successful integrations and the realization of practical benefits as soon as possible. 

Wetteri differs from many other operators in the automotive sector because of its comprehensive business model and extensive offering. Wetteri’s business model covers the sale of new and used passenger and commercial vehicles, as well as the sale of heavy vehicles. In addition, Wetteri offers a wide range of maintenance services and repair shop services, as well as spare parts and tyre services in all vehicle categories. Through acquisitions, Wetteri has become stronger by means of a wider service network, new brand representation and brand-specific expertise, for example. Wetteri’s business model and Finland’s largest car brand representation are strengths that help the company navigate the constantly challenging market situation. 

This year, the number of first registrations of new passenger cars is expected to be 76,000, still well below the long-term average. There is a strong need for renewal in Finland’s rapidly ageing car fleet: the emissions reduction targets for transport will not be achieved with the current car fleet, and a new fleet is also required to improve road safety. The automotive sector has pent-up demand that will be unleashed in the near future, as well as strong potential for organic growth. The demand for new cars is also expected to pick up in the second half of this year. More moderate interest rate developments and the continued tax incentive for fully electric company cars are promising signals for growth. 

In 2024, we will continue to execute our growth strategy with determination. In early 2024, Suur-Savon Auto and Suvanto Trucks Oy became part of Wetteri. Suvanto Trucks provided Wetteri with strong expertise in purchasing used commercial trucks, in addition to procurement channels. We are planning to build a nationwide sales network for used commercial trucks and make more efficient use of our existing distribution channels. In May, we signed the first import and distribution agreement in Wetteri’s history for earth-moving machinery. In June 2024, we will open a major used car dealership in Vantaa in line with the Wetteri Premium concept. This will enable us to respond to the growing demand for high-quality used cars in the Helsinki metropolitan area. During 2024, we will also explore opportunities for funding growth, expanding the company’s ownership base and strengthening self-sufficiency through a directed share issue for institutional investors, private investors and Wetteri’s personnel.”  

Estimate of developments in 2024   

Challenges in the availability of new cars have mainly been resolved, and deliveries from the order backlog, which started in 2023, will continue in 2024. Economic uncertainty may reduce the demand for new cars in all vehicle categories, and the number of first registrations is expected to be lower than in 2023. The recent signals of stabilised interest rates and a change in the direction of inflation may increase the demand for new cars in all vehicle categories, and the used car trade is expected to continue to grow. Maintenance operations are expected to continue at a strong level. Customer orders are expected to increase from the previous year. 

Wetteri’s disclosure of financial information in 2024 

28 August 2024  Interim report for January–June 2024 

21 November 2024  Interim report for January–September 2024 

Oulu 21 May 2024  

Wetteri Plc  

Board of Directors 

Further information:   

Aarne Simula, CEO and President, Wetteri Plc   

Tel. +358 400 689 613, aarne.simula@wetteri.fi   

Wetteri Plc – An Entrepreneur-Driven Automotive Growth Company

Wetteri Plc is an entrepreneur-driven growth company in the automotive industry. In addition to the retail trade of passenger, utility and heavy-duty vehicles, the Company provides maintenance and damage repair services from passenger cars to heavy-duty vehicles. The Company has 49 offices in its home country, headquartered in Oulu. The company employs around 1000 people, of whom nearly 70% work in maintenance and repair services. Wetteri promotes digitalisation in the automotive sector and is an important player on the common journey towards emission-free motoring. More information: sijoittajat.wetteri.fi/en/