Wulff Group Plc’s Half-Year Financial Report for January 1 – June 30, 2022
HALF-YEAR FINANCIAL REPORT | JULY 25, 2022 AT 9.30 A.M.
This is a summary of Wulff Group Plc’s half-year financial report for January-June 2021. Wulff Group’s half-year financial report as a whole is attached as a PDF file to this stock exchange release and it is also available on the company’s website wulff.fi/en.
Sales growing in the Nordic markets
1.4.–30.6.2022 BRIEFLY
- Net sales increased in the Nordic countries in the Contract Customers Segment; domestically, net sales of international exhibition services and financial administration services grew clearly
- Net sales totalled EUR 24.9 million (23.2), an increase of 7.1%
- EBITDA was EUR 1.0 million (5.1) and comparable EBITDA was EUR 1.0 million (1.3)
- Operating profit was EUR 0.4 million (4.6) and comparable operating profit (EBIT) was EUR 0.4 million (0.8)
- Earnings per share (EPS) was EUR 0.02 (0.65) and comparable earnings per share (EPS) was EUR 0.02 (0.09)
- The equity ratio was 38.8% (33.0)
- The outlook remains unchanged; Wulff estimates that net sales in 2022 will increase clearly and the comparable operating profit will increase compared to 2021
1.1.–30.6.2022 BRIEFLY
- Net sales totalled EUR 50.5 million (38.5), increased by 31.0%
- EBITDA was EUR 2.8 million (6.0) and comparable EBITDA was EUR 2.8 million (2.3)
- Operating profit was EUR 1.6 million (5.1) and comparable operating profit (EBIT) was EUR 1.6 million (1.4)
- Earnings per share (EPS) was EUR 0.16 (0.68) and comparable earnings per share was EUR 0.16 (0.13)
WULFF GROUP PLC’S CEO ELINA PIENIMÄKI
We have invested in expanding and developing our service operations. In a rapidly changing and challenging world situation, investing in growth in the stable financial administration service industry has been profitable. The decision to reform the international exhibition service industry and developing new remote meeting solutions has both brought us sales and made us an interesting and versatile partner also for customers who organize traditional meetings again. It is great that we have been able to acquire new customers also in our traditionally strong industry, the sale of workplace products and services. Accelerated and diversified price inflation has affected the achievement of our profit improvement goals, as, for example, public administration supply contracts have not enabled a quick enough reaction to transfer changes in our purchase prices to customer prices. The integration of the acquisition we made last year, Staples Finland, into Wulff is progressing well and as planned. Our customers benefit from the acquisition, they will receive an even wider selection of products and services through the integration. For customers of the former Staples, for example, our Expertise Sales products is new and interesting. The decisions to combine management systems and methods of operation have been correct and useful, also in the opinion of our personnel; we again received strong results from our annual personnel survey.
Even in demanding situations, I think it's important to stick to the strategy, not just adapt operations to the moment. Important strategy elements for us at Wulff are responsibility and customer experience. I am proud of the fact that, for example, the high-quality Q-Connect products we sell exclusively in our operating countries are developed to be even more responsible: the products and their manufacturing processes consider the UN 2030 sustainable development goals in terms of environmental friendliness and social responsibility as comprehensively as possible. I believe that as a results-oriented sales company, relying on our responsible strategy, we can make the world a better place one workplace at a time.
GROUP’S NET SALES AND RESULT PERFORMANCE
In January-June 2022 net sales totalled EUR 50.5 million (38.5), and in April-June EUR 24.9 million (23.2). Net sales increased in the first half year period by 31.0% (29.3) and by 7.1% (54.1) in the second quarter. Net sales increased thanks to strong sales development in the Nordic countries in the Contract Customers Segment, as well as due to brisk sales of international exhibition services and remote meeting services as well as growth in sales of financial administration services in Finland. On January 4, 2022, Wulff completed a sale of Carpentum Oy's stock that strengthens the supply of financial management services. The Expertise Sales Segment’s net sales of hygiene and protective products decreased from the previous financial year, as expected.
In January-June 2022 the gross margin amounted to EUR 15.3 million (12.4) being 30.3% (32.2) of net sales, and EUR 7.1 million (7.1) in the second quarter being 28.7% (30.5) of net sales. The acquisition of Wulff Solutions on 3 May 2021 contributed EUR 4.7 million to the gross margin in January-June and EUR 2.1 million in April-June. As the effects of the Coronavirus pandemic gradually receded, the development of the relative sales margin was influenced by the focus of demand on product groups that preceded the pandemic. The availability of the products is challenging, and the price inflation is strong. The proportion of net sales in the Contract Customers Segment continued to grow while diminished in the Expertise Sales Segment. The effect of the price inflation trend was considerable in the most demanded product groups and in terms of logistics costs in April-June 2022.
In January-June 2022 employee benefit expenses amounted to EUR 9.0 million (7.5) being 17.7% (19.4) of net sales, and respectively, in the second quarter EUR 4.5 million (4.2), being 18.0% (18.2) of net sales. Wulff ’s employees increased by 114 because of the Wulff Solutions acquisition. The proportional increase in employee benefit expenses was less than the proportional increase in net sales. In the second quarter of 2021, non-recurring personnel expenses arising from the completion of the acquisition and termination of employment amounted to approximately EUR 0.2 million.
Other operating expenses amounted to EUR 3.9 million (3.7) in January-June 2022, being 7.7% (9.7) of net sales and respectively EUR 1.9 million (2.5) in the second quarter, being 7.6% (10.9) of net sales. The group used fewer external services as planned than in the comparison period. In April-June 2022, the non-recurring relocation costs of Wulff Solutions, acquired on May 3, 2022, to Wulff premises were EUR 0.1 million. The non-recurring costs related to the completion of the acquisition were approximately EUR 0.5 million in the second quarter of 2021.
In January-June 2022 EBITDA amounted to EUR 2.8 million (6.0) being 5.5% (15.6) of net sales, and EUR 1.0 million (5.1) in the second quarter, being 3.9% (21.9) of net sales. Goodwill recognition of EUR 4.5 million due to the favourable acquisition and EUR 0.7 million of costs arising from the implementation of the acquisition have been deducted from the comparable results 2021. In January-June 2022 comparable EBITDA amounted to EUR 2.8 million (2.3) being 5.5% (5.9) of net sales, and EUR 1.0 million (1.3) in the second quarter, being 3.9% (5.8) of net sales.
Operating profit (EBIT) amounted to EUR 1.6 million (5.1), 3.2% (13.3) of net sales and respectively EUR 0.4 million (4.6), 1.6% (19.7) in the second quarter. The comparable operating profit (EBIT) amounted to EUR 1.6 million (1.4), 3.2% (3.6) of net sales and respectively EUR 0.4 million (0.8), 1.6% (3.5) in the second quarter.
In January-June 2022 the financial income and expenses totalled (net) EUR -0.4 million (-0.2) including interest expenses of EUR -0.2 million (-0.1) and mainly currency-related other financial items and bank expenses EUR -0.1 million (-0.1). In the second quarter financial income and expenses totalled (net) EUR -0.2 million (-0.1). Financial expenses were EUR 0.1 million higher than the comparison period due to exchange rate fluctuations.
In January-June 2022 the result before taxes was EUR 1.2 million (5.0), in the second quarter the result before taxes was EUR 0.2 million (4.5). In January-June 2022 the comparable result before taxes was EUR 1.2 million (1.2), in the second quarter the comparable result before taxes was EUR 0.2 million (0.7)
The net profit for the reporting period was EUR 1.1 million (4.8) and in the second quarter the net profit was EUR 0.2 million (4.4). The comparable net profit for the reporting period was EUR 1.1 million (1.0) and in the second quarter the comparable net profit was EUR 0.2 million (0.6).
Earnings per share (EPS) was EUR 0.16 (0.68) in January-June 2022, and EUR 0.02 (0.65) in the second quarter. Comparable EPS was EUR 0.16 (0.13) in January-June 2022, and EUR 0.02 (0.09) in the second quarter.
KEY FIGURES
| II | II | I–II | I–II | I–IV | |
| EUR 1000 | 2022 | 2021 | 2022 | 2021 | 2021 |
| Net sales | 24 873 | 23 228 | 50 483 | 38 542 | 90 424 |
| Change in net sales % | 7.1% | 54.1% | 31.0% | 29.3% | 57.1 % |
| Gross profit | 7 127 | 7 087 | 15 318 | 12 414 | 28 685 |
| Gross profit. % | 28.7% | 30.5% | 30.3% | 32.2% | 31.7 % |
| EBITDA | 971 | 5 095 | 2 770 | 6 024 | 9 128 |
| EBITDA margin. % | 3.9% | 21.9% | 5.5% | 15.6% | 10.1 % |
| Comparable EBITDA | 971 | 1 338 | 2 770 | 2 267 | 6 073 |
| Comparable EBITDA margin. % | 3.9% | 5.8% | 5.5% | 5.9% | 6.7 % |
| Operating profit/loss | 398 | 4 576 | 1 605 | 5 135 | 6 940 |
| Operating profit/loss margin. % | 1.6% | 19.7% | 3.2% | 13.3% | 7.7 % |
| Comparable operating profit/loss | 398 | 819 | 1 605 | 1 378 | 3 885 |
| Comparable operating profit/loss margin. % | 1.6% | 3.5% | 3.2% | 3.6% | 4.3 % |
| Profit/Loss before taxes | 224 | 4 491 | 1 224 | 4 967 | 6 552 |
| Profit/Loss before taxes margin. % | 0.9% | 19.3% | 2.4% | 12.9% | 7.2 % |
| Comparable profit/Loss before taxes | 224 | 734 | 1 224 | 1 210 | 3 497 |
| Comparable profit/Loss before taxes margin. % | 0.9% | 3.2% | 2.4% | 3.1% | 3.9 % |
| Net profit/loss for the period attributable to equity holders of the parent company | 163 | 4 368 | 1 077 | 4 631 | 5 896 |
| Net profit/loss for the period. % | 0.7% | 18.8% | 2.1% | 12.0% | 6.5 % |
| Comparable net profit/loss for the period attributable to equity holders of the parent company | 163 | 611 | 1 077 | 874 | 2 841 |
| Comparable net profit/loss for the period. % | 0.7% | 2.6% | 2.1% | 2.3% | 3.1 % |
| Earnings per share. EUR (diluted = non-diluted) | 0.02 | 0.65 | 0.16 | 0.68 | 0.87 |
| Comparable earnings per share. EUR (diluted = non-diluted) | 0.02 | 0.09 | 0.16 | 0.13 | 0.42 |
| Return on equity (ROE). % | 0.9% | 29.4% | 5.6% | 29.4% | 36.3 % |
| Return on investment (ROI). % | 0.9% | 17.5% | 4.4% | 17.5% | 25.0 % |
| Equity-to-assets ratio at the end of period. % | 38.8% | 33.0% | 38.8% | 33.0% | 38.1 % |
| Debt-to-equity ratio at the end of period | 65.9% | 71.4% | 65.9% | 71.4% | 62.1 % |
| Equity per share at the end of period. EUR * | 2.82 | 2.55 | 2.82 | 2.55 | 2.73 |
| Investments in non-current assets | 931 | 493 | 1 443 | 721 | 1 388 |
| Investments in non-current assets. % of net sales | 3.7% | 2.1% | 2.9% | 1.9% | 1.5 % |
| Treasury shares held by the Group at the end of period | 44 812 | 137 260 | 44 812 | 137 260 | 137 260 |
| Treasury shares. % of total share capital and votes | 0.6% | 2.0% | 0.6% | 2.0% | 2.0% |
| Average number of outstanding shares | 6 862 816 | 6 770 368 | 6 858 521 | 6 768 318 | 6 769 352 |
| Number of total issued shares at the end of period | 6 907 628 | 6 907 628 | 6 907 628 | 6 907 628 | 6 907 628 |
| Personnel on average during the period | 285 | 255 | 287 | 216 | 248 |
| Personnel at the end of period | 287 | 295 | 287 | 295 | 278 |
* Equity attributable to the equity holders of the parent company / Number of shares excluding the acquired own shares
RISKS AND UNCERTAINTIES IN THE NEAR FUTURE
General economic and market developments as well as the employment rate have a significant impact on the demand for workplace products and services. The recent inflationary development has intensified and broadened due to. e.g. measures taken to prevent the pandemic as well as Russia’s assault to Ukraine and the trade sanctions that followed. The general uncertainty in the global economy also impacts Wulff's operations. The effects of the Coronavirus pandemic and the restrictions in place to contain and mitigate the virus have had a broad impact on the needs of both the global and local economy and customers. In addition, megatrends in the global economy, such as digitalization and responsibility, are affecting market change. There are both risks, and opportunities involved in developing a range of products and services in line with changing markets and needs. Typical business risks include the successful implementation of Wulff's strategy, such as the integration of operations from business acquisitions, and operational risks arising from the personnel, logistics and IT environment. Intense competition in the workplace products and services industry can affect the profitability of the business. Changes in exchange rates affect the Group's net result and balance sheet.
SUBSEQUENT EVENTS
The Group has not had any significant subsequent events
MARKET SITUATION AND FUTURE OUTLOOK
Megatrends play a role in Wulff’s operations. The company's operating environment is positively affected by the growing share of knowledge work in all work performed. On the other hand, demographic developments are actively reducing the number of people in employment at present. The integration of technology into products and services is an opportunity for Wulff. Digitalization brings new ways for an already multi-channel company to reach and serve customers and streamline its own operations. Of the megatrends, the most significant for Wulff's operations and future is responsible operations and, in particular, consideration for the environment: is the environment treated as a resource or is the goal to improve the state of the environment. Future success is strongly built on these themes and their importance is growing in business and consumer decision-making. Wulff has chosen responsibility, particularly positive climate action, increasing equality and decent work and economic growth (UN Sustainable Development Goals 2030) as important elements of its strategy.
Demand for products is significantly affected by general economic and market developments as well as the employment rate. Before the Coronavirus pandemic, the market for workplace products and services in the Nordic countries had remained stable for several years. Wulff estimates that the overall market for workplace products and services will remain stable, despite rapid changes in work environments. Safe encounters are important. Wulff expects demand for hygiene, cleaning, and protection products to remain at a good level despite the change, even though protective products are no longer essential, as they were during the breakout and spreading of the pandemic. At the same time, the Coronavirus pandemic has accelerated the upheaval on how we work; the growth of multi-local teleworking has increased the number of workstations and the demand for products needed at workstations. Demand for IT supplies, printing products and traditional office supplies is expected to stabilize at pre-pandemic levels in the near future. This is due to the partial return to work and the increased number of new workstations created by the pandemic-driven change in working life in homes and leisure homes. The Group’s net sales and operating profit are affected by the development of the international exhibition services industry, as the industry is gradually recovering from the Coronavirus pandemic. Demand for Wulff Entre’s traditional Premium Exhibition services is recovering as the industry reopens, and the development of the Coronavirus pandemic are affecting the amount of market activity taking place.
The ongoing geopolitical crisis, the Russian invasion of Ukraine and the coercive measures against Russia do not directly affect Wulff's activities, as Wulff has not had any activities or partnerships in the countries involved in the crisis. The crisis is having an impact on global supply chains, the changes to which may also indirectly affect Wulff's industries. Changes into global supply chains have intensified and broadened the recent price inflation development. Continued inflation makes it necessary to secure the development of gross margin. The uncertainty concerning the intensity and broadening of inflation set a restraint into predictability.
The reorganisation of Wulff’s contract sales organisation in Finland along with the cooperation negotiations conducted with Wulff Oy Ab and Wulff Solutions Oy (previously Staples Finland Oy) in August–September 2021 caused functions in sales, administration and support functions to be merged. As a result of the cooperation negotiations, the company will achieve annual cost savings of approximately EUR 1.9 million in personnel costs. With the implemented and planned restructuring measures such as the consolidation of information systems, logistical and operational processes, and facility changes, Wulff expects to achieve total annual cost synergies of approximately EUR 3 million in stages. A significant portion of these cost synergies will already be realised in 2022.
Wulff aims to grow profitably, and it has the continuing ability to be a more active player in M&A than its competitors.
Wulff estimates that net sales in 2022 will increase clearly and comparable operating profit will increase compared to 2021.
WULFF GROUP PLC’S FINANCIAL REPORTING
Wulff Group Plc will release the following financial report in 2022:
Interim Report, January-September 2022 Monday October 24, 2022
In Espoo on July 25, 2022
WULFF GROUP PLC
BOARD OF DIRECTORS
Further information:
CEO Elina Pienimäki
tel. +358 40 647 1444
e-mail: elina.pienimaki@wulff.fi
DISTRIBUTION
Nasdaq Helsinki Oy
Key media
www.wulff.fi/en
A better world - one workplace at a time. We enable better and more sustainable work environments and a perfect working day. We do the workplace - where ever it is today. At Wulff you will find e.g. hygiene, protection and safety products, air purification, workplace products, coffee accessories, property and cleaning products, office and IT supplies, ergonomics, first aid, and innovative products for construction sites. Our range also includes high-quality Canon printing and document management services and, most recently, financial management services. Customers can also acquire international exhibition services and solutions for remote encounters from us. As a clear domestic market leader, we are constantly developing our range and, according to Taloustutkimus research, we offer the best customer service in the industry (shared number one, TEP 2021). In addition to Finland, Wulff Group operates in Sweden, Norway and Denmark. Read more at wulff.fi/en.