Wulff Group Plc’s Half-Year Financial Report for January 1 – June 30, 2022
Strong second quarter - investments in sales culture and synergies are paying off
1.4.–30.6.2023 BRIEFLY
- Net sales totalled EUR 24.4 million (24.9), decreased by 2.0%
- EBITDA and comparable EBITDA was EUR 1.3 million (1.0)
- Operating profit and comparable operating profit (EBIT) were EUR 0.8 million (0.4)
- Earnings and comparable earnings per share (EPS) were EUR 0.09 (0.02)
- The equity ratio was 42.1% (38.8)
- The outlook remains unchanged; Wulff estimates that net sales and comparable operating profit 2023 will increase compared to 2022.
1.1.–30.6.2023 BRIEFLY
- Net sales totalled EUR 49.6 million (50.5), decreased by 1.7%
- EBITDA and comparable EBITDA were EUR 2.7 million (2.8)
- Operating profit and comparable operating profit (EBIT) were EUR 1.7 million (1.6)
- Earnings and comparable earnings per share (EPS) were EUR 0.17 (0.16)
WULFF GROUP PLC’S CEO ELINA RAHKONEN
I am pleased with the positive earnings development in our first half of the year. It reports that the integration of the acquisition of Staples Finland in spring 2021: the integration of expertise, operating models, doing and systems, progressed as planned and well. The realized synergy benefits are reflected positively in our result. In all operating countries and business areas, it has been possible to clarify the focus of operations after the pandemic period, and necessary changes have also been made to operations. Our position as an expert in the Nordic working life has also been strengthened in this respect in all our businesses. It is important to know what is important to our customers now and in the future - and we get this information effectively and in real time from up to 200,000 personal customer encounters every year.
The positive development of profitability gives us the capabilities to build a responsible future and develop our product and service selection in line with our customers' wishes. Our results also show our customers' appreciation for our top-class sales expertise. At Wulff, solution-oriented customer service is the number one goal in both sales and support services. I believe we are the most competitive company in the field in the Nordics thanks to our committed staff and partners. What makes us a successful company is that we strongly share the same values with our customers. That's why our customers choose us as their partner again and again, and that's why we also win new ones.
GROUP’S NET SALES AND RESULT PERFORMANCE
In January-June 2023 net sales totalled EUR 49.6 million (50.5), and in April-June EUR 24.4 million (24.9). Net sales decreased in the first half year period by 1.7% (increased 31.0) and by 2.0% (increased 7.1) in the second quarter. In the second quarter, the sales of the Contract Customers Segment increased in Finland and almost equal to the comparison period in Scandinavia. The turnover of the Contract Customers Segment was affected by the emphasis on profitability, customer choices and the targeting of new customer acquisition activities. Wulff's accounting and financial management service business grew with the purchase of Carpentum Oy in 2022. The sales of the financial administration service business have grown as expected and steadily. The sales of Wulff Entre's international exhibition services and remote meeting solutions shrank from the comparison period due to the event selections that affected sales targeting. The development of Expertise Sales in Finland was positive compared to the comparison period, in the Scandinavian market Expertise Sales shrank slightly.
In January-June 2023 the gross margin amounted to EUR 15.2 million (15.3) being 30.7% (30.3) of net sales, and EUR 7.5 million (7.1) in the second quarter being 30.8% (28.7) of net sales. The integration of Wulff Solutions Oy, which was purchased in spring 2021, into Wulff's Contract Customers Segment proceeded as planned during the review period. The relative development of the sales margin was influenced by changes in demand for products sold by Wulff. The demand for products in the care products area is livelier than during the Coronavirus pandemic. Sales of more traditional workplace products and services are recovering to follow the general economic and employment situation. During the review period, the sales margin of workplace products has been affected by price inflation, which significantly accelerated during the comparison period and then became widespread. The purchase prices of the best-selling products were higher compared to the comparison period. During the review period, the availability of Wulff's range of products has normalized. The logistics cost challenges have been answered with the synergy benefits implemented in the Contract Customers Segment. The Contract Customers Segment's share of net sales shrank compared to the comparison period, while the share of gross margin increased. The sales value of the Expertise Sales Segment was almost the same as the comparison period, with a balanced development of the gross margin.
In January-June 2023 employee benefit expenses amounted to EUR 9.0 million (9.0) being 18.2% (17.7) of net sales, and respectively, in the second quarter EUR 4.5 million (4.5), being 18.3% (18.0) of net sales.
Other operating expenses amounted to EUR 3.6 million (3.9) in January-June 2023, being 7.2% (7.7) of net sales and respectively EUR 1.8 million (1.9) in the second quarter, being 7.4% (7.6) of net sales. The use of external services was reduced from the comparison period, both absolutely and relatively, thanks to the consolidation of the functions of the merging companies and Wulff's most cost-effective operating models as possible.
In January-June 2023 EBITDA and comparable EBITDA amounted to EUR 2.7 million (2.8) being 5.5% (5.5) of net sales, and EUR 1.3 million (1.0) in the second quarter, being 3.4% (3.9) of net sales. Operating profit (EBIT) and comparable operating profit (EBIT) amounted to EUR 1.7 million (1.6), 3.5% (3.2) of net sales and respectively EUR 0.8 million (0.4), 3.4% (1.6) in the second quarter. The first two quarters of 2023 and 2022 did not include items affecting comparability.
In January-June 2023 the financial income and expenses totalled (net) EUR -0.5 million (-0.4) including interest expenses of EUR -0.4 million (-0.2) 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 -0.3 million (-0.2). Financial expenses were EUR 0.1 million higher than the comparison period due to the increase in interest expenses caused by the rise in market interest rates.
In January-June 2023 the result before taxes was EUR 1.2 million (1.2), in the second quarter the result before taxes was EUR 0.5 million (0.2).
The net profit for the reporting period was EUR 1.2 million (1.1) and in the second quarter the net profit was EUR 0.6 million (0.2).
Earnings per share and comparable earnings per share (EPS) were EUR 0.17 (0.16) in January-June 2023, and EUR 0.09 (0.02) in the second quarter.
KEY FIGURES
| II | II | I–II | I–II | I–IV | |
| EUR 1000 | 2023 | 2022 | 2023 | 2022 | 2022 |
| Net sales | 24 365 | 24 873 | 49 617 | 50 483 | 102 171 |
| Change in net sales % | -2.0% | 7.1% | -1.7% | 31.0% | 13.0 % |
| Gross profit | 7 494 | 7 127 | 15 247 | 15 318 | 30 986 |
| Gross profit. % | 30.8% | 28.7% | 30.7% | 30.3% | 30.3 % |
| EBITDA | 1 308 | 971 | 2 725 | 2 770 | 6 213 |
| EBITDA margin. % | 5.4% | 3.9% | 5.5% | 5.5% | 6.1 % |
| Operating profit/loss | 832 | 398 | 1 741 | 1 605 | 3 988 |
| Operating profit/loss margin. % | 3.4% | 1.6% | 3.5% | 3.2% | 3.9 % |
| Profit/Loss before taxes | 541 | 224 | 1 218 | 1 224 | 3 273 |
| Profit/Loss before taxes margin. % | 2.2% | 0.9% | 2.5% | 2.4% | 3.2 % |
| Net profit/loss for the period attributable to equity holders of the parent company | 598 | 163 | 1 159 | 1 077 | 3 052 |
| Net profit/loss for the period. % | 2.5% | 0.7% | 2.3% | 2.1% | 3.0 % |
| Earnings per share. EUR (diluted = non-diluted) | 0.09 | 0.02 | 0.17 | 0.16 | 0.45 |
| Return on equity (ROE). % | 2.8% | 0.9% | 5.5% | 5.6% | 15.5 % |
| Return on investment (ROI). % | 2.3% | 0.9% | 4.7% | 4.4% | 11.2 % |
| Equity-to-assets ratio at the end of period. % | 42.1% | 38.8% | 42.1% | 38.8% | 40.5 % |
| Debt-to-equity ratio at the end of period | 65.6% | 65.9% | 65.6% | 65.9% | 60.6 % |
| Equity per share at the end of period. EUR * | 3.08 | 2.82 | 3.08 | 2.82 | 3.02 |
| Investments in non-current assets | 271 | 931 | 723 | 1 443 | 2 479 |
| Investments in non-current assets. % of net sales | 1.1% | 3.7% | 1.5% | 2.9% | 2.4 % |
| Treasury shares held by the Group at the end of period | 111 624 | 44 812 | 111 624 | 44 812 | 111 624 |
| Treasury shares. % of total share capital and votes | 1.6% | 0.6% | 1.6% | 0.6% | 1.6 % |
| Average number of outstanding shares | 6 796 004 | 6 862 816 | 6 796 004 | 6 858 521 | 6 852 051 |
| 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 | 269 | 285 | 273 | 287 | 286 |
| Personnel at the end of period | 267 | 287 | 267 | 287 | 280 |
* 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
The general economic and market development and the employment rate have a significant impact on the demand for workplace products and services. Global inflation trends have an impact on Wulff's operations. The rate of increase in prices accelerated during the comparison period and gradually broadened since then. During the review period, the development of costs related to energy commodities and logistics has moderated, as have the least processed products. The development of global and local economies is affected by rising prices and monetary policy decisions aimed at taming inflation. These also affect Wulff's operations. In addition, megatrends in the global economy, for example responsibility, digitalization, the sharing economy and the aging of the population, affect the market change. The development of a product and service selection in line with changing markets and needs involves both risks and opportunities. Usual business risks include the successful implementation of Wulff's strategy, for example the integration of operations related to a company acquisition, as well as operational risks arising from the personnel, logistics and IT environment. Tight competition in the workplace product and service industry can affect business profitability. Changes in exchange rates affect the group's net profit and balance sheet.
SUBSEQUENT EVENTS
The Group has not had any significant subsequent events.
MARKET SITUATION AND FUTURE OUTLOOK
Among the global megatrends, Wulff's operating environment is positively affected by the increase in the share of knowledge work in all work performed. The development of the demographic structure is currently reducing the number of people actively working, although at the same time working careers are getting longer, e.g. as the average retirement age rises. The integration of technology into products and services is an opportunity for Wulff. Digitization already brings new ways for the multi-channel company to reach and serve customers and increase the productivity of its own operations. The most significant of the megatrends in terms of Wulff's operation and future is responsible operation and the green transition: is the environment treated as a resource or is the goal to improve the state of the environment. Future success will be strongly built on these themes, and their importance will increase in the decision-making of companies and consumers. Wulff has chosen responsibility and especially positive climate actions, increasing equality and decent work and economic growth (UN Sustainable Development Goals 2030) as important elements of his strategy.
The demand for products and services is essentially influenced by the general development of the economy and the market, as well as the employment rate. The market for workplace products and services has developed steadily in the Nordic countries. Wulff estimates that the overall market for workplace products and services remains relatively stable even when rapid changes occur in work environments. The demand for hygiene, cleaning, and protective products seems to have stabilized at a higher level than before the pandemic, as they are perceived as important occupational health and safety products. Work performed in multiple locations has increased and increased the number of workstations and the demand for products needed at workstations. The demand for IT supplies, printing products and traditional office supplies continues to develop post-pandemic. This is affected by the return to jobs and the increased number of new jobs. The group's turnover and operating profit are affected by the ongoing recovery of the capacity of the international exhibition service industry from the pandemic period.
The ongoing geopolitical crisis, Russia's attack on Ukraine and sanctions aimed at Russia do not directly affect Wulff's operations, as Wulff has not had operations or partnerships in countries involved in the crisis. The crisis has had an impact on global supply chains, whose changes may still indirectly affect Wulff's operations as well. The changes in the supply chains have intensified and broadened the trend of price inflation. The availability challenges of many product groups have subsided after the comparison period due to the reorganization of global supply chains. As the inflation trend continues, measures are needed to ensure a positive development of the sales margin. The wide scope of price inflation and its effect on the costs of the services used, as well as the related uncertainty, limit predictability.
As a result of the cooperation negotiations between Wulff Oy Ab and Wulff Solutions Oy held in August-September 2021 in connection with the renewal of Wulff's Finnish Contract Sales Organization, functions in sales, administration and support functions were combined. As a result of the cooperation negotiations, the company achieves annual cost savings of around 1.9 million euros from personnel costs. In the same context, Wulff announced that it believed in annual cost synergy benefits of a total of at least 3 million euros that would be realized in stages, a significant part of which was expected to be realized already in 2022. Wulff announced that it had achieved a total of approximately 2.5 million euros in annual cost synergy benefits during the financial year 2022 through reorganization measures, for example the integration of information systems and logistics and operational processes and thanks to changes in premises.
Thanks to the implemented reorganization measures, Wulff achieved a cost synergy benefit of approximately EUR 0.4 million in January-June.
Wulff's goal is to grow profitably, and it is constantly ready to be a more active player in business arrangements than its competitors.
Wulff estimates that net sales and comparable operating profit 2023 will increase compared to 2022.
WULFF GROUP PLC’S FINANCIAL REPORTING
Wulff Group Plc will release the following financial report in 2023:
Interim Report, January-September 2023 Monday October 17, 2023
In Espoo on July 17, 2023
WULFF GROUP PLC
BOARD OF DIRECTORS
Further information:
CEO Elina Rahkonen
tel. +358 40 647 1444
e-mail: elina.rahkonen@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 make the workplace where you do your work. Here you can find today's workplace products: e.g. cafe supplies, real estate and cleaning maintenance products, office and IT supplies, ergonomics, first aid, hygiene, protection and safety products, air purification and innovative products for construction sites. Our selection also includes high-quality Canon printing and document management services as well as financial management services. Our customers also purchase international exhibition services and solutions for remote meetings from us. It is important for us to constantly develop our product range to be more and more sustainable and our customer experience to be the best in the field. In addition to Finland, Wulff Group operates in Sweden, Norway, and Denmark. Read more at wulff.fi/en.