Wulff Group Plc’s Half-Year Financial Report for January 1–June 30, 2021
HALF-YEAR FINANCIAL REPORT JULY 26, 2021 AT 10.45 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 www.wulff.fi.
The acquisition boosted revenue and operating profit growth
1.4.–30.6.2021 BRIEFLY
- Wulff became the market leader by acquiring workplace products and services expert Staples Finland Ltd and its Finnish parent company EMO Finland Ltd (hereinafter Wulff Solutions) on May 3, 2021 for EUR 6.0 million
- Net sales totaled EUR 23.2 million (15.1), an increase of 54.1%
- EBITDA grew to EUR 5.1 million (1.7) and comparable EBITDA was EUR 1.3 million (1.7)
- Operating profit was EUR 4.6 million (1.2) and comparable operating profit (EBIT) was EUR 0.8 million (1.2)
- Earnings per share (EPS) was EUR 0.65 (0.09) and comparable earnings per share (EPS) was EUR 0.09 (0.09)
- The equity ratio was 33.0% (38.9)
- Wulff updated the outlook for comparable operating profit on May 3, 2021; Wulff estimates that the net sales will grow to approximately EUR 90 million in 2021 (EUR 57.5 million in 2020), operating profit will grow significantly from the previous year and comparable operating profit will remain at a good level in 2021. Wulff maintains the operating guidelines for operating profits and updates the outlook for net sales: net sales are predicted to grow to more than EUR 90 million.
1.1.–30.6.2021 BRIEFLY
- Net sales totalled EUR 38.5 million (29.8), increased by 29.3%
- EBITDA was EUR 6.0 million (2.4) and comparable EBITDA was EUR 2.3 million (2.4)
- Operating profit was EUR 5.1 million (1.5) and comparable operating profit (EBIT) was EUR 1.4 million (1.5)
- Earnings per share (EPS) was EUR 0.68 (0.09) and comparable earnings per share was EUR 0.13 (0.09)
WULFF GROUP PLC’S CEO ELINA PIENIMÄKI
“Thanks to the acquisition of Staples' Finnish operations in May, we are now the market leader in work environment products and services in Finland. With the acquisition in line with our strategy, our service offering expanded, our purchasing power increased and our ability to renew our product and service offerings and invest in digitalisation improved. I am pleased with the positive feedback we have received regarding the acquisition from our customers, partners, staff and owners.
The two companies, which have both been operating in the market for more than 130 years, have the optimum conditions for merging their operations: the companies are achievers of a pandemic year capable of renewal and adaptation. Moreover, the values that guide their operations and the operating models are similar. The merge will create a strong foundation for future growth through economies of scale.
The merger is proceeding as planned. Our goal is a unified, customer-oriented and efficient management and operating model in Finland. Our goal is to achieve annual synergy benefits of approximately EUR 3 million by 2023. Benefits are expected as early as the end of 2021 and more broadly next year. A wider product range brings additional sales and efficient operating models increase productivity and the quality of the customer experience, and thereby increase competitiveness. We can offer employees more career options and be a more attractive employer.
The transaction was a growth leap for us to become a major domestic player in our industry, and the business outlook is positive for us. We are a competitive and attractive partner: responsibility, locality and multi-channel as values and features invite more and more companies to partner. Combined with the best sales expertise in the Nordic countries, active acquisition of new customers and an international partner network, growth is possible in the future as well.”
GROUP’S NET SALES AND RESULT PERFORMANCE
In January-June 2021 net sales totaled EUR 38.5 million (29.8), and in April-June EUR 23.2 million (15.1). Net sales increased in the first half year period by 29.3% (2.0) and by 54.1% (-2.0) in the second quarter. Net sales increased mainly due to the acquisition of Wulff Solutions on May 3, 2021. The sales of the Expertise Sales segment’s hygiene and protective products decreased from the peak year 2020.
EUR 6.0 million was paid from Wulff Solutions, which is less than the company's net assets at the time of acquisition on May 3, 2021, approximately EUR 10.5 million. EUR 4.5 million arising from the bargain purchase is recognized in the other operating income. The recognition of negative goodwill has been treated as a non-recurring item affecting comparability.
In January-June 2021 the gross margin amounted to EUR 12.4 million (11.0) being 32.2% (36.9) of net sales, and EUR 7.1 million (5.8) in the second quarter being 30.5% (38.6) of net sales. Gross margin increased by EUR 2.3 million thanks to the acquisition of Wulff Solutions on May 3, 2021 but decreased due to lower sales of hygiene and protective products in the Expertise Sales segment than in the comparison period. The gross margin level of the increased Contract Customers segment in relation to net sales is lower than the gross margin level of Expertise Sales segment. In addition, the gross margin level fell short of the comparison period after the price level of hygiene products stabilized from the peak of 2020.
In January-June 2021 employee benefit expenses amounted to EUR 7.5 million (6.5) and 19.4% (21.8) of net sales, and respectively, in the second quarter EUR 4.2 million (3.2), being 18.2% (21.5) of net sales. Wulff ’s employees increased by 114 as a result of the acquisition. The increase in employee benefit expenses in relation to net sales was lower than the 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 3.7 million (2.3) in January-June 2021, being 9.7% (7.7) of net sales and respectively EUR 2.5 million (1.0) in the second quarter, being 10.9% (6.3) of net sales. The non-recurring costs related to the completion of the acquisition were approximately EUR 0.5 million.
In January-June 2021 EBITDA amounted to EUR 6.0 million (2.4) being 15.6% (7.9) of net sales, and EUR 5.1 million (1.7) in the second quarter, being 21.9% (11.2) of net sales. Goodwill recognition of EUR 4.5 million due to the favorable acquisition and EUR 0.7 million of costs arising from the implementation of the acquisition have been deducted from the comparable results. The first half-year period of 2020 did not include items affecting comparability. In January-June 2021 comparable EBITDA amounted to EUR 2.3 million (2.4) being 5.9% (7.9) of net sales, and EUR 1.3 million (1.7) in the second quarter, being 5.8% (11.2) of net sales.
Operating profit (EBIT) amounted to EUR 5.1 million (1.5), 13.3% (5.0) of net sales and respectively EUR 4.6 million (1.2), 19.7% (8.1) in the second quarter. The comparable operating profit (EBIT) amounted to EUR 1.4 million (1.5), 3.6% (5.0) of net sales and respectively EUR 0.8 million (1.2), 3.5% (8.1) in the second quarter.
In January-June 2021 the net total of financial income and expenses totaled EUR -0.2 million (-0.4) including interest expenses EUR -0.1 million (-0.1) and mainly the net of currency-related other financial items and bank expenses EUR -0.1 million (-0.3). In the second quarter, the net total of financial income and expenses totaled (net) EUR -0.1 million (-0.2).
In January-June 2021 the result before taxes was EUR 5.0 million (1.1), in the second quarter the result before taxes was EUR 4.5 million (1.0). In January-June 2021 the comparable result before taxes was EUR 1.2 million (1.1), in the second quarter the comparable result before taxes was EUR 0.7 million (1.0)
The net profit for the reporting period was EUR 4.8 million (0.9) and in the second quarter the net profit was EUR 4.4 million (0.9). The comparable net profit for the reporting period was EUR 1.0 million (0.9) and in the second quarter the comparable net profit was EUR 0.6 million (0.9).
Earnings per share (EPS) was EUR 0.68 (0.09) in January-June 2021, and EUR 0.65 (0.09) in the second quarter. Comparable EPS was EUR 0.13 (0.09) in January-June 2021, and EUR 0.09 (0.09) in the second quarter.
KEY FIGURES
| II | II | I–II | I–II | I–IV | |
| EUR 1000 | 2021 | 2020 | 2021 | 2020 | 2020 |
| Net sales | 23 228 | 15 072 | 38 542 | 29 802 | 57 541 |
| Change in net sales % | 54.1% | -2.0% | 29.3% | 2.0% | 2.1% |
| Gross profit | 7 087 | 5 820 | 12 414 | 10 996 | 20 748 |
| Gross profit. % | 30.5% | 38.6% | 32.2% | 36.9% | 36.1% |
| EBITDA | 5 095 | 1 695 | 6 024 | 2 350 | 5 204 |
| EBITDA margin. % | 21.9% | 11.2% | 15.6% | 7.9% | 9.0% |
| Comparable EBITDA | 1 338 | 1 695 | 2 267 | 2 350 | 5 204 |
| Comparable EBITDA margin. % | 5.8% | 11.2% | 5.9% | 7.9% | 9.0% |
| Operating profit/loss | 4 576 | 1 221 | 5 135 | 1 491 | 3 541 |
| Operating profit/loss margin. % | 19.7% | 8.1% | 13.3% | 5.0% | 6.2% |
| Comparable operating profit/loss | 819 | 1 221 | 1 378 | 1 491 | 3 541 |
| Comparable operating profit/loss margin. % | 3.5% | 8.1% | 3.6% | 5.0% | 6.2% |
| Profit/Loss before taxes | 4 491 | 1 042 | 4 967 | 1 098 | 3 101 |
| Profit/Loss before taxes margin. % | 19.3% | 6.9% | 12.9% | 3.7% | 5.4% |
| Comparable profit/Loss before taxes | 734 | 1 042 | 1 210 | 1 098 | 3 101 |
| Comparable profit/Loss before taxes margin. % | 3.2% | 6.9% | 3.1% | 3.7% | 5.4% |
| Net profit/loss for the period attributable to equity holders of the parent company | 4 368 | 620 | 4 631 | 641 | 2 174 |
| Net profit/loss for the period. % | 18.8% | 4.1% | 12.0% | 2.2% | 3.8% |
| Comparable net profit/loss for the period attributable to equity holders of the parent company | 611 | 620 | 874 | 641 | 2 174 |
| Comparable net profit/loss for the period. % | 2.6% | 4.1% | 2.3% | 2.2% | 3.8% |
| Earnings per share. EUR (diluted = non-diluted) | 0.65 | 0.09 | 0.68 | 0.09 | 0.32 |
| Comparable earnings per share. EUR (diluted = non-diluted) | 0.09 | 0.09 | 0.13 | 0.09 | 0.32 |
| Return on equity (ROE). % | 29.4% | 6.7% | 29.4% | 7.1% | 19.1% |
| Return on investment (ROI). % | 17.5% | 5.1% | 17.5% | 5.6% | 15.2% |
| Equity-to-assets ratio at the end of period. % | 33.0% | 38.9% | 33.0% | 38.9% | 41.9% |
| Debt-to-equity ratio at the end of period | 71.4% | 69.5% | 71.4% | 69.5% | 57.3% |
| Equity per share at the end of period. EUR * | 2.55 | 1.86 | 2.55 | 1.86 | 2.00 |
| Investments in non-current assets | 493 | 147 | 721 | 361 | 719 |
| Investments in non-current assets. % of net sales | 2.1% | 1.0% | 1.9% | 1.2% | 1.2% |
| Treasury shares held by the Group at the end of period | 137 260 | 144 260 | 137 260 | 144 260 | 144 260 |
| Treasury shares. % of total share capital and votes | 2.0% | 2.1% | 2.0% | 2.1% | 2.1% |
| Average number of outstanding shares | 6 770 368 | 6 509 415 | 6 768 318 | 6 519 022 | 6 791 043 |
| 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 | 255 | 193 | 216 | 196 | 189 |
| Personnel at the end of period | 295 | 187 | 295 | 187 | 176 |
* 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 general uncertainty in the global economy also impacts Wulff's operations. The effects of the coronavirus pandemic and the restrictions in place to contain an mitigate the virus have 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
Tomi Hilvo, President and CEO of Wulff Entre, resigned from his position and from Wulff-Group Plc’s Management Team on July 26, 2021. The Group has not had any other significant events after the reporting period.
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 and increasing equality as important elements of its strategy.
Demand for products is significantly affected by general economic and market developments as well as the employment rate. In recent years, the market for workplace products and services in the Nordic countries has remained stable. Wulff estimates that the overall market for workplace products and services will remain stable, despite rapid changes in work environments. With the positive development in vaccine coverage, protection products will no longer be as necessary as they were at the onset of the pandemic. However, safe encounters will continue to be important. Wulff expects demand for hygiene, cleaning, cleaning, and protection products to remain at a good level despite the change. At the same time, the pandemic has brought lasting changes to the way we work; teleworking has increased and 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 return to work and the increased number of new workstations created by the pandemic-driven change in working life in homes and leisure homes.
In Finland, the company focuses on unifying Wulff Solutions Oy's operations with regard to workplace products and services, with the aim of providing the best customer experience and the most responsible and constantly evolving products and services in the industry. Synergies are sought step by step in all activities. The Group's net sales and operating profit are weakened by the situation in the international exhibition services sector, which is recovering slowly. Demand for Wulff Entre's traditional Premium Exhibition services is still low due to the coronavirus pandemic.
Wulff aims to grow profitably and it has the continuing ability to be a more active player in M&A than its competitors.
On May 3, 2021, Wulff estimated that net sales in 2021 will increase to approximately EUR 90 million (EUR 57.5 million in 2020), operating profit will increase significantly from the previous year and comparable operating profit will remain at a good level in 2021. The company maintains its operating guidelines for operating profits and updates its net sales outlook: Wulff estimates that net sales are predicted to grow to more than EUR 90 million (EUR 57.5 million in 2020), operating profit will grow significantly from the previous year and comparable operating profit will remain at a good level in 2021. Wulff's medium-term financial targets remain unchanged. Wulff targets in the medium-term an average annual growth of 5-10% of the net sales, a growing comparable operating profit per cent and an increasing dividend per share.
WULFF GROUP PLC’S FINANCIAL REPORTING
Wulff Group Plc will release the following financial report in 2021:
Interim Report, January-September 2021 Monday October 25, 2021
In Espoo on July 26, 2021
WULFF GROUP PLC
BOARD OF DIRECTORS
Further information:
CEO Elina Pienimäki
tel. +358 40 647 1444
e-mail: elina.pienimaki@wulff.fi
DISTRIBUTION
NASDAQ OMX Helsinki Oy
Key media
A better world – one workplace at a time. Wulff’s goal is a perfect workday! We enable better working environments and create workplaces, wherever you may be. More comfortable, healthier, safer, more enjoyable, more active and more diverse? How do you want to better you workday and working environment? Wulff has the solution. We offer our customers hygiene- and protective products, air purifiers, office supplies, facility management products, catering solutions, IT supplies, ergonomics, first aid, and innovative products for worksites. Customers can also acquire international exhibition services from Wulff. In addition to Finland, Wulff operates in Sweden, Norway, and Denmark. Check out our products and services at wulff.fi/en/.