Wulff Group Plc’s Interim Report for January 1 – March 31, 2023

INTERIM REPORT | APRIL 24, 2023 AT 9.30 A.M.

This is a summary of Wulff Group Plc’s Interim Report for January-March 2022. Wulff Group’s Interim 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/en.

Wulff’s fine Q1: profitability remained good - turnover decreased slightly

1.1.-31.3.2023 BRIEFLY

• Net sales totalled EUR 25.3 million (25.6), increased by 1.4 %.
• EBITDA and comparable EBITDA were EUR 1.4 million (1.8).
• Operating profit and comparable operating profit (EBIT) amounted to EUR 0.9 million (1.2).
• Earnings and comparable earnings per share (EPS) were EUR 0.08 (0.13).
• Equity-to-assets ratio improved to 41.6 % (39.8).
• Kari Juutilainen, Lauri Sipponen, Jussi Vienola, and Kristina Vienola were elected as members to the Board of Directors. Kari Juutilainen was elected as the Chairman of the Board by the Board of Directors.
• The outlook remains the same; Wulff estimates that net sales and comparable operating profit 2023 will increase compared to 2022.

WULFF GROUP’S CEO ELINA RAHKONEN

Although our turnover decreased slightly, we are satisfied that the number of customers is increasing in all our operating countries and our position as a partner in selected industries, for example in the care industry has strengthened. The integration of Staples Finland which was purchased in spring 2021, into our workplace product and service business is progressing as planned, and we will achieve more synergies in operations during 2023.

At the beginning of the year, turnover was affected by the comparison period's brisk sales of products related to the coronavirus pandemic in both the Contract Customer and Expert Sales segments, and profitability by widespread price inflation. Our growth continued strongly in the Nordic countries, in account and financial management services, and in the sale of Wulff Entre's international exhibition services and remote meeting solutions. We have a good business strategy, we are committed to our guidelines, and we expect our turnover and comparable operating profit to increase compared to 2022. I'm proud of how important it is for every Wulf resident to influence the development of our operations to become more and more responsible and to offer the best customer experience in the industry. Wulff's strong sales culture is also appreciated by our customers and partners: we are trusted as the best and most expert distribution channel in the industry.

GROUP’S NET SALES AND RESULT PERFORMANCE

In January-March 2023 net sales totalled EUR 25.6 million (25.6). Net sales decreased by 1,4 % (67.2). Sales growth in the Contract Customers Segment continued, especially in Scandinavia, while in the domestic market the segment’s sales decreased. The turnover of Contract Customers Segment in Finland was affected by the emphasis on profitability and the resulting policies in customer selection, as well as the expected continued contraction of sales of protective products. In Q1, the Wulff Solutions acquisition on May 3, 2021, had an impact on net sales of EUR 9.2 million (10.6). Wulff’s accounting and financial services took a significant growth step in the beginning of year 2022 by acquisition Carpentum Oy. Due to the acquisition, the sales of the financial administration services business have grown in line with expectations. Sales of Wulff Entre's international exhibition services and remote meeting solutions increased clearly during the reporting period. In Expertise Sales Segment, the decrease in demand for hygiene and protective products was reflected in a contraction in turnover, as expected.

The gross margin amounted to EUR 7.8 million (8.2) being 30.7% (32.0) of net sales in January-March 2023. The company's integration into Wulff's Contract Customers Segment progressed as planned during the reporting period. The development of the relative sales margin was influenced by changes in the priority areas of demand for the products sold by Wulff. After the pandemic, the share of sales of more traditional workplace products and services is returning towards the previous level. The sales margin of workplace products is strongly affected by widespread price inflation. In particular, the price inflation of the products in most demand was significantly more prominent in the review period. During the reporting period, the availability of products has normalized and the development of logistics costs has leveling off. The Contract Customers Segment share of turnover and gross margin increased slowly during the reporting period than the comparison period. The sales of the Expertise Sales Segment decreased from the comparison period, e.g., with the decrease in sales of hygiene and protective products.

In January-March 2023 employee expenses amounted to EUR 4.6 million (4.5) being 18.1% (17.4) of net sales. Personnel costs increased in relation to turnover by 0.5 % units.

Other operating expenses amounted to EUR 1.8 million (2.0) in January-March 2023 being 7.1% (7.7) of net sales. As planned, the group used fewer external services than in the comparison period.

In January-March 2023 EBITDA and the comparable EBITDA amounted to EUR 1.4 million (1.8), 5.6 % (7.0) of net sales.

The operating profit (EBIT) and the comparable operating profit (EBIT) amounted to EUR 0.9 million (1.2), 3,6 % (4.7) of net sales. The first quarters of 2023 and 2022 did not include items affecting comparability.

In January-March 2023 the financial income and expenses totalled (net) EUR -0.2 million (-0.2) including interest expenses of EUR -0.2 million (-0.2) and mainly currency-related other financial items and bank expenses EUR -0.1 million (-0.1). The Financial expenses were EUR 0.03 million higher than the comparison period due to the rise in interest rates.

In January-March 2023 the result before taxes was EUR 0.7 million (1.0), and the net profit EUR 0.6 million (0.9).

Earnings per share and comparable earnings-per-share (EPS) were EUR 0.08 (0.13) in January-March 2023.

KEY FIGURES

* 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. The intensity of the inflation trend has been affected by the increase in the cost of energy commodities and logistics-related costs, e.g. as a result of Russia's invasion of Ukraine. The development of global and local economies is affected by rising prices and monetary policy decisions aimed at combating 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 demographic development 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. Digitalization brings new ways for an already multi-channel company to reach and serve customers and streamline its own operations. Of all megatrends, the most significant for Wulff's operations are responsible operations and 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 and services is significantly affected by general economic and market developments as well as the employment rate. The market for workplace products and services has developed stably in the Nordic countries, except for fluctuations caused by the Coronavirus pandemic during the comparison period and the previous period. Wulff estimates that the overall market for workplace products and services will remain stable, even when there are rapid changes in work environments. Safe face-to-face meetings are taken care of even after the Coronavirus pandemic, and that is why Wulff estimates that the demand for hygiene, cleaning, sanitation, and protection products will remain livelier in the future than it was before the pandemic. The 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 continues to develop post-pandemic. This is due to the return to work and the increased number of new workstations. 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.

The on-going geopolitical crisis, the Russian invasion to 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 business. Changes into global supply chains have intensified and broadened the recent price inflation development. The availability challenges of many product groups have eased with the reorganization of global supply chains and the leveling off, of the demand peak that followed the pandemic. Especially in Europe, the uncertainty related to the availability of energy commodities has caused an increase in logistics costs. Continued inflation makes it necessary to secure the development of gross margin. The uncertainty concerning the intensity and broadening of inflation sets 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 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. In the same context, Group announced that they believed in annual cost synergy benefits totalling at least EUR 3 million to be realized in stages and a significant part of which was expected to be realized already in 2022. Wulff announced that during the 2022 fiscal year, it has achieved a total of approximately 2.5 million euros in annual cost synergy benefits thanks to reorganization measures, for example the unification of information systems and logistics and operational processes, as well as office space changes.

Thanks to the reorganization measures implemented, Wulff achieved a cost synergy benefit of approximately 0.2 million euros in the review period.

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 reports in 2023:

Half-Year Report January-June 2023                     Monday July 17, 2023

Interim Report January-September 2023              Monday October 23, 2023

In Espoo on April 24, 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.