Wulff Group Plc’s Interim Report for January 1 – September 30, 2023
INTERIM REPORT | OCTOBER 23, 2023 AT 9.30 A.M.
This is a summary of Wulff Group Plc’s Interim Report January 1–September 30, 2023. The complete report is attached to this stock exchange release as a pdf-file. The report is also available at the website www.wulff.fi.
The third quarter fell short of expectations – operational programme will improve profitability
1.7.–30.9.2023 BRIEFLY
- Net sales totalled EUR 21.2 million (24.0), decreased by 11.6%
- EBITDA was EUR 0.8 million (1.7) and comparable EBITDA was EUR 1.1 million (1.7)
- Operating profit (EBIT) was EUR 0.3 million (1.2) and comparable operating profit (EBIT) was EUR 0.6 million (1.2)
- Earnings per share (EPS) was EUR 0.02 (0.13) and comparable earnings per share was EUR 0.06 (0.13)
- The financial guidance was updated from October 16, 2023: Wulff estimates that comparable operating profit will decrease clearly from 2022 (2022: EUR 4.0 million). Earlier (published on February 20, 2023, last repeated on July 17, 2023), Wulff estimated that net sales (2022: EUR 102.2 million) and comparable operating profit (2022: EUR 4.0 million) will increase compared to 2022.
1.1–30.9.2023 BRIEFLY
- Net sales totalled EUR 70.8 million (74.5), decreased by 4.9%
- EBITDA was EUR 3.5 million (4.4) and comparable EBITDA was EUR 3.8 million (4.4)
- Operating profit (EBIT) was EUR 2.1 million (2.8) and comparable operating profit (EBIT) was EUR 2.4 million (2.8)
- Earnings per share (EPS) was EUR 0.19 (0.29) and comparable earnings per share was EUR 0.23 (0.29)
WULFF GROUP PLC’S CEO ELINA RAHKONEN
Wulff's third quarter was left with our expectations, and we believe the result will grow again next year. During the third quarter, the demand for products and services was influenced by the general tightening of the economic situation. At Wulff, this has been reflected in particular in the profitability of the Group's exhibition services and print and document management services. As a solution-oriented sales company, we are adaptable and react quickly to changes in the market. Investing in sales and cost-effective activities are important elements that build competitiveness in our culture and that is why I believe we will win new customers in all our businesses. The positive profitability development is supported by the merger of Staples Finland Oy’s operations and systems in Finland. Realistic synergies and, for example, updated B2B online store bring savings, streamline our own work, and improve customer experience and service. Integration work is progressing as planned and the last related projects will be completed during the rest of 2023 and early 2024. We will continue our strong responsibility work in the development of our product range and in our own activities. Sustainable development is always sustainable success – with year 2023 falling short of our expectations, the future of a competitive and growth -oriented sales company with a responsible strategy is always bright.
GROUP’S NET SALES AND RESULT PERFORMANCE
In January–September 2023, net sales totalled EUR 70.8 million (74.5), and EUR 21.2 million (24.0) in July–September. Net sales decreased by 4.9% (+18.6) in January–September and by 11.6% (-1.0) in the third quarter. In the third quarter, the Contract Customers Segment's net sales decreased both in Finland and in Scandinavia due to the weakened general market situation. The net sales of the Contract Customers Segment was affected by customer selection, as well as the targeting of new customer sales efforts. The net sales of Wulff's accounting and financial management services increased in the third quarter. The sales of international exhibition services and remote meeting solutions shrank from the comparison period due to the event selections that affected sales targeting. Net sales of the Expertise Sales Segment decreased both in Finland and Scandinavia.
In January–September 2023 the gross margin amounted to EUR 21.3 million (22.5) being 30.1% (30.2) of net sales, and EUR 6.1 million (7.2) in the third quarter being 28.6% (29.8) of net sales. 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 increased. Sales of more traditional workplace products and services follow the general economic and employment situation, decreasing from the comparison period. Price inflation slowed down during the review period. The purchase prices of the best-selling products were still higher than in the comparison period.
In January-September 2023, employee benefit expenses amounted to EUR 12.5 million (12.7) being 17.7% (17.0) of net sales, and EUR 3.5 million (3.7) being 16.4% (15.6) of net sales in the third quarter.
On September 1, 2023, Wulff sold Wulff Beltton AB and Wulff Beltton AS, which were responsible for the loss-making Expertise Sales in Scandinavia, to their minority owners. The sales loss from the transaction was EUR 0.3 million and it increases other operating expenses from the comparison period. The sales loss EUR 0.3 million has been removed from the comparable result of the review period.
Other operating expenses amounted to EUR 5.4 million (5.6) in January–June 2023, being 7.6% (7.6) of net sales, and EUR 1.8 million (1.8), being 8.5% (7.4) of net sales, in the third quarter.
In January–September 2023 EBITDA amounted to EUR 3.5 million (4.4), being 5.0% (6.0) of net sales, and EUR 0.8 million (1.7), being 3.8% (7.0) of net sales, in July–September. In January–September 2023 comparable EBITDA amounted to EUR 3.8 million (4.4), being 5.4% (6.0) of net sales, and EUR 1.1 million (1.7), in the third quarter, being 5.2% (7.0) of net sales.
Operating profit (EBIT) amounted to EUR 2.1 million (2.8), 2.9% (3.7) of net sales, and EUR 0.3 million (1.2), 1.6% (4.9), in the third quarter. The comparable operating profit (EBIT) amounted to EUR 2.4 million (2.8), 3.3% (3.7) of net sales, and EUR 0.6 million (1.2), 3.0% (4.9), in the third quarter.
In January-September 2023, the financial income and expenses totalled (net) EUR -0.7 million (-0.5), including interest expenses of EUR -0.7 million (-0.3), and mainly currency-related other financial items (net) totalled EUR -0.1 million
(-0.2). In the third quarter, the financial income and expenses (net) totalled EUR -0.2 million (-0.2).
In January–September 2023, the result before taxes was EUR 1.3 million (2.2), while the result before taxes was EUR 0.1 million (1.0) in the third quarter. In January–September 2023, the comparable result before taxes was EUR 1.6 million (2.2), while the comparable result before taxes was EUR 0.4 million (1.0) in the third quarter.
In January–September 2023, the net profit was EUR 1.3 million (2.0) and EUR 0.1 million (0.9) in the third quarter. The comparable net profit for the reporting period was EUR 1.6 million (2.0), while the comparable net profit was EUR 0.4 million (0.9) in the third quarter.
Earnings per share (EPS) were EUR 0.19 (0.29) in January–September 2023 and EUR 0.02 (0.13) in the third quarter. Comparable earnings per share (EPS) were EUR 0.23 (0.29) in January–September 2023 and EUR 0.06 (0.13) in the third quarter.
KEY FIGURES
| III | III | I-III | I-III | I-IV | |
| EUR 1000 | 2023 | 2022 | 2023 | 2022 | 2022 |
| Net sales | 21 231 | 24 011 | 70 848 | 74 494 | 102 171 |
| Change in net sales % | -11.6% | -1.0% | -4.9% | 18.6% | 13.0 % |
| Gross profit | 6 068 | 7 157 | 21 315 | 22 475 | 30 986 |
| Gross profit. % | 28.6% | 29.8% | 30.1% | 30.2% | 30.3 % |
| EBITDA | 805 | 1 677 | 3 529 | 4 447 | 6 213 |
| EBITDA margin. % | 3.8% | 7.0% | 5.0% | 6.0% | 6.1 % |
| Comparable EBITDA | 1 096 | 1 677 | 3 821 | 4 447 | 6 213 |
| Comparable EBITDA margin. % | 5.2% | 7.0% | 5.4% | 6.0% | 6.1 % |
| Operating profit/loss | 336 | 1 166 | 2 077 | 2 770 | 3 988 |
| Operating profit/loss margin. % | 1.6% | 4.9% | 2.9% | 3.7% | 3.9 % |
| Comparable operating profit/loss | 628 | 1 166 | 2 369 | 2 770 | 3 988 |
| Comparable operating profit/loss margin. % | 3.0% | 4.9% | 3.3% | 3.7% | 3.9 % |
| Profit/Loss before taxes | 113 | 1 013 | 1 331 | 2 238 | 3 273 |
| Profit/Loss before taxes margin. % | 0.5% | 4.2% | 1.9% | 3.0% | 3.2 % |
| Comparable profit/Loss before taxes | 405 | 1 013 | 1 622 | 2 238 | 3 273 |
| Comparable profit/Loss before taxes margin. % | 1.9% | 4.2% | 2.3% | 3.0% | 3.2 % |
| Net profit/loss for the period attributable to equity holders of the parent company | 119 | 888 | 1 278 | 1 965 | 3 052 |
| Net profit/loss for the period. % | 0.6% | 3.7% | 1.8% | 2.6% | 3.0 % |
| Comparable net profit/loss for the period attributable to equity holders of the parent company | 410 | 888 | 1 569 | 1 965 | 3 052 |
| Comparable net profit/loss for the period. % | 1.9% | 3.7% | 2.2% | 2.6% | 3.0 % |
| Earnings per share. EUR (diluted = non-diluted) | 0.02 | 0.13 | 0.19 | 0.29 | 0.45 |
| Comparable earnings per share. EUR (diluted = non-diluted) | 0.06 | 0.13 | 0.23 | 0.29 | 0.45 |
| Return on equity (ROE). % | 0.6% | 4.4% | 6.2% | 10.0% | 15.5 % |
| Return on investment (ROI). % | 1.0% | 3.2% | 5.7% | 7.6% | 11.2 % |
| Equity-to-assets ratio at the end of period. % | 42.3% | 40.2% | 42.3% | 40.2% | 40.5 % |
| Debt-to-equity ratio at the end of period | 67.6% | 68.7% | 67.6% | 68.7% | 60.6 % |
| Equity per share at the end of period. EUR * | 3.11 | 2.94 | 3.11 | 2.94 | 3.02 |
| Investments in non-current assets | 361 | 416 | 1 084 | 1 859 | 2 479 |
| Investments in non-current assets. % of net sales | 1.7% | 1.7% | 1.5% | 2.5% | 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 | 6 859 969 | 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 | 260 | 286 | 269 | 287 | 286 |
| Personnel at the end of period | 245 | 284 | 245 | 284 | 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 financial guidance was updated from October 16, 2023 onward especially due to the decline in net sales and profitability of the company's international exhibition and remote studio business, and the company’s printing and document management services. Also, the tightening of the general economic situation has affected the group's operations. Wulff expects comparable operating profit to decrease clearly compared to 2022 (2022: EUR 4.0 million). Earlier (published on February 20, 2023, last repeated on July 17, 2023), Wulff estimated that net sales (2022: EUR 102.2 million) and comparable operating profit (2022: EUR 4.0 million) will increase compared to 2022.
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.
Wulff has systematically renewed its business organizations for Finnish workplace products and services. After the acquisition of Staples Finland Oy (later Wulff Solutions Oy) in the spring of 2021, the sales, administration and support functions of Wulff Oy Ab and Wulff Solutions Oy were combined in the August-September 2021 cooperation negotiations. Thanks to the consolidation of the organization, the company achieved annual personnel cost savings of approximately EUR 1.9 million. In total, the measures implemented in stages will bring at least EUR 3 million cost benefits annually, of which approximately EUR 2.5 million were achieved during the 2022 financial year. In addition to the reorganization of personnel, synergy will be achieved through, among other things, the integration of information systems, logistics and operational processes, and business premises. During January-September 2023, Wulff has achieved a cost synergy benefit of approximately 0.6 million euros with the above-mentioned measures.
Wulff's goal is to grow profitably, and it is constantly ready to be a more active player in business arrangements than its competitors.
FINANCIAL GUIDANCE
The tightening of the general economic situation has affected the group's operations. Wulff expects comparable operating profit to decrease clearly compared to 2022 (2022: EUR 4.0 million).
In Espoo on October 23, 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.