Increased growth and stronger financial position
The second quarter shows MEKO’s stability even in a weak economy. We increased sales, improved operating profit and generated higher cash flow. It was particularly important that we substantially strengthened our financial position by reducing our debt/equity ratio. In parallel, we are addressing the macro-environmental challenges of above all rising prices by intensifying activities to increase our margins.
AUGUST 23, 2023
More favorable market – growth in all business areas
MEKO enables mobility by offering spare parts, service and workshop concepts in eight markets around the Baltic Sea, which makes us the industry leader in northern Europe. We know that the need for servicing and repairs remains constant even if some demand may be temporarily postponed during difficult times. The second quarter confirmed the pattern and demand increased from several customer groups, thereby improving market conditions, particularly in Sweden, Norway and Denmark. Overall, net sales increased in all business areas and were up 28 percent in total. Organic growth was 9 percent. The sharpest increase was noted in the Poland/the Baltics and Denmark business areas.
Increased operating profit – and measures to strengthen margins
The strong sales trend and our acquisition of Koivunen in 2022 contributed to the increase in operating profit. EBIT amounted to SEK 304 M (185), including the effect of the strategically important property sale carried out in Finland in May. Even excluding the impact of this sale, earnings increased where adjusted EBIT rising to SEK 270 M (240). The healthy performance in the Sweden/Norway business area was particularly positive.
We are concurrently responding to challenges. This pertains to factors including rising prices and the impact of the weak SEK and NOK against the EUR. Added together, this had a negative impact on our adjusted EBIT margin for the quarter. This motivates us to intensify efforts to reduce costs, adjust prices and to negotiate more with sub-suppliers. The action plans we launched earlier in the Denmark and Sweden/Norway business areas are beginning to produce results, which is positive.
Stronger financial position – according to plan
The property sale in Finland has considerably strengthened MEKO’s financial position and our debt/equity ratio is decreasing according to plan. This again demonstrates our ability to identify values in major acquisitions and our capacity to effectively reduce the loan-to-value ratio after completion of an acquisition. At the end of the quarter, we had a debt ratio of 2.61 measured as net debt in relation to annual EBITDA, well within the target range of 2.0 to 3.0. It is also gratifying that cash flow increased compared with the year-earlier period, even without the impact of the property sale.
MEKO now has adequate financial flexibility for investments, acquisitions and also dividends – in line with our objective. In May, the Annual General Meeting resolved to raise the dividend to SEK 3.30 (3.00) per share with disbursement in two instalments. The first payment of SEK 1.10 per share took place in May and the remaining SEK 2.20 per share will be distributed in November.
Mobility barometer 2023: Car remains unchallenged favorite
As industry leader, our ambition is to drive development in all areas. For example, we have the most complete offering in the market for servicing and repairing electric cars. In parallel, we are constantly developing new services for modern car life. In order to respond to and create demand for new services, we conduct the Mobility Barometer – the largest survey of mobility habits in the Nordic region. This year’s survey was launched in May and the main conclusion is clear: The car remains by far the most popular mode of transport. The survey illustrates a strong belief in the car’s role in the future.
MEKO will also be a leader in sustainability. I am therefore pleased that we, as one of the first companies in the industry, linked sustainability targets to our existing bank loans during the quarter. This will accelerate our sustainability agenda. Above all, this is essential if we are to continue to live up to MEKO’s vision: We enable mobility – today, tomorrow and in the future.
President and CEO