Interim report January – June 2010

24 August 2010 08:00

1 April – 30 June

•  Revenues increased 9 per cent to SEK 913 M (839).
• EBIT rose 67 per cent to SEK 144 M (86) and the EBIT margin increased to 16 per cent (10).
• Profit after financial items increased 61 per cent to SEK 143 M (89).
• Profit after tax amounted to SEK 107 M (65).
• Earnings per share before and after dilution amounted to SEK 3.29 (1.98).
• Mekonomen will establish its first Mega unit in Helsinki, Finland, during the autumn.
  A total of 15 Mega units are planned for Finland by 2012.
  

  1 January – 30 June

• Revenues increased 8 per cent to SEK 1,716 M (1,583).
• EBIT increased 64 per cent to SEK 234 M (143) and the EBIT margin rose to 14 per cent (9).
• Profit after financial items increased 63 per cent to SEK 234 M (144).
• Profit after tax amounted to SEK 173 M (104).
• Earnings per share before and after dilution amounted to SEK 5.36 (3.17).
• Net indebtedness at the end of the period totalled SEK 108 M (79).

CEO’s comments

Record strong quarter for Mekonomen

• EBIT for the second quarter of 2010 rose 67 per cent
• Strong turnaround in Denmark
• EBIT margin in Norway at record level

Mekonomen’s EBIT for the second quarter of 2010 increased 67 per cent to SEK 144 M (86). The EBIT margin amounted to 16 per cent (10). Revenues increased 9 per cent to SEK 913 M (839). Adjusted for currency effects and calculated on the comparable number of workdays during the period, growth was 10 per cent.

The strong EBIT margin was partly due to an improved gross margin and partly to consistent cost control throughout the operations. While Mekonomen’s sales increased, costs in a number of areas were unchanged.

Growth was a direct consequence of our targeted initiatives: 

• Marketing of Mekonomen Direkt significantly increased consumers’ knowledge of Mekonomen throughout Scandinavia.
• The sales success of Mekonomen’s proprietary-brand products continued. For the wiper blade product category, our own brand accounted for 18 per cent of Mekonomen’s sales in the category. During the second quarter Mekonomen Original Generator was launched and accounted for 20 per cent of Mekonomen´s sales in the category.
• Mekonomen Fleet (the company’s venture in the corporate market) continued to expand. The number of customer agreements was 45 in mid-August.
• Sales to Mekonomen Service Centers increased 27 per cent during the second quarter.
• The number of workshops affiliated to Mekonomen continued to increase and totalled 1,266 (1,152) at the end of the period. The number of stores amounted to 223 (214) during the same period.

EBIT in Denmark for the second quarter rose to SEK 20 M (1) and the EBIT margin for the first six months of 2010 amounted to 6 per cent (0), which indicates a strong turnaround. The positive earnings trend was the result of targeted initiatives in the past three years, which focused on marketing efforts aimed at strengthening the Mekonomen brand and methodical cost-efficiency enhancements.

In Norway, sales increased 13 per cent. The EBIT margin attained a record level of 20 per cent (16). Both growth and profitability were the result of continuing investments in the Mekonomen concept.

EBIT margin in Sweden amounted to 19 per cent (16). Growth was 11 per cent. In June, a regional warehouse was established in Luleå, which will provide Mekonomen with the possibility to further strengthen its customer service in the northernmost parts of Sweden, Norway and Finland. The warehouse in Luleå is also key to the snowmobile spare parts venture. In June, Mekonomen also opened its first M-concept store in Liljeholmen, Stockholm. M is aimed directly at women; its design and product range are adapted to the target group and will continue to be established in malls and shopping centres.

On the Capital Market Day in June 2010, an announcement was made that Mekonomen will soon be initiating an international expansion. The first country outside Scandinavia will be Finland, where the plan is to establish 15 Mega units until 2012.

The strong earnings trend during the second quarter of the year clearly demonstrated that the repositioning of the stores, with store and workshop in the same unit, generated increased revenues and reduced costs. While prioritising consistent cost control, the launch of the Mekonomen concept continues at full speed, to make CarLife easier for our customers.

Håkan Lundstedt
President and CEO

For further information, please contact:
Håkan Lundstedt, President and CEO Mekonomen AB, Tel: +46 (0)8-464 00 00
Gunilla Spongh, CFO Mekonomen AB, Tel: +46 (0)8-464 00 00

Mekonomen makes CarLife easier through a wide and easily accessible range of inexpensive and innovative solutions and products for consumers and companies. We are Scandinavia’s leading spare-parts chain with proprietary wholesale operations, more than 200 stores and more than 1,000 workshops operating under the Mekonomen brand.