Year-end Report January - December 2011

15 February 2012 08:00

1 January – 31 December

• Revenues increased 25 per cent adjusted for currency effects and calculated on comparable workdays. Prior to adjustments, revenues increased 23 per cent to SEK 4,237 M (3,447).
• EBIT increased 11 per cent to SEK 536 M (485) and the EBIT margin amounted to 13 per cent (14).
• Profit after financial items rose 8 per cent to SEK 523 M (485).
• Profit after tax amounted to SEK 380 M (351).
• Earnings per share before and after dilution amounted to SEK 11.39 (10.95).
• The Board proposes a dividend of SEK 8.00 (8.00).

1 October – 31 December

• Revenues increased 22 per cent adjusted for currency effects and calculated on comparable workdays. Prior to adjustment, revenues increased 22 per cent to SEK 1,088 M (892).
• EBIT amounted to SEK 104 M (110) and the EBIT margin to 10 per cent (12).
• Profit after financial items amounted to SEK 100 M (111).
• Profit after tax totalled SEK 71 M (78).
• Earnings per share before and after dilution were SEK 2.16 (2.52).
• Net debt totalled SEK 580 M (12) at the end of the period.

Significant events

• On 12 October, Mekonomen signed an agreement to acquire Meca. Meca’s sales forecast for 2011 amounted to approximately SEK 1,500 M and operating profit to about SEK 180 M. The acquisition was approved by Swedish Competition Authority in December 2011 and a decision by the Norwegian Competition Authority is expected at latest on March 16, 2012
• The acquisition of Sørensen og Balchen in Norway had an impact of SEK 176 M on net sales for the fourth quarter and SEK 603 M for the 11 March – 31 December period. EBIT was impacted by SEK 25 M for the quarter and SEK 88 M for the 11 March – 31 December period.
• EBIT was impacted by SEK 23 (10) M during the quarter and SEK 58 (10) M for the full-year, attributable to acquisition costs in connection with Sørensen og Balchen, as well as Meca and other ventures.

CEO’s comments

Operating profit for the full-year increased 11 per cent – revenues rose 23 per cent

Improved revenues for 2011 despite a weak market

Mekonomen’s EBIT for the full-year 2011 increased to SEK 536 M (485) and revenues rose 23 per cent to SEK 4,237 M (3,447).

During the fourth quarter, revenues increased 22 per cent. Operating profit declined 5 per cent to SEK 104 M (110), primarily due to non-recurring costs of SEK 23 M, consisting of in long-term investments of SEK 12 M and costs totalling SEK 11 M in connection with the acquisition of Meca.

The number of affiliated workshops rose in 2011 to 1,683 (1,336) and the number of stores increased to 334 (230). Sørensen og Balchen was acquired in March and in October an agreement was signed to acquire Meca Scandinavia. The acquisition of Meca has been approved by the Swedish Competition Authority and is being investigated by the Norwegian Competition Authority. During the year, several market initiatives were implemented, for example, new Mega units, the establishment in Finland, the marine venture, proprietary workshops, as well as the integration of Sørensen og Balchen.

The 2011 financial year was characterised by weak market growth, primarily pertaining to consumer and accessories sales. Particularly in the fourth quarter, the market was negatively impacted partly by the warm weather and partly by the negative general economic outlook. However, Mekonomen experienced stronger growth than the total market in the Nordic region for both the fourth quarter and the full-year 2011, mainly due to successful market investments.

EBIT in Denmark for the full-year 2011 rose to SEK 63 M (45) and the EBIT margin to 8 per cent (6). Operating profit for the fourth quarter declined to SEK 1 M (7), primarily due to intense market investments to increase the number of affiliated workshops, as well as a tougher competitive environment.

Operating profit for Sørensen og Balchen in the fourth quarter amounted to SEK 25 M and for the 11 March – 31 December period to SEK 88 M. The integration work has been very successful. Sørensen og Balchen is operated as an independent group within Mekonomen, with its own brand and store concept.

EBIT margin in Sweden for the full-year 2011 amounted to 18 per cent (18) and sales rose 2 per cent. Sales in affiliated workshops rose significantly during the year and Mekonomen Fleet noted considerable successes.

The EBIT margin in Norway for the full-year 2011 amounted to 16 per cent (18) and sales rose 2 per cent, adjusted for currency effects and calculated on comparable number of workdays. During the year, market initiatives were implemented with the establishment of Medium and Mega units in Norway. Mekonomen Fleet also had a breakthrough in the Norwegian market in 2011.

Costs for Mekonomen’s long-term market initatives will also have an impact of approximately SEK 10 M on earnings during the first quarter of 2012. In addition, it is estimated that non-recurring costs in connection with the acquisition of Meca will impact earnings by a further SEK 9 M during the first quarter.

After a year of ambitious initiatives, including two major acquisitions, Mekonomen now has a stable platform. Consequently, the 2012 financial year will be one of consolidation, with a focus on improved profitability in a market that will most likely remain weak. The investments implemented during 2011 constitute a stable foundation to further confirm the role as the leading player in the Nordic region within our market segment. Mekonomen’s journey continues!

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

The information in this interim report is such that Mekonomen is obligated to publish in accordance with the Securities Market Act.

The information was submitted for publication on 15 February 2012.

Mekonomen makes CarLife easier through a wide and easily accessible range of inexpensive and innovative solutions and products for consumers and companies. We are the leading automotive spare-parts chain in the Nordic region, with proprietary wholesale operations, more than 300 stores and more than 1,600 workshops operating under the Mekonomen brand.