Interim report January - March 2014

08 May 2014 07:30

1 January - 31 March 2014
● Revenues for the quarter increased 3 per cent to SEK 1,441 M (1,405).
● EBITA rose 3 per cent to SEK 133 M (129) and the EBITA margin amounted to 9 per cent (9).
● EBIT amounted to SEK 103 M (103) and the EBIT margin amounted to 7 per cent (7).
● The gross margin increased to 54.1 per cent (53.9).
● Profit after financial items increased to SEK 99 M (87). Other financial items were positively impacted by non-recurring effects of SEK 5 M (0).
● Earnings per share before and after dilution rose to SEK 1.83 (1.77).
● The net debt at the end of the period amounted to SEK 1,738 M (1,854), compared with SEK 1,642 M at the end of the year.

Significant events
● No significant events occurred during the first quarter of 2014.

CEO’s comments

Higher sales and stable operating profit

Overall our position has strengthened during the quarter. Excluding non-recurring costs and excluding the loss in MECA's business in Denmark, earnings improved in all our Group companies.

Mekonomen Group’s revenues for the first quarter of 2014 increased 3 per cent to SEK 1,441 M (1,405) and the operating profit was unchanged at SEK 103 M (103). EBITA increased 3 per cent to SEK 133 M (129). Non-recurring costs totalling SEK 10 M from the cost-savings programme being implemented in the Group were charged to earnings in the first quarter. Adjusted for currency effects and calculated on comparable number of workdays, revenues rose 3 per cent. Comparable sales rose 4 per cent. The late Easter this year had a positive impact on sales for March.

EBIT for MECA decreased to SEK 5 M (21) and the operating margin amounted to 1 per cent (4).

MECA, excluding Denmark, reported EBIT of SEK 29 M (33) and EBITA of SEK 47 M (51) during the first quarter. Net sales increased 4 per cent to SEK 411 M (394). MECA’s earnings were negatively impacted by SEK 9 M in thequarter due to non-recurring personnel-related costs relating to the cost-savings programme.

EBIT in Denmark declined to a loss of SEK 23 M (loss: 13) and net sales fell to SEK 151 M (160). In Denmark, we have a weak market with continued tough competition. The action plan which is being implemented includes ongoing adaptations of the cost structure and increased investment in our workshop chains, that have strong positions in Denmark.

EBIT for Mekonomen Nordic increased to SEK 88 M (79) and the EBIT margin amounted to 13 (13) per cent. EBITA rose to SEK 95 M (83) and the EBITA margin was 14 per cent (14). The underlying net sales increased 5 per cent. EBIT for Mekonomen Sweden was SEK 62 M (62), with an EBIT margin of 14 per cent (15). EBIT for Mekonomen Norway rose to SEK 33 M (25), with an EBIT margin of 17 per cent (13).

EBIT for Sørensen og Balchen rose to SEK 20 M (15) and the operating margin increased to 11 per cent (8). EBITA increased to 24 SEK M (19). Net sales for Sørensen og Balchen declined to SEK 171 M (174). The underlying net sales rose 2 per cent, thanks to the continued favourable development of Sørensen og Balchen’s strong brands and concepts.

The workshop chains of the Group continue to capture market shares and sales to our affiliated workshops in Sweden, Norway and Finland rose 8 per cent in local currency during the first quarter of 2014, compared with the year-earlier period. In Sweden, Norway and Finland sales to Mekonomen Group’s non-affiliated workshops and consumers increased 7 and 4 per cent, respectively, in local currency.

Organic growth is a primary focus in 2014 for the Mekonomen Group. Key elements in our growth effort include e-commerce, our proprietary brands ProMeister and Carwise, as well as the implementation of new concepts for our workshop chains. During the first quarter, we noted that these investments resulted in higher sales to all customer groups.

The coordination of shared functions we have implemented has been successful and we work continuously to evaluate additional potential for coordination within the Group. The aim is a more efficient organisation and work methods throughout the entire Group. As previously announced the programme is calculated to give a positive effect on EBIT of SEK 30 M on a full-year basis as from 2015. Non-recurring costs due to the cost-savings programme are expected to amount to SEK 5 M in the second quarter of 2014.

Mekonomen Group operates in a market and an industry that is characterised by tough competition, which has been very traditional in the distribution between branded workshops and independent workshops. This industry has changed and is beginning to consolidate. We have a scalable platform, for example in purchasing and logistics. This, combined with strong brands and competent employees, makes me convinced that the Mekonomen Group is taking benefit from a continued modernisation of the industry.

Håkan Lundstedt

President and CEO

For further information, please contact:

Håkan Lundstedt, President and CEO, Mekonomen AB, Tel: +46 (0)8-464 00 00
Per Hedblom, CFO, Mekonomen AB, Tel: +46 (0)8-464 00 00
Gunilla Spongh, Head of International Business, 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 8 May 2014 at 7:30 a.m.