Interim report January - June 2021

20 August 2021 07:30

April 1–June 30, 2021

• Net sales increased 11 percent to SEK 3,210 M (2,894). Organic growth was 12 percent. Net sales were negatively impacted 2 percent due to currency effects.
• Adjusted EBIT amounted to SEK 314 M (281) and the adjusted EBIT margin was 10 percent (10).
• EBIT totaled SEK 280 M (211) and the EBIT margin was 9 percent (7). EBIT was not impacted by any items affecting comparability during the quarter (neg: 31).
• Earnings per share, before and after dilution, amounted to SEK 3.24 (2.49).
• Cash flow from operating activities amounted to SEK 406 M (669).
• Net debt was SEK 2,549 M (3,299) at the end of the period, compared with SEK 2,673 M at December 31, 2020 and SEK 2,733 M at March 31.
• Restrictions related to covid-19 had a limited impact on the quarter, while the comparative period was adversely impacted by the outbreak of covid-19 and the data breach.

January 1–June 30, 2021

• Net sales increased 8 percent to SEK 6,211 M (5,768). Organic growth was 11 percent. Net sales were negatively impacted by currency effects of 3 percent.

• Adjusted EBIT amounted to SEK 538 M (379) and the adjusted EBIT margin was 9 percent (6).
• EBIT totaled SEK 466 M (270) and the EBIT margin was 7 percent (5). EBIT was not impacted by any items affecting comparability during the period (neg: 31).
• Earnings per share, before and after dilution, amounted to SEK 5.10 (2.20).
• Cash flow from operating activities amounted to SEK 585 M (731).
• Restrictions related to covid-19 had a limited impact on the period, while the comparative period was adversely impacted by the outbreak of covid-19 and the data breach.
• New financing through the issue of a senior unsecured bond of SEK 1.25 billion.
• At the capital markets day held on February 25 an updated strategy was presented to achieve the long-term financial targets.

CEO comments

Strong performance in an improved market
We have reported a strong second quarter with increased organic growth and improved profitability. The quarter was characterized by easing restrictions, increased activity and strong demand for our products and services. We estimate that we have gained market share in several of our markets while further strengthening our financial position. Overall, Mekonomen Group has a unique position where we strongly can capitalize on the timeless need for mobility. I am convinced that we will continue to deliver profitable and sustainable growth.

Strong organic growth
We reported strong organic growth in net sales of 12 percent in the second quarter, primarily driven by increased activity in our markets. Currency effects had a negative impact on growth of 1.5 percent. Market trends benefited from an easing in covid-19 restrictions, even if the number of vehicle kilometers driven by the vehicle fleet as a whole is lower than normal. Higher raw material prices, a shortage of individual components and disruptions in supply chains had an impact on market development. However, we have largely offset this by being proactive and through strong relationships with our suppliers. Overall, we secured good access to spare parts and accessories, and even created opportunities for some stock-building and greater diversity in our inventory. As we move forward, we expect underlying demand for our products and services to remain favorable.

Sustained profitable growth
Profitability increased during the quarter as a result of strong growth combined with a continued focus on cost reductions. EBIT rose to SEK 280 M (211) and the EBIT margin to 9 percent (7). The year-earlier quarter was adversely impacted both by the data breach the MECA/Mekonomen business area experienced in spring 2020 and the beginning of the covid-19 pandemic. The initiatives and structural measures we implemented last year had a clear positive impact on profitability for the quarter. The gross margin improved to 45.5 percent (45.3), with positive contributions from the previously implemented currency-related price increases.

Strong financial position opens for new opportunities
In the past year, we have consistently worked to strengthen our financial position. This work continued during the quarter, when our net debt relative to EBITDA, excluding effects from IFRS 16, decreased to 2.0 times (3.8). This is in the lower portion of our strategic target range. Cash flow from operating activities amounted to SEK 406 M (669), where the year-earlier period was positively impacted by deferred VAT and tax payments of approximately SEK 300 M. This position of strength offers us favorable preconditions to manage market fluctuations and to, in line with our strategy, invest in continued growth. This could be organic in our existing operations or through strategic acquisitions. Profitable growth through acquisitions is one of our most distinct historical strengths, as we have over the years built extensive knowledge of how to create synergies and improve margins.

Letter of intent with electric car producer Fisker
One strong overall trend is increased sales and service of electric cars. It was particularly gratifying, and evidence of our strong position, to sign a letter of intent during the quarter with the electric car producer Fisker concerning spare parts, service and repairs in Denmark, Norway and Sweden. The agreement means we will extend our wholesale operations to include spare parts, and train workshops to take care of service and repairs. Together with Fisker, we will in this way develop an innovative and simple logistics model and aftermarket business. We also see major opportunities for growth together with other electric car players in the transition to greener technology in the vehicle aftermarket.

Well-positioned for tomorrow’s market
Mekonomen Group is a leading player in the market today with excellent opportunities to further strengthen its position through the transformation toward an even more sustainable and profitable company. I am proud of what we have achieved together during the past year. We have met demand through proactivity in our purchasing and strong relationships with our suppliers and in parallel improved our profitability through continued cost discipline. The Group’s financial position is strong and we are well prepared. Our goal is clear: We will be the best and broadest partner for everyone that services and maintains cars in our markets – today and in the future.

Pehr Oscarson
President and CEO

This information is such information that Mekonomen AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 a.m CET on August 20, 2021. The interim report is published in Swedish and English. The Swedish version is the original version and has been translated into English.