Year-end report January - December 2021

11 February 2022 07:30

Strong end to a historically profitable year

October 1–December 31, 2021

• Net sales increased 9 percent to SEK 3,129 M (2,879). Organic growth was 7 percent.
• Adjusted EBIT amounted to SEK 203 M (287) and the adjusted EBIT margin was 6 percent (10).
• EBIT totaled SEK 173 M (260) and the EBIT margin was 5 percent (9). EBIT was positively impacted by items affecting comparability during the quarter of SEK 3 M (pos: 11).
• Earnings per share, before and after dilution, amounted to SEK 2.09 (3.29).
• Cash flow from operating activities amounted to SEK 192 M (373).
• Net debt was SEK 2,264 M (2,673) at the end of the period, compared with SEK 2,275 M at September 30.
• Restrictions related to covid-19 had a limited impact on the quarter and the comparative period. 
• The comparative period was impacted by insurance compensation of SEK 56 M related to the loss of income resulting from the data breach during the second quarter 2020.

January 1–December 31, 2021

• Net sales increased 7 percent to SEK 12,309 M (11,511). Organic growth was 8 percent. Net sales were negatively impacted by currency effects of 2 percent.
• Adjusted EBIT amounted to SEK 1,031 M (937) and the adjusted EBIT margin was 8 percent (8).
• EBIT totaled SEK 894 M (738) and the EBIT margin was 7 percent (6). EBIT was positively impacted by items affecting comparability during the period of SEK 3 M (neg: 44).
• Earnings per share, before and after dilution, amounted to SEK 10.21 (7.67).
• Cash flow from operating activities amounted to SEK 1,227 M (1,625).
• 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.
• The data breach impacted the comparative period, but insurance compensation of SEK 63 M largely compensated for the financial impact of the loss of income.
• New financing through the issue of a senior unsecured bond of SEK 1.25 billion during the first quarter.
• At the capital markets day held on February 25, an updated strategy was presented to achieve the long-term financial targets.
• The Board of Directors proposes a dividend of SEK 3,00 (-).

CEO comments

Strong end to a historically profitable year
2021 will go down in history as the most profitable year ever for Mekonomen Group. The fourth quarter has confirmed our strong position with robust growth and reasonably good profitability, despite some market impact from the increased spread of covid-19 and the reintroduction of restrictions. Overall, we can see continued strong demand, and estimate that we have gained market shares. Looking ahead, I am very optimistic. We have the strength to effectively manage the challenges in the world around us and lead the transition of our industry. We possess a tried and tested ability to generate value through carefully chosen strategic acquisitions. I am convinced that we will continue to deliver profitable growth.

Strong demand in our markets
The fourth quarter continued to demonstrate strong demand in most of our markets. Market development benefited from a slightly colder winter, but was to some extent adversely impacted by the spread of covid-19 and the reintroduction of restrictions in response to rising infection rates. Organic net sales growth was 7 percent, primarily driven by strong growth in Poland and Sweden. A shortage of certain components and disruptions in supply chains had some impact on the market development, but we were proactive in our purchasing and leveraged our strong relationships with suppliers. This ensured good access to spare parts and accessories and enabled us to accumulate some stock during the quarter. 

Healthy level of profitability
Profitability remained positive, despite the impact of investments for future growth, such as marketing investments, as well as higher transport costs. Some cost increases, related to a general inflation trend in our operating environment, had a marginal impact. EBIT amounted to SEK 173 M (260) and the EBIT margin was 5 percent (9), including items affecting comparability of SEK 3 M (11). The year-earlier quarter was positively impacted by the payment of insurance compensation of SEK 56 M and government grants of SEK 8 M related to covid-19. The gross margin was 45.4 percent (45.9), as higher volumes and earlier price adjustments could not fully offset negative currency fluctuations and a slight change to the product mix. We are carefully monitoring developments and will take further action as required to safeguard and strengthen our margins.

Strong financial position enables dividend
The Board of Directors proposes a dividend of SEK 3.00 (0.00) per share for 2021, corresponding to a total dividend of SEK 168 M (0). Consideration has been taken to the company´s potential acquisition opportunities, financial position, investment needs and future prospects. Net debt decreased to SEK 2,264 M (2,673) and cash flow from operating activities decreased somewhat to SEK 1,227 M (1,625) during the financial year, following some inventory build-up and higher sales. Our net debt/EBITDA decreased to 1.9 times (2.5), which is slightly below our target range and offers an adequate margin to our bank covenants.

Well-positioned for the green transition
Mekonomen Group is a leading participant in the green transition that the automotive aftermarket is undergoing. At the beginning of the quarter, we achieved the target that 1,500 of our workshops shall comply with level 1 of the E+ standard. This provides a guarantee that the right expertise and equipment are available to take care of the majority of work required on modern electric cars. Our head start offers favorable conditions to achieve the target of becoming the preferred choice for electric car owners in Northern Europe. We are continuing to rapidly raise the level of expertise, expand the product range and develop services as more companies and consumers switch to electric cars. We now cover a satisfactory range of the spare parts needs of the 30 most popular electric car models in our markets, and are working quickly to achieve full coverage in 2022.

Top-class, future-proof logistics
One of our greatest strengths is highly efficient logistics. This enables rapid deliveries, increased availability, and better working conditions at the same time as we reduce the risk of disruption. We are also meeting the increased environmental requirements and can continue the digitization of the value chain at full force. Confirmation of our extensive expertise in this field came in October when we received the Retail Award in the category for Logistics Initiative of the Year. We received the award for our logistics transformation when we merged our two Swedish central warehouses. Today, 70 percent of our order rows in the Swedish central warehouse are handled by the automated logistics solution.

A historic year – when we continued to benefit from earlier acquisitions
We can now look back on the best-ever year in terms of earnings since Mekonomen Group was founded 49 years ago. Our financial position is strong and we can not only pay a dividend to our shareholders but also invest in profitable growth, both organically and through acquisitions. Our carefully chosen strategic acquisitions in particular continue to generate long-term value in the Group. FTZ in Denmark, Inter-Team in Poland and Sørensen og Balchen in Norway are all examples of acquired companies that are increasingly making a positive contribution to our growing profitability. Partly due to their successful efforts in their respective markets, but also as a result of the substantial synergies we have created in the Group. This is an important element in our proven strategy for sustainable value generation that we will continue to follow. I am proud of what the Group has achieved during the year and would like to say a huge thank you to all employees and shareholders.

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 contactperson set out above on February 11, 2022
at 07:30. The interim report is published in Swedish and English. The Swedish version is the original version and has been translated into English.