Year-end report January - December 2022

15 February 2023 07:30

October 1 - December 31, 2022

• Net sales increased 24 percent to SEK 3,895 M (3,129). Adjusted for the acquisition of Koivunen, net sales increased 10 percent. Organic growth was 5 percent. 
  Net sales were positively impacted by 4 percent due to currency effects.
• Adjusted EBIT amounted to SEK 198 M (203) and the adjusted EBIT margin was 5.0 percent (6.3).
• EBIT amounted to SEK 148 M (173) and the EBIT margin was 3.7 percent (5.4). EBIT was negatively impacted in the quarter by items affecting comparability of SEK 22 M (pos: 3), related to restructuring in the Norwegian operations in the Sweden/Norway business area.
• Earnings per share, before and after dilution, amounted to SEK 2.05 (2.09).
• Cash flow from operating activities amounted to SEK 326 M (192).
• Net debt was SEK 3,558 M (2,264) at the end of the period, compared with SEK 3,659 M at September 30.
• The uncertain global situation impacted sales and profitability in the quarter in several of the Group’s markets.

January 1–December 31, 2022

• Net sales increased 14 percent to SEK 14,067 M (12,309). Adjusted for the acquisition of Koivunen, net sales increased 7 percent. Organic growth was 3 percent. Net sales were positively impacted by 3 percent due to currency effects. 
• Adjusted EBIT amounted to SEK 945 M (1,031) and the adjusted EBIT margin was 6.6 percent (8.2).
• EBIT amounted to SEK 759 M (894) and the EBIT margin was 5.3 percent (7.1). EBIT was negatively impacted in the period by items affecting comparability of SEK 70 M (pos: 3), of which SEK 48 M was related to costs and transaction tax in conjunction with the acquisition of Koivunen and SEK 22 M was attributable to restructuring in the Norwegian operations in the Sweden/Norway business area.
• Earnings per share, before and after dilution, amounted to SEK 8.12 (10.21).
• Cash flow from operating activities amounted to SEK 1,048 M (1,227). 
• During the period, the Parent Company Mekonomen AB (publ.) completed its name change to MEKO AB (publ.). 
• On July 1, MEKO finalized the acquisition of Koivunen with operations in Finland and the Baltics for a purchase consideration of EUR 131 M and the operations were included in MEKO’s financial statements from that date. 
• As of the third quarter of 2022, the Group reports according to five business areas: Denmark, Finland, Poland/the Baltics, Sweden/Norway and Sørensen og Balchen (Norway). Comparative figures have been restated.
• Restrictions related to covid-19 affected both the period and the comparative period, but to a varying extent in the different business areas. 
• The uncertain global situation impacted sales and profitability in the period in most of the Group’s markets, and had a negative impact on cash flow due to the build up of buffer inventory to offset the impact of disruptions in the supply chain.
• The Board of Directors proposes a dividend of SEK 3.30 (3.00) to be paid in two installments, 1.10 in May and 2.20 in November.

CEO comments

Strong growth and improved cash flow
I am pleased with the underlying strength demonstrated by MEKOs performance in the fourth quarter. In a challenging global situation, our organic growth increased while our business model remains stable and generates strong cash flow. We have established a position as market leader in northern Europe and are ramping up our efficiency enhancement efforts. Overall, we have a healthy financial position and can look back on one of our strongest years so far. It is gratifying that the Board can propose a dividend of SEK 3.30 per share for 2022.

Industry leader in northern Europe
MEKO is leading our industry in northern Europe: enabling mobility by providing workshops with spare parts, services and workshop concepts under established brands and with unbeatable logistics and availability. Following the strategic acquisition of Koivunen, we strengthened our position in Finland and also established a position in the Baltics. We now operate in eight markets with 75 million people and 35 million cars, which offers increased opportunities for efficiency improvements and profitable growth. The synergy gains we anticipated in connection with the acquisition of Koivunen are confirmed as planned and will be realized by 2024 as previously communicated. 

Solid development in our markets but continuing challenging market conditions in Denmark
The macro environment remained complex in the fourth quarter, with rising inflation, high interest rates and turbulence as a result of the war in Ukraine. Demand continued to be strong in Poland and the Baltics, while Sweden and Finland have shown continued good development. In Norway, conditions have improved, mainly in B2B, while demand in Denmark has been more challenging. 

The Group’s net sales increased by just over 24 percent to SEK 3,895 M (3,129) in the quarter, of which organic growth was 5 percent. Excluding the acquisition of Koivunen, growth was 10 percent and means MEKO in 2022 achieved its highest level of sales for a single year since the company was founded.

Stable profitability – increased efforts to raise margins
One of MEKO’s main strengths is our size. It provides us with significant purchasing power and economies of scale. This helped us to report stable profitability during the year. However, levels were slightly impacted in the fourth quarter due to initiatives to reduce costs and higher purchasing prices. One important measure during the quarter was the discontinuation of nine branches in Norway while retaining availability for our customers – an initiative in line with our strategy to continuously optimize operations. 

In the fourth quarter, EBIT amounted to SEK 148 M compared with SEK 173 M in the same quarter of the boom year of 2021. This resulted in an overall EBIT margin of 3.7 percent (5.4). Earnings were impacted by items affecting comparability of SEK -22 M (3) arising from efficiency measures in Norway. Adjusted EBIT amounted to SEK 198 M (203) and the adjusted EBIT margin to 5.0 percent (6.3). The gross margin fell to 42.8 percent (45.4) mainly due to the acquisition of Koivunen, with a generally lower gross margin.

Strong financial position and dividend proposal
Our earnings capacity gives us a solid financial position. It is gratifying that our cash flow in the fourth quarter improved compared with same period of 2021, despite slightly higher working capital. At the end of 2022, our net debt was SEK 3,558 M (2,264), with the increase attributable to the acquisition of Koivunen. This yields net debt in relation to EBITDA of 3.36 times, including 6 months earnings effect from Koivunen – slightly higher than our goal of a debt ratio between 2 and 3. I feel confident that we can reach the target range in 2023, aided by our strong cash flow.

Overall, 2022 was one of the strongest years since MEKO was founded, with our highest ever group revenue and a second best EBIT. We are well positioned in the market. It is also one of the reasons that the Board of Directors has proposed a dividend to shareholders of SEK 3.30 per share to be paid in two installments, 1.10 in May and 2.20 in November. 

Leading the transformation toward more sustainable mobility
MEKO has a timeless business model that is driven by the constant need for mobility. There is a consistent demand for properly functioning vehicles, regardless of the technology they use. Electrification is progressing at full speed and MEKO is helping to drive this green transition. Through our special efforts in 2022, we trained workshops and secured the industry’s most comprehensive supply of spare parts for electric cars. We welcome electric cars in the same way as petrol and diesel cars. 

Taken together, MEKO stands strong in a broader international context than previously. We have major potential to continue to grow and increase our profitability in an enduring manner.

I would like to say a huge thank you to all employees and shareholders for this past year.

Pehr Oscarson
President and CEO

This information is such information that MEKO 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 15, 2023 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.