PUUILO PLC, HALF-YEAR FINANCIAL REPORT, 13 SEPTEMBER 2023 at 8.30 EET
Highlights Q2/2023
- Net sales increased by 17.0% (+11.9%) and were EUR 104.4 million (89.2)
- Like-for-like store net sales increased by 8.1% (+7.9%)
- Online store net sales decreased by 4.3% (-1.6%)
- Gross profit was EUR 38.7 million (32.5) and gross margin was 37.1% (36.5%)
- Adjusted EBITA was EUR 20.9 million (18.0), which corresponds to an adjusted EBITA margin of 20.0% (20.2%).
- EBIT was EUR 20.6 million (17.1) which corresponds to 19.7% of net sales (19.2%)
- Operating free cash flow was EUR 32.0 million (29.6)
- Earnings per share were EUR 0.18 (0.15)
- Earnings per share excluding listing expenses were EUR 0.18 (0.16)
- One new store was opened during the second quarter (no new stores)
Highlights H1/2023
- Net sales increased by 14.3% (+7.2%) and were EUR 169.3 million (148.1)
- Like-for-like store net sales increased by 6.8% (+2.4%)
- Online store net sales decreased by 10.5% (-4.6%)
- Gross profit was EUR 62.4 million (53.1) and gross margin was 36.9% (35.9%)
- Adjusted EBITA was EUR 28.2 million (24.2), which corresponds to an adjusted EBITA margin of 16.6% (16.4%)
- EBIT was EUR 27.6 million (23.0) which corresponds to 16.3% of net sales (15.5%)
- Operating free cash flow was EUR 42.3 million (32.8)
- Earnings per share were EUR 0.24 (0.20)
- Earnings per share excluding listing expenses were EUR 0.24 (0.21)
- Two new stores were opened during the reporting period (no new stores)
Figures are in millions of euros unless otherwise stated and have been rounded. Hence the sum of individual figures may differ from the total shown. Puuilo's financial year starts on 1 February and ends on 31 January the following year. The figures in parentheses refer to the comparison period the previous year, unless otherwise stated. The information in this report is unaudited.
Key figures
EUR million | Q2/2023 | Q2/2022 | H1/2023 | H1/2022 | 2022 |
Net sales | 104.4 | 89.2 | 169.3 | 148.1 | 296.4 |
Net sales development (%) | 17.0% | 11.9% | 14.3% | 7.2 % | 9.7 % |
Like-for-like store net sales development (%) | 8.1% | 7.9% | 6.8 % | 2.4 % | 5.5% |
Online store net sales development (%) | -4.3% | -1.6% | -10.5% | -4.6 % | 3.9% |
Gross profit | 38.7 | 32.5 | 62.4 | 53.1 | 107.2 |
Gross margin (%) | 37.1% | 36.5% | 36.9% | 35.9 % | 36.2% |
Adjusted EBITA* | 20.9 | 18.0 | 28.2 | 24.2 | 48.8 |
Adjusted EBITA* margin (%) | 20.0% | 20.2% | 16.6% | 16.4 % | 16.5% |
EBITA* | 20.9 | 17.4 | 28.2 | 23.6 | 48.2 |
EBITA* margin (%) | 20.0% | 19.5% | 16.6% | 15.9 % | 16.2% |
EBIT | 20.6 | 17.1 | 27.6 | 23.0 | 47.0 |
EBIT margin (%) | 19.7% | 19.2% | 16.3% | 15.5 % | 15.9% |
Net income | 15.4 | 13.1 | 20.2 | 17.3 | 35.1 |
EPS (EUR) | 0.18 | 0.15 | 0.24 | 0.20 | 0.41 |
EPS excl. listing expenses (EUR) | 0.18 | 0.16 | 0.24 | 0.21 | 0.42 |
Operating free cash flow | 32.0 | 29.6 | 42.3 | 32.8 | 52.7 |
Net debt / adjusted EBITDA | 1.2 | 1.5 | 1.2 | 1.5 | 1.5 |
Number of stores (end of period) | 39 | 34 | 39 | 34 | 37 |
Number of personnel converted into full-time employees (FTE) | 880 | 748 | 785 | 708 | 693 |
Puuilo's financial year starts on 1 February and ends on 31 January the following year
* Operating profit before the amortisation of Puuilo trademark
Outlook for the financial year 2023
Puuilo specifies the outlook for the financial year 2023 given in its financial statements release on 30 March 2023 and repeated in the Q1 business review on 14 June 2023.
Puuilo now forecasts that net sales for the financial year 2023 will be EUR 325 - 355 million (296.4) and the adjusted operating profit (adjusted EBITA) in euros will be EUR 50 - 60 million (48.8). Previously, the company forecasted that net sales and adjusted operating profit (adjusted EBITA) in euros would increase compared to the financial year 2022.
The specified guidance is based on the development in the first half of the year and the outlook for the second half of the financial year.
The forecast includes elements of uncertainty arising from the energy crisis, the war in Ukraine as well as decline in purchasing power due to rise in interest rates and inflation.
Puuilo's long-term targets
There have been no changes in Puuilo's long-term financial targets or growth expectations, announced in connection with the listing.
Puuilo's long-term targets for the financial years 2021-2025:
- Growth: Net sales above EUR 400 million by the end of financial year 2025 with annual organic growth in excess of 10%.
- Profitability: Adjusted EBITA margin between 17 - 19% of net sales.
- Dividend policy: Puuilo aims to distribute at least 80% of net income for each financial year in dividends, depending on the company's capital structure, financial position, general economic and business conditions, and future prospects.
- Leverage: Net debt to adjusted EBITDA below 2.0x.
CEO Juha Saarela's review
It is a pleasure to present our solid results for the second quarter. We had a very strong performance in the second quarter, mainly resulting from a strong growth in customer flows. In Q2, the number of customers grew by over 18% compared to previous year. Puuilo is performing well, although the overall retail market is facing difficulties. Thus, our market share continues to strengthen. This is also supported by the customer survey we conducted in May. The survey shows that we are winning customers from our main competitors.
In Q2, Puuilo net sales increased by 17.0% (+11.9%) and by 8.1% (+7.9%) in comparative terms. We had another commercially very successful quarter and for the first time, quarterly net sales exceeded EUR 100 million. Each month of the quarter succeeded well, and the highest growth was seen in July. The sales increased in all main product groups, also in comparable terms. The increase in the basket size discontinued, which was mainly due to the sales mix changing to products with lower unit prices. Currently, consumers are clearly postponing the purchase of more expensive products and focusing on the affordable everyday supplies. Puuilo's concept serves these customers extremely well because most of the products we sell cost less than 10 euros.
In Q2, Puuilo's adjusted EBITA was EUR 20.9 million (18.0) and it increased by EUR 2.8 million compared to previous year. The increase resulted from the positive development in net sales and good cost control but above all, the improved gross profit. In Q2, the company's gross profit was 37.1% (36.5%) and it grew by 0.7 percentage points compared to previous year. The positive development of the gross profit was supported by the decrease in logistics and storage costs to normal levels, which have been our focus area. This is also clearly reflected in the decrease of inventory value, which has been our goal since the pandemic years. Profitable business and efficient working capital management are also shown in the company's cash assets, which are at record level.
The growth continues. In June, we opened a new store in Vihti's Nummela, where we made another opening sales record as customers rushed to the store to make purchases at affordable price. In the second half of the year, we will have three more openings, namely Kerava that was opened in August together with Helsinki Konala and Vantaa Varisto which will be opened later this year.
The operating environment is, by all external measures, challenging to say the least. Rising interest rates, high inflation and the price of energy make consumers reduce their consumption during the rest of the year as well. However, our figures make us trust the company's performance also in the future. Discount retail maintains its profitability and is doing well also in financially challenging times.
Significant events of the reporting period
Performance matching share plan for key employees
On 14 April 2023 the Board of Directors of Puuilo Plc decided to launch a new share-based incentive plan for the key employees of the company. The aim of the plan is to align the objectives of the shareholders and the key employees in order to increase the value of the company in the long-term.
The Performance Matching Share Plan includes one performance period, spanning approximately financial years 2023 - 2025. The performance criteria are the Total Shareholder Return of the Puuilo share (TSR) and the Adjusted EBITA of the Puuilo Group. The target group of the plan consists of a maximum of 80 persons, including the CEO, members of the Management Team, Store Managers and other key personnel. Primarily, the rewards from the plan will be paid partly in the company's shares and partly in cash by the end of May 2026. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to the participant. The rewards to be paid on the basis of the plan correspond to the value of an approximate maximum total of 678,000 Puuilo Plc shares, including the proportion to be paid in cash. The final number of shares will depend on the participants' personal share acquisitions and the achievement of the targets set for the performance criteria.
At the end of the reporting period, the amount to be recognised as expense for the financial year 2023 for the plan 2023 - 2025 is estimated at a total of EUR 0.2 million.
Repurchase of own shares
On 14 June 2023, Puuilo announced that the company's Board of Directors had decided to use the authorization given by the Annual General Meeting held on 16 May 2023 to repurchase the company's own shares.
The repurchases started on 15 June 2023 and ended on 27 June 2023. During this period, Puuilo repurchased 240,000 shares for an average price of EUR 7.0885 per share, corresponding to approximately 0.28% of the total number of the company's shares, which is 84,776,953.
The repurchased shares are to be used for pay-outs under the share-based incentive plans of Puuilo Plc. The shares were repurchased through public trading on Nasdaq Helsinki at the market price prevailing at the time of repurchase.
Following the repurchases, the company holds a total of 555,000 shares.
Significant events after the end of the reporting period
Puuilo did not have any significant events after the reporting period.
Next financial reports
Puuilo's financial year starts on 1 February and ends on 31 January the following year. The company publishes Business reviews for the first and third quarter, a Half-year financial report and a Financial statements release.
Business review Q3 February - October 2023 on 13 December 2023
Financial Statements Release 2023 on 27 March 2024
Business review Q1 February - April 2024 on 12 June 2024
Half-year Financial Report February - July 2024 on 12 September 2024
Business review Q3 February - October 2024 on 11 December 2024
The Financial statements 2023 and the Report by the Board of Directors and will be published during week 16.
Puuilo's Annual General Meeting is planned for Wednesday 15, May 2024. The meeting will be convened by the company's Board of Directors separately at a later date.
Conference call in English and webcast in Finnish
The report will be presented for analysts, investors, and the media on the publication date in English at 10:00 am EET (9:00 am CET) and in Finnish at 11.30 am EET (10:30 am CET).
The conference call in English can be followed live at https://puuilo.videosync.fi/2023-q2-results. Asking questions requires participation in the conference call. You can access the teleconference by registering on the link http://palvelu.flik.fi/teleconference/?id=10010326. After the registration you will be provided phone numbers and a conference ID to access the conference. If you wish to ask questions, please, dial *5 on your telephone keypad to enter the queue.
The webcast in Finnish will begin at 11.30 am EET at https://puuilo.videosync.fi/2023-q2-tulos.
Recordings of both events will be available later the same day at Puuilo's Investors website at https://www.investors.puuilo.fi/en/investors/reports_and_presentations.
For further information, please contact:
Juha Saarela, CEO, mobile phone: +358 50 409 7641
Ville Ranta, CFO, mobile phone: +358 40 555 4995
