KH Group Plc
Stock Exchange Release 7 May 2024 at 8.00 am EEST
KH Group Plc's Business Review January-March 2024: Focus on business profitability
This is the summary of the Business Review for January-March 2024. The full Half-Year Report is attached to this release and is also available on the company's website at www.khgroup.com.
KH Group, January-March 2024 pro forma
- Net sales amounted to EUR 84.2 (100.2) million.
- Operating profit was EUR -0.3 (1.0) million.
- KH-Koneet's net sales and operating profit decreased considerably year-on-year.
- Indoor Group's net sales decreased significantly. Operating profit, including the capital gain of EUR 3.7 million from the Estonian real estate sale transaction, was higher than in the comparison period.
- HTJ's net sales were at the same level as in the comparison period but operating profit decreased.
- NRG's net sales and operating profit significantly increased year-on-year.
- The Group's cash and cash equivalents amounted to EUR 8.1 million at the end of the review period.
KH Group, January-March 2024 IFRS
- Net sales amounted to EUR 84.2 (-) million. The figure for the comparison period only includes the parent company's net sales.
- Operating profit was EUR -0.7 (-2.8) million.
- Net profit for the period was EUR -3.2 (-2.4) million.
- Earnings per share (undiluted and diluted) were EUR -0.05 (-0.04).
- Equity per share at the end of the review period was EUR 1.30 (1.42).
- Return on equity for rolling 12 months was -19.2% (-9.5%).
- Gearing at the end of the review period was 225.3% (10.5%).
- Gearing excluding lease liabilities was 141.6% (10.4%).
CEO Lauri Veijalainen:
"Our consolidated pro forma net sales and operating profit significantly declined year-on-year. The extremely challenging market situation, uncertainty, the political strikes that disrupted the Finnish labour market and business, and the deployment of Indoor Group's ERP system had a negative impact on consolidated net sales.
KH-Koneet's net sales decreased very significantly in both operating countries. As a result, operating profit also turned negative. In terms of net sales and operating profit, operations in Sweden almost reached the level of operations in Finland.
Indoor Group's first quarter was weak. The Asko and Sotka chains lost net sales and consequently profitability. According to the Federation of Finnish Special Commodity Trade ETU's statistics, net sales in the furniture market in January 2024 fell by 9% year-on-year, and Indoor's own development continued in the same direction throughout the quarter. Both chains continue to actively implement measures aimed at enhancing operational efficiency and improving profitability. These measures included increasing visitor volumes and sales, improving conversion rates, strengthening margins and maintaining careful cost control. The new ERP system was deployed on 1 March 2024 and had a negative impact on net sales and operating profit. By the end of March, Indoor Group discontinued its operations in Estonia. As part of this, the company successfully sold its property in Estonia, generating a capital gain of EUR 3.7 million. For a long time, the Estonian operations had operated at loss.
In a declining market, HTJ managed to maintain net sales at the same level as in the comparison period, but operating profit decreased. The business area's moderate net sales and operating profit are explained by an increased project portfolio and the acquisitions made in recent years.
Nordic Rescue Group's pro forma net sales and operating profit significantly improved year-on-year. The demand for rescue vehicles in Finland and Sweden has remained at a good level, and production capacity for 2024 has already been sold out.
During the financial period, we will continue our development efforts in our business areas, many of which are focusing on securing net sales and consequently operating profit as well as ensuring operational efficiency. We will continue to move forward with KH Group's change in strategy as planned.
The company updated on 30 April 2024 its earlier guidance on net sales and operating profit for 2024. This is due to general economic uncertainty, the very challenging market situation and more cautious purchasing behaviour by consumers.
KH Group estimates, with the current Group structure, to reach net sales of EUR 400-420 million and operating profit of EUR 12-16 million in 2024, including the operating profit from Indoor Group's Estonian real estate sale transaction."
Events after th review period
After the Annual General Meeting of the company held on 24 April 2024, the parties to the KH-Koneet shareholder agreement have informed the parent company that they are exercising share put options. According to the agreement, minority shareholders have the right to sell 50% of their current holding in KH-Koneet Group Oy during 2024. The redemption of shares held by minority shareholders will be completed by June 2024 and amounts to approximately EUR 2.9 million. The redemption will increase the parent company's holding in KH-Koneet Group Oy to 95.1%. The remaining 4.9% minority interest can be redeemed in 2025, as defined in the shareholder agreement, and its fair value based on the figures of the financial statements of 31 December 2023 was EUR 3.4 million.
The parent company's financing agreement was renewed in April. The company has signed a new loan amounting to EUR 5.1 million. EUR 2.9 million of the loan proceeds will be used for a redemption of shares in KH-Koneet Group Oy and EUR 0.5 million for an additional investment in Nordic Rescue Group Oy.
Beginning of May, the new ERP system was successfully implemented at Indoor Group's Asko stores.
Future outlook
KH Group's medium-term objective is to become an industrial group built around the KH-Koneet business and to divest other business areas in line with previous strategy. At the same time, active developments will continue regarding other business areas. Exit planning and the assessment of exit opportunities for the other business areas will also continue.
In the 2023 Financial Statements Release published on 21 March 2024, the company estimated net sales of EUR 400-420 million and operating profit of EUR 14-16 million for the financial year 2024. The guidance did not include the operating profit of approximately EUR 3.7 million from Indoor Group's real estate sale in Estonia, which the company announced on 21 March 2024 at 12 noon.
The company updated on 30 April 2024 its earlier guidance on net sales and operating profit for 2024. KH Group estimates, with the current Group structure, to reach net sales of EUR 400-420 million and operating profit of EUR 12-16 million in 2024, including the operating profit from the real estate sale in Estonia.
KH GROUP PLC
Lauri Veijalainen
CEO
FURTHER INFORMATION:
CEO Lauri Veijalainen, tel. +358 46 876 1648
DISTRIBUTION:
Nasdaq Helsinki Ltd
Major media
www.khgroup.com
KH Group Plc is a conglomerate with four business areas: KH-Koneet, Indoor Group, Nordic Rescue Group and HTJ. All of our business areas are leading players in their sectors in B2B products and services and consumer trade. Our objective is to focus on the business of the earth-moving machinery supplier KH-Koneet. Other business areas will be further developed and then divested in line with the Group's investment strategy. KH Group's share is listed on Nasdaq Helsinki.
