A new of quarter of profitability and strong cash flow from operating activities
Interim report January-June 2024 - Pricer AB
A new of quarter of profitability and strong cash flow from operating activities
Second quarter 2024
• Net sales amounted to SEK 644.0 M (687.2), a decrease of 6.3 percent compared to the same quarter last year.
• Operating profit increased to SEK 48.5 M (-0.3), which corresponds to an operating margin of 7.5 percent (0.0).
• Operating profit before depreciation, amortization and impairment rose to SEK 66.4 M (14.6).
• Cash flow from operating activities increased to SEK 68.9 M (19.0).
• Order intake was SEK 497.5 M (678), a decrease of 26.6 percent compared to the same quarter last year.
• Order backlog amounted to SEK 490 M (626), of which the majority is expected to be delivered in Q3 and Q4 2024.
• Profit for the quarter increased to SEK 42.3 M (-15.8).
• Earnings per share (basic) were SEK 0.26 (-0.14).
• Earnings per share (diluted) were SEK 0.26 (-0.14).
Comments from President and CEO Magnus Larsson
It is very gratifying that again in the second quarter we can report that our long-term efforts to improve the company's profitability resulted in a continued improvement to the gross margin, operating profit and net profit compared with earlier quarters. During the quarter, we also won a highly strategic contract when a large Tier 1 North American grocery retailer placed its first order for our Pricer Plaza SaaS solution and four-color labels for full-store installations at 50 of its 1,500 stores, making it the largest deployment of four-color labels in North America to date.
Delayed orders impact order intake
The order intake for the quarter amounted to SEK 498 M (678). The lower order intake is an effect of expected orders from two of our largest customers being delayed until after summer. We have ongoing discussions with both and expect a good order intake during the autumn as both customers need for continued, or accelerated, store digitization remains. Compared with last year, we can see that the order intake in France and Sweden has slowed slightly, which was offset by a higher order intake in North America, the Nordics and Italy. Net sales of SEK 644 M (687) for the quarter indicated a 6-percent decline compared with the year-earlier quarter. Like the order intake, net sales were also impacted by order delays, although this could be offset by high sales in several markets. Six different sales areas can be found among our top ten customers in terms of sales, with Oceania growing significantly as a result of successful sales efforts and widespread interest in our SaaS solution Pricer Plaza and four-color labels.
Market growth as retailers move from words to action
In the North American market, we can see how interest in and the need for in-store digitalization is continuing to rise. Major players in the market are moving from words to action. The strategic orders in the second quarter described above are a clear sign of this.The changes we have made in our North American organization have started to gain traction quicker than expected but need more time to reach their full effect. In the UK, we attended a fantastic trade fair in April and a large number of leading chains have initiated strategic activities to evaluate, plan and budget for digitalizing their stores over the next few years. We can also see that large volumes of four-color labels are in demand in an increasing number of markets since they provide our customers with better opportunities to generate interest and capture awareness in stores. For us, this means a more advantageous product mix and the possibility to strengthen the gross profit margin. We will also start producing four-color labels in Germany in the autumn in order to meet the needs for such labels in Europe and North America, and we are looking forward to delivering volumes of these "made in Germany" labels in the fourth quarter.
Third highest operating and net profit in the Group's history
Despite experiencing what we consider to be a short-term decline in order intake and sales, our long-term efforts to strengthen profitability are clearly continuing to bear fruit. Operating profit for the quarter rose to SEK 48.5 M (-0.3), representing a sharp improvement compared with the same quarter last year. The same is true for net profit, which increased to SEK 42.3 M (-15.8). The improved profitability this quarter was attributable to effective cost control and the continued improvement in the gross margin, which rose to 22.8 percent (16.0) in the quarter. The rising gross margin is the result of the long-term efforts that we initiated in 2022 and that have continued in 2024, and the margin was also positively impacted by an advantageous customer and product mix in the quarter.
Well on our way to long-term competitiveness and profitable growth
Our internal transformation project is progressing well and as part of our journey of change we have reorganized the operations to clarify areas of responsibility, roles and mandates. The new organization also has a well-defined structure and ownership for our internal activities related to processes and automation so as to ensure growth without costs increasing at the same rate. In addition, our cost savings program is continuing according to plan and the full effects will be achieved early in the third quarter. We have continued to deliver a strong cash flow during the quarter and are now on our way to establishing a stable platform to enable us to attain our long-term financial goals: annual growth in net sales on par with the market or at least 15 percent, and an operating margin in excess of 8 percent.
Retail's first choice
We have the privilege of operating on a market with the favorable combination of a low degree of penetration and a high rate of growth. A constantly increasing number of retailers, large and small, in both existing and new markets and segments, believe that the digitalization of their chains is critical for them to tackle the challenges they face, such as staff shortages, inflation and competition. Our solutions are a strategic part of an investment in store digitalization and help our customers to boost their profitability through greater efficiency, improved control and monitoring, increased sales and an enhanced in-store customer experience. As one of the leaders in solutions for store communication, I see particularly good opportunities for us to create long-term competitiveness, profitable growth and become retail's first choice in the future.
Magnus Larsson
President and CEO
For further information, please contact:
Magnus Larsson, President and CEO, +46 704 316851
Claes Wenthzel, acting CFO, +46 70 862 01 22
info@pricer.com
This information constitutes inside information that Pricer AB is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014 and the Swedish Securities Market Act. The information was sent for publication, through the agency of the contact persons set out above, at the time stated by the Company's news distributor, Cision, at the publication of this press release.
Every care has been taken in the translation of this document. In the event of discrepancies, the Swedish original will supersede the English translation.
About Pricer
Pricer is a leading global technology company serving the rapidly growing smart retail market with in-store digital solutions that enhance both store performance and the shopping experience. Through electronic shelf labels, advanced technology, such as optical wireless communication and AI, and continuous innovation, Pricer offers the foundation for in-store communication and efficiency. The industry-leading Pricer platform delivers benefits from 30 years of deployment experience and is fast, robust, interconnectable and scalable. Pricer was founded in Sweden in 1991 and is listed on Nasdaq Stockholm. For further information, please visit www.pricer.com
