Sales record with 10% organic growth
Summary of the period
Numbers in parentheses refer to outcome of the corresponding period of the previous year.
Second quarter: April 1st - June 30th, 2024
- Net revenue amounted to 630.5 MSEK (572.1 MSEK), corresponding to an increase of 10% (21%)
- Organic, currency-adjusted growth amounted to 10% (9%)
- Operational EBITDA amounted to 140.9 MSEK (118.3 MSEK), corresponding to an increase of 19%, and an EBITDA-margin of 22.3% (20.7%). The operational adjustments totaling 2.2 MSEK concern M&A costs, a post-revision adjustment from 2022, and non-cash flow-impacted evaluation of acquisition stock to fair value
- Operational EBITA amounted to 119.9 MSEK (98.7 MSEK), corresponding to an increase of 21% and an EBITA-margin of 19.0% (17.3%)
- Operational EBIT amounted to 119.6 MSEK (98.5 MSEK), corresponding to an increase of 21% and an EBIT-margin of 19.0% (17.2%)
- Exchange gains amounted to 0.1 MSEK (2.8 MSEK)
- Profit after tax amounted to 20.9 MSEK (16.3 MSEK)
- Earnings per share calculated on 158,731,900 shares (158,731,900 shares) amounted to 0.13 SEK (0.10 SEK)
- Cash flow from operating activities amounted to 81.2 MSEK (81.4 MSEK)
- 50.0 MSEK has been amortized on the debts to credit institution
- As of June 30th, 2024, cash amounted to 170.0 MSEK (197.6 MSEK)
First half year: January 1st - June 30th, 2024
- Net revenue amounted to 1,228.0 MSEK (1,095.3 MSEK), corresponding to an increase of 12% (29%)
- Organic, currency-adjusted growth amounted to 11% (10%)
- Operational EBITDA amounted to 279.7 MSEK (224.0 MSEK), corresponding to an increase of 25%, and an EBITDA-margin of 22.8% (20.5%). The operational adjustments totaling 10.5 MSEK concern M&A costs, a post-revision adjustment from 2022, and a non-cash flow-impacted evaluation of acquisition stock to fair value.
- Operational EBITA amounted to 239.1 MSEK (186.4 MSEK), corresponding to an increase of 28% and an EBITA-margin of 19.5% (17.0%)
- Operational EBIT amounted to 238.4 MSEK (185.9 MSEK), corresponding to an increase of 28% and an EBIT-margin of 19.4% (17.0%)
- Exchange gains amounted to 4.5 MSEK (1.0 MSEK)
- Profit after tax amounted to 51.0 MSEK (33.5 MSEK)
- Earnings per share calculated on 158,731,900 shares (158,731,900 shares) amounted to 0.32 SEK (0.21 SEK)
- Cash flow from operating activities amounted to 151.8 MSEK (181.9 MSEK)
- 75.0 MSEK has been amortized on the debts to credit institution
Significant event during the second quarter
Swedencare launches NaturVet by Swedencare: Bringing America's leading pet brand to Europe.
Significant events after the second quarter
Swedencare acquires the Canadian Pet Health company MedVant Inc through the newly established Canadian subsidiary, "Swedencare Canada Holding Inc".
Words from the CEO
Sales Record and several Strategic Decisions
The second quarter's net sales of 630 MSEK represented an increase of 10% compared to Q2 2023, while our operational EBITDA amounted to 141 MSEK, an increase of 19%. During the quarter, we made two minor brand acquisitions, distributed dividends to our shareholders, and continued to amortize and reduce our net debt. Our cash flow demonstrates the strength of our business model and enables us to act on attractive business opportunities quickly. Our organic growth was 10% for the quarter and 11% for the half-year, compared to Pet Supplement Market growth of 6%*.
Market Situation
In all major markets, demand is strong, and the pet market shows growth. Online and Pet Retail show the highest growth for us together with our manufacturing segment. The veterinary channel, with 8% growth in the quarter, has significant differences between markets, group companies, and different customers. Our larger veterinary customers remain cautious with larger orders and prefer to increase order frequency instead. This presents some capacity challenges for us, which has also slightly impacted on our profitability. However, we have indications that the year's second half will show more robust and more consistent demand. We continue to consolidate our operations and find synergies. Another group company has moved to our warehouse and logistics hub in Tampa, resulting in cost savings from the current quarter in terms of rent, personnel, and inventory optimization.
Our operations in Canada for pharmaceutical development and manufacturing are showing their strongest quarter ever and continue to have a high demand. The manufacturing division will grow significantly in the coming years, providing more consistent revenue streams and an opportunity to optimize the cost base. Our unique flavoring ingredient, FlavorPal, continues to grow with new customers during the quarter, and several of the largest pharmaceutical companies are now evaluating the product.
Strategic decisions
Our largest group company, NaturVet, underwent a significant reorganization of the sales and marketing department during the quarter, focusing on streamlining and targeting the organization towards the most crucial customer categories. This, combined with our manufacturing capacity and an innovation pipeline will give us a significant competitive advantage where we can be even more agile regarding product launches and finding unique customer-specific solutions.
The organization is now built for the important and upcoming expansion into "big box retailers." This category of chains is now as large or even larger outlet than traditional "pet retail," and naturally, NaturVet should also be available to pet owners in this store category. The sales cycles are long, and it is not until 2025 and 2026 that our team is discussing and planning for launches with potential customers. I look forward to providing information once a decision has been made about which partners we will collaborate with.
Europe
Our European segment continues to deliver solid results and growth of 31%. Our European CCO, Laszlo Varga, briefly describes our European strategy below and will participate in our webinar presentation at 10:30 today.
New Acquisitions
During the quarter, we completed two minor brand acquisitions that we plan to use for some customers with whom we do not currently have a relationship. Healthy Solutions for Pets ("HSP") is a smaller and relatively new brand whose products are already manufactured by us. Vet Worthy® is a well-known brand that we could acquire due to a restructuring by its owner. Both acquisitions are expected to contribute with minor sales in 2024 and more substantially in 2025.
We have also signed an acquisition transaction for a company in Canada. Medvant is a smaller product- and distribution company that covers the entire Canadian veterinary market. We know each other well, as the company has successfully distributed RX Vitamins® for several years. The pet market in Canada is about one-tenth of the US market, and we see great opportunities to launch several of our brands, not previously sold in Canada, through Medvant.
Finally, I want to thank the entire organization for a great halfyear and wish you a wonderful summer.
Håkan Lagerberg
Malmö, July 25th, 2024
*Source: Virtue Market Research, Grand View Research, Straits Research
projects.
The complete interim report is attached to this press release and is available at www.swedencare.com.
Swedencare invites shareholders and analysts to a presentation of the half year report where CEO Håkan Lagerberg and CFO Jenny Graflind will comment on the report. Laszlo Varga, CCO Europe, will also participate on the webinar to briefly describe our European strategy. The presentation will be held at 10:30-11:15am CEST and can be followed via live webinar.
Please use this link to join the webinar:https://us06web.zoom.us/j/82168818711
For more information, please contact:
Håkan Lagerberg, CEO Swedencare
Phone: +46 (0)73 517 01 70
Email: hakan.lagerberg@swedencare.se
Jenny Graflind, CFO Swedencare
Phone: +46 (0)73 944 85 54
Email: jenny.graflind@swedencare.se
FNCA is the Certified Adviser of the Company
Please visit the Company homepage www.swedencare.com
About Swedencare
Swedencare, a listed company on NASDAQ First North Growth Market, develops, produces and sells premium products in the global and fast-growing market for healthcare products for cats, dogs and horses. The company has an extensive product portfolio with strong brands such as NaturVet®, Innovet, Pet MD®, Rx Vitamins®, nutravet®, and ProDen PlaqueOff®, the original for good oral health. Swedencare's headquarter is in Malmö, Sweden and the company's products are currently sold in approximately sixty-five countries to veterinarians, pet stores, and online through a distribution network, including subsidiaries in nine countries and an international network of retailers. Swedencare's sales have increased significantly over several years with maintained high profitability.
This information is information that Swedencare is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-07-25 07:30 CEST.
