Continued improvements and further initiatives to increase profitability
April 1 - June 30, 2024
- Net sales increased 9 percent to SEK 4,680 M (4,292). Organic growth was 5 percent. Currency effects had a positive impact of 1 percent on net sales.
- EBIT amounted to SEK 284 M (304) and the EBIT margin to 6.0 percent (6.8). The year-earlier quarter was positively impacted by a capital gain of SEK 59 M from the sale of properties in Finland. This stands in contrast to the current period when EBIT was negatively impacted by items affecting comparability totaling SEK -48 M (59).
- Adjusted EBIT increased to SEK 357 M (270) and the adjusted EBIT margin to 7.5 percent (6.2).
- Earnings per share before and after dilution amounted to SEK 2.86 (3.03).
- Cash flow from operating activities amounted to SEK 698 M (486).
- On May 16, MEKO held its Annual General Meeting when Dominick Zarcone was elected as new Chairman of the Board.
January 1 - June 30, 2024
- Net sales increased 9 percent to SEK 9,000 M (8,265). Organic growth was 8 percent. Currency effects had a positive impact of 1 percent on net sales.
- EBIT amounted to SEK 431 M (503) and the EBIT margin to 4.7 percent (5.9). The year-earlier period was positively impacted by a capital gain of SEK 59 M from the sale of properties in Finland. In contrast, EBIT for the current period was affected negatively by items affecting comparability of SEK -103 M (59).
- Adjusted EBIT increased to SEK 581 M (497) and the adjusted EBIT margin to 6.4 percent (5.9).
- Earnings per share, before and after dilution, amounted to SEK 3.78 (4.46).
- Cash flow from operating activities amounted to SEK 984 M (513).
- Net debt in relation to EBITDA decreased to a multiple of 2.5 compared with 2.7 at the beginning of the year.
Significant events after the end of the period:
- MEKO received approval from the Polish competition authority for its acquisition of Elit Polska and thereafter completed the transaction on July 31, 2024.
CEO comments:
We continue to build a stronger MEKO
The second quarter shows the tangible impact of our efforts to build a stronger and more profitable MEKO. We are improving our margins, have strong cash flow and have reduced our debt ratio. In parallel, we continue to grow and are expanding through new acquisitions. Our focus is now to continue in the same direction and to implement additional measures to improve earnings where we can see challenges.
MEKO's business concept is tried-and-tested and has proven stable over time: We satisfy the constant need for mobility
using functioning vehicles, regardless of the vehicle's technology and fuel. Through our well-known brands and
workshop concepts we help customers in eight countries, making us the industry leader in the independent automotive
aftermarket in northern Europe.
We aim to strengthen this position. We will both continue to grow and to become more profitable, with even more energy to invest in the transition and in tomorrow's mobility. As part of this ambition, we launched the 'Building a stronger MEKO' initiative in November 2023, and I am pleased to see that these efforts had a clear impact on the second quarter. In several ways, results are progressing in the right direction, compared with the first quarter and with the year-earlier period.
Continued growth - strongest trend in Scandinavia
Net sales increased 9 percent during the second quarter, and we noted both larger volumes and the effects of our own price adjustments. The performance of the Sweden/Norway, Denmark and Sørensen og Balchen business areas was
particularly strong. Market conditions and the macroeconomic situation are more favorable in Scandinavia, primarily in Sweden and Norway. However, the market climate remains weaker in Finland, Poland and the Baltics, where competition remains intense.
Broad measures deliver better margins
We perform a wide range of work to strengthen profitability through activities in all business areas. These include efficiency enhancements, cost reductions and price adjustments as well as investments in a new enterprise system and in additional automated warehouses. Some measures produce rapid results, while others have a positive impact in the longer term. Of particular note in the second quarter were the results of our streamlining measures in Sweden and Norway, where we optimized costs and our logistics network. This led to a clear improvement in our adjusted EBIT for the quarter. The adjusted EBIT margin improved to 7.5 percent, compared with 6.2 percent for the second quarter of 2023.
EBIT was impacted by transaction costs for our strategic acquisition of the spare parts wholesaler Elit Polska and investments in our new enterprise system. The year-earlier period was impacted by non-recurring effects from a major property sale in Finland during the second quarter of 2023, which had a significant improvement on earnings.
Stronger cash flow and lower debt ratio
Cash flow was strong during the quarter, supported by improvements to earnings and working capital. This also had a
positive effect on our debt ratio, which fell to 2.5 at the end of the period, compared with 2.7 at the beginning of the year. We are therefore well within our target range of 2.0-3.0, which provides us a solid financial position with greater flexibility.
Further initiatives to strengthen profitability
In other words, we can see that plenty is moving in the right direction. However, this does not mean we have finished work to strengthen long-term profitability. We are now continuing to move in the same direction and implemented several measures in the second quarter, primarily in Finland, where we have noted certain challenges. In April, we decided to automate our Finnish central warehouse to streamline our inventory management In June, further steps were taken to reform the organization and to optimize the customer offering, workflows and the number of employees. We aim to improve our margins and increase our advantage as industry leader.
Advancing positions through acquisitions
We also started strengthening operations in Poland. The acquisition of Elit Polska, which was completed at the end of
July, is part of this plan. Elit Polska clearly expands our geographic presence and offers synergy potential in areas
such as logistics and distribution. I am also pleased that we are advancing our positions in Estonia in a similar way through the acquisition of Automeister, which owns the country's leading workshop concept, Carstop. This will enable us to increase our market share and achieve important synergies.
MEKO stands firm - with an ambition to always be the most complete partner for everyone that drives, repairs or maintains vehicles. We are now continuing to strengthen our position, where we can leverage a business that remains stable even in more turbulent times.
Pehr Oscarson
President and CEO
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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 contact person set out above on August 22, 2024 at 07:30 CEST. The interim report is published in Swedish and English. The Swedish version is the original version and has been translated into English.
