Wetteri Plc Half-year Report 28 August 2024 at 9.30
Summary of the review period 1 April to 30 June 2024
- The Group's revenue was EUR 131,1 million ((comparison period: EUR 106,8 million in April-June 2023) with an increase of 23%
- Adjusted EBITDA vas EUR 4,6 million (EUR 5,2 million)
- The adjusted operating profit was EUR 0,7 million (EUR 2,2 million)
- The operating profit was EUR -0,7 million (EUR 1,3 million)
- The revenue of the Passenger Cars segment increased by EUR 17,4 million (25 %) year-on-year
- The revenue of the Heavy Equipment segment increased by EUR 2,4 million (14%) year-on-year
- The revenue of the Maintenance Services segment increased by EUR 4,8 million (25%) year-on-year
Summary of the review period 1 January to 30 June 2024
- The Group's revenue was EUR 275.7 million (EUR 194.3 million), with an increase of 42% which has mainly been gained through strategic acquisitions
- Adjusted EBITDA was EUR 10.8 million (EUR 10.7 million)
- The adjusted operating profit was EUR 3.2 million (EUR 4.9 million)
- The operating profit was EUR 0.5 million (EUR 2.2 million)
- The revenue of the Passenger Cars segment increased by EUR 64.7 million (53%) year-on-year; invoiced sales of used cars grew by 87%
- The revenue of the Heavy Equipment segment increased by EUR 1.3 million (3%) year-on-year
- The revenue of the Maintenance Services segment increased by EUR 15.8 million (47%) year-on-year
- The car dealership business operations of the Suur-Savo Cooperative became part of Wetteri through an acquisition on 1 January 2024
- Suvanto Trucks Oy became part of Wetteri through a share exchange on 29 February 2024
- Lahden Rekkapaja Oy became part of Wetteri on 28 June 2024
Financial guidance for 2024 updated on 23 August 2024
- Revenue EUR 520-640 million
- Adjusted operating profit EUR 12.8-15.6 million
The company's medium-term (3-year) target is to achieve EUR 1,000 million in revenue and EUR 30 million in operating profit.
Key performance indicators
EUR thousand | 1 Apr to 30 Jun 2024 | 1 Apr to 30 Jun 20231) | Change | 1 Jan to 30 Jun 2024 | 1 Jan to 30 Jun 20231) | Change | 1 Jan to 31 Dec 20231) |
Revenue | 131,109 | 106,845 | 23% | 275,660 | 194,253 | 42% | 432,502 |
EBITDA | 3,804 | 5,087 | -25% | 9,150 | 9,446 | -3% | 20,061 |
EBITDA, % of revenue | 3% | 5% | 3% | 5% | 5% | ||
Adjusted EBITDA 2) | 4,612 | 5,241 | -12% | 10,768 | 10,711 | 1% | 23,970 |
Adjusted EBITDA, % of revenue | 4% | 5% | 4% | 6% | 6% | ||
Operating profit (loss) (EBIT) | -666 | 1,300 | -151% | 469 | 2,153 | -78% | 4,713 |
Operating profit (loss), % of revenue | -1% | 1% | 0% | 1% | 1% | ||
Adjusted operating profit 2) | 695 | 2,157 | -68% | 3,227 | 4,891 | -34% | 11,225 |
Adjusted operating profit, % of revenue | 1% | 2% | 1% | 3% | 3% | ||
Profit (loss) before tax | -3,889 | -1,063 | - | -5,370 | -1,197 | - | -4,339 |
Profit (loss) before tax, % of revenue | -3% | -1% | -2% | -1% | -1% | ||
Profit (loss) for the period from continuing operations | -3,672 | -920 | - | -4,980 | -1,166 | - | -4,336 |
Profit (loss) for the period from continuing operations, % of revenue | -3% | -1% | -2% | -1% | -1% | ||
Profit (loss) for the period | -1,102 | -720 | - | -2,384 | -686 | - | -4,049 |
Profit (loss) for the period, % of revenue | -1% | -1% | -1% | 0% | -1% | ||
Earnings per share from continuing operations, basic (EUR) | -0.02 | -0.01 | -0.03 | -0.01 | -0.03 | ||
Earnings per share from continuing operations, diluted (EUR) | -0.02 | -0.01 | -0.03 | -0.01 | -0.03 | ||
Earnings per share, basic (EUR) | -0.01 | -0.01 | -0.02 | -0.01 | -0.03 | ||
Earnings per share, diluted (EUR) | -0.01 | -0.01 | -0.02 | -0.01 | -0.03 | ||
Return on equity (ROE), % | -41% | -8% | -29% | -4% | -13% | ||
Return on investment (ROI), % | -16% | -8% | -13% | -6% | -9% | ||
Equity ratio, % | 16% | 16% | 16% | 16% | 16% | ||
Liquidity, % | 85% | 93% | 85% | 93% | 83% | ||
Average number of personnel during the review period 3) | 1,025 | 955 | 1,039 | 852 | 926 | ||
Invoiced sales of new passenger cars (pcs) | 924 | 962 | 1,994 | 1,545 | 3,322 | ||
Invoiced sales of new commercial trucks (pcs) | 28 | 46 | 72 | 102 | 181 | ||
Invoiced sales of used passenger cars (pcs) | 2,522 | 1,464 | 4,965 | 2,684 | 5,764 | ||
Invoiced sales of used commercial trucks (pcs) | 124 | 33 | 176 | 65 | 114 | ||
Orders: new passenger cars (pcs) | 887 | 787 | 1,889 | 1,417 | 2,862 | ||
Orders: new commercial trucks (pcs) | 55 | 45 | 91 | 89 | 127 | ||
Passenger cars: order backlog at the end of the period | 36,476 | 71,361 | 36,476 | 71,361 | 57,343 | ||
Commercial trucks: order backlog at the end of the period | 16,378 | 21,700 | 16,378 | 21,700 | 13,655 | ||
Passenger car repair shop: hours sold | 87,342 | 86,132 | 176,392 | 151,525 | 319,562 | ||
Commercial truck repair shop: hours sold | 27,224 | 26,443 | 56,442 | 55,911 | 110,759 |
1) Training business operations sold during the first half of 2024 are presented as discontinued operations on the half-year report, and the income statement items of training business are presented in the consolidated income statement as part of the Group's profit (loss) from discontinued operations, separately from the income statement items of the Group's continuing operations. The presentation of the income statement for the comparison period and the calculation of the key performance indicators derived from the comparison period's income statement items have also been adjusted accordingly.
2) The adjusted EBITDA and operating profit do not take items affecting the comparability of the Group's EBITDA and operating profit into account, such as significant non-recurring items of income and expenses and amortisation of the fair value of assets recognised on the balance sheet by means of acquisition calculations. The purpose of the adjusted EBITDA and operating profit is to improve the comparability of the Group's EBITDA and operating profit between periods. The reconciliation of the adjusted EBITDA and operating profit is presented on page 17 of the interim report.
3) The calculation of the number of personnel has been revised in the review period so that the number of personnel at the end of each month has been added together, and the amount thus obtained has been divided by the number of months in the review period. The comparison information has also been adjusted to correspond to this calculation method.
Aarne Simula, CEO:
"The first half of 2024 was moderate for Wetteri in a historically difficult market situation that turned out weaker than expected. As a result of mergers and acquisitions, the Group's net sales increased by 42 percent from the previous year and amounted to EUR 275.7 million. Adjusted EBITDA settled at last year's level at EUR 10.8 million. Adjusted operating profit decreased from the corresponding period last year and was EUR 3.2 million. During the review period, Wetteri's performance was affected by the difficult market situation, general economic uncertainty and weak consumer confidence. After the review period on 23rd August, Wetteri updated its financial guidance for 2024 due to the temporal transfer of the profit and turnover effects of the planned new acquisitions, as well as the weaker-than-estimated market situation of new cars.
In January-June, Wetteri's net sales increased in all segments, most significantly in the passenger cars segment, whose net sales increased by 53 percent from the corresponding period of the previous year and amounted to EUR 186.0 million. The number of used cars invoiced increased by 85 per cent from the previous year. The soaring growth is possible by Wetteri's self-sufficiency in used cars: for every new car sold, Wetteri gets a used car in exchange. Wetteri's high-quality and versatile range of replacement cars can respond well to market demand. The order backlog of new passenger cars at the end of the review period was EUR 36.5 million. The profitability of the passenger car business was weakened by the costs related to mergers and acquisitions as well as financial expenses. The turnover of heavy equipment increased slightly from the previous year's January-June and was EUR 38.6 million. 72 new trucks and 176 used trucks were invoiced. In January-June, the turnover of maintenance services increased by 47% to EUR 49.3 million.
There is a playoff going on in the automotive industry. The market situation is as weak as in the recession of the 1990s, and the transformation of the industry has forced many operators to choose between closing the business and selling it. Importers reorganize their dealer networks and centralize representations to the largest operators. Consolidation will continue, because in the automotive sector, size is strength. It is estimated that in three to five years there will be only a few companies trading in new passenger cars in Finland. The automotive playoff is a key driver of Wetteri's growth, and the company continues to purposefully implement its growth strategy.
In the spring, Wetteri launched an efficiency program to improve profitability and save costs. The program includes measures, for example, to reorganize operations and improve the efficiency of administration. With regard to the premises, the possibilities for combining functions have been studied and the use of the premises has been enhanced. The use of labour has been adjusted with various measures. Annual savings of EUR 4 million are sought. It is clear that the improvement in profitability resulting from acquisitions will not occur in a short period of time, but Wetteri is determined to take all the necessary steps needed to realise the synergy benefits. Thanks to the acquisitions that Wetter has already implemented, the company has grown into a nationwide automotive operator with an extensive service network and even stronger multi-brand expertise. The nationwide presence makes Wetteri an interesting partner for importers, as evidenced by the addition of new brand representations during the past year. Multi-brand representation is a major contributor to organic growth.
The forecast for new passenger car registrations in 2024 has been lowered from about 80,000 to 75,000 passenger cars, which is significantly below the long-term average. In last few years, the Finnish car fleet has aged, and now there is a great need for its renewal: emission reduction targets will not be achieved with the current car fleet, in addition, modern equipment is needed improve to traffic safety. In the coming years, the car market has accumulated pent-up demand and strong organic growth potential. Increased availability of new cars is likely to increase demand. In the automotive sector, demand for new cars is expected to pick up already during the rest of the year. Moderate growth has been seen in both the European and domestic automotive markets. The automotive industry predicts a growth of about 10% in the new car trade next year.
This year, Wetteri has continued to promote its growth strategy, and the focus has been on heavy equipment. In early 2024 Suur-Savon Auto and Suvanto Trucks Oy became part of Wetteri. With Suvanto Trucks, Wetteri gained know-how in the purchase of van trucks as well as procurement channels. In May, Wetteri signed the first import and resale agreement in its history with Sany earthmoving machines. In June, the company strengthened its heavy equipment business by acquiring Lahden Rekkapaja Oy, which specializes in truck superstructures, and by opening exchange truck sales points in Joensuu and Kuopio. In late summer, we opened a used car centre in Vantaa in accordance with the Wetteri Premium concept, which allows us to meet the growing demand for high-quality exchange cars in the Helsinki Metropolitan Area. Wetteri's position is strong in a market that is turning to growth."
Estimated development of the industry and the company in 2024
In 2024, registrations of new passenger cars are estimated to remain at 75,000 in the whole country, compared to an estimate of 80,000 new passenger cars at the beginning of the year. Economic uncertainty has weighed on demand more than anticipated in the early part of the year, but the automotive industry predicts that demand for new passenger cars and heavy equipment will start to grow at the end of 2024. An increase of about 10% is forecast for 2025. Lower interest rates and lower inflation may increase demand for new cars in all vehicle categories, and improved availability of new cars will support demand growth. During the current year, Wetteri has strengthened its brand representations nationwide, which is estimated to support organic growth during the rest of the year. The used car trade is expected to continue to grow. Maintenance operations are expected to remain strong. Customer orders are expected to grow in the second half of the year. Wetteri has launched a program to improve the profitability of operations and achieve savings. The program includes measures with an impact on personnel, more efficient operating models and more efficient use of premises.
Wetteri's disclosure of financial information in 2024
21 November 2024 Interim report for January-September 2024
Webcast on 28 August 2024 at 14.00
Wetteri will arrange a webcast for shareholders, analysts and the media starting at 14:00 on 28 August 2024. In the broadcast, Wetteri Plc's CEO and President Aarne Simula will present January-June financial performance, talk about the company's strategy progress and open the situation in the automotive market. Webcast available in Finnish: https://wetteri.videosync.fi/q2-2024/register.
Oulu 28 August 2024
Wetteri Plc
Board of Directors
Further information:
Aarne Simula, CEO, Wetteri Plc
Tel. +358 400 689 613, aarne.simula@wetteri.fi
Panu Kauppinen, CFO, Wetteri Plc
Tel. +358 44 236 3740, panu.kauppinen@wetteri.fi
Wetteri Plc - an entrepreneur-driven growth company in the automotive sector
Wetteri Plc is an entrepreneur-driven growth company in the automotive sector. The company engages in the retail sales of passenger cars, commercial vehicles and heavy vehicles, and produces maintenance and repair shop services for vehicles, from passenger cars to heavy vehicles. Headquartered in Oulu, the company has 50 locations in Finland. The company employs nearly 1,000 people, of whom around 70% work in maintenance and repair services. Wetteri promotes digitalisation in the automotive sector and is an important player on the common journey towards emission-free motoring. More information: sijoittajat.wetteri.fi/en/
