Sales record with 9% organic growth
Summary of the period
Numbers in parentheses refer to outcome of the corresponding period of the previous year.
Third quarter: July 1st - September 30th, 2024
- Net revenue amounted to 641.0 MSEK (602.0 MSEK), corresponding to an increase of 6% (25%)
- Organic, currency-adjusted growth amounted to 9% (17%)
- Operational EBITDA amounted to 135.7 MSEK (136.3 MSEK), unchanged 0%, and an EBITDA-margin of 21.2% (22.6%). The operational adjustments totaling 3.1 MSEK concern M&A costs, and non-cash flow-impacted evaluation of acquisition stock to fair value
- Operational EBITA amounted to 115.2 MSEK (116.0 MSEK), corresponding to a decrease of -1% and an EBITA-margin of 18.0% (19.3%)
- Operational EBIT amounted to 114.7 MSEK (115.6 MSEK), corresponding to a decrease of -1% and an EBIT-margin of 17.9% (19.2%)
- Exchange losses amounted to -0.3 MSEK (0.7 MSEK)
- Profit after tax amounted to 24.0 MSEK (38.1 MSEK)
- Earnings per share calculated on 158,819,193 shares (158,731,900 shares) amounted to 0.15 SEK (0.24 SEK)
- Cash flow from operating activities amounted to 125.6 MSEK (135.6 MSEK)
- 50.0 MSEK has been amortized on the debts to credit institution
- As of September 30th, 2024, cash amounted to 193.1 MSEK (243.2 MSEK)
First nine months: January 1st - September 30th, 2024
- Net revenue amounted to 1,868.9 MSEK (1,697.3 MSEK), corresponding to an increase of 10% (27%)
- Organic, currency-adjusted growth amounted to 10% (12%)
- Operational EBITDA amounted to 415.4 MSEK (360.3 MSEK), corresponding to an increase of 15%, and an EBITDA-margin of 22.2% (21.2%). The operational adjustments totaling 13.5 MSEK concern M&A costs, an adjustment of customer provisions due to additional claims from 2022, and a non-cash flow-impacted evaluation of acquisition stock to fair value.
- Operational EBITA amounted to 354.3 MSEK (302.4 MSEK), corresponding to an increase of 17% and an EBITA-margin of 19.0% (17.8%)
- Operational EBIT amounted to 353.1 MSEK (301.5 MSEK), corresponding to an increase of 17% and an EBIT-margin of 18.9% (17.8%)
- Exchange gains amounted to 4.2 MSEK (1.7 MSEK)
- Profit after tax amounted to 75.1 MSEK (71.6 MSEK)
- Earnings per share calculated on 158,760,998 shares (158,731,900 shares) amounted to 0.47 SEK (0.45 SEK)
- Cash flow from operating activities amounted to 277.4 MSEK (317.5 MSEK)
- 125.0 MSEK has been amortized on the debts to credit institution
Significant event during the third quarter
Swedencare acquires the Canadian Pet Health company MedVant Inc. through the newly established Canadian subsidiary, Swedencare Canada Holding Inc.
Significant events after the third quarter
There are no significant events after the end of the third quarter to comment on.
Words from the CEO
Sales Record and 9% organic growth
The net sales for the third quarter amounted to 641 MSEK, representing an increase of 6% compared to Q3 2023, while our operational EBITDA margin was 21.2%, totaling 136 MSEK. During the quarter, we made a small acquisition of Medvant, a veterinary distributor in Canada. We continued to reduce our net debt/EBITDA which is now at 2.2 compared to 2.9 in September 2023. Our cash flow remains strong, and we have used our cash for both acquisitions and amortization of 50 MSEK in the quarter. Our organic growth was 9% for the quarter and 10% for the year's first nine months.
Growth remains more robust than the market but lower than where we usually should be. Our largest unit, NaturVet, experienced negative growth during the quarter, primarily due to two reasons, which I describe below. For the rest of the group, the quarter was strong, with organic growth of over 30%.
Market Situation
Demand is good in all major markets, and the pet market shows growth. Online, the Veterinary channel, and our manufacturing segment show our most substantial growth.
With an increase of 16% for the quarter, the veterinary channel is strong in all markets except the UK. In the UK, the larger veterinary chains have been somewhat cautious, which may be due to the anti-trust investigation initiated regarding the veterinary market. In other UK channels, demand is strong, indicating that underlying consumer demand remains good. Our persistent work towards the channel in the USA yields results, and our more extensive collaborations are further developing. The Italian animal health market is growing by 9% in the quarter, and we continue to gain market share with growth of 22%.
Our European segment continues to deliver solid results and 30% growth despite the weaker veterinary market in the UK.
We continue to build our online business in North America and Europe which has strong growth. It is mainly our platform sales with partners like Amazon, Chewy, and Zooplus driving the strong sales but our expanded investment in our e-commerce team is increasing sales directly to the end consumer. In addition to sales, the increased customer communication also provides us with new and valuable insights into which preferences and areas we should focus on regarding product development.
NaturVet
NaturVet's sales, which showed negative growth during the quarter, are mainly due to two reasons. The strategic work and negotiation I mentioned in connection with the previous quarterly report regarding our Amazon sales is now completed. This means that from 2026, we will take the direct relationship with Amazon from our current partner in-house, giving us the entire sales revenue and control over marketing efforts. During the current quarter, this affected NaturVet's sales to our partner but not sales to the end consumer, which had a good development with 13% growth of Amazon sales. During the current quarter, I expect our sales to the partner to show growth and follow the positive trend we have regarding sales to the end consumer. In addition, the quarter was affected by a significant retail customer shutting down a large private label concept which we provided and has yet to be replaced.
Even though the quarter was disappointing, I am convinced our new team and strategy will deliver high growth in the coming years. We are strengthening our current relationships in Pet retail and have the excellent opportunity to enter the "Big box retail channel," which is approximately the same size as the Pet Retail channel. We currently have several dialogues/final negotiations, and we will be in the channel already in 2025 and with more partners in 2026. Even the large pharmacy chains in the USA have started to take an interest in animal health and are a significant opportunity for us.
Manufacturing
All manufacturing units have strong demand, with high year-on-year growth, and in Europe, we continue to expand capacity. John Kane, Production Director, describes more below and will participate in our web presentation. Our units in Florida were closed for a few days in September and October due to the two severe hurricanes that affected large parts of the southeastern USA. Fortunately, none of our employees were physically harmed, but homes and cars suffered minor damage. Our facilities fared well due to their location and the preparations made by our excellent teams.
In conclusion, I want to thank the entire organization for their efforts, and I look forward to finishing the year strong.
Håkan Lagerberg
Malmö October 23th, 2024
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 Q3 report where CEO Håkan Lagerberg and CFO Jenny Graflind will comment on the report. John Kane, Production Director, will also take part in the presentation. 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/88987045558
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 2024-10-23 07:30 CEST.
