Axfood summarises a third quarter with a continued positive trend in customer traffic, increased volumes and reinforced market positions, despite high comparison figures. Profitability was impacted by additional initiatives to strengthen price positions. The quarter was also characterised by a continued strong focus on investments for the future, and the ramp-up for all stores was finalised at the new logistics centre in Bålsta. In addition, the Swedish Competition Authority recently approved the Group's City Gross acquisition, an acquisition that will strengthen competition on the market and create new opportunities for Axfood.
President and CEO Simone Margulies comments on the interim report for the third quarter 2024:
"Although comparison figures remained high, Axfood's growth for the third quarter was in line with the market, with higher volumes and a positive trend in customer traffic contributing to a 3.5% increase in retail sales. As a result, we are once again reinforcing our market positions, and conditions to continue challenging and growing.
The fact that Willys continued to defend its strong position this quarter, with growth of 3.8%, is a sign of strength. Initiatives to strengthen its price position had a negative impact on profitability during the quarter in a market with intense competition. These initiatives are implemented to secure the profile with Sweden's cheapest bag of groceries, and contributes to a continued high level of customer traffic and loyalty as well as a strengthened market position going forward. Through favourable growth of 4.5% in like-for-like sales and effective cost control, Hemköp continues to successfully and profitably navigate the traditional grocery retail segment of the market. Our restaurant wholesaler Snabbgross is taking further steps and strengthens its market position. Growth was 5.6% in the quarter, with higher volumes and an increased number of customers.
The establishment of the Group's new logistics structure continued during the quarter. Towards the end of the quarter, the final volumes of frozen food were transferred to the new logistics facility in Bålsta, which means that the ramp-up for all stores is now complete. We are now in a phase where we will gradually increase focus on operational adjustments to improve productivity and efficiency. Tests are now also under way for the roll-out of e-commerce. In addition, the expansion of the existing high-bay warehouse in Backa, Gothenburg, continued to increase the Group's capacity and efficiency. Establishing a new logistics structure is an extensive endeavour - one that continued to give rise to additional costs in the third quarter. This is however an important long term shift that will result in cost savings and greater competitiveness over time, as well as an even more efficient and sustainable product supply.
We are delighted to have recently received approval from the Swedish Competition Authority for our acquisition of City Gross, which was eagerly anticipated. We now look forward to taking over as the company's new owner on 1 November, welcoming our new colleagues to the Axfood family, and starting the work to invest in strengthening the chain's competitiveness and challenge the leading players in the hypermarket segment.
This is my first interim report as President and CEO of Axfood. In summary, we have reinforced our market positions despite high comparison figures and intense competition, and taken new steps in our investments in the future, aimed at strengthening our long-term competitiveness."
Third quarter summary
- Net sales totalled SEK 20,902 m (20,293), an increase of 3.0%.
- Retail sales totalled SEK 16,427 m (15,873), an increase of 3.5%.
- Operating profit amounted to SEK 1,007 m (1,036). Operating profit in the prior year period included items affecting comparability of SEK -60 m. The operating margin was 4.8% (5.1).
- Adjusted operating profit amounted to SEK 1,007 m (1,095). The adjusted operating margin was 4.8% (5.4).
- Net profit for the period amounted to SEK 715 m (738) and earnings per share before dilution to SEK 3.26 (3.38).
- On 15 August, Simone Margulies assumed the role as President and CEO of Axfood. On the same day, Shoan Etemadi assumed the role as Managing Director of Hemköpskedjan.
- In September, a dividend of SEK 4.25 per share was paid out, the second part of the dividend to shareholders totalling SEK 8.50 per share (8.15).
Summary January - September
- Net sales totalled SEK 62,197 m (60,342), an increase of 3.1%.
- Retail sales totalled SEK 49,217 m (47,196), an increase of 4.3%.
- Operating profit amounted to SEK 2,661 m (2,609). Operating profit in the prior year period included items affecting comparability of SEK -179 m. The operating margin was 4.3% (4.3).
- Adjusted operating profit amounted to SEK 2,661 m (2,787). The adjusted operating margin was 4.3% (4.6).
- Net profit for the period amounted to SEK 1,858 m (1,841) and earnings per share before dilution to SEK 8.54 (8.50).
Significant events after the balance sheet date
- On 15 October, the Swedish Competition Authority approved Axfood's acquisition of City Gross. The acquisition will be completed on 1 November.
Axfood will present the interim report for the third quarter 2024 in a webcast at 9:30 a.m. (CET) today, 24 October 2024. The report will be presented by Simone Margulies, President and CEO, and Anders Lexmon, CFO. You can find a link to the webcast at axfood.com. A link to register to participate via conference call is also available at axfood.com. Upon registration, a telephone number and conference ID for the conference call will be provided.
For further information, please contact:
Alexander Bergendorf, Head of Investor Relations, Axfood AB, tel +46 73 049 18 44
The information herein is such that Axfood AB (publ) is required to make public in accordance with
the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person listed above, at 7:00 a.m. CET on 24 October 2024.
This document is an English translation of the Swedish original. In the event of any discrepancies, the Swedish version shall govern.
Axfood aspires to be the leader in affordable, good and sustainable food. Our family of companies includes the store chains Willys and Hemköp as well as Tempo, Handlar'n and Matöppet. B2B sales are handled through Snabbgross, and our support company Dagab is responsible for the Group's product development, purchasing and logistics. The Axfood family also includes Urban Deli as well as the partly owned companies Apohem, Eurocash and City Gross. Together the Group has approximately 13,000 employees and sales of more than SEK 80 billion. Axfood has been listed on Nasdaq Stockholm since 1997, and the principal owner is Axel Johnson AB. Read more at www.axfood.com.
