Careium reports second quarter results 2022

The quarter in summary

• Careium’s net sales amounted to SEK 174.4 million (147.0), an increase of 18.7 percent. Service sales amounted to 132.0 million (113.8) an increase of 16.1 percent. Product sales amounted to 42.4 million (33.2) an increase of 27.7 percent.
• Gross margin amounted to 37.4 percent (41.6).
• Adjusted operating profit (EBIT) amounted to SEK 14.1 million (6.2) excluding restructuring costs of SEK 0.6 million. Including restructuring costs EBIT amounted to SEK 13.5 million (6.0) corresponding to an operating margin of 7.7 percent (4.1). In addition, operating profit was positively affected by non-recurring items of SEK 21.0 million.
• Free cash flow of SEK -3.9 million (-27.6).
• Organic growth amounted to 8.2 percent.
• Earnings per share amounted to SEK 0.68 (0.18).

 

The half-year in summary

• Careium’s net sales amounted to SEK 353.0 million (284.9), an increase of 23.9 percent. Service sales amounted to 271.5 million (226.4) an increase of 19.9 percent. Product sales amounted to 81.5 million (58.6) an increase of 39.2 percent.
• Gross margin amounted to 38.3 percent (41.8).
• Adjusted operating profit (EBIT) amounted to SEK 10.6 million (11.7) excluding restructuring costs of SEK 21.5 million. Including restructuring costs EBIT amounted to SEK -10.9 million (11.2) corresponding to an operating margin of -3.1 percent (5.6). In addition, operating profit was positively affected by non-recurring items of SEK 14.1 million.
• Free cash flow of SEK 0.6 million (-50.2).
• Organic growth amounted to 13.0 percent.
• Earnings per share amounted to SEK -0.15 (0.33).

 

CEO’s comment

During the second quarter, we continued our growth journey and increased net sales compared to the previous year in all markets for both products and services. Sales increased by 18.7 percent in the quarter and by 23.9 percent in the first half year. Our sales development reflects the strong need we have identified for technology-driven welfare services in Europe. The organic growth amounted to 8.2 percent in the quarter.

In the Nordic region, especially in Sweden, we continued to win procurements with a new highest level of connections to our alarm centres, showing our customers appreciate our offering and the quality of our service delivery. Sales in Central Europe were also higher compared to the previous year. The United Kingdom & Ireland region continued strong product sales driven by the increased demand for digital social alarms. The region’s product sales increased with 34 percent compared to the previous quarter and 83 percent compared to the previous year.

We continue our work to strengthen and develop our offerings, especially in mobile welfare technology with applications including friends and family in the care chain. Mobility and involvement will become part of a stronger, safer and more inclusive care. For our software platform, we are working with a number of customers in Central Europe for a planned implementation during the third quarter.

The gross margin during the second quarter amounted to 37.4 percent, which was on a par with the first quarter but slightly lower than the previous year. Lower sales of services and high costs in the UK operations had a slight negative impact on the gross margin as did the continued challenges in the supply chain with high freight and component costs. Despite these issues, we were able to maintain our gross margin at an acceptable level.

Operating profit (EBIT) amounted to SEK 13.5 million (6.0) in the quarter, positively affected by SEK 27.8 million from a revaluation of the additional purchase consideration for Spanish Victrix. Victrix’s software platform is now becoming an important part of our offering, but its commercialization has been delayed compared to the plan at the time of the acquisition, which affects the additional purchase consideration. An additional SEK 7.4 million in transformation costs for the UK operations was charged to EBIT.

EBIT excluding the revaluation and transformation cost amounted to SEK -6.9 million. The previously communicated challenges in the UK continue to weigh on the Group’s profitability. During the quarter we have worked intensely with measures to improve quality and efficiency in the UK which will show effect in the second half year. In addition to the transformation program, initiatives to strengthen the profitability have been identified in the rest of the Group. The measures, including the restructuring we are doing in the UK, are expected to increase operating profit by approximately 60-80 million on an annual basis and the estimated transformation costs in 2022 amount to 25-30 million, of which 7.4 million have been charged in the second quarter and 19.8 million in the first half of 2022.

I am confident that the steps we are taking and the offer we have are leading us towards becoming the market leader in technology enabled care in Europe. I appreciate all the hard work our employees, especially in the UK, are doing on a daily basis. We are dedicated to restructure the UK operations during the second half of 2022 while driving continued sales growth through our unique offering of welfare technology.

 

Webcast

Careium will publish the report for the second quarter of 2022 on Friday July 15th, 2022 at 8am (CET). An online audiocast and conference call will be held at 1pm (CET) on the same day where CEO Carl-Johan Zetterberg Boudrie will present the report and answer questions.

The webcast can be found at www.careium.com/sv-se/investerare or via https://tv.streamfabriken.com/careium-q2-2022. The presentation will be held in English.

To participate in the conference call please dial one of the following numbers.

Sweden: +46 8 505 163 86

UK: +44 203 198 4884

USA: +1 412 317 6300

PIN: 6840468#

The presentation will be available on www.careium.com/sv-se/investerare as soon as the report has been made public. The recording of the webcast will be available on the same link after the presentation.

This information is information that Careium is obliged to disclose in accordance with the EU Market Abuse Regulation. The information was submitted for publication on Wednesday, July 15, 2022, at the time of the above contact persons, 08.00 (CEST).