NoHo Partners Plc’s Half Year Financial Report 1 January–30 June 2023: Profitable growth continued faster than market

NoHo Partners Plc

Half Year Financial Report 8 AUGUST 2023 AT 8.00 EET

NoHo Partners Plc’s Half Year Financial Report 1 January–30 June 2023: Profitable growth continued faster than market

APRIL–JUNE 2023 IN BRIEF

•  Turnover was MEUR 93.3 (90.2) and increased by 3.5%. 

•  In the second quarter of 2022, MEUR 4.8 of governmental assistance due to Covid-related business restrictions in the first quarter was retrospectively recorded.

•  Operational EBITDA was MEUR 12.6 (18.3, 13.5 when adjusted by governmental assistance*) and decreased by 31.1%.

•  EBIT was MEUR 10.7 (16.1, 11.4 when adjusted by governmental assistance*) and decreased by 33.3%.

•  EBIT margin was 11.5% (17.9%, 12.6% when adjusted by governmental assistance*)

•  The result for the period was MEUR 4.1 (10.5, 5.8 when adjusted by governmental assistance*) and decreased by 61.0%. The result adjusted by the change in Eezy Plc share price and governmental assistance in the same period in the previous year was MEUR 5.9 (6.6).

•  Earnings per share were EUR 0.17 (0.45, 0.21 when adjusted by governmental assistance*) and decreased by 63.2%. Earnings per share adjusted by entries related to Eezy Plc shares and governmental assistance in the same period in the previous year was EUR 0.25 (0.25). 

 

JANUARY–JUNE 2023 IN BRIEF

•  Turnover was MEUR 169.2 (138.7) and increased by 22.0%.

•  Operational EBITDA was MEUR 20.7 (19.4) and increased by 6.8%.

•  EBIT was MEUR 16.7 (14.8) and increased by 12.6%.

•  EBIT margin was 9.9% (10.7%)

•  The result for the period was MEUR 6.6 (7.0) and decreased by 6.1%. The result adjusted by the change in Eezy Plc share price was 7.7 (7.8).

•  Earnings per share were EUR 0.26 (0.27) and decreased by 4.8%. Earnings per share adjusted by entries related to Eezy Plc shares was EUR 0.31 (0.29). 

Unless otherwise stated, figures in parentheses refer to the corresponding period last year.

* In the second quarter of 2022, MEUR 4.8 of governmental assistance due to Covid-related business restrictions in the first quarter was retrospectively recorded. When adjusted by these grants, operational EBITDA was MEUR 13.5, EBIT MEUR 11.4 and EBIT margin 12.6%. The adjustment only applies between the first and the second quarter of 2022 and does not impact the cumulative result in the first half of 2022.

 

KEY FIGURES

MEUR	Q2 2023	Q2 2022 *	Change, %	Q1–Q2 2023	Q1–Q2 2022	Change, %	Q1–Q4 2022
Turnover	93.3	90.2	3.5	169.2	138.7	22.0	312.8
Operational EBITDA	12.6	18.3	-31.1	20.7	19.4	6.8	41.6
EBIT	10.7	16.1	-33.3	16.7	14.8	12.6	31.6
EBIT, %	11.5	17.9		9.9	10.7		10.1
Result of the financial period	4.1	10.5	-61.0	6.6	7.0	-6.1	4.9
Earnings per share for the review period attributable to the owners of the company, EUR	0.17	0.45	-63.2	0.26	0.27	-4.8	0.07
Earnings per share adjusted by entries related to Eezy Plc shares, EUR	0.25	0.49	-48.8	0.31	0.29	6.7	0.56
Interest-bearing net liabilities excluding IFRS 16 impact				122.9	126.9	-3.1	121.0
Gearing ratio excluding IFRS 16 impact, %				147.5	138.7		135.1
Ratio of net debt to operational EBITDA excluding IFRS 16 impact				2.9	3.5		2.9
Adjusted equity ratio, %				25.9	29.5		29.1
Material margin, %	75.4	75.1		75.3	74.8		75.3
Personnel expenses, %	32.7	31.9		32.9	34.0		33.2

 

FUTURE OUTLOOK

PROFIT GUIDANCE AS OF 6 JULY 2023

NoHo Partners estimates that, during the financial year 2023, it will achieve total turnover of approximately MEUR 380 and EBIT margin of approximately 9% in the restaurant business.

Previous profit guidance (as of 16 February 2023):

Previously, the company estimated that it will achieve total turnover of over MEUR 350 and EBIT margin of approximately 9% in the restaurant business during the financial year 2023.

FINANCIAL TARGETS FOR THE STRATEGY PERIOD 2022-2024

The company’s long-term guidance is as follows:

The Group aims to achieve turnover of approximately MEUR 400 and an EBIT margin of approximately 10% during 2024. In the long-term, the company aims to keep the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, under 3 and distribute annually increasing dividend.

The company will reach the targets set for the strategy cycle ending in 2024 ahead of time. The company will update its long-term strategic and financial targets for the next strategy cycle 2024-2026 and publish them during the first half of 2024.

MARKET ENVIRONMENT

The business outlook for the tourism and restaurant sector has improved from recent years to a pre-pandemic level, but the outlook and consumer confidence continue to be weakened by the uncertain geopolitical climate, consumers’ reduced purchasing power and the general rise in costs. The company continues to take active measures to prepare for potentially rapid changes in the market situation by actively monitoring operational efficiency and pricing, using centralised procurement agreements and engaging in regular dialogue with suppliers and other partners. Customer demand is estimated to continue at a good level during 2023.

In a normal operating environment in the restaurant business, most of the profits are made during the second half of the year due to the seasonal nature of the business. The demand for restaurant services is usually less susceptible to cyclical fluctuations compared to other service and retail industries. The company’s size and large portfolio protect it from the strongest fluctuations.

CEO REVIEW

The good start in the beginning of the year continued in the second quarter with an EBIT margin of 11.5%. At the same time, the EBIT margin for the first half of the year increased to almost 10%. I am particularly satisfied with the profitability level achieved in this environment of exceptional cost pressure and weakened consumers’ purchasing power. The relative profitability and cash flow in Finnish operations continued at a very good level and enable future growth investments as well as an increasing dividend distribution. I am also happy with the profitability improvement achieved in the international business. As this business segment is still in a strong growth and development phase, I consider an EBIT margin of almost 8% in the quarter to be a very good result.

Supported by good profitability development and strong cash flow, the company returned to acquisitions-driven growth. In the reporting period, the acquisitions of three Helsinki-based nightclubs and the Sauna Restaurant Kuuma were completed, and the acquisition of the Sushibar + Wine -chain was announced. Sushibar + Wine will be integrated into the Group in the third quarter. The combined annual revenue of these acquisitions amounts to approximately MEUR 17. After the reporting period, entering into the growing European premium burger market and the establishing of Better Burger Society -company in collaboration with an equity investor were also disclosed. The Swiss Holy Cow! -hamburger chain was announced as the company’s first acquisition as well as the strategy to grow and expand through acquisitions of leading local hamburger brands in the European market. I consider this very promising and productive value creation for the shareholders.

The strengthened balance sheet and strong cash flow generated by the business allowed the company to return to paying dividends as well as complete several strategic growth investments within the limits of the targeted debt level.

Throughout the beginning of the year, consumer demand has remained at a good level and also in the second quarter, the use of restaurant services continued at last years’ level. In our own restaurant portfolio, the number of customers remained stable in all business areas. For restaurants, the value of average purchase has increased slightly due to inflation whilst in entertainment venues and night clubs we see some decline in consumers’ spending. We expect the consumers’ purchasing power to continue under pressure during the second half of the year. In response to this, the focus is on high quality customer experience and good value for money across the portfolio.

Profit guidance for the full year 2023 was raised on 6 July following a good beginning of the year and in connection to the acquisition in Switzerland. Due to the good business development, the targets set for the strategy cycle ending in 2024 will be reached ahead of time. We have started planning for the next strategy cycle and will consequently update new long-term financial targets in the first half of 2024.

Aku Vikström
CEO

IMPLEMENTATION OF THE STRATEGY 

The Group aims to achieve turnover of approximately MEUR 400 and an EBIT margin of approximately 10% during 2024. In the long-term, the company aims to keep the ratio of net debt to operational EBITDA, adjusted for IFRS 16 lease liability, under 3 and distribute annually increasing dividend.

NoHo Partners’ growth strategy focuses on the three areas:

•          Profitable growth in the Norwegian restaurant market through acquisitions (50 million growth target) 

•          Scaling up the Friends & Brgrs chain in Finland (30 million growth target)

•          Large and profitable urban projects (30 million growth target)

The core of the company’s strategy continues to be on profitable growth, which sets a clear framework on the acquisition targets. Profitability will not be sacrificed for excessively aggressive growth.

In Norway, after a strong growth phase, the company has focused on developing profitability and optimising the restaurant portfolio. Profitability in Norway is now on a good level and focus will return on acquisitions-driven growth.

The expansion of the Friends & Brgrs chain progresses on schedule and very profitably. In the second quarter, the chain expanded with two new restaurants in Tampere and Joensuu, Finland. After the reporting period, NoHo Partners announced that Friends & Brgrs will become part of Better Burger Society, a company established together with equity investor Intera Partners, targeting a leading position in the growing premium burger market in Europe. The first acquisition of Better Burger Society is the Swiss burger chain Holy Cow!. By focusing the scalable brand business in one separate company, NoHo Partners can more efficiently expand its premium burger business into the large European markets.

The final phase of large urban projects of the strategy cycle will come to completion in the second half of the year as the restaurant operations of the Helsinki Expo and Convention Centre are taken over by NoHo Partners as of 1 July 2023 and the cultural centre Helsingin Kulttuurikasarmi, including its four restaurants, opens in November 2023.

TURNOVER AND INCOME

In April–June 2023, the Group’s turnover increased by 3.5% to MEUR 93.3 (90.2), which represents growth faster than market (source: Nordea Kuluttajamittari). Operational EBITDA was MEUR 12.6 (18.3) and decreased by 31.1%. EBIT was MEUR 10.7 (16.1) with an EBIT margin of 11.5% (17.9). The result for April–June was MEUR 4.1 (10.5). In the second quarter of 2022, MEUR 4.8 of governmental assistance due to Covid-related business restrictions in the first quarter was retrospectively recorded. When adjusted by these grants, operational EBITDA was MEUR 13.5, EBIT MEUR 11.4 and EBIT margin 12.6%. The result adjusted by the change in Eezy Plc share price and governmental assistance in the same period in the previous year was MEUR 5.9 (6.6).

In January–June 2023, the Group’s turnover increased by 22.0% to MEUR 169.2 (138.7). Operational EBITDA increased by 6.8% compared to the corresponding period in the previous year and was MEUR 20.7 (19.4). EBIT was MEUR 16.7 (14.8) with an EBIT margin of 9.9 (10.7). The result for the period was MEUR 6.6 (7.0). The result adjusted by the change in Eezy Plc share price was MEUR 7.7 (7.8).

The company was able to balance the effects of inflation on its business through centralised purchasing agreements and price increases, and the general rise in prices did not significantly affect the material margin. In spite of the labour shortages in the industry, the company also performed well in recruitment and resource allocation, and the growth in turnover as well as operational efficiency has kept personnel expenses at a competitive level.

FINNISH OPERATIONS 

MEUR	Q2 2023	Q2 2022*	Q1–Q2 2023	Q1–Q2 2022	Q1–Q4 2022
Turnover	77.4	72.9	138.9	110.2	251.2
Operational EBITDA	10.8	15.9	17.3	15.1	34.8
EBIT	9.5	14.6	14.6	12.2	28.2
EBIT, %	12.3	20.0	10.5	11.1	11.2
Material margin, %	75.3	75.1	75.0	74.6	75.3
Personnel expenses, %	32.5	31.5	32.8	33.2	32.8

 

* In the second quarter of 2022, MEUR 4.3 of governmental assistance due to Covid-related business restrictions in the first quarter was retrospectively recorded. When adjusted by these grants, the segment’s operational EBITDA was MEUR 11.6, EBIT MEUR 10.3 and EBIT margin 14.1%. The adjustment only applies between the first and the second quarter of 2022 and does not impact the cumulative result in the first half of 2022.

 

In April–June 2023, the turnover increased by 6.2% to MEUR 77.4 (72.9) compared to the previous year. Operational EBITDA was MEUR 10.8 (15.9). EBIT in April–June was MEUR 9.5 (14.6) with an 12.3% (20.0) EBIT margin.

In January–June 2023, the turnover increased by 26.1% to MEUR 138.9 (110.2) compared to the previous year. Operational EBITDA was MEUR 17.3 (15.1). EBIT was MEUR 14.6 (12.2) with a 10.5% (11.1) EBIT margin.

Changes in the restaurant portfolio in April–June 2023

•          Apollo Live Club, Maxine and Kaivohuone, Helsinki (new)

•          Kirsikka, Helsinki (new)

•          Friends & Brgrs, Joensuu and Tampere (new)

•          Sauna restaurant Kuuma, Tampere (new)

•          Hanko Aasia, Jyväskylä (concept change)

•          Pigs and chicks, Tampere (closed)

INTERNATIONAL BUSINESS 

MEUR	Q2 2023	Q2 2022*	Q1–Q2 2023	Q1–Q2 2022	Q1–Q4 2022
Turnover	15.9	17.3	30.3	28.5	61.6
Operational EBITDA	1.9	2.4	3.5	4.3	6.8
EBIT	1.2	1.5	2.1	2.6	3.4
EBIT, %	7.8	8.9	6.8	9.1	5.5
Material margin, %	76.0	75.1	76.2	75.6	75.3
Personnel expenses, %	33.7	33.5	33.8	37.1	35.1

 

* In the second quarter of 2022, MEUR 0.4 of governmental assistance due to Covid-related business restrictions in the first quarter was retrospectively recorded. When adjusted by these grants, the segment’s operational EBITDA was MEUR 2.0, EBIT MEUR 1.1 and EBIT margin 6.2%. The adjustment only applies between the first and the second quarter of 2022 and does not impact the cumulative result in the first half of 2022.

 

In April–June 2023, turnover decreased by 8.1% from the previous year to MEUR 15.9 (17.3). Operational EBITDA was MEUR 1.9 (2.4). EBIT was MEUR 1.2 (1.5) with a 7.8% (8.9) EBIT margin. In April–June 2023, turnover in Norway, denominated in Norwegian krone, was MNOK 113 (111), a growth of 1.1% compared to the previous year. Denominated in euro, the turnover in Norway decreased by MEUR 1.4 due to a significantly weaker Norwegian krone relative to the euro.

In January–June 2023, turnover increased by 6.4% from the previous year to MEUR 30.3 (28.5) Operational EBITDA was MEUR 3.5 (4.3). EBIT was MEUR 2.1 (2.6) with a 6.8% (9.1) EBIT margin.

Changes in the restaurant portfolio in April–June 2023

•       Luca Østerbro, Copenhagen (closed)

•       Cocks & Cows Amager, Copenhagen (closed)

TURNOVER BY BUSINESS AREA 

FINNISH OPERATIONS	Q2 2023	Q2 2022	Q1–Q2 2023	Q1–Q2 2022	Q1–Q4 2022
Restaurants
Turnover, MEUR	33.8	32.2	62.3	49.4	112.2
Share of total turnover, %	36.2	35.7	36.8	35.6	35.9
Change in turnover, %	4.7	-	26.0	-	54.4
Units at the end of period, number	91	92	91	92	93
Entertainment venues
Turnover, MEUR	31.3	29.9	52.3	41.3	97.2
Share of total turnover, %	33.6	33.1	30.9	29.8	31.1
Change in turnover, %	4.9	-	26.7	-	91.9
Units at the end of period, number	74	71	74	71	71
Fast food -restaurants
Turnover, MEUR	12.3	10.8	24.3	19.4	41.9
Share of total turnover, %	13.2	12.0	14.3	14.0	13.4
Change in turnover, %	14.3	-	24.9	-	20.6
Units at the end of period, number	54	48	54	48	52
Total turnover, MEUR	77.4	72.9	138.9	110.2	251.2

  

INTERNATIONAL BUSINESS	Q2 2023	Q2 2022	Q1–Q2 2023	Q1–Q2 2022	Q1–Q4 2022
Norway
Turnover, MEUR	9.7	11.1	18.6	19.0	39.7
Share of total turnover, %	10.3	12.3	11.0	13.7	12.7
Change in turnover, %	-13.2	-	-1.8	-	136.1
Units at the end of period, number	21	21	21	21	21
Denmark
Turnover, MEUR	6.2	6.2	11.7	9.5	21.9
Share of total turnover, %	6.7	6.9	6.9	6.9	7.0
Change in turnover, %	1.0	-	22.7	-	95.3
Units at the end of period, number	17	19	17	19	19
Total turnover, MEUR	15.9	17.3	30.3	28.5	61.6

 

CASH FLOW, INVESTMENTS AND FINANCING

The Group’s operating net cash flow in January–June was MEUR 32.2 (32.3). Cash flow before change in working capital was MEUR 40.2 and changes in working capital MEUR 0.6.

The investment net cash flow in January–June was MEUR -7.1 (-1.7) The investments in January–June in Finland included, for example, the opening of four new Friends & Brgrs restaurants, nine concept changes from Hanko Sushi restaurant to Hanko Aasia restaurant and the acquisition of Lumo Laukontori Oy (Saunaravintola Kuuma). Investing activities in January–June 2022 included a MEUR 4.2 sale of Eezy Plc’s shares, classified as assets held for sale.

Financial net cash flow amounted to MEUR -23.8 (-33.4), including MEUR 16.5 of IFRS 16 lease liability payments, MEUR 5.4 of dividend payments and MEUR 6.3 of amortisation of financial institution loans.

The Group’s interest-bearing net liabilities excluding the impact of IFRS 16 liabilities increased during January–June by MEUR -1.9 and amounted to MEUR 122.9 at the end of the review period. The Group’s gearing ratio excluding the impact of IFRS 16 liabilities increased from 135.1% at the beginning of the financial period to 147.5%.

Adjusted net finance costs in January–June excluding the expense due to the decrease of the market value of Eezy Plc shares classified as assets held for sale were MEUR 7.1 (6.1). IFRS 16 interest expenses included in adjusted net finance costs in January–June were MEUR 3.9 (3.6).

EVENTS AFTER THE REPORTING PERIOD 

NoHo Partners acquires the leading Swiss premium burger chain Holy Cow! in collaboration with Intera Partners

On 6 July 2023, NoHo Partners announced that the company has, together with private equity investor Intera Partners, established Better Burger Society, a company targeting a leading position in the growing premium burger market in Europe. As part of the transaction, NoHo Partners’ share ownership in Friends & Brgrs is invested into the new company. The first acquisition of Better Burger Society is the Swiss premium burger chain Holy Cow!. The transaction is expected to be completed during the third quarter of 2023.

The company issued a positive profit warning

On 6 July 2023, NoHo Partners announced it increased its profit guidance for 2023 concerning revenue in connection to the above-mentioned Holy Cow! -acquisition. According to the new profit guidance, NoHo Partners estimates that, during the financial year 2023, it will achieve total turnover of approximately MEUR 380 and EBIT margin of approximately 9% in the restaurant business.

In July 2023, Group turnover was approximately MEUR 30.4

NoHo Partners’ turnover in July 2023 was approximately MEUR 30.4 (29.3) and increased by 4% compared to the same period in the previous year.

NoHo Partners publishes in the interim reports the Group turnover for the first month of the commencing quarter. The target is to provide better service to investors through timely and transparent investor communications.

BRIEFING FOR THE MEDIA, ANALYSTS AND INVESTORS AT 10:00 EET

A briefing for the media, analysts and investors will be organised today, 8 August 2023. In the briefing, NoHo Partners CEO Aku Vikström will review NoHo Partners Plc's financial performance, key events, the current state of business and the outlook.

The briefing is available as a live webcast. The briefing will be held in Finnish. The presentation materials and a recording of the briefing will be available on the company’s website later today.

NoHo Partners’ full Half Year Financial Report for January–June 2023 is attached to this release and available at www.noho.fi/en.

Tampere, 8 August 2023

NOHO PARTNERS PLC 
Board of Directors

For more information, please contact:  

Aku Vikström, CEO, contact through tel. +358 50 413 8158
Jarno Suominen, Deputy CEO, tel. +358 40 721 5655
Jarno Vilponen, CFO, tel. +358 40 721 9376