Profits improved in the third quarter and guidance upgraded
Company announcement no. 11 2020/21 – INSIDE INFORMATION
Allerød, 25 February 2021
Interim report – 9M 2020/21
(1 April – 31 December 2020)
Profits improved in the third quarter and guidance upgraded
- Sales growth driven by increasing demand for healthcare and health products
- Online sales via matas.dk up by 91% and proportion of online sales increased to 25.8% (Q3 2019/20: 16.2%)
- Profit growth driven by economies of scale in the online business
- Full-year guidance further upgraded
Matas generated revenue of DKK 1,313.0 million in Q3 2020/21, a year-on-year increase of DKK 139.6 million, or 11.9%.
Q3 sales were boosted by the pay-out of frozen holiday pay, while physical store sales were adversely affected by new restrictions.
The proportion of online sales grew significantly as COVID-19 restrictions were tightened, to make up 25.8% for the third quarter. Physical store sales stood their ground, dropping by only 0.4%, partly as a result of strong demand for healthcare products (Health & Wellbeing), which were up by 23.4%.
Gregers Wedell-Wedellsborg, CEO of Matas A/S:
”Matas’ new business model proved resilient to large fluctuations during the quarter. Despite the costs incurred to ensure a safe shopping environment for our customers and employees, earnings were up as well due not least to profitability gains in our online business”.
Earnings (EBITDA before special items) came to DKK 292.8 million in Q3, a year-on-year increase of DKK 28.9 million. The EBITDA margin before special items was 22.3%, in line with the 22.5% reported for Q3 2019/20, even with a significantly greater share of online sales, which are historically less profitable.
“The reopening of the retail sector from 1 March is a great relief and a bright spot that will result in more customers in the streets and in stores. As we have also seen a massive growth in our online sales in January and February, we can now upgrade guidance”, said Gregers Wedell-Wedellsborg.
Matas is upgrading its full-year guidance which was most recently upgraded on 8 January 2021.Matas now forecasts growth of more than 12% in both overall revenue and underlying revenue, compared with the previous estimate of 10%. The EBITDA margin is now expected to exceed 18.5%, compared with the previous estimate of more than 18%. The CAPEX estimate is maintained at DKK 120 – 140 million.
Matas’ ambition for financial year 2022/23, as set out in the ‘Renewing Matas’ strategy, is to grow revenue to about DKK 4 billion and keep its earnings capacity, in terms of the EBITDA margin before special items, above 18%.
Management now expects these two financial ambitions to be achieved already in 2020/21. Against this background, Matas has launched a project to update its strategy.
Q3 2020/21 highlights
- Revenue grew by 11.9% year on year in Q3 2020/21, while underlying like-for-like sales were up by 12.8%. All categories recorded higher sales. Boosting sales by 23.4%, Health & Wellbeing recorded the strongest sales growth, while High-End Beauty grew sales by an also strong 11.5%. The number of trading days was unchanged compared with Q3 2019/20.
- Online sales were ahead by 78% year on year, and 84,000 new customers shopped at matas.dk for the first time. Online sales accounted for 25.8% of Q3 2020/21 revenue against 16.2% in the year-earlier period.
- Underlying like-for-like sales in the Group’s physical stores were down by a moderate 0.4% year on year on the back of increasing basket sizes.
- The gross margin for Q3 2020/21 was 43.8%, down from 43.9% in the year-earlier period. The slightly lower gross margin was attributable mainly to a higher proportion of online sales compared with the same quarter of last year and to the fact that part of the sales were accounted for by COVID-19-related articles such as face masks, which were sold at next to no margins.
- Overall costs (other external costs and staff costs) amounted to 21.6% of revenue against 21.5% in the same quarter of last year. Costs were up by DKK 30.9 million as a result of increased freight and logistics costs in the wake of online sales growth. At the same time, greater economies of scale translated into a more efficient and profitable online business.
- EBITDA before special items came to DKK 292.8 million, up from DKK 263.9 million in the year-earlier period. Growth was driven by higher revenue combined with a lower cost to revenue ratio attributable in part to greater economies of scale in the online business. The EBITDA margin before special items was 22.3% against 22.5% in Q3 2019/20.
- Cash generated from operations was an inflow of DKK 514.6 million in Q3 2020/21 against an inflow of DKK 254.2 million in Q3 2019/20, an increase of DKK 260.4 million attributable mainly to a combination of lower inventories and higher trade payables.
9M 2020/21 highlights
- Revenue for the first nine months of 2020/21 was up by 11.2%, and underlying like-for-like sales grew by 11.7% year on year. Boosting sales by 18.9%, Health & Wellbeing recorded the strongest 9M sales growth. The number of trading days was unchanged compared with the same period of 2019/20.
- Online sales surged by 100% year on year to make up 24.1% of 9M 2020/21 revenue against 13.4% in the year-earlier period.
- Underlying sales in the Group’s physical stores were down by 1.9% year on year as footfall was adversely affected by the COVID-19 pandemic.
- The 9M 2020/21 gross margin was 43.8% against 44.1% in the year-earlier period. The lower gross margin was attributable to a higher proportion of online sales and to the fact that COVID-19-related articles such as face masks were sold at next to no margins.
- Overall costs amounted to 23.7% of revenue against 24.5% in 9M 2019/20. Overall costs were up by DKK 52.2 million as a consequence of higher activity and acquisitions, while underlying costs fell as a result of ongoing rationalisation measures.
- EBITDA before special items came to DKK 645.1 million, up from DKK 580.8 million in the year-earlier period. The EBITDA margin before special items was 20.2%, in line with the year-earlier level.
- Cash generated from operations was an inflow of DKK 934.7 million in 9M 2020/21 against an inflow of DKK 446.0 million in 9M 2019/20. The DKK 488.8 million increase was attributable to favourable earnings and working capital developments, in particular a reduction of funds tied up in stock, combined with a small positive impact from the postponed payment of A tax under the government's COVID-19 relief package.
| 2020/21 | 2019/20 | 2020/21 | 2019/20 | |
| (DKKm) | Q3 | Q3 | 9M | 9M |
| Revenue | 1,313.0 | 1,173.4 | 3,192.4 | 2,871.5 |
| Gross profit | 575.4 | 515.1 | 1,398.0 | 1,266.6 |
| EBITDA before special items | 292.8 | 263.9 | 645.1 | 580.8 |
| EBIT | 190.5 | 165.6 | 339.8 | 282.1 |
| Adjusted profit after tax | 175.4 | 137.5 | 315.2 | 259.6 |
| Free cash flow | 412.5 | 161.3 | 739.0 | 144.8 |
| Revenue growth | 11.9% | 7.4% | 11.2% | 5.8% |
| Underlying like-for-like revenue growth | 12.8% | 4.7% | 11.7% | 1.6% |
| Gross margin | 43.8% | 43.9% | 43.8% | 44.1% |
| EBITDA margin before special items | 22.3% | 22.5% | 20.2% | 20.2% |
| Net interest-bearing debt/EBITDA before special items | 2.2 | n.a.* |
* The number cannot be calculated at 31/12/2019 due to a lack of historical EBITA numbers after IFRS 16 implementation.
Conference call
Matas will host a conference call for investors and analysts on Thursday, 25 February 2021 at 11:00 a.m. The conference call and the presentation can be accessed on Matas’ investor website: https://investor.en.matas.dk.
Conference call access numbers for investors and analysts:
| DK: | +45 82333194 |
| UK: | +44 3333009032 |
| US: | +1 8335268383 |
| Link to webcast: | https://streams.eventcdn.net/matas/2020q3 |
Contacts
Gregers Wedell-Wedellsborg
CEO, tel +45 48 16 55 55
Anders Skole-Sørensen
CFO, tel +45 48 16 55 55
Klaus Fridorf
Head of Communication, tel +45 61 20 19 97
Henrik Lund
Head of Investor Relations, tel +45 30 30 99 08
Forward-looking statements
This interim report contains statements relating to the future, including statements regarding Matas Group's future operating results, financial position, cash flows, business strategy and future targets. Such statements are based on management’s reasonable expectations and forecasts at the time of release of the announcement. Forward-looking statements are subject to risks and uncertainties and a number of other factors, many of which are beyond Matas Group's control. This may have the effect that actual results may differ significantly from the expectations expressed in the announcement. Without being exhaustive, such factors include general economic and commercial factors, including market and competitive conditions, supplier issues and financial and regulatory issues as well as any effects of measures to contain the spread of COVID-19 that are not specifically mentioned above.
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