Tokmanni Group Corporation Half-Year Financial Report January–June 2022: Revenue at the previous year’s level, EBIT burdened by cost increases

Tokmanni Group Corporation        Half-Year Financial Report        29 July 2022 at 8.30 a.m.

SECOND QUARTER 2022 HIGHLIGHTS

• Revenue grew by 1.7 % (5.4%) and was EUR 306.7 million (301.5)
• Like-for-like revenue for stores decreased by 1.5% (+4.4%)
• Comparable gross profit totalled EUR 106.9 million (105.8), with the comparable gross margin being 34.8% (35.1%)
• Comparable EBIT amounted to EUR 27.0 million (32.3), representing 8.8% of revenue (10.7%)
• Cash flow from operating activities amounted to EUR 62.8 million (61.5)
• Earnings per share, diluted was EUR 0.35 (0.41)

JANUARY–JUNE 2022 HIGHLIGHTS

• Revenue grew by 1.2% (8.8%) and was EUR 534.1 million (527.6)
• Like-for-like revenue for stores decreased by 2.0% (+7.8%)
• Comparable gross profit totalled EUR 180.6 million (180.5), with the comparable gross margin being 33.8% (34.2%)
• Comparable EBIT amounted to EUR 26.5 million (39.1), representing 5.0% of revenue (7.4%)
• Cash flow from operating activities amounted to EUR -2.3 million (39.5)
• Earnings per share, diluted was EUR 0.32 (0.48)

TOKMANNI’S OUTLOOK FOR 2022

In 2022 Tokmanni expects the revenue to be at the previous year’s level. Comparable EBIT measured in euros is expected to be EUR 90–110 million in 2022. The forecast includes elements of uncertainty, which depend on the development of inflation, interest rates, the war in Ukraine, the COVID-19 pandemic and the effects of these.

TOKMANNI’S PRESIDENT AND CEO MIKA RAUTIAINEN

An exceptional operating environment affected clearly Tokmanni’s sales, gross margin and EBIT in the second quarter.

Sales in the second quarter were, in practice, at the previous year’s level. The total revenue grew by 1.7% (5.4%), while the like-for-like revenue decreased by 1.5% (increased by 4.4%). Sales in the second quarter was overshadowed by exceptionally low consumer confidence, the negative impact of inflation on purchasing power and the markedly delayed spring and summer seasons. Sales grew in interior decoration, grocery, cosmetics, and apparel, while sales were weak in garden soil, fertilizers, and plants, as well as in outdoor activities product categories.

The delay in the spring season caused inventories to increase considerably. The value of inventories was EUR 313.9 million (252.6) at the end of the second quarter. In addition to the weak sales of spring season products, inventories increased because of markedly higher sourcing prices and improved shelf availability at the stores, as well as the new and expanded stores. With regard to inventories, measures are in progress to reach a more normal level by the end of the year.

The comparable gross margin in the second quarter was 34.8% (35.1%), which is close to the previous year’s level. The gross margin was burdened by our decision to maintain low price levels, the sales mix caused by the delayed spring season and higher freight costs. Despite the increase in sourcing prices, we have been determined to maintain the lowest price level at the expense of the gross margin. We are confident that this decision will continue to strengthen Tokmanni’s perceived price image and customer trust.

Our result for the second quarter was EUR 27.0 million (32.3). The decrease from the previous year was mainly due to higher costs. In practice, all costs increased. Personnel expenses were increased by the general increase in salaries that entered into force at the beginning of May and sickness absences caused by the pandemic, although they were at a slightly lower level than in early 2022. Property expenses increased due to general cost inflation and new store locations. In the second half of the year, we will focus on strict cost control and improved operational efficiency.

The exceptional market situation is expected to continue during the second half of the year. Tokmanni continues to respond to the rapidly changing market situation and apply effective solutions to improve customer trust.

Key figures
	4–6/ 2022	4–6/ 2021	Change %	1–6/ 2022	1–6/ 2021	Change %	1–12/ 2021
Revenue, MEUR	306.7	301.5	1.7%	534.1	527.6	1.2%	1 141.8
Like-for-like revenue development, %	-1.5	4.4		-2.0	7.8		4.8
Customer visit development %	0.7	2.4		0.0	0.9		0.8
Gross profit, MEUR	108.0	105.6	2.3%	181.7	181.6	0.1%	397.8
Gross margin, %	35.2	35.0		34.0	34.4		34.8
Comparable gross profit, MEUR	106.9	105.8	1.0%	180.6	180.5	0.0%	396.4
Comparable gross margin, %	34.8	35.1		33.8	34.2		34.7
Operating expenses	-62.5	-57.3	9.1%	-119.6	-110.0	8.7%	-226.9
Comparable operating expenses	-63.0	-57.8	8.9%	-120.2	-110.3	9.0%	-227.6
EBITDA, MEUR	46.6	49.1	-5.0%	64.1	73.3	-12.5%	174.5
EBITDA, %	15.2	16.3		12.0	13.9		15.3
Comparable EBITDA, MEUR	45.1	48.7	-7.5%	62.4	71.9	-13.2%	172.5
Comparable EBITDA, %	14.7	16.2		11.7	13.6		15.1
Operating profit (EBIT), MEUR	28.6	32.6	-12.4%	28.3	40.4	-30.0%	107.7
Operating profit margin EBIT, %	9.3	10.8		5.3	7.7		9.4
Comparable EBIT, MEUR	27.0	32.3	-16.3%	26.5	39.1	-32.1%	105.7
Comparable EBIT, %	8.8	10.7		5.0	7.4		9.3
Net financial items, MEUR	-2.5	-2.5	0.0%	-5.0	-5.1	-2.5%	-10.1
Net capital expenditure, MEUR*	11.6	3.6		22.4	5.9		21.7
Net debt / comparable EBITDA **	2.6	2.0		2.6	2.0		1.8
Net cash from operating activities, MEUR	62.8	61.5		-2.3	39.5		126.8
Return on capital employed, %	4.6	5.5		4.6	6.8		17.1
Return on capital employed %, rolling 12 months	15.3	18.1		15.3	18.1		18.0	***
Return on equity, %	10.4	12.6		9.3	14.8		33.8	***
Return on equity %, rolling 12 months	31.8	40.7		31.8	40.7		37.9	***
Equity ratio, %	24.8	25.9		24.8	25.9		30.0	***
Number of shares, weighted average during the financial period (thousands)	58 759	58 731		58 759	58 731		58 731
Diluted number of shares, weighted average during the financial period (thousands)	58 789	58 775		58 781	58 762		58 776
Earnings per share, basic (EUR/share)	0.35	0.41		0.32	0.48		1.33
Earnings per share, diluted (EUR/share)	0.35	0.41		0.32	0.48		1.33
Personnel at the end of the period	4 832	4 701		4 832	4 701		4 105
Personnel on average in the period	4 445	4 357		4 182	4 099		4 132

* Net capital expenditure, excluding non-current receivables from others.
** Rolling 12 months comparable EBITDA.
*** The figures for the comparison year of 2021 have been adjusted due to a correction made to the figures from previous financial years concerning the method of recognizing purchase rebates. The impact of the adjustment of assets for the period 1–6/2021 is on inventories at EUR -3.2 million and on deferred tax assets at EUR 0.6 million. The impact of the adjustment of liabilities for the period 1–6/2021 is on retained earnings at EUR -2.6 million.

Analyst and press conference

Tokmanni’s President and CEO Mika Rautiainen and CFO Markku Pirskanen will present the review to analysts, investors and media representatives on the publication day at 11:30 am in English (Finnish time).

The live webcast can be accessed via Tokmanni's website at https://ir.tokmanni.fi/en/investors or through the link https://tokmanni.videosync.fi/2022-q2-results. On-demand version of the presentation will be available on the company's website later during the same day.

The participants can also join a telephone conference that will be arranged in conjunction with the live webcasts. The participants are asked to dial in 5-10 minutes prior to starting time using the phone number and passcode below.

Finland: +358 9 8171 0310
Sweden: +46 8 5664 2651
UK: +44 33 3300 0804
US: +1 63 1913 1422
Passcode: 17352373#

For further information, please contact

Mika Rautiainen, CEO, tel. +358 020 728 6061, mika.rautiainen(at)tokmanni.fi
Markku Pirskanen, CFO, tel. +358 20 728 7390, markku.pirskanen(at)tokmanni.fi
Maarit Mikkonen, Head of IR and Communications, tel. +358 40 562 2282, maarit.mikkonen(at)tokmanni.fi

Tokmanni in brief

Tokmanni is Finland’s leading variety discount retailer. Some 4,100 Tokmanni employees make customers’ everyday life and special occasions easier by offering a versatile and up-to-date assortment of Finnish and international brand-name products and other high-quality products at prices that are always affordable. With around 200 stores around Finland and an online store, Tokmanni is always close to its customers. In 2021, Tokmanni’s revenue was EUR 1,142 million and comparable EBIT amounted to EUR 106 million. Tokmanni's shares are listed on Nasdaq Helsinki.

Distribution

Nasdaq Helsinki
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