Tokmanni Group Corporation Half-Year Financial Report January–June 2023: Revenue grew by 4.0%, comparable gross margin improved markedly to 36.1%

Tokmanni Group Corporation        Half-Year Financial Report        4 August 2023 at 8:00 am

SECOND QUARTER 2023 HIGHLIGHTS

• Revenue grew by 4.0% (1.7%) and was EUR 318.9 million (306.7)
• Like-for-like revenue increased by 1.0% (-1.5%)
• Comparable gross profit was EUR 115.1 million (106.9) and comparable gross profit % was 36.1% (34.8%)
• Comparable EBIT amounted to EUR 28.5 million (27.0), 8.9% of revenue (8.8%)
• Cash flow from operating activities amounted to EUR 79.8 million (62.8)
• Earnings per share, diluted was EUR 0.33 (0.35)

JANUARY–JUNE 2023 HIGHLIGHTS

• Revenue grew by 4.3% (1.2%) and was EUR 557.1 million (534.1)
• Like-for-like revenue increased by 1.7 % (-2.0 %)
• Comparable gross profit was EUR 190.6 million (180.6) and comparable gross profit % was 34.2% (33.8%)
• Comparable EBIT amounted to EUR 26.2 million (26.5), 4.7% of revenue (5.0%)
• Cash flow from operating activities amounted to EUR 66.8 million (-2.3)
• Earnings per share, diluted was EUR 0.26 (0.32)

TOKMANNI’S OUTLOOK FOR 2023

Tokmanni’s outlook for 2023 changed following the acquisition of Dollarstore. The updated outlook was published after the completion of the transaction on 1 August 2023.

New outlook

In 2023, Tokmanni expects its revenue to be EUR 1,370-1,440 million. Comparable EBIT is expected to be EUR 90-110 million.

Previous outlook

In 2023, Tokmanni expects its revenue to be EUR 1,200–1,270 million. Comparable EBIT is expected to be EUR 85–100 million.

TOKMANNI’S PRESIDENT AND CEO MIKA RAUTIAINEN

The highlights of Tokmanni’s second quarter included the following: revenue increased by 4.0% (1.7 %), the comparable gross margin improved markedly to 36.1% (34.8%), the comparable operating result improved to EUR 28.5 million (27.0), and the value of inventories decreased year-on-year and was EUR 292.0 million (313.9).

The decline in sales volumes continued and was around 3% in the second quarter. Customers’ purchasing behaviour was still cautious, and the demand for lower-priced groceries increased. Barbecue accessories and garden plants were the best-performing products during the gardening season, which is important for Tokmanni. Products costing more than 100 euros continued to be the lowest-selling products.

The comparable gross margin in the second quarter improved markedly and was 36.1% (34.8%). The positive development was driven by an increase in the proportion of private labels, smaller clearance sales and lower purchase prices.

Cost increases weighed significantly on the second-quarter result. Lease and property costs rose the most as a result of general cost inflation. The increase in personnel costs was affected by a one-off payment in connection with the payment of salaries in April, as well as the pay rises implemented at the beginning of June. Comparable EBIT was EUR 28.5 million (27.0).

Our systematic efforts to return inventories to more normal levels were successful. The value of inventories was EUR 292.0 million (313.9) at the end of June. Our work related to accurate warehouse management and the implementation of the new logistics centre is progressing well.

Other successes in the second quarter included the good sales development of private labels, the integration of Click Shoes into the Tokmanni Group and the growing popularity of the Tokmanni Klubi customer loyalty programme. Negative impacts arose from customers’ weaker purchasing power and the modest overall sales growth that ensued, as well as higher costs in terms of leases and properties in particular.

Tokmanni’s third quarter got off to a strong start when we announced that we are implementing our growth strategy by acquiring Dollarstore, a Swedish discount retailer. The transaction was completed on 1 August 2023. The creation of the leading Nordic discount retailer has begun.

Key figures
	4–6/ 2023	4–6/ 2022	Change %	1–6/ 2023	1–6/ 2022	Change %	1–12/ 2022
Revenue, MEUR	318.9	306.7	4.0%	557.1	534.1	4.3%	1,168.0
Like-for-like revenue development, %	1.0	-1.5		1.7	-2.0		-0.7
Customer visit development, %	0.4	0.7		2.4	0.0		0.8
Gross profit, MEUR	115.3	108.0	6.8%	191.2	181.7	5.2%	396.8
Gross profit, %	36.1	35.2		34.3	34.0		34.0
Comparable gross profit, MEUR	115.1	106.9	7.7%	190.6	180.6	5.5%	398.0
Comparable gross profit, %	36.1	34.8		34.2	33.8		34.1
Operating expenses	-67.7	-62.5	8.3%	-127.1	-119.6	6.3%	-243.7
Comparable operating expenses	-67.7	-63.0	7.5%	-126.9	-120.2	5.5%	-243.1
EBITDA, MEUR	48.5	46.6	4.0%	65.9	64.1	2.8%	157.1
EBITDA, %	15.2	15.2		11.8	12.0		13.5
Comparable EBITDA, MEUR	48.3	45.1	7.1%	65.5	62.4	5.0%	158.9
Comparable EBITDA, %	15.1	14.7		11.8	11.7		13.6
Operating profit (EBIT), MEUR	28.7	28.6		26.7	28.3		84.1
Operating profit (EBIT), %	9.0	9.3		4.8	5.3		7.2
Comparable EBIT, MEUR	28.5	27.0		26.2	26.5		85.8
Comparable EBIT, %	8.9	8.8		4.7	5.0		7.3
Net financial items, MEUR	-4.2	-2.5	68.6%	-7.5	-5.0	50.0%	-10.7
Net capital expenditure, MEUR*	15.0	11.6	28.8%	33.2	22.4	48.6%	54.7
Net cash from operating activities, MEUR	79.8	62.8		66.8	-2.3		86.3
Net debt				453.1	421.1		383.4
Net debt (without lease liabilities)				120.2	127.3		100.4
Net debt / comparable EBITDA **				2.8	2.6		2.4
Return on capital employed, %				12.3	15.3		12.8
Return on equity, %				24.1	31.8		26.9
Equity ratio, %				27.5	24.8		31.2
Number of shares, weighted average during the financial period (thousands)	58,824	58,759		58,817	58,759		58,815
Diluted number of shares, weighted average during the financial period (thousands)	58,874	58,789		58,868	58,781		58,858
Earnings per share, basic (EUR/share)	0.33	0.35		0.26	0.32		1.00
Earnings per share, diluted (EUR/share)	0.33	0.35		0.26	0.32		1.00
Personnel at the end of the period				4,895	4,832		4,241
Personnel on average in the period	4,530	4,445		4,265	4,182		4,236

* Net capital expenditure, excluding non-current receivables from others
** Rolling 12 months comparable EBITDA

Analyst and press conference

Tokmanni’s President and CEO Mika Rautiainen and CFO Tapio Arimo will present the report to analysts, investors and media representatives on the publication day at 9:00 am in Finnish and 10:30 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 links below. On-demand version of the presentation will be available on the company's website later during the same day.

Suomi: https://cloud.webcast.fi/tokmanni/tokmanni_2023_0804_q2_finnish

Englanti: https://cloud.webcast.fi/tokmanni/tokmanni_2023_0804_q2_english

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 password below.

Finland: +358 9 2319 5437
Sweden: +46 (0) 8 5052 0424
UK: +44 (0) 33 0551 0200
US: +1 786 697 3501
Password: 100408 (webcast in English)
Password: 090408 (webcast in Finnish)

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 one of the leading variety discount retailers in the Nordics. Around 5,400 Tokmanni employees in Finland, Sweden and Denmark 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 more than 360 Tokmanni, Dollarstore, Big Dollar, Miny, Click Shoes and Shoe House stores and online stores, Tokmanni is always close to its customers. In 2022, Tokmanni’s revenue was EUR 1,168 million and comparable EBIT amounted to EUR 86 million. Tokmanni's shares are listed on Nasdaq Helsinki.

Distribution

Nasdaq Helsinki
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