Tokmanni Group Corporation’s Financial Statement Bulletin 2022: Revenue grew but operating profit declined due to higher costs

Tokmanni Group Corporation        Financial Statement Bulletin        10 February 2023 at 8:00 am

FOURTH QUARTER 2022 HIGHLIGHTS

• Revenue grew by 1.5% (2.3%) and was EUR 339.0 million (334.1)
• Like-for-like revenue decreased by 1.0% (-0.3%)
• Comparable gross profit was EUR 119.5 million (120.8) and comparable gross profit percent was 35.2% (36.2%)
• Comparable EBIT amounted to EUR 35.8 million (40.5), 10.5% of revenue (12.1%)
• Cash flow from operating activities amounted to EUR 92.2 million (74.9)
• Earnings per share, diluted was EUR 0.41 (0.52)

JANUARY-DECEMBER 2022 HIGHLIGHTS

• Revenue grew by 2.3% (6.4%) and was EUR 1,168.0 million (1,141.8)
• Like-for-like revenue decreased by 0.7% (+4.8%)
• Comparable gross profit was EUR 398.0 million (396.4), and comparable gross profit % was 34.1% (34.7%)
• Comparable EBIT amounted to EUR 85.8 million (105.7), 7.3% of revenue (9.3%)
• Cash flow from operating activities amounted to EUR 86.3 million (126.8)
• Earnings per share, diluted was EUR 1.00 (1.33)

DIVIDEND PROPOSAL

Tokmanni’s Board of Directors proposes to the Annual General Meeting a dividend of maximum EUR 0.76 per share, which would be paid in two instalments.

TOKMANNI’S OUTLOOK FOR 2023

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

2022 was a challenging year for Tokmanni. The shift in consumer behaviour resulting from weaker purchasing power was larger than we had predicted. After years of rapid growth, adjusting to declining volumes and sharply rising costs was more difficult than we expected. What was positive, though, was that we were able to grow Tokmanni’s sales measured in euros in 2022 with our excellent offering of grocery and non-grocery products. In 2022, about 51.2% (49.9%) of Tokmanni’s revenue came from grocery products and about 48.8% (50.1%) came from non-grocery products.

The strengthening of Tokmanni’s grocery sales and maintaining low prices meant that our gross profit percentage declined. The comparable gross margin for the full year was 34.1% (34.7%). The weakening of purchasing power meant that discounts and campaign sales accounted for a larger share of total sales, which also contributed to the lower gross profit.

The biggest negative impact on profit came from the general rise in costs. Rents and electricity costs contributed the most to the cost increases. Due to increased costs and a lower gross profit percentage, comparable EBIT fell to EUR 85.8 million (105.7).

During 2022, Tokmanni’s inventories were elevated due to a shift in consumer behaviour. However, we succeeded in considerably reducing our inventories during the fourth quarter. At the end of the year, the value of inventories was EUR 281.3 million (263.6). The increase in the value of inventories at the end of the year was mainly due to higher purchase prices driven by inflation. Tokmanni will continue to increase the efficiency of its supply chain and to purposefully manage its inventories.

Despite the challenging market, we are highly confident in executing Tokmanni’s growth strategy. The conditions for variety discount retail are very good in a price-driven market. In addition, the actions taken to implement the strategy have been successful. Our private labels, especially Miny, have grown nicely. The popularity of Tokmanni Klubi exceeded our expectations, there are almost 2 million members.

I would like to thank all Tokmanni customers, partners and especially Tokmanni’s employees for the year 2022.

Key figures
	10–12/ 2022	10–12/ 2021	Change %	1–12/ 2022	1–12/ 2021	Change %
Revenue, MEUR	339.0	334.1	1.5%	1 168.0	1 141.8	2.3%
Like-for-like revenue development, %	-1.0	-0.3		-0.7	4.8
Customer visit development %	0.3	-0.1		0.8	0.8
Gross profit, MEUR	117.8	121.1	-2.7%	396.8	397.8	-0.3%
Gross profit, %	34.7	36.2		34.0	34.8
Comparable gross profit, MEUR	119.5	120.8	-1.1%	398.0	396.4	0.4%
Comparable gross profit, %	35.2	36.2		34.1	34.7
Operating expenses	-67.3	-63.8	5.5%	-243.7	-226.9	7.4%
Comparable operating expenses	-66.2	-63.9	3.6%	-243.1	-227.6	6.8%
EBITDA, MEUR	51.7	58.4	-11.5%	157.1	174.5	-10.0%
EBITDA, %	15.3	17.5		13.5	15.3
Comparable EBITDA, MEUR	54.5	58.1	-6.1%	158.9	172.5	-7.9%
Comparable EBITDA, %	16.1	17.4		13.6	15.1
Operating profit (EBIT), MEUR	33.0	40.9	-19.3%	84.1	107.7	-22.0%
Operating profit (EBIT), %	9.7	12.2		7.2	9.4
Comparable EBIT, MEUR	35.8	40.5	-11.7%	85.8	105.7	-18.8%
Comparable EBIT, %	10.5	12.1		7.3	9.3
Net financial items, MEUR	-2.9	-2.5	18.3%	-10.7	-10.1	6.3%
Net capital expenditure, MEUR*	20.9	6.9	204.3%	54.7	21.7	151.5%
Net debt / comparable EBITDA				2.4	1.8
Net cash from operating activities, MEUR	92.2	74.9		86.3	126.8
Return on capital employed, %				12.8	18.0
Return on equity, %				26.9	37.9
Equity ratio, %				31.2	30.0
Number of shares, weighted average during the financial period (thousands)	58 818	58 732		58 815	58 731
Diluted number of shares, weighted average during the financial period (thousands)	58 860	58 781		58 858	58 776
Earnings per share, basic (EUR/share)	0.41	0.52		1.00	1.33
Earnings per share, diluted (EUR/share)	0.41	0.52		1.00	1.33
Personnel at the end of the period	4 241	4 105		4 241	4 105
Personnel on average in the period	4 229	4 102		4 236	4 132

* Net capital expenditure, excluding non-current receivables from others

Analyst and press conference

Tokmanni’s President and CEO Mika Rautiainen and CFO Tapio Arimo will present the review to analysts, investors and media representatives on the publication day at 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 link https://cloud.webcast.fi/tokmanni/tokmanni_2023_0210_q4_english. 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 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: 121982

For further information, please contact

Mika Rautiainen, President and CEO, tel. +358 20 728 6061, mika.rautiainen(at)tokmanni.fi
Tapio Arimo, CFO, tel. +358 20 728 7390, tapio.arimo(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 4,200 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 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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