Interim report – 9M 2018/19 -

News Desk 2022 · 2019-02-07T03:45:16-05:00

Interim report – 9M 2018/19 - Matas grew sales in Christmas quarter and accelerated digital build-up Company announcement no. 15 2018/19 Allerød, 7 February 2019 Interim report – 9M 2018/19 (1 April – 31 December 2018) Matas grew sales in Christmas quarter and accelerated digital build-up Matas made further headway in implementing its new strategy in the third quarter of financial year 2018/19 and also delivered higher revenue and continued online sales growth. Earnings were down on the year-earlier period, primarily due to increased investments in the digital build-up. Gregers Wedell-Wedellsborg, CEO of Matas A/S, said: “We are pleased that our strategy to renew Matas continues to feed through to results. Overall sales were up in the all-important Christmas quarter, our digital transformation continued at full speed with online sales surging by more than 50%, and the acquisition of Firtal Group was completed. In the past quarter, we geared up our digital efforts, fully aware that this would reduce year-on-year earnings. Overall, we therefore consider the profit of above DKK 200 million – which was in line with our expectations – satisfactory.” The Matas Group generated revenue of DKK 1,092.6 million in Q3 2018/19 (1 October 2018 - 31 December 2018), an increase of 1.7% (including revenue from Firtal Group ApS from final completion of the transaction on 13 November 2018) on the DKK 1,074.8 million reported for Q3 2017/18. Underlying like-for-like sales, i.e. sales in stores operated by the Group in both Q3 2018/19 and Q3 2017/18, were up by 0.5% in Q3 2018/19. The digital transformation continued at full speed with sales on matas.dk surging by 51%. EBITDA before exceptional items came to DKK 206.0 million compared with DKK 227.0 million for Q3 2017/18. Impacted by the digital build-up, the acquisition of Firtal Group ApS and higher campaign activity, the EBITDA margin before exceptional items fell to 18.8% from 21.1% in the year-earlier period. Underlying like-for-like sales for the first nine months of 2018/19 were unchanged compared with the same period of 2017/18. The acquisition of Firtal Group, the owner of, e.g., helsebixen.dk, was completed in Q3 2018/19. The transaction was approved by the Danish Competition and Consumer Authority on 5 November 2018 with closing on 13 November 2018. Q3 2018/19 highlights Q3 2018/19 revenue came to DKK 1,092.6 million, up 1.7% on the DKK 1,074.8 million reported for Q3 2017/18 (restated, see note 1). Underlying like-for-like sales, i.e. sales in stores operated by the Group in both Q3 2018/19 and Q3 2017/18, were up by 0.5% in Q3 2018/19.The High-End Beauty and Vital segments reported higher sales, while sales in the remaining shops fell slightly back. The average basket size grew by 2.5% to DKK 180, while the number of transactions was down by 1.3% from 6.0 million in Q3 2017/18 to 5.9 million in Q3 2018/19.Online sales on matas.dk were up by 51% over the year-earlier period. More than half of all webshop orders in the third quarter were picked up at a Matas store.Q3 2018/19 gross profit was DKK 480.9 million for a gross margin of 44.0%, a 1 percentage point decrease from 45.0% in Q3 2017/18 that was driven by investments in competitive campaigns.Total costs increased by DKK 13.5 million relative to the year-earlier period. Other external costs were up by DKK 7.9 million and staff costs by DKK 5.6 million. These increases were driven primarily by the digital build-up, including costs from running Firtal Group.EBITDA was DKK 204.7 million against DKK 221.5 million last year. The EBITDA margin was 18.7%, down from 20.6% in Q3 2017/18. The decline was mainly attributable to the digital build-up and increased campaign activity.EBITDA before exceptional items came to DKK 206.0 million, compared with DKK 227.0 million in the same period of last year. The EBITDA margin before exceptional items was 18.8% against 21.1% in Q3 2017/18.Q3 profit after tax was DKK 122.3 million, and Adjusted profit after tax was DKK 139.8 million against DKK 154.8 million in Q3 2017/18.The effective tax rate for Q3 2018/19 was 22.0%, equivalent to a tax expense of DKK 34.5 million.Cash generated from operations increased by DKK 7.7 million to DKK 337.1 million.The free cash flow was an inflow of DKK 127.4 million in Q3 2018/19, down from an inflow of DKK 237.4 million in Q3 2017/18. Disregarding the acquisition of Firtal Group ApS, the free cash flow was in line with the year-earlier level.Gross debt stood at DKK 1,575.8 million at 31 December 2018. Net interest-bearing debt was DKK 1,509.6 million at 31 December 2018, equivalent to 2.8x LTM EBITDA before exceptional items as compared with 2.5x at the end of Q3 2017/18. 9M 2018/19 highlights 9M 2018/19 revenue was DKK 2,713.6 million, up by 0.7% from the DKK 2,695.5 million reported for the first nine months of 2017/18 (restated, see note 1). Underlying like-for-like revenue was unchanged.Online sales on matas.dk were up by 54% over the year-earlier period.Gross profit was DKK 1,211.6 million for a gross margin of 44.6%, 0.2 of a percentage point lower than in the year-earlier period.EBITDA came to DKK 437.1 million for an EBITDA margin of 16.1% against 16.7% for 9M 2017/18.EBITDA before exceptional items came to DKK 452.9 million for an EBITDA margin before exceptional items of 16.7% against 17.5% for 9M 2017/18.9M profit after tax was DKK 229.8 million, and Adjusted profit after tax net of amortisation not related to software and exceptional items was DKK 290.5 million, compared with DKK 248.6 million and DKK 309.1 million, respectively, for 9M 2017/18.Cash generated from operations grew to DKK 489.1 million in the first nine months of 2018/19 from DKK 460.3 million in the year-earlier period. The free cash flow was an inflow of DKK 206.1 million against an inflow of DKK 296.0 million in 9M 2017/18. Outlook The Group’s financial guidance for financial year 2018/19 is at: Underlying revenue unchanged relative to 2017/18, with a specification of underlying revenue growth (like-for-like growth) in the -0.5 to 0.5% range. Previously -1 to 1%.An EBITDA margin before exceptional items above 15%.CAPEX between DKK 110 million and DKK 130 million.Total investments (CAPEX and other investments) between DKK 240 million and DKK 260 million. Our financial guidance for 2018/19 is based on assumptions of slightly growing consumer spending, a continuing decline in physical store footfall and persistently intensive competition in the health, beauty and personal care market. Our guidance includes costs for implementing Matas’ growth strategy. The 2018/19 financial year contains an extra trading day compared with FY 2017/18, which is expected to have a slightly positive effect on revenue. Overview over financial guidance 2018/19 CompanyNo 1 2018/19No 5 2018/19No 5 2018/19No 15 2018/19announcementAnnual report 2017/18Acquisition of Firtal Group ApSInterim Report 6M 2018/19Interim Report 9M 2018/19 Underlying revenue Unchanged relative to 2017/18 Unchanged relative to 2017/18Unchanged relative to 2017/18Unchanged relative to 2017/18LFL growth -1 to 1%-1 to 1%-1 to 1%-0.5 to 0.5%EBITDA margin Above 14.5%Above 14.5% before special itemsAbove 15% before special itemsAbove 15% before special items CAPEX DKK 110 – 130 mDKK 110 – 130 mDKK 110 – 130 mDKK 110 – 130 mTotal investmentsn.a.DKK 240 – 260 mDKK 240 – 260 mDKK 240 – 260 m Conference call Matas will host a conference call for investors and analysts on Thursday, 7 February 2019 at 11:00 a.m. The conference call and the presentation can be accessed on our investor website: www.investor.en.matas.dk. Conference call access numbers for investors and analysts: DK: +45 32 72 80 42 UK: +44 (0) 844 571 8892 US: +1 631 510 7495 Event code: 5065465 Link to webcast: https://edge.media-server.com/m6/p/bz5axxnb Contacts Gregers Wedell-Wedellsborg Anders T. Skole-Sørensen CEO, tel +45 48 16 55 55 CFO, tel +45 48 16 55 55 Elisabeth Toftmann Klintholm Klaus Fridorf Head of Investor Relations Corp. Affairs, tel +45 48 16 55 48 Head of Communication, tel +45 61 20 19 97 Forward-looking statements This interim report contains statements relating to the future, including statements regarding the 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 interim report. Forward-looking statements are subject to risks and uncertainties and a number of other factors, many of which are beyond the Matas Group's control. This may have the effect that actual results may differ significantly from the expectations expressed in the interim report. Without being exhaustive, such factors include general economic and commercial factors, including market and competitive conditions, supplier issues and financial and regulatory issues. Attachment Matas 9M 201819 UK FINAL

Company announcement no. 15 2018/19 Allerød, 7 February 2019

Interim report – 9M 2018/19 (1 April – 31 December 2018)

Matas grew sales in Christmas quarter and accelerated digital build-up

Matas made further headway in implementing its new strategy in the third quarter of financial year 2018/19 and also delivered higher revenue and continued online sales growth. Earnings were down on the year-earlier period, primarily due to increased investments in the digital build-up.

Gregers Wedell-Wedellsborg, CEO of Matas A/S, said:

“We are pleased that our strategy to renew Matas continues to feed through to results. Overall sales were up in the all-important Christmas quarter, our digital transformation continued at full speed with online sales surging by more than 50%, and the acquisition of Firtal Group was completed.

In the past quarter, we geared up our digital efforts, fully aware that this would reduce year-on-year earnings. Overall, we therefore consider the profit of above DKK 200 million – which was in line with our expectations – satisfactory.”

The Matas Group generated revenue of DKK 1,092.6 million in Q3 2018/19 (1 October 2018 - 31 December 2018), an increase of 1.7% (including revenue from Firtal Group ApS from final completion of the transaction on 13 November 2018) on the DKK 1,074.8 million reported for Q3 2017/18.

Underlying like-for-like sales, i.e. sales in stores operated by the Group in both Q3 2018/19 and Q3 2017/18, were up by 0.5% in Q3 2018/19. The digital transformation continued at full speed with sales on matas.dk surging by 51%.

EBITDA before exceptional items came to DKK 206.0 million compared with DKK 227.0 million for Q3 2017/18. Impacted by the digital build-up, the acquisition of Firtal Group ApS and higher campaign activity, the EBITDA margin before exceptional items fell to 18.8% from 21.1% in the year-earlier period.

Underlying like-for-like sales for the first nine months of 2018/19 were unchanged compared with the same period of 2017/18.

The acquisition of Firtal Group, the owner of, e.g., helsebixen.dk, was completed in Q3 2018/19. The transaction was approved by the Danish Competition and Consumer Authority on 5 November 2018 with closing on 13 November 2018.

Q3 2018/19 highlights

Q3 2018/19 revenue came to DKK 1,092.6 million, up 1.7% on the DKK 1,074.8 million reported for Q3 2017/18 (restated, see note 1). Underlying like-for-like sales, i.e. sales in stores operated by the Group in both Q3 2018/19 and Q3 2017/18, were up by 0.5% in Q3 2018/19.
The High-End Beauty and Vital segments reported higher sales, while sales in the remaining shops fell slightly back. The average basket size grew by 2.5% to DKK 180, while the number of transactions was down by 1.3% from 6.0 million in Q3 2017/18 to 5.9 million in Q3 2018/19.
Online sales on matas.dk were up by 51% over the year-earlier period. More than half of all webshop orders in the third quarter were picked up at a Matas store.
Q3 2018/19 gross profit was DKK 480.9 million for a gross margin of 44.0%, a 1 percentage point decrease from 45.0% in Q3 2017/18 that was driven by investments in competitive campaigns.
Total costs increased by DKK 13.5 million relative to the year-earlier period. Other external costs were up by DKK 7.9 million and staff costs by DKK 5.6 million. These increases were driven primarily by the digital build-up, including costs from running Firtal Group.
EBITDA was DKK 204.7 million against DKK 221.5 million last year. The EBITDA margin was 18.7%, down from 20.6% in Q3 2017/18. The decline was mainly attributable to the digital build-up and increased campaign activity.
EBITDA before exceptional items came to DKK 206.0 million, compared with DKK 227.0 million in the same period of last year. The EBITDA margin before exceptional items was 18.8% against 21.1% in Q3 2017/18.
Q3 profit after tax was DKK 122.3 million, and Adjusted profit after tax was DKK 139.8 million against DKK 154.8 million in Q3 2017/18.
The effective tax rate for Q3 2018/19 was 22.0%, equivalent to a tax expense of DKK 34.5 million.
Cash generated from operations increased by DKK 7.7 million to DKK 337.1 million.
The free cash flow was an inflow of DKK 127.4 million in Q3 2018/19, down from an inflow of DKK 237.4 million in Q3 2017/18. Disregarding the acquisition of Firtal Group ApS, the free cash flow was in line with the year-earlier level.
Gross debt stood at DKK 1,575.8 million at 31 December 2018. Net interest-bearing debt was DKK 1,509.6 million at 31 December 2018, equivalent to 2.8x LTM EBITDA before exceptional items as compared with 2.5x at the end of Q3 2017/18.

9M 2018/19 highlights

9M 2018/19 revenue was DKK 2,713.6 million, up by 0.7% from the DKK 2,695.5 million reported for the first nine months of 2017/18 (restated, see note 1). Underlying like-for-like revenue was unchanged.
Online sales on matas.dk were up by 54% over the year-earlier period.
Gross profit was DKK 1,211.6 million for a gross margin of 44.6%, 0.2 of a percentage point lower than in the year-earlier period.
EBITDA came to DKK 437.1 million for an EBITDA margin of 16.1% against 16.7% for 9M 2017/18.
EBITDA before exceptional items came to DKK 452.9 million for an EBITDA margin before exceptional items of 16.7% against 17.5% for 9M 2017/18.
9M profit after tax was DKK 229.8 million, and Adjusted profit after tax net of amortisation not related to software and exceptional items was DKK 290.5 million, compared with DKK 248.6 million and DKK 309.1 million, respectively, for 9M 2017/18.
Cash generated from operations grew to DKK 489.1 million in the first nine months of 2018/19 from DKK 460.3 million in the year-earlier period. The free cash flow was an inflow of DKK 206.1 million against an inflow of DKK 296.0 million in 9M 2017/18.

Outlook

The Group’s financial guidance for financial year 2018/19 is at:

Underlying revenue unchanged relative to 2017/18, with a specification of underlying revenue growth (like-for-like growth) in the -0.5 to 0.5% range. Previously -1 to 1%.
An EBITDA margin before exceptional items above 15%.
CAPEX between DKK 110 million and DKK 130 million.
Total investments (CAPEX and other investments) between DKK 240 million and DKK 260 million.

Our financial guidance for 2018/19 is based on assumptions of slightly growing consumer spending, a continuing decline in physical store footfall and persistently intensive competition in the health, beauty and personal care market.

Our guidance includes costs for implementing Matas’ growth strategy.

The 2018/19 financial year contains an extra trading day compared with FY 2017/18, which is expected to have a slightly positive effect on revenue.

Overview over financial guidance 2018/19

Company	No 1 2018/19	No 5 2018/19	No 5 2018/19	No 15 2018/19
announcement	Annual report 2017/18	Acquisition of Firtal Group ApS	Interim Report 6M 2018/19	Interim Report 9M 2018/19

Underlying revenue	Unchanged relative to 2017/18	Unchanged relative to 2017/18	Unchanged relative to 2017/18	Unchanged relative to 2017/18
LFL growth	-1 to 1%	-1 to 1%	-1 to 1%	-0.5 to 0.5%
EBITDA margin	Above 14.5%	Above 14.5% before special items	Above 15% before special items	Above 15% before special items
CAPEX	DKK 110 – 130 m	DKK 110 – 130 m	DKK 110 – 130 m	DKK 110 – 130 m
Total investments	n.a.	DKK 240 – 260 m	DKK 240 – 260 m	DKK 240 – 260 m

Conference call

Matas will host a conference call for investors and analysts on Thursday, 7 February 2019 at 11:00 a.m. The conference call and the presentation can be accessed on our investor website: www.investor.en.matas.dk.

Conference call access numbers for investors and analysts: DK: +45 32 72 80 42 UK: +44 (0) 844 571 8892 US: +1 631 510 7495 Event code: 5065465

Link to webcast: https://edge.media-server.com/m6/p/ bz5axxnb

Contacts

Gregers Wedell-Wedellsborg Anders T. Skole-Sørensen CEO, tel +45 48 16 55 55 CFO, tel +45 48 16 55 55

Elisabeth Toftmann Klintholm Klaus Fridorf Head of Investor Relations & Corp. Affairs, tel +45 48 16 55 48 Head of Communication, tel +45 61 20 19 97

Forward-looking statements

This interim report contains statements relating to the future, including statements regarding the 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 interim report. Forward-looking statements are subject to risks and uncertainties and a number of other factors, many of which are beyond the Matas Group's control. This may have the effect that actual results may differ significantly from the expectations expressed in the interim report. Without being exhaustive, such factors include general economic and commercial factors, including market and competitive conditions, supplier issues and financial and regulatory issues.

Attachment