TCM Group A/S: Interim Report for Q2 2024
Interim report for Q2 2024 (April 1 - June 30)
(All figures in brackets refer to the same period in 2023 – AUBO Production A/S has been included in the figures since July 3, 2023)
Sales growth and improved earnings achieved despite a tough market environment.
CEO Torben Paulin:
“In the second quarter, our sales showed positive growth, even with the expected downturn in the B2B kitchen market. We experienced an organic sales increase of 5% year-on-year, bolstered by a remarkable over 25% growth in B2C sales. As anticipated, B2B sales saw a decline this quarter due to a slowdown in the Project sales sector. Overall, our revenue for Q2 reached DKK 332 million, up from DKK 256 million in the same quarter last year. In Denmark, which represents 80% of our Group revenue, sales grew by 15%, with an underlying organic growth rate of 6%.
Our overall gross margin improved to 21.5% in Q2, compared to 20.2% in the same quarter last year. This margin growth is attributed to the inclusion of AUBO sales (following the acquisition of AUBO Production in Q3 of 2023) and an increase in the proportion of higher-margin B2C sales.
In Q2, our adjusted EBIT was DKK 28 million, an increase from DKK 22 million in Q2 last year, with an adjusted EBIT margin of 8.4%, slightly down from 8.7% in Q2 last year. When factoring in the amortization of intangible assets from the AUBO acquisition, the underlying adjusted EBIT margin improved from 8.7% last year to 8.9% this year.
We reported a free cash flow of DKK 26 million, a significant rise from DKK -2 million last year, driven by higher earnings and a notable improvement in working capital. Our leverage ratio decreased to 3.20, down from 3.73 in the previous quarter, which remains comfortably within our agreed covenants.
During the second quarter, TCM Group expanded its footprint in Denmark by opening two additional AUBO branded stores.
In line with our commitment to transparency regarding the environmental impact of our products, we released third-party approved and validated Environmental Product Declarations (EPD) for the AUBO brand this quarter, ensuring that all our brands are now covered by EPDs.
We have revised our financial outlook for 2024, now anticipating full-year revenue between DKK 1,125-1,200 million (up from DKK 1,000-1,150 million) and adjusted EBIT earnings in the range of DKK 70-90 million (previously DKK 55-85 million). This updated outlook reflects an expected positive impact from the adjustment of the contingent consideration related to the AUBO Production A/S acquisition, estimated at DKK 3-5 million.
Financial Highlights for Q2 2024
- Revenue of DKK 332.2 million (DKK 255.5 million), representing a 30.0% increase.
- Adjusted EBITDA of DKK 36.7 million (DKK 27.5 million), with a margin of 11.1% (10.8%).
- Adjusted EBIT of DKK 28.0 million (DKK 22.3 million), margin at 8.4% (8.7%).
- Non-recurring items had a total impact of DKK 0.0 million (DKK 2.8 million).
- EBIT of DKK 28.0 million (DKK 19.5 million), corresponding to a margin of 8.4% (7.6%).
- Net profit of DKK 18.9 million (DKK 12.2 million).
- Free cash flow was DKK 25.8 million (DKK -1.6 million).
- Cash conversion ratio stood at 94.8% (48.8%).
Financial Highlights for H1 2024
- Revenue of DKK 624.7 million (DKK 519.4 million), an increase of 20.3%.
- Adjusted EBITDA of DKK 61.1 million (DKK 45.5 million), with a margin of 9.8% (8.8%).
- Adjusted EBIT of DKK 43.8 million (DKK 35.4 million), margin at 7.0% (6.8%).
- Non-recurring items had a negative impact of DKK 0.0 million (DKK 4.7 million).
- EBIT of DKK 43.8 million (DKK 30.9 million), corresponding to a margin of 7.0% (5.9%).
- Net profit of DKK 25.9 million (DKK 17.6 million).
- Free cash flow was DKK 38.4 million (DKK -37.4 million).
- Full-year guidance remains at revenue between DKK 1,125-1,200 million and adjusted EBIT earnings of DKK 70-90 million.
For more information, please contact:
Torben Paulin, CEO, TCM Group A/S, +45 21 21 04 64
Thomas Hjannung, CFO, TCM Group A/S, +45 25 17 42 33
IR Contact – ir@tcmgroup.dk
About TCM Group
TCM Group is the third-largest manufacturer of kitchens and bathroom furniture in Scandinavia. Our products are designed and produced in Denmark, reflecting a strong tradition of quality and craftsmanship. We operate a multi-brand strategy, with our primary brand being Svane Køkkenet, alongside Tvis Køkken, Nettoline, and AUBO. Together, these brands cover a wide pricing spectrum and are distributed through approximately 220 dealers across Denmark and Scandinavia. Additionally, we offer private label kitchens through DIY stores in Denmark and independent kitchen stores in Norway, and we supply the 45% owned e-commerce kitchen business Celebert, which operates under various brands.
Frequently Asked Questions
What does TCM Group A/S report for Q2 2024?
TCM Group A/S reported significant growth in sales and earnings, achieving a revenue of DKK 332 million despite market challenges.
How did the company's gross margin change in Q2 2024?
The overall gross margin rose to 21.5% in Q2 2024, up from 20.2% in the same period last year.
What is the financial outlook for TCM Group for 2024?
The financial outlook for 2024 anticipates revenue between DKK 1,125-1,200 million and adjusted EBIT earnings ranging from DKK 70-90 million.
Which brands does TCM Group operate under?
TCM Group operates several brands, including Svane Køkkenet, Tvis Køkken, Nettoline, and AUBO.
How did the free cash flow perform in Q2 2024?
In Q2 2024, free cash flow reached DKK 26 million, a notable increase compared to DKK -2 million last year.
