Wulff Group Plc’s Interim Report for January 1 – September 30, 2022
INTERIM REPORT | OCTOBER 24, 2022 AT 9.30 A.M.
This is a summary of Wulff Group Plc’s Interim Report for January-September 2022. Wulff Group’s Interim Report as a whole is attached as a PDF file to this stock exchange release and it is also available on the company’s website www.wulff.fi.
Operating profit increased due to profitability measures
1.7.–30.9.2022 BRIEFLY
- Net sales totalled EUR 24.0 million (24.2), decreased by 1.0%
- EBITDA and comparable EBITDA were EUR 1.7 million (1.7)
- Operating profit (EBIT) and comparable operating profit (EBIT) were EUR 1.2 million (1.0)
- Earnings per share (EPS) and comparable earnings per share were EUR 0.13 (0.10)
- The outlook remains unchanged; Wulff estimates that net sales in 2022 will increase clearly and the comparable operating profit will increase compared to 2021
1.1–30.9.2022 BRIEFLY
- Net sales totalled EUR 74.5 million (62.8), increased by 18.6%
- EBITDA was EUR 4.4 million (7.7) and comparable EBITDA was EUR 4.4 million (4.0)
- Operating profit (EBIT) was EUR 2.8 million (6.2) and comparable operating profit (EBIT) was EUR 2.8 million (2.4)
- Earnings per share (EPS) was EUR 0.29 (0.78) and comparable earnings per share was EUR 0.29 (0.23)
WULFF GROUP PLC’S CEO ELINA PIENIMÄKI
The energy crisis and rising prices affect us all: general consumption as well as company purchasing and investments. In Wulff's operations, this can be seen as a strong focus on profitability and in the selective guidelines for new customer acquisitions. We trust that a competitive advantage can be found now and in the future from our strategy "a better world, one workplace at a time". Especially at the time of changes and in an uncertain economic situation, it is important to work long-term to achieve our strategic goals. Our results have developed positively in a challenging time, and in the review period, sales growth has been achieved especially in our Scandinavian operations. It is especially thanks to our top-class sales expertise. Thank you to all our customers for choosing Wulff as your partner. Just as valuable as getting a new customer, is being able to serve the customer again and again and extend the contract. Your choices show that you value a local, domestic, and responsible partner. The climate crisis is an issue whose solution is shared by the whole world and every better choice has an impact. Regarding workplace products and services, it is possible to make a green transition easily with Wulff.
GROUP NET SALES AND PERFORMANCE
In January–September 2022, net sales totalled EUR 74.5 million (62.8), and EUR 24.0 million (24.2) in July–September. Net sales grew by 18.6% (48.7) in January–September and decreased by 1.0% (-95.1) in the third quarter. Sales of the Contract Customers Segment increased especially in Scandinavia. In Finland, Contract Customers Segment's turnover was affected by the emphasis put on profitability and the resulting policies in customer selection, as well as the expected continued contraction in sales of protective products. At the beginning of the year, Wulff invested in strengthening the offering of its accounting and financial management services by purchasing Carpentum Oy on January 4, 2022. The sales of the financial administration services business have increased as expected due to the transaction. Sales of Wulff Entre's international exhibition services and remote meeting solutions have been growing during the review period. In Expertise Sales Segment, the decrease in demand of hygiene and protective products was, as expected, reflected in a decrease in turnover.
In January–September 2022 the gross margin amounted to EUR 22.5 million (19.8) being 30.2% (31.5) of net sales, and EUR 7.2 million (7.4) in the third quarter being 29.8% (30.5) of net sales. The acquisition of Wulff Solutions on 3 May 2021 contributed EUR 7.1 million to the gross margin in January-September 2022. The integration of the purchased company into Wulff is progressing as planned. In the review period, the relative development of the sales margin was particularly affected by the emphasis on demand for workplace products and services that preceded the Coronavirus pandemic. In addition to price inflation, these most demanded products are still subject to availability challenges and an accelerated increase in logistics costs during July-September. The proportion of net sales in the Contract Customers Segment continued to grow while diminished in the Expertise Sales Segment, e.g. with the decrease in sales of hygiene and protective products.
In January-September 2022, employee benefit expenses amounted to EUR 12.7 million (11.2) being 17.0% (17.9) of net sales, and EUR 3.7 million (3.7) being 15.6% (15.4) of net sales in the third quarter. In the second quarter of 2021, non-recurring personnel expenses arising from the completion of the acquisition and termination of employment amounted to approximately EUR 0.2 million.
Other operating expenses amounted to EUR 5.6 million (5.9) in January–June 2022, being 7.6% (9.4) of net sales, and EUR 1.8 million (2.1), being 7.4% (8.8) of net sales, in the third quarter. As planned, the group used fewer external services than in the comparison period.
In January–September 2022 EBITDA amounted to EUR 4.4 million (7.7), being 6.0% (12.3) of net sales, and EUR 1.7 million (1.7), being 7.0% (7.1) of net sales, in July–September. Goodwill recognition of EUR 4.5 million due to the favourable acquisition and EUR 0.7 million of costs arising from the implementation of the acquisition have been deducted from the comparable results 2021. In January–September 2022 comparable EBITDA amounted to EUR 4.4 million (4.0), being 6.0% (6.3) of net sales, and EUR 1.7 million (1.7), in the third quarter, being 7.0% (7.1) of net sales.
Operating profit (EBIT) amounted to EUR 2.8 million (6.2), 3.7% (9.8) of net sales, and EUR 1.2 million (1.0), 4.9% (4.3), in the third quarter. The comparable operating profit (EBIT) amounted to EUR 2.8 million (2.4), 3.7% (3.8) of net sales, and EUR 1.2 million (1.0), 4.9% (4.3), in the third quarter.
In January-September 2022, the financial income and expenses totalled (net) EUR -0.5 million (-0.3), including interest expenses of EUR -0.3 million (-0.2), and mainly currency-related other financial items (net) totalled EUR -0.2 million
(-0.1). In the third quarter, the financial income and expenses (net) totalled EUR -0.2 million (-0.1). Financial expenses were EUR 0.1 million higher than the comparison period due to exchange rate fluctuations and the rise of the market interest rates.
In January–September 2022, the result before taxes was EUR 2.2 million (5.9), while the result before taxes was EUR 1.0 million (0.9) in the third quarter. In January–September 2022, the comparable result before taxes was EUR 2.2 million (2.1), while the comparable result before taxes was EUR 1.0 million (0.9) in the third quarter.
In January–September 2022, the net profit was EUR 2.0 million (5.5) and EUR 0.9 million (0.8) in the third quarter. The comparable net profit for the reporting period was EUR 2.0 million (1.8), while the comparable net profit was EUR 0.9 million (0.8) in the third quarter.
Earnings per share (EPS) were EUR 0.29 (0.78) in January–September 2022 and EUR 0.13 (0.10) in the third quarter. Comparable earnings per share (EPS) were EUR 0.29 (0.23) in January–September 2022 and EUR 0.13 (0.10) in the third quarter.
KEY FIGURES
| III | III | I-III | I-III | I-IV | |
| EUR 1000 | 2022 | 2021 | 2022 | 2021 | 2021 |
| Net sales | 24 011 | 24 246 | 74 494 | 62 788 | 90 424 |
| Change in net sales, % | -1.0% | 95.1% | 18.6% | 48.7% | 57.1 % |
| Gross profit | 7 157 | 7 392 | 22 475 | 19 806 | 28 685 |
| Gross profit. % | 29.8% | 30.5% | 30.2% | 31.5% | 31.7 % |
| EBITDA | 1 677 | 1 714 | 4 447 | 7 738 | 9 128 |
| EBITDA margin, % of net sales | 7.0% | 7.1% | 6.0% | 12.3% | 10.1 % |
| Comparable EBITDA | 1 677 | 1 714 | 4 447 | 3 981 | 6 073 |
| Comparable EBITDA margin. % of net sales | 7.0% | 7.1% | 6.0% | 6.3% | 6.7 % |
| Operating profit/loss | 1 166 | 1 032 | 2 770 | 6 167 | 6 940 |
| Operating profit/loss margin, % of net sales | 4.9% | 4.3% | 3.7% | 9.8% | 7.7 % |
| Comparable operating profit/loss | 1 166 | 1 032 | 2 770 | 2 410 | 3 885 |
| Comparable operating profit/loss, % of net sales | 4.9% | 4.3% | 3.7% | 3.8% | 4.3 % |
| Profit/Loss before taxes | 1 013 | 889 | 2 238 | 5 856 | 6 552 |
| Profit/Loss before taxes margin, % of net sales | 4.2% | 3.7% | 3.0% | 9.3% | 7.2 % |
| Comparable profit before taxes | 1 013 | 889 | 2 238 | 2 099 | 3 497 |
| Comparable profit before taxes, % of net sales | 4.2% | 3.7% | 3.0% | 3.3% | 3.9 % |
| Net profit/loss for the period attributable to equity holders of the parent company | 888 | 661 | 1 965 | 5 292 | 5 896 |
| Net profit/loss for the period, % of net sales | 3.7% | 2.7% | 2.6% | 8.4% | 6.5 % |
| Comparable net profit/loss for the period attributable to equity holders of the parent company | 888 | 661 | 1 965 | 1 535 | 2 841 |
| Comparable net profit/loss for the period, % of net sales | 3.7% | 2.7% | 2.6% | 2.4% | 3.1 % |
| Earnings per share, EUR (diluted = non-diluted) | 0.13 | 0.10 | 0.29 | 0.78 | 0.87 |
| Comparable earnings per share. EUR (diluted = non-diluted) | 0.13 | 0.10 | 0.29 | 0.23 | 0.42 |
| Return on equity (ROE), % | 4.4% | 3.9% | 10.0% | 33.3% | 36.3 % |
| Return on investment (ROI), % | 3.2% | 4.3% | 7.6% | 21.8% | 25.0 % |
| Equity-to-assets ratio at the end of period, % | 40.2% | 35.9% | 40.2% | 35.9% | 38.1 % |
| Debt-to-equity ratio at the end of period | 68.7% | 63.8% | 68.7% | 63.8% | 62.1 % |
| Equity per share at the end of period, EUR * | 2.94 | 2.64 | 2.94 | 2.64 | 2.73 |
| Investments in non-current assets | 416 | 247 | 1 859 | 968 | 1 388 |
| Gross investments, % of net sales | 1.7% | 1.0% | 2.5% | 1.5% | 1.5 % |
| Treasury shares held by the Group at the end of period | 44 812 | 137 260 | 44 812 | 137 260 | 137 260 |
| Treasury shares, % of total share capital and votes | 0.6% | 2.0% | 0.6% | 2.0% | 2.0% |
| Average number of outstanding shares | 6 862 816 | 6 770 368 | 6 859 969 | 6 769 009 | 6 769 352 |
| Number of total issued shares at the end of period | 6 907 628 | 6 907 628 | 6 907 628 | 6 907 628 | 6 907 628 |
| Personnel on average during the period | 286 | 299 | 287 | 276 | 248 |
| Personnel at the end of period | 284 | 297 | 284 | 297 | 278 |
* Equity attributable to the equity holders of the parent company / Number of shares excluding the acquired own shares
RISKS AND UNCERTAINTIES IN THE NEAR FUTURE
General economic and market developments as well as the employment rate have a significant impact on the demand for workplace products and services. The intensity of the inflation trend has been affected first by the pandemic restrictions and then by Russia's attack on Ukraine. The development of both the global economy and local economies is strongly affected by the energy crisis, rising prices and monetary policy decisions aimed at combating inflation. All of this also affects Wulff's operations. In addition, megatrends in the global economy, such as digitalization and responsibility, are affecting market change. There are both risks, and opportunities involved in developing a range of products and services in line with changing markets and needs. Typical business risks include the successful implementation of Wulff's strategy, such as the integration of operations from business acquisitions, and operational risks arising from the personnel, logistics and IT environment. Intense competition in the workplace products and services industry can affect the profitability of the business. Changes in exchange rates affect the Group's net result and balance sheet.
SUBSEQUENT EVENTS
The Group has not had any significant events after the reporting period.
MARKET SITUATION AND FUTURE OUTLOOK
Among the global megatrends, Wulff's operating environment is positively affected by the increase in the share of knowledge work in all work performed. On the other hand, demographic developments are actively reducing the number of people in employment at present. The integration of technology into products and services is an opportunity for Wulff. Digitalization brings new ways for an already multi-channel company to reach and serve customers and streamline its own operations. Of the megatrends, the most significant for Wulff's operations and future is responsible operations and, in particular, consideration for the environment: is the environment treated as a resource or is the goal to improve the state of the environment. Future success is strongly built on these themes and their importance is growing in business and consumer decision-making. Wulff has chosen responsibility, particularly positive climate action, increasing equality and decent work and economic growth (UN Sustainable Development Goals 2030) as important elements of its strategy.
Demand for products is significantly affected by general economic and market developments as well as the employment rate. Before the Coronavirus pandemic, the market for workplace products and services in the Nordic countries had remained stable for several years. Wulff estimates that the overall market for workplace products and services will remain stable, even when there are rapid changes in work environments. Safe face-to-face meetings will be taken care of even after the Coronavirus pandemic in the future, and therefore at Wulff, the demand for hygiene, cleaning, and protection products is estimated to remain at a good level. The pandemic has accelerated the upheaval on how we work; the growth of multi-local teleworking has increased the number of workstations and the demand for products needed at workstations. Demand for IT supplies, printing products and traditional office supplies continues to develop post-pandemic. This is due to the partial return to work and the increased number of new workstations. The Group’s net sales and operating profit are affected by the development of the international exhibition services industry, as the industry is gradually recovering from the Coronavirus pandemic.
The ongoing geopolitical crisis, the Russian invasion of Ukraine and the coercive measures against Russia do not directly affect Wulff's activities, as Wulff has not had any activities or partnerships in the countries involved in the crisis. The crisis is having an impact on global supply chains, the changes to which may also indirectly affect Wulff's industries. Changes into global supply chains have intensified and broadened the recent price inflation development and made it difficult for many product groups to be available. Continued inflation makes it necessary to secure the development of gross margin. The uncertainty concerning the intensity and broadening of inflation set a restraint into predictability.
The reorganisation of Wulff’s contract sales organisation in Finland along with the cooperation negotiations conducted with Wulff Oy Ab and Wulff Solutions Oy in August–September 2021 caused functions in sales, administration and support functions to be merged. As a result of the cooperation negotiations, the company will achieve annual cost savings of approximately EUR 1.9 million in personnel costs. With the implemented and planned restructuring measures such as the consolidation of information systems, logistical and operational processes, and facility changes, Wulff expects to achieve total annual cost synergies of approximately EUR 3 million in stages. A significant portion of these cost synergies will already be realised in 2022.
Wulff aims to grow profitably, and it has the continuing ability to be a more active player in M&A than its competitors.
Wulff estimates that net sales in 2022 will increase clearly and comparable operating profit will increase compared to 2021.
In Espoo on October 24, 2022
WULFF GROUP PLC
BOARD OF DIRECTORS
Further information:
CEO Elina Pienimäki
tel. +358 40 647 1444
e-mail: elina.pienimaki@wulff.fi
DISTRIBUTION
Nasdaq Helsinki Oy
Key media
www.wulff.fi/en
A better world - one workplace at a time. We enable better and more sustainable work environments and a perfect working day. We do the workplace - where ever it is today. At Wulff you will find e.g. hygiene, protection and safety products, air purification, workplace products, coffee accessories, property and cleaning products, office and IT supplies, ergonomics, first aid, and innovative products for construction sites. Our range also includes high-quality Canon printing and document management services and, most recently, financial management services. Customers can also acquire international exhibition services and solutions for remote encounters from us. As a clear domestic market leader, we are constantly developing our range and, according to Taloustutkimus research, we offer the best customer service in the industry (shared number one, TEP 2021). In addition to Finland, Wulff Group operates in Sweden, Norway and Denmark. Read more at wulff.fi/en.
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