Wulff Group Plc’s Interim Report for January 1 – September 30, 2021

INTERIM REPORT OCTOBER 25, 2021 AT 9.30 A.M.

This is a summary of Wulff Group Plc’s interim report for January-September 2021. 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.

The acquisition boosted growth and the positive earnings trend continued

July 1–September 30, 2021 IN BRIEF

  • Net sales totalled EUR 24.2 million (12.4), increased by 95.1%
  • EBITDA and comparable EBITDA were EUR 1.7 million (1.3)
  • Operating profit (EBIT) and comparable operating profit (EBIT) were EUR 1.0 million (0.9)
  • Earnings per share (EPS) and comparable earnings per share were EUR 0.10 (0.09)
  • Wulff estimates that net sales will grow to more than EUR 90 million in 2021 (EUR 57.5 million in 2020), operating profit will grow significantly from the previous year, and comparable operating profit will remain at a good level in 2021.

January 1–September 30, 2021 IN BRIEF

  • Net sales totalled EUR 62.8 million (42.2), increased by 48.7%
  • EBITDA was EUR 7.7 million (3.7) and comparable EBITDA was EUR 4.0 million (3.7)
  • Operating profit (EBIT) was EUR 6.2 million (2.4) and comparable operating profit (EBIT) was EUR 2.4 million (2.4)
  • Earnings per share (EPS) was EUR 0.78 (0.19) and comparable earnings per share was EUR 0.23 (0.19)
  • The equity ratio was 35.9% (41.5)

WULFF GROUP PLC’S CEO ELINA PIENIMÄKI

“The transformation of working life is here now, and we at Wulff are ready to serve our customers in the new situation. We strongly believe that people look forward to returning to work and encounters, while multi-location and teleworking has become a permanent part of our daily lives. As a market leader in our field and as a multi-channel company, we reach comprehensively and personally companies of different sizes in different industries in our operating countries. We get real-time information about companies’ needs – and we can respond to them quickly. Our market position is strengthened, and growth and the positive development of profitability are supported by the acquisition of Staples Finland to the Wulff Group in May. We have implemented the measures to combine Contract Customers in a determined and prompt manner. As a result of the co-operation negotiations between Wulff Solutions (formerly Staples Finland) and Wulff Oy Ab, which ended in September, we have an efficient organization in Finland that focuses on sales and customer experience. Although it was necessary to terminate employment relationships to eliminate duplication, the Wulff family as a whole grew in Finland with new top professionals. We also gained new partners and customers. I am glad to be able to work with both familiar and new people, as well as people who are important to Wulff.”

GROUP NET SALES AND PERFORMANCE

In January–September 2021, net sales totalled EUR 62.8 million (42.2), and EUR 24.2 million (12.4) in July–September. Net sales grew by 48.7% (2.3) in January–September and by 95.1% (3.2) in the third quarter. The increase was driven by the acquisition of Wulff Solutions on May 3, 2021. The sales of the Expertise Sales segment’s hygiene and protective products decreased from the pandemic year 2020. 

A price of EUR 6.0 million was paid for the acquisition of Wulff Solutions. The final acquisition price of EUR 6.0 million is less than the net assets of the company, approximately EUR 10.5 million, at the acquisition date of May 3, 2021. The goodwill gain of EUR 4.5 million resulting from the completed acquisition has been recognised in other operating income. This negative goodwill recognition has been treated as a non-recurring item affecting comparability.

In January–September 2021 the gross margin amounted to EUR 19.8 million (15.4), accounting for 31.5% (36.5) of net sales, and EUR 7.4 million (4.4) in the third quarter, equal to 30.5% (35.5) of net sales. Thanks to the acquisition of Wulff Solutions on May 3, 2021, the margin increased by EUR 5.5 million for the full reporting period and by EUR 3.1 million in July-September. The gross margin level of the increased Contract Customers segment in relation to net sales is lower than the gross margin level of Expertise Sales segment. In addition, the gross margin level fell short of the comparison period after the price level of hygiene products stabilized from the peak of 2020.

In January-September 2021, employee benefit expenses amounted to EUR 11.2 million (8.8) being 17.9% (20.8) of net sales, and EUR 3.7 million (2.3) being 15.4% (18.4) of net sales in the third quarter. Wulff’s personnel increased by 114 employees as a result of the acquisition. The increase in employee benefit expenses in relation to net sales was lower than the increase in net sales. 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 5.9 million (3.2) in January–June 2021, being 9.4% (7.5) of net sales, and EUR 2.1 million (0.9), being 8.8% (7.3) of net sales, in the third quarter. In the second quarter of 2021, non-recurring expenses arising from the completion of the acquisition amounted to approximately EUR 0.5 million.

In January–September 2021 EBITDA amounted to EUR 7.7 million (3.7), being 12.3% (8.7) of net sales, and EUR 1.7 million (1.3), being 7.1% (10.7) of net sales, in July–September. Goodwill recognition of EUR 4.5 million due to the favourable acquisition during the second quarter and EUR 0.7 million of costs arising from the implementation of the acquisition have been deducted from the comparable results. The reporting period 2020 did not include items affecting comparability. In January–September 2021 comparable EBITDA amounted to EUR 4.0 million (3.7), being 6.3% (8.7) of net sales, and EUR 1.7 million (1.3), being 7.1% (10.7) of net sales, in the third quarter.

Operating profit (EBIT) amounted to EUR 6.2 million (2.4), 9.8% (5.7) of net sales, and EUR 1.0 million (0.9), or 4.3% (7.2), in the third quarter. The comparable operating profit (EBIT) amounted to EUR 2.4 million (2.4), 3.8% (5.7) of net sales, and EUR 1.0 million (0.9), 4.3% (7.2), in the third quarter.

In January-September 2021, the financial income and expenses totalled (net) EUR -0.3 million (-0.5), including interest expenses of EUR -0.2 million (-0.1), and mainly currency-related other financial items (net) totalled EUR -0.1 million

(-0.4). In the third quarter, the financial income and expenses (net) totalled EUR -0.1 million (-0.1).

In January–September 2021, the result before taxes was EUR 5.9 million (1.9), while the result before taxes was EUR 0.9 million (0.8) in the third quarter. In January–September 2021, the comparable result before taxes was EUR 2.1 million (1.9), while the comparable result before taxes was EUR 0.9 million (0.8) in the third quarter.

In January–September 2021, the net profit was EUR 5.5 million (1.6) and EUR 0.8 million (0.7) in the third quarter. The comparable net profit for the reporting period was EUR 1.8 million (1.6), while the comparable net profit was EUR 0.8 million (0.7) in the third quarter.

Earnings per share (EPS) were EUR 0.78 (0.19) in January–September 2021 and EUR 0.10 (0.09) in the third quarter. Comparable earnings per share (EPS) were EUR 0.23 (0.19) in January–September 2021 and EUR 0.10 (0.09) in the third quarter.

KEY FIGURES

III III I-III I-III I-IV
EUR 1000 2021 2020 2021 2020 2020
Net sales 24 246 12 425 62 788 42 227 57 541
Change in net sales, % 95.1% 3.2% 48.7% 2.3% 2.1%
Gross profit 7 392 4 408 19 806 15 403 20 748
Gross profit. % 30.5% 35.5% 31.5% 36.5% 36.1%
EBITDA 1 714 1 327 7 738 3 677 5 204
EBITDA margin, % of net sales 7.1% 10.7% 12.3% 8.7% 9.0%
Comparable EBITDA 1 714 1 327 3 981 3 677 5 204
Comparable EBITDA margin. % of net sales 7.1% 10.7% 6.3% 8.7% 9.0%
Operating profit/loss 1 032 899 6 167 2 390 3 541
Operating profit/loss margin, % of net sales 4.3% 7.2% 9.8% 5.7% 6.2%
Comparable operating profit/loss 1 032 899 2 410 2 390 3 541
Comparable operating profit/loss, % of net sales 4.3% 7.2% 3.8% 5.7% 6.2%
Profit/Loss before taxes 889 802 5 856 1 900 3 101
Profit/Loss before taxes margin, % of net sales 3.7% 6.5% 9.3% 4.5% 5.4%
Comparable profit before taxes 889 802 2 099 1 900 3 101
Comparable profit before taxes, % of net sales 3.7% 6.5% 3.3% 4.5% 5.4%
Net profit/loss for the period attributable to equity holders of the parent company 661 619 5 292 1 260 2 174
Net profit/loss for the period, % of net sales 2.7% 5.0% 8.4% 3.0% 3.8%
Comparable net profit/loss for the period attributable to equity holders of the parent company 661 619 1 535 1 260 2 174
Comparable net profit/loss for the period, % of net sales 2.7% 5.0% 2.4% 3.0% 3.8%
Earnings per share, EUR (diluted = non-diluted) 0.10 0.09 0.78 0.19 0.32
Comparable earnings per share. EUR (diluted = non-diluted) 0.10 0.09 0.23 0.19 0.32
Return on equity (ROE), % 33.3% 5.0% 33.3% 12.1% 19.1%
Return on investment (ROI), % 21.8% 3.9% 21.8% 9.5% 15.2%
Equity-to-assets ratio at the end of period, % 35.9% 41.5% 35.9% 41.5% 41.9%
Debt-to-equity ratio at the end of period 63.8% 62.6% 63.8% 62.6% 57.3%
Equity per share at the end of period, EUR * 2.64 1.95 2.64 1.95 2.00
Investments in non-current assets 247 27 968 388 719
Gross investments, % of net sales 1.0% 0.2% 1.5% 0.9% 1.2%
Treasury shares held by the Group at the end of period 137 260 144 260 13 7260 144 260 144 260
Treasury shares, % of total share capital and votes 2.0% 2.1% 2.0% 2.1% 2.1%
Average number of outstanding shares 6 770 368 6 763 368 6 769 009 6 800 335 6 791 043
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 299 185 276 192 189
Personnel at the end of period 297 182 297 182 176

* 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 general uncertainty in the global economy also impacts Wulff’s operations. The effects of the coronavirus pandemic and the restrictions in place to contain and mitigate the virus have a broad impact on the needs of both the global and local economy and customers. 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

Megatrends play a role in Wulff’s operations. The company’s operating environment is positively affected by the growing 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 and increasing equality 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 pandemic, the market for workplace products and services in the Nordic countries remained stable for several years. Wulff estimates that the overall market for workplace products and services will remain stable, despite rapid changes in work environments. With the positive development in vaccine coverage, protection products will no longer be as necessary as they were at the onset of the pandemic. However, safe encounters will continue to be important. Wulff expects demand for hygiene, cleansing, cleaning, and protection products to remain at a good level despite the change. At the same time, the pandemic has brought lasting changes to the way we work; teleworking has increased and increased the number of workstations and the demand for products needed at workstations. Demand for IT supplies, printing products and traditional office supplies is expected to stabilize at pre-pandemic levels in the near future. This is due to the partial return to work and the increased number of new workstations created by the pandemic-driven change in working life in homes and leisure homes. The Group’s net sales and operating profit are weakened by the situation in the international exhibition services, which is recovering slowly. Demand for Wulff Entre’s traditional Premium Exhibition services remains low due to the coronavirus pandemic, even though the market has finally opened.

Wulff renewed its Finnish Contract Customers organization. As a result of the co-operation negotiations between Wulff Oy Ab and Wulff Solutions Oy (formerly Staples Finland Oy) held in August-September, the functions in sales, administration and support functions were merged. The negotiations were part of developing operations and strategy to be more commercial, customer-centric, and responsible. Synergy benefits will be sought in stages in all activities. During the last quarter of 2021, non-recurring costs due to the termination of employment will be approximately EUR 0.7 million. At the same time, the restructuring will result in personnel and information system cost savings of approximately EUR 0.7 million in the last quarter of 2021. As a result of the co-operation procedures, the company will achieve annual cost savings of approximately EUR 1.9 million. With the reorganization measures now implemented and planned, such as the merging of software and IT systems, as wells as logistics and operating processes, and the changes in premises, Wulff expects to achieve a total annual cost synergy benefit of approximately EUR 3 million in stages. A significant part of the cost synergies will be realized already 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 maintains its guidance for operating profits and its outlook for net sales. Wulff estimates that net sales will grow to more than EUR 90 million (EUR 57.5 million in 2020), operating profit will grow significantly from the previous year, and comparable operating profit will remain at a good level in 2021. As previously stated, Wulff targets in the medium-term an average annual growth of 5-10% of the net sales, a growing comparable operating profit per cent and an increasing dividend per share. Wulff will update its strategy and financial targets during 2021 and announce possible changes by the end of 2021.

In Espoo on October 25, 2021

WULFF-YHTIÖT OYJ
BOARD OF DIRECTORS

Further information:
CEO Elina Pienimäki
tel. +358 40 647 1444
e-mail: elina.pienimaki@wulff.fi

DISTRIBUTION
Nasdaq OMX Helsinki Oy
Key media
www.wulff.fi  

A better world – one workplace at a time. Wulff’s goal is a perfect workday! We enable better working environments and create workplaces, wherever you may be. More responsible, more comfortable, healthier, safer, more enjoyable, more active, and more diverse? How would you like to improve your working day and environment? Wulff has the solution. We offer our customers hygiene- and protective products, air purifiers, office supplies, facility management products, catering solutions, IT supplies, ergonomics, first aid, and innovative products for worksites. Customers can also acquire international exhibition services and solutions for remote encounters from Wulff. As the clear market leader in Finland, we are constantly developing our offering and, according to Taloustutkimus, we offer the best customer service in the industry. In addition to Finland, Wulff operates in Sweden, Norway, and Denmark. More information at wulff.fi

View release (PDF)