Interim report – H1 2017/18
Matas A/S
Half Year financial report
Interim report – H1 2017/18
Company announcement 10 2017/18
Alleroed, 2017-11-08 08:00 CET (GLOBE NEWSWIRE) -- Interim report – H1 2017/18
(1 April – 30 September 2017)
Slow revenue growth and weaker earnings performance
“Although we were faced with intensified competition, Matas lifted revenue in
the second quarter of 2017/18, thanks partly to growing demand for High-End
Beauty products and an increase in basket sizes. However, falling short of
Matas’s ambitions, our performance in the first half of 2017/18 was
unsatisfactory.
Against this background, we are launching a range of measures to strengthen our
product offering and boost our performance. For our customers, this means lower
prices and better bargains on a large selection of top-line products and more
attractive benefits for Club Matas’s almost 1.8 million members. At the same
time, we will make it easier and quicker for our customers to shop at Matas.dk,
which – with about 24,000 products – offers Denmark’s largest product range
within health, beauty and wellness”, said Gregers Wedell-Wedellsborg, CEO.
“To free resources for proactive initiatives, we will carry out a cost
reduction programme. Concurrently, we will close down StyleBox as an
independent chain and speed up efforts to adjust the retail network. Lastly,
based on the changing market conditions, we have launched a process to refocus
our strategy based on Matas’s fundamental strengths”.
Q2 2017/18 highlights
-- Q2 2017/18 revenue was up by 0.8% year on year to DKK 778.0 million.
Underlying like-for-like revenue growth was also 0.8%.
-- Revenue growth was driven by increased sales in all shops-in-shop except
the Material shop. Footfall declined in Q2 2017/18, which was reflected in
a lower number of transactions, whereas the average basket size grew by
6.6%. Online sales were up by more than 35% over the year-earlier period.
-- High-End Beauty sales developed satisfactorily, more than offsetting the
negative impact of declining Mass Beauty sales amid a larger number of
competing outlets relative to the same period of last year. Mass Beauty
sales were also impacted by increased competition from supermarkets.
Overall Beauty sales were slightly ahead.
-- Q2 2017/18 gross profit came to DKK 344.2 million, taking the gross margin
to 44.2%, a 2.7 percentage point decline from 46.9% in Q2 2016/17. The fall
was driven by intensified competition from particularly supermarkets and a
high proportion of campaign sales across categories.
-- Disregarding non-recurring costs of DKK 12.7 million incurred in connection
with the change of CEO, total costs were down by DKK 11.8 million relative
to the same period of last year. The cost reduction was partly attributable
to the cost trimming programme completed towards the end of financial year
2016/17.
-- EBITA, stated before exceptional items as per the definition on page 80 of
the Annual Report for 2016/17, was DKK 89.0 million for Q2 2017/18. This
took the EBITA margin to 11.4% compared with 12.6% for the same period the
year before. The margin was driven down by the lower contribution ratio.
EBITDA before exceptional items came to DKK 107.5 million, for an EBITDA
margin of 13.8%.
-- Q2 profit after tax was DKK 40.3 million, and Adjusted profit after tax net
of amortisation not related to software and exceptional items was DKK 65.3
million, compared with DKK 54.6 million and DKK 69.4 million, respectively,
in Q2 2016/17.
-- Cash generated from operations grew to DKK 54.2 million in Q2 2017/18 from
DKK 13.1 million in the year-earlier period. The free cash flow was an
inflow of DKK 25.3 million against an outflow of DKK 21.8 million in Q1
2016/17, driven by a working capital reduction.
-- Gross debt stood at DKK 1,746.3 million at 30 September 2017. Our gross
debt target remains DKK 1,600-1,800 million. Net interest-bearing debt was
DKK 1,694.0 million at 30 September 2017, equivalent to 2.8 times LTM
EBITDA before exceptional items, as compared with 2.8 times at the end of
Q2 2016/17.
H1 2017/18 highlights
-- H1 2017/18 revenue was DKK 1,598.9 million, a year-on-year decline of 1.3%.
Underlying like-for-like revenue was down by 1.1%.
-- Gross profit for H1 2017/18 was DKK 723.3 million, equivalent to a gross
margin of 45.2%, down from 47.1% in the year-earlier period.
-- EBITA for H1 2017/18 came to DKK 208 million, down from DKK 234.4 million
in the year-earlier period. Overall, the EBITA margin came to 13.0%, a
year-on-year decline of 1.5 percentage points. The margin was driven down
by the lower contribution ratio. EBITDA before exceptional items came to
DKK 244.0 million, for an EBITDA margin of 15.3%.
-- H1 profit after tax was DKK 114.4 million, and Adjusted profit after tax
net of amortisation not related to software and exceptional items was DKK
154.3 million, compared with DKK 139.1 million and DKK 168.7 million,
respectively, in H1 2016/17.
-- The free cash flow grew to DKK 58.6 million in H1 2017/18 from DKK 3.8
million in the same period of last year.
Measures to boost profits
-- Against the backdrop of changing market conditions, Matas is launching a
range of measures to free resources for new initiatives and to enhance the
customer experience and our competitive strength. These measures will
include cost reductions, closing down StyleBox as a chain and speeding up
efforts to adjust the retail network, primarily in locations with more than
one Matas store.
-- We will enhance the customer experience by further developing Club Matas,
the digital platform and the webshop. We will strengthen our competitive
power through proactive commercial initiatives in the form of investments
in campaigns, reducing prices and membership benefits.
-- In addition, we are intensifying our focus on e-commerce through the
appointment of a Director of e-commerce, who will be reporting directly to
the CEO.
Outlook
-- Falling short of Matas’s ambitions, our performance in the first half of
2017/18 was unsatisfactory. In response, Matas has revised its full-year
financial guidance, see company announcement no. 9 of 10 October 2017.
-- Against this background, Matas has launched a process to refocus its
strategy, which will include a revision of its long-term financial targets.
-- It remains the Group's policy to distribute surplus capital to shareholders
through a combination of dividends of a minimum of 60% of Adjusted profit
after tax and share buybacks. No share buybacks will be carried out in
2017/18.
-- The intention is to maintain dividend distributions at a level unchanged in
DKK terms relative to 2015/16 and 2016/17 (DKK 6.30 per share).
The 2017/18 guidance is unchanged from company announcement no. 9 of 10 October
2017:
-- A decline in underlying like-for-like revenue of 0-2% after taking a
negative calendar effect into account.
-- EBITA before exceptional items of DKK 440-470 million.
-- Investments of around DKK 90-100 million (excluding store acquisitions).
EBITA is stated before exceptional items as per the definition on page 80 of
the Annual Report for 2016/17. Accordingly, exceptional items related to
planned measures to improve the profit performance are not included in the
EBITA guidance for 2017/18. Non-recurring costs of DKK 12.7 million incurred in
connection with the change of Matas A/S’s CEO are included in EBITA guidance.
Conference call
Matas will host a conference call for investors and analysts on 8 November 2017
at 2:00 p.m.
The conference call and presentation can be accessed on our investor website:
www.investor.en.matas.dk.
Conference call access numbers for investors and analysts:
DK: +45 38 32 28 69
UK: +44 (0)20 3427 1910
US: +1718 971 5768
Event code: “Matas” or 1067169
Please call 5 minutes before the conference call begins.
Link to webcast: https://edge.media-server.com/m6/p/zca7buar
Contacts
Gregers Wedell-Wedellsborg
CEO, tel +45 48 16 55 55
Anders T. Skole-Sørensen
CFO, tel +45 48 16 55 55
Elisabeth Toftmann Klintholm
Head of Investor Relations & Strategy, tel +45 48 16 55 48
