Musti Group plc Interim Report 10 August 2021 at 8:30 a.m. EEST
Musti Group plc Interim Report 1 October 2020 – 30 June 2021
Continuing strong growth
April – June 2021
· Group net sales totalled EUR 82.7 million (68.8 million), an increase of
20.2%.
· Like-for-like sales growth was 11.6%.
· Adjusted EBITA was EUR 7.3 (6.4) million, up by 13.3%.
· Adjusted EBITA margin was 8.8% (9.3%).
· Operating profit increased by 25.6% to EUR 5.3 (4.2) million, representing
6.4% (6.1%) of net sales.
· Profit for the period totalled EUR 4.1 (4.9) million.
· Earnings per share, basic was EUR 0.12 (0.14).
· Number of stores grew to 308 (290).
October 2020 – June 2021
· Group net sales totalled EUR 249.4 million (207.5 million), an increase of
20.2%.
· Like-for-like sales growth was 12.1%.
· Adjusted EBITA was EUR 25.6 (19.7) million, up by 29.6%.
· Adjusted EBITA margin was 10.3% (9.5%).
· Operating profit increased by 68.5% to EUR 19.8 (11.7) million, representing
7.9% (5.7%) of net sales.
· Profit for the period totalled EUR 15.7 (5.9) million.
· Earnings per share, basic was EUR 0.47 (0.19).
· Number of stores grew to 308 (290).
· Number of loyal customers grew to 1,257 thousand (1,107 thousand).
The figures in parenthesis refer to the comparison period, i.e. the same period
in the previous year, unless stated otherwise. Musti Group’s financial year is
from 1 October to 30 September.
Key figures
EUR million or as 4-6/20 4-6/20 Change 10/2020 10/2019 Change FY2020
indicated 21 20 % -6/2021 -6/2020 %
Net sales 82.7 68.8 20.2 249.4 207.5 20.2 284.4
Net sales growth, % 20.2% 16.6% 20.2% 13.9% 15.3%
LFL sales growth, % 11.6% 11.5% 12.1% 11.2% 11.5%
LFL store sales 10.7% 4.3% 9.1% 7.1% 7.3%
growth, %
Online share, % 24.1% 25.0% 23.4% 22.7% 22.5%
Gross margin, % 45.4% 42.6% 45.6% 43.8% 43.8%
EBITA 6.9 5.7 21.4 24.6 16.2 52.4 25.5
Adjusted EBITA 7.3 6.4 13.3 25.6 19.7 29.6 29.8
Adjusted EBITA margin, 8.8% 9.3% 10.3% 9.5% 10.5%
%
Operating profit 5.3 4.2 25.6 19.8 11.7 68.5 19.6
Operating profit 6.4% 6.1% 7.9% 5.7% 6.9%
margin, %
Profit/loss for the 4.1 4.9 -15.1 15.7 5.9 168.3 11.8
period
Earnings per share, 0.12 0.14 -14.4 0.47 0.19 0.37
basic, EUR
Net cash flow from 10.1 2.2 366.2 39.9 21.5 85.9 41.9
operating activities
*)
Investments in 3.5 2.2 60.7 9.7 7.0 37.7 8.9
tangible and
intangible assets
Net debt / LTM 2.0 2.4 -18.6 2.0 2.4 -18.6 2.0
adjusted EBITDA
Number of loyal 1,257 1,107 13.5 1,257 1,107 13.5 1,151
customers, thousands
Number of stores at 308 290 6.0 308 290 6.0 293
the end of the period
of which directly 257 227 6.2 257 227 6.2 231
operated
*) Interest and other finance income received has been reclassified from net
cash flow operating activities to net cash flow from financing activities.
CEO’s comments
The third quarter of the financial year 2021 demonstrated once again our ability
to grow sustainably quarter after quarter with increasing gross margin and we
are entering the post-pandemic environment in a position of strength. Even
though facing the high comparison figures from previous year, group net sales
growth was 20% together with excellent improvement in gross margin. All the
important indicators supporting strong and sustainable growth are going into
right direction; we are constantly winning new customers, the average spend is
going upwards, customer satisfaction continues to stay on a high level and the
share of sales of own and exclusive products is growing. We continue to support
our customers in transitioning to a post-pandemic environment and the
fundamentals of our business are constant: everything we do starts and ends with
our customers. I am very pleased to report another successful quarter today:
· Group net sales increased by 20.2% to EUR 82.7 million in Q3. The increase
was largely due to like-for-like growth in all countries and the increasing
number of new customers, together with an increased number of directly operated
stores. Like-for-like growth amounted to 11.6% (11.5%).
· Store sales increased by 23.8% to EUR 59.9 million, driven by an increased
number of stores and strong like-for-like store sales growth in all countries.
Like-for-like store sales growth was 10.7% (4.3%). Store sales growth in the
comparison period was negatively impacted by restrictions relating to the COVID
-19 pandemic.
· Online sales increased by 15.8% to EUR 19.9 million. Online sales accounted
for 24.1% (25.0%) of total net sales. In the comparison period, online sales
growth was positively impacted by the channel shift towards online sales due to
restrictions relating to the COVID-19 pandemic.
· Net cash flow from operating activities was extremely strong and totaled EUR
10.1 million (EUR 2.2 million).
The Pet Parenting trend has been continuing strong, and the favorable trend in
puppy registrations keeps getting stronger. Puppy registrations in Sweden were
up again by 16% in June 2021 compared to corresponding month in 2020 and what is
most important, the growth in Musti Group’s new puppy customers continues
stronger than ever. In June 2021, we received an all-time high number of new
puppy customers, an increase of 33% compared to the corresponding month previous
year. Given the strong underlying market development, we are utilizing the
momentum and investing heavily on sales growth to reach out to more new
customers and to develop an ecosystem for Pet Parents to further increase
attractiveness and customer loyalty. This reflects our strategy and supports the
mid- and long-term financial targets, and we are well on track to reach the
updated sales and margin targets set in May 2021.
In June 2021 we successfully concluded negotiations with franchisees of all 16
stores operating under franchising agreement in Finland. After the transactions
are finished in Q4 2021, all stores in Finland are directly operated. As a
result of both strong organic growth and accelerated acquisitions, we have
upgraded our estimate of increase in own directly operated stores to 45-55
stores during the financial year. The rapid store expansion, focusing on
building a seamless ecosystem for the growing number of customers and
strengthening the assortment of own and exclusive products has added costs in a
short-term, but will pay back in the longer term.
The Group’s adjusted EBITA increased by 13.3% to EUR 7.3 million in Q3. The
increase was due to sales growth. Adjusted EBITA margin was 8.8% (9.3%). The
comparison period’s cost structure was positively impacted by lower working
hours in our stores and lower operating costs driven by the COVID-19 pandemic.
This year, quarterly adjusted EBITA margin development was in line with periods
prior to the COVID-19 pandemic, where Q3 has normally been the quarter with the
lowest profitability driven by lower volume and margins. Adjusted EBITA was
still negatively impacted by EUR 0.3 million by the low efficiency in Eskilstuna
driven by the warehouse consolidation project that was executed in Q1 2021.
However, the efficiency has improved as planned and is expected to normalize by
the end of Q4. I am extremely pleased with the gross margin development. Gross
margin increased to 45.4% (42.6%) as a result of lower share of online sales,
more efficient marketing campaigns, favorable product mix and efficient supply
chain management. Operating profit increased by 25.6% to EUR 5.3 million.
Adjusted EBITA margin increased to 12.4% in Sweden and 16.3% in Norway. In
Finland, adjusted EBITA margin decreased slightly from the comparison period to
21.8%. However, especially in Finland, the comparison period was positively
impacted by cost savings in relation to the COVID-19 pandemic, mainly caused by
lower working hours. Hence, adjusted EBITA in Q3 2021 was more in line with
periods prior to the COVID-19 pandemic.
Our focus remains on making the life of pets and their parents easier, safer and
more fun. For the benefit of our customers, business and shareholders, we are
determined to continuously improve our performance and do things a bit better
every single day. Our personnel prove their expertise and genuine will to serve
our customer in the best possible way every day, which I want to sincerely thank
them all for.
David Rönnberg,
CEO
Financial targets
The long-term financial targets updated by the Board of Directors on 3 May 2021
are:
Growth Net sales to reach at least EUR 500 million by the financial
year 2024 by continuation of strong customer acquisition
momentum and increasing share of wallet.
Profitability Mid- to long-term adjusted EBITA margin of at least 13 per cent
with steadily improving profile. Margin increase is expected to
be realised through steady gross margin and improving operating
leverage.
Capital Maintain net debt in relation to adjusted EBITDA below 2.5x
structure in the long term.
Dividend To pay a dividend corresponding to 60-80 per cent of net
policy profit. Any potential dividend shall take into account
acquisitions, the company’s financial position, cash flow and
future growth opportunities.
The financial targets are forward-looking statements and are not guarantees of
future financial performance.
Webcast for analysts and media
A live webcast for analysts and media will be arranged today, 10 August 2021 at
14:00 EEST. The event will be held in English. The report will be presented by
CEO David Rönnberg and CFO Robert Berglund. The webcast can be followed at
https://mustigroup.videosync.fi/2021-q3-results.
A recording of the webcast will be available later at the company’s website at
www.mustigroup.com/investors/reports-and-presentations/.
You can participate in the telephone conference by calling:
Finland: +358 981710310
Sweden: +46 856642651
United Kingdom: +44 3333000804
United States: +1 6319131422
The participants will be asked to provide the following PIN code: 88224383#
Helsinki, 10 August 2021
Board of Directors
The information in this Interim Report is unaudited.
Further information:
David Rönnberg, CEO, tel. +46 70 896 6552
Robert Berglund, CFO, tel. +358 50 534
8657
Essi Nikitin, Head of IR and Communications, tel +358 50 581 1455
Distribution:
Nasdaq Helsinki
Main media
www.mustigroup.com
Musti Group in brief
Musti Group makes the life of pets and their owners easier, safer and more fun.
We are the leading Nordic pet care company, and we operate an omnichannel
business model to cater for the needs of pets and their owners across Finland,
Sweden and Norway. We offer a wide, curated assortment of pet products. We also
provide pet care services such as grooming, training and veterinary services in
selected locations.
Musti Group’s net sales were EUR 284 million in the financial year 2020. At the
end of the financial year 2020, the company had 1,162 employees, over one
million loyal customers and 293 stores.