Wetteri Plc Half-year Report 28 August 2024 at 9.30
Summary of the review period 1 April to 30 June 2024
· The Group's revenue was EUR 131,1 million ((comparison period: EUR 106,8
million in April-June 2023) with an increase of 23%
· Adjusted EBITDA vas EUR 4,6 million (EUR 5,2 million)
· The adjusted operating profit was EUR 0,7 million (EUR 2,2 million)
· The operating profit was EUR -0,7 million (EUR 1,3 million)
· The revenue of the Passenger Cars segment increased by EUR 17,4 million (25
%) year-on-year
· The revenue of the Heavy Equipment segment increased by EUR 2,4 million
(14%) year-on-year
· The revenue of the Maintenance Services segment increased by EUR 4,8 million
(25%) year-on-year
Summary of the review period 1 January to 30 June 2024
· The Group's revenue was EUR 275.7 million (EUR 194.3 million), with an
increase of 42% which has mainly been gained through strategic acquisitions
· Adjusted EBITDA was EUR 10.8 million (EUR 10.7 million)
· The adjusted operating profit was EUR 3.2 million (EUR 4.9 million)
· The operating profit was EUR 0.5 million (EUR 2.2 million)
· The revenue of the Passenger Cars segment increased by EUR 64.7 million
(53%) year-on-year; invoiced sales of used cars grew by 87%
· The revenue of the Heavy Equipment segment increased by EUR 1.3 million (3%)
year-on-year
· The revenue of the Maintenance Services segment increased by EUR 15.8
million (47%) year-on-year
· The car dealership business operations of the Suur-Savo Cooperative became
part of Wetteri through an acquisition on 1 January 2024
· Suvanto Trucks Oy became part of Wetteri through a share exchange on 29
February 2024
· Lahden Rekkapaja Oy became part of Wetteri on 28 June 2024
Financial guidance for 2024 updated on 23 August 2024
· Revenue EUR 520-640 million
· Adjusted operating profit EUR 12.8-15.6 million
The company's medium-term (3-year) target is to achieve EUR 1,000 million in
revenue and EUR 30 million in operating profit.
Key performance indicators
EUR thousand 1 Apr 1 Apr Change 1 Jan 1 Jan Change 1 Jan
to to 30 to to 30 to 31
30 Jun Jun 30 Jun Jun Dec
2024 20231) 2024 20231) 20231)
Revenue 131,109 106,845 23% 275,660 194,253 42% 432,502
EBITDA 3,804 5,087 -25% 9,150 9,446 -3% 20,061
EBITDA, % of 3% 5% 3% 5% 5%
revenue
Adjusted EBITDA 4,612 5,241 -12% 10,768 10,711 1% 23,970
2)
Adjusted EBITDA, 4% 5% 4% 6% 6%
% of revenue
Operating profit -666 1,300 -151% 469 2,153 -78% 4,713
(loss) (EBIT)
Operating profit -1% 1% 0% 1% 1%
(loss), % of
revenue
Adjusted 695 2,157 -68% 3,227 4,891 -34% 11,225
operating profit
2)
Adjusted 1% 2% 1% 3% 3%
operating profit,
% of
revenue
Profit (loss) -3,889 -1,063 - -5,370 -1,197 - -4,339
before tax
Profit (loss) -3% -1% -2% -1% -1%
before tax, % of
revenue
Profit (loss) for -3,672 -920 - -4,980 -1,166 - -4,336
the period from
continuing
operations
Profit (loss) for -3% -1% -2% -1% -1%
the period from
continuing
operations, % of
revenue
Profit (loss) for -1,102 -720 - -2,384 -686 - -4,049
the period
Profit (loss) for -1% -1% -1% 0% -1%
the period, % of
revenue
Earnings per -0.02 -0.01 -0.03 -0.01 -0.03
share from
continuing
operations, basic
(EUR)
Earnings per -0.02 -0.01 -0.03 -0.01 -0.03
share from
continuing
operations,
diluted (EUR)
Earnings per -0.01 -0.01 -0.02 -0.01 -0.03
share, basic
(EUR)
Earnings per -0.01 -0.01 -0.02 -0.01 -0.03
share, diluted
(EUR)
Return on equity -41% -8% -29% -4% -13%
(ROE), %
Return on -16% -8% -13% -6% -9%
investment (ROI),
%
Equity ratio, % 16% 16% 16% 16% 16%
Liquidity, % 85% 93% 85% 93% 83%
Average number of 1,025 955 1,039 852 926
personnel during
the review period
3)
Invoiced sales of 924 962 1,994 1,545 3,322
new passenger
cars (pcs)
Invoiced sales of 28 46 72 102 181
new commercial
trucks (pcs)
Invoiced sales of 2,522 1,464 4,965 2,684 5,764
used passenger
cars (pcs)
Invoiced sales of 124 33 176 65 114
used commercial
trucks (pcs)
Orders: new 887 787 1,889 1,417 2,862
passenger cars
(pcs)
Orders: new 55 45 91 89 127
commercial trucks
(pcs)
Passenger cars: 36,476 71,361 36,476 71,361 57,343
order backlog at
the end of the
period
Commercial 16,378 21,700 16,378 21,700 13,655
trucks: order
backlog
at the end of the
period
Passenger car 87,342 86,132 176,392 151,525 319,562
repair shop:
hours
sold
Commercial truck 27,224 26,443 56,442 55,911 110,759
repair shop:
hours sold
1) Training business operations sold during the first half of 2024 are presented
as discontinued operations on the half-year report, and the income statement
items of training business are presented in the consolidated income statement as
part of the Group's profit (loss) from discontinued operations, separately from
the income statement items of the Group's continuing operations. The
presentation of the income statement for the comparison period and the
calculation of the key performance indicators derived from the comparison
period's income statement items have also been adjusted accordingly.
2) The adjusted EBITDA and operating profit do not take items affecting the
comparability of the Group's EBITDA and operating profit into account, such as
significant non-recurring items of income and expenses and amortisation of the
fair value of assets recognised on the balance sheet by means of acquisition
calculations. The purpose of the adjusted EBITDA and operating profit is to
improve the comparability of the Group's EBITDA and operating profit between
periods. The reconciliation of the adjusted EBITDA and operating profit is
presented on page 17 of the interim report.
3) The calculation of the number of personnel has been revised in the review
period so that the number of personnel at the end of each month has been added
together, and the amount thus obtained has been divided by the number of months
in the review period. The comparison information has also been adjusted to
correspond to this calculation method.
Aarne Simula, CEO:
“The first half of 2024 was moderate for Wetteri in a historically difficult
market situation that turned out weaker than expected. As a result of mergers
and acquisitions, the Group's net sales increased by 42 percent from the
previous year and amounted to EUR 275.7 million. Adjusted EBITDA settled at last
year's level at EUR 10.8 million. Adjusted operating profit decreased from the
corresponding period last year and was EUR 3.2 million. During the review
period, Wetteri's performance was affected by the difficult market situation,
general economic uncertainty and weak consumer confidence. After the review
period on 23rd August, Wetteri updated its financial guidance for 2024 due to
the temporal transfer of the profit and turnover effects of the planned new
acquisitions, as well as the weaker-than-estimated market situation of new cars.
In January-June, Wetteri's net sales increased in all segments, most
significantly in the passenger cars segment, whose net sales increased by 53
percent from the corresponding period of the previous year and amounted to EUR
186.0 million. The number of used cars invoiced increased by 85 per cent from
the previous year. The soaring growth is possible by Wetteri's self-sufficiency
in used cars: for every new car sold, Wetteri gets a used car in exchange.
Wetteri's high-quality and versatile range of replacement cars can respond well
to market demand. The order backlog of new passenger cars at the end of the
review period was EUR 36.5 million. The profitability of the passenger car
business was weakened by the costs related to mergers and acquisitions as well
as financial expenses. The turnover of heavy equipment increased slightly from
the previous year's January-June and was EUR 38.6 million. 72 new trucks and 176
used trucks were invoiced. In January-June, the turnover of maintenance services
increased by 47% to EUR 49.3 million.
There is a playoff going on in the automotive industry. The market situation is
as weak as in the recession of the 1990s, and the transformation of the industry
has forced many operators to choose between closing the business and selling it.
Importers reorganize their dealer networks and centralize representations to the
largest operators. Consolidation will continue, because in the automotive
sector, size is strength. It is estimated that in three to five years there will
be only a few companies trading in new passenger cars in Finland. The automotive
playoff is a key driver of Wetteri's growth, and the company continues to
purposefully implement its growth strategy.
In the spring, Wetteri launched an efficiency program to improve profitability
and save costs. The program includes measures, for example, to reorganize
operations and improve the efficiency of administration. With regard to the
premises, the possibilities for combining functions have been studied and the
use of the premises has been enhanced. The use of labour has been adjusted with
various measures. Annual savings of EUR 4 million are sought. It is clear that
the improvement in profitability resulting from acquisitions will not occur in a
short period of time, but Wetteri is determined to take all the necessary steps
needed to realise the synergy benefits. Thanks to the acquisitions that Wetter
has already implemented, the company has grown into a nationwide automotive
operator with an extensive service network and even stronger multi-brand
expertise. The nationwide presence makes Wetteri an interesting partner for
importers, as evidenced by the addition of new brand representations during the
past year. Multi-brand representation is a major contributor to organic growth.
The forecast for new passenger car registrations in 2024 has been lowered from
about 80,000 to 75,000 passenger cars, which is significantly below the long
-term average. In last few years, the Finnish car fleet has aged, and now there
is a great need for its renewal: emission reduction targets will not be achieved
with the current car fleet, in addition, modern equipment is needed improve to
traffic safety. In the coming years, the car market has accumulated pent-up
demand and strong organic growth potential. Increased availability of new cars
is likely to increase demand. In the automotive sector, demand for new cars is
expected to pick up already during the rest of the year. Moderate growth has
been seen in both the European and domestic automotive markets. The automotive
industry predicts a growth of about 10% in the new car trade next year.
This year, Wetteri has continued to promote its growth strategy, and the focus
has been on heavy equipment. In early 2024 Suur-Savon Auto and Suvanto Trucks Oy
became part of Wetteri. With Suvanto Trucks, Wetteri gained know-how in the
purchase of van trucks as well as procurement channels. In May, Wetteri signed
the first import and resale agreement in its history with Sany earthmoving
machines. In June, the company strengthened its heavy equipment business by
acquiring Lahden Rekkapaja Oy, which specializes in truck superstructures, and
by opening exchange truck sales points in Joensuu and Kuopio. In late summer, we
opened a used car centre in Vantaa in accordance with the Wetteri Premium
concept, which allows us to meet the growing demand for high-quality exchange
cars in the Helsinki Metropolitan Area. Wetteri's position is strong in a market
that is turning to growth.”
Estimated development of the industry and the company in 2024
In 2024, registrations of new passenger cars are estimated to remain at 75,000
in the whole country, compared to an estimate of 80,000 new passenger cars at
the beginning of the year. Economic uncertainty has weighed on demand more than
anticipated in the early part of the year, but the automotive industry predicts
that demand for new passenger cars and heavy equipment will start to grow at the
end of 2024. An increase of about 10% is forecast for 2025. Lower interest rates
and lower inflation may increase demand for new cars in all vehicle categories,
and improved availability of new cars will support demand growth. During the
current year, Wetteri has strengthened its brand representations nationwide,
which is estimated to support organic growth during the rest of the year. The
used car trade is expected to continue to grow. Maintenance operations are
expected to remain strong. Customer orders are expected to grow in the second
half of the year. Wetteri has launched a program to improve the profitability of
operations and achieve savings. The program includes measures with an impact on
personnel, more efficient operating models and more efficient use of premises.
Wetteri's disclosure of financial information in 2024
21 November 2024 Interim report for January-September 2024
Webcast on 28 August 2024 at 14.00
Wetteri will arrange a webcast for shareholders, analysts and the media starting
at 14:00 on 28 August 2024. In the broadcast, Wetteri Plc's CEO and President
Aarne Simula will present January-June financial performance, talk about the
company's strategy progress and open the situation in the automotive market.
Webcast available in Finnish: https://wetteri.videosync.fi/q2-2024/register.
Oulu 28 August 2024
Wetteri Plc
Board of Directors
Further information:
Aarne Simula, CEO, Wetteri Plc
Tel. +358 400 689 613, aarne.simula@wetteri.fi
Panu Kauppinen, CFO, Wetteri Plc
Tel. +358 44 236 3740, panu.kauppinen@wetteri.fi
Wetteri Plc - an entrepreneur-driven growth company in the automotive sector
Wetteri Plc is an entrepreneur-driven growth company in the automotive sector.
The company engages in the retail sales of passenger cars, commercial vehicles
and heavy vehicles, and produces maintenance and repair shop services for
vehicles, from passenger cars to heavy vehicles. Headquartered in Oulu, the
company has 50 locations in Finland. The company employs nearly 1,000 people, of
whom around 70% work in maintenance and repair services. Wetteri promotes
digitalisation in the automotive sector and is an important player on the common
journey towards emission-free motoring.More information:
sijoittajat.wetteri.fi/en/