Interim report January – June 2011

24 August 2011 08:00

1 April – 30 June

• Revenues increased 33 per cent adjusted for currency effects and calculated on comparable workdays. Prior to adjustment, revenues increased 28 per cent to SEK 1,169 M (913).
• EBIT increased 20 per cent to SEK 173 M (144) and the EBIT margin amounted to 15 per cent (16).
• Profit after financial items increased 17 per cent to SEK 167 M (143).
• Profit after tax amounted to SEK 122 M (107).
• Earnings per share before and after dilution amounted to SEK 3.67 (3.29).

1 January – 30 June

• Revenues increased 23 per cent adjusted for currency effects and calculated on comparable workdays. Prior to adjustment, revenues increased 18 per cent to SEK 2,032 M (1,716).
• EBIT increased 15 per cent to SEK 269 M (234) and the EBIT margin amounted to 13 per cent (14).
• Profit after financial items increased 12 per cent to SEK 261 M (234).
• Profit after tax amounted to SEK 191 M (173).
• Earnings per share before and after dilution amounted to SEK 5.75 (5.36).
• Net debt totalled SEK 671 M (108) at the end of the period.

Significant events

• The acquisition of Sørensen og Balchen in Norway impacted net sales in the second quarter by SEK 199 M, as well as SEK 237 M for the six-month period.

EBIT was positively impacted by SEK 27 M for the second quarter, as well as SEK 13 M for the six-month period after acquisition costs and marketing efforts.

Table included in attached PDF

CEO’s comments

Strong quarter for Mekonomen

• EBIT for the second quarter of 2011 rose 20 per cent
• EBIT margin in Denmark at record level
• Successful integration of Sørensen og Balchen
  
  

Mekonomen’s EBIT for the second quarter of 2011 increased 20 per cent to SEK 173 M (144). Revenues increased 28 per cent to SEK 1,169 M (913). EBIT margin amounted to 15 per cent (16). Adjusted for currency effects and calculated on comparable number of workdays during the period, growth was 33 per cent. During the quarter, we focused strongly on further improvements in Denmark and on the integration of Sørensen og Balchen.

EBIT in Denmark for the second quarter rose to SEK 26 M (20) and the EBIT margin increased to 13 per cent (10). The EBIT margin for the first six months of the year nearly doubled to 11 per cent (6). The underlying net sales increased 3 per cent. Net sales in Denmark declined during the second quarter to SEK 195 M (204) due to negative currency effects. During the quarter, we launched the BilXtra store chain in Denmark. In a first phase, ten stores from a Danish competing chain were converted to BilXtra. As a result of this initiative we now have 51 stores in Denmark. The BilXtra chain in Denmark is operated as a franchise and the objective is to expand with more stores.

The operations in Norway currently consist both of our original operation in Norway (Mekonomen Norway), and of Sørensen og Balchen. Mekonomen Norway reported an EBIT margin of 18 per cent (20). The underlying net sales in Mekonomen Norway increased 4 per cent during the quarter. Net sales declined 2 per cent, primarily due to currency effects and a weak consumer market. EBIT for Sørensen og Balchen amounted to SEK 37 M during the quarter. The EBIT margin was 18 per cent and the integration work was successful.

The EBIT margin in Sweden amounted to 18 per cent (19). Growth was 4 per cent and the underlying net sales rose 5 per cent. In April, a Mega facility was opened at Gärdet in Stockholm, which was well-received by our customers. M by Mekonomen was awarded Retail Store of the Year 2011, when Market magazine organised the Great Retail Day in May. Women and families with children are key target groups for Mekonomen, which makes the award particularly significant. The breakthrough of Mekonomen into the marine market has been developed according to plan in spite of the general downturn of the marine market by 30-40 per cent. Following the end of the period, Mekonomen launched a price guarantee on original service in Sweden, which will provide additional security for our customers. If a lower price is offered by an authorised branded workshop, Mekonomen will match the price.

Costs for Mekonomen’s marketing efforts, with investments in new Mega units, the establishment in Finland, the venture with spare parts for snowmobiles and marine, proprietary workshops, as well as the integration of Sørensen og Balchen, amounted to a total of SEK 10 M during the second quarter. Costs for these long-term ventures will also impact the third quarter by approximately SEK 10 M, and also the fourth quarter by SEK 10 M.

Similar to the beginning of the year, the second quarter was characterised by weak market growth, particularly pertaining to consumer and accessories sales. I see no clear signs of a recovery in the market for accessories. Sale of new cars has weakened and the sales in the retail market have declined. The positive impact for Mekonomen is that when the economy weakens, consumers and companies review their expenses, which increases Mekonomen’s attraction.

During the second quarter of the year, Mekonomen achieved its highest EBIT, while continuing to invest with undiminished capacity. In addition, Mekonomen workshops have shown a strong development during the period by underlying net sales of 15 per cent.

In conclusion, it is particularly gratifying that we raised the EBIT margin in Denmark to a favourable level and that the integration work with Sørensen og Balchen to date has exceeded expectations. We are prepared to face a weaker economy and Mekonomen’s concept has an added advantage when customers prioritise their own wallets. I see the same signs now as in the end of 2007 and the beginning of 2008 which means that we can take market shares. Mekonomen will continue to be the winner in the market and I am confidently looking forward to the future.

Håkan Lundstedt, President and CEO

For further information, please contact:

Håkan Lundstedt, President and CEO Mekonomen AB, Tel: +46 (0)8-464 00 00
Gunilla Spongh, CFO Mekonomen AB, Tel: +46 (0)8-464 00 00