Swedencare AB (publ) HALF YEAR REPORT April 1st – June 30th 2023
Sales record and 9% organic growth
Summary of the period
Numbers in parentheses refers to outcomes during the corresponding period of the previous year.
Second quarter: April 1st – June 30th, 2023
Net revenue amounted to 572.1 MSEK (470.9 MSEK), corresponding to an increase of 21%
Organic, currency-adjusted growth amounted to 9% (4%)
Operational EBITDA amounted to 119.5 MSEK (123.2 MSEK), corresponding to a decrease of 3% and an operational EBITDA margin of 20.9% (26.2%)
Operational EBITA amounted to 99.9 MSEK (107.5 MSEK), corresponding to a decrease of 7% and an operational EBITA-margin of 17.5% (22.8%)
Operational EBIT amounted to 98.5 MSEK (107.3 MSEK), corresponding to a decrease of 8% and an operational EBIT-margin of 17.2% (22.8%)
Profit after tax amounted to 16.3 MSEK (60.2) MSEK)
Earnings per share calculated on 158 731 900 shares (158 111 805 shares) amounted to 0,10 SEK (0,38 SEK)
Cash flow from operating activities amounted to 81.5 MSEK (15.7 MSEK). 50 MSEK has been amortized on the debts to credit institutions
As of June 30th 2023 cash amounted to 197.6 MSEK (235.5 MSEK)
First half year: January 1st – June 30th, 2023
Net revenue amounted to 1095.3 MSEK (848.6 MSEK), corresponding to an increase of 29%
Organic, currency-adjusted growth amounted to 10% (6%)
Operational EBITDA amounted to 226.8 MSEK (217.9 MSEK), corresponding to an increase of 4% and an operational EBITDA-margin of 20.7% (25.7%)
Operational EBITA amounted to 189.3 MSEK (189.6 MSEK), and an operational EBITA-margin of 17.3% (22.3%)
Operational EBIT amounted to 185,9 MSEK (189.1 MSEK), corresponding to a decrease of 2% and an operational EBIT-margin of 17,0% (22.3%)
Profit after tax amounted to 33.5 MSEK (74.9 MSEK)
Earnings per share calculated on 158 731 900 shares (152 325 798 shares) 0.21 SEK (0.49 SEK)
Cash flow from operating activities amounted to 181.9 MSEK (65.9 MSEK)
Exchange gains amounted to 1.0 MSEK (7.2 MSEK)
Significant events during the second quarter
Symrise has published a mandatory tender offer to the shareholders of Swedencare after having acquired an additional 2,300 shares in Swedencare AB (publ) and that Symrise´s holding has reached the equivalent of 30 percent of the number of shares and votes in Swedencare AB. The Board of Directors, excluding the representatives from Symrise, recommends the shareholders of Swedencare not to accept the mandatory cash offer made by Symrise AG.
MWI Animal Health® has acquired the exclusive rights to market and sell the Stratford Care Brand in the US.
Swedencare has made an addition to the group management team with Laszlo Varga as Swedencare's European Commercial Officer who starts August 15th.
Significant events after the second quarter
There are no significant events after the end of the second quarter to comment on.
Words from the CEO
The second quarter's net revenue of 572.1 MSEK represents a 21% increase compared to Q2 2022, marking our strongest quarter ever. At the same time, our operational EBITDA is 119.5 MSEK, corresponding to a margin of 20.9%. Our strong cash flow during the quarter enabled a total of 105 MSEK in paid dividends, payment for an acquisition, and amortizations.
Our organic growth of 9% is stronger than the market, confirming that our strategy of working with long-term partnerships is generating sales. The inventory clearances that significantly affected us in 2022 had during Q2 2023 an impact on some companies within the group but are now mostly over, which is why we expect an even stronger organic growth in the second half of the year. The last month of the quarter, witnessed just like the previous one, our highest sales ever. Regarding our different sales channels, Online and Pet Retail are stronger, while the Veterinary channel remains somewhat slow. Our new strategic veterinary collaborations, Patterson, which we announced in March, and the new agreement with MWI communicated in June, have required training and preparatory work during the past six months and are expected to result in increased sales from this quarter onwards when their respective sales force promotes our new co-operation to over 20 000 veterinary clinics.
Strong growth with a slightly lower margin
Our margin was negatively affected during the quarter due to the restructuring in Vetio South, which cost more and took longer than expected. Most of the work is now completed and it will show in the profitability going forward. Also, Vetio North delivered lower profitability than anticipated due to the project mix and project delays. However, during the quarter, we signed several new customers, which strengthens the base for continued growth with improved profitability. Vetio North now has customers from five continents, demonstrating both the global demand in the development of pet pharma and our position as experts in developing high-quality products. It also highlights the strong customer interest in our patented Soft chew process. The margin has also been negatively impacted by our strong growth in the Online channel, where the major platforms have considerably raised their sales fees. I expect the measures we have taken during the quarter, along with others planned throughout the year, will lead to a margin improvement in the future.
Acquire interesting concept
During the quarter, we acquired an exciting and newly established company focused on a membership concept for veterinary clinics in the USA, Vet Buyers Direct. The concept offers member clinics favorable prices and access to high-quality products for a monthly subscription fee.
NaturVet® and ProDen PlaqueOff®
Our largest brand, NaturVet®, had a record quarter with the successful launch of its new product line "Scoopables." The launch is deemed the best ever, and some of the largest chains have yet to introduce the line. ProDen PlaqueOff® continues its strong development, growing by 45% during the quarter compared to the same period last year. The strongest growth is seen online in both the UK and the USA, but our flagship product also shows good growth in other channels worldwide.
Mandatory tender offer
During the quarter, Symrise presented a mandatory tender offer since they exceeded a 30% ownership stake, offering 37.50 SEK per share. The acceptance period has now expired, and I, along with many other major shareholders, have not accepted the offer because we are convinced that we will build significantly higher shareholder value in the coming years. I look forward to continuing the growth journey we have embarked on together with Symrise and all of you.
During the quarter, we conducted a global employee survey for the first time, the results of which we will work with throughout the year in our various companies. At group level, we are clearly above average in employee satisfaction and willingness to recommend our workplace. This result is something I both hoped for and expected as I often travel and visit our group companies, meeting engaged and committed colleagues. After the summer, Laszlo Varga, our new CCO Europe, will join us as an important addition to our group management team, crucial for capitalizing on all the business opportunities we see ahead of us.
Thank you for this time, and I hope you all have a wonderful summer!
Håkan Lagerberg, CEO
Malmö July 27th, 2023