Bhg Group Ab · OMXSTO:BHG
Bhg Group Ab — Q3 2022 Earnings Presentation
29 slides from Bhg Group Ab's earnings presentation, Oct 27, 2022
Slide 1: 2022/Q3 New organisation and action plan to strengthen profitability and cash flow
2022/Q3 New organisation and action plan to strengthen profitability and cash flow BHG gained market share, while inventory declined and cash flow was improved compared with the previous year. Profitability challenges, primarily as a result of price pressure in the market. 27/10/2022 1
Slide 2: Today's presenters
Today’s presenters Gustaf Öhrn Acting President and CEO Jesper Flemme CFO 27/10/2022 2
Slide 3: Agenda
Agenda • Q3 2022 highlights • Strategic ambition and structure • Financial update • Conclusions • Q&A 27/10/2022 3
Slide 4: Agenda
Agenda • Q3 2022 highlights • Strategic ambition and structure • Financial update • Conclusions • Q&A 27/10/2022 4
Slide 5: Select financial highlights – Q3 2022
Select financial highlights – Q3 2022 Sales Earnings Cash flow Cash flow from operating Net Sales (SEK) Adj. EBIT(SEK) activities (SEK) 3,107m 48m -133m Total: 1.5% Pro-forma organic: -6.8% Organic: -5.3% 1.5% Growth Adj. EBIT margin BHG gained market share, while inventory declined and cash flow wa
Slide 6: Difficult market situation – contracting market last quarters
Difficult market situation – contracting market last 5 quarters Organic growth, Y-on-Y development 42% 37% Contracting market 36% 32% 22% 20% 15% 14% 8% 9% 6% 2% 1% -5% -8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 Massive
Slide 7: Several actions taken to respond to challenging market coming 12-18 months
Several actions taken to respond to challenging market coming 12-18 months Structural changes • Three new segments from 1 January 2023 / revised strategy • Tailor offering to customer groups, clarify synergies & reduce complexity Cost • Cost reduction target of SEK 150-200m initiatives • Primarily o
Slide 8: Sources of growth in a tough market – the BHG advantage
Sources of growth in a tough market – the BHG advantage • International expansion, including external marketplaces • Internal marketplace for intercompany sales, facilitating assortment expansion • Opportunities when competitors go out of business or leave product categories • When the market recoup
Slide 9: Agenda
Agenda • Q3 2022 highlights • Strategic ambition and structure • Financial update • Conclusions • Q&A 27/10/2022 9
Slide 10: Strategic starting point – Project Olympia
Strategic starting point – Project Olympia Reduce complexity across Find value via revenue Find value via cost decentralized BUs with synergies (e.g., synergies (e.g., structural common operating intercompany sales, cross- changes, consolidating procedures selling) warehouses, tech) 27/10/2022 10
Slide 11: Three new segments – platforms for meeting customer needs and increase synergy realisation
Three new segments – platforms for meeting customer needs and increase synergy realisation Home Improvement Value Home Premium Living • Comprehensive offering • For price-conscious • Offers customers for Nordic DIY customers European customers who interested in home with a broad range of well- want
Slide 12: Group structure and focus
Group structure and focus Set overall strategy and targets • Critical company-wide corporate functions at group level, to Group offer support to BUs while fulfilling compliance obligations BU strategic direction with operational function BU • BU controls assortment, procurement & warehousing to harv
Slide 13: Agenda
Agenda • Q3 2022 highlights • Strategic ambition and structure • Financial update • Conclusions • Q&A 27/10/2022 13
Slide 14: Strong sales given the market situation – weak profitability
Strong sales given the market situation – weak profitability We further advanced our position in the quarter, despite a EBIT margin impacted by price pressure in the market weak overall market due to weak demand Net sales (SEKm) Adjusted EBIT (SEK) Adjusted EBIT margin 1.5% Pro-forma organic growth:
Slide 15: EBIT margin bridge 2021 Q3 – 2022 Q3
EBIT margin bridge 2021 Q3 2022 Q3 EBIT margin Q3 '21 5,4% • Product margin (i.e. before deduction of Fulfilment costs) amounted to 37.3% - 1.0p.p. lower than same FX effect period last year Product margin • Negatively impacted by price pressure in the market as a result of weak demand and currenc
Slide 16: Forceful actions taken to reduce inventory and improve cash flow – liquidity remains healthy
Forceful actions taken to reduce inventory and improve cash flow – liquidity remains healthy Negative development in working capital is a result of Liquidity mainly driven by cash flow from investing and BHG’s seasonal profile financing activities Jul-Sep 2022 (SEKm) SEKm Share issue and amortisatio
Slide 17: We feel confident in our plan to get back to the capital structure target
We feel confident in our plan to get back to the capital structure target Overview of financial position • Net debt / EBITDA of 3.4x, outside the range of SEKm 30 Sep 2022 the Group’s medium-term capital structure target Interest bearing liabilities 5,087.9 • Previously announced measures to improve
Slide 18: Agenda
Agenda • Q3 2022 highlights • Strategic ambition and structure • Financial update • Conclusions • Q&A 27/10/2022 18
Slide 19: Q3 Summary
Q3 Summary We gained market share in a We expect the market to remain challenging for the next 12-18 months tough market Prioritization 1) cash flow, 2) profitability, 3) growth New organization and Three new segments from 1 January 2023 structural changes Tailor offering to customer groups,
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Slide 21: Appendix
Appendix 27/10/2022 21
Slide 22: Condensed consolidated financial information
Condensed consolidated financial information Jul-Sep Jan-Sep Jan-Dec SEKm (if not otherwise stated) 2022 2021 ∆% 2022 2021 ∆% 2021 Net sales 3,106.7 3,060.5 1.5 10,125.7 9,178.8 10.3 12,666.0 Gross profit 371.5 788.2 -52.9 2,188.8 2,429.2 -9.9 3,357.1 Gross margin (%) 12.0 25.8 -13.8 p.p. 21.6 26.5
Slide 23: DIY segment
DIY segment Jul-Sep Jan-Sep Jan-Dec SEKm (if not otherwise stated) 2022 2021 ∆% 2022 2021 ∆% 2021 Net sales 1,809.7 1,862.0 -2.8 5,779.3 5,436.5 6.3 7,259.6 Gross profit 186.1 433.6 -57.1 1,103.2 1,344.5 -17.9 1,764.3 Gross margin (%) 10.3 23.3 -13.0 p.p. 19.1 24.7 -5.6 p.p. 24.3 Adjusted gross prof
Slide 24: Home Furnishing segment
Home Furnishing segment Jul-Sep Jan-Sep Jan-Dec SEKm (if not otherwise stated) 2022 2021 ∆% 2022 2021 ∆% 2021 Net sales 1,303.6 1,205.9 8.1 4,377.3 3,769.6 16.1 5,442.8 Gross profit 186.1 354.9 -47.6 1,087.3 1,089.3 -0.2 1,597.7 Gross margin (%) 14.3 29.4 -15.2 p.p. 24.8 28.9 -4.1 p.p. 29.4 Adjusted
Slide 25: P&L
P&L Jul-Sep Jan-Sep Jan-Dec SEKm 2022 2021 2022 2021 2021 Net sales 3,106.7 3,060.5 10,125.7 9,178.8 12,666.0 Other operating income 2.6 0.7 17.1 1.3 15.6 Total net sales 3,109.3 3,061.2 10,142.8 9,180.2 12,681.6 Cost of goods sold -2,735.2 -2,272.3 -7,937.0 -6,749.7 -9,308.9 Personnel costs -264.6
Slide 26: Balance sheet
Balance sheet 30 Sep 31 dec SEKm 2022 2021 2021 Non-current assets Goodwill 6,460.7 6,403.3 6,318.7 Other intangible fixed assets 2,903.0 2,901.6 2,893.3 Total intangible fixed assets 9,363.7 9,304.9 9,212.0 Buildings and land 21.8 31.8 21.9 Leased fixed assets 893.8 754.4 893.3 Tangible fixed asset
Slide 27: Consolidated statement of cash flows
Consolidated statement of cash flows Jul-Sep Jan-Sep Jan-Dec SEKm 2022 2021 2022 2021 2021 EBITDA -221.2 221.9 255.5 809.3 1,081.2 Adjustments for items not included in cash 382.3 0.6 379.6 17.8 2.4 flow Income tax paid -27.9 -24.0 -195.3 -79.5 -105.6 Cash flow from operating activities before 133.3
Slide 28: Reconciliation of non-IFRS metrics
Reconciliation of non-IFRS metrics Jul-Sep Jan-Sep Jan-Dec SEKm 2022 2021 2022 2021 2021 Operating income -361.5 123.0 -140.1 553.1 710.6 Donation UNHCR - - 1.5 - - Acquisition-related costs 1.0 19.6 12.9 19.6 23.4 Warehouse consolidation - - 2.1 - - Strategy work 3.1 - 12.5 - - Inventory impairment
Slide 29: WE MAKE LIVING EASY
WE MAKE LIVING EASY