Pierce; Interim report January - March 2024
Strong improvement
January – March 2024
- Net revenue increased by 3%, totalling SEK 356 (345) million.
- Operating profit (EBIT) was SEK 7 (-21) million. Adjusted operating profit (EBIT) was SEK 7 (-21) million and the adjusted operating margin was 2.0% (-6.2%).
- Cash flow for the period was SEK 57 (-33) million and the cash position at the end of the period was SEK 278 (105) million.
- Earnings per share before and after dilution was SEK 0.32 (-0.14).
| Jan-Mar | Apr 2023- | Jan-Dec | |||
| SEKm (unless stated otherwise) | 2024 | 2023 | Mar 2024 | 2023 | |
| Net revenue | 356 | 345 | 1,548 | 1,537 | |
| Growth (%) | 3% | -18% | -3% | -8% | |
| Growth in local currencies (%) | 2% | -22% | -7% | -13% | |
| Gross profit | 162 | 137 | 632 | 607 | |
| Profit after variable costs | 82 | 54 | 285 | 256 | |
| Overhead costs | -59 | -61 | -265 | -267 | |
| EBITDA | 23 | -7 | -6 | -36 | |
| Operating profit (EBIT) | 7 | -21 | -82 | -111 | |
| Adjusted EBITDA | 23 | -7 | 20 | -11 | |
| Adjusted operating profit (EBIT) | 7 | -21 | -40 | -69 | |
| Items affecting comparability | 0 | 0 | -42 | -42 | |
| Profit/loss for the period | 25 | -11 | -60 | -96 | |
| Gross margin (%) | 45.6% | 39.7% | 40.9% | 39.5% | |
| Profit after variable costs (%) | 23.1% | 15.6% | 18.4% | 16.7% | |
| Adjusted EBITDA (%) | 6.5% | -2.2% | 1.3% | -0.7% | |
| Adjusted operating margin (EBIT) (%) | 2.0% | -6.2% | -2.6% | -4.5% | |
| Cash flow for the period | 57 | -33 | 181 | 91 | |
| Net debt (+) / Net cash (-) | -278 | -105 | -278 | -222 | |
| Earnings per share before dilution (SEK) | 0.32 | -0.14 | -0.75 | -1.21 | |
| Earnings per share after dilution (SEK) | 0.32 | -0.14 | -0.75 | -1.21 | |
Significant events during the reporting period
Series C share issue
In March 2024, Pierce Group AB (publ) carried out a directed issue of 950,000 series C shares to Nordic Issuing AB to ensure the delivery of performance shares to participants in the LTIP 2023/2026 performance-based share program.
Significant events after the end of the reporting period
On 13 May 2024 the Board of Directors revised the medium to long term financial targets regarding the net revenue growth and the adjusted EBIT margin to reflect the prevailing conditions in the market where Pierce operates. The capital structure target and the dividend policy remain unchanged.
CEO comments
We showed a strong improvement in the first quarter, despite it being the seasonally toughest quarter during the year for us. Our adjusted EBIT was SEK 7 million, marking a significant increase from last year's SEK -21 million. This is the result of sales growing with 3 percent and gross margin increasing with almost 6 percent. Following a slow start, demand increased through the quarter. The margin improvement was a result of price increases to customers and reduced in-freight costs as well as changes in obsolescence provisions. The adjusted EBIT includes positive effects from changes in obsolescence provisions with SEK 9 million, which was a result of our increased focus on selling slow moving stock.
Our liquidity remains robust with a solid cash position of SEK 278 million at the end of the first quarter. Following our efforts put into stock management initiatives and changing the operating model, we are happy to see a material improvement in our net working capital, in addition to the effect from our changed assumptions for slow-moving stock. However, we expect somewhat increased stock levels going forward in support of seasonal fluctuations, the need to ensure product availability and to capture future growth opportunities.
We have successfully implemented our new, simplified operating model and fostered an action-oriented and empowered culture. Decisions are now made faster and more aligned with business requirements. The Pierce team is capable, committed and enabled and this has been instrumental in our achievements thus far.
Our transformation journey is however far from over. Our vision is to become the unquestionable leading e-tailer of the European market of gear, accessories, and parts for motorcycle riding. To realise this vision, which we call Pierce 2.0, we have identified seven strategic pillars that guide our efforts.
- To achieve absolute leadership in the Offroad segment and profitable growth in the Onroad segment
- To have the highest customer loyalty in the industry
- To create a simple and powerful go-to-market approach
- To be the best in the industry in pricing and purchasing
- To have market-leading value-for-money own brands
- A modern and scalable tech stack
- A lean, fast and agile organisation
True transformation takes time, which is why 2024 will be the crucial year of catapulting the start of the transformation for us.
In addition to organisational enhancements, we are undertaking a comprehensive overhaul of our technology infrastructure. We are building a composable, cloud-based tech stack comprising best-in-class systems to enhance our operational capabilities.
Through process re-engineering and automation initiatives, we aim to streamline workflows and eliminate non-value adding process steps. Furthermore, we are exploring the integration of AI solutions to further optimise our operations.
Additionally, we are committed to consolidating and building real value-for-money own brands, and we are on track to launch our first loyalty program in the near future.
To reflect the prevailing conditions in the market where Pierce operates, the Board of Directors has reviewed and decided to revise the medium to long term financial targets regarding the net revenue growth and the adjusted operating margin (EBIT).
In conclusion, we remain firmly committed to our vision and strategic objectives.
On a personal note, I am proud and impressed by the energy, knowledge, commitment and drive that I witnessed when we recently gathered the entire company for a joint kick-off of Pierce 2.0.