Wetteri Oyj: Wetteri Plc's interim report for 1 January to 30 September 2024: 30% growth in net sales, historically poor market conditions weakened operational performance
Wetteri Plc Interim report 22 November 2024 at 9.30
Summary of the review period 1 July to 30 September 2024
- The Group's revenue was EUR 119.6 million (EUR 110.3 million), with an increase of 8%
- Adjusted EBITDA was EUR 6.2 million (EUR 6.9 million)
- The adjusted operating profit was EUR 2.1 million (EUR 3.3 million)
- The operating profit was EUR 1.2 million (EUR 2.1 million)
- The revenue of the Passenger Cars segment decreased by EUR 1.1 million (-2%) year-on-year
- The revenue of the Heavy Equipment segment increased by EUR 7.5 million (50%) year-on-year
- The revenue of the Maintenance Services segment increased by EUR 3.2 million (16%) year-on-year
Summary of the review period 1 January to 30 September 2024
- The Group's revenue was EUR 395.3 million (EUR 304.6 million), with an increase of 30%, which was mainly generated through strategic acquisitions
- Adjusted EBITDA was EUR 17.0 million (EUR 17.6 million)
- The adjusted operating profit was EUR 5.4 million (EUR 8.2 million)
- The operating profit was EUR 1.7 million (EUR 4.3 million)
- The revenue of the Passenger Cars segment increased by EUR 63.6 million (33%) year-on-year; invoiced sales of used cars grew by 72%
- The revenue of the Heavy Equipment segment increased by EUR 8.7 million (17%) year-on-year
- The revenue of the Maintenance Services segment increased by EUR 19.0 million (35%) 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
Updated financial guidance for 2024 (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 Jul to 30 Sep 2024 | 1 Jul to 30 Sep 20231) | Change | 1 Jan to 30 Sep 2024 | 1 Jan to 30 Sep 20231) | Change | 1 Jan to 31 Dec 20231) |
| Revenue | 119,649 | 110,308 | 8% | 395,309 | 304,562 | 30% | 432,502 |
| EBITDA | 5,818 | 6,329 | -8% | 14,968 | 15,775 | -5% | 20,061 |
| EBITDA, % of revenue | 5% | 6% | 4% | 5% | 5% | ||
| Adjusted EBITDA 2) | 6,211 | 6,852 | -9% | 16,979 | 17,563 | -3% | 23,970 |
| Adjusted EBITDA, % of revenue | 5% | 6% | 4% | 6% | 6% | ||
| Operating profit (loss) (EBIT) | 1,186 | 2,127 | -44% | 1,655 | 4,279 | -61% | 4,713 |
| Operating profit (loss), % of revenue | 1% | 2% | 0% | 1% | 1% | ||
| Adjusted operating profit 2) | 2,138 | 3,300 | -35% | 5,365 | 8,192 | -35% | 11,225 |
| Adjusted operating profit, % of revenue | 2% | 3% | 1% | 3% | 3% | ||
| Profit (loss) before tax | -1,954 | -132 | - | -7,324 | -1,329 | - | -4,339 |
| Profit (loss) before tax, % of revenue | -2% | 0% | -2% | 0% | -1% | ||
| Profit (loss) for the period from continuing operations | -982 | -153 | - | -5,962 | -1,319 | - | -4,336 |
| Profit (loss) for the period from continuing operation, % of revenue | -1% | 0% | -2% | 0% | -1% | ||
| Profit (loss) for the period | -882 | -401 | - | -3,266 | -1,087 | - | -4,049 |
| Profit (loss) for the period, % of revenue | -1% | 0% | -1% | 0% | -1% | ||
| Earnings per share from continuing operations, basic (EUR) | -0.01 | 0.00 | -0.04 | -0.01 | -0.03 | ||
| Earnings per share from continuing operations, diluted (EUR) | -0.01 | 0.00 | -0.04 | -0.01 | -0.03 | ||
| Earnings per share, basic (EUR) | -0.01 | 0.00 | -0.02 | -0.01 | -0.03 | ||
| Earnings per share, diluted (EUR) | -0.01 | 0.00 | -0.02 | -0.01 | -0.03 | ||
| Return on equity (ROE), % | -10% | -5% | -23% | -5% | -13% | ||
| Return on investment (ROI), % | -11% | -6% | -13% | -6% | -9% | ||
| Equity ratio, % | 17% | 15% | 17% | 15% | 16% | ||
| Liquidity, % | 80% | 92% | 80% | 92% | 83% | ||
| Average number of personnel during the financial year | 1,011 | 992 | 1,030 | 899 | 926 | ||
| Invoiced sales of new passenger cars (pcs) | 696 | 929 | 2,690 | 2,474 | 3,322 | ||
| Invoiced sales of new commercial trucks (pcs) | 39 | 36 | 111 | 138 | 181 | ||
| Invoiced sales of used passenger cars (pcs) | 2,282 | 1,527 | 7,247 | 4,211 | 5,764 | ||
| Invoiced sales of used commercial trucks (pcs) | 108 | 20 | 284 | 85 | 114 | ||
| Orders: new passenger cars (pcs) | 784 | 746 | 2,673 | 2,163 | 2,862 | ||
| Orders: new commercial trucks (pcs) | 40 | 21 | 131 | 110 | 127 | ||
| Passenger cars: order backlog at the end of the period | 36,337 | 64,665 | 36,337 | 64,665 | 57,343 | ||
| Commercial trucks: order backlog at the end of the period | 17,154 | 18,750 | 17,154 | 18,750 | 13,655 | ||
| Passenger car repair shop: hours sold | 85,153 | 84,129 | 261,545 | 235,654 | 319,562 | ||
| Commercial truck repair shop: hours sold | 25,572 | 24,553 | 82,014 | 80,464 | 110,759 |
1) The training business operations, which were sold in the first half of 2024, are presented as discontinued operations in the interim report. The income statement items related to the training business operations are presented in the consolidated income statement for the review period as part of the profit (loss) of the Group's discontinued operations, separately from the income statement items related to the Group's continuing operations. The presentation of the income statement for the comparison period and the calculation of the key figures derived from the items in the income statement for the comparison period have also been adjusted accordingly. The adjusted comparison period information is unaudited.
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.
Aarne Simula, CEO:
"The situation in the car market continued to be historically weak between January and September, which affected Wetteri's performance during the review period. The Group's revenue increased by 30% from the previous year as a result of corporate transactions, amounting to EUR 395.3 million. Adjusted EBITDA fell slightly short of last year's level and was EUR 17.0 million. The adjusted operating profit decreased year-on-year, amounting to EUR 5.4 million. The difficult market situation, general economic uncertainty and weak consumer confidence had a negative impact on Wetteri's performance during the review period. Wetteri updated its financial guidance for 2024 on 23 August 2024 because of the weaker-than-expected market situation in the new passenger car trade and postponement of planned new acquisitions.
In January-September, Wetteri's revenue increased by 33% in the Passenger Cars segment and amounted to EUR 258,6 million. The invoiced sales of used cars increased by 72% in terms of the number of cars. Growth is made possible by Wetteri's self-sufficiency in used cars: For every new car sold, Wetteri receives a used car, and its extensive range of used cars meets the market demand. The order backlog for new passenger cars at the end of the review period stood at EUR 36.3 million. In January-September, the Heavy Equipment segment's revenue increased slightly year-on-year and was EUR 61.2 million. The invoiced sales of new commercial trucks totalled 111 units, and the invoiced sales of used commercial trucks amounted to 284 units. The Maintenance Services segment's revenue increased by 35% in January-September, amounting to EUR 72.8 million.
On November 21, we announced that Wetteri will sell its subsidiary, Wetteri Power Oy, which operates in the sales and maintenance of Volvo and Renault-branded trucks. The purchase price of the transaction is approx. EUR 32.5 million and the implementation of the transaction is estimated to take place around years end. This transaction is very positive for Wetteri's shareholders. The acquisition significantly strengthens Wetteri's balance sheet as well as its ability to execute strategic acquisitions and thus provides excellent support for the company's growth strategy. Profitable growth also opens opportunities to pay dividends in the future.
The automotive industry is going through a historical transformation and the operations will be focused on a few big players. Our goal is to grow into Finland's largest full-service multi-brand car company, and this transaction takes us towards this goal. We see that now is the right time to invest in the growth of the passenger car business. We will continue to develop the heavy equipment business, for which we have excellent prerequisites thanks to this transaction. We have a strong position in the used truck trade and expanded our business by starting to import earthmoving machinery. Truck maintenance will continue with five brands.
The efficiency improvement measures launched in spring 2024 and the review of the cost structure will continue also during the coming year. Annual savings of EUR 5 million are sought. It is clear that the improvement in profitability resulting from the acquisitions will not occur in a short time, but Wetteri will continue to systematically take measures to realize synergy benefits. We are also developing our other activities, and we have recently launched a new service product, Wetteri-Turva, for which we expect strong demand. Wetteri-Turva is an additional security purchased for a replacement car, which covers possible repair or maintenance costs even in unexpected situations.
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 the acquisition Suvanto Trucks, Wetteri gained expertise in procurement channels and the purchase of used commercial trucks. In May, Wetteri signed the first import and distribution agreement in its history on Sany earth-moving machinery. In June, the company strengthened its heavy equipment business by acquiring Lahden Rekkapaja, which specialises in truck superstructures, and opened used commercial truck dealerships in Joensuu and Kuopio. In the late spring of 2024, we opened a major used car dealership in Vantaa in line with the Wetteri Premium concept. This will enable us to respond to the growing demand for high-quality used cars in the Helsinki metropolitan area. Wetteri has a strong position in a market that is turning to growth. In the late summer of 2024, we strengthened our position as a Kia and Mitsubishi dealer by expanding our cooperation with Astara Finland, a brand importer. From the beginning of October, the Rinta-Jouppi car dealership's Kia and Mitsubishi businesses were transferred to Wetteri in Oulu, Rovaniemi and Pori through a business acquisition. Wetteri will continue to implement its growth strategy even more strongly in the coming year."
Estimate of future developments in the industry and the company
The total number of first registrations of new cars in Finland is expected to be around 75,000 in 2024, while the forecast in early 2024 was around 80,000 new passenger cars, in January-September in total of 55,507 new cars were registered. Economic uncertainty has weighed on demand more than expected, but there have been signs of an increase in demand for new cars towards the end of the year. An increase of around 10% is forecast for 2025. Lower interest and inflation rates may increase the demand for new cars as consumer confidence grows. The increased availability of new cars will contribute to the growth of demand.
During the current year, Wetteri has strengthened its brand representation nationwide, which is expected to support organic growth. The used car trade is expected to continue to grow. Maintenance operations are expected to continue at a strong level. Wetteri has started a programme to improve the profitability of its operations and reduce costs. The programme includes measures with an impact on personnel, as well as more efficient operating models and more efficient use of facilities.
Wetteri's disclosure of financial information in 2025
Wetteri's financial information schedule for 2025 will be published in December.
Webcast on 22 November 2024 at 11.30
Wetteri will hold a webcast for shareholders, analysts and the media on 22 November 2024 at 11.30. During the webcast, Wetteri Plc's CEO, Aarne Simula, will present the result for January-September, provide information about the progress of the company's strategy and discuss the market situation in the automotive sector. The webcast can be followed at https://wetteri.videosync.fi/q3-2024
Oulu 22 November 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