KH Group Co., Ltd.
Stock Exchange Announcement May 7, 2024 8:00 AM EEST
KH Group Plc Business Review January-March 2024: Focus on business profitability
This is a summary of our business review from January to March 2024. The complete semi-annual report is attached to this release and is also available from the company's website at: www.khgroup.com.
KH Group, forecast for January to March 2024
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Net sales amounted to €84.2 million (€120 million).
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Operating profit was -300,000 euros.
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KH-Koneet's sales and operating income decreased significantly compared to the same period last year.
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Indoor Group sales decreased significantly. Operating income, including a capital gain of €3.7 million from the Estonian property sale transaction, was higher than in the comparative period.
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HTJ's sales were at the same level as the same period last year, but operating income decreased.
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NRG's sales and operating income increased significantly compared to the same period last year.
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The Group's cash and cash equivalents amounted to €8.1 million at the end of the period under review.
KH Group, IFRS for January-March 2024
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Net sales were €84.2 million(-). For the comparison period, only the sales of the parent company are listed.
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Operating profit was -7 million euros (-2.8 million euros).
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Net income for the period was -3.2 million euros (-2.4 million euros).
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Earnings per share (pre-diluted and diluted) amounted to EUR -0.05 (-0.04).
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Net assets per share at the end of the review period amounted to €1.30 (€1.42).
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The rolling 12-month return on equity was -19.2% (-9.5%).
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Gearing at the end of the review period was 225.3% (10.5%).
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Gearing excluding lease debt was 141.6% (10.4%).
CEO Lauri Beijalainen:
“Our consolidated pro forma results show a significant decline in sales and operating profit compared to the same period last year. Due to extremely difficult market conditions, uncertainty, a political strike that disrupted the Finnish labor market and business, and the Indore Group ERP system implementation had a negative impact on consolidated net sales.
KH-Koneet's net sales decreased significantly in both countries of operation. As a result, operating income was also negative. In terms of net sales and operating profits, the Swedish operations reached approximately the same level as the Finnish operations.
Indoor Group's first quarter was weak. The Asco and Sotka chains lost net sales, resulting in lower profits. According to statistics from the Finnish Specialty Goods Trade Union ETU, the net sales of the furniture market in January 2024 decreased by 9% compared to the previous year, and the development of Indoor itself continued in the same direction throughout the quarter. Both chains will continue to actively implement measures aimed at improving operational efficiency and profitability. These measures include increasing visitor numbers and sales, improving conversion rates, strengthening profit margins, and maintaining prudent cost control. The new ERP system was implemented on March 1, 2024, and had a negative impact on net sales and operating income. By the end of March, Indore Group had ended its operations in Estonia. As part of this, the company successfully sold a property in Estonia, generating a capital gain of €3.7 million. For a long time, Estonia's business operated in the red.
Amid the market slump, sales remained at the same level as the previous year, but operating income decreased. The moderate net sales and operating profits of this business area are explained by the growing project portfolio and the acquisitions made in recent years.
Nordic Rescue Group's estimated net sales and operating income improved significantly compared to the same period last year. Demand for rescue vehicles in Finland and Sweden remains at a good level, with production capacity for 2024 already sold out.
During the fiscal year-end period, we will continue our efforts to develop our business fields, with most of our efforts focused on securing sales and associated operating profits and operational efficiency. We will continue to move forward with the KH Group's strategic changes as planned.
On April 30, 2024, the company updated its previous guidance for 2024 net sales and operating income. This is due to general economic uncertainty, very challenging market conditions, and more cautious consumer purchasing behavior.
With the current group structure, KH Group expects to have net sales of 400-420 million euros and operating profit of 12-16 million euros in 2024, including operating profits from Indore Group's Estonian real estate sale transaction. I expect it to reach. ”
Events after the review period
After the company's annual general meeting held on April 24, 2024, the parties to the KH-Koneet shareholder agreement notified the parent company that they were exercising their stock acquisition rights. According to the agreement, minority shareholders will have the right to sell 50% of their current holdings in KH-Koneet Group Oy during 2024. The redemption of the shares held by minority shareholders is expected to be completed by June 2024 and will amount to approximately EUR 2.9 million. With this redemption, the parent company's ownership in KH-Koneet Group Oy will increase to 95.1%. The remaining 4.9% minority interest may be redeemed in 2025 as defined in the shareholders' agreement and had a fair value of €3.4 million based on financial statement figures at December 31, 2023.
The parent company's loan agreement was renewed in April. The company has signed a new loan of 5.1 million euros. Of the loan proceeds, 2.9 million euros will be used for the redemption of shares in KH-Koneet Group Oy and 500,000 euros will be used for further investment in Nordic Rescue Group Oy.
In early May, the new ERP system was successfully implemented at Indore Group's Asco stores.
Future prospects
The medium-term goal of KH Group is to become an industrial group centered on the KH-Koneet business and divest other business areas in line with its previous strategy. At the same time, we will continue to actively develop other business fields. Exit plans and exit opportunities in other business areas continue to be evaluated.
In its 2023 financial statement release published on March 21, 2024, the company estimated fiscal year 2024 net sales of 400-420 million euros and operating income of 14-16 million euros. . Guidance did not include operating profit of approximately 3.7 euros. Indore Group has raised $1 million through the sale of real estate in Estonia, the company announced at noon on March 21, 2024.
On April 30, 2024, the company updated its previous guidance for 2024 net sales and operating income. With the current group structure, KH Group expects net sales of 400-420 million euros and operating profit of 12-16 million euros in 2024. includes operating income from the sale of real estate in Estonia.
KH Group Co., Ltd.
lauri veyerainen
CEO
Further information:
CEO Lauri Vejjalainen, Phone: +358 46 876 1648
distribution:
Nasdaq Helsinki K.K.
major media
www.khgroup.com
KH Group Plc is a conglomerate with four business areas: KH-Koneet, Indoor Group, Nordic Rescue Group and HTJ. All of our business areas are major players in the fields of B2B products and services and consumer trade. Our objective is to focus on his KH-Koneet business, a supplier of earthmoving machinery. Other business areas will be further developed and subsequently sold in line with the Group's investment strategy. KH Group's shares are listed on Nasdaq Helsinki.
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