Company announcement no. 13 2019/20 – INSIDE INFORMATION
Allerød, 27 February 2020

Interim report – 9M 2019/20

(1 April – 31 December 2019)

Earnings growth in Matas on the back of strong Christmas season quarter with higher sales, more customers and a new online sales record. Guidance upgraded.

Matas A/S generated revenue of DKK 1,173 million in Q3 2019/20 (1 October 2019 - 31 December 2019), up 7.4% on the DKK 1,093 million reported for Q3 2018/19. Earnings were DKK 218.9 million before IFRS 16 (EBITDA before exceptional items) and DKK 263.9 million after IFRS 16, a year-on-year increase of 6.2%.

Underlying like-for-like sales, i.e. sales in stores operated in both Q3 2019/20 and Q3 2018/19, were up by 4.7% in Q3 2019/20.

Gregers Wedell-Wedellsborg, CEO of Matas A/S: “The third quarter was an important milestone for Matas. The interaction between the online channel and our physical stores was impeccable, and with a higher number of customers generally spending more money, we recorded historically high revenue and solid earnings growth”.

The Group’s digital transformation continued at full speed with sales on matas.dk surging by a record-high 84%. Factoring in revenue from Firtal, 16.2% of sales were completed online, compared with 8.5% in the year-earlier period. Matas still aims to be the customer’s first choice, online as well as in retail stores.

Revenue guidance for financial year 2019/20 has been upgraded to overall revenue growth of above 5% (previously around 5%) and underlying revenue growth of above 1.5% (previously around 1.5%). Guidance for the EBITDA margin before exceptional items is specified at 14-14.5% before IFRS 16 (previously 14-15%).

“We’re pleased to note that the strong momentum witnessed in the Christmas season quarter has continued into 2020 and that we're therefore able to upgrade our revenue guidance for financial year 2019/20. We will continue to invest in renewing Matas and have also specified our earnings guidance”, said Gregers Wedell-Wedellsborg.

The interim report for Q3 2019/20 is presented in accordance with IFRS 16. However, key financials are also presented before IFRS 16 in order to enable year-on-year comparisons with 2018/19. IFRS 16 implementation primarily affected EBITDA and EBIT as well as cash flows from operating and financing activities. Revenue and gross margin were not affected by IFRS 16 implementation.

Q3 2019/20 highlights

  • Revenue grew by 7.4%, while underlying like-for-like sales, i.e. sales in stores operated in both Q3 2019/20 and Q3 2018/19, were up by 4.7% in Q3 2019/20.
  • Online sales via matas.dk were ahead by 84% year-on-year, while overall online sales, including revenue acquired from Firtal, surged by 104% to make up 16.2% of Q3 2019/20 revenue from 8.5% in Q3 2018/19.
  • The gross margin was 43.9% against 44.0% in Q3 2018/19.
  • On 9 October 2019, Firtal Group acquired Din Frisør Shop, a small operator of two webshops. The initial purchase price was DKK 15 million, to which should be added contingent consideration of DKK 5 million. With the acquisition of Din Frisør Shop, Firtal has gained access to new segments focused on professional haircare and beauty products.

The below cost and earnings comments are based on pre-IFRS 16 numbers.

  • Impacted by costs added by Firtal and Kosmolet and by increased activity on matas.dk, costs were up by DKK 21.2 million. Other external costs were up by DKK 13.7 million and staff costs rose by DKK 7.5 million.
  • EBITDA before exceptional items came to DKK 218.9 million, up from DKK 206.0 million in the year-earlier period. The EBITDA margin before exceptional items was 18.7% against 18.8% in Q3 2018/19.
  • Cash generated from operations was an inflow of DKK 209.2 million in Q3 2019/20 against an inflow of DKK 337.1 million in Q3 2018/19. The free cash flow was an inflow of DKK 109.7 million compared with an inflow of DKK 127.4 million in the year-earlier period.
  • The ratio of net interest-bearing debt to EBITDA before exceptional items was 3.0 against 2.8 at 31 December 2018.

9M 2019/20 highlights

  • Revenue was up by 5.8% and underlying like-for-like sales grew by 1.6% over the first nine months of 2018/19.
  • Online sales via matas.dk were ahead by 72% year-on-year, while overall online sales, including revenue acquired from Firtal, surged by 141% to make up 13.4% of 9M 2019/20 revenue from 5.9% in the same period of 2018/19.
  • The gross margin was 44.1% against 44.6% for the first nine months of 2018/19.

The below cost and earnings comments are based on pre-IFRS 16 numbers.

  • Overall costs increased by DKK 64.5 million relative to the first nine months of 2018/19. Costs added from the acquisitions of Firtal and Kosmolet drove other external costs up by DKK 34.4 million and staff costs by DKK 18.4 million. Costs were further impacted by significantly increased activity on matas.dk.
  • EBITDA before exceptional items and after adjustments came to DKK 446.2 million against DKK 452.9 million in the year-earlier period. The EBITDA margin before exceptional items and after adjustments was 15.5% against 16.7% for the first nine months of 2018/19.
  • Disregarding acquisitions of subsidiaries, the free cash flow for the first nine months of 2019/20 was DKK 130.4 million against DKK 316.8 million for the year-earlier period. The decline was attributable to larger inventories to cover the Christmas quarter and the addition of stocks from the new matas.dk webshop and Kosmolet and Firtal, which were only to a limited extent offset by increases in other working capital items. In addition, the free cash flow was adversely affected by larger investments in the first nine months of the year than in the year-earlier period.
 After IFRS 16Bef. IFRS 16Bef. IFRS 16After IFRS 16Bef. IFRS 16Bef. IFRS 16
 2019/202019/202018/192019/202019/202018/19
(DKKm)Q3Q3Q39M9M9M
       
Revenue1,173.41,173.41,092.62,871.52,871.52,713.6
Gross profit515.1515.1480.91,266.61,266.61,211.6
EBITDA before exceptional items262.7218.9206.0562.2446.2452.9
EBIT165.6167.5162.9282.1287.0313.9
Adjusted profit after tax137.5142.9139.8259.6275.6290.5
Free cash flow154.7109.7127.4127.3(7.3)206.1
Revenue growth7.4%7.4%1.7%5.8%5.8%0.7%
Underlying like-for-like revenue growth4.7%4.7%0.5%1.6%1.6%0.0%
Gross margin43.9%43.9%44.0%44.1%44.1%44.6%
EBITDA margin before except. items22.5%18.7%18.8%20.2%15.5%16.7%
Net interest-bearing debt/EBITDA before exceptional items   n.a.3.02.8

Financial targets

The Group’s financial targets for financial year 2019/20 for overall revenue growth and underlying revenue growth have been upgraded relative to the guidance announced in company announcement no. 11 2019/20 (Trading Update for Q3 2019/20). At the same time, guidance for the EBITDA margin before exceptional items has been specified.

Our overall financial targets for financial year 2019/20 are as follows:

  • Overall revenue growth of above 5% (previously: around 5%)
  • Underlying like-for-like revenue growth of above 1.5% (previously: around 1.5%)
  • EBITDA margin before exceptional items of 14-14.5 % before IFRS 16 (previously: 14-15%)
  • CAPEX between DKK 150 million and DKK 170 million (unchanged)

The Group’s financial targets for financial year 2019/20 reflect the full-year effects of the Firtal acquisition (closing at 13 November 2018), which is included in underlying revenue growth from December 2019, the Kosmolet A/S acquisition (closing at 11 June 2019) and Firtal Group’s acquisition of Din Frisør Shop (closing at 9 October 2019).

The Group’s financial targets for 2019/20 are based on assumptions of slightly growing sales of beauty, health and personal care products, a continuing decline in physical store footfall and persistently intensive competition in the beauty, health and personal care market. The Group’s revenue guidance for the remainder of financial year 2019/20 does not factor in any significant effects of the spreading of the COVID-19 virus.

The Group’s long-term financial ambitions are unchanged.

Realised and projected KPI levels are set out in the table below.


Financial targets and ambitions		Realised
Q3 2019/20		Realised
9M 2019/20		Targets
for 2019/20		Ambitions for 2022/23
   Ongoing 
Customer engagement (M-NPS)63 (index 98)63 (index 98)improvement70 (index 110)
Revenue (DKK)/revenue growth*1,173m/+7.4%2,871m/+5.8%Above 5%App. DKK 4.0bn
Underlying like-for-like revenue growth4.7%1.6%Above 1.5%Positive
EBITDA margin** b. except. items (b. IFRS 16)18.7%15.5% 14-14.5%Above 14%
CAPEX (DKK m)46m126m150-170mBelow 90m
Gearing** (before IFRS 16) 3.0 2.5-32.5-3

* Includes revenue from Firtal for the period 13 November 2018 to 31 December 2019 and revenue from Kosmolet from 11 June 2019 to 31 December 2019. ** Before IFRS 16, inclusive of Firtal and Kosmolet.

As expected, the acquisition of Kosmolet A/S involved an initial investment of DKK 145 million, of which DKK 10 million was paid in Matas shares. To this should be added contingent consideration of up to DKK 20.0 million payable in June 2020.

As expected, the acquisition of Din Frisør Shop involved an initial investment of DKK 15 million. To this should be added contingent consideration of DKK 5 million payable in October 2020.


Conference call

Matas will host a conference call for investors and analysts on Thursday, 27 February 2020 at 10:00 a.m. CET.
The conference call and the presentation can be accessed on our investor website: www.investor.en.matas.dk.

Conference call access numbers for investors and analysts:

DK:                              +45 78 15 01 08
UK:                              +44 (0) 333 300 9266
US:                              +1 833 526 8395

Link to webcast:            https://matas.eventcdn.net/202002/

Contacts

Gregers Wedell-Wedellsborg                                                                                                             
CEO, tel +45 48 16 55 55             

Anders Skole-Sørensen
CFO, tel +45 48 16 55 55                  

Elisabeth Toftmann Klintholm                                                                 
Head of Investor Relations & Corp. Affairs, tel +45 48 16 55 48

Klaus Fridorf
Head of Communication, tel +45 61 20 19 97

Forward-looking statements

This interim report contains statements relating to the future, including statements regarding the Matas Group's future operating results, financial position, cash flows, business strategy and future targets. Such statements are based on management’s reasonable expectations and forecasts at the time of release of the interim report. Forward-looking statements are subject to risks and uncertainties and a number of other factors, many of which are beyond the Matas Group's control. This may have the effect that actual results may differ significantly from the expectations expressed in the interim report. Without being exhaustive, such factors include general economic and commercial factors, including market and competitive conditions, supplier issues and financial and regulatory issues.


Attachment

  • 13 Matas 9M 2019_20 FINAL UK

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