Continued strong demand and initiatives yielding results - 23% organic growth for Q4

Summary of the period
Numbers in parentheses refer to outcomes during the corresponding period of the previous year.

Fourth quarter: October 1st - December 31st, 2023

  • Net revenue amounted to 627.2 MSEK (497.4 MSEK), corresponding to an increase of 26% (95%)
  • Organic, currency-adjusted, growth amounted to 23% (-5%)
  • Operational EBITDA amounted to 135.5 MSEK (120.2 MSEK), corresponding to an increase of 13%, and a margin of 21.6% (24.2%)
  • Operational EBITA amounted to 115.4 MSEK (102.0 MSEK), corresponding to an increase of 13%, and a margin of 18.4% (20.5%)
  • Operational EBIT amounted to 113.3 MSEK (100.5 MSEK), corresponding to an increase of 13%, and a margin of 18.1% (20.2%)
  • Exchange losses amounted to -5.1 MSEK (-1.9 MSEK)
  • The profit after tax amounted to -13.0 MSEK (15.8 MSEK), impacted by the annual tax expense for the US group being booked in the fourth quarter
  • Earnings per share calculated on 158 731 900 shares (158 522 955 shares) amounted to -0.08 SEK (0.10 SEK)
  • Cash flow from operating activities amounted to 126.3 MSEK (96.0 MSEK)
  • 75.0 MSEK has been amortized on the debts to credit institutions
  • As of December 31st, 2023 cash amounted to 237.3 MSEK (245.1 MSEK)


Full year 2023

  • Net revenue amounted to 2,324.6 MSEK (1,829.5 MSEK), corresponding to an increase of 27% (137%)
  • Organic, currency-adjusted, growth amounted to 15% (2%)
  • Operational EBITDA amounted to 499.3 MSEK (439.6 MSEK), corresponding to an increase of 14%, and a margin of 21.5% (24.0%)
  • Operational EBITA amounted to 421.4 MSEK (376.1 MSEK), corresponding to an increase of 12%, and a margin of 18.1% (20.6%)
  • Operational EBIT amounted to 414.8 MSEK (373.8 MSEK), corresponding to an increase of 11%, and a margin of 17.8% (20.4%)
  • Exchange losses amounted to -3.4 MSEK (11.5 MSEK)
  • The profit after tax amounted to 58.6 MSEK (94.5 MSEK)
  • Earnings per share calculated on 158 731 900 shares (155 346 212 shares) amounted to 0.37 SEK (0.61 SEK)
  • Cash flow from operating activities amounted to 444.0 MSEK (260.2 MSEK)
  • 200.5 MSEK has been amortized on the debts to credit institutions
  • The board proposes a dividend of 0.23 SEK (0.22 SEK) per share


Significant events during the fourth quarter
There are no significant events to comment on during the fourth quarter.

Significant events after the fourth quarter
Pet MD Brands, Inc., one of Swedencare AB:s North American subsidiaries has acquired the American company which includes the brand Riley's® Organics, which sells and markets organic premium treats for dogs. The acquisition was completed in two steps; 30% of the company was acquired on October 2nd, 2023, and the remaining 70% on January 2nd, 2024.

Words from the CEO
With the conclusion of the year, we demonstrate that the growth trend from Q3 persists. The fourth quarter's net revenue of 627 MSEK corresponding to a 26% increase compared to Q4 2022 and marks our strongest quarter ever, with our EBITDA reaching 135 MSEK, equivalent to a margin of 21.6%. Our continued strong cash flow during the quarter has enabled a minority acquisition as well as 75 MSEK in amortizations, and we continue to reduce our net debt.

Our organic growth, 23% for the quarter and 15% for the full year, is evidence that our organization has worked diligently throughout the year to lay the foundation for stable and continuous growth, which should outpace the market. Several of our group companies had their strongest quarter of the year, contributing to another record quarter for the group. All channels experienced growth for us, and it's worth noting that both Vetio companies had their best quarter of the year. The strategy we developed at the beginning of the year for Vetio has been successful, primarily due to impressive efforts from management and the entire organization.

Strong growth everywhere
We are growing faster than the market in all regions, with some group companies achieving impressive growth rates well over 30%, while most are around 20%. Vetio UK (formerly CVP) continued the development we saw in the previous quarter, and as of November 2023, their growth is also counted as organic. The anticipated demand for soft chews in Europe has proven to be accurate, and we are already now expanding our capacity to cover both our internal and, especially, external demand in this product segment. We have just launched our proprietary "Wellichews" and ProDen PlaqueOff® versions, and later this spring, we will also offer our European customers NaturVet®.

Our margin was affected negatively by some extraordinary costs such as relocating Rx Vitamins from New York to our warehouse and logistics hub outside Tampa, Florida, as well as organizationally, as we have had double costs for several leading positions during the quarter before handover. Additionally, we have had write-offs related to inventory and accounts receivable during the quarter. Therefore, I expect that without these factors, we will deliver a higher margin in the upcoming quarters.

NaturVet, ProDen PlaqueOff® and PetMD
Our largest company NaturVet has had another strong quarter both in Pet Retail and Online. Since December, our new CEO, Geoff Granger, has taken over and is very enthusiastic about all the opportunities we have to take sales to a new level. There will be initiatives in acquiring new customer segments and partnerships, exploring new markets, and launching new products.

ProDen PlaqueOff® continuing its strong growth, it expanded by 46% during the quarter. As before, our powder product, the original, remains the fastest-growing, along with our new Soft Chews, which have so far only been launched in North America, but are set to launch in Europe during the current quarter.

Pet MD is growing by over 40% in the quarter, and our in-house Direct-to-Consumer (D2C) operations for our various group companies/brands continue to grow as well. In 2024, we are making further investments in D2C, including two new hires at our headquarters in Malmö. End-customer relationships and insights, along with the opportunity to test market offerings, are the driving reasons for this investment, even though it naturally also provides us with increased sales and higher margins.

New acquisition and prospects for 2024
At the beginning of 2024, we announced to the market the acquisition of Riley's, a product brand specializing in organic treats, one of the fastest-growing categories in the pet industry. We see significant opportunities to expand the product range and launch the brand in both Pet Retail and Veterinary channels. Our acquisition agenda is primarily focused on finding assets that bring something new to the group, where we see opportunities for rapid and profitable growth and synergies. Additionally, we have a particular focus on regions where we do not yet have operations, such as Asia, New Zealand, and Australia. However, we are not in a hurry, and as you know, we are meticulous and have high standards for organization, historical growth, and profitability, and, perhaps most importantly, a strong corporate culture before initiating a process.

It feels very satisfying to have ended the year strongly, and our methodical and structural work to deliver long-lasting high growth is beginning to show results. Some projects worth mentioning are the product diversification initiatives that both nutravet and Rx Vitamins have started, including a completely new product category within dermatological products produced internally. Stratford, which has had a transitional year, is beginning to see the results of integrated collaborations with the two largest Veterinary distributors in North America, as well as new executives in the organization bringing in new and high expertise in business development and sales.

I anticipate continued growth throughout 2024 while also expecting profitability to improve. In 2023, we implemented several structural and organizational changes which impacted margins. Now, we are about to reap the rewards of this work, which you will read about in upcoming reports.

Finally, I want to thank the entire organization for a successful 2023, and you can rest assure that the commitment and attitude are geared towards Swedencare continuing to evolve and improve on all fronts in the coming years.

Håkan Lagerberg, CEO
Malmö February 15th, 2024

The complete year end report is attached to this press release and is available at www.swedencare.com

Swedencare invites shareholders and analysts to a presentation of the year end report where CEO Håkan Lagerberg and CFO Jenny Graflind will comment on the report. The presentation will be held today at 10:30 -11:00 am CET and can be followed via live webinar.
Please use this link to join the webinar: https://us06web.zoom.us/j/87572589704

For more information, please contact:

Håkan Lagerberg, CEO Swedencare
Phone: +46 (0)73 517 01 70
Email: hakan.lagerberg@swedencare.se

Jenny Graflind, CFO Swedencare
Phone: +46 (0)73 944 85 54
Email: jenny.graflind@swedencare.se

FNCA is the Certified Adviser of the Company

Please visit the Company homepage www.swedencare.com

About Swedencare

Swedencare, a listed company on NASDAQ First North Growth Market, develops, produces and sells premium products in the global and fast-growing market for healthcare products for cats, dogs and horses. The company has an extensive product portfolio with strong brands such as NaturVet®, Innovet, Pet MD®, Rx Vitamins®, nutravet®, and ProDen PlaqueOff®, the original for good oral health. Swedencare’s headquarter is in Malmö, Sweden and the company's products are currently sold in approximately sixty-five countries to veterinarians, pet stores, and online through a distribution network, including subsidiaries in nine countries and an international network of retailers. Swedencare's sales have increased significantly over several years with maintained high profitability.

This information is information that Swedencare is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-02-15 07:30 CET.

Attachments

Swedencare Year End Report Q4 2023

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