TCM A/S : Webcast Presentation Q2 2020

TCM Group A/S

Interim Report April-June 2020

August 18, 2020

Covid-19 status

• Store traffic in the beginning of Q2 hard hit, but increased during the quarter
• Temporary sales campaigns launched in the early stage of the virus outbreak
• Order intake has shown an increasing trend during the quarter
• Higher level of discounts has had an adverse impact on margin

2

Business update Q2 2020

• Growth primarily driven by the Danish market primarily within Nettoline towards the DIY market as well as a higher share of 3rd party products
• Sales to Norway declined. The Norwegian kitchen market influenced by Covid-19, lower oil price, and currency fluctuations
• Number of branded stores increased to 69 (66). Furthermore, 20 dealers have converted stores into the Nettoline store concept and therefore considered branded stores
• Financial outlook reinstated

3

Revenue growth in Q2, despite an extraordinary market situation

Revenue

260 mDKK

(258 mDKK)

Cash conversion	0.8%
101.8%	revenue growth
(102.6%)

NWC ratio	EBIT
-8.8%	40 mDKK
(-7.1%)	(42 mDKK)

EBIT margin

15.2%

(16.3%)

4

Q2 revenue growth driven by B2C market and export

	2020	2019	2020		2019
	Apr-Jun	Apr-Jun	Jan-Jun		Jan-Jun
Net revenue (mDKK)	260	258	514		508
- Organic growth		0.8%		1.3%

Q2 comments:	2.2% growth
in DK revenue
❑ Revenue growth in Denmark was +2.2%
❑ Growth driven by Nettoline towards the DIY market
as well as higher share of 3rd party revenue	12.8% decrease
❑ Revenue outside Denmark decreased by 12.8%
in revenue
	outside DK

5

P&L highlights

	2020	2019	2020	2019
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun
Net revenue (mDKK)	260	258	514	508
- Gross Margin	27.4%	28.6%	26.6%	27.0%
EBIT (mDKK)	40	42	69	73
- EBIT margin	15.2%	16.3%	13.5%	14.4%

Q2 comments

• Gross margin adversely impacted by sales campaigns initiated in the early stage of the virus outbreak. Impact from these campaigns will continue to impact into Q3
• Sales mix had an adverse margin impact due to revenue growth being driven by structurally lower margin products
• Additional costs and efficiency loss in production had an adverse impact on gross profit of c. 1mDKK
• SG&A costs were on par with Q2 LY

6

NWC ratio up on LY supported by extended credit on VAT/income tax - part of the government's stimulus packages

	2020	2019
	Jun	Jun
Net working capital (mDKK)	-89	-69
NWC ratio	-8.8%	-7.1%
NIBD (mDKK)	19	151
Leverage (x EBITDA)	0.1	0.8

Q2 comments

• NWC impacted favourably by stimulus packages of c. 25mDKK
• Higher level of inventories due to increased buffer level to ensure high delivery assurance during the Covid-19 situation
• NWC ratio was -8.8% compared to -7.1% in Q2 last year
• NIBD was 19mDKK compared 151mDKK Q2 last year.
• At the end of Q2 NIBD was impacted by 39mDKK due to implementation of IFRS 16
• Solid balance sheet with a leverage at 0.1 compared to 0.8 last year

7

High cash conversion continued

	2020	2019	2020	2019
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun
Operating profit (mDKK)	40	42	69	73
Depreciation and amortization (mDKK)	5	5	11	10
Change in NWC (mDKK)	28	1	-20	-26
Tax a.o (mDKK)	0	0	-6	-5
Capex excl. acquisitions (mDKK)	-4	-2	-8	-5
Operating cash flow excl. acquisitions	69	46	46	48
(mDKK)
Cash conversion			101.8%	102.6%
Capex ratio			1.5%	0.8%

Q2 comments

• Free cash flow was 69mDKK compared to 46mDKK in Q2 2019
• Change in NWC in the quarter was 27mDKK higher than Q2 2019, favourably impacted by extended credit in stimulus packages of c. 25mDKK, which will have a similar adverse impact in Q3 2020.
• Capex was 2mDKK higher than Q2 2019.
• Cash conversion in Q2 was 102% compared to 103% in Q2 2019

8

Financial outlook 2020

TCM Group

• Full-yearguidance for 2020 is reinstated:
• Net revenue: 980-1,020mDKK, which is at level on par with 2019 (1,007mDKK)
• EBIT: 135-145mDKK, slightly below 2019

(EBIT excluding non-recurring items)

	Revenue development					Adjusted EBIT development
	DKKm								DKKm
				1,007	980-1,020									154
Nettoline	900		140	135-145
817
							115
										Nettoline
				600
						79

2016PF 2017 2018 2019 2020 (guidance)

2016PF 2017 2018 2019 2020 (guidance)

9

Q&A