Verkkokauppa com Oyj : Half-year report, January-June (unaudited) 16 July 2021

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HALF-YEAR REPORT for 1 January - 30 June 2021

GROWTH CONTINUED WITH RECORD-HIGH SECOND QUARTER OPERATING PROFIT

Verkkokauppa.com Oyj - Half-Year report 16 July 2021, 8:00 a.m. EEST

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period). Figures are unaudited.

April - June 2021 in brief

• Revenue was 130.5 million euros (123.1)
• Gross profit was 22.4 million euros (21.4) or 17.2% of revenue (17.4%)
• Operating profit was 5.1 million euros (4.4) or 3.9% of revenue (3.5%)
• Comparable operating profit was 5.1 million euros (4.8) or 3.9% of revenue (3.9%)
• Profit for the period was 3.8 million euros (3.3)
• Earnings per share was 0.08 euros (0.07)
• Investments were 1.7 million euros (0.4)
• Operating cash flow was 3.5 million euros (-2.6)
• The Board of Directors decided, according to authorization, to pay the 2nd dividend installment of 0.058 euros per share on 27 July 2021.

January - June 2021 in brief

• Revenue was 264.5 million euros (248.3)
• Gross profit was 44.2 million euros (40.8) or 16.7% of revenue (16.4%)
• Operating profit was 10.3 million euros (7.8) or 3.9% of revenue (3.1%)
• Comparable operating profit was 10.3 million euros (8.6) or 3.9% of revenue (3.5%)
• Profit for the period was 7.6 million euros (5.7)
• Earnings per share was 0.17 euros (0.13)
• Investments were 2.1 million euros (0.7)
• Operating cash flow was -5.5 million euros (1.0)

							Change						Change
	KEY RATIOS		4-6/2021		4-6/2020		%		1-6/2021		1-6/2020		%	1-12/2020
	Eur million		130.5						264.5
	Revenue			123.1		6.1%			248.3		6.5%
						553.6

Gross profit	22.4	21.4	4.8%	44.2	40.8	8.2%	88.4
Gross margin, %	17.2%	17.4%		16.7%	16.4%		16.0%
EBITDA	6.3	5.6	13.3%	12.8	10.2	24.7%	24.6
EBITDA, %	4.9%	4.6%		4.8%	4.1%		4.4%
Operating profit	5.1	4.4	17.3%	10.3	7.8	32.6%	19.6
Operating margin, %	3.9%	3.5%		3.9%	3.1%		3.5%
Comparable operating profit	5.1	4.8	5.9%	10.3	8.6	20.1%	20.4
Comparable operating margin, %	3.9%	3.9%		3.9%	3.5%		3.7%
Net profit	3.8	3.3	14.9%	7.6	5.7	33.0%	14.6
Investments	1.7	0.4	324.3%	2.1	0.7	219.3%	1.4
Operating cash flow	3.5	-2.6		-5.5	1.0		16.9

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FINANCIAL GUIDANCE FOR 2021 REMAINS UNCHANGED

The company expects the revenue to be between 570-620 million euros (554 million euros) and comparable operating profit to be between 20-26 million euros (20.4 million euros) in 2021.

CEO PANU PORKKA'S REVIEW

Verkkokauppa.com's second quarter was in line with our expectations. Our revenue grew by 6.1 percent against a strong comparison period and amounted to EUR 130.5 million. The transition of retail to online channels boosted our growth, and we were able to respond to consumer demand for seasonal products with a broad product range. In April-June, Verkkokauppa.com's online sales, excluding exports, increased by 15.1 percent year on year, representing 61 percent of total sales.

Growth came from multiple sources. B2B sales, a strategic focus area for Verkkokauppa.com, increased strongly in the second quarter, by 38.4 percent. In April-June, particularly popular were computers and cameras, as well as from evolving categories sports gear and home & lighting. The revenue excluding exports, increased in April-June by 6.6 percent year on year.

Gross profit increased by 4.8 percent to EUR 22.4 million, representing 17.2 percent of revenue. Verkkokauppa.com's comparable operating profit grew by 17.3 percent in April-June to EUR 5.1 million. Profitability improved thanks to the increased share of product categories with higher profit margins in total sales.

In June, Verkkokauppa.com was awarded as one of the most innovative companies in Finland in the Finnish Innovation Index, conducted by Hanken School of Economics to assess the perceptions of consumers about the most innovative companies.

We are continuing the long-term development of our operations in line with our strategy, focusing on developing our efficient fulfilment processes and our excellent customer experience. The Jätkäsaari logistics automation investment program, commenced this summer to increase warehouse capacity and create cost efficiencies, has progressed as planned. The first phase of the investment is to build a fully automated AutoStore® small item warehouse. The construction is well underway, and the technical design of the warehouse and the preparations for the space have begun. When completed in early 2022, the new warehouse will enable even faster deliveries and better product availability, with considerably more efficient warehouse space utilization.

We are confident about the development of our business in the second half of the year. We believe that the increasing shift of consumers to online sales channels is permanent. This development supports Verkkokauppa.com, a major player in the consumer goods ecommerce market. One of our strategic goals is to strengthen Verkkokauppa.com's position in the B2B segment, and we can be satisfied with our progress in this area as well. We have a stable market position and a loyal customer base to whom we provide a wide and exciting assortment.

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FINANCIAL DEVELOPMENT

REVENUE AND PROFITABILITY

	4-6/	4-6/		1-6/	1-6/		1-12/
EUR million	2021	2020	Change%	2021	2020	Change%	2020

Revenue		130.5		123.1	6.1%	264.5	248.3
Operating profit		5.1		4.4	17.3%	10.3	7.8
Operating margin, %		3.9%		3.5%		3.9%	3.1%
- advisory costs related to transfer to		-				-
official list of Nasdaq Helsinki			0.5		0.8
Comparable operating profit		5.1		4.8	5.9%	10.3	8.6
Comparable operating margin, %		3.9%		3.9%		3.9%	3.5%

6.5%	553.6
32.6%	19.6

3.5%

0.8

20.1%	20.4
	3.7%

Share of sales, %

		4-6/2021		4-6/2020		1-6/2021		1-6/2020	FY 2020
Customer segments		72%				72%
Consumer			76%			70%	74 %
B2B		22%		17%		22%		19%	18 %
Export		6%		7%		7%		11%	8 %
Sales channels		61%				61%
On-line			56%			53%	56 %
Off-line		33%		37%		32%		36%	36 %
Website visits, million		17.4		20.4		37.3		37.3	87.0

Sales includes orders and deliveries in transit. On-line and off-line sales exclude export sales.

April-June 2021

In April-June 2021, Verkkokauppa.com's revenue grew by 6.1 percent year on year, totaling 130.5 million euros (123.1). Especially the sales of computers, cameras, sports and nutrition as well as home and lighting were strong.

The shift of retail to online channels continued. In the second quarter, Verkkokauppa.com's online sales increased 15.1 percent year on year, representing 61 percent of total sales (56%). Visits to the Verkkokauppa.com website declined year on year, totaling 17.4 million (20.4) during the second quarter. During the comparison period and in the early days of corona pandemic, there was a record number of new visitors getting to know Verkkokauppa.com webstore. Visitor's conversion percent, ie. share of buying customers has been developing favorably compared to last year. Sales for corporate customers (B2B) increased 38.4 percent, representing 22 percent of total sales (17%). For export business, sales remained close to the level of the comparison period, representing 6 percent of total sales (7%). The revenue excluding exports, increased during April-June by 6,6 percent year on year.

The company-financed customer financing proceeds were 1.0 million euros (0.9) including both interest income and fee income.

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Personnel costs increased in April-June by 11.5 percent to 9.4 million euros (8.4). The increase resulted mainly from IT and administration. During the reporting period, other operating expenses decreased slightly to 7.1 million euros (7.5).

Operating profit in April-June increased 0.8 million euros, totaling 5.1 million euros (4.4), representing 3.9 percent of revenue (3.5%). Comparable operating profit was 5.1 million euros (4.8) and profit for the period 3.8 million euros (3.3).

Earnings per share were 0.08 euros (0.07) in April-June.

January-June 2021

In January-June, Verkkokauppa.com's revenue grew by 6.5 percent year on year, totaling 264.5 million euros (248.3).

The company-financed customer financing proceeds were 2.0 million euros (1.8) including both interest income and fee income. The credit loss allowance was increased to 1.2 million euros (1.1) at the end of June.

Personnel costs increased in January-June by 8.2 percent to 18.4 million euros (17.0). The increase resulted mainly from IT and purchasing. During the reporting period, other operating expenses decreased slightly to 13.4 million euros (13.8).

In the first half, Operating profit increased by 2.5 million euros, totaling 10.3 million euros (7.8), representing

3.9 percent of revenue (3.1%). Comparable operating profit was 10.3 million euros (8.6) and profit for the period 7.6 million euros (5.7).

Earnings per share were 0.17 euros (0.13) in January-June.

FINANCE AND INVESTMENTS

Operating cash flow was -5.5 million euros (1.0) in January-June 2021. Operating cash flow was impacted by change in working capital. Drivers for change in working capital were mainly growth in inventories when preventing possible availability shortage, preparing for summer season sales and campaigns, as well as a decline in accounts payable.

Ordinary seasonal fluctuations are reflected for cash and cash equivalents, cash flow and accounts payable, which usually reach the highest point at the end of the fourth quarter and the lowest point at the end of the second quarter.

Investments totaled 2.1 million euros (0.7) in January-June 2021. During the reporting period the company invested and capitalized 0.2 million euros (0.4) in salary costs. In the first half, a dividend of EUR 14.9 million (4.7) in total was distributed for the shareholders.

Verkkokauppa.com has revolving credit facilities totaling 20 million euros, which have not been utilized. Of these credit facilities, 15 million euros are for three years, and 5 million euros for five years as of 1 July 2019.

PERSONNEL

During the reporting period, the number of employees increased, and the total number of employees was 801 (747) at the end of June 2021. The increase in personnel mainly resulted from the seasonal employees hired