Interim report: 1 January-30 September 2022

2022-10-27 07:00:00

New organisation and action plan to strengthen profitability and cash flow – BHG gained market share, while inventory declined and cash flow was improved compared with the previous year. Profitability challenges, primarily as a result of price pressure in the market.

HIGHLIGHTS

1 July-30 September

  • Net sales increased 1.5% to SEK 3,106.7 million (3,060.5). Organic growth was -5.3% and pro-forma organic growth was -6.8%
  • Adjusted gross profit declined -5.3% to SEK 746.1 million (788.2), corresponding to an adjusted gross margin of 24.0% (25.8)
  • Adjusted EBIT amounted to SEK 47.8 million (164.5), corresponding to an adjusted EBIT margin of 1.5% (5.4)
  • Cash flow from operating activities amounted to SEK -133.0 million (-232.0)
  • Earnings per share amounted to SEK -0.62 (0.50) before dilution and SEK -0.62 (0.49) after dilution

1 January-30 September

  • Net sales increased 10.3% to SEK 10,125.7 million (9,178.8). Organic growth was -4.7% and pro-forma organic growth was -4.2%
  • Adjusted gross profit increased 5.5% to SEK 2,563.4 million (2,429.2), with an adjusted gross margin of 25.3% (26.5)
  • Adjusted EBIT amounted to SEK 344.2 million (626.3), corresponding to an adjusted EBIT margin of 3.4% (6.8)
  • Cash flow from operating activities amounted to SEK -173.1 million (223.6)
  • Earnings per share amounted to SEK 1.61 (3.09) before dilution and SEK 1.61 (3.05) after dilution

Key events during and after the period

  • On 11 August, Chairman of the Board Gustaf Öhrn took over as acting CEO of BHG Group (“BHG”), after the decision was made that Adam Schatz would leave his position as CEO. The process of recruiting a new CEO is under way.
  • On 19 September, BHG announced that from 1 January 2023, the Group’s governance and reporting of its operations will take place in three new segments: Home Improvement, Value Home and Premium Living. This changes is being made to make it easier to tailor BHG’s offerings to the needs of different customers, while also creating synergies. Mikael Hagman was appointed Deputy CEO and Head of the Home Improvement segment and Christian Eriksson was appointed Head of the Value Home segment, while Bank Bergström was appointed Head of the Premium Living segment. All three are members of BHG Group’s executive management team.
  • On 11 October, BHG announced its earnings performance for the third quarter of 2022 as well as measures it would take to improve profitability:
    • SEK 150–200 million in cost cuts on an annual basis, which are expected to become fully effective beginning in the second quarter of 2023.
    • A target to reduce items held in inventory by an additional SEK 100–200 million in the fourth quarter, in addition to reducing inventory by SEK 98 million during the third quarter, thereby improving cash flow.
    • In addition, BHG announced that the Group’s covenants had been renegotiated and that earn-out payments for acquired companies are expected to be lower than previously announced.

In addition to the above measures, the Board of Directors decided to recognise an impairment loss of SEK 375 million on the value of its inventory as of 30 September 2022.

CONFERENCE CALL IN CONNECTION WITH PUBLICATION OF THE INTERIM REPORT
Gustaf Öhrn, Acting President and CEO, and Jesper Flemme, CFO, will hold a conference call at 10:00 a.m. on Thursday 27 October in connection with the publication of the interim report. The call will be held in English. To participate, please call
+46850516386 (PIN 0351698#) or visit https://ir.financialhearings.com/bhg-q3-2022.
The presentation will be available from the Group’s website: https://www.wearebhg.com/investors/presentations/.

INTERIM REPORTS ON WWW.WEAREBHG.COM
The full interim report for the period January-September 2022 and previous interim and year-end reports are available at https://www.wearebhg.com/investors/financial-reports/

MFN