KH Group Plc’s Business Review January–March2024

Focus on business profitability

KH Group Plc
Stock Exchange Release 7 May 2024 at 8.00 am EEST

KH Group Plc’s Business Review January–March 2024: Focus on business profitability

This is the summary of the Business Review for January–March 2024. The full Half-Year Report is attached to this release and is also available on the company’s website at www.khgroup.com.

KH Group, January–March 2024 pro forma 

• Net sales amounted to EUR 84.2 (100.2) million.
• Operating profit was EUR -0.3 (1.0) million.
  
• KH-Koneet’s net sales and operating profit decreased considerably year-on-year.
• Indoor Group’s net sales decreased significantly. Operating profit, including the capital gain of EUR 3.7 million from the Estonian real estate sale transaction, was higher than in the comparison period.
• HTJ’s net sales were at the same level as in the comparison period but operating profit decreased.
• NRG’s net sales and operating profit significantly increased year-on-year.
• The Group’s cash and cash equivalents amounted to EUR 8.1 million at the end of the review period.
  

KH Group, January–March 2024 IFRS 

• Net sales amounted to EUR 84.2 (-) million. The figure for the comparison period only includes the parent company’s net sales.
• Operating profit was EUR -0.7 (-2.8) million.
• Net profit for the period was EUR -3.2 (-2.4) million.
• Earnings per share (undiluted and diluted) were EUR -0.05 (-0.04).
• Equity per share at the end of the review period was EUR 1.30 (1.42).
• Return on equity for rolling 12 months was -19.2% (-9.5%).
• Gearing at the end of the review period was 225.3% (10.5%).
  
• Gearing excluding lease liabilities was 141.6% (10.4%). 

CEO Lauri Veijalainen:

“Our consolidated pro forma net sales and operating profit significantly declined year-on-year. The extremely challenging market situation, uncertainty, the political strikes that disrupted the Finnish labour market and business, and the deployment of Indoor Group’s ERP system had a negative impact on consolidated net sales.

KH-Koneet’s net sales decreased very significantly in both operating countries. As a result, operating profit also turned negative. In terms of net sales and operating profit, operations in Sweden almost reached the level of operations in Finland.

Indoor Group’s first quarter was weak. The Asko and Sotka chains lost net sales and consequently profitability. According to the Federation of Finnish Special Commodity Trade ETU’s statistics, net sales in the furniture market in January 2024 fell by 9% year-on-year, and Indoor’s own development continued in the same direction throughout the quarter. Both chains continue to actively implement measures aimed at enhancing operational efficiency and improving profitability. These measures included increasing visitor volumes and sales, improving conversion rates, strengthening margins and maintaining careful cost control. The new ERP system was deployed on 1 March 2024 and had a negative impact on net sales and operating profit. By the end of March, Indoor Group discontinued its operations in Estonia. As part of this, the company successfully sold its property in Estonia, generating a capital gain of EUR 3.7 million. For a long time, the Estonian operations had operated at loss.