Interim report January–September 2014

Net sales for the third quarter amounted to SEK 2,950 million (2,798). Organic growth was a negative 3 per cent (pos: 2). Operating profit, excluding restructuring costs of SEK 326 million (–) related to goodwill impairment in Hygena, amounted to SEK 233 million (180), corresponding to an operating margin of 7.9 per cent (6.4). Currency gains of approximately SEK 15 million (losses: 25) affected the Group’s operating profit excluding restructuring costs. Loss after tax including restructuring costs amounted to SEK 323 million (profit: 90), corresponding to earnings per share of negative SEK 1.93 (pos: 0.55). Operating cash flow amounted to SEK 171 million (207).

In total, market performance was deemed to be unchanged compared with the year-earlier period. The UK market continued to grow, but on the whole other relevant markets declined slightly.

Organic sales growth was negative 3 per cent (pos: 2). Currency effects impacted net sales positively for the quarter in an amount of SEK 237 million (neg: 34).

The gross margin rose to 42.9 per cent (40.7), positively impacted by primarily higher sales values, lower prices of materials and positive currency effects.

Operating profit increased primarily due to the improved gross margin, which offset lower sales volumes.

Currency gains of approximately SEK 15 million (losses: 25) affected the Group’s operating profit, of which SEK 15 million (neg: 5) comprised translation effects and SEK 0 million (neg: 20) transaction effects.

Restructuring costs attributable to the planned sale of Hygena amounted to SEK 477 million, of which SEK 326 million pertained to impairment of goodwill and SEK 151 million to impairment of deferred tax assets.

Return on capital employed including restructuring costs amounted to 10.9 per cent over the past twelve-month period (Jan-Dec 2013: 14.6), negatively affected by goodwill impairment in Hygena. 

Operating cash flow decreased as a result of the negative change in working capital and increased investments. 

Comments from the CEO
“The gross margin for the past twelve-month period has continued to improve and the operating margin is the highest third-quarter figure in eight years. A large part of the negative organic growth is related to the sales decline in Hygena, but the decrease was also attributable to lower sales during the summer months in the Nordic region, except for Sweden. The planned divestment of Hygena is expected to be finalised before year-end, subject to approval from the French competition authority. Going forward, we are focusing on generating organic growth, while we are evaluating potential acquisitions and plan to increase our number of stores from next year,” says Morten Falkenberg, President and CEO.

For further information
Please contact any of the following on: +46 (0)8 440 16 00 or +46 (0)705 95 51 00:
• Morten Falkenberg, President and CEO
• Mikael Norman, CFO
• Lena Schattauer, Head of Investor Relations