Thursday, July 18, 2024
Organic growth and significant improvement in operating profit during the quarter
April–June 2024 (second quarter)
January–June 2024 (six months)
Significant events after the end of the reporting period
Comment by the CEO
The second quarter of 2024 saw us take further steps towards achieving our new financial targets, consisting of an EBIT margin of more than 8 percent by 2027, average annual organic growth of 3–5 percent and net debt not exceeding 2.5 x adjusted EBITDA. The course has been set and now we need to keep following it.
Underlying demand for our core offering, namely high quality, healthy and sustainable food, is strong, but inflation and interest rate rises in recent years have slowed consumer demand for several of our product categories. We saw some signs of improvement during the quarter, however, as interest rate cuts contributed to increased confidence and a greater willingness to spend. The clear fall in inflation is also helping to shift the focus from price negotiations to new business. As a result we were able to return to organic growth in the second quarter.
The second quarter is usually the weakest quarter of the year for Midsona. This year the figures were boosted in the second quarter by the fact that Easter fell in the first quarter, as demand for our categories is weak during this holiday, at the same time as there were two fewer store and selling days in June than usual. Sales increased by 3 percent to SEK 918 million (893) during the quarter, an increase that might have been even greater if it had not been adversely affected by production bottlenecks, above all in Germany.
The Group’s operating profit/loss amounted to SEK 22 million (–15), and operating profit/loss, before items affecting comparability, amounted to SEK 22 million (–1), driven by increased sales and a stronger gross margin, which increased to 28.9 percent (26.4). For the third consecutive quarter, the gross margin increased, despite continued high raw material prices and temporarily higher production overheads at some production facilities. The improvement was driven by good price management, an improved product mix as a result of range rationalisation and the termination of unprofitable contracts.
As during the first quarter of the year, we saw a clear improvement in the performance of all the divisions in the second quarter:
The implementation of our new strategy to increase our profitability and achieve our financial targets continued according to plan. After the end of the period, a new organisational structure was presented in which central Marketing & Innovation, Purchasing and HR functions are being introduced in order to strengthen the foundations of profitable growth through increased central coordination between the divisions. Top talent is being recruited to the functions internally, to give them a flying start, and the new posts will entail membership of Group Management.
The past quarter saw continued improvements for Midsona, although we still have much to do. We are taking further steps to create even stronger foundations for profitable organic growth. We believe that in 2024 we will continue to see gradual improvements. Our focus going forward is to implement our new strategy, to move us step by step towards the attainment of our financial targets.
Peter Åsberg
President and CEO
FOR MORE INFORMATION, PLEASE CONTACT:
Peter Åsberg, President and CEO
Phone: +46 730 26 16 32
E-mail: peter.asberg@midsona.com
Max Bokander, CFO
Phone: +46 708 65 13 64
E-mail: max.bokander@midsona.com
ABOUT MIDSONA
Midsona develops and markets strong brands within health and well-being, with products that help people live a healthier and more sustainable life, with an increased understanding of the origin of the raw material and with transparency as to the content. The Midsona share is listed on NASDAQ OMX Stockholm. For more information www.midsona.com/en.
This is information of the type that Midsona AB (publ) is obligated to make public in accordance with the EU Market Abuse Regulation the Securities Market Act. The information was submitted for publication through the agency of the contact persons set out above on July 18, 2024, at 08.00 am CEST.
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Midsona_Q2_2024_EN