RELEASE OF THE FINANCIAL STATEMENTFor the 1st of January, 31 December 2021
SOLID PERFORMANCEDURING 2021 – LAST QUARTER IN A CHALLENGING MARKET ENVIRONMENT
Verkkokauppa.com arranges two virtual news conferences on a result publication day. Finnish news conference is held at 10:00 Finnish Time. Another news conference is for analysts and institutional investors in English at 11:00 pm Finnish time. You can find details of the events as well as how to participate at the end.
The complete report is attached to this release and also available at https://investors.verkkokauppa.com/en
Verkkokauppa.com Oyj Finance Statement Released 10 February 2022, 8:00 a.m. EET
Unless otherwise stated the comparison figures in brackets refers the the corresponding period in previous years (reference period). These figures have not been audited.
October December 2021 In brief
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Revenue was EUR 168.9 Million (176.0).
-
Gross profit was EUR 26.2 Million (26.7 million), or 15.5% of revenue (15.1%).
-
Operating profit (EBIT), which was EUR 5.3million (6.2%) or 3.2% of revenue (3.5%).
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Comparable operating profits were EUR 5.3million (6.2%) or 3.2% revenue (3.5%)
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Net profit was EUR 4.0 million (4.7).
-
Earnings per share were EUR 0.09 (0.10)
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Investments were EUR1.9 Million (0.4).
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Operating cash flow was EUR 4.65 million (10.4)
January December2021 in short
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The revenue was EUR 574.5 Million (553.6).
-
Gross profit was EUR 91.2 million (88.4), or 15.9% of revenue (16.0%).
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Operating profit (EBIT), EUR 20.3 million (19.6) was 3.5% of revenue (3.5%).
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Comparable operating profits were EUR 20.3 million (20.4), or 3.5% of revenue (3.7%).
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Net profit was EUR 15.1 Million (14.6).
-
Earnings per Share were EUR 0.34 (0.33).
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Investments were EUR 4.9 million (1.4).
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Operating cash flow was EUR 6.9 million (16.9)
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The Board of Directors proposes that the annual general meeting pay a total dividend of EUR 0.2246 per share for the financial year 2021. After the Annual General Meeting, the total dividend will be divided into a EUR 0.060 share payment. The AGM is requested to authorize the Board of Directors’ discretion to divide the total of EUR 0.186 each share into three quarterly instalments.
|
KEY RATIOS |
1012/2021 |
1012/2020 |
Change % |
112/2021 |
112/2020 |
Change % |
|
EURMillion |
||||||
|
Revenue |
168.9 |
176.0 |
-4.0% |
574.5 |
553.6 |
3.8% |
|
Gross profit |
26.2 |
26.7 |
-1.8% |
91.2 |
88.4 |
3.1% |
|
Gross margin, |
15.5% |
15.1% |
15.9% |
16.0% |
||
|
EBITDA |
6.6 |
7.5 |
-12.1% |
25.3 |
24.6 |
2.8% |
|
EBITDA, % |
3.9% |
4.3% |
4.4% |
4.4% |
||
|
Operating profit |
5.3 |
6.2 |
-14.0% |
20.3 |
19.6 |
3.6% |
|
Operating margin, % |
3.2% |
3.5% |
3.5% |
3.5% |
||
|
Comparable operating profit |
5.3 |
6.2 |
-14.0% |
20.3 |
20.4 |
-0.5% |
|
Comparable operating margin: % |
3.2% |
3.5% |
3.5% |
3.7% |
||
|
Net profit |
4.0 |
4.7 |
-14.4% |
15.1 |
14.6 |
3.2% |
|
Investments |
1.9 |
0.4 |
360.5% |
4.9 |
1.4 |
257.9% |
|
Operating cash flow |
4.6 |
10.4 |
-55.5% |
6.7 |
16.9 |
-60.5% |
FINANCIAL GUIDANCEFOR 2022
The company expects to generate between EUR 590640 million and EUR 574.5 million in revenue, with an adjusted operating profit (adjusted EBIT) of between EUR 1925 million and EUR 20.4 million by 2022.
PANU PORKKA, CEOS REVIEW
The coronavirus pandemic of 2021 created some exceptional circumstances in the year 2021. Verkkokauppa.com reached a new record at EUR 574.5 millions. This growth was mainly due to corporate sales which increased by 19% year-on-year. Consumer preference for online shopping increased further due to the pandemic. Online sales increased by 13.5 per cent compared with previous year. Customers’ day-to-day lives were made easier by getting used to online shopping.
Q4 revenue decreased by 4.0% from a strong comparable period to EUR 168.9million. Campaign season, which began in November, dominated the quarter. The period saw lower than expected demand and was less than the previous year. The Omicron variant of Christmas sales started on a quieter note, and customers were unable to visit the stores. The consumer electronic market, measured by GfK*, declined by 7.9 percent during the quarter. The availability of certain product categories also affected sales. Corporate sales, one of our strategic growth areas, was strong in the fourth quarter with a 11% increase year-on-year. Computers, gaming, toys, and sports products were the top-selling product categories.
The fourth quarter’s lower sales had a negative impact on profitability. The operating profit (EBIT), which fell to EUR 5.9 million, was due to lower sales. Despite the difficult market, the gross profit margin for the year-over-year improved to 15.5 per cent.
We have worked hard over the past year to achieve our renewed strategy and vision to remain a leader in ecommerce through innovation and development. Both the Jtksaari investment in warehouse automation and the increase of the number of products under our own brand have been completed quickly. As planned, AutoStore warehouse automation will be increased during the spring. The company’s first acquisition, announced yesterday, will accelerate the development of and efficient sourcing own brand products. These are crucial steps in the long-term growth plan to reach the goal of EUR 1 billion revenue by 2025. We will continue to grow our business long-term, focusing on customer service and experience, which will result in profitable growth.
I remain optimistic about the future. We have been able adapt to a constantly evolving market and be able respond quickly to changing consumer behavior and customer needs.
I want to thank our staff for their hard work over the past year. We have been able to endure a difficult year, with different degrees of extraordinary measures, and maintain a high level service. This required flexibility and a strong service attitude from everyone in the company.
* GfK panel market. GfK (www.gfk.com) is an independent intelligence platform for the consumer product industry.
FINANCIAL DEVELOPMENT
PROFITABILITY AND REVENUE
|
EUR million |
10-12/2021 |
10-12/2020 |
Change% |
1-12/2021 |
1-12/2020 |
Change% |
|
Revenue |
168.9 |
176.0 |
-4.0% |
574.5 |
553.6 |
3.8% |
|
Operating profit |
5.3 |
6.2 |
-14.0% |
20.3 |
19.6 |
3.6% |
|
Operating margin, % revenue |
3.2% |
3.5% |
3.5% |
3.5% |
||
|
– advisory costs for transfer to Nasdaq Helsinki’s official list |
0.0 |
0.0 |
0.0 |
0.8 |
||
|
Comparable operating profit |
5.3 |
6.2 |
-14.0% |
20.3 |
20.4 |
-0.5% |
|
Comparable operating Margin, % of Revenue |
3.2% |
3.5% |
3.5% |
3.7% |
|
Share of sales |
||||||
|
10-12/2021 |
10-12/2020 |
1-12/2021 |
1-12/2020 |
|||
|
Customer segments |
||||||
|
Consumer |
72% |
77% |
72% |
74% |
||
|
B2B |
20% |
18% |
21% |
18% |
||
|
Export |
7% |
6% |
7% |
8% |
||
|
Sales channels |
0% |
0% |
||||
|
On-line |
63% |
62% |
61% |
56% |
||
|
Off-line |
30% |
33% |
32% |
36% |
||
|
Website visits, million |
25.1 |
29.9 |
80.0 |
87.0 |
||
Sales include orders and deliveries in transit. Export sales are not included in both on-line and offline sales.
October–December 2021
Verkkokauppa.com revenue decreased by 4.0% year-on-year, to 168.9m euros (176). The campaign season, which was typical for the last quarter of 2018, was quieter than anticipated. Customers were also affected by the Corona situation in December which led to a significant decline in sales in brick and mortar stores. Computers, toys, and games were the top-selling product categories.
The fourth quarter saw Verkkokauppa.com’s online sales account for 63 percent (62%). Visitors to Verkkokauppa.com fell year-on-year, with 25.1million (29.9) visits during the fourth quarter. During the comparison period, however, the company managed to convert many online visitors to regular customers, with an increase in conversion rate. Sales to corporate clients (B2B), increased 10.7 per cent, which is 20 percent of total sales (18%). The campaign season saw an increase in export business, with a 7 percent share of total sales (6%). In OctoberDecember, revenue excluding export fell by 5.4 percent.
The net proceeds from consumer financing totaled 1.2 million Euros (1.0), including interest income and fees income.
The OctoberDecember decrease in personnel costs was 7.2 percent to 9.7 millions euros (10.4) The COVID year bonus, which was paid to all employees, made personnel costs more expensive in the comparison period. Other operating expenses rose slightly to 10.1million euros (8.9) during the reporting period. To prepare for high-season sales and campaigns, logistics and warehouse costs were increased to offset possible shortages.
Operating profit (EBIT), a measure of operating profit, decreased by 0.9 million Euros in OctoberDecember to 5.3 million Euros (6.2), which is 3.2 percent less than revenue (3.5%). The decline in sales impacted profitability especially. Comparable operating profit was 5.3m euros (6.2), and profit for the period was 4.0m euros (4.7).
Earnings per share for the last quarter were 0.09 euros (0.10) OctoberDecember.
JanuaryDecember 2021
Verkkokauppa.com’s revenue grew by 3.8% year-on-year, reaching a record high of 574.5 million euros (553.6) in JanuaryDecember.
The net proceeds from consumer financing totaled 4.3 million Euros (3.6), including both interest income, and fee income. At December’s end, the credit loss allowance was 0.8million euros (1.1).
In January-December, personnel costs rose by 2.8 percent to reach 36.6 million euros (35.6). This was mainly due both to IT and to purchasing and assortment handling. Other operating expenses rose slightly to 30.3million euros (28.8) during the reporting period.
Operating profit rose by 0.7 million euro in January-December to 20.3 million euros (19.6). This represents 3.5 percent of revenue (3.5%). Comparable operating profits were 20.3 million euros (20.4) whereas profit for the period was 15.1 million euro (14.6). Comparability was impacted by the 0.8 million euro costs incurred during the stock listing process.
Earnings per share were 0.34 euro (0.25) in JanuaryDecember.
FINANCE & INVESTMENTS
In January-December 2021 the operating cash flow was 6.7 millions euros (16.9) Changes in working capital had a significant impact on operating cash flow. Changes in working capital are driven by the growth of inventories to manage possible availability shortages and prepare for high season campaigns and sales.
Cash and cash equivalents, cash flows and accounts payable reflect seasonal fluctuations. They are usually at their highest points at end of fourth quarter and at their lowest points at end of second quarter.
In January-December 2021, investments totaled 4.9 Million Euros (1.4). The majority of investments went to Jtksaari Automation Warehouse Project. The company incurred 0.4 million euros (0.6) in salary costs over the reporting period. Dividends of EUR 20.1 Million (9.6) were distributed to shareholders in January-December.
Verkkokauppa.com offers revolving credit facilities of 20 million euros. They have not been used.
EVENTS AFTER THE REPORTING PARIO
Verkkokauppa.com made the announcement on 9 February 2022 that it had acquired e-ville.com. Verkkokauppa.com will use the acquisition to expand and strengthen its own brands. The purchase price is approximately EUR 5.3million. EUR 3.3million will be paid in cash, and EUR 2.0million in new shares. A directed share issue to the seller will be made at closing. Additional purchase price installments up to EUR 6.7 million have been agreed between the parties. These will only be payable if combined sales of products under their own brands exceed set targets in 2022, 2023, and/or 2024. The maximum aggregate purchase price may be EUR 12.0million.
The transaction will close in April 2022. Verkkokauppa.com will consolidate the acquired business operations starting in the second quarter of 2022. Verkkokauppa.com’s revenue for 2022 will be positively affected by E-villes operations of EUR 58 millions.
SHORT-TERM RISKS AND BUSINESS UNCERTAINTIES
Verkkokauppa.com’s risks and uncertainties are a reflection of the operating environment and general consumer behaviour, such as demand for consumer electronics, circumstances affecting export trade, availability and price, and the competitive landscape. Business operations can also be affected by uncertainties and risks related to company transactions, investments and procurement, logistics and information technology and other aspects of the business. These uncertainties can have a positive or negative impact on the company’s performance, financial position, and operations.
Verkkokauppa.com’s business and growth prospects may be negatively affected by general uncertainty in the global economic system and the associated uncertainty in the financial market behavior in Europe, Finland and the rest of the world. Inflation and tightening of monetary policies may have an increasing effect on consumer confidence in the economy, and therefore consumer behavior.
People’s lives continue to be affected by the COVID-19 pandemic. In the short-term, we expect that new virus variants or a reemergence of the pandemic will have an impact on company operations. The possibility of a pandemic recurrence could cause uncertainty in the economy, which could impact consumer purchasing behavior. There are still challenges in the production chain and logistics efficiency. This includes availability of products and certain components as well as containers. However, we have taken steps to prepare for possible shortages in stock levels and optimized our inventory accordingly.
BUSINESS OUTLOOK
Verkkokauppa.com’s business operations are expected to grow positively. The company believes it will be able to benefit from online shift and grow its market share in the selected categories. The company can expand its operations according to its strategy thanks to its strong balance sheet.
The shifting consumer behavior, accelerated by COVID-19, has helped the company grow its online sales. The company believes that the shift to online sales by more customers is permanent.
The COVID-19 epidemic will gradually ease. As travel opens up, we can expect to see an increase in export business. However, it is possible for consumers to spend their money on services and traveling. We believe that the pandemic’s side effects, such as component shortages and other issues, could still have an impact upon the availability of certain products through 2022. The possibility of a resurgence could result in uncertainty in household confidence in the economy, which could impact consumer purchasing behavior.
The economic growth in the early part of the year will be slower impacted by pandemic related restrictions*. This could have an impact on consumers behavior during the first half. A pandemic is not the only factor that will impact demand. It will also make it more difficult to forecast and predict the future due to uncertainty surrounding the economy, inflation, availability and geopolitical situations.
*source: Economic survey from the Finlands Ministry of Finance, winter 2021: http://urn.fi/URN:ISBN:978-952-367-886-6
FINANCIAL GUIDANCE FOR 2022
The company expects to generate between EUR 590640 million and EUR 574.5 million in revenue, with comparable operating profit of EUR 1925 million and EUR 20.4 million in 2022.
BOARD PROPOSAL TO PROFIT DISTRIBUTION
The distributable funds of the company were EUR 35,080.298.13 as of 31 December 2021.
The Board of Directors proposes that Verkkokauppa.com Oyj’s profit of EUR 15.093,137.88 for this financial year be transferred into the retained earnings account. The Annual General Meeting is proposed by the Board of Directors that a total dividend of EUR 0.26 per share be paid for 2021. This dividend will be divided into a dividend of EUR 0.060 per share, to be paid in accordance to the Annual General Meeting. The Board of Directors is also authorized to distribute a quarterly dividend at its discretion, not exceeding EUR 0.186 per shares. This proposal is based upon the company’s 2021 results and its liquidity position.
Verkkokauppa.com maintains its dividend policy. The company pays a growing dividend to its owners every quarter.
VERKKOKAUPPA.COMS ANNUAL GENERAL MEETING 2022
An annual general meeting will be held on Thursday, March 24, 2022. The Board of Directors will call the meeting separately.
Helsinki, Finland, 10 Feb 2022
Verkkokauppa.com Oyj
Board of Directors
NEWSCONFERENCES
An analyst conference, investor and media meeting will be held in Finnish on Thursday 10 February 2022 at 10:00 (EEST). Verkkokauppa.com CEO Panu Porkka will discuss the developments during the reporting period.
A press conference in English will take place via Livestream webcast at 11:00 a.m. EEST on Thursday, February 10, 2022. Questions can be sent via e-mail before or during the presentation [email protected].
Both events have presentation materials available at https://investors.verkkokauppa.com/en/presentations. Livestream is available for both press conferences. www.verklive.com.
COMPANY RELEASES EVENTS AND OTHER INFORMATION
Verkkokauppa.com organizes events and publishes its financial reports as follows.
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The Financial Statements for 2021 in the week starting 28 February (week 9 in 2022).
-
AGM on the 24th March 2022
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Interim report January March 2022, Thursday 28 April 2022
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Half-year financial reports for January June 2022 and Thursday 14 July 2022
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Interim report for January-September 2022 on Thursday, 27 October 2022
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Thursday, 9 February 2023: Financial statements bulletin 2022
More information:
Panu Porkka, CEO, Verkkokauppa.com Oyj
[email protected]
Mikko Forsell, CFO, Verkkokauppa.com Oyj
[email protected]
Tel. +358 50 434 2516
Marja Mkinen is Head of Investor Relations at Verkkokauppa.com Oyj
[email protected]
Tel. +358 40 671 2999
Distribution:
Nasdaq Helsinki
Main media
www.verkkokauppa.com
Verkkokauppa.comCustomers are empowered to follow their passions by offering a broad product range of over 80,000 products. Verkkokauppa.com Oyj provides services to its corporate and retail customers through its webstore, megastores and 24h kiosk. It also offers fast delivery and a network of collection points. The company is Finland’s most popular and most visited online retailer. Its deliveries reach approximately 75 percent the Finnish population within 24 hours. The Company has four megastores, located in Oulu Pirkkala Raisio and Helsinki. Its headquarters is also located there. Verkkokauppa.com has more than 750 employees and is listed on the Nasdaq Helsinki stock market under the ticker “VERK”.
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