FINANCIAL INFORMATION:
SECOND QUARTER
- Net sales amounted to SEK 1,861 million (1,710), an increase of 9% compared with the corresponding period last year. Organic growth amounted to 9%.
- EBITA amounted to SEK 139 million (129).
- EBIT amounted to SEK 90 million (83).
- Adjusted EBITA amounted to SEK 141 million (120), an increase of 18% compared to the corresponding period last year.
- Cash flow from operating activities amounted to SEK -49 million (445).
- Profit after tax amounted to SEK 32 million (0).
- Basic and diluted earnings per share amounted to SEK 0.07 (0.00).
SIX MONTHS
- Net sales amounted to SEK 3,699 million (3,303), an increase of 12% compared with the corresponding period last year. Organic growth amounted to 10%.
- EBITA amounted to SEK 272 million (259).
- EBIT amounted to SEK 176 million (168).
- Adjusted EBITA amounted to SEK 268 million (223), an increase of 20% compared to the corresponding period last year.
- Cash flow from operating activities amounted to SEK 11 million (627).
- Profit after tax amounted to SEK 55 million (-4).
- Basic and diluted earnings per share amounted to SEK 0.12 (-0.01).
SIGNIFICANT EVENTS:
IN THE SECOND QUARTER
- Humble Group completed the second and final stage of the real estate sale, which is structured as a sale and leaseback transaction. See note 5 for more information.
- Humble Group held its Annual General Meeting on May 22, 2024. The Annual General Meeting resolved in accordance with the Nomination Committee's proposal to re-elect existing Board members and elect Noel Abdayem as a new Board member, who is also an existing member of the management team.
- Humble Group has extended its existing credit agreement by a total of SEK 300 million, of which SEK 150 million is a short-term loan and SEK 150 million is an extension of the existing revolving credit facility.
AFTER THE QUARTER
- Humble Group invites you to the Capital Markets Day on September 19, 2024.
CEO WORDS FROM THE REPORT
"INCREASED GROSS PROFIT AND STRENGTHENED MARGIN
The second quarter of the year saw a continued increase in sales with organic growth of 9%, with a slightly weaker consumer market and the negative impact of pricing for certain input goods. It is particularly pleasing to see how the efforts to strengthen the gross margin are paying off. The gross margin amounted to 31.5% (29.3%) and gross profit increased by 17%. Combined with good cost control, the adjusted EBITA margin strengthened to 7.6% (7.0%) and adjusted EBITA amounted to SEK 141 million (120), corresponding to an increase of 18%. Taking into account that we have completed the divestment of the property portfolio, which reduced adjusted EBITA by SEK 4 million compared with the same period last year, the relative improvement is 22%. During the period, we have continued to invest strategically in our operations with new machines and product series to meet the demand and order intake we see for the fall and 2025. The strategic investments are also reflected in the tied-up working capital of SEK 199 million, of which SEK 175 million is concentrated in seven operations, which we believe will have an extra high growth going forward. We have had a strong momentum during the last weeks of June and the beginning of July with many ongoing initiatives in a scale-up phase, which contributes to an exciting fall ahead.
The business
We are leaving an intense second quarter behind us, characterized by operational consolidation, optimization of process flows and escalation to more shifts in our factories. The work is continuing but has been affected by some delivery delays of machinery and equipment. The delays have meant that several of the capacity increases and the start-up of new production lines have only had a marginal effect during the period. The aim is for the majority of the strategic initiatives for capacity development to be implemented in the third quarter and in full production before the end of the year. This creates good conditions for continuing to grow organically in 2025 and to meet the delivery rate of products that our brands and B2B customers demand. Some bright spots for the period are expanded capacity for sugar-free candy at Grahns, the production and launch of True Dates, which has already generated sales of SEK 10 million in just a few weeks, and our own soft bar, which is manufactured at Bars Production and sold under the Pro Brands brand. We have received several significant listings for the new products for the autumn window in the service and grocery trade, which provides good conditions to capitalize on the development projects that we have already invested in and run over the past two years.
Several of our most prominent brands have also continued to grow internationally. We started work on a US venture a year ago and now the first products are in transit with a launch planned for after the summer. The US is a huge market with high consumer acceptance for this type of better-for-you products and the response from trade fair participants and the retail chains we have initiated dialog with has been overwhelmingly positive. At the same time, it is an opportunity we approach with caution, given the size of the market and the complexity of both launching and managing the supply chain. Ordinary Swedish candy has had a remarkable boost among younger consumers in social media internationally. During the quarter, we have therefore acquired the domain swedishcandy.com with the aim of launching Swedish candy in both the US and Europe.
Our B2B exposure with contract manufacturing and private label continues to gain market share and we are receiving more and more inquiries from operators and established chains who see Humble as a partner to deliver quality products at an attractive price. The proven business model of our international group companies, such as Solent with its rapid market expansion, provides a counterbalance to our premium brands and we see interesting opportunities to expand in both the Scandinavian and Central European markets.
Results
Net sales continued to develop well with volume driven organic growth of 9%, price development was for the first time in many quarters negligible. The early Easter had a positive impact of 3% in the second quarter and organic growth for the first half-year totaled 10%. Sweden had a slightly weaker development due to product changes and pricing in manufacturing and raw materials. The consumer showed some weakness during the period but recovered strongly in the second half of June. Investments in our international expansion are paying off and sales abroad increased by 17% for the quarter and 15% for the first half.
Gross margin has been a major focus to recover since the macroeconomic conditions deteriorated in 2022 and 2023. It is gratifying to see how we have achieved a consistent improvement for the third quarter in a row. Freight rates from Asia have increased sharply in the first half of the year, but with favorable contracts and efficient management, we have managed to keep these at an attractive level relative to the market. For international freight, we have begun a major consolidation process where we see an upside in gathering additional volume under a common agreement and benefiting from economies of scale such as better pricing and increased volume availability.
As a result of strategic investments in new product lines and market launches, as well as an approaching peak season for several of our businesses, we had a weak development of cash flow after changes in working capital. We are vigilant about working capital ties and aim to normalize them over time around historically lower levels relative to net sales.
During the period and the first half, we have significantly increased the marketing of our products and brands, which are activities that will benefit us in a few years' time. We have also invested in the future growth of our factories, which initially drives costs before the capacity improvements are fully operational. Despite this, we have managed to increase the profitability margin measured as adjusted EBITA by 9% sequentially and 8% compared to last year. The improvement is primarily driven by the increased gross profit and good cost control. With continued growth, there is more margin to be gained from the economies of scale that our platform offers. A large part of the earn-outs have now been paid, which will help improve net interest income going forward. We appreciate the support of extended credit facilities from our banks who want to contribute to Humble's development.
Outlook
Preparations for the change of listing from First North to Nasdaq Stockholm's main list have proceeded according to plan and, barring unforeseen events, the ambition is that our application for a change of listing will be approved and thus implemented during the third quarter of 2024. In addition, we invite you to Humble's Capital Markets Day on Thursday, September 19 in central Stockholm, where participants will have the opportunity to meet more members of Group Management and get to know our four business segments better.
The second half of the year has started well and we are entering with full focus the most intense period with the important months of August-November. We have a target to reduce debt further and seasonally we expect a cash flow release from working capital in the fourth quarter. With a strong order intake and confidence in high demand, we have invested in well-stocked inventories and intend to deliver more products to the market than ever before."
The report is attached and can also be downloaded in full from the company's website here.
For further information, please contact:
Simon Petrén, CEO, Humble Group AB
Tel: +468 61 32 888
Email:simon.petren@humblegroup.com
This information is information that Humble Group AB is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information in this press release was published through the agency of the contact person set out above, at the time stated by Humble Group's news distributor Cision at the time of publication of this press release.
About Humble
Humble Group is a Swedish FMCG group delivering next generation consumer products that are better for people and the planet. Humble's operations consist of the business segments Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution, which have a focus on health and sustainability. The company aims to drive organic and structural growth through acquisitions and with synergies in the business units. For more information visit www.humblegroup.com
Humble is listed on Nasdaq Stockholm, First North Growth Market, under the ticker HUMBLE. FNCA Sweden AB is Humble's certified adviser.
Forward-looking statements
This press release contains forward-looking statements that reflect Humble's intentions, beliefs or expectations regarding Humble's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which Humble operates. Forward-looking statements are statements that are not historical facts and can be identified by the use of words such as "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "anticipates", "should", "could" and, in each case, the negatives thereof, or similar expressions. The forward-looking statements in this press release are based on various assumptions, many of which are based on additional assumptions. Although Humble believes that the assumptions reflected in these forward-looking statements are reasonable, there can be no assurance that they will materialize or that they are accurate. Because these assumptions are based on assumptions or estimates and are subject to risks and uncertainties, actual results or outcomes could differ materially from those in the forward-looking statements for a variety of reasons. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this press release by the forward-looking statements. Humble does not guarantee that the assumptions underlying the forward-looking statements contained in this press release are accurate and any reader of the press release should not place undue reliance on the forward-looking statements contained in this press release. The information, opinions and forward-looking statements expressed or implied herein are made only as of the date of this press release and are subject to change. Neither Humble nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, except as required by law or Nasdaq First North. Growth Markets' Rule Book for Issuers.
