Quarterly Report • Nov 8, 2018
Quarterly Report
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Successful acquisition of FTZ and Inter-Team resulting in record sales
| SUMMARY OF | ||||||||
|---|---|---|---|---|---|---|---|---|
| THE GROUP'S | ||||||||
| EARNINGS TREND | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
| SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Revenue | 1 887 | 1 414 | 33 | 5 028 | 4 492 | 12 | 6 536 | 6 000 |
| Operating profit before | ||||||||
| amortisation and impairment of | ||||||||
| intangible fixed assets (EBITA) | 155 | 157 | -1 | 446 | 515 | -13 | 581 | 649 |
| EBIT | 118 | 127 | -7 | 351 | 427 | -18 | 447 | 522 |
| Profit after financial items | 233 | 119 | 95 | 460 | 388 | 18 | 547 | 475 |
| Profit after tax | 85 | 89 | -4 | 260 | 293 | -11 | 335 | 368 |
| Earnings per share, SEK | 2,30 | 2,43 | -5 | 6,99 | 7,98 | -12 | 9,06 | 10,05 |
| EBITA margin, % | 8 | 11 | 9 | 11 | 9 | 11 | ||
| EBIT margin, % | 6 | 9 | 7 | 9 | 7 | 9 |
| EBIT ADJUSTED FOR ITEMS AFFECTING COMPARABILITY, SEK M |
Jul–Sep 2018 |
Jul–Sep 2017 |
Change, % | Jan–Sep 2018 |
Jan–Sep 2017 |
Change, % | 12 months Oct–Sep |
Full-year 2017 |
|---|---|---|---|---|---|---|---|---|
| EBIT, excluding items affecting comparability |
122 | 120 | 2 | 400 | 420 | -5 | 503 | 515 |
| Items affecting comparability | -4 | 7 | n/a | -49 | 7 | n/a | -56 | 7 |
| EBIT | 118 | 127 | -7 | 351 | 427 | -18 | 447 | 522 |
In early September, we concluded the acquisition of FTZ and Inter-Team, which will almost double Mekonomen Group's sales. The acquisition was part financed with a rights issue of just over SEK 1.6 billion, which was fully subscribed and was concluded in October. I would like to thank investors for your trust and confidence in Mekonomen Group and our expansion into Denmark and Poland which are important strategic moves for the Group.
Mekonomen Group's total revenue increased 33 per cent to SEK 1,887 M (1,414) in the third quarter. Sales growth adjusted for FTZ and Inter-Team, was 5 per cent in the quarter, with positive contribution from the strong NOK in relation to SEK and an increase in the number of proprietary workshops. At the same time, sales were negatively affected by the very hot summer, which meant more workshops were closed and also closed for longer periods than in 2017. Adjusted for FTZ and Inter-Team, number of workdays (same number as the year earlier) and currency effects, revenue rose 2 per cent.
In the third quarter, MECA, Mekonomen and Sørensen og Balchen reported increased net sales compared to the third quarter last year, positively affected by strengthened NOK. Adjusted for number of workdays and currency effects MECA reported an increase in net sales, while net sales in Mekonomen and Sørensen og Balchen did not reach up to last year's level.
EBIT for the Group amounted to SEK 118 M (127) in the third quarter, adversely impacted by items affecting comparability of SEK 4 M (pos. 7), which mainly included costs for the acquisition process. EBIT adjusted for items affecting comparability rose to SEK 122 M (120). EBIT adjusted for FTZ and Inter-Team and items affecting comparability amounted SEK 116 M (120) for the quarter, which is aligned with the preliminary information for the third quarter we communicated on 28 September.
EBIT was adversely impacted by continued weakening of the SEK against EUR and the exceptionally hot summer. In addition, an increase in the number of proprietary workshops compared with the preceding year affected the profitability negatively in the quarter.
During the last year Mekonomen Group's number of proprietary workshops has increased from approximately 40 workshops to just above 70 workshops. Owning a number of workshops ourselves is strategically important in order to develop our strong customer offer and to create value for our shareholders. More proprietary workshops mean increased revenue in the Group, as we also add the earnings of automotive technicians' working hours. In the third quarter, the profitability of the workshops is low due to lower demand for car service during the summer months, while the fixed costs are evenly distributed over the year.
In the third quarter, the newly acquired businesses FTZ and Inter-Team are included from September. The reported net sales and EBIT for September are comparable to last year (prior to acquisition). FTZ reported net sales of SEK 252 M and EBIT of SEK 13 M and Inter-Team reported net sales of SEK 147 M and EBIT of SEK 0 M. The Inter-Team business operates at a lower margin than the Group as a whole and we expect some EBIT margin dilution as a result of the acquisition.
We experienced lower demand for workshop services in the market in July and August. The summer months are normally weaker, but the extremely hot summer further reduced demand. Our assessment is that a large part of the demand that normally occurs during the summer months will not create pent-up demand in the autumn. The need for workshop services which was postponed has resulted in longer waiting times at the workshops in the autumn rather than increased sales.
Both the work with our new digital spare parts catalogue and the work with the joint central warehouse for MECA and Mekonomen in Sweden are progressing according to plan. Our tests with low volumes of the new automation during the summer period went well and we have started our gradual ramp-up during the autumn, which implies that we are putting more and more articles into the new automation solution.
The acquisition of FTZ and Inter-Team has strengthened our position in the Northern Europe. Forward, my focus is to enhance our competitiveness and customer offerings in all our markets and utilise the synergies we can achieve by pooling knowledge in areas such as customer relationship, efficient logistics and innovation. Even if FTZ and Inter-Team will operate as separate businesses the integration is important and the work to achieve purchasing synergies of SEK 100 M with full effect from 2021 has already begun.
The shortage of service technicians and other roles in our industry remains significant and is one of the industry's greatest challenges. Our estimate is that the industry as a whole needs about 6,400 new employees over the next three years. Mekonomen Group is actively engaged in attracting and training new people to become automotive technicians. The high grades needed for admission to our vocational upper secondary school program ProMeister Fordon in Stockholm and Lund confirms the substantial interest in modern education for automotive technicians. The upskilling of existing technicians in, for example, electric and hybrid cars and new technology is a central pillar if we are to meet customer needs in the future with the current rapid technological progress.
I am very positive to the inclusion of FTZ and Inter-Team in Mekonomen Group and I am convinced that we have the right conditions for long-term competitiveness and profitability in all of our main markets – Denmark, Norway, Poland and Sweden.
Pehr Oscarson President and CEO
Mekonomen Group consists of the leading car service chains in northern Europe with proprietary wholesale operations, over 460 stores and more than 3,400 affiliated workshops operating under the Group's brands. Our businesses all have one thing in common: we make car life easier and more affordable for our customers. We do so through a broad and accessible range of affordable and innovative solutions and products for consumers and companies.
Mekonomen Group's business concept is to offer consumers and companies solutions for a simpler and more affordable car life by using clear and innovative concepts, high quality and an efficient logistics chain.
Mekonomen Group's five segments – FTZ, Inter-Team, MECA, Mekonomen and Sørensen og Balchen – are responsible for their own wholesale operations. The supply of goods is mainly from suppliers in Europe and Asia. Through our stores, we sell and deliver spare parts and accessories to our affiliated workshops as well as other B2B customers, partner stores and consumers.
| TOTAL REVENUE | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
|---|---|---|---|---|---|---|---|---|
| DISTRIBUTION, SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Net sales, external, per segment |
||||||||
| FTZ | 252 | - | 252 | - | 252 | - | ||
| Inter-Team | 147 | - | 147 | - | 147 | - | ||
| MECA | 467 | 442 | 6 | 1 500 | 1 431 | 5 | 1 976 | 1 907 |
| Mekonomen | 656 | 650 | 1 | 2 014 | 2 004 | 1 | 2 693 | 2 683 |
| Sørensen og Balchen | 180 | 178 | 1 | 571 | 603 | -5 | 746 | 778 |
| Other segments | 148 | 103 | 44 | 432 | 346 | 25 | 567 | 482 |
| Total net sales, Group | 1 850 | 1 372 | 35 | 4 915 | 4 383 | 12 | 6 382 | 5 850 |
| Other operating revenue | 37 | 42 | -12 | 113 | 109 | 4 | 154 | 150 |
| GROUP REVENUE | 1 887 | 1 414 | 33 | 5 028 | 4 492 | 12 | 6 536 | 6 000 |
Revenue distribution per country and segment is presented in the table on page 18.
| GROWTH EXCL. FTZ AND INTER-TEAM PER CENT |
MECA | Mekonomen | Sørensen og Balchen | Group | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2018 | Q3 | Jan–Sep | Q3 | Jan–Sep | Q3 | Jan–Sep | Q3 | Jan–Sep | |
| Underlying increase | 2,2 | 3,6 | -1,0 | -0,2 | -4,7 | -7,4 | 2,4 | 2,0 | |
| Currency effects | 3,4 | 1,5 | 2,0 | 0,9 | 6,0 | 2,6 | 2,7 | 1,2 | |
| Effect, workdays | 0,0 | -0,3 | 0,0 | -0,2 | 0,0 | -0,5 | 0,0 | -0,2 | |
| Nominal increase | 5,6 | 4,8 | 1,0 | 0,5 | 1,2 | -5,3 | 5,1 | 3,0 | |
| SALES IN COMPARABLE UNITS – growth compared with the same period of previous year, local currency |
Group | |
|---|---|---|
| PER CENT | Third quarter 2018 | Jan–Sep 2018 |
| Sales growth in comparable units | 1,2 | -0,8 |
Revenue amounted to SEK 1,887 M (1,414). Adjusted for the acquisition of FTZ and Inter-Team and positive currency effects (SEK 39 M), revenue rose 2 per cent. During the quarter, the number of workdays was unchanged in Sweden and Norway, compared with the year-earlier period. Calculated on comparable workdays and adjusted for currency effects, revenue increased 2 per cent excluding FTZ and Inter-Team. Sales in comparable units rose 1 per cent in local currency. The decline in sales of DAB products had an adverse impact of approximately SEK 21 M compared to last year.
Revenue amounted to SEK 5,028 M (4,492). Adjusted for FTZ and Inter-Team and positive currency effects (SEK 56 M), revenue rose 2 per cent. During the period, the number of workdays was unchanged in Sweden and one day less in Norway, compared with the year-earlier period. Calculated on comparable workdays and adjusted for currency effects, revenue increased 2 per cent excluding FTZ and Inter-Team. Sales in comparable units declined 1 per cent in local currency. The decline in sales of DAB products had an adverse impact on revenue of approximately SEK 121 M.
EBITA amounted to SEK 155 M (157) and the EBITA margin was 8 per cent (11). EBITA was negatively impacted by items affecting comparability of SEK 4 M (pos: 7), attributable to costs for the acquisition process of FTZ and Inter-Team. During the quarter, currency effects in the balance sheet had a positive impact of SEK 4 M (6).
EBIT amounted to SEK 118 M (127) and the EBIT margin amounted to 6 per cent (9). EBIT was negatively impacted by items affecting comparability of SEK 4 M (pos: 7), attributable to costs for the acquisition process of FTZ and Inter-Team. During the quarter, currency effects in the balance sheet had a positive impact of SEK 4 M (6).
Profit after financial items amounted to SEK 233 M (119). Net interest expense was SEK 16 M (expense: 7) and other financial items amounted to income of SEK 131 M (expense: -1) related to currency effects connected to the long term loans. Profit after tax totaled SEK 85 M (89). The tax expense was negatively impacted by the impairment of deferred tax assets pertaining to Group deductions for earlier loss carryforwards in Denmark pursuant to the acquisition of FTZ totaling SEK 93 M. Corporate tax in Sweden will be reduced in two steps from 2019, which will have an effect on the calculation of deferred tax in the balance sheet, and this had a positive impact on the tax expense of SEK 7 M. Earnings per share, before and after dilution, amounted to SEK 2.30 (2.43).
EBITA amounted to SEK 446 M (515) and the EBITA margin was 9 per cent (11). EBITA was negatively impacted by items affecting comparability totalling SEK 49 M (pos: 7), of which SEK 20 M was attributable to costs for impairment of DAB product stocks for the Norwegian market, SEK 23 M to costs for the acquisition process of FTZ and Inter-Team and SEK 6 M to the divestment of Marinshopen. Currency effects in the balance sheet had a positive impact of SEK 1 M (4) on EBITA.
EBIT amounted to SEK 351 M (427) and the EBIT margin amounted to 7 per cent (9). EBIT was negatively impacted by items affecting comparability totalling SEK 49 M (pos: 7), of which SEK 20 M was attributable to impairment of DAB product stocks for the Norwegian market, SEK 23 M to costs for the acquisition process of FTZ and Inter-Team and SEK 6 M to the divestment of Marinshopen. Currency effects in the balance sheet had a positive impact of SEK 1 M (4) on EBIT.
Profit after financial items amounted to SEK 460 M (388). Net interest expense was SEK 30 M (expense: 19) and other financial items amounted to income of SEK 139 M (expense: 20) related to currency effects connected to the long term loans. Profit after tax amounted to SEK 260 M (293). The tax expense was negatively impacted by the impairment of deferred tax assets pertaining to Group deductions for earlier loss carryforwards in Denmark pursuant to the acquisition of FTZ totaling SEK 93 M. Corporate tax in Sweden will be reduced in two steps from 2019, which will have an effect on the calculation of deferred tax in the balance sheet, and this had a positive impact on the tax expense of SEK 7 M. Earnings per share, before and after dilution, amounted to SEK 6.99 (7.98).
Cash flow from operating activities in the third quarter amounted to SEK 176 M (79) and SEK 417 M (250) for the nine-month period. Tax paid amounted to SEK 18 M (29) for the third quarter and to SEK 145 M (183) for the nine-month period. Cash and cash equivalents amounted to SEK 346 M (194), compared with SEK 254 M at year-end. The equity/assets ratio was 21 per cent (42). Long-term interest-bearing liabilities amounted to SEK 3,482 M (1,459), compared with SEK 1,453 M at year-end. Current interest-bearing liabilities amounted to SEK 2,494 M (371), compared with SEK 255 M at year-end.
Net debt amounted to SEK 5,622 M (1,625) compared with SEK 1,444 M at year-end, representing an increase of SEK 4,178 M from prior year-end. The increase in net debt is largely attributable to loans raised in conjunction with the acquisition of FTZ and Inter-Team of SEK 4,265 M, a dividend of SEK 259 M, and an effect of repayments, investments and acquisitions, and a positive operating cash flow. Loan repayments totaled SEK 34 M in the quarter.
Investments in fixed assets amounted to SEK 25 M (79) in the third quarter, and to SEK 169 M (134) for the nine-month period. Depreciation and impairment of tangible fixed assets amounted to SEK 23 M (15) for the third quarter and to SEK 56 M (45) for the nine-month period. Investments in the ongoing establishment and inventories for the central warehouse in Strängnäs totaled SEK 2 M (65) in the third quarter, and SEK 98 M (71) for the nine-month period. Investments now amount to a total of SEK 187 M.
Company and business combinations amounted to SEK 4,325 M (14) during the third quarter and to SEK 4,377 M (57) for the nine-month period, of which SEK 0 M (1) pertained to an estimated supplementary purchase consideration for the third quarter and SEK 3 M (13) for in the nine-month period. In addition, supplementary purchase considerations of SEK 0 M (0) were paid in the quarter, and SEK 5 M (3) in the nine-month period. Acquired assets totaled SEK 2,816 M (13) and assumed liabilities SEK 1,416 M (2) for the nine-month period. In addition to goodwill, which amounted to SEK 1,900 M (20), intangible surplus values of SEK 829 M (26) were identified pertaining to customer relations and brands of SEK 548 M (0). Deferred tax liabilities attributable to acquired intangible fixed assets amounted to SEK 300 M (1). Acquired non-controlling interests amounted to SEK 0 M (2) in the third quarter and to SEK 0 M (8) for the nine-month period. Divested non-controlling interests amounted to SEK 0 M (0) for the nine-month period. Divested businesses amounted to SEK 0 M (10) in the third quarter and SEK 6 M (10) for the nine-month period.
On 6 July Mekonomen entered into an agreement to acquire all shares in the automotive spare-parts distributors FTZ Autodele & Verktøj A/S ("FTZ") in Denmark and INTER-TEAM Sp.z.o.o. ("Inter-Team") in Poland. After approvals had been received from relevant authorities the acquisition of FTZ and Inter-Team was completed by 3 September, 2018. The consideration of the shares has been fully submitted and paid in cash and the total consideration amounted to 404 MEUR, recalculated at the exchange rate at the transaction day to 4,284 MSEK. FTZ and Inter-Team are included in Mekonomen financial reporting from the day of acquisition 3 September 2018.
In addition to FTZ and Inter-team during the third quarter the Group has also acquired five workshops in Eskilstuna, Lund, Rosersberg, Nödinge and Nybro and one workshop in Jaren and one workshop in Trøndelag in Norway. Acquisition has also been made of Bilglascentralen with operations in Gothenburg and 51 per cent of the shares in Mekster AB, which sells spare parts online. These acquisitions only have a marginal impact on consolidated sales and earnings.
See the preliminary effects of the acquisitions on page 20-21
The Group has acquired ten workshops in Värnamo, Gislaved, Hedemora, Trollhättan, Strömstad, Borås, Gävle and Nynäshamn, and acquired a 65 per cent stake in Allt i Bil AB, with seven workshops in Sweden as well as Sandefjord and Skøyen in Norway, and established four workshops in Karlskoga, Karlshamn, Skellefteå and Kiruna. Four stores were also acquired in Sweden, Hedemora, Vårby, Kristinehamn and Söderhamn. The acquisitions had only a marginal impact on consolidated sales and earnings.
At the end of the period, the total number of stores in the chains was 466 (345), of which 393 (266) were proprietary stores. The number of affiliated workshops totaled 3,413 (2,026). See the distribution in the table on page 19.
During the period, the average number of employees was 2,561 (2,156). See the distribution in the table on page 19.
To adapt segment reporting to the changed internal organisation and governance, a new segment division has been implemented. As of the first quarter of 2018 until the second quarter, the Group was reported in three segments – MECA, Mekonomen and Sørensen og Balchen. Reporting according to the new segment division occurred for the first time in the first quarter of 2018. The comparative figures have been restated. For further information, refer to "Accounting policies." From the third quarter 2018, the two new units FTZ and Inter-Team will be reported in two additional segments.
| FTZ | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Net sales, external | 252 | - | - | 252 | - | - | 252 | - |
| Operating profit before amortisation | ||||||||
| and impairment of intangible | ||||||||
| assets (EBITA) | 14 | - | - | 14 | - | - | 14 | - |
| EBIT | 13 | - | - | 13 | - | - | 13 | - |
| EBITA margin, % | 5 | - | 5 | - | 5 | - | ||
| EBIT margin, % | 5 | - | 5 | - | 5 | - | ||
| Number of stores/of which proprietary | 51 / 51 | 0 / - | - | |||||
| Number of AutoMester | 423 | - | - | |||||
| Number of Din BilPartner | 136 | - | - | |||||
| Number of HELLA Service Partner | 336 | - | - | |||||
| Number of CarPeople | 26 | - | - |
The FTZ segment mainly includes wholesale and store operations in Denmark and is part of this report since September, or only one month.
During the third quarter, FTZ reported net sales and EBIT for September comparable to last year (prior to acquisition).
Net sales amounted to SEK 252 M (-) for the quarter and to SEK 252 M (-) for the period. EBIT amounted to SEK 13 M (-) for the third quarter and EBIT margin to 5 per cent (-).
| INTER-TEAM | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Net sales, external | 147 | - | - | 147 | - | - | 147 | - |
| Operating profit before amortisation | ||||||||
| and impairment of intangible | ||||||||
| assets (EBITA) | 0 | - | - | 0 | - | - | 0 | - |
| EBIT | 0 | - | - | 0 | - | - | 0 | - |
| EBITA margin, % | 0 | - | 0 | - | 0 | - | ||
| EBIT margin, % | 0 | - | 0 | - | 0 | - | ||
| Number of stores/of which proprietary | 82 / 79 | 0 / - | - | |||||
| Number of O.K. Serwis | 282 | - | - | |||||
| Number of INTER DATA SERVICE | 178 | - | - |
The Inter-Team segment mainly includes wholesale and store operations in Poland and the export business and is part of this report since September, or only one month.
During the third quarter, Inter-Team reported net sales and EBIT for September comparable to last year (prior to acquisition). The Inter-Team business operates at a lower margin than the Group as a whole.
Net sales amounted to SEK 147 M (-) for the quarter and to SEK 147 M (-) for the period. EBIT amounted to SEK 0 M (-) for the third quarter and EBIT margin 0 per cent (-).
| MECA | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Net sales, external | 467 | 442 | 6 | 1 500 | 1 431 | 5 | 1 976 | 1 907 |
| Operating profit before amortisation | ||||||||
| and impairment of intangible | ||||||||
| assets (EBITA) | 51 | 58 | -13 | 216 | 229 | -5 | 261 | 273 |
| EBIT | 48 | 56 | -15 | 208 | 222 | -6 | 251 | 265 |
| EBITA margin, % | 11 | 13 | 14 | 16 | 13 | 14 | ||
| EBIT margin, % | 10 | 13 | 14 | 15 | 12 | 14 | ||
| Number of stores/of which proprietary | 85 / 77 | 86 / 76 | 86 / 76 | |||||
| Number of MECA Car Service | 706 | 708 | 722 |
The MECA segment mainly includes wholesale and store operations in Sweden and Norway, and fleet operations in Sweden.
MECA reported a good sales development in the third quarter, despite the unusual warm summer. Sales to MECA Car Service workshops and other major customers remained favorable. The strong sales growth in the Norwegian operations is mainly affected by strong NOK and positive sales contribution from acquired workshops. EBIT was negatively affected by higher purchasing prices, due to strong EUR, and increased costs related to the higher number of proprietary workshops compared to the third quarter last year.
Net sales totaled SEK 467 M (442) for the quarter, of which net sales in the Swedish operations amounted to SEK 214 M (216) and in the Norwegian operations to SEK 253 M (227). For the nine-month period, net sales amounted to SEK 1,500 M (1,431), of which net sales in the Swedish operations amounted to SEK 707 M (700) and in the Norwegian operations to SEK 792 M (731). The currency effect on net sales against the NOK was a positive SEK 15 M for the quarter and a positive SEK 22 M for the nine-month period. The number of workdays in the quarter was unchanged in Sweden and Norway compared with the year-earlier quarter and unchanged for the nine-month period in Sweden, but with one day less in Norway. Underlying net sales rose 2 per cent in the third quarter and 4 per cent in the nine-month period. MECA's EBIT totaled SEK 48 M (56) for the third quarter and EBIT margin amounted to 10 per cent (13).
| MEKONOMEN 1) | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Net sales, external | 656 | 650 | 1 | 2 014 | 2 004 | 1 | 2 693 | 2 683 |
| Operating profit before amortisation and impairment of intangible |
||||||||
| assets (EBITA) | 92 | 80 | 15 | 244 | 237 | 3 | 333 | 325 |
| EBIT | 90 | 79 | 15 | 240 | 234 | 3 | 318 | 313 |
| EBITA margin, % | 14 | 12 | 12 | 11 | 12 | 12 | ||
| EBIT margin, % | 13 | 12 | 12 | 11 | 11 | 11 | ||
| Number of stores/of which proprietary | 173 / 145 | 179 / 148 | 175 / 145 | |||||
| Number of Mekonomen Service Centres | 730 | 747 | 746 | |||||
| Number of MekoPartner | 226 | 230 | 236 |
1) As of 1 January 2018, Marinshopen has been included in "Other segments" instead of the Mekonomen segment, the comparative figures have not been restated. Marinshopen's net sales amounted to SEK 8 M for the third quarter of 2017, to SEK 22 M for the January–September 2017 period, and to SEK 26 M for the full-year 2017. EBIT totalled SEK 0 M in the third quarter of 2017, a negative SEK 1 M for the January–September 2017 period, and a negative SEK 12 M, including impairment losses on goodwill of SEK 9 M, for the full-year 2017.
The Mekonomen segment mainly includes wholesale, store and fleet operations in Sweden and Norway.
In the third quarter Mekonomen presented a good sales growth to affiliated workshops. The segment reported a net sales in line with last year, despite being adversely impacted by the extremely hot summer. Sales growth in the Norwegian operations is mainly affected by strong NOK against SEK. EBIT was negatively affected by increased purchasing prices, which was offset by strong cost control in the Swedish operations.
Net sales totaled SEK 656 M (650) for the quarter, of which net sales in the Swedish operations amounted to SEK 433 M (439) and in the Norwegian operations to SEK 223 M (210). For the nine-month period, net sales amounted to SEK 2,014 M (2,004), of which net sales in the Swedish operations totaled SEK 1,343 M (1,348) and in the Norwegian operations SEK 671 M (656). The currency effect on net sales against the NOK was a positive SEK 13 M for the quarter and a positive SEK 18 M for the nine-month period. The number of workdays in the quarter was unchanged in Sweden and Norway compared with the year-earlier quarter and unchanged for the nine-month period in Sweden, but with one day less in Norway. Underlying net sales declined 1 per cent during the quarter and were largely unchanged for the nine-month period. Mekonomen's EBIT totaled SEK 90 M (79) for the third quarter and EBIT margin amounted to 13 per cent (12).
| SØRENSEN OG BALCHEN | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year | ||
|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | Chg, % | 2018 | 2017 | Chg, % | Oct–Sep | 2017 |
| Net sales, external | 180 | 178 | 1 | 571 | 603 | -5 | 746 | 778 |
| Operating profit before amortisation and impairment of intangible |
||||||||
| assets (EBITA) | 29 | 27 | 8 | 82 | 94 | -12 | 109 | 120 |
| EBIT | 29 | 27 | 8 | 82 | 93 | -12 | 109 | 120 |
| EBITA margin, % | 16 | 15 | 14 | 15 | 14 | 15 | ||
| EBIT margin, % | 16 | 15 | 14 | 15 | 14 | 15 | ||
| Number of stores/of which proprietary | 66 / 38 | 74 / 39 | 68 / 39 | |||||
| Number of BilXtra | 262 | 261 | 258 |
The Sørensen og Balchen segment mainly includes wholesale and store operations in Norway.
Sørensen og Balchen reported increased net sales in the third quarter that were positively impacted by the strong NOK, while the exceptionally hot summer had an adverse impact. The segment continued to report efficient cost control during the third quarter.
Net sales amounted to SEK 180 M (178) for the quarter and to SEK 571 M (603) for the nine-month period. During the quarter, the currency effect on net sales against the NOK was a positive SEK 11 M for the second quarter and a positive SEK 16 M for the nine-month period. The number of workdays was unchanged in Norway compared with the year-earlier period, but one day less during the nine-month period. Underlying net sales decreased 5 per cent in the third quarter, and 7 per cent in the nine-month period. Sørensen og Balchen's EBIT totaled SEK 29 M (27) for the third quarter and the EBIT margin was 16 per cent (15).
| GROWTH PER CUSTOMER GROUP – growth compared with the same period |
July–September 2018 | January-September 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| of previous year | Affiliated | Consumers | Other | Partner | Affiliated | Consumers | Other | Partner | ||
| PER CENT | workshops | B2B customers | stores 1) | workshops | B2B customers | stores 1) | ||||
| Nominal growth | 38,9 | -2,8 | 56,2 | 6,5 | 20,7 | -2,1 | 13,4 | -0,1 | ||
| Currency adj. growth | 35,0 | -5,2 | 51,5 | 2,7 | 19,2 | -3,3 | 11,9 | -1,7 |
1) Change in growth for partner stores can become large percentages, as for instance in cases of stockbuilding and acquisitions, but are minor amounts for the Group.
| – growth compared with the same period of previous year |
Affiliated | Consumers | Other | Partner | Affiliated | Consumers | Other | Partner |
|---|---|---|---|---|---|---|---|---|
| PER CENT | workshops | B2B customers | stores 1) | workshops | B2B customers | stores 1) | ||
| Nominal growth | 19,0 | -3,4 | -2,4 | 6,5 | 14,5 | -2,3 | -4,5 | -0,1 |
| Currency adj. growth | 15,7 | -5,8 | -5,4 | 2,7 | 13,1 | -3,5 | -5,7 | -1,7 |
1) Change in growth for partner stores can become large percentages, as for instance in cases of stockbuilding and acquisitions, but are minor amounts for the Group.
Mekonomen has no actual seasonal effects in its operations. However, the number of workdays affects both sales and earnings.
| WORKDAYS | Q1 | Q2 | Q3 | Q4 | Full-year | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BY COUNTRY | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 |
| Sweden | 63 | 64 | 61 | 60 | 59 | 62 | 65 | 65 | 66 | 62 | 63 | 64 | 250 | 251 | 253 |
| Norway | 62 | 65 | 61 | 60 | 58 | 62 | 65 | 65 | 66 | 62 | 63 | 64 | 249 | 251 | 253 |
| Denmark | - | - | - | - | - | - | 65 | - | - | 62 | - | - | 250 | - | - |
| Poland | - | - | - | - | - | - | 64 | - | - | 63 | - | - | 251 | - | - |
The company conducted a review and assessment of operating and financial risks and uncertainties in accordance with the 2017 Annual Report. Since then, two large companies (FTZ and Inter-Team) have been added. Our assessment is that this has not resulted in any new significant risk areas but that currency and interest rate exposure increased as a result of increased foreign operation and larger loans. A full assessment will be presented in the annual report 2018. For the effect of exchange-rate fluctuations on profit before tax, refer to page 38 of the 2017 Annual Report. For a full presentation of the risks affecting the Group, refer to the 2017 Annual Report.
The Parent Company's operations mainly comprise Group Management and finance management. The Parent Company's earnings after net financial items were a positive SEK 102 M (neg: 3) for the third quarter and a positive SEK 88 M (neg: 30) for the nine-month period excluding share dividends of SEK 340 M (315) from subsidiaries for the nine-month period. The average number of employees was 5 (5). During the quarter, Mekonomen AB sold goods and services to Group companies totalling SEK 8 M (9) and for SEK 19 M (31) in the nine-month period.
"Other segments" includes business operations and operating segments that are not reported separately. These include Mekonomen's wholesale and store operations in Finland, Meko Service Nordic with the BilLivet workshop operations, the Speedy workshop operations, the Allt i Bil workshop operations, the Tunga Fordon, ProMeister Solutions, Preqas, the Mekster operations, the Mekonomen car leasing services, a joint venture in Poland (InterMeko Europa), Lasingoo Norge and Group-wide functions that also include Mekonomen AB (publ). Mekonomen's store operations in Iceland were divested during the first quarter and Marinshopen was divested during the second quarter.
The Tunga Fordon, ProMeister Solutions, Preqas and MECA Scandinavia AB operations were previously reported under MECA but have been part of "Other segments" since the first quarter of 2018. Comparative figures have been restated.
The units reported in "Other Segments" do not reach the quantitative thresholds for separate reporting and the benefits of reporting them as separate segments are considered limited for users of the financial statements. EBIT for "Other segments" amounted to a negative SEK 36 M (neg: 15) in the third quarter and negative SEK 128 M (neg: 65) for the nine-month period.
"Other items" includes acquisition-related items attributable to Mekonomen AB's direct acquisitions. Current acquisition-related items are amortisations of acquired intangible assets pertaining to the acquisitions of MECA, Sørensen og Balchen, FTZ and Inter-Team totaling an expense of SEK 26 M (expense: 19) for the third quarter and an expense of SEK -64 M (expense: -58) for the nine-month period.
The Board of Mekonomen AB resolved on 24 August 2018, subject to the approval of the General Meeting, to increase the company's share capital via a rights issue for Mekonomen's shareholders. The Board decision was approved by shareholders at an Extraordinary General Meeting on 26 September 2018.
The subscription price was set at SEK 79 per share.
The result from the rights issue, for which the subscription period ended on 18 October 2018, showed that the rights issue is oversubscribed. As a result of the rights issue, Mekonomen has received proceeds amounting to approximately SEK 1,621m. The right issue will increase Mekonomen´s share capital with 51,287,837.50 to SEK 141,041,055.00 by issuing 20,515,135 shares. The number of shares in Mekonomen after the rights issue will amount to 56,416,622 shares. The bridgeloan that was intended to be repaid with the rights issue as a part of the financing of the acquisition of FTZ and Inter-Team has been repaid after completion of the rights issue.
Mekonomen Group applies the International Financial Reporting Standards (IFRS) as adopted by the EU. This interim report was prepared in accordance with the Annual Accounts Act and IAS 34 Interim Financial Reporting. The same accounting policies and measurement methods were applied as in the most recent Annual Report with the exception of IFRS 15 and IFRS 9, which are described below. This interim report consists of pages 1–26 and should be read in its entirety.
New standards or interpretations that became effective on or after 1 January 2018 have not had any material effect on Mekonomen Group's financial statements for the interim period.
As of 1 January 2018, Mekonomen Group applies IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. Neither IFRS 15 nor IFRS 9 have had any material effect on Mekonomen Group's financial statements, except for expanded disclosure requirements. The adoption of IFRS 15 has not had any material effect on revenue recognition in the consolidated income statement. Total assets in the balance sheet rose SEK 8 M in the third quarter of 2018 due to gross recognition of provisions for returned goods. The Group has chosen to use the modified retrospective application which is why the comparative figures have not been restated. Nor has the introduction of IFRS 9 affected the consolidated income statement or total assets in any material amounts. Impairment of accounts receivable and loan receivables will follow the simple model in IFRS 9. The Group has chosen to use the modified retrospective application, which is why comparative figures have not been restated.
IFRS 16 Leasing is a new accounting policy that will become effective as of 1 January 2019. The Group has not yet completed its assessment of the effects of IFRS 16, but does expect the standard to have a material impact on total assets, increased fixed assets and liabilities, as well as on EBITDA and interest expenses in the income statement.
The Parent Company prepares its accounts in accordance with the Swedish Annual Accounts Act and RFR 2 and applies the same accounting policies and measurement methods as in the most recent Annual Report.
As of 1 January 2018, Mekonomen Group has implemented a new organisation that is better adapted to the business. The organisational change and related changes to internal control have also affected the segment reporting. As of the first quarter until the second quarter of 2018, Mekonomen Group presented three segments: MECA, Mekonomen and Sørensen og Balchen.
The MECA segment comprises MECA Sweden and MECA Norway. The Mekonomen segment comprises Mekonomen Sweden and Mekonomen Norway. The Sørensen og Balchen segment is unchanged. The Tunga Fordon, ProMeister Solutions, Preqas and MECA Scandinavia AB operations that were previously reported under MECA, are now included in "Other segments." Comparative figures have been restated. Marinshopen, which was previously included in Mekonomen Sweden, was also reported until its divestment in May 2018 in "Other segments." Comparative figures have not been restated.
MECA Sweden and MECA Norway, like Mekonomen Sweden and Mekonomen Norway, have been merged into the MECA and Mekonomen segments, respectively, since the operations in Sweden and Norway work under the same brand, sell similar products through their stores to the same type of customer categories, and operate their businesses under similar conditions.
As of September 2018, the new FTZ and Inter-Team operations will also be reported in two separate segments.
| Information | Period | Date |
|---|---|---|
| Year-end report | January–December 2018 | 2019-02-14 |
| Interim report | January–March 2019 | 2019-05-02 |
| Interim report | January–June 2019 | 2019-08-23 |
| Interim report | January–September 2019 | 2019-11-08 |
| Year-end report | January–December 2019 | 2020-02-07 |
The 2018 Annual General Meeting will be held on 2 May 2019 in Stockholm. The Annual Report will be published and available on Mekonomen's website by 11 April 2019.
In accordance with the guidelines established at the Annual General Meeting on 9 May 2018, Mekonomen has established a Nomination Committee. The Nomination Committee shall prepare and submit proposals to the Annual General Meeting on 2 May 2019 pertaining to the election of a Chairman of the Annual General Meeting, the number of Board members and deputy members, the election of a Chairman and other members to the company's Board of Directors, Board fees, as well as any remuneration for committee work, election of and fees paid to auditors, and guidelines for the appointment of the Nomination Committee.
Prior to the 2019 Annual General Meeting, the Nomination Committee consists of John Quinn, LKQ Corporation, Evert Carlsson, Swedbank Robur Fonder, Arne Lööw, Fjärde AP-fonden and Carl Gustafsson, Didner & Gerge Småbolagsfond. John Quinn has been appointed Chairman of the Nomination Committee. Mekonomen's Board member, Helena Skåntorp, was co-opted to the Nomination Committee.
Stockholm, 8 November, 2018 Mekonomen AB (publ), Corp. Reg. No. 556392-1971
Pehr Oscarson President and CEO
For further information, please contact: Pehr Oscarson, President and CEO, Mekonomen AB, tel +46 (0)8-464 00 00 Åsa Källenius, CFO, Mekonomen AB, tel +46 (0)8-464 00 00 Helena Effert, IRO, Mekonomen AB, tel +46 (0)8-464 00 00
This information is such information that Mekonomen AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act.
The information was submitted for publication, through the agency of the contact person set out above, at 07:30 a.m CET on 8 November 2018.
The interim report is published in Swedish and English. The Swedish version is the original version and has been translated into English.
We have reviewed the condensed interim financial information (interim report) of Mekonomen AB (publ) at 30 September 2018 and the nine-month period that ended on that date. The Board of Directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express an opinion on this interim report based on our review.
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity . A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards of Auditing (ISA), and other generally accepted auditing practices in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. The conclusion based on a review does not give the same level of assurance as an opinion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, 8 November 2018
PricewaterhouseCoopers AB
Lennart Danielsson Linda Corneliusson Authorised Public Accountant Authorised Public Accountant Auditor-in-charge
| CONDENSED CONSOLIDATED INCOME | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| STATEMENT, SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Net sales | 1 850 | 1 372 | 4 915 | 4 383 | 6 382 | 5 850 |
| Other operating revenue | 37 | 42 | 113 | 109 | 154 | 150 |
| Total revenue | 1 887 | 1 414 | 5 028 | 4 492 | 6 536 | 6 000 |
| Goods for resale | -900 | -626 | -2 297 | -1 997 | -2 955 | -2 654 |
| Other external costs | -365 | -284 | -1 050 | -910 | -1 389 | -1 249 |
| Personnel expenses | -444 | -332 | -1 179 | -1 025 | -1 540 | -1 386 |
| Operating profit before depreciation/ | ||||||
| amortisation and impairment of tangible | ||||||
| and intangible fixed assets (EBITDA) | 177 | 172 | 502 | 560 | 652 | 710 |
| Depreciation and impairment of tangible fixed assets |
||||||
| Operating profit before amortisation and | -23 | -15 | -56 | -45 | -71 | -60 |
| impairment of intangible | ||||||
| fixed assets (EBITA) | 155 | 157 | 446 | 515 | 581 | 649 |
| Amortisation and impairment of intangible | ||||||
| fixed assets | -37 | -30 | -96 | -88 | -134 | -127 |
| EBIT | 118 | 127 | 351 | 427 | 447 | 522 |
| Interest income | 2 | 1 | 3 | 3 | 4 | 4 |
| Interest expenses | -18 | -8 | -33 | -21 | -41 | -29 |
| Other financial items | 131 | -1 | 139 | -20 | 136 | -23 |
| Profit after financial items | 233 | 119 | 460 | 388 | 547 | 475 |
| Tax | -147 | -30 | -200 | -95 | -212 | -107 |
| PROFIT FOR THE PERIOD | 85 | 89 | 260 | 293 | 335 | 368 |
| Profit for the period attributable to: | ||||||
| Parent Company's shareholders | 83 | 87 | 251 | 286 | 325 | 361 |
| Non-controlling interests | 3 | 2 | 9 | 7 | 10 | 7 |
| PROFIT FOR THE PERIOD | 85 | 89 | 260 | 293 | 335 | 368 |
| Earnings per share before and after dilution, SEK |
2,30 | 2,43 | 6,99 | 7,98 | 9,06 | 10,05 |
| CONSOLIDATED STATEMENT OF | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| COMPREHENSIVE INCOME, SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Profit for the period | 85 | 89 | 260 | 293 | 335 | 368 |
| Other comprehensive income: | ||||||
| Components that will not be reclassified to profit/loss for the year: |
||||||
| - Actuarial gains and losses | -2 | - | -2 | - | -1 | 0 |
| Components that may later be reclassified to profit/loss for the year: |
||||||
| - Exchange-rate differences from translation of foreign subsidiaries 1) |
-151 | 11 | -49 | -31 | -70 | -51 |
| - Cash-flow hedges 2) | 1 | 1 | 2 | 2 | 3 | 3 |
| Other comprehensive income, net after tax | -152 | 11 | -49 | -29 | -68 | -48 |
| COMPREHENSIVE INCOME FOR THE PERIOD | -67 | 101 | 211 | 265 | 267 | 320 |
| Comprehensive income for the period attributable to: |
||||||
| Parent Company's shareholders | -69 | 99 | 201 | 258 | 256 | 313 |
| Non-controlling interests | 2 | 2 | 10 | 7 | 10 | 7 |
| COMPREHENSIVE INCOME FOR THE PERIOD | -67 | 101 | 211 | 265 | 267 | 320 |
1) At 30 September 2018, the accumulated translation reserve pertaining to former operations in Denmark was a negative SEK -14 M (i.e. excluding translation differences for
FTZ). The translation reserve pertaining to Denmark will be reclassified in shareholders' equity via the income statement in the amount applicable at that time
if the Danish company is liquidated, which will be investigated in the future. The translation of Danish subsidiaries (exkl FTZ) amounted to SEK 0 M (0) in other comprehensive
income for the quarter and a loss of SEK 1 M (0) for the nine-month period.
2) Holding of financial interest-rate derivatives for hedging purposes, according to Level 2 measurements defined in IFRS 13.
| SUMMARY CONSOLIDATED BALANCE SHEET | 30 September | 30 September | 31 December |
|---|---|---|---|
| SEK M | 2018 | 2017 | 2017 |
| ASSETS 1) | |||
| Intangible fixed assets | 5 858 | 2 717 | 2 686 |
| Tangible fixed assets | 480 | 248 | 254 |
| Financial fixed assets | 85 | 42 | 62 |
| Deferred tax assets | 0 | 77 | 93 |
| Goods for resale | 2 595 | 1 339 | 1 382 |
| Current receivables | 1 747 | 973 | 823 |
| Cash and cash equivalents | 346 | 194 | 254 |
| TOTAL ASSETS | 11 111 | 5 590 | 5 554 |
| SHAREHOLDERS' EQUITY AND LIABILITIES 1) | |||
| Shareholders' equity | 2 340 | 2 323 | 2 379 |
| Long-term liabilities, interest-bearing | 3 482 | 1 459 | 1 453 |
| Deferred tax liabilities | 449 | 142 | 168 |
| Long-term liabilities, non-interest-bearing | 13 | 35 | 18 |
| Current liabilities, interest-bearing | 2 494 | 371 | 255 |
| Current liabilities, non-interest-bearing | 2 334 | 1 259 | 1 280 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 11 111 | 5 590 | 5 554 |
1) The carrying amounts of financial assets and liabilities are measured at either fair value or a reasonable approximation of fair value.
| CONDENSED CONSOLIDATED CHANGES IN | 30 September | 30 September | 31 December |
|---|---|---|---|
| EQUITY, SEK M | 2018 | 2017 | 2017 |
| Shareholders' equity at the beginning of the year | 2 379 | 2 324 | 2 324 |
| Comprehensive income for the period | 211 | 265 | 320 |
| Acquisition/divestment of non-controlling interests | 6 | -8 | -7 |
| Shareholders' contributions from minority shareholders | 3 | - | - |
| Dividend to shareholders | -259 | -259 | -258 |
| SHAREHOLDERS' EQUITY AT THE END OF THE PERIOD | 2 340 | 2 323 | 2 379 |
| Of which non-controlling interests | 29 | 15 | 16 |
| CONDENSED CONSOLIDATED CASH-FLOW | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| STATEMENT, SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Operating activities | ||||||
| Cash flow from operating activities | ||||||
| before changes in working capital, excluding tax paid |
290 | 166 | 643 | 532 | 786 | 675 |
| Tax paid | -18 | -29 | -145 | -183 | -28 | -66 |
| Cash flow from operating activities | ||||||
| before changes in working capital | 272 | 137 | 498 | 350 | 757 | 609 |
| Cash flow from changes in working capital: | ||||||
| Changes in inventory | -104 | -76 | -65 | -76 | -115 | -127 |
| Changes in receivables | -57 | -55 | -145 | -116 | -103 | -74 |
| Changes in liabilities | 65 | 72 | 128 | 94 | 123 | 88 |
| Increase (–)/Decrease (+) working capital | -96 | -58 | -81 | -99 | -95 | -113 |
| Cash-flow from operating | ||||||
| activities | 176 | 79 | 417 | 250 | 662 | 496 |
| Cash flow from | ||||||
| investing activities | -4 134 | -83 | -4 325 | -167 | -4 386 | -229 |
| Cash flow from | ||||||
| financing activities | 4 106 | -66 | 4 012 | -175 | 3 892 | -295 |
| CASH FLOW FOR THE PERIOD | 148 | -70 | 104 | -92 | 169 | -27 |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD |
213 | 268 | 254 | 291 | 194 | 291 |
| Exchange-rate difference in cash and cash equivalents |
-15 | -4 | -12 | -5 | -17 | -9 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |
346 | 194 | 346 | 194 | 346 | 254 |
The financial instruments measured at fair value in the balance sheet are shown below. This was carried out by dividing the measurements into three levels, which is described in the 2017 Annual Report, Note 11. All of Mekonomen's financial instruments are included in Level 2, excluding supplementary purchase considerations, which are included in Level 3. However, current supplementary purchase considerations do not represent material amounts.
The main methods and assumptions used to determine the fair value of the financial instruments shown in the table below are described in the 2017 Annual Report, Note 11. The financial instruments contained in the interim report are the same as those in the 2017 annual accounts.
| CONSOLIDATED DERIVATIVE INSTRUMENTS | ||
|---|---|---|
| MEASURED AT FAIR VALUE IN | 30 September | 30 September |
| THE BALANCE SHEET, SEK M | 2018 | 2017 |
| FINANCIAL ASSETS | ||
| Derivatives: Currency swaps | - | - |
| Derivatives: Interest-rate swaps | - | - |
| TOTAL | - | - |
| FINANCIAL LIABILITIES | ||
| Derivatives: Currency swaps | - | - |
| Derivatives: Interest-rate swaps | 2 | 5 |
| TOTAL | 2 | 5 |
| GROUP´S FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT CATEGORY, 30 September 2018 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Derivative | Loan and accounts | Other financial | Total carrying | Fair value | Non-monetary | Balance sheet | ||||||
| SEK M | instruments | receivables | liabilities | amount | assets & liabilities | summary | ||||||
| FINANCIAL ASSETS | ||||||||||||
| Financial fixed assets | - | 63 | - | 63 | 63 | 22 | 85 | |||||
| Accounts receivable | - | 1 183 | - | 1 183 | 1 183 | - | 1183 | |||||
| Other current receivables | - | - | - | - | - | 564 | 564 | |||||
| Cash and cash equivalents | - | 346 | - | 346 | 346 | - | 346 | |||||
| TOTAL | - | 1 592 | - | 1 592 | 1 592 | 586 | 2 178 | |||||
| FINANCIAL LIABILITIES | ||||||||||||
| Long-term liabilities, interest-bearing | - | - | 3 482 | 3 482 | 3 482 | - | 3 482 | |||||
| Long-term liabilities, non-interest-bearing | - | - | 9 | 9 | 9 | 4 | 13 | |||||
| Current liabilities, interest-bearing | 2 | - | 2 492 | 2 494 | 2 494 | - | 2 494 | |||||
| Accounts payable | - | - | 1 149 | 1 149 | 1 149 | - | 1 149 | |||||
| Other current liabilities | - | - | 13 | 13 | 13 | 1 172 | 1 185 | |||||
| TOTAL | 2 | - | 7 145 | 7 147 | 7 147 | 1 176 | 8 322 |
| Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 NET SALES, SEK M 1) FTZ 252 - - - - - - - - - - - - Inter-Team 147 - - - - - - - - - - - - MECA 467 543 490 1 907 477 442 495 493 1 842 470 433 487 452 Mekonomen 2) 3) 656 726 631 2 683 679 650 703 651 2 727 680 665 727 656 Sørensen og Balchen 180 209 182 778 176 178 211 213 725 182 179 192 172 Other segments 4) 148 154 130 482 135 103 119 125 492 134 115 132 111 GROUP 1850 1633 1 432 5850 1 467 1 372 1 529 1 482 5786 1 466 1 392 1 537 1 391 EBITA, SEK M FTZ 14 - - - - - - - - - - - - Inter-Team 0 - - - - - - - - - - - - MECA 51 104 61 273 45 58 93 77 283 62 60 92 68 Mekonomen 2) 92 108 45 325 89 80 90 67 323 69 92 82 80 Sørensen og Balchen 29 39 14 120 27 27 39 28 117 29 29 36 24 Other segments 4) -30 -50 -31 -70 -26 -8 -19 -17 -129 -57 -26 -22 -23 GROUP 155 202 89 649 134 157 203 155 594 103 154 189 149 EBIT, SEK M FTZ 13 - - - - - - - - - - - - Inter-Team 0 - - - - - - - - - - - - MECA 48 102 59 265 42 56 91 75 278 61 58 91 68 Mekonomen 2) 90 107 43 313 79 79 89 66 320 68 91 82 79 Sørensen og Balchen 29 39 14 120 27 27 39 28 117 29 29 36 24 Other segments 4) -36 -55 -37 -98 -32 -15 -26 -24 -156 -64 -33 -28 -30 Other items 5) -26 -19 -19 -77 -19 -19 -19 -19 -77 -19 -19 -19 -19 GROUP 118 173 60 522 96 127 174 126 481 74 125 161 121 INVESTMENTS, SEK M 6) FTZ - - - - - - - - - - - - - Inter-Team 1 - - - - - - - - - - - - MECA 3 4 4 15 4 2 4 5 11 4 2 3 3 Mekonomen 7 55 50 96 11 69 8 8 33 15 5 6 7 Sørensen og Balchen 1 3 2 3 0 0 1 1 5 2 1 1 1 Other segments 4) 13 16 10 49 14 7 15 13 62 22 12 18 9 GROUP 25 78 66 164 30 79 28 27 111 43 20 28 20 EBITA MARGIN, % FTZ 5 - - - - - - - - - - - - Inter-Team 0 - - - - - - - - - - - - MECA 11 19 12 14 9 13 19 15 15 13 14 19 15 Mekonomen 2) 3) 14 14 7 12 13 12 12 10 11 10 13 11 12 Sørensen og Balchen 16 18 8 15 15 15 18 13 16 16 16 18 14 GROUP 8 12 6 11 9 11 13 10 10 7 11 12 10 EBIT MARGIN, % FTZ 5 - - - - - - - - - - - - Inter-Team 0 - - - - - - - - - - - - MECA 10 18 12 14 9 13 18 15 15 13 13 19 15 Mekonomen 2) 3) 13 14 7 11 11 12 12 10 11 10 13 11 12 Sørensen og Balchen 16 18 8 15 15 15 18 13 16 16 16 18 13 GROUP 6 10 4 9 6 9 11 8 8 5 9 10 9 |
QUARTERLY DATA, SEGMENTS | 2018 | 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
1) Net sales for each segment are from external customers.
2) As of 1 January 2018, Marinshopen has been included in "Other segments" instead of the Mekonomen segment. The comparative figures have not been restated.
Marinshopen's net sales amounted to SEK 8 M for the third quarter of 2017 and EBIT to SEK 0 M. For January–September 2017, net sales amounted to SEK 22 M and EBIT to a negative SEK 1 M. For full-year 2017, net sales amounted to SEK 26 M and EBIT to a negative SEK 12 M, including impairment losses on goodwill of SEK 9 M. Marinshopen was
divested externally during the second quarter of 2018.
3) Revenue for Mekonomen for the second quarter of 2017 has been restated for adjusted sales of SEK 24 M from external sales to internal sales. No
impact on EBIT. For further information, refer to the press release on 23 August 2017.
4) "Other segments" includes Mekonomen's wholesale and store operations in Finland, Meko Service Nordic with the BilLivet workshop operations, Speedy workshop
operations, Allt i Bil workshop operations, The Tunga Fordon, ProMeister Solutions, Preqas, Mekster operations, the Mekonomen car leasing services, the joint venture in
Poland (InterMeko Europe, Lasingoo Norge and Group-wide functions that also include Mekonomen AB (publ). Mekonomen's store operations in Iceland were divested during the first quarter and Marinshopen was divested in the second quarter of 2018.
5) "Other items" includes acquisition-related items attributable to Mekonomen AB's direct acquisitions. Current acquisition-related items pertain to amortisations of acquired
intangible assets pertaining to the acquisitions of MECA, Sørensen og Balchen, FTZ and Inter-Team.
6) Investments do not include company and business combinations.
| REVENUE DISTRIBUTION PER COUNTRY | Jul–Sep | Jul–Sep | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | ||||||||
| Revenue distribution per country | Denm Poland Swed Norway Total | Denm Poland Swed | Norway | Total | ||||||
| FTZ | 252 | 252 | - | - | ||||||
| Inter-Team | 147 | 147 | - | - | ||||||
| MECA | 214 | 253 | 467 | 216 | 227 | 442 | ||||
| Mekonomen | 433 | 223 | 656 | 439 | 210 | 650 | ||||
| Sørensen og Balchen | 180 | 180 | 178 | 178 | ||||||
| Other segments | 148 | 103 | ||||||||
| Total net sales, Group | 1 850 | 1 372 | ||||||||
| Other revenue | 37 | 42 | ||||||||
| GROUP REVENUE | 1 887 | 1 414 |
Distribution of revenue per country based on the country that generates revenue for each segment.
| REVENUE DISTRIBUTION PER COUNTRY | Jan–Sep | Jan–Sep | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK M | 2018 | |||||||||
| Revenue distribution per country | Denm Poland Swed Norway Total | Denm Poland Swed | Norway | Total | ||||||
| FTZ | 252 | 252 | - | - | ||||||
| Inter-Team | 147 | 147 | - | - | ||||||
| MECA | 707 | 792 | 1 500 | 700 | 731 | 1 431 | ||||
| Mekonomen | 1 343 | 671 | 2 014 | 1 348 | 656 | 2 004 | ||||
| Sørensen og Balchen | 571 | 571 | 603 | 603 | ||||||
| Other segments | 432 | 346 | ||||||||
| Total net sales, Group | 4 915 | 4 383 | ||||||||
| Other revenue | 113 | 109 | ||||||||
| GROUP REVENUE | 5 028 | 4 492 |
| QUARTERLY DATA, SEK M | 2 018 2017 |
2016 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q2 | Q1 | FY | Q4 | Q3 | Q2 | Q1 | FY | Q4 | Q3 | Q2 | Q1 | |
| Revenue 1) | 1 887 | 1 673 | 1 469 | 6 000 | 1 507 | 1 414 | 1 560 | 1 518 | 5 937 | 1 508 | 1 432 | 1 573 | 1 424 |
| EBITDA | 177 | 219 | 106 | 710 | 150 | 172 | 218 | 170 | 656 | 121 | 168 | 203 | 163 |
| EBITA | 155 | 202 | 89 | 649 | 134 | 157 | 203 | 155 | 594 | 103 | 154 | 189 | 149 |
| EBIT | 118 | 173 | 60 | 522 | 96 | 127 | 174 | 126 | 481 | 74 | 125 | 161 | 121 |
| Net financial items | 114 | -3 | -2 | -47 | -9 | -8 | -18 | -13 | -35 | -2 | -13 | -9 | -11 |
| Profit after financial items | 233 | 170 | 58 | 475 | 87 | 119 | 156 | 113 | 446 | 72 | 112 | 152 | 110 |
| Tax | -147 | -38 | -15 | -107 | -12 | -30 | -38 | -27 | -105 | -6 | -31 | -40 | -27 |
| Profit for the period | 85 | 131 | 43 | 368 | 75 | 89 | 118 | 86 | 342 | 66 | 82 | 112 | 83 |
| EBITDA margin, % | 9 | 13 | 7 | 12 | 10 | 12 | 14 | 11 | 11 | 8 | 12 | 13 | 11 |
| EBITA margin, % | 8 | 12 | 6 | 11 | 9 | 11 | 13 | 10 | 10 | 7 | 11 | 12 | 10 |
| EBIT margin, % | 6 | 10 | 4 | 9 | 6 | 9 | 11 | 8 | 8 | 5 | 9 | 10 | 9 |
| Earnings per share, SEK | 2,30 | 3,53 | 1,15 | 10,05 | 2,07 | 2,43 | 3,22 | 2,33 | 9,32 | 1,83 | 2,20 | 3,02 | 2,28 |
| Shareholders' equity per share, SEK | 64,4 | 66,3 | 68,8 | 65,8 | 65,8 | 64,3 | 61,6 | 66,3 | 64,4 | 64,4 | 63,0 | 59,3 | 62,5 |
| Cash flow per share, SEK | 4,9 | 6,5 | 0,2 | 13,8 | 6,8 | 2,2 | 3,7 | 1,0 | 15,1 | 5,8 | 2,2 | 6,4 | 0,8 |
| Return on shareholders' equity, %2) | 13,7 | 14,0 | 13,6 | 15,6 | 15,6 | 15,3 | 15,2 | 14,9 | 15,1 | 15,1 | 15,9 | 17,6 | 18,7 |
| Share price at the end of the period | 126,4 | 123,8 | 142,6 149,25 149,25 | 184,5 | 167,0 | 176,5 | 171,5 | 171,5 | 167,0 | 182,0 | 201,0 | ||
1) Revenue for the second quarter of 2017 has been restated for adjusted sales of SEK 24 M from external sales to internal sales. No impact on EBIT.
For further information, refer to the press release on 23 August 2017.
2) The key figures for return on shareholders' equity are calculated on a rolling 12-month basis for each quarter.
| KEY FIGURES | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 | |
| Return on shareholders' equity, % | - | - | 13,7 | 15,3 | 13,7 | 15,6 |
| Return on total capital, % | - | - | 8,7 | 8,9 | 8,7 | 9,1 |
| Return on capital employed, % | - | - | 11,7 | 11,9 | 11,7 | 12,2 |
| Equity/assets ratio, % | 21,1 | 41,6 | 21,1 | 41,6 | 21,1 | 42,8 |
| Net debt, SEK M | - | - | 5 622 | 1 625 | 5 622 | 1 444 |
| Net debt/EBITDA, multiple 2) | 8,62 | 2,38 | 8,62 | 2,38 | 8,62 | 2,03 |
| Gross margin, % | 51,3 | 54,4 | 53,3 | 54,4 | 53,7 | 54,6 |
| EBITDA margin, % | 9,4 | 12,2 | 10,0 | 12,5 | 10,0 | 11,8 |
| EBITA margin, % | 8,2 | 11,1 | 8,9 | 11,5 | 8,9 | 10,8 |
| EBIT margin, % | 6,3 | 9,0 | 7,0 | 9,5 | 6,8 | 8,7 |
| Earnings per share, SEK | 2,30 | 2,43 | 6,99 | 7,98 | 9,06 | 10,05 |
| Shareholders' equity per share, SEK | - | - | 64,4 | 64,3 | 64,4 | 65,8 |
| Cash flow per share, SEK | 4,9 | 2,2 | 11,6 | 7,0 | 18,4 | 13,8 |
| Number of shares at the end of the period | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 |
| Average number of shares during the period | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 |
1) Key figures for return on shareholders' equity/total capital/capital employed and net debt/EBITDA are calculated on a rolling 12-month basis for the January–June period.
2) EBITDA includes FTZ and Inter-Team only one month 2018 (1/12 of rolling 12-months) and is calculated before the rights issue was finalized.
| NUMBER OF STORES | FTZ | Inter-Team | MECA | Mekonomen 1) | Balchen | Sørensen og | Other segments 1) |
Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AND WORKSHOPS | 30 September | 30 September | 30 September | 30 September | 30 September 30 September | 30 September | ||||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Number of stores | ||||||||||||||
| Proprietary stores | 51 | - | 79 | - | 77 | 76 | 145 | 148 | 38 | 39 | 3 | 3 | 393 | 266 |
| Partner stores | - | - | 3 | - | 8 | 10 | 28 | 31 | 28 | 35 | 6 | 3 | 73 | 79 |
| Total | 51 | 0 | 82 | 0 | 85 | 86 | 173 | 179 | 66 | 74 | 9 | 6 | 466 | 345 |
| Number of workshops | ||||||||||||||
| Mekonomen Service Centres | - | - | - | - | - | - | 730 | 747 | - | - | 61 | 46 | 791 | 793 |
| MekoPartner | - | - | - | - | - | - | 226 | 230 | - | - | - | - | 226 | 230 |
| Speedy | - | - | - | - | - | - | - | - | - | - | 39 | 33 | 39 | 33 |
| BilXtra | - | - | - | - | - | - | - | - | 262 | 261 | - | - | 262 | 261 |
| MECA Car Service | - | - | - | - | 706 | 708 | - | - | - | - | - | 1 | 706 | 709 |
| Allt i Bil | - | - | - | - | - | - | - | - | 8 | - | 8 | 0 | ||
| AutoMester | 423 | - | - | - | - | - | - | - | 423 | 0 | ||||
| Din BilPartner | 136 | - | - | - | - | - | - | - | 136 | 0 | ||||
| HELLA Service Partner | 336 | - | - | - | - | - | - | - | 336 | 0 | ||||
| CarPeople | 26 | - | - | - | - | - | - | - | 26 | 0 | ||||
| O.K. Serwis | - | - | 282 | - | - | - | - | - | 282 | 0 | ||||
| INTER DATA SERVICE | - | - | 178 | - | - | - | - | - | 178 | 0 | ||||
| Total | 921 | 0 | 460 | 0 | 706 | 708 | 956 | 977 | 262 | 261 | 108 | 80 | 3 413 | 2 026 |
1) From 1 January 2018 until its divestment in May 2018, Marinshopen has been included in "Other segments" instead of the Mekonomen segment. The comparative figures have not been restated due to immateriality.
| AVERAGE NUMBER OF EMPLOYEES | Jan–Sep | Jan–Sep |
|---|---|---|
| 2018 | 2017 | |
| FTZ | 130 | - |
| Inter-Team | 143 | - |
| MECA | 617 | 525 |
| Mekonomen 1) | 926 | 944 |
| Sørensen og Balchen | 258 | 259 |
| Other segments1) | 488 | 428 |
| Total | 2 561 | 2 156 |
1) "Other segments" includes Mekonomen's wholesale and store operations in Finland, Meko Service Nordic with the BilLivet workshop operations, Speedy workshop
operations, Allt i Bil workshop operations, The Tunga Fordon, ProMeister Solutions, Preqas, and Mekster operations, the Mekonomen car leasing services, the joint venture in
Poland (InterMeko Europe, Lasingoo Norge and Group-wide functions that also include Mekonomen AB (publ). Mekonomen's store operations in
Iceland were divested in the first quarter and Marinshopen during the second quarter of 2018.
On 6 July 2018, Mekonomen agreed to acquire all shares in automotive spare-parts distributors FTZ Autodele & Værktøj A/S ("FTZ") in Denmark and INTER-TEAM Sp.z.o.o. ("Inter-Team") in Poland. Following approval by the relevant authorities, the acquisition of FTZ and Inter-Team was concluded on 3 September 2018. Payment was made in full in cash for the shares and the total purchase consideration was EUR 404 M, translated using the transaction-date rate to SEK 4,284 M. The distribution of the total purchase consideration is presented in the table below.
Mekonomen and the sellers have also entered into a separate agreement whereby Mekonomen under certain conditions may acquire Nordic Forum Holding A/S, the former holding company for FTZ and Inter-Team, before 31 December 2018. However, any such transaction is not deemed to be of material importance for the Group.
The acquisition of FTZ and Inter-Team fits well with the Mekonomen Group's strategy to be part of the ongoing consolidation in Europe. The transaction is strategic for Mekonomen Group, which is now taking the next step on its journey of growth. Through FTZ, the Group is strengthening its position as the leading spare-parts distributor in the Nordic region and has through FTZ, which has a 28 per cent share of the Danish market, become the leading spare-parts distributor in Denmark. Through Inter-Team, Mekonomen Group has established a strong market position in Poland and will take part in the fast-growing and fragmented Polish car parts market, which is moreover characterised by an older fleet of cars than in the Nordic countries. The acquired companies will be developed within the scope of their existing corporate structures and brands within their own segments in the Group.
Mekonomen Group's sales almost doubled following the acquisition of FTZ and Inter-Team. The acquisition is expected to generate annual synergies of SEK 100 M, most of which comprise purchasing synergies, with full effect in 2021. The Group has also increased the number of its stores from about 330 to about 460 and the number of affiliated workshops from 2,000 to more than 3,400.
FTZ and Inter-Team are included in Mekonomen's financial reporting from the acquisition date of 3 September 2018.
In addition to FTZ and Inter-Team, which are recognised separately below, information on corporate acquisitions is provided in aggregate form since each individual acquisition is not deemed to be of such a size as to warrant separate recognition. All other acquisitions were paid in cash. For further information about other acquisitions, refer also to the section Acquisitions and establishments, page 6.
During the nine-month period January to September 2018, FTZ and Inter-Team together impacted the Group's net sales by SEK 400 M, and had a positive impact on EBIT of SEK 13 M, excluding acquisition costs of SEK 23 M and excluding planned amortisation of intangible assets identified in connection with the acquisition of SEK 6 M. The impact of other acquisitions on consolidated sales and earnings was only marginal.
Had FTZ and Inter-Team been acquired on 1 January 2018, the impact on the Group's net sales during the nine-month period of January–September 2018 and the impact on EBIT would have totaled:
| SEK M | FTZ | Inter-Team | Total |
|---|---|---|---|
| Net sales, external | 2 453 | 1 398 | 3 851 |
| EBIT1) | 252 | 18 | 270 |
1) Excluding planned amortisation of intangible assets identified in connection with the acquisition of SEK 58 M.
The total of other acquisitions would have had a insignificant impact on sales and profit had they been implemented at the beginning of the year.
Acquisition-related costs amounted to SEK 23 M for the nine-month period January–September 2018. Acquisition costs are, in all material respects, attributable to the acquisition of FTZ and Inter-Team. These expenses are not included in the total purchase consideration in the table below, but are recognised as other expenses in the consolidated income statement.
| Preliminary effects of acquisitions | Other | Total | ||
|---|---|---|---|---|
| SEK M | FTZ | Inter-Team | acquisitions | acquisitions |
| Value of acquired assets and liabilities | ||||
| Intangible fixed assets | 8 | 3 | 1 | 11 |
| Tangible fixed assets | 76 | 51 | 13 | 140 |
| Financial fixed assets | 15 | 6 | 0 | 20 |
| Deferred tax assets | - | 1 | 0 | 1 |
| Inventories | 546 | 604 | 11 | 1 161 |
| Current receivables | 586 | 204 | 10 | 800 |
| Cash and cash equivalents | 640 | 38 | 4 | 682 |
| Long-term liabilities | -12 | -469 | -1 | -482 |
| Deferred tax liabilities | -18 | - | - | -18 |
| Current liabilities | -618 | -275 | -23 | -916 |
| Acquired net assets | 1 223 | 163 | 15 | 1 400 |
| Brands | 518 | 30 | - | 548 |
| Customer relations | 778 | 22 | 29 | 829 |
| Goodwill | 1 811 | 34 | 54 | 1 900 |
| Deferred tax liabilities | -285 | -10 | -5 | -300 |
| Acquired non-controlling interests, surplus value recognised against shareholders' equity |
0 | |||
| Total identifiable net assets | 4 045 | 239 | 93 | 4 377 |
| Total purchase consideration | -4 045 | -239 | -93 | -4 377 |
| – of which, cash portion | -4 045 | -239 | -90 | -4 374 |
| – of which, supplementary purchase considerations, liabilities | - | - | -3 | -3 |
| Cash and cash equivalents in the acquired companies1) | 640 | 38 | 4 | 682 |
| Less adjustments for the acquired units' liabilities to the seller1) | - | -469 | - | -469 |
| Addition of supplementary purchase considerations paid for previous years | - | - | -5 | -5 |
| Impact on Group's cash and cash equivalents | -3 405 | -670 | -91 | -4 166 |
1) On the transaction-date, FTZ's and Inter-Team's respective Group balances in relation to the seller were settled. FTZ's receivables for the seller (mainly through funds in the Group account) were transferred to own bank accounts at FTZ and are included in the balance sheet for FTZ presented above under cash and cash equivalents. Inter-Team's liabilities to the seller of SEK 469 M were assumed by Mekonomen AB through an adjustment with the seller.
The fair value of the acquired receivables was SEK 800 M.
The brands have an indefinite useful life. The amount for Customer relations is 829 MSEK of which 800 MSEK pertains to the acquisition of FTZ and Inter-Team, which has an estimated useful life of ten years. The other customer relations of 29 MSEk has an estimated useful life of five years. With respect to other amortisation of intangible assets, refer to the 2017 Annual Report.
The arising goodwill is primarily attributable to the value of geographical expansion and a stronger market position, particularly in the Nordic countries. The arising goodwill is also attributable to expected specific synergies in Mekonomen, new customers and, to a limited extent, the total workforce. These benefits have not been recognised separately from goodwill since they do not meet the criteria for recognition of identifiable intangible assets. The acquisitions of FTZ and Inter-Team are expected to generate annual synergies of SEK 100 M, most of which comprise purchasing synergies. The synergies will gradually increase from the beginning of the second half of 2018 and are expected to reach full effect in 2021. Costs of SEK 60 M are expected to arise in conjunction with the work to realise purchasing synergies. FTZ and Inter-Team will continue to operate as independent companies in their current company structure, and no significant integration expenses will therefore arise over time.
17 MSEK of the goodwill that arose in connection with the acquisitions is expected to be tax deductible.
| CONDENSED INCOME STATEMENT FOR | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| THE PARENT COMPANY, SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Operating revenue | 19 | 20 | 54 | 65 | 70 | 81 |
| Operating expenses | -27 | -21 | -78 | -79 | -111 | -112 |
| EBIT | -8 | -1 | -23 | -14 | -41 | -31 |
| Net financial items 1) | 110 | -2 | 452 | 299 | 451 | 298 |
| Profit after financial items | 102 | -3 | 428 | 285 | 410 | 267 |
| Appropriations | - | - | - | - | 171 | 171 |
| Tax | -115 | 0 | -113 | 6 | -129 | -11 |
| PROFIT FOR THE PERIOD | -13 | -3 | 316 | 291 | 452 | 427 |
1) Net financial items include dividends on participations in subsidiaries totalling SEK 340 M (315) for the first nine months and SEK 315 M for the full-year 2017.
| STATEMENT OF COMPREHENSIVE INCOME | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| FOR THE PARENT COMPANY, SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Profit for the period | -13 | -3 | 316 | 291 | 452 | 427 |
| COMPREHENSIVE INCOME FOR THE PERIOD | -13 | -3 | 316 | 291 | 452 | 427 |
| CONDENSED BALANCE SHEET FOR THE PARENT COMPANY, | 30 September | 30 September | 31 December |
|---|---|---|---|
| SEK M | 2018 | 2017 | 2017 |
| ASSETS | |||
| Fixed assets | 7 928 | 3 191 | 3 248 |
| Current receivables in Group companies | 1 118 | 1 329 | 1 502 |
| Other current receivables | 59 | 146 | 29 |
| Cash and cash equivalents | 184 | 101 | 152 |
| TOTAL ASSETS | 9 289 | 4 767 | 4 931 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | 2 882 | 2 681 | 2 817 |
| Untaxed reserves | 252 | 210 | 252 |
| Provisions | 3 | 2 | 3 |
| Long-term liabilities | 3 477 | 1 450 | 1 446 |
| Current liabilities in Group companies | 87 | 6 | 145 |
| Other current liabilities | 2 589 | 418 | 269 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 9 289 | 4 767 | 4 931 |
| SUMMARY OF CHANGES IN EQUITY FOR | 30 September | 30 September | 31 December |
|---|---|---|---|
| EQUITY, SEK M | 2018 | 2017 | 2017 |
| Shareholders' equity at the beginning of the year | 2 817 | 2 642 | 2 642 |
| Comprehensive income for the period | 316 | 291 | 427 |
| Dividend to shareholders | -251 | -251 | -251 |
| SHAREHOLDERS' EQUITY AT THE END OF THE PERIOD | 2 882 | 2 681 | 2 817 |
PARENT COMPANY'S SHAREHOLDERS,
As of the January-June 2016 interim report, Mekonomen applies the Guidelines on Alternative Performance Measures issued by ESMA*. An alternative performance measure is a financial measure of historical or future financial performance, financial position, or cash flows that are not defined or specified in IFRS. Mekonomen believes that these measures provide valuable supplementary information to company management, investors and other stakeholders when evaluating the company's performance. The alternative performance measures are not always comparable with measures used by other companies since not all companies calculate these measures in the same way. These should therefore be seen as a supplement to the measures defined according to IFRS. For definitions of key figures, refer to page 20. For relevant reconciliations of the alternative performance measures that cannot be directly read in or derived from the financial statements, refer to the tables below. For historical reconciliations of alternative performance measures, refer also to supplements to the 2016 and 2017 Annual Report on our website: http://www.mekonomen.com/en/alternative-performance-measures/. *The European Securities and Markets Authority.
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
| RETURN ON SHAREHOLDERS' EQUITY | Jan–Sep | 1) | Jan–Sep 1) | 12 months | Full-year | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK M | |||||||||||
| 2018 | 2017 | Oct–Sep | 2017 | ||||||||
| Profit for the period (rolling 12-month basis) | 335 | 359 | 335 | 368 | |||||||
| – Less non-controlling interest of profit for the period (rolling 12 months) | -10 | -7 | -10 | -7 | |||||||
| Profit for the period excluding non-controlling interest (rolling 12 months) | 325 | 352 | 325 | 361 | |||||||
| – Divided by SHAREHOLDERS' EQUITY ATTRIBUTABLE TO PARENT | |||||||||||
| COMPANY'S SHAREHOLDERS, average over the past five quarters 2) | 2 366 | 2 295 | 2 366 | 2 315 | |||||||
| RETURN ON SHAREHOLDERS' EQUITY, % | 13,7 | 15,3 | 13,7 | 15,6 | |||||||
| 2) SHAREHOLDERS' EQUITY ATTRIBUTABLE TO | 2018 | 2017 | 2016 | ||||||||
| PARENT COMPANY'S SHAREHOLDERS, SEK M | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Shareholders' equity | 2 340 | 2 398 | 2 487 | 2 379 | 2 323 | 2 224 | 2 396 | 2 324 | 2 276 | 2 139 | 2 257 |
| – Less non-controlling interest of shareholders' equity | -29 | -18 | -17 | -16 | -15 | -12 | -15 | -14 | -13 | -10 | -13 |
| SHAREHOLDERS' EQUITY ATTRIBUTABLE | |||||||||||
| TO PARENT COMPANY'S SHAREHOLDERS | 2 311 | 2 380 | 2 469 | 2 363 | 2 308 | 2 212 | 2 381 | 2 311 | 2 263 | 2 129 | 2 244 |
| SHAREHOLDERS' EQUITY ATTRIBUTABLE TO |
| RETURN ON TOTAL CAPITAL | Jan–Sep 1) | Jan–Sep 1) | 12 months | Full-year |
|---|---|---|---|---|
| SEK M | 2018 | 2017 | Oct–Sep | 2017 |
| Profit after financial items (rolling 12 months) | 547 | 460 | 547 | 475 |
| – Plus Interest Expenses (rolling 12 months) | 41 | 28 | 41 | 29 |
| Profit after financial items plus interest expenses (rolling 12 months) | 587 | 488 | 587 | 504 |
| – Divided by TOTAL ASSETS, average over the past five quarters 3) | 6 732 | 5 500 | 6 732 | 5 518 |
| RETURN ON TOTAL CAPITAL, % | 8,7 | 8,9 | 8,7 | 9,1 |
average over the past five quarters 2 366 2 347 2 347 2 315 2 295 2 259 2 266 2 218 2 175 2 132 2 144
| 3) TOTAL ASSETS | 2018 | 2017 | 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK M | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Total assets | 11 111 | 5 798 | 5 608 | 5 554 | 5 590 | 5 465 | 5 528 | 5 452 | 5 466 | 5 481 | 5 387 |
| TOTAL ASSETS, | |||||||||||
| average over the past five quarters | 6 732 | 5 603 | 5 549 | 5 518 | 5 500 | 5 479 | 5 463 | 5 430 | 5 424 | 5 410 | 5 439 |
| RETURN ON CAPITAL EMPLOYED | Jan–Sep 1) | Jan–Sep 1) | 12 months | Full-year |
|---|---|---|---|---|
| SEK M | 2018 | 2017 | Oct–Sep | 2017 |
| Profit after financial items (rolling 12 months) | 547 | 460 | 547 | 475 |
| – Plus interest expenses (rolling 12 months) | 41 | 28 | 41 | 29 |
| Profit after financial items plus interest expenses | 587 | 488 | 587 | 504 |
| – Divided by CAPITAL EMPLOYED, average over the past five quarters 4) | 5 007 | 4 119 | 5 007 | 4 117 |
| RETURN ON CAPITAL EMPLOYED, % | 11,7 | 11,9 | 11,7 | 12,2 |
1) The key figures for return on shareholders' equity/total capital/capital employed are calculated on a rolling 12-month basis for the January–September period.
| 4) CAPITAL EMPLOYED | 2018 | 2017 | 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK M | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Total assets | 11 111 | 5 798 | 5 608 | 5 554 | 5 590 | 5 465 | 5 528 | 5 452 | 5 466 | 5 481 | 5 387 |
| – Less deferred tax liabilities | -449 | -147 | -157 | -168 | -142 | -149 | -155 | -163 | -142 | -148 | -158 |
| – Less long-term liabilities, non-interest-bearing | -13 | -11 | -16 | -18 | -35 | -35 | -32 | -24 | -25 | -25 | -9 |
| – Less current liabilities, non-interest-bearing | -2 334 -1 370 -1 228 -1 280 -1 259 -1 162 -1 178 | -1 199 -1 205 -1 154 -1 087 | |||||||||
| CAPITAL EMPLOYED | 8 316 | 4 271 | 4 207 | 4 087 | 4 153 | 4 119 | 4 162 | 4 066 | 4 094 | 4 155 | 4 133 |
| CAPITAL EMPLOYED, | |||||||||||
| average over the past five quarters | 5 007 | 4 167 | 4 146 | 4 117 | 4 119 | 4 119 | 4 122 | 4 107 | 4 122 | 4 136 | 4 165 |
| GROSS MARGIN | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Net sales | 1 850 | 1 372 | 4 915 | 4 383 | 6 382 | 5 850 |
| – Less goods for resale | -900 | -626 | -2 297 | -1 997 | -2 955 | -2 654 |
| Total | 950 | 747 | 2 618 | 2 386 | 3 427 | 3 196 |
| – Divided by net sales | 1 850 | 1 372 | 4 915 | 4 383 | 6 382 | 5 850 |
| GROSS MARGIN, % | 51,3 | 54,4 | 53,3 | 54,4 | 53,7 | 54,6 |
| EARNINGS PER SHARE | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Profit for the period | 85 | 89 | 260 | 293 | 335 | 368 |
| – Less non-controlling interests' share | -3 | -2 | -9 | -7 | -10 | -7 |
| Profit for the period attributable to | ||||||
| Parent Company's shareholders | 83 | 87 | 251 | 286 | 325 | 361 |
| – Divided by average number of shares 5) | 35 901 487 | 35 901 487 | 35 901 487,0 | 35 901 487 | 35 901 487 | 35 901 487 |
| EARNINGS PER SHARE, SEK | 2,30 | 2,43 | 6,99 | 7,98 | 9,06 | 10,05 |
| SHAREHOLDERS' EQUITY PER SHARE | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|
| SEK M | 2018 | 2017 | Oct–Sep | 2017 |
| Shareholders' equity | 2 340 | 2 323 | 2 340 | 2 379 |
| – Less non-controlling interest of shareholders' equity | -29 | -15 | -29 | -16 |
| SHAREHOLDERS' EQUITY ATTRIBUTABLE TO PARENT COMPANY'S | ||||
| SHAREHOLDERS | 2 311 | 2 308 | 2 311 | 2 363 |
| – Divided by number of shares at the end of the period 5) | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 |
| SHAREHOLDERS' EQUITY PER SHARE, SEK | 64,4 | 64,3 | 64,4 | 65,8 |
| CASH FLOW PER SHARE | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| SEK M | 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 |
| Cash flow from operating activities | 176 | 79 | 417 | 250 | 662 | 496 |
| – Divided by average number of shares 5) | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 |
| CASH FLOW PER SHARE, SEK | 4,9 | 2,2 | 11,6 | 7,0 | 18,4 | 13,8 |
| 5) AVERAGE NUMBER OF SHARES | Jul–Sep | Jul–Sep | Jan–Sep | Jan–Sep | 12 months | Full-year |
|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | Oct–Sep | 2017 | |
| Number of shares at the end of the period | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 |
| – Multiplied by the number of days that the | ||||||
| number of shares at the end of the period has | ||||||
| remained unchanged during the period | 92 | 92 | 273 | 273 | 365 | 365 |
| Number of shares on another date during the | 0 | 0 | 0 | 0 | 0 | 0 |
| period – Multiplied by the number of days that the |
||||||
| number of shares on another date has | ||||||
| existed during the period | 0 | 0 | 0 | 0 | 0 | 0 |
| – Total divided by the number of days during | ||||||
| the period | 92 | 92 | 273 | 273 | 365 | 365 |
| AVERAGE NUMBER OF SHARES | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 | 35 901 487 |
| NET DEBT | 30 September | 30 September | 31 December |
|---|---|---|---|
| SEK M | 2018 | 2017 | 2017 |
| Long-term liabilities, interest-bearing | 3 482 | 1 459 | 1 453 |
| – Less interest-bearing long-term liabilities and provisions for | |||
| pensions, leasing, derivatives and similar obligations | -4 | -9 | -7 |
| Current liabilities, interest-bearing | 2 494 | 371 | 255 |
| – Less interest-bearing current liabilities and provisions for | |||
| pensions, leasing, derivatives and similar obligations | -2 | -2 | -2 |
| – Less cash and cash equivalents | -346 | -194 | -254 |
| NET DEBT | 5 622 | 1 625 | 1 444 |
| FINANCIAL DEFINITIONS | |
|---|---|
| Return on shareholders' equity | Profit for the period, excluding non-controlling interests, as a percentage of average shareholders' equity |
| attributable to Parent Company's shareholders. Average shareholders' equity attributable to Parent Company's | |
| shareholders is calculated as shareholders' equity attributable to Parent Company's shareholders at the end | |
| of the period plus the shareholders' equity for the four immediately preceding quarters attributable Parent | |
| Company's shareholders at the end of the periods divided by five. | |
| Return on capital | Profit after net financial items plus interest expenses as a percentage of average capital employed. |
| employed | Average capital employed is calculated as capital employed at the end of the period plus the capital employed |
| for the four immediately preceding quarters divided by five. | |
| Return on total capital | Profit after financial items plus interest expenses as a percentage of average total assets. |
| Average total assets is calculated as total assets at the end of the period plus the total assets for the four | |
| immediately preceding quarters at the end of the periods divided by five. | |
| Gross margin | Net sales less costs for goods for resale, as a percentage of net sales. |
| Gross profit | Revenue less costs for goods for resale. |
| EBIT margin | EBIT after depreciation/amortisation as a percentage of total revenue. |
| EBITA | EBIT after depreciation according to plan but before amortisation and impairment of intangible |
| fixed assets. | |
| EBITA margin | EBITA as a percentage of total revenue. |
| EBITDA | EBIT before depreciation/amortisation and impairment of tangible and intangible fixed assets. |
| EBITDA margin | EBITDA as a percentage of total revenue. |
| Shareholders' equity per share | Shareholders' equity excluding non-controlling interests, in relation to the number of shares at the end of the |
| period. | |
| Cash flow per share | Cash flow from operating activities in relation to the average number of shares. Average number of shares is |
| calculated as the average number of shares at the end of the period multiplied by the number of days that this | |
| number existed during the period, plus any other number of shares during the period multiplied by the number | |
| of days that this or these numbers existed during the period, with the total divided by the number of days during | |
| the period. | |
| Cash and cash equivalents | Cash and cash equivalents comprise cash funds held at financial institutions and current liquid investments |
| with a term from the date of acquisition of less than three months, which are exposed to only an insignificant | |
| risk of fluctuations in value. Cash and cash equivalents are recognised at nominal amounts. | |
| Net debt | Long and short-term interest-bearing liabilities for borrowing, meaning excluding pensions, leasing, derivatives |
| and similar obligations, less cash and cash equivalents. | |
| Earnings per share | Profit for the period excluding non-controlling interests, in relation to the average number of shares. Average |
| number of shares is calculated as the average number of shares at the end of the period multiplied by the | |
| number of days that this number existed during the period, plus any other number of shares during the period | |
| multiplied by the number of days that this or these numbers existed during the period, with the total divided by | |
| the number of days during the period. | |
| Equity/assets ratio | Shareholders' equity including non-controlling interests as a percentage of total assets. |
| Capital employed | Total assets less non-interest-bearing liabilities and provisions, including deferred tax liabilities. |
| Affiliated workshops | Workshops that are not proprietary, but conduct business under the Group's brands/workshop concepts |
|---|---|
| (Mekonomen Service Centre, MekoPartner, MECA Car Service, BilXtra and Speedy). | |
| B2B | Sales of goods and services between companies (business-to-business). |
| B2C | Sales of goods and services between companies and consumers (business-to-consumer). |
| DAB products | Car accessories with solutions for receiving digital radio broadcasts. DAB is an abbreviation for Digital Audio |
| Broadcasting. | |
| Proprietary stores | Stores with operations in subsidiaries, directly or indirectly majority owned by Mekonomen AB. |
| Proprietary workshops | Workshops with operations in subsidiaries, directly or indirectly majority owned by Mekonomen AB. |
| OBP | Proprietary products, such as Mekonomen Group's proprietary products ProMeister and Carwise. |
| Fleet operations | Mekonomen Group's offering to business customers comprising service and repairs of cars, sales of spare |
| parts and accessories, and tyre storage. | |
| Sales in comparable | Sales in comparable units comprise external sales, in local currency, in majority-owned stores, wholesale |
| units | sales to partner stores, external sales in majority-owned workshops and Internet sales. |
| Sales to Customer Group | Sales to affiliated workshops and sales to proprietary workshops. |
| Affiliated workshops | |
| Sales to Customer Group | Cash sales from proprietary stores to customer groups other than Affiliated Workshops and Other B2B |
| Consumer | Customers, as well as the Group's e-commerce sales to consumers. |
| Sales to Customer Group | Sales to partner stores. |
| Partner stores | |
| Sales to Customer Group | Sales to business customers that are not affiliated with any of Mekonomen Group's concepts, including sales |
| Other B2B Customers | in Fleet operations. |
| Comparable units | Stores, majority-owned workshops and Internet sales that have been in operation over the past 12-month period and throughout the entire preceding comparative period. |
| Items affecting comparability | Events or transactions with significant effects, which are relevant for understanding the financial performance when comparing income for the current the period with previous periods, including restructuring programmes, costs related to major legal disputes, impairments, and gains and losses from the acquisition or divestments of businesses, subsidiaries, associated companies and joint ventures or items of a similar nature. |
| Concept workshops | Affiliated workshops |
| Lasingoo | The car portal that Mekonomen Group owns together with industry players that simplifies the workshop |
| selection and booking processes for car owners. | |
| ProMeister | Mekonomen Group's proprietary brand for high-quality spare parts with five-year guarantees. |
| ProMeister sales | Sales of Mekonomen Group's proprietary brand ProMeister, mainly consists of spare parts, but also |
| accessories. | |
| Spare parts for cars | Parts that are necessary for a car to function. |
| Partner stores | Stores that are not proprietary, but conduct business under the Group's brands/store concepts. |
| Accessories for cars | Products that are not necessary for a car to function, but enhance the experience or extend use of the car, such as car-care products, roof boxes, car child seats, etc. |
| Underlying | Sales adjusted for the number of comparable workdays and currency effects. |
| net sales | |
| Currency effects in the | Impact of currency with respect to realised and unrealised revaluations of foreign short-term |
| balance sheet | non-interest-bearing current receivables and liabilities. |
| Currency transaction effects | Impact of currency with respect to internal sales from Bileko Car Parts AB, and from MECA CarParts AB to |
| each country. | |
| Currency translation effects | Impact of currency from translation of earnings from foreign subsidiaries to SEK. |
| Other operating revenue | Mainly comprises rental income, marketing subsidies and exchange-rate gains in Mekonomen Group. |
Postal address: Box 19542 SE-104 32 Stockholm, Sweden
Street address: Solnavägen 4, 10th floor, Stockholm, Sweden
Tel: +46 (0)8 464 00 00 E-mail: [email protected] www.mekonomen.com
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