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Festi — Interim / Quarterly Report 2020
Nov 4, 2020
2195_rns_2020-11-04_0c7d5ac3-5a14-484b-b1d7-38a156c08225.pdf
Interim / Quarterly Report
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4 November 2020 – Festi Q3 2020 Interim Report
FESTI
Profit in Q3 2020 ISK 1,162 million
Main results
- Margin from sales of goods and services was ISK 5,831 million compared to ISK 5,644 million in Q3 2019, an increase of 3.3%.
- EBITDA ISK 2,586 million compared to ISK 2,617 million in Q3 2019, a decrease of 1.2%.
- Decline in results is related to COVID-19 restrictions enforced beginning of August
- Gross margin from sales 24.8% in Q3 2020 compared to 23.4% in Q3 2019
- Equity ISK 29,682 million and equity ratio 34.8% compared to 35.3% at the end of 2019.
- Net interest-bearing debt without lease liabilities ISK 28,109 million compared to ISK 28,011 million at the end of 2019.
- EBITDA guidance for 2020 is updated and is in the range between ISK 7,200 – 7,500 million
| ISK million | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | %Change |
|---|---|---|---|---|---|---|---|---|
| Income Statement | ||||||||
| Sale of goods and services | 23,524 | 24,092 | -567 | -2.4% | 63,038 | 63,712 | -674 | -1.1% |
| Margin from sales of goods and services | 5,831 | 5,644 | 187 | 3.3% | 15,396 | 14,923 | 473 | 3.2% |
| Other operating income | 342 | 412 | -69 | -16.9% | 951 | 1,423 | -473 | -33.2% |
| EBITDA | 2,586 | 2,617 | -31 | -1.2% | 5,310 | 5,839 | -529 | -9.1% |
| EBIT | 1,786 | 2,138 | -352 | -16.5% | 3,293 | 3,898 | -605 | -15.5% |
| EBT | 1,435 | 1,809 | -375 | -20.7% | 2,136 | 2,531 | -395 | -15.6% |
| Profit for the period | 1,162 | 1,480 | -317 | -21.4% | 1,740 | 2,081 | -340 | -16.4% |
| Statement of Financial Position | 30.9.2020 | 31.12.2019 | Change | %Change | ||||
| Inventories | 8,672 | 7,678 | 993 | 12.9% | ||||
| Trade receivables | 4,217 | 3,756 | 461 | 12.3% | ||||
| Interest bearing liabilities without lease liabilities | 33,099 | 33,380 | -281 | -0.8% | ||||
| Cash and cash equivalents | 4,991 | 5,369 | -378 | -7.0% | ||||
| Net interest bearing liabilities without lease liabilities | 28,109 | 28,011 | 97 | 0.3% | ||||
| Statement of Cash Flows | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | %Change |
| Cash flows from operating activities | 2,453 | 2,280 | 173 | 7.6% | 4,369 | 4,278 | 91 | 2.1% |
| Investing activities | -998 | -318 | -680 | 213.5% | -2,435 | 1,343 | -3,778 | -281.3% |
| Financing activities | -756 | -79 | -677 | 854.1% | -2,345 | -3,073 | 728 | -23.7% |
| Cash and cash equiv. at the end of the period | 4,991 | 6,839 | -1,848 | -27.0% | 4,991 | 6,839 | -1,848 | -27.0% |
| Key indicators | ||||||||
| Margin from sales | 24.8% | 23.4% | 1.4% | 5.8% | 24.4% | 23.4% | 1.0% | 4.3% |
| EBITDA/gross profit | 44.4% | 46.4% | -2.0% | -4.3% | 34.5% | 39.1% | -4.6% | -11.8% |
| Equity ratio | 34.8% | 35.3% | -0.5% | -1.4% | ||||
| Salaries/gross profit | 42.5% | 42.0% | 0.4% | 1.0% | 49.3% | 48.6% | 0.7% | 1.5% |
| Return on equity | 7.4% | 11.0% | -3.6% | -32.7% | ||||
| Investments | 1,297 | 514 | 782 | 152.1% | 2,584 | 1,496 | 1,088 | 72.7% |
| Inventory turnover | 7.5 | 8.4 | -0.92 | -10.9% | 8.3 | 8.5 | -0.20 | -2.4% |
4 November 2020 – Festi Q3 2020 Interim Report
FESTI
Operations in the third quarter
Our third quarter EBITDA results were good despite significant effects on the operation because of COVID-19 congregation ban had on the operations. EBITDA was in the amount of ISK 2,586 million which was 1,2% lower than same time last year. The COVID-19 outbreak had significant economic impact during the quarter, but the Group is balanced in exposure with its diversified business mix. Elko had strong results while N1 and Krónan operations were in line with expectations. Overall results for Festi are in line with the EBITDA guidance published at the end of last April.
Revenues
- Sales of goods and services were ISK 23,524 million in Q3 2020 compared to ISK 24,092 million in Q3 2019, down by 2.4%.
- Diversified business mix. Increase in grocery, convenience goods and electronic equipment.
- Significant growth in online stores.
- New Krónan store opened in downtown Reykjavík.
| ISK million | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | % Change |
|---|---|---|---|---|---|---|---|---|
| Sale of goods and services | ||||||||
| Grocery and convenience goods | 12,520 | 11,247 | 1,274 | 11.3% | 34,683 | 31,049 | 3,635 | 11.7% |
| Fuel and Electricity | 5,930 | 8,318 | -2,388 | -28.7% | 14,641 | 20,297 | -5,656 | -27.9% |
| Electronic Equipment | 3,364 | 2,804 | 560 | 20.0% | 8,851 | 7,621 | 1,230 | 16.1% |
| Other goods and services | 1,710 | 1,723 | -13 | -0.8% | 4,863 | 4,746 | 117 | 2.5% |
| Total Sale of goods and services | 23,524 | 24,092 | -567 | -2.4% | 63,038 | 63,712 | -674 | -1.1% |
| Total Other Operating income | 342 | 412 | -69 | -16.9% | 951 | 1,423 | -473 | -33.2% |
| Total Income | 23,867 | 24,504 | -637 | -2.6% | 63,989 | 65,135 | -1,147 | -1.8% |
Revenue from grocery and convenience goods are up by 11%, sale of electronic equipment, up by 20% between years. Revenue from fuel sales and electricity are down by 29% between years but sold quantity is down by only 20%. Revenues from other goods and services are down by 1%.
| ISK million | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | % Change |
|---|---|---|---|---|---|---|---|---|
| Margin from sales of goods and services | ||||||||
| Grocery and convenience goods | 3,147 | 2,980 | 168 | 5.6% | 8,099 | 7,462 | 638 | 8.5% |
| Fuel and Electricity | 1,305 | 1,448 | -144 | -9.9% | 3,203 | 3,939 | -736 | -18.7% |
| Electronic Equipment | 773 | 654 | 120 | 18.3% | 2,198 | 1,716 | 482 | 28.1% |
| Other goods and services | 605 | 563 | 43 | 7.6% | 1,897 | 1,807 | 89 | 4.9% |
| Total margin from sales of goods and services | 5,831 | 5,644 | 187 | 3.3% | 15,396 | 14,923 | 473 | 3.2% |
Total margin from sales of goods and services is ISK 5,831 million compared to ISK 5,644 million for the same quarter last year, an increase of 3.3%. Margin from grocery and convenience goods is ISK 3,147 and up by 5.6%. Margin from electronic equipment sales is ISK 773 and is up by 18.3% and margin from other goods is ISK 605 and up by 7.6% but margin from fuel and electricity is ISK 1,305 and down by 10%.
4 November 2020 – Festi Q3 2020 Interim Report
FESTI
Operating expenses
- Operating expenses in Q3 2020 was ISK 3,587 million compared to ISK 3,438 million in Q3 2019
- COVID-19 added cost of ISK 108 million in Q3 2020.
| ISK million | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | % Change |
|---|---|---|---|---|---|---|---|---|
| Operating expenses | ||||||||
| Salaries and other personnel expenses | 2,475 | 2,371 | 104 | 4.4% | 7,588 | 7,250 | 338 | 4.7% |
| Other operating expenses | ||||||||
| Operating costs of real estate | 382 | 436 | -54 | -12.4% | 1,161 | 1,236 | -75 | -6.1% |
| Maintenance expenses | 152 | 156 | -4 | -2.3% | 508 | 470 | 38 | 8.1% |
| Sales and marketing expenses | 178 | 182 | -4 | -2.2% | 550 | 569 | -19 | -3.3% |
| Office and administrative expenses | 154 | 139 | 15 | 10.6% | 449 | 369 | 79 | 21.5% |
| Communication expenses | 81 | 101 | -20 | -19.8% | 354 | 385 | -31 | -8.1% |
| Bad debt and change in allowance for bad debt | 28 | 28 | -1 | -2.4% | 65 | 10 | 55 | 541.7% |
| Other expenses | 137 | 25 | 112 | 447.5% | 362 | 218 | 144 | 65.8% |
| Total Other operating expenses | 1,111 | 1,067 | 44 | 4.1% | 3,448 | 3,258 | 191 | 5.9% |
| Total Operating Expenses | 3,587 | 3,438 | 148 | 4.3% | 11,037 | 10,507 | 529 | 5.0% |
Salaries and other personnel expenses amount to ISK 2,475 million compared to ISK 2,371 million in Q3 2019 which is an increase of 4.4% over years. Full time employees are 1,198 which is down by 4% compared to the same quarter last year. Added COVID-19 personnel expenses in the quarter is ISK 73 million. The table below illustrates the difference between years in millions ISK.
| Salaries and other personnel expenses Q3 2019 | 2.371 |
|---|---|
| Change in full-time position equivalents | -28 |
| Contractual wage increases | 79 |
| Accrued vacation, change | -11 |
| Covid-19 effects | 73 |
| Other | -9 |
| Salaries and other personnel expenses Q3 2020 | 2.475 |
Other operating expenses were ISK 1,111 million compared to ISK 1,067 million in Q3 2019, an increase of 4.3%. Included is COIVID-19 related cost of ISK 35 million.
Financial items
- Net finance cost ISK 351 million in Q3 2020 compared to ISK 329 million in Q3 2019.
| ISK million | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | % Change |
|---|---|---|---|---|---|---|---|---|
| Finance income | 1 | 68 | -67 | -98.6% | 181 | 157 | 24 | 15.2% |
| Finance expenses | -521 | -536 | -15 | -2.8% | -1,576 | -1,807 | 232 | -12.8% |
| Share of profit from associates | 169 | 139 | 29 | 21.1% | 238 | 284 | -46 | -16.3% |
| Total | -351 | -329 | -23 | 6.8% | -1,157 | -1,367 | 209 | -15.3% |
4 November 2020 – Festi Q3 2020 Interim Report
FESTI
Statement of financial position
- Total assets amounted to ISK 85,294 million at end of 9M 2020
- Equity ratio 34.8%
- Cash and cash equivalents ISK 4,991 million
| ISK million | 30.9.2020 | 31.12.2019 | Change | % Change |
|---|---|---|---|---|
| Goodwill | 14,668 | 14,070 | 598 | 4.2% |
| Other intangible assets | 4,988 | 4,650 | 338 | 7.3% |
| Property and equipment | 31,908 | 31,434 | 475 | 1.5% |
| Leased assets | 5,270 | 3,862 | 1,408 | 36.4% |
| Investment properties | 7,237 | 7,354 | -117 | -1.6% |
| Inventories | 8,672 | 7,678 | 993 | 12.9% |
| Trade receivables | 4,217 | 3,756 | 461 | 12.3% |
| Cash and cash equivalents | 4,991 | 5,369 | -378 | -7.0% |
| Interest bearing liabilities without lease liabilities | 33,099 | 33,380 | -281 | -0.8% |
| Net interest bearing liabilities without lease liabilities | 28,109 | 28,011 | 97 | 0.3% |
| Net interest bearing liabilities | 33,556 | 31,975 | 1,581 | 4.9% |
| Equity ratio | 34.8% | 35.3% | -1% | -1.4% |
| Inventory turnover | 8.3 | 8.6 | -0.3 | -3.5% |
Goodwill is ISK 14,668 million and other intangible assets ISK 4,988 million at end of Q3 2020. Properties and equipment amounted to ISK 31,908 million and investment properties to ISK 7,237 million at end of Q3 2020.
Net interest-bearing liabilities without lease liabilities amount to ISK 28,109 million which is an increase of ISK 97 from year-end2019. Equity ratio was 34.8% at the end of Q3 2020 compared to 35.3% at year-end 2019. The cash position remains strong and the balance sheet healthy.
4 November 2020 – Festi Q3 2020 Interim Report
FESTI
Cash flow and investments
- Net cash from operating activities ISK 2,453 million compared to ISK 2,280 million in Q3 2019
- Cash used for investments was ISK 998 million, mostly in retail properties.
- Dividend paid was ISK 648 million.
| ISK million | Q3 2020 | Q3 2019 | Change | % Change | 9M 2020 | 9M 2019 | Change | % Change |
|---|---|---|---|---|---|---|---|---|
| Cash flow | ||||||||
| Cash and cash equivalents, beginning of period | 4,294 | 4,950 | -656 | -13.3% | 5,369 | 4,267 | 1,102 | 25.8% |
| Net cash to operating activities | 2,453 | 2,280 | 173 | 7.6% | 4,369 | 4,278 | 91 | 2.1% |
| Net cash used in investing activities | -998 | -318 | -680 | 213.5% | -2,435 | 1,343 | -3,778 | -281.3% |
| Net cash used in financing activities | -756 | -79 | -677 | 854.1% | -2,345 | -3,073 | 728 | -23.7% |
| Effect of movements in exchange rates on cash | -3 | 6 | -9 | -143.6% | 33 | 24 | 9 | 36.6% |
| Cash and cash equivalents change | 696 | 1,889 | -1,192 | -63.1% | -378 | 2,572 | -2,950 | -114.7% |
| Cash and cash equivalents, end of period | 4,991 | 6,839 | -1,848 | -27.0% | 4,991 | 6,839 | -1,848 | -27.0% |
Net cash from operating activities was ISK 2,453 million in Q3 2020 compared to ISK 2,280 in same quarter last year. Investments were ISK 1,297 million compared to ISK 514 million last year. New Krónan store opened this quarter in Hallveigarstíður in Reykjavík. Krónan Austurver and Krónan Norðurhella as well as ELKO Akureyri are well underway in progress and will open in Q4 2020. Dividend paid in Q3 2020 was 648 million. Net Cash and cash equivalents increased by ISK 696 million compared to ISK 1,889 million last year.
Future outlook and EBITDA guidance for 2020
EBITDA guidance for the year 2020 is updated and is now in the range of ISK 7,200 – 7,500 million.
Following factors may affect the ongoing business:
- Uncertainties related to COVD19 and the ongoing congregation ban
- Volatility in fuel prices and the ISK
- Unemployment rates and drop in GDP
- The Icelandic economy will be affected for some months/years
The company has an equity ratio of 34.8% and a strong cash position. The business outlook is good, and the company is well equipped to handle the projects that lie ahead
Shareholders
- The Company’s market capitalization was ISK 48.2 billion at the end of Q3 2020.
- Dividend for 2019 was paid out to shareholders 2nd September 2020.
- Buy-back program started 5th of October for up to 1.2% of own shares.
- No. of shareholders were 965 at end of Q3 down from 1,005 at end of Q2.
4 November 2020 – Festi Q3 2020 Interim Report
FESTI
Investor meeting - Presentation on Thursday the 5th of November 2020
A presentation will be held online on Thursday the 5th of November 2020 due to COVID restrictions. Eggert Kristófersson CEO of Festi will present the results and answer questions. Registration is here https://origo.zoom.us/webinar/register/WN_hHJK_5-cSLquAMAub24JAg
The meeting will begin at 08:30 local time. The presentation and related material will be accessible on Festi website following the presentation, see http://festi.is/fjarfestar/fjarhagsupplysingar/ as well as on the company news section on Nasdaq OMX Iceland hf. webpage.
Financial calendar
- Annual Financial statement for the year 2020: 25 February 2021
- Annual general meeting 2021: 22 March 2021
For further information please contact Eggert Þór Kristófersson, CEO, ([email protected]) or Magnús Kr. Ingason, CFO, ([email protected]).