Wetteri PLC — Earnings Release 2023

Mar 14, 2024

Wetteri Plc financial statements bulletin for the financial year 1 January to 31 December 2023

Wetteri Plc financial statements bulletin for the financial year 1 January to 31 December 2023

Year of strong growth

Wetteri Plc Financial Statements Bulletin 14 March 2024 at 8.30 EET

This is a summary of Wetteri Oyj's financial statement bulletin. The financial
statement bulletin is attached in its entirety to this summary and can be read
on the company's website at www.sijoittjat.wetteri.fi/en.

During 2022, the Wetteri Group (hereinafter “Wetteri”, “the Wetteri Group”, “the
Group” or “the company”) carried out several corporate arrangements in
preparation for its listing on the stock exchange. For this reason, the
financial information for the financial year (January-December 2023) is not
comparable with the financial information for the comparison period (24 February
to 31 December 2022). The financial information for the comparison period (24
February to 31 December 2022) includes the comprehensive income and balance
sheet of the Group company Themis Holding Oy as of its establishment on 24
February 2022, as well as the comprehensive income and balance sheet of the
Group company Wetteri Yhtiöt Oy and its subsidiaries as of the implementation of
the share transaction on 11 May 2022. Themis Holding Oy was established for the
stock exchange listing and the preceding corporate arrangements, in which it
acted as the acquiring party in terms of accounting. In the comparison period
(24 February to 31 December 2022), it did not have any business operations until
after the implementation of Wetteri Yhtiöt Oy's share transaction on 11 May
2022. Because the financial information for the financial year and the
comparison period is not comparable, this financial statements bulletin contains
pro forma information concerning the comprehensive income of the Group and its
operating segments for the periods 1 October to 31 December 2022 and 1 January
to 31 December 2022. This pro forma information is hypothetical and has been
prepared for illustrative purposes only. The financial statements bulletin and
the pro forma information it contains are unaudited.

The comparison figures in brackets refer to the comparison period 1 October to
31 December 2022 and to the pro forma information for 1 October to 31 December
2022 or 1 January to 31 December 2022. Whether reference is being made to the
reference period or to the pro forma information is mentioned separately.

Summary of the review period 1 October to 31 December 2023

· The Group's revenue was EUR 131.1 million (EUR 74.8 million in
October-December 2022; pro forma: EUR 77.5 million in October-December 2022).
· Adjusted EBITDA was EUR 6.8 million (EUR 2.3 million; EUR 2.3 million).
· The adjusted operating profit was EUR 3.3 million (EUR -0.2 million; EUR
-0.2 million).
· The operating profit was EUR 0.7 million (EUR 2.4 million; EUR 2.4
million).
· The revenue of the Passenger Cars segment increased by EUR 40.2 million
(+82%) year-on-year (pro forma October-December 2022).
· The revenue of the Heavy Equipment segment decreased by EUR 0.9 million (
-6%) year-on-year (pro forma October-December 2022).
· The revenue of the Maintenance Services segment increased by EUR 14.6
million (+194%) year-on-year (pro forma October-December 2022).

Summary of the financial year 1 January to 31 December 2023

· The Group's revenue was EUR 443.3 million (comparison period: EUR 191.8
million in February-December 2022; pro forma: EUR 291.0 million in
January-December 2022).
· Adjusted EBITDA was EUR 24.9 million (EUR 9.8 million; EUR 13.8 million).
· The adjusted operating profit was EUR 12.0 million (EUR 3.3 million; EUR 3.9
million).
· The operating profit was EUR 5.4 million (EUR -2.3 million; EUR -4.0
million).
· The revenue of the Passenger Cars segment increased by EUR 112.5 million
(+65%) year-on-year (pro forma January-December 2022).
· The revenue of the Heavy Equipment segment increased by EUR 8.2 million
(+14%) year-on-year (pro forma January-December 2022).
· The revenue of the Maintenance Services segment increased by EUR 31.7
million (+71%) year-on-year (pro forma January-December 2022).
· Autotalo Hartikainen became part of Wetteri through a business acquisition
on 7 March 2023.
· AutoPalin became part of Wetteri through a business acquisition on 1 June
2023.
· The car dealership business operations of the Suur-Savo Cooperative became
part of Wetteri after the financial year on 1 January 2024.
· Suvanto Trucks Oy became part of Wetteri through a share exchange after the
financial year on 29 February 2024.

Financial guidance

The company maintains the content of its financial guidance for 2024, but
expresses the guidance in a range according to the disclosure policy:

· Revenue EUR 660 - 800 million
· Adjusted operating profit EUR 19 - 23 million

The company's medium-term (3 years) goal is to achieve a revenue of 1,000
million and an operating profit of 30 million.

Former expression

Financial guidance for 2024

· Revenue MEUR 730
· Adjusted profit MEUR 21

The company's medium-term (3 years) goal is to achieve a revenue of 1,000
million and an operating profit of 30 million.

Key performance indicators

[][][][][][][]
EUR Q4/2023 Q4/2022 Pro Change[2)] 2023 2022[1)] Pro
Change[2)]
thousand forma forma
Q4/2022 2022
[1
)]

Revenue 131,089 74,781 77,519 69% 443,287 191,825 291,042
52%
EBITDA 4,662 758 847 451% 21,009 6,172 9,125
130%
EBITDA, % 4% 1% 1% 5% 3% 3%
of
revenue
Adjusted 6,783 2,257 2,346 189% 24,918 9,788 13,804
81%
EBITDA[3)]
Adjusted 5% 3% 3% 6% 5% 5%
EBITDA, %
of
revenue
Operating 702 -2,446 -2,447 - 5,351 -2,279 -3,954
-
profit
(loss)
(EBIT)
Operating 1% -3% -3% 1% -1% -1%
profit
(loss),
%
of revenue
Adjusted 3,343 -196 -164 - 12,030 3,322 3,860
212%
operating
profit[3)]
Adjusted 3% 0% 0% 3% 2% 1%
operating
profit, %
of revenue
Profit -2,775 -3,377 -3,800 - -3,824 -4,367 -7,255
-
(loss)
before tax
Profit -2% -5% -5% -1% -2% -2%
(loss)
before
tax, %
of revenue
Profit -2,963 -2,798 -3,358 - -4,049 -3,834 -6,545
-
(loss)
for the
period
Profit -2% -4% -4% -1% -2% -2%
(loss)
for the
period, %
of
revenue
Earnings -0.02 -0.03 -0.03 -0.05
per
share,
basic
(EUR)
Earnings -0.02 -0.03 -0.03 -0.05
per
share,
diluted
(EUR)
Return on -35% -47% -13% -25%
equity
(ROE),
%
Return on -15% -15% -9% -11%
investment
(ROI),
%
Equity 16% 20% 16% 20%
ratio,
%
Liquidity, 83% 85% 83% 85%
%
Average 1,007 632 926 622
number
of
personnel
during the
financial
year[4)]
Invoiced 848 549 3,322 1,394
sales
of new
passenger
cars
(pcs)
Invoiced 43 55 181 143
sales
of new
commercial
trucks
(pcs)
Invoiced 1,553 1,169 5,764 3,280
sales
of used
passenger
cars
(pcs)
Orders: 699 636 2,862 1,916
new
passenger
cars
(pcs)
Orders: 17 26 127 89
new
commercial
trucks
(pcs)
Passenger 57,343 82,700 57,343 82,700
cars:
order
backlog at
the
end of the
period
Commercial 13,655 20,100 13,655 20,100
trucks:
order
backlog at
the
end of the
period
Passenger 83,908 57,054 319,562 109,342
car
repair
shop:
hours sold
Commercial 30,295 31,173 110,759 74,514
truck
repair
shop:
hours
sold

[1)] Q4/2022 refers to the period 1 October to 31 December 2022, and 2022 to the
period 24 February to 31 December 2022. The financial information for the
comparison period is not comparable with the financial information for the
financial year because the company did not have any business operations in the
comparison period until after 11 May 2022.

[2)] Change refers to the change between Q4/2023 and pro forma Q4/2022 and the
change between 2023 and pro forma 2022.

[3)] The adjusted EBITDA and operating profit do not take items affecting the
comparability of the Group's EBITDA and operating profit into account, such as
significant non-recurring items of income and expenses and amortisation of the
fair value of assets recognised on the balance sheet by means of acquisition
calculations. The purpose of the adjusted EBITDA and operating profit is to
improve the comparability of the Group's EBITDA and operating profit between
periods. The reconciliation of the adjusted EBITDA and operating profit is
presented on page 20 of the financial statements bulletin.

[4)] The calculation of the number of personnel has been revised in the
financial year so that the number of personnel at the end of each month has been
added together, and the amount thus obtained has been divided by the number of
months in the financial year. Comparative information has also been adjusted to
match this calculation method.

Aarne Simula, CEO:

Growth strategy launched in 2023

“2023 was a year of strong growth for Wetteri as a whole, and we initiated
measures in line with our growth strategy. Two corporate transactions were
completed and, and four new used car centres were opened during the year. We
also announced future acquisitions that were completed in the beginning of 2024.

Considering the operating environment, the company's financial performance was
quite favourable. The Group's revenue was EUR 443.3 million, and its adjusted
EBITDA increased to EUR 24.9 million. The adjusted operating profit was EUR 12.0
million. The rise in interest rates affected the profitability of Wetter's
business, and during the last quarter of 2023, unexpected challenges emerged in
the operating environment of the automotive sector: a strike in the stevedoring
sector affected the new car deliveries, and this had an impact on the Passenger
Cars segment's performance in particular over the last few weeks of the year.
Maintenance operations were burdened by the fact the Christmas holidays fell on
weekdays.

In Wetteri's business segments, revenue growth was highest in the Passenger Cars
segment, and revenue rose to EUR 284.5 million. The invoiced sales of new cars
increased by around 61% year-on-year, and the order backlog for new cars at the
end of the financial year was at a good level (EUR 57.3 million). The Heavy
Equipment segment's revenue increased by 14% year-on-year. Its adjusted
operating profit increased by 49% and was nearly EUR 3.7 million. The
Maintenance Services segment's adjusted operating profit stood at nearly EUR 5.7
million, with an increase of 200% from the previous year.

Wetteri's goal is to be the largest and most profitable player in the automotive
sector by the end of 2025. Wetteri's growth strategy is acquisition-driven. This
strategic choice is based on the ongoing historical transformation in the
automotive industry. Consolidation into larger units with better profitability
in the car trade is a megatrend resulting from numerous smaller changes in
technology, industry operating models and consumer behaviour. The car trade as a
business is increasingly about volume: size brings synergy benefits and improves
operational efficiency. It also gives leverage to navigate the transformation of
the operating environment. Wetteri's acquisition-driven growth strategy is based
on volume growth and decreasing costs as a result of synergy benefits, as well
as improved margins. There are several well-managed automotive companies in
Finland that cannot cope with the pressure of the transformation on their own,
but that gain successful continuity as part of a larger whole. Wetteri's value
creation journey has only just begun.

Wetteri is distinguished from many other automotive operators by its business
model. Wetteri's business model covers the sale of new and used passenger and
commercial vehicles, as well as the sale of heavy vehicles. In addition, Wetteri
offers a wide range of maintenance services and repair shop services, as well as
spare parts and tyre services in all vehicle categories. With the acquisitions
of Autotalo Hartikainen and AutoPalin completed in 2023, Wetteri has become
stronger by means of a wider service network, new brand representation and brand
expertise, for example. Wetteri's business model and Finland's largest car brand
representation are strengths that help the company navigate challenging
operating environments successfully. Wetteri's highly skilled, trained and
committed personnel play a major role in the company's growth story, and in
December 2023 we announced the free share issue to all of our car business
personnel.

This year, the number of first registrations of new passenger cars is expected
to be 80,000, well below the long-term average. The Finnish car fleet is the
oldest in Europe, with an average age of 13.2 years. There is a strong need for
renewal in the car fleet: the emissions reduction targets for transport will not
be achieved with the current car fleet, but a new fleet is also required to
improve road safety. This means that the automotive sector has pent-up demand as
well as strong potential for organic growth. The stabilised inflation and
interest rates support the increase in the demand for new cars. Wetteri's multi
-brand representation and national presence offer a good basis for responding to
demand.

In 2024, we will continue to implement our growth strategy with great
determination, and in the beginning of year 2024 Suur-Savon Auto and Suvanto
Trucks Oy became part of Wetteri. With Suvanto Trucks acquisition Wetteri gained
purchase channels and expertise, and we will start building a nationwide sales
network for used heavy vehicles by utilising our new and older distribution
channels more efficiently. In the late spring of 2024, we will open a major used
car dealership in Vantaa in line with the Wetteri Premium concept. This will
enable us to respond to the growing demand for high-quality used cars in the
Helsinki metropolitan area. During 2024, we will also explore opportunities for
funding growth, expanding the company's ownership base and strengthening self
-sufficiency through a directed share issue for institutional investors, private
investors and Wetteri's personnel.”

The Board of Director's proposal for measures concerning the profit for the
financial year

The distributable funds of Wetteri Plc, the parent company, are EUR 64.2
million, including the profit (loss) for the financial year (EUR -0.6 million).
The Board of Directors proposes to the Annual General Meeting that no dividend
be distributed from the profit (loss) for the financial year, and that the
profit (loss) for the financial year be transferred to retained earnings
(losses).

Estimate of developments in 2024

Availability gaps for new cars have largely been resolved, and the order backlog
will continue to be delivered during 2024. Economic uncertainty may have an
impact on the demand for new cars in all vehicle categories, and new car
registrations in the sector are expected to remain below the level of 2023.
Recent signals of interest rates stabilizing and inflation turning downward may
increase demand for new cars across all vehicle categories, and demand for used
cars is expected to grow. Maintenance operations are expected to continue strong
performance.

Annual General Meeting 2024

Wetteri Plc's Annual General Meeting is scheduled to be held on 22 May 2024. The
notice of the meeting will be published later by means of a stock exchange
release.

Wetteri's disclosure of financial information in 2024

Wetteri will publish its annual report and financial statements, corporate
governance statement and remuneration report on 18 April 2023.

30 May 2024                        Interim report for January-March 2024

28 August 2024                    Interim report for January-June 2024

21 November 2024               Interim report for January-September 2024

Webcast 14 March 2024 at 3 pm

Wetteri will hold a webcast for shareholders, analysts and the media on 14 March
2024 at 3 pm. During the webcast, Wetteri Plc's CEO, Aarne Simula, will present
the result for 2023, provide information about the progress of the company's
strategy and discuss the market situation in the automotive sector. The webcast
can be followed at https://wetteri.videosync.fi/q4-2023

Oulu 14 March 2024

Wetteri Plc

Board of Directors

Further information:

Aarne Simula, CEO, Wetteri Plc

Tel. +358 400 689 613, aarne.simula@wetteri.fi

Panu Kauppinen, CFO, Wetteri Plc

Tel. +358 44 236 3740, panu.kauppinen@wetteri.fi

Wetteri Plc - an entrepreneur-driven growth company in the automotive sector

Wetteri Plc is an entrepreneur-driven growth company in the automotive sector.
The company engages in the retail sales of passenger cars, commercial vehicles
and heavy vehicles, and produces maintenance and repair shop services for
vehicles, from passenger cars to heavy vehicles. Headquartered in Oulu, the
company has 49 locations in Finland. The company employs nearly 1,000 people, of
whom around 70% work in maintenance and repair services. Wetteri promotes
digitalisation in the automotive sector and is an important player on the common
journey towards emission-free motoring. More
information: sijoittajat.wetteri.fi/en/ (http://www.sijoittajat.wetteri.fi/)

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