Verkkokauppa Com Oyj

Verkkokauppa Com

Welcome to Verkkokauppa Com's Q2 and half year results presentation. My name is Elisa Forsman. I am the head of investor relations and I'm joined here with our CEO Panu Porkka and CFO Jesper Blomster. We'll start with a presentation by Panu where he will go through the key highlights of our Q2 results. We'll then move on to the Q&A session with both Panu and Jesper. We have a few of our analysts joining us live here in Helsinki, so we'll take their questions first before moving on to the online questions. And just a reminder, if you want to ask a question, please type them into the question box on your webcast panel. I will then address them in the Q&A session. But with that, I think it's time to get started. Panu, please go ahead.

Good morning also on my behalf and welcome to our Q2 presentation. I will start my presentation first of all with the operating environment. Then we will jump into the report published this morning. So highlights from the financials and also from the strategy execution. We will have market outlook and guidance and then key takeaways at the end. And as Elisa mentioned, we will have a separate Q&A session after my presentation where CFO Jesper is also joining with me and available for questions. If I start with the operating environment, the consumer electronic market here in Finland pretty much stayed the same, so it has been muted for quite a long period of time. We did not see significant changes in the consumption or discretionary shopping. We did see some early positive signs. If you look at the consumer confidence, it started to improve during the second quarter. And during June time, it has been the best since three or four years. Also, if you look at consumer's own performance, use on economics, it has been going into the right direction during the second quarter. But with that in a muted market, we will still able to report decent growth figures and we gained market share. If you look at the revenue development, the growth was driven mainly by our online business, which is the key part of our business. 71.5% of all revenue is generated through our online parts of the business. The strongest category, the strongest segment was our B2B business, which was growing by over 18%. Also, during the second quarter, we have season sales regards to spring and summer sale. It is not a huge season for us, but it's still an important part of our business. We were successful in our commercial operations during that period of time. And once again, the key highlight in growth perspective was our international business growing by as much as 63%, driven by our success in the Swedish market. If you look at the Finnish market, our spearhead of the strategy, fast delivery capabilities, is gaining momentum, is gaining our market share volumes, again growing significantly during the second quarter by 45%. It now amounts to 30% of all online sales. We have been systematically working on our margins. It's good to bear in mind that previous year cross-margin had the positive impact of our consumer financing business, which we sold last year. And that negative impact is bigger than we have currently dealt with the previous year. So we have been working hard to mitigate the loss and we are getting closer and closer to previous year levels. with dynamic pricing, successful commercial activities, also the season sales, improved supplier terms, better negotiations from that side, but also category management and healthy inventory are contributing positively to our margins. The profitability was obviously positively impacted by our volumes. So growth with good margin levels yielding in cross-profit improvement At the same time, cost efficiency improved again. Some increase in personal costs, other operating expenses going more down than that. So in total, cost efficiency was improved. And this all yielded into operating result, 2.5 comparable operating result of 2.4 million. So clear improvement the previous year. We have been stacking up certain categories during the first part of the year. We saw that there will be increases in component driven categories. We have done wisely so. The overstocking in certain category has been mitigated with positive category management and inventory management activities. We are now actually on lower level and absolute figures than we were previous year. We have still good availability in those component related categories, so that will be a positive impact going forward. the third and fourth water. So overall the inventory turn has improved and the inventory is on a really healthy level currently. On financials, obviously, the positive execution and operations are reflecting in our balance sheet as well. Cash flow was a strong one, significant improvement to previous year, obviously related to the inventory level development. Net debt on a low level, if we exclude the lease liabilities, it's even on a negative side. Strong cash position and equity ratio now almost at 25%. Significant improvement to previous year. Low amount of invests as we have an investment light business model and few additional notes. First of all, we have been refinancing the business during the June time and now we have rolled over The 15 million term loan and 20 million revolving credit facility, if there's a need for that in case. Secondly, we started, it was probably one of the fewest, maybe the first share buyback programs of the company amounting to a total value of 5 million euros and it's ongoing as planned. And thirdly, due to the really good financial position, of the company and good execution the board decided this morning that the second installment of the dividend will be paid out with 0.048 euros per share so thank you all investors and owners for your support few words about the strategy execution we are proud in the way that we are transforming the Finnish consumer electronic market and being the trailblazer in making fast deliveries the new norm. Like I said, the volumes grew by 45%. Even more important for me personally is that more and more consumers are adapting to this new way of shopping. The customer base increased as much as 65% during the quarter. We have also slightly expanded the coverage of fast deliveries and now we are really dominant with this approach to the market. If you look at the areas where we are offering fast deliveries, almost half of all online sales are tied up to fast delivery capabilities and that is huge. Secondly, we are We are proud to be the market leader in the Finnish market. We are gaining market share, but this is not enough. We want to have additional growth outside of the Finnish market. We have been systematically building these capabilities and the international business grew by 63%, driven by the success in the Swedish market. In the Swedish market, we have platform partnerships with Cedeon, and Amazon both were contributing positively during the second quarter as well as our own channels where we are selling directly to the Swedish consumers. We have a positive development in our partner network in Central Europe so we try to find always new good partners where we can distribute our high qualitative products. We are building the brand that is standing out also when comparing best in breed. So not only in the Finnish market, but internationally as well. So we are proud to see that our marketing efforts are being recognized internationally as we won the Silver Lion in Cannes for our TikTok currency viral payback campaign. In addition, our customer experience is benchmarked to the best in class, not in Finland, but Nordics and Europe and globally. And we were renowned to be best in Finland, best in electronics in general, and third overall in omnichannel index during this year. So what do we expect from the latter half of the year? Like I said in the beginning, we see the first positive signs of a recovery. The consumer confidence Most of the time has been a leading indicator, which is then transported in consumption and discretionary shopping. So that is the one. Secondly, consumers' confidence in own economics is also going in the right direction. The bank institutes are also expecting GDP to start to recover. Probably it will be a slow and gradual improvement, not something abrupt, but these are positive signs that should be transported in consumption. Regardless of the market, we are confident that our business model stands out and we are able to gain market share and have growth regardless of the market development. And therefore, there's no need to update our guidance. We do believe that we will be having a growth year this year and the comparable operating result will improve from previous year. Previous year, the level was 14.8 million. So if I sum up The second quarter, it was totally in line with our own internal expectations. The market is showing the first signs of recovery, but that didn't have any positive impact on consumption during the second quarter yet. We maintained our growth path and gained market share while working on our profitability cost efficiency leading into this EBIT improvement and as we are doing it at the same time we are transforming the Finnish market we are executing our strategy and gaining momentum outside of the Finnish borders thank you all and now we will jump into the Q&A