FINANCIAL INFORMATION:
THIRD QUARTER
- Net sales amounted to SEK 1 354 million (401).
- EBITA amounted to SEK 108 million (24).
- Adjusted EBITA amounted to SEK 125 million (39).
- Adjusted EBITA per share amounted to SEK 0.41 (0.17).
- Earnings per share amounted to SEK -0.89 (-0.52).
- Cash flow from operating activities before changes in working capital amounted to SEK 105 million (38).
PRO FORMA THIRD QUARTER*
- Net sales amounted to SEK 1,654 million.
- EBITA amounted to SEK 116 million.
- Adjusted EBITA amounted to SEK 130 million.
- Adjusted EBITA per share amounted to SEK 0.43.
NINE MONTHS
- Net sales amounted to SEK 3,215 million (656).
- EBITA amounted to SEK 263 million (31).
- Adjusted EBITA amounted to SEK 299 million (63).
- Adjusted EBITA per share amounted to SEK 0.99 (0.26).
- Earnings per share amounted to SEK -2.31 (-0.86).
- Cash flow from operating activities before changes in working capital amounted to SEK 269 million (33).
PRO FORMA* NINE MONTHS
- Net sales amounted to SEK 4,648 million.
- EBITA amounted to SEK 333 million.
- Adjusted EBITA amounted to SEK 390 million.
- Adjusted EBITA per share amounted to SEK 0.130.
SIGNIFICANT EVENTS:
IN THE THIRD QUARTER
- Humble completes the acquisition of Amber House, Body Science, Privab Nässjö and Privab Stockholm.
- Humble holds an extraordinary general meeting, Ola Cronholm is elected as a new board member and replaces Thomas Petrén.
- Humble has successfully issued bonds totaling SEK 300 million in the third quarter.
AFTER THE THIRD QUARTER
- Humble has secured a new revolving credit facility together with SEB and Nordea totaling SEK 650 million, replacing the previous credit facility with SEB of SEK 400 million.
CEO COMMENTARY FROM THE REPORT
" CONTINUED GROWTH IN A CHALLENGING MARKET
We delivered another quarter characterized by strong organic growth and increasing demand from our customers, despite the challenges posed by global economic and geopolitical factors. In total, we reached net sales in the third quarter of SEK 1,354 million (401), with organic growth of 18%. Several of the companies in the group have broken sales records during the quarter and September. Delays in transferring price increases, high freight costs (backlog from previous periods in the income statement) and a weaker SEK exchange rate had a slightly negative impact on the adjusted EBITA margin, which amounted to 9.2 percent (9.7) and resulted in an adjusted EBITA of SEK 125 million (39). The high demand for our products has led to increased inventory levels, which ties up working capital and resulted in a negative cash flow from operating activities of SEK -30 million (9) during the quarter. Overall, we have addressed the most imminent challenges and we have positive momentum in the Group for next year.
The effects of shifting energy prices, high inflation, price increases and logistics challenges have been significant throughout 2022, impacting the Group with a negative effect on gross margin totaling -4% in the first three quarters. The main driver has been the high freight rates that peaked in the second and third quarters, which has had a negative impact on our profitability over the last twelve months. However, we have seen a decline in the global freight index and prices in recent weeks are almost back to normal levels. In addition, we have had a negative impact from delays in transferring price increases to retailers, as well as a weaker krona exchange rate in relation to the international currencies with which we buy products. Despite all the challenges, the development of the business remains strong, as reflected in the high organic growth. The absolute majority of the growth comes from increasing volume, but we also see opportunities to continue to work on price increases and optimize the balance between growth and profit.
We have taken several important steps with initiatives to create an environment in which our companies can benefit from the Group's skills and resources, in-house production, combined sales efforts, centralization of administrative functions, and reaching new markets and channels through the Group's global distribution network. The synergies are still at an early stage, but with the potential to be realized and where we see that the work to establish an efficient operational platform has started to bear fruit.
Acquisitions
During the third quarter, we completed the acquisitions of Body Science International, Amber House, Privab Stockholm and Privab Nässjö. The cash part of the acquisitions resulted in a net cash effect of SEK -316 million.
The acquisition of Body Science International strengthens our global position in the sports nutrition segment and the ability to expand into new international markets. Amber House was consolidated in July 2022 and through the acquisition we add another well-run entrepreneurial business in a key market, with access to new retail channels and brands in the Personal Care segment.
From an M&A perspective, we have had relatively lower activity in the third quarter, as we adopted a slightly more restrictive and strategic approach due to the macro climate and market conditions. We still have a large number of incoming inquiries, with interest from entrepreneurs and companies that see the value of becoming part of Humble. The M&A pipeline is strong and we are continuously evaluating new opportunities.
Focus on balance sheet and cash flow
Many of our subsidiaries have broken sales records in September, driven by higher demand for our products and attractive positioning. The breadth of our businesses, combined with our general entrepreneurial spirit, ensures that the Group has the resilience needed in a demanding market, where daily adaptations to new challenges provide an opportunity to gain further market share in each category. The growth has also meant higher inventory levels and increased accounts receivable, resulting in an increase in working capital and a negative cash flow from operating activities for the quarter. This, combined with the completed acquisitions, resulted in higher net debt, which amounted to SEK 2,271 million (105) at the end of the period. Going forward, our priority is to improve the efficiency of our supply and value chain and strengthen cash generation from the underlying businesses.
The future
We continue to capitalize on the fragmented and dynamic consumer market and maintain the growth strategy for our businesses. The short-term focus is on reducing costs in the underlying businesses and implementing strategies and providing support with some central services, with the aim of improving the purchasing process and managing working capital more effectively.
ESG and sustainability work is progressing, with many new initiatives in place, such as a new packaging solution in some of our candy brands that will reduce CO2 emissions from the material by around -40%. It is an honor to work with our inspiring and committed team of entrepreneurs and employees who share our vision."
Download the full report here.
*The pro forma presented in this interim report shows what the consolidated results of Humble Group would have looked like if all announced acquisitions up to the date of this interim report had been consolidated as of January 1, 2022.
For further information, please contact:
Simon Petrén, CEO, Humble Group AB
Tel: +46 70 999 94 55
Email: simon.petren@humblegroup.se
This information is information that Humble Group AB is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information in this press release was published through the agency of the contact person set out above, at the time stated by Humble Group's news distributor Cision at the time of publication of this press release.
About Humble
Humble Group is a Swedish foodtech and FMCG group delivering the next generation of consumer products that are good for people and the planet. Humble focuses on the foodtech, eco, sustainability and vegan segments. The company is growing through organic growth, acquisitions and leveraging synergies across its business units: brands, distribution, manufacturing and ingredients. Humble's technologies, refined through scientific research and extensive market experience, facilitate new formulations and recipes that improve taste and texture for the next generation of sugar-reduced, sustainable and vegan products. For more information visit www.humblegroup.se
Humble is listed on Nasdaq Stockholm, First North Growth Market, under the ticker HUMBLE.
FNCA Sweden AB is Humble's certified adviser. Tel: 08-528 00 399 E-mail: info@fnca.se
Forward-looking statements
This press release contains forward-looking statements that reflect Humble's intentions, beliefs or expectations regarding Humble's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which Humble operates. Forward-looking statements are statements that are not historical facts and can be identified by the use of words such as "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "anticipates", "should", "could" and, in each case, the negatives thereof, or similar expressions. The forward-looking statements in this press release are based on various assumptions, many of which are based on additional assumptions. Although Humble believes that the assumptions reflected in these forward-looking statements are reasonable, there can be no assurance that they will materialize or that they are accurate. Because these assumptions are based on assumptions or estimates and are subject to risks and uncertainties, actual results or outcomes could differ materially from those in the forward-looking statements for a variety of reasons. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this press release by the forward-looking statements. Humble does not guarantee that the assumptions underlying the forward-looking statements contained in this press release are accurate and any reader of the press release should not place undue reliance on the forward-looking statements contained in this press release. The information, opinions and forward-looking statements expressed or implied herein are made only as of the date of this press release and are subject to change. Neither Humble nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, except as required by law or Nasdaq First North Growth Market's Rule Book for Issuers.
