"Humble Group continues to grow and we are taking market share through increased distribution, more products and new partnerships in international markets. With an operating cash flow of 285 MSEK (246), we see the result of a continued focus on optimizing the flow of goods. Thanks to the improved capital structure and reduced interest costs, we are starting to get a picture of how we will be able to generate a positive free cash flow in the future that can be used for value-creating activities, something I personally have had as a milestone since the Group was founded. Net sales of SEK 1,936 million (1,606) represent a stable increase from the previous year and organic growth amounted to 18%. Profitability measured in adjusted EBITA of SEK 162 million (155) is in line with our expectations and the margin is under some pressure from increased marketing efforts and the consolidation and integration processes that we started in the fall. We are not afraid to take short-term costs for long-term value creation. Investments with additional two or three shifts in several of our factories are costly, but at the same time something that will allow us to achieve higher capacity utilization of our machinery and enable increased growth in the future. Thework to improve the gross margin is going in the right direction and continues to be in focus for all our operations, but there is a long way to go before we reach previous levels." - Simon Petrén, CEO Humble Group AB.
FINANCIAL INFORMATION:
FOURTH QUARTER
- Net sales amounted to SEK 1,936 million (1,606).
- EBITDA amounted to SEK 184 million (143).
- EBITA amounted to SEK 156 million (119).
- EBIT amounted to SEK 66 million (62).
- Adjusted EBITDA amounted to SEK 190 million (179).
- Adjusted EBITA amounted to SEK 162 million (155).
- Adjusted EBIT amounted to SEK 72 million (98).
- Cash flow from operating activities amounted to SEK 285 million (246).
- The result after tax amounted to SEK -11 million (-18).
- Earnings per share before and after dilution amounted to SEK -0.02 (-0.06).
- Adjusted EBIT per share amounted to SEK 0.16 (0.33).
TWELVE MONTHS
- Net sales amounted to SEK 7,050 million (4,800).
- EBITDA amounted to SEK 659 million (504).
- EBITA amounted to SEK 547 million (419).
- EBIT amounted to SEK 318 million (257).
- Adjusted EBITDA amounted to SEK 696 million (551).
- Adjusted EBITA amounted to SEK 584 million (466).
- Adjusted EBIT amounted to SEK 355 million (304).
- Cash flow from operating activities amounted to SEK 1,088 million (255). Adjusted for tax deferrals of SEK 260 million, cash flow from operating activities amounted to SEK 828 million.
- The result after tax amounted to SEK -106 million (-36).
- Earnings per share before and after dilution amounted to SEK -0.28 (-0.13).
- Adjusted EBIT per share amounted to SEK 0.94 (1.07).
SIGNIFICANT EVENTS:
IN THE FOURTH QUARTER
- Humble Group enters into an agreement to sell real estate. The first part of the sale is completed in December and is structured as a sale and leaseback transaction.
- Humble Group enters into a binding agreement to sell all shares in Bayn Production AB.
AFTER THE QUARTER
- Humble Group completes the sale of all shares in Bayn Production AB as part of the group's long-term strategy to streamline operations.
CEO WORDS FROM THE REPORT
"A STRONG FINISH TO A TRANSFORMATIVE YEAR
Humble Group continues to grow and we are taking market share through increased distribution, more products and new partnerships in international markets. With an operating cash flow of 285 MSEK (246), we see the result of a continued focus on optimizing the flow of goods. Thanks to the improved capital structure and reduced interest costs, we are starting to get a picture of how we will be able to generate a positive free cash flow in the future that can be used for value-creating activities, something I personally have had as a milestone since the Group was founded. Net sales of SEK 1,936 million (1,606) represent a stable increase from the previous year and organic growth amounted to 18%. Profitability measured in adjusted EBITA of SEK 162 million (155) is in line with our expectations and the margin is under some pressure from increased marketing efforts and the consolidation and integration processes that we started in the fall. We are not afraid to take short-term costs for long-term value creation. Investments with additional two or three shifts in several of our factories are costly, but at the same time something that will allow us to achieve higher capacity utilization of our machinery and enable increased growth in the future. The work to improve the gross margin is going in the right direction and continues to be in focus for all our operations, but there is still a long way to go before we reach previous levels.
During the fall, we have started to launch a selective consolidation strategy, where some smaller operations are integrated into larger platforms. I am satisfied with the progress we have made in the consolidation work and as many as six companies have become part of a larger machinery and we see good opportunities to utilize economies of scale and streamline the value chain. By becoming a larger player in each sub-segment, we will be more competitive with the trade and enable several classic synergy effects such as increased distribution, joint purchasing and pricing, for a more efficient supply chain. An excellent example of this is the Group's latest joint project between the operating companies Solent Group (offline retail) and Go Superfoods (online retail, Amazon), where we complement each other's sales structure effectively and will start rolling out each product portfolio to more channels and customers.
We have advanced in the development of the commercial B2B platform within Future Snacking and Quality Nutrition, with Arena Nutrition and Arena Confectionery spearheading the Nordic manufacturing of high quality products within health and sustainability. Here we see potential in working closely with our customers and our incubator, to then utilize the business segment Nordic Distribution in an agile way and test innovations and products in the market.
During the year we have created several exciting brand projects internally and my ambition is that we will be able to present some of them to the market already this spring. It is a constant work to keep track of the trends that arise in the FMCG world and it is clear that the trade today does not have the right infrastructure required to be able to capitalize on fast-growing (and sometimes short-term) trends from e.g. TikTok and Instagram. Here, our intention is to be a dynamic player that can quickly act on an opportunity and offer the right product at the right time. We currently have a network of over 300 contract manufacturers and a large international distribution platform. This makes us an interesting partner for smaller entrepreneurial companies that have found a "super product" but do not have the resources, speed or knowledge to scale to more than a few markets.
Humble's price fighter and private label business continues to gain ground and it is clear that many customers are satisfied with the concept we offer. Our subsidiary Solent Group is leading the way in this segment and we have many exciting business opportunities ahead of us. We are refining our strategy to be able to respond more quickly to the potential of new markets. I am convinced that we will see improvements in this area in the coming years and we have already started to see the results of the cooperation in the Nordic region and elsewhere.
The fourth quarter is seasonally the largest for the Group and we are expected to deliver both a good result and a stable cash flow. Considering how many areas we are developing and changing to create conditions for higher profitability and growth in the long term, it is therefore particularly gratifying that it has not taken too much focus from the core business and that we have a good development in all segments. The macro trend for products with a focus on health and sustainability remains very strong, where, for example, sports nutrition in Sweden grew by 9% in 2023, which should be able to give us some tailwind going forward. A strategic goal is to create the conditions and structure internally to grow with the trend and at the same time take market shares from existing players. Given that we currently have a significantly higher demand from external customers for our products than our factories have the capacity to deliver, there is no doubt that there are many companies out there who see us as a future B2B partner to ally with.
With the cost-intensive indebtedness at the beginning of the year after sharply increased market interest rates, cash flow has been the main target to improve in Humble in 2023. It is therefore pleasing to see the strong end of the year with an increased operating cash flow in 2023 from SEK 255 million to SEK 1,088 million (SEK 828 million excluding tax deferral). Investable cash flow has also strengthened from SEK -99 million to SEK 486 million, largely driven by economies of scale, working capital optimization and the new capital structure. We still have many areas of improvement in working capital management, but there is a significant difference in efficiency now compared to previous years. Finding a successful recipe for cash flow optimization in the group is a powerful tool to continue to create value among the new acquisitions that will be part of Humble in the future.
Overall, we enter 2024 with optimism and full focus on what lies ahead. The macro environment continues to be turbulent and we are closely monitoring developments in areas such as the turbulence of the Red Sea shipping crisis and increased cocoa prices. It is exciting to be part of the development of the Group's growth initiatives, such as investments in everything from a new beverage line and bar producer in Australia, to technologies for new candy products and home-care that will roll out in stores. Those who have followed us for a while know that we have a penchant for innovation, and it would be disappointing if we don't see several new successes in the Humble portfolio by 2025. Finally, I would like to take the opportunity to thank all shareholders and our fantastic employees for your fighting spirit during a tough and rewarding year. The company has taken great strides in terms of maturity and it is you who make the difference - together we continue the journey towards building the FMCG group of the future."
The report is attached and can also be downloaded in full from the company's website here.
For further information, please contact:
Simon Petrén, CEO, Humble Group AB
Tel: +468 61 32 888
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 has been published through the agency of the contact person above, at the time stated by Humble Group's news distributor Cision when publishing this press release.
About Humble
Humble Group is a Swedish FMCG group that delivers next-generation consumer products that are better for people and the planet. Humble's operations consist of the business segments Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution, which are focused on health and sustainability. The company aims to drive organic and structural growth through acquisitions and with synergies in the business units. 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 do not relate to historical facts and can be identified by the use of words such as "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "assumes", "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 will be accurate. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, actual results or outcomes may 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 in this press release are correct and any reader of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements expressed or implied herein speak only as of the date of this press release and are subject to change. Neither Humble nor anyone else undertakes to review, update, confirm or publicly announce any revision to any forward-looking statement to reflect events that occur or circumstances that arise in relation to the content of this press release, unless required by law or Nasdaq First North. Growth Market's rules for issuers.
