Release Date: September 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales grew by more than 30%, reaching EUR302 million.
- Reported EBITDA increased by 45%, indicating strong operational performance.
- The acquisition of Stella Pack significantly boosted numbers, contributing EUR39.2 million in net sales.
- Strong performance in key markets such as Greece, Poland, and Romania, with Greece showing an 18.5% growth.
- Strategic partnerships and innovations have led to good growth, particularly in the Beauty, Skin, and Sun Care categories.
Negative Points
- The situation in Ukraine remains challenging, with market conditions expected to stay tough for the rest of the year.
- Hungary showed a decline in sales, attributed to market conditions and strategic shifts.
- Private Label business, despite growth, reported a loss in EBIT, highlighting its low-margin nature.
- The second half of the year is expected to face significant competitive pressure, potentially impacting margins.
- There is some uncertainty regarding the full-year guidance due to external factors like the situation in Ukraine and competitive pressures.
Q & A Highlights
Q: Home care sales category, excluding Stella Pack, grew by 2.6%, but EBIT grew by double digits. Could you explain why this big growth in EBIT despite the lower sales growth in that segment?
A: The significant EBIT growth in the home care segment is due to multiple factors, including efficiency improvements in our operations, margin improvement programs, and better promotional activities. Additionally, there were no price increases in this category for 2024, which means the growth is primarily driven by cost improvements and portfolio mix.
Q: Hungary sales were down. What exactly is the reason for that?
A: The market in Hungary is quite tough. We have strategically decided to focus more on modern trade and core categories, which has resulted in a 6% growth in modern trade for the first half of the year. We are also expanding our portfolio in other categories, including skincare, which shows positive signs.
Q: Why was the Private Label EBIT at a loss even though it grew significantly?
A: The Private Label business is a low-margin category and is primarily used to support our factory capacities. The EBIT appears as breakeven due to the way we report, but it supports the margins and costs for the branded part of the Homecare Solutions category.
Q: What is the growth rate for Greek-only sales in the first half?
A: Greek standalone sales grew by 18%, which is consistent with the overall growth rate for Greece.
Q: What are the current trading trends in the third quarter, and how do they align with your full-year guidance?
A: We are maintaining the growth seen in the first half, although there is some pressure in August. We are confident in achieving our full-year guidance of EUR80 million EBITDA, despite expecting increased competition and challenges in the second half.
Q: How much more improvement do you anticipate in working capital days for the full year?
A: We expect the trend of working capital improvement to continue, similar to the 11 days improvement seen in the first half. We are consistently focusing on improving the percentage of operating working capital as a percent of net sales.
Q: Can you quantify the contribution of volume and price to the 13.4% organic growth?
A: In 2024, some categories did not have any price increases, while others had inflationary price increases between 2% to 4%. The growth is primarily volume-driven, especially in the beauty and skin care categories, where the mix of more expensive products also contributes to the value growth.
Q: Are you considering acquisitions outside your current geographical areas?
A: Our focus remains on our current territories in Southeastern Europe. We are not looking for acquisitions outside this region at this moment.
Q: What drove the significant growth in the personal care segment in H1, and what should we expect for the remainder of the year?
A: The growth in personal care is due to our strong execution, focus on HERO portfolio, and strategic initiatives. We expect to continue this growth trend, although we anticipate increased competition in the second half of the year.
Q: Can you explain the significant margin jump in the beauty and skin care segment?
A: The margin improvement is not solely due to pricing. Last year, we had significant upfront investments in launching a new skincare brand, which impacted margins. This year, the growth in sun care and better product mix have contributed to the margin improvement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
