Enento Group Plc | Stock Exchange Release | July 16, 2024 at 12:00:00 EEST
SUMMARY
April – June 2024 in brief
- Net sales declined by 2,9% excluding the impact from the discontinued Tambur service at comparable exchange rates.
- Net sales amounted to EUR 38,5 million (EUR 39,7 million), a decrease of 3,0% (at comparable exchange rates decrease of 2,9%).
- Adjusted EBITDA was EUR 14,1 million (EUR 14,5 million), a decrease of 2,6% (at comparable exchange rates decrease of 2,5%).
- Adjusted EBITDA margin was 36,7% (36,5%), an increase of 0,1 pp (at comparable exchange rates increase of 0,2 pp).
- Adjusted EBIT was EUR 10,9 million (EUR 11,8 million), a decrease of 7,5% (at comparable exchange rates decrease of 7,3%).
- Operating profit (EBIT) was EUR 7,8 million (EUR 8,7 million).
- The efficiency program targeting at least 10-million-euro efficiencies by the end of 2024, has reached more than 90% of the targeted efficiencies by the end of the second quarter.
January – June 2024 in brief
- Net sales declined by 4,0% excluding the impact from the discontinued Tambur service at comparable exchange rates.
- Net sales amounted to EUR 75,7 million (EUR 79,6 million), a decrease of 4,9% (at comparable exchange rates decrease of 4,6%).
- Adjusted EBITDA was EUR 26,5 million (EUR 29,2 million), a decrease of 9,1% (at comparable exchange rates decrease of 8,9%).
- Adjusted EBITDA margin was 35,0% (36,7%), a decrease of 1,6 pp (at comparable exchange rates decrease of 1,6 pp).
- Adjusted EBIT was EUR 20,3 million (EUR 23,8 million), a decrease of 14,6% (at comparable exchange rates decrease of 14,4%).
- Operating profit (EBIT) was EUR 13,0 million (EUR 15,6 million).
In April-June 2024, the items affecting comparability amounted to EUR -1,0 million (-0,7 EUR million) and in January-June 2024 to EUR -3,0 million (-3,3 EUR million), including mainly restructuring and other efficiency program-related costs.
In April-June 2024, the amortization from fair value adjustments amounted to EUR -2,1 million (EUR -2,4 million) and in January-June 2024 to EUR -4,2 million (EUR -4,8 million).
KEY FIGURES
| EUR million | 1.4. – 30.6.2024 | 1.4. – 30.6.2023 | 1.1. – 30.6.2024 | 1.1. – 30.6.2023 | 1.1. – 31.12.2023 |
| Net sales | 38,5 | 39,7 | 75,7 | 79,6 | 155,9 |
| Net sales change, % (comparable fx rates) | -2,9 | -3,5 | -4,6 | -0,7 | -2,6 |
| Net sales change, % (reported fx rates) | -3,0 | -8,6 | -4,9 | -5,3 | -6,9 |
| Operating profit (EBIT) | 7,8 | 8,7 | 13,0 | 15,6 | 30,4 |
| EBIT margin, % | 20,4 | 21,9 | 17,2 | 19,6 | 19,5 |
| Adjusted EBITDA | 14,1 | 14,5 | 26,5 | 29,2 | 57,1 |
| Adjusted EBITDA margin, % | 36,7 | 36,5 | 35,0 | 36,7 | 36,6 |
| Adjusted operating profit (EBIT) | 10,9 | 11,8 | 20,3 | 23,8 | 46,0 |
| Adjusted EBIT margin, % | 28,4 | 29,8 | 26,8 | 29,9 | 29,5 |
| New services of net sales, %* | 15,3 | 13,7 | 14,7 | 12,0 | 12,2 |
| Free cash flow | 6,1 | 5,9 | 12,9 | 16,0 | 32,0 |
| Net debt to adjusted EBITDA, x | 2,6 | 2,4 | 2,6 | 2,4 | 2,4 |
| Earnings per share, EUR | 0,19 | 0,24 | 0,31 | 0,41 | 0,74 |
| Comparable earnings per share, EUR** | 0,26 | 0,31 | 0,46 | 0,57 | 1,05 |
* The share of new services of net sales is calculated as net sales of those services introduced within the past 36 months. The calculation formula has been revised from 1st January 2024 onwards. Before, the net sales of new services was calculated as net sales of those services introduced within the past 24 months. The comparison figures have been restated. With the previous calculation formula the net sales from new services would have been in April-June 2024 EUR 3.1 million (EUR 4,4 million) and in January-June 2024 EUR 5.5 million (EUR 7,7 million). The share of new services of net sales,% would have been in April-June 2024 8,0% (11,1%) and in January-June 2024 7,3% (9,7%). See note 1 Alternative Performance Measures.
** Comparable earnings per share does not contain amortization from fair value adjustments related to acquisitions or their tax impact.
FUTURE OUTLOOK AND GUIDANCE (UPDATED 16th of JULY 2024)
Enento specifies its previous outlook and provides revenue guidance.
The Company’s operating environment remains challenging due to uncertainty in the general economic situation, which is expected to continue to affect Enento’s financial performance. Enento’s Swedish consumer credit information sector continues to face a challenging operating environment, but Enento expects the environment to stabilize during the second half of the financial year. Enento will continue to prioritize cost control to maintain profitability.
Enento expects demand in its markets to stabilize during the second half of the year. The Company’s year-on-year revenue development is consequently expected to improve in the second half of the financial year compared to the development in the first half of the year. For the full year 2024, Enento expects revenue to decline compared to 2023 (at comparable exchange rates and excluding the impact from the discontinued Tambur service).
FUTURE OUTLOOK (PREVIOUS 9th of February 2024)
The operating environment for Enento remains challenging and volatile due to the uncertainty in the general economic situation in our operating countries. This instability is expected to affect Enento’s financial performance, notably within the Swedish consumer credit information sector. The first half of the year is expected to be challenging and while some recovery signs are visible for the second half of the year, these remain uncertain.
Enento continues to streamline its operations through the efficiency program, prioritizing careful cost control to maintain profitability level in a challenging market situation. The profitability of the company may also be affected by variations in the sales mix.
Given these conditions, Enento will not issue precise financial guidance for net sales or profitability at this stage.
JEANETTE JÄGER, CEO
Our operations in Finland, Norway, and Denmark continued to show positive development, while the consumer credit market in Sweden remained challenging through the second quarter of 2024. The challenges in Sweden resulted in lower net sales at the group level. We have updated our outlook and now expect the financial development in the second half of the year to follow the trends observed in the first half.
In the second quarter, our 10-million-euro efficiency program progressed as planned, achieving over 90% of its target on a run-rate basis by the quarter’s end. Organic net sales were EUR 38,5 (39,7) million, representing a decrease of 2,9% at comparable exchange rates. Our adjusted EBITDA was EUR 14,1 (14,5) million, decreasing by 2,5% at comparable exchange rates, resulting in an adjusted EBITDA margin of 36,7% (36,5%). It is important to note that the postponement of some planned costs to the second half of the year improved the adjusted EBITDA in the second quarter but will respectively burden it in the second half of the year.
The share of net sales from new services reached 15,3%, an improvement from 13,7% in 2023. Our service development focuses on our core and prioritized growth areas. In the compliance space, we aim to become the Nordic leader with the strongest offering. With the Q2 launches, we now have our first true Nordic offering. We possess unique data within our compliance offering in Finland, and we have signed a supplier agreement to offer similar services in Sweden. Another significant development was the launch of our open banking (PSD2) service in Sweden, where we will have great potential with a unique offering to complement our traditional services with real-time open banking data.
This year, we initiated a major project of consolidating our IT infrastructure, starting in Sweden, and continuing in Finland during the second half of the year. This project transitions our operations from five setups to a unified Nordic IT infrastructure, enhancing security and efficiency. We anticipate realizing initial cost savings at the end of 2024. The consolidation is a major milestone to our strategy to integrate Enento with Nordic capabilities and achieve cost efficiencies through driving scale. It also sets the stage for future modernization and development of our services.
Business Insight’s net sales development was positive in Finland, Norway, and Denmark. Net sales grew in enterprise solutions and compliance services in Finland and real estate information services in Finland and Sweden. This quarter, we launched a new ESG-integrated property valuation service in Finland, with promising prospects based on our Swedish experience. In Finland, the introduction of improved service packages by premium solutions has enhanced the customer experience and facilitated the transition to enterprise accounts according to our BI conversion strategy.
The Consumer Insight business area experienced another challenging quarter, with revenue significantly below the levels of the second quarter of 2023 though year-on-year revenue development improved compared to Q1. In Sweden, despite faint signs of increasing consumer credit volumes, the consumer lending market continued to be challenging, with low activity levels in the loan broker channel. On the positive side, we have successfully penetrated the e-commerce market vertical, where customers engage with our core credit offerings, independent of our legacy systems. In Finland, despite the underlying market volumes continuing on a low level, successful customer integrations with the Finnish positive credit register helped balance the revenue. Enento’s solutions have received positive feedback for effectively supporting various customer use cases.
The process of establishing new legislation in Sweden, aimed for preventing over-indebtedness, is still underway. We expect to have more information by the fall. We are proactively preparing for the different scenarios regarding regulatory changes. We have the ability to adapt to changes and continue creating value for our customers with our advanced services.
Looking ahead, the projections in our operating countries remain uncertain, as reflected in the updated outlook. We anticipate the challenging situation with our consumer credit information business to continue in Sweden. At the group level, overall development is expected to remain stable, as observed during the first half of the year. The measures we have taken in executing our strategy support our confidence in our ability to generate value once the conditions improve.
WEBCAST
Webcast for analysts, investors and media will be arranged on 16 July 2024, starting at 2.00 p.m. (EEST). CEO Jeanette Jäger and CFO Elina Stråhlman will present the results in English.
The webcast can be followed at: https://enento.videosync.fi/q2-2024
The presentation material and the webcast recording will be available on Enento’s investor website.
Helsinki, 16 July 2024
ENENTO GROUP PLC
Board of Directors