Enento Group Plc | Stock Exchange Release | April 23, 2024 at 12:15:00 EEST
SUMMARY
January – March 2024 in brief
- Net sales declined by 5,2% excluding the impact from the discontinued Tambur service at comparable exchange rates.
- Net sales amounted to EUR 37,3 million (EUR 40,0 million), a decrease of 6,8% (at comparable exchange rates decrease of 6,3%).
- Adjusted EBITDA was EUR 12,4 million (EUR 14,7 million), a decrease of 15,6% (at comparable exchange rates decrease of 15,2%).
- Adjusted EBITDA margin was 33,3% (36,8%), a decrease of 3,5 pp (at comparable exchange rates decrease of 3,5 pp).
- Adjusted EBIT was EUR 9,4 million (EUR 12,0 million), a decrease of 21,7% (at comparable exchange rates decrease of 21,4%).
- Operating profit (EBIT) was EUR 5,2 million (EUR 6,9 million).
- The efficiency program, initially targeting at least 8-million-euro efficiencies, has been extended to aim for 10-million-euro in efficiencies by the end of 2024. By the end of the first quarter, more than 70% of the updated target has been achieved.
In January-March 2024, the items affecting comparability amounted to EUR -2,0 million (-2,6 EUR million), including mainly restructuring and other efficiency program-related costs.
In January-March 2024, the amortization from fair value adjustments amounted to EUR -2,1 million (EUR -2,4 million).
KEY FIGURES
| EUR million | 1.1. – 31.3.2024 | 1.1. – 31.3.2023 | 1.1. – 31.12.2023 | |||
| Net sales | 37,3 | 40,0 | 155,9 | |||
| Net sales change, % (comparable fx rates) | -6,3 | 2,3 | -2,6 | |||
| Net sales change, % (reported fx rates) | -6,8 | -1,7 | -6,9 | |||
| Operating profit (EBIT) | 5,2 | 6,9 | 30,4 | |||
| EBIT margin, % | 14,0 | 17,3 | 19,5 | |||
| Adjusted EBITDA | 12,4 | 14,7 | 57,1 | |||
| Adjusted EBITDA margin, % | 33,3 | 36,8 | 36,6 | |||
| Adjusted operating profit (EBIT) | 9,4 | 12,0 | 46,0 | |||
| Adjusted EBIT margin, % | 25,1 | 29,9 | 29,5 | |||
| New services of net sales, %* | 14,0 | 10,4 | 19,1 | |||
| Free cash flow | 6,9 | 10,1 | 32,0 | |||
| Net debt to adjusted EBITDA, x | 2,4 | 2,1 | 2,4 | |||
| Earnings per share, EUR | 0,13 | 0,18 | 0,74 | |||
| Comparable earnings per share, EUR** | 0,20 | 0,26 | 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 EUR 2,5 million (EUR 3,3 million) and the share of new services of net sales,% would have been 6,7% (8,3%). 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 (UNCHANGED)
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
During the first quarter of 2024, we successfully continued to concentrate on sustaining our stable and robust profitability level, and this was achieved despite lower volumes and declining net sales, thanks to advancements in our efficiency program and the implementation of cost-saving measures. We made progress with our growth strategy in several areas, including the further development of our compliance offerings and the introduction of a new open banking service for the Swedish market. These efforts, among others, are aimed at retaining and expanding our strong position in our core area of credit information and securing a leading role in business insights. As anticipated in our 2023 financial statements release, the macroeconomic environment has remained challenging, particularly in Sweden, and has shown clear signs of weakening in Finland as well. The strikes in Finland have had a broad effect on the overall economic activity in society and therefore impacted the demand for our services.
In the first quarter, our organic net sales were EUR 37,3 million, representing a decrease of 5,2% at comparable exchange rates. In Sweden, the demand for consumer credit information services remains sluggish, while in Finland, the demand was significantly weaker compared to the previous year. Additionally, the first quarter included one less business day compared to 2023. On the positive side, net sales in Norway and Denmark continued to grow. Our adjusted EBITDA reached EUR 12,4 (14,7) million, decreasing by 15,2% at comparable exchange rates, which resulted in an adjusted EBITDA margin of 33,3% (36,8%). We continued to make significant progress with our efficiency program and have decided to increase the efficiency target from 8 to 10 million euros by the end 2024. The program has already achieved over 70% of its updated target on a run-rate basis by the end of the first quarter. Furthermore, our free cash flow is expected to remain strong, enabling us to continue investing in our growth areas and return capital to our shareholders.
The share of net sales from new services was 14,0%, marking an impressive improvement from the level of 10,4% in 2023. Most of this growth was generated from the continued implementation of our daily updated credit register in Sweden, the Finnish certificate offering sales, as well as the new real estate information services in both countries. In our continuous efforts to enhance the transparency and relevance of Enento Group’s financial reporting, we have decided to revise the calculation logic of our ‘share of net sales from new services’ KPI, now in line with the industry standard. The revised calculation now extends to cover services launched within the past 36 months, compared to the previous 24 months. Our focus in service development lies in the prioritized growth areas of ESG, compliance and master data, as well as open banking and fraud prevention.
Business Insight’s net sales growth in Denmark and Norway was strong. In Finland, Business Insight also remained on a growth trajectory, while in Sweden, the challenges in the macroeconomic environment are impacting the demand for our services. We continued to see net sales growth especially in the real estate information services in Finland and Sweden and premium services targeted to SMEs across all countries. The transition of the Nordic compliance service offering towards a recurring revenue model is expected to provide stability in terms of revenue development.
In the first quarter, the Consumer Insight business area faced lower demand for credit information services in both Sweden and Finland. In Sweden, the consumer credit information sector is declining due to reduced lending volumes, broker usage, and market exits, a trend that started in September last year. Finland faces downturn but without the market consolidation, largely due to lenders pausing operations and re-evaluating business models. Both countries are experiencing reduced transaction volumes, influenced by consumer caution amidst high inflation, rising interest rates, and increasing bankruptcies.
A significant achievement for Consumer Insight is the adaption of our credit information services for the Finnish positive credit register, starting on 1 April 2024. Our Finnish services are now integrated with the new governmental register data. Many of our customers have opted to rely on our expertise to retrieve the data and enhance it with our analytics and decisioning services. In Sweden, we are about to launch the PSD2 offering for open banking data, which has already attracted a very promising sales pipeline.
Looking ahead, the consumer credit information business is expected to face challenges in the second quarter of 2024. Despite the current unfavorable macroeconomic situation, the measures we have taken in our strategy execution give us confidence in our ability to generate value supported by improving macroeconomics.
WEBCAST
Webcast for analysts, investors and media will be arranged on 23 April 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/q1-2024
The presentation material and the webcast recording will be available on Enento’s investor website.
Helsinki, 23 April 2024
ENENTO GROUP PLC
Board of Directors