KH Group Plc’s Business Review January–September 2023: Profitable
business in a challenging market
KH Group Plc Stock Exchange Release 1 November
2023 at 8:00 am EET
KH Group Plc’s Business Review January–September
2023
Profitable business in a challenging market
This is the summary of the Business Review for January–September
2023. The complete Review is attached to this release and is also
available on the company’s website at www.khgroup.com.
First quarter as a conglomerate
Based on the change in strategy announced on 15 December 2022,
Sievi Capital Plc transformed its operations from a private equity
investment company into a conglomerate on 4 May 2023 by a decision
of the Annual General Meeting. In connection with this, the
company’s name was changed to KH Group Plc. The trading code of the
share was previously SIEVI and was changed to KHG as a result of
the change of the trade name on 10 May 2023.
KH Group’s strategy will no longer include making private equity
investments in new industries. The medium-term objective is to
become an industrial group built around the KH-Koneet business. The
development of other business areas will continue in the same way
as before, and the aim is to divest them in line with the previous
investment strategy.
KH Group did not previously consolidate the data of its
subsidiaries into Group-level calculations line item by line item,
but recognised investments in the companies at fair value through
profit and loss. Starting from 1 May 2023, the Group has
consolidated its subsidiaries into the income statement and balance
sheet line item by line item. More information on the change in
accounting principles and its significant effects on the reported
figures is provided in the tables section.
The following unaudited pro forma financial figures have been
prepared for illustrative purposes only. The pro forma figures aim
to illustrate the comparable result of the segments and the Group
if the change in investment entity status had taken place on 1
January 2022, and the companies that were part of the group
structure on 30 September 2023 had been consolidated into the
income statement line item by line item for the periods 1
January–31 December 2022 and 1 January–30 September 2023.
The unaudited pro forma figures are based on the subsidiaries’
audited financial statements for the financial year 2022 and on
unaudited accounting figures for the periods 1 January–30 September
2022 and 1 July–30 September 2023.
The segment and consolidated income statement comments have been
prepared on the basis of pro forma figures, unless otherwise
stated. The section "Pro forma financial information" presents more
detailed accounting policies. KH Group has not drawn up pro forma
figures for balance sheet and cash flow items.
KH Group, July–September 2023 pro
forma
- Net sales amounted to EUR 100.4 (107.5) million.
- Operating profit was EUR 5.1 (6.0) million.
- The net sales of KH-Koneet significantly decreased year-on-year
due to the weakened general market situation. Profitability was
supported by operational efficiency improvement and the machinery
leasing business.
- Indoor Group’s net sales were nearly on a par with the
corresponding period last year, and profitability improved when
compared to the early part of the year.
- HTJ and NRG achieved profitable growth.
- The Group’s cash and cash equivalents remained strong and
amounted to EUR 19.4 million at the end of the review period. The
parent company used cash proceeds from the Logistikas divestment to
repay a bank loan of EUR 10 million in full.
KH Group, January–September 2023 pro
forma
- Net sales amounted to EUR 309.3 (323.2) million.
- Operating profit was EUR 7.3 (8.5) million.
KH Group, January–September 2023 reported
IFRS
- Net sales amounted to EUR 172.5 (-) million. The figure
includes net sales accumulated in May–September.
- Operating profit was EUR -16.1 (-8.5) million.
- Net profit for the period was EUR -12.1 (-6.9) million.
- Earnings per share (undiluted and diluted) were EUR -0.15
(-0.12).
- Equity per share at the end of the review period was EUR 1.39
(1.49).
- Return on equity for rolling 12 months was -16.1% (4.1%).
- Gearing at the end of the review period was 202.7%
(13.8%).
- Gearing excluding lease liabilities was 80.2%
(13.6%).
CEO Lauri Veijalainen:
“I started as the CEO of KH Group and Indoor Group on 1 August
2023.
Our consolidated pro forma net sales declined slightly
year-on-year, as did our operating profit. The challenging general
market situation had an impact on the net sales of both KH-Koneet
and Indoor Group. For KH-Koneet, net sales in Finland decreased
significantly less than in its other main market, Sweden but
nevertheless, KH-Koneet’s profitability improved compared to the
first half of the year. For Indoor Group, it was positive that the
Sotka chain outperformed the market by a clear margin in terms of
the development of net sales during the review period. The Insofa
furniture factory’s order book remained strong throughout the
review period. Both of Indoor Group’s chains continued to actively
implement measures aimed at enhancing operational efficiency and
improving profitability. These measures included increasing visitor
volumes and sales, improving conversion rates, strengthening
margins and maintaining careful cost control.
In October, Indoor Group Holding Oy received commitments from
its largest shareholders regarding an additional investment
totalling EUR 2.75 million to strengthen its balance sheet
position. KH Group’s share of the additional investment is EUR 2.1
million. The additional investment will be made by the end of
December 2023.
For HTJ and Nordic Rescue Group, pro forma net sales and
operating profit improved year-on-year. Nordic Rescue Group’s
operating profit turned positive during the review period. HTJ’s
performance was supported by the growth of the project portfolio
and the acquisitions made in 2022–2023. Nordic Rescue Group’s
business now has a much better foundation after the Group ceased
the loss-making rescue lift business at the end of last year. The
demand for rescue vehicles in Finland and Sweden has remained
stable.
In the fourth quarter, we will continue our development efforts
across our business areas, many of which are focusing on
operational efficiency. At the same time, we will continue to move
forward with KH Group’s change in strategy as
planned.Financial
performance
KH Group, Pro forma key figures
The accounting principles applied in preparing the pro forma
figures and reconciliations are presented later in the report under
“Pro forma financial figures”.
EUR million |
7–9/2023 |
7–9/2022 |
1–9/2023 |
1–9/2022 |
1–12/2022 |
Net sales |
100.4 |
107.5 |
309.3 |
323.2 |
441.3 |
Pro forma EBITDA (1) |
13.8 |
14.0 |
32.6 |
31.5 |
43.1 |
EBITDA, % |
13.7% |
13.1% |
10.6% |
9.8% |
9.8% |
Pro forma operating profit (EBIT) |
5.1 |
6.0 |
7.3 |
8.5 |
12.2 |
Operating profit (EBIT), % |
5.1% |
5.6% |
2.4% |
2.6% |
2.8% |
Pro forma profit before taxes |
2.8 |
4.1 |
-1.0 |
3.0 |
4.5 |
(1) EBITDA = operating profit + depreciation
and amortisationKH Group, July–September, pro
forma
KH Group’s pro forma net sales amounted to EUR 100.4 (107.5)
million, representing a year-on-year decline of 7%. Net sales
increased in HTJ and Nordic Rescue Group, and decreased in
KH-Koneet and Indoor Group. Operating profit for the review period
came to EUR 5.1 (6.0) million. The operating profit margin
decreased by 0.5 percentage points to 5.1%. All segments recorded a
positive operating profit. The parent company’s share of the
operating profit for the review period was EUR -0.8 (-0.3) million.
The factors contributing to the parent company’s increased
operating expenses include project expenses associated with the
change in strategy and non-recurring items related to
organisational restructuring, which totalled EUR 0.5 million for
the review period.
In spite of the challenging market and resulting decrease in net
sales, we managed to maintain operating profit close to the
previous year’s level. The Group’s pro forma profit before taxes
for the review period was positive by a clear margin.
KH Group, January–September, pro forma
KH Group’s net sales decreased by 4% to EUR 309.3 (323.2)
million. Net sales increased in HTJ and Nordic Rescue Group and
decreased in KH-Koneet and Indoor Group. Operating profit was
positive in all business segments. Of the segments, Nordic Rescue
Group and HTJ improved their operating profit year-on-year, and
their profitability has turned positive by a clear margin. The
parent company’s share of the operating profit for the review
period was EUR -2.2 (-1.4) million. The factors contributing to the
parent company’s increased operating expenses include project
expenses and non-recurring items associated with the change in
strategy, which totalled EUR 0.8 million for the review period.
Events after the review period
KH Group’s group company Indoor Group Holding Oy received
commitments in October from its largest shareholders regarding
additional investment totalling EUR 2.75 million to strengthen its
balance sheet position. KH Group Plc’s share of the additional
investment is EUR 2.1 million. The additional investment will be
made by the end of December 2023.
Future outlook
KH Group’s medium-term objective is to become an industrial
group built around the KH-Koneet business and to divest other
business areas in line with previous strategy. At the same time,
active developments will continue regarding other business areas.
Exit planning and the assessment of exit opportunities for the
other business areas will also continue.
In accordance with KH Group’s current financial guidance
practices, the company does not issue a separate Group-level
financial guidance. KH Group’s strategy and financial targets will
be presented at the Capital Markets Day to be held on 29 November
2023.
KH GROUP PLC
Lauri VeijalainenCEO
FURTHER INFORMATION: CEO Lauri Veijalainen, tel. +358 46 876
1648
DISTRIBUTION: Nasdaq Helsinki LtdMajor
mediawww.sievicapital.fi
Sievi Capital is now a conglomerate with a new name KH Group.
Our four business areas are leading players in their sectors in B2B
products and services and consumer trade. The objective of our
strategy change is to focus on the business of the earth-moving
machinery supplier KH-Koneet. KH Group’s share is listed on Nasdaq
Helsinki.
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