Duell Corporation full-year financial report September 2021-August 2022

November 10, 2022| Duell Corporation | Inside Information

This company announcement is a summary of Duell’s Full Year Financial Report for September 2021–August 2022. The complete Report is attached to this announcement as a pdf file. It is also available on the company website at https://investors.duell.eu/ 

A year of growth in an uncertain market

Full year and comparative figures presented below are derived from audited financial statement. Quarterly figures are unaudited.

June 2022-August 2022 "Q4 2022" (comparable figures in parenthesis 6/2021-8/2021): 

• Net sales increased 79.6% to EUR 34.6 million (EUR 19.4 million). Organic net sales growth was 19.2%.
• Adjusted EBITDA increased 8.8% to EUR 2.0 million (EUR 1.8 million) with an adjusted EBITDA margin of 5.7% (9.4%).
• Adjusted EBITA increased 8.2% to EUR 1.8 million (EUR 1.6 million) with an adjusted EBITA margin of 5.1% (8.5%).
• Adjusted operating profit was EUR 1.3 million (EUR 1.7 million) with a margin of 3.7% (8.6%).
  

September 2021-August 2022 "FY 2022" (comparable figures in parenthesis 9/2020-8/2021):

• Net sales increased 61.5% to EUR 124.0 million (EUR 76.8 million). Organic net sales growth was 15.7%.
• Adjusted EBITDA increased 9.3% to EUR 9.5 million (EUR 8.7 million) with an adjusted EBITDA margin of 7.6% (11.3%). EBITDA was EUR 7.4 million (EUR 8.3 million). The differences between adjusted and reported figures are explained by items affecting comparability. Items affecting comparability included EUR 2.1 million fees and expenses related to the listing of Duell Corporation.
• Adjusted EBITA increased 8.5% to EUR 8.7 million (EUR 8.0 million) with an adjusted EBITA margin of 7.0% (10.5%).
• Adjusted operating profit decreased 8.4% to EUR 7.0 million (EUR 7.6 million) with a margin of 5.6 % (9.9 %)
• Earnings per share was EUR 0.08 at end of August 2022.
• Medium-term financial targets changed.

Duell Corporation submitted a listing application with Nasdaq Helsinki Ltd on November 15, 2021, to list the Company’s shares on the First North Growth Market maintained by Nasdaq Helsinki. Trading in Duell’s shares commenced on the First North Growth Market of Nasdaq Helsinki on November 24, 2021.

Outlook for financial year 2023

The market continues to be uncertain. The accelerating inflation and the overall economic environment have decreased consumer confidence. These factors will reduce predictability. Duell will continue to execute its growth strategy despite uncertain market conditions.

Duell expects to have net sales growth organically and inorganically. Adjusted EBITA is expected to grow both in absolute and relative terms for the current financial year ending August 31, 2023. Organic net sales growth is calculated excluding the impact of acquisitions and divestments.

CEO Jarkko Ämmälä:

The fourth quarter was closer to our plan despite the market turmoil and the demand normalised after the weaker than expected third quarter. The supply chain issues eased gradually towards the end of the quarter. However, the customer demand started to decrease again at the end of August increasing the Inventory levels. Despite the decrease in consumer demand, we managed to reach an organic growth of 15.7% and including the impact of acquisitions, net sales grew by 61.5%. Organic growth in the fourth quarter was 19.2%. Adjusted EBITA increased by 8.5% to 8.7 EUR million, driven by organic net sales growth during the financial year ending August 31, 2022.

The financial year 2022 included important milestones. Our shares were listed in November, and we carried out two important acquisitions as part of our geographical and brand portfolio expansion. At the same time, we witnessed severe market uncertainty as the unexpected war in Ukraine broke out in addition to the continued COVID-19 pandemic. These two factors followed by increasing inflation, caused decline in consumer confidence and in the demand from the spring 2022 onwards. 

Despite the market turmoil, we achieved our growth targets. Net sales including impact of acquisitions grew to EUR 124.0 million from previous years’ EUR 76.8 million. Share of European sales was 38%. Correspondingly, the Nordic countries' share of total sales was 62%. Big part of the sales growth came from acquisitions and the European market. Adjusted EBITA margin decreased from 10.5% to 7.0%.

Share of online sales decreased slightly from previous years’ 26.1% to 25.2%. The share of own brands sales remained the same at 20.7%. Our goal is to increase the share of our own brands to 25% in 2025. We were successfully expanding our brand portfolio both organically and through acquisitions from 260 to almost 500 brands. The assortment currently includes some 150,000 items. 

The two acquisitions we accomplished were Netherland based Techno Motor Veghel B.V. (TMV, currently Duell TMV B.V.) in February and Finnish based PowerFactory Nordic Oy Ab in May. The acquisition of TMV provides us a growth platform for motorcycle’s motocross market and cross selling potential especially in Benelux. It will also enhance logistics capability and sales to other European countries. The PowerFactory acquisition opens the market for the bicycling segment in the Nordic countries. 

We made a strategic decision to increase our inventory levels due to supply chain challenges to ensure the availability of products for our dealers. However, the delivery delays and deliveries received after the season led us with higher inventory levels. Therefore, one of our key focus areas for the current financial year is to decrease networking capital by lowering inventory levels to improve our financial position. We also prioritise the cost structure optimisation with cost consciousness in all our operations. As we have made four acquisitions within 18 months, the integration measures and achieving synergy benefits by cutting overlaps and utilising synergy opportunities for cross selling and growth is another of our key focus areas. 

We have three key strategic objectives: geographical market expansion, being the partner for supporting online sales and developing our brand portfolio. Our objective is to become the best partner for dealers and brand owners throughout Europe and strengthen the leading market position in the Nordics. We continue to execute the growth strategy despite the uncertain market conditions. It will potentially include acquisitions.

Key figures and ratios EUR thousand	Q4 2022 (6/2022- 8/2022)	Q4 2021 (6/2021-8/2021)	FY 2022 (9/2021-8/2022)	FY 2021 (9/2020-8/2021)
Net sales	34,636	19,369	123,991	76,756
Net sales growth, %	79.6	28.0	61.5	29.1
Constant currency net sales growth, %	80.7	24.0	61.9	26.7
Organic net sales growth, %	19.2	19.7	15.7	24.1
EBITDA	1,984	1,584	7,383	8,322
EBITDA margin, %	5.7	8.2	6.0	10.8
Items affecting comparability, EBITDA*	0	239	2,074	333
Adjusted EBITDA	1,984	1,823	9,457	8,655
Adjusted EBITDA margin, %	5.7	9.4	7.6	11.3
EBITA	1,776	1,403	6,652	7,711
EBITA margin, %	5.1	7.2	5.4	10.0
Adjusted EBITA	1,776	1,642	8,726	8,044
Adjusted EBITA margin, %	5.1	8.5	7.0	10.5
Operating profit	1,271	1,434	4,904	7,282
Operating profit margin, %	3.7	7.4	4.0	9.5
Adjusted operating profit	1,271	1,673	6,978	7,615
Adjusted operating profit margin, %	3.7	8.6	5.6	9.9
Earnings per share, basic, EUR	0.03	n/a	0.08	n/a
Earnings per share, diluted, EUR	0.03	n/a	0.08	n/a
Number of outstanding shares at the end of the period, basic	25,454,574	n/a	25,454,574	n/a
Number of outstanding shares at the end of the period, diluted	25,454,574	n/a	25 454 574	n/a
Weighted average number of shares, basic	25,454,574	n/a	25 454 574	n/a
Weighted average number of shares, diluted	25,454,574	n/a	25,454,574	n/a
Investments in tangible and intangible assets excluding acquisitions	453	0	915	398
Net debt	44,571	38,683	44,571	38,683
Net working capital	57,718	33,744	57,718	33,744
Operating free cash flows	8,941	3,666	-1,818	2,329

*) Items affecting comparability:

IPO costs EUR 0 thousand in Q4 2022 (EUR 239 thousand in Q4 2021).

IPO costs EUR 2 074 thousand in 9/2021-8/2022 (IPO costs EUR 292 thousand and M&A costs EUR 41 thousand in 9/2020-8/2021).

 

Operational key figures	Q4 2022 (6/2022- 8/2022)	Q4 2021 (6/2021-8/2021)	FY 2022 (9/2021-8/2022)	FY 2021 (9/2020-8/2021)
Number of brands	490	248	496	291
Share of own brand sales, % of total	15.9	15.3	20.7	20.7
Share of online sales, % of total	25.8	26.1	25.2	26.1
Equity ratio, %	33.4	15.2	33.4	15.2
Full-time equivalent employees, average*	232	128	193	112

*) Including seasonal employees

 

Significant events during the reporting period

In December 2021, Duell announced a significant distribution agreement with Michelin, one of the world's leading tire manufacturers. Through the agreement, Michelin's motorcycle and scooter tires are available in Duell's import range in Finland, Sweden and Denmark.

In February 2022, Duell acquired Techno Motor Veghel B.V., a well-known Dutch distributor of motocross and offroad products. The transaction was important for Duell, as it enables the company to expand into the motocross market, especially in the Benelux region, but also in the rest of Europe. The acquisition will impact on Duell's net sales and has added significant new brands to the already extensive product portfolio.

In May 2022, Duell acquired the Finnish company PowerFactory Nordic Oy Ab. The acquisition is part of Duell's growth strategy, which will give access to the Nordic bicycle spare parts and accessories market and offer new growth potential in the European bicycle segment. The arrangement also complements the offering of other categories with new brands.

Significant events after review period

The company announced to start change negotiations in Finnish companies on October 4, 2022, in accordance with the Co-operation Act regarding the need to reduce the workforce on production, financial and operational reorganization grounds. The grounds for the need to reduce the workforce are based on the goal of eliminating overlaps, making operations more efficient and achieving synergy benefits within the Group. The negotiations concern a total of approximately 80 employees in Finland. The goal is to achieve annual cost savings of around EUR 1 million in the Duell Group. The cost savings estimate for the current financial year is approximately EUR 600,000. The estimated personnel reduction need is at its most totally 25 employees in Duell Group.

Webcast for investors and media

Duell will arrange a live webcast for investors and media in English on November 10, 2022, at

10.30 am EET. The webcast can be followed online through this link. A presentation will be held by CEO Jarkko Ämmälä, CFO Riitta Niemelä and IR Pellervo Hämäläinen. A recording of the event will be available later the same day at www.investors.duell.eu.

Medium-term financial targets (3-5 years) (Targets changed)

Growth: net sales in the range of EUR 200-300 million by the end of 2025, achieved through yearly growth organically and inorganically. (The growth target remains the same, but the part of organic growth has been updated: Growth target from previous year: net sales in the range of EUR 200–300 million by the end of 2025, achieved through a combination of clearly above 10 % annual organic growth and acquisitions.) 

Profitability: adjusted EBITA margin of at least 13% in the medium-term.

Leverage: net debt to adjusted EBITDA ratio in the range of 2-3. Leverage may temporarily exceed the target range (for example, in conjunction with acquisitions).

Financial reporting and Annual General Meetings in 2022 and 2023

• Annual Report will be published the week starting on November 14, 2022.
• The Annual General Meeting is scheduled for December 1, 2022. The Board of Directors of the company will convene the meeting.
• Business reports for financial year 2023
  • September 2022-November 2022, first quarter: Wednesday, January 18, 2023
  • September 2022-February 2023 including second quarter: Wednesday, April 5, 2023
  • September 2022-May 2023 including third quarter: Thursday, July 6, 2023
  • September 2022-Autust 2023 including fourth quarter: Thursday, November 9, 2023
• The Annual General Meeting is scheduled for December 5, 2023. The Board of Directors of the company will convene the meeting.

Further information

Jarkko Ämmälä, CEO
Duell Corporation
+358 50 056 5149
jarkko.ammala@duell.eumailto: 

Pellervo Hämäläinen, IR
Duell Corporation

+358 40 674 5257

pellervo.hamalainen@duell.eu

Certified Advisor
Oaklins Merasco Ltd, +358 9 612 9670 

Duell Corporation (Duell) is an import and wholesale company based in Mustasaari, Finland, established in 1983. Duell imports, manufactures, and sells products through an extensive distribution network in Europe covering 8,500 dealers. The range of products includes 150,000 items under 500 brands. The assortment covers spare parts and accessories for motorcycling, bicycling, ATVs/UTVs, mopeds and scooters, snowmobiling and boating. Logistics centres are located in Finland, Sweden, Netherlands and France. Duell’s net sales in 2022 was EUR 124 million and it employs over 200 people. Duell’s shares were listed in November 2021 and are traded on the First North Marketplace. www.duell.eu