Embellence Group (EMBELL) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 reached SEK 191 million, up 13% year-over-year, with 12% organic growth and a 1% positive currency effect, marking the fourth consecutive quarter of organic growth.

• EBITA margin improved to 13.0% from 8.9% year-over-year, with EBITA up 63% to SEK 25 million, driven by strong sales growth.

• Net profit for the quarter was SEK 13 million, compared to a loss of SEK 2 million in Q2 2023.

• Updated brand-focused strategy and new long-term financial targets were introduced at Capital Markets Day in May 2024.

• Hospitality and Direct to Consumer channels outperformed, while the UK market remained sluggish.

Financial highlights

• Net sales for Q2 2024 were SEK 191 million, up from SEK 170 million in Q2 2023; gross margin was 60.1% (down from 61.4%).

• EBITA rose to SEK 25 million from SEK 15 million; EBITDA margin improved to 13% in Q2.

• Net profit for the period was SEK 13 million, compared to a loss of SEK 2 million in Q2 2023.

• Operating cash flow improved to SEK 43 million from SEK 12 million year-over-year, driven by improved operating result and SEK 20 million working capital improvement.

• Inventory increased by SEK 12 million due to seasonal stock build, but absolute inventory level is lower than prior year.

Outlook and guidance

• New long-term target to reach net sales of SEK 1 billion by 2028 through organic growth.

• EBITA margin target above 15%, leverage target below 2.5x EBITDA, and dividend payout of 30-50% of net income; no dividend for 2023.

• Strategic focus on scaling marketing in hospitality, investing in online sales, and expanding in North America and the Mediterranean.

• Market conditions remain challenging, especially in the UK, but signs of recovery are emerging elsewhere.