Unaudited consolidated interim accounts for the third quarter and
first nine months of 2023
Segments (EURm) |
Q3/23 |
Q3/22 |
yoy |
9m/23 |
9m/22 |
yoy |
Supermarkets |
153.5 |
149.8 |
2.4% |
455.2 |
433.1 |
5.1% |
Department
stores |
23.9 |
22.9 |
4.1% |
75.6 |
71.4 |
5.9% |
Cars |
51.1 |
39.8 |
28.4% |
148.6 |
112.4 |
32.3% |
Security
segment |
4.0 |
2.4 |
68.0% |
10.4 |
6.9 |
49.9% |
Real Estate |
1.7 |
1.6 |
7.8% |
4.9 |
4.6 |
6.5% |
Total sales |
234.1 |
216.5 |
8.2% |
694.7 |
628.4 |
10.5% |
Supermarkets |
6.2 |
2.6 |
141.1% |
12.6 |
8.0 |
57.4% |
Department
stores |
-0.4 |
-0.2 |
157.6% |
-0.2 |
0.3 |
-175.9% |
Cars |
3.6 |
3.2 |
12.3% |
11.4 |
8.5 |
33.7% |
Security
segment |
0.0 |
0.1 |
-52.5% |
0.1 |
0.1 |
47.9% |
Real Estate |
2.2 |
2.7 |
-19.7% |
7.6 |
8.1 |
-6.0% |
IFRS 16 |
-0.5 |
-0.7 |
-25.4% |
-1.5 |
-1.7 |
-8.9% |
Total profit before tax |
11.2 |
7.8 |
43.6% |
29.9 |
23.3 |
28.2% |
In the third quarter of 2023, the consolidated
unaudited sales revenue of the Group was 234.1 million euros, which
was 8.2% more than the sales revenue of the same period last year.
The sales revenue in the nine months was 694.7 million euros, which
was a 10.5% increase in comparison with the result of the first
nine months of 2022, when the sales revenue was 628.4 million
euros. The consolidated unaudited net profit of the third quarter
of 2023 was 11.2 million euros, thus coming close to the result of
the same period of 2021, which was less affected by the increase in
energy prices, but exceeded the profit of the comparable period of
2022 by 3.4 million euros. The net profit of the Group for the
first nine months of 2023 was 24.6 million euros, which was 30.5%
higher than the result of the comparable period in the previous
year. In the first nine months, the pre-tax profit was 29.9 million
euros, increasing by 28.2% compared to the year before. Net profit
was affected by the dividend payment, from which 5.3 million euros
of income tax was calculated in the first quarter of 2023; 4.5
million euros of income tax was calculated a year before.
In the third quarter of 2023, the Group achieved
a strong 8.2% increase in sales revenue thanks to the continued
significant sales performance of the car segment, which was
supported by higher-volume sales transactions. The security segment
also contributed to the high growth rate of sales volume, where the
two prominent security companies acquired in the third quarter
added synergy and turnover growth. In the supermarket and Kaubamaja
department store segments, sales growth is more modest due to
changes in consumer behaviour. Growing uncertainty about the future
has made customers more cautious and thrifty. Although price growth
has slowed down and wage growth is catching up with price
increases, food prices have still grown rapidly and exceed the
growth rate of wages. The latter affects the sales growth of the
supermarket segment the most. The limited physical access to the
Tallinn building of Kaubamaja due to large-scale road construction
works in the centre of Tallinn continued to have an inhibiting
effect on the result of the Kaubamaja department store segment in
the third quarter. The decrease in energy prices has provided an
opportunity to restore the profitability of the Group to the level
of 2021. The labour costs of the Group increased by 11.0% in the
third quarter of 2023, while the number of employees decreased by
1.0%.
In the third quarter, the Group adopted an
important strategic decision for the development of the logistics
centre. TKM Kinnisvara AS is building a logistics centre with a
total area of 17,200 m2 on its property located at 1 Paemurru
Street, city of Maardu. In August, TKM Kinnisvara AS and AS Merko
Ehitus Eesti signed a construction contract for the construction of
the logistics centre with a cost of approximately 20 million euros.
The cost of the construction is financed from own funds and a bank
loan. The modern energy class A building will be built in
accordance with the requirements of the BREEAM certificate. The
logistics centre will primarily serve the cargo volumes of Selver,
its completion is scheduled for the autumn 2024. The establishment
of the logistics centre will add new business opportunities for the
companies of TKM Group and increase the efficiency of work
processes. Logistics cooperation between Selver and AS Balbiino,
which is a company of the NG Investeeringud OÜ Group, which has a
significant holding in the Group, will continue in the new
logistics centre. NG Logistics OÜ, a subsidiary of AS Balbiino,
will be responsible for the day-to-day operation of the logistics
centre. The operation of the logistics centre by NG Logistics OÜ is
not a significant or unusual transaction in the sense of the
regulations of the Nasdaq Tallinn Stock Exchange. The exact terms
and conditions of the transactions concerning the operation of the
logistics centre will be agreed upon in 2024 in accordance with
market conditions and the transfer pricing regulation.
In the third quarter, the Group's security
segment enhanced its market position and future prospects with the
acquisition of two prominent security companies. The first,
Skarabeus Julgestusteenustus OÜ, is a pan-Estonian firm with
branches in Tallinn, Tartu, Pärnu, and Central Estonia. It offers
manned security, patrol, and technical security services. In 2022,
the company had a revenue of 3.1 million euros and employed 168
people. The second, Caesari Turvateenistuse AS, is among Estonia's
oldest security companies, having operated since 1994. Serving
primarily Harju County, it provides manned security, patrol, and
technical security services and oversees the construction and
maintenance of security systems. Its 2022 revenue stood at 727
thousand euros with 31 employees.
In August, the supermarket segment opened its
73rd store with a sales area of 3,700 m2 in Kurna Park. In the
construction of Kurna Selver, materials that turned out to be
unnecessary in other stores were used as much as possible. LED
technology was introduced throughout the store, and the selection
of technology was based on environmentally friendly solutions. In
September, the supermarket segment opened a fully renovated Delice
store with a completely new premium brand and concept at Solaris
Centre in the heart of Tallinn. In the Kaubamaja department store
segment, development work on the e-shop platform continued. The
renovated I.L.U. cosmetics store of Kristiine Centre, which was
transferred to a new concept, was opened in the third quarter. The
development of the functionalities of the Partner Card loyalty
programme for the retail segments has continued. In the third
quarter, the convenience functionalities of the Partner application
were improved and the ‘pay later’ payment solutions were further
developed, which are planned to be made available to customers in
the last quarter of the year.
Earlier in the reporting year, development work
took place, during which the largest store in the supermarket
segment in Järve, Tallinn, was closed for renovation works for
nearly two months in the second quarter. Reopened at the end of
May, the renovated Järve Selver has been well received by
customers. In the first quarter, the supermarket segment renovated
the Ringtee Selver in Tartu and the Ülemiste I.L.U. store was
renovated under a new concept, while the sales area was increased
by almost half to 460 square metres. The NYX make-up shop-in-shop
with a separate entrance was opened in the Ülemiste I.L.U.
cosmetics store. In the real estate segment, the solar park built
on the roof of Viimsi Centre was completed in the second quarter.
In January, WOW Selver in Saare County, which did not meet
expectations, and Punane Selver in Lasnamäe, Tallinn, were closed
in May.
At the end of the reporting period, the number
of loyal customers was more than 717 thousand, which is 1.9% more
than the year before. The proportion of loyal customers in the
turnover of the group was 84.8% (during the first nine months of
2022, it was 83.9%). The Partner Card application launched a year
ago had been used by more than 176 thousand customers by the end of
the quarter, which is about 24% of all customers who have a Partner
Card. The application allows customers to conveniently use their
personal phone as a scanner and as a payment solution. More than 12
thousand new loyal customers have registered their first Partner
Card directly from the application. About 13% of the users of all
Selver self-service cash registers use a phone instead of a
scanner, and the most active users of the application are those
aged up to 24. At the end of the third quarter, we added the
possibility of creating and sharing shopping lists, and customers
can now see their personal Selver special offers directly from
their phone.
Selver supermarkets
The consolidated sales revenue of the
supermarket business segment in the nine months of 2023 was 455.2
million euros, increasing by 5.1% compared to the previous year.
The consolidated sales revenue was 153.5 million euros in the third
quarter, increasing by 2.4% in comparison with the same period of
last year. In the first nine months and during the third quarter of
2023, the average sales revenue per square metre of selling space
was 0.43 thousand euros per month, which is 5.3% and 1.7% higher,
respectively, than during the same periods last year. From the
point of view of comparable stores, the revenue from the sale of
goods per square metre of selling space was 0.44 thousand euros in
the first nine months of the year and in the third quarter,
increasing by 6.7% and 3.1%, respectively, compared to the
reference period. In the first nine months of 2023, 33.1 million
purchases were made from the stores, which was 1.8% more than in
the reference year.
In the third quarter of 2023, both pre-tax
profit and net profit were 6.2 million euros, which was 3.7 million
euros more than in the reference period. The consolidated pre-tax
profit of the supermarket segment in the first nine months of 2023
was 12.6 million euros, increasing by 4.6 million euros in
comparison with the previous year. The net profit in the first nine
months was 11.4 million euros – an increase of 5.6 million euros
compared to the previous year. The difference between net profit
and profit before income tax is due to the income tax paid on
dividends – this year, the income tax on dividends was 1 million
euros less than the year before.
The financial results of the first nine months
of 2023 were affected by the increased turnover from the opening of
the Priisle and Tabasalu Selvers in Tallinn in 2022 and the Kurna
Selver in August 2023, and the lost turnover from the closure of
the WOW Selver in Saare County and Punane Selver in Tallinn. Sales
revenue has been affected by the suspension of sales due to
renovation works at Ringtee Selver in Tartu and Järve Selver (the
largest Selver store in Tallinn) and Delice Solaris in Tallinn. All
the projects listed above have also involved one-time costs and
investments. The results of the supermarket segment continue to be
affected by accelerated inflation and a decrease in consumer
confidence. During 2023, the price increase has slowed down, but
the price level of products and services is still high. The
significant increase in the price of food products has forced
customers to change their shopping habits, increased interest in
campaign products, and reduced the volume sales of goods below the
level of last year. The warm weather had a positive effect on the
sale of seasonal goods in June and August, while the demand for
industrial goods that are not essential on a daily basis is more
modest. The growth of e-commerce sales slowed somewhat in the third
quarter, but remained faster than the growth of retail sales.
Electricity expenses have decreased compared to last year, which
has made it possible to improve the profit position. The growth of
labour costs in the first nine months has been faster than the
growth of sales revenue in the supermarket segment (9%). The faster
increase in wage costs is due to the general pressure to increase
wages and partly due to the temporary closure of stores for
renovation, where sales were suspended. Possibilities have been
sought to increase the efficiency of work processes by reducing
working hours and thereby increasing employee wages.
The rapid decline in the production volume of
Kulinaaria OÜ, which belongs to the supermarket segment, which
started in the second half of last year, slowed down in the second
quarter, but returned to a slow decline again at the end of the
third quarter. The ready-made party dishes category is the most
affected. The central kitchen continues with daily consistent
product development as the expectations of customers for new
products have increased. In the third quarter, we launched new
products in every category. The products were very well received by
the customers. Sustainability is important in the central kitchen –
sustainable development goals are taken into account in production,
packaging, employee well-being, and the supply chain. Thanks to
environmentally friendly solutions and more resource-efficient
production, the footprint of Selveri Köök has decreased by
approximately 80% in 6 years. In 2022, the footprint was
significantly reduced thanks to the adoption of green electricity.
When it comes to packaging, Kulinaaria OÜ has completely switched
to salad boxes made of 100% recycled material, which ensure food
safety and hygiene. In addition, their production requires less
plastic.
Selver opened one new store this year – Kurna
Selver in Harju County in August. Three stores have been renovated:
Ringtee Selver in Tartu was reopened in February; in May, the
largest store of the Selver chain – Järve Selver – was reopened in
Tallinn; and in September, the Delice Solaris store was opened with
a renewed concept. In the first quarter, 14 Selver stores started
issuing identity documents issued by the Police and Border Guard
Board. By the end of the third quarter, this number had reached 41.
It is planned to further increase the number of stores issuing
identity documents this year. Issuing ID cards and passports earned
us the title of the best cooperation project of the 2023 Trade Act
of the Year.
As at the end of March, the supermarket segment
includes 71 Selver stores, 2 Delice stores, and the mobile store
and café, with a total sales area of 120.3 thousand m2, as well as
e-Selver, which is the e-shop with the largest service area in
Estonia, and the central kitchen Kulinaaria OÜ.
Department stores
The sales revenue of the business segment of the
Kaubamaja department store in the first nine months of 2023 was
75.6 million euros, exceeding the sales of the same period last
year by 5.9%. The sales revenue of the third quarter was 23.9
million euros, which was 4.1% better than last year. The pre-tax
profit of the Kaubamaja department stores segment in the first nine
months of 2023 was 0.2 million euros. The pre-tax loss of the third
quarter was 0.4 million euros, which increased by 0.3 million
compared to the same period last year.
The average sales revenue of Kaubamaja
department stores per square metre of selling space was 0.3
thousand euros per month in the first nine months – 8% higher than
in the same period last year. Last year, the full-scale war that
started in Ukraine negatively affected sales in the second half of
the first quarter. This spring, however, customer interest was high
and the number of visits to stores was much higher than last year.
The discount of winter season goods was affected by a
warmer-than-average winter in the first six months of the year,
which is why the discount percentages were higher this year, but
the increased sales volumes compensated for the lower margin and
had a positive effect on the result. The results of the second and
third quarter were negatively affected by the construction works of
the Old City Harbour tram line in the centre of Tallinn, which
started at the beginning of April, as a result of which most of the
intersections surrounding the Kaubamaja department store were
closed by the beginning of July. Pedestrian traffic was also
affected. The sales of fashion goods at the beginning of the autumn
season were affected by an warmer-than-average September, but the
Ilu Aeg campaign at the beginning of September had the best sales
figures in years.
In the third quarter of 2023, the sales revenue
of OÜ TKM Beauty Eesti, which operates the I.L.U. cosmetics stores,
was 2.0 million euros, which is 34.0% more than in the second
quarter of 2022. In the third quarter, the profit was 0.1 million
euros, which was equivalent to the comparable period in 2022. The
sales revenue in the first nine months of 2023 was 5.6 million
euros, which is 28.0% more than in the same period of 2022. In the
first nine months of 2023, the profit was 0.2 million euros, which
was 0.1 million euros more than during the comparable period in
2022. The most important event of the third quarter was the
renovation of the I.L.U. cosmetics store in Kristiine Centre under
a new concept and its opening in early August. Due to the
renovation, there was a one-month business interruption in the
store. All stores showed an increase in sales and the number of
visitors, but the growth was stronger in renovated stores.
Car trade
The sales revenue of the car trade segment was
148.6 million euros in the first nine months of 2023. The sales
revenue increased by 32.3% compared to the sales revenue of the
same period last year. The 51.1-million-euro sales revenue of the
third quarter was 28.4% higher than the sales revenue in the third
quarter of 2022. In the first nine months, a total of 4,842 new
vehicles were sold, of which 1,673 were sold in the third quarter.
The net revenue of the segment in the first nine months of 2023 was
10.2 million euros, exceeding the profit for the same period of the
year before by 2.1 million euros. The pre-tax profit of the segment
for the first nine months of 2023 was 11.4 million euros, exceeding
the profit for the same period in 2022 by 2.9 million euros. The
pre-tax profit of the third quarter of 2023 was 3.6 million euros,
which is 12.3% higher than the profit of the same period of the
year before.
The continued stable and timely vehicle
deliveries of the car brands represented by the Group are behind
the outstanding results of the third quarter of 2023. The
normalised supply situation has made it possible to ensure good
sales, while in the situation of intense competition it has become
common to offer discounted prices. Some major sales to fleet
customers and car rental companies took place in the third quarter.
The Group also achieved success in several public procurements. The
fleet sold by the Group has reached a volume that keeps the
after-sales services and body repair departments working at full
capacity.
The increase in the price of new cars and
increased loan interest rates have made private customers
especially cautious when making purchase decisions, and they tend
to postpone them. On the other hand, the price increase has
increased interest in used cars. Interest in electric cars and
plug-in hybrids has stabilised.
At the end of 2023, sales of new Škoda vehicles
will begin in Vilnius. The new Škoda Superb mid-class sedan and the
KIA EV9 electric SUV are expected to hit the market in the near
future.
Security segment
The sales revenue of the security segment
outside the Group in the first nine months of 2023 was 10.4 million
euros, increasing by 49.9% in comparison with the same period of
last year. The pre-tax profit of the segment in the first nine
months of the year was 0.1 million euros, increasing by 0.05
million euros compared to the same period last year. The sales
revenue of the segment outside the Group in the third quarter of
2023 was 4.0 million euros, increasing by 68.0% compared to the
same period last year. The pre-tax profit of the third quarter of
2023 was 0.03 million euros, which is 0.03 million euros less than
the profit of the same period of the year before.
The third-quarter results of the segment were as
expected. Several important contracts were concluded, for example
with the Art Museum of Estonia, where the security segment company
Viking Security AS will start providing security services from
March next year. The biggest negative impact is still the risk of
payment difficulties for customers and partners.
In the third quarter, two strong Estonian
security companies were added to the security segment through
acquisition: Skarabeus Julgestusteenistus OÜ, whose 2022 revenue
was 3.1 million euros, and Caesari Turvateenistuse AS, whose 2022
revenue was 0.7 million euros. The acquired companies are planned
to be merged with Viking Security AS by the end of 2023. The
acquisition of the two companies will strengthen the business
activities of all areas through the combination of strong industry
know-how, increased operational capacity, and cost efficiency.
Real estate
The sales revenue earned in the real estate
segment outside the Group was 4.9 million euros in the first nine
months of 2023. Sales revenue increased by 6.5% compared to the
same period last year. The sales revenue of the segment outside the
Group in the third quarter was 1.7 million euros. Sales revenue
increased by 7.8% compared to the previous year. The pre-tax profit
of the real estate segment in the first nine months of 2023 was 7.6
million euros, with the profit decreasing by 6.0%. The pre-tax
profit of the segment in the third quarter was 2.2 million euros.
Pre-tax profit decreased by 19.7% in the reference period.
Despite the deepening uncertainty in the
economy, the number of visitors to the shopping centres belonging
to the segment showed growth. The number of visitors to shopping
areas in the centre of Tallinn decreased due to street
reconstruction and road closures taking place in the surrounding
area. The sales revenue growth of the segment was positively
impacted by the high occupancy of retail spaces in both Estonia and
Latvia. In May, the car wash completed as an extension of the gas
station in Peetri at 1 Raudkivi Road leased to a party outside the
Group started operations. In June, the Viimsi Centre solar park was
completed, which covers part of the energy needs of the rental
premises of the centre and contributed to the increase in sales
revenue of the real estate segment.
The decline in the profit of the segment is
attributable to the increase in the cost of loan money due to the
increase in interest rates in the euro area intended by the
European Central Bank to tighten monetary policy, as the majority
of the loan portfolio of the Group is concentrated in the real
estate segment. The interest expense has multiplied compared to the
reference base of a year ago.
In companies in the real estate segment,
sustainability plays an important role: attention is constantly
paid to improving the energy efficiency of buildings and developing
more resource-efficient and environmentally friendly solutions. The
extension of the Saku Selver parking lot was completed in
September, which increases the convenience of customers visiting
the store.
In the third quarter, TKM Kinnisavara AS started
developing a logistics centre in Maardu for the needs of the Group.
The total area of the centre is 17,200 m2 and the construction will
cost approximately 20 million euros. The construction of the
logistics centre is financed from the Group's own funds and a bank
loan. A solar energy park will be built on the roof of the
logistics centre, the energy production of which will cover a
significant part of the building's electricity consumption.
Completion of logistics centre is planned for autumn 2024.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
In thousands of euros
|
30.09.2023 |
31.12.2022 |
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
8,744 |
22,436 |
Trade and other receivables |
22,818 |
27,200 |
Inventories |
96,726 |
89,194 |
Total current assets |
128,288 |
138,830 |
Non-current assets |
|
|
Long-term receivables and
prepayments |
308 |
299 |
Investments in associates |
1,758 |
1,722 |
Investment property |
64,270 |
63,623 |
Property, plant and equipment |
417,381 |
420,600 |
Intangible assets |
24,802 |
21,723 |
Total non-current assets |
508,519 |
507,967 |
TOTAL ASSETS |
636,807 |
646,797 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Current liabilities |
|
|
Borrowings |
31,427 |
97,107 |
Trade
and other payables |
98,614 |
111,449 |
Total current liabilities |
130,041 |
208,556 |
Non-current liabilities |
|
|
Borrowings |
262,305 |
190,825 |
Deferred tax liabilities |
5,299 |
5,299 |
Provisions for other liabilities and charges |
590 |
458 |
Total non-current liabilities |
268,194 |
196,582 |
TOTAL LIABILITIES |
398,235 |
405,138 |
Equity |
|
|
Share capital |
16,292 |
16,292 |
Statutory reserve capital |
2,603 |
2,603 |
Revaluation reserve |
105,141 |
106,981 |
Retained earnings |
114,536 |
115,783 |
TOTAL EQUITY |
238,572 |
241,659 |
TOTAL LIABILITIES AND EQUITY |
636,807 |
646,797 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
In thousands of euros
|
|
III quarter 2023 |
III quarter 2022 |
9 months 2023 |
9 months 2022 |
|
|
|
|
|
|
Revenue |
234,113 |
216,457 |
694,661 |
628,376 |
|
Other operating income |
326 |
344 |
1,186 |
1,206 |
|
|
|
|
|
|
|
Cost of merchandise |
-170,489 |
-157,845 |
-505,471 |
-457,629 |
|
Service expenses |
-14,195 |
-17,019 |
-44,320 |
-46,033 |
|
Staff costs |
-25,577 |
-23,046 |
-78,298 |
-69,274 |
|
Depreciation, amortisation and impairment losses |
-10,379 |
-9,778 |
-30,657 |
-29,199 |
|
Other expenses |
-222 |
-142 |
-805 |
-629 |
|
Operating profit |
13,577 |
8,971 |
36,296 |
26,818 |
|
Finance income |
24 |
1 |
40 |
3 |
|
Finance costs |
-2,495 |
-1,255 |
-6,592 |
-3,646 |
|
Finance income on shares of associates accounted for using the
equity method |
56 |
58 |
166 |
160 |
|
Profit before tax |
11,162 |
7,775 |
29,910 |
23,335 |
|
Income tax expense |
0 |
0 |
-5,301 |
-4,480 |
|
NET PROFIT FOR THE FINANCIAL YEAR |
11,162 |
7,775 |
24,609 |
18,855 |
|
Other comprehensive income: |
|
|
|
|
|
Items that will not be subsequently reclassified to profit or
loss |
|
|
|
|
|
Other comprehensive income for the financial
year |
0 |
0 |
0 |
0 |
|
TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL
YEAR |
11,162 |
7,775 |
24,609 |
18,855 |
Basic and diluted earnings per share (euros) |
0.27 |
0.19 |
0.60 |
0.46 |
|
|
|
|
|
|
|
|
|
|
Raul Puusepp
Chairman of the Board
Phone +372 731 5000
- Börs_Kaubamaja_3Q2023_eng
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