Brødrene A & O Johansen (AOJ) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue exceeded expectations with 2.8% growth, driven by positive B2B and strong B2C performance, which grew for the third consecutive quarter.

• Investments continued in outlet upgrades, store expansion (notably in Stockholm and Odense), and integration of recent acquisitions including Svenska VA-System, VVSKupp/Designkupp, and Workwear Group.

• AO's Danish B2B business gained market share, and B2C ambitions include reaching a 10% EBITDA margin through scale.

Financial highlights

• Q2 2024 revenue was DKK 1,302m, up 2.8% year-over-year; organic revenue declined 1.6% after adjusting for M&A and working days.

• Gross margin declined by 0.8 percentage points to 22.8% due to fierce competition and overcapacity; EBITDA was DKK 75.1m (5.8% margin), down from DKK 92.6m in Q2 2023.

• Net interest-bearing debt ended at DKK 801m, with undrawn credit facilities exceeding DKK 700m.

• Cash flow from operations improved by DKK 100m year-over-year.

Outlook and guidance

• 2024 revenue guidance raised to DKK 5,300–5,500m including acquisitions; organic revenue guidance is DKK 5,150–5,300m.

• EBITDA and EBT guidance remain unchanged at DKK 340–370m and DKK 200–230m, respectively.

• Additional DKK 20m in costs expected in H2 2024 for integration, new hires, and credit risk.

• Expectation to double earnings in H2 2024, driven by organic growth, acquisitions, holiday allowance, and supplier bonuses.