MEKO (MEKO) Q2 2024 earnings summary

Executive summary

• Achieved best-ever quarter for adjusted EBIT, driven by efficiency measures, cost savings, and successful streamlining, especially in Sweden and Norway, with strong organic growth in all markets.

• Strong operating cash flow and improved financial position, with net debt/EBITDA reduced to 2.5, well within the 2–3x target range.

• Strategic acquisitions in Poland (Elit Polska) and Estonia (Automeister) expanded market presence and support future growth and synergies.

• Continued focus on cost savings, organizational restructuring, and automation projects in Sweden, Denmark, and Finland.

• Reported EBIT impacted by one-time effects, including SEK 48 million in non-recurring costs and SEK 14 million in transaction costs for Elit Polska.

Financial highlights

• Net sales up 9% year-over-year in Q2 2024 to SEK 4,680M, with 5% organic growth and additional growth from more workdays.

• Adjusted EBIT increased 32% year-over-year to SEK 357M in Q2, with margin up to 7.6% from 6.3% last year.

• Operating cash flow surged 44% year-over-year to SEK 698M in Q2; H1 operating cash flow up 92% to SEK 984M.

• Earnings per share decreased 6% year-over-year to SEK 2.86 in Q2, impacted by one-off items.

• Gross margin stable at 42.9% in Q2 2024, with minor negative impact from sales mix.

Outlook and guidance

• Ongoing initiatives to further improve profitability, including automation of three warehouses in 2025 and margin improvement in underperforming regions.

• On track to reach long-term financial targets: annual sales growth of at least 5% and adjusted EBIT growth of at least 10%.

• Recent acquisitions expected to generate synergies but may initially weigh on margins.

• Working capital expected to grow in line with sales for the remainder of the year.