Talenom (TNOM) Q2 2023 earnings summary

Executive summary

• H1 net sales rose 22.1% YoY to €63.7m, driven mainly by acquisitions in Sweden and Spain and organic growth in Finland; growth investments and weak economic conditions weighed on profitability.

• Group-wide profitability measures began in spring, including a temporary recruitment pause and fixed-cost reductions.

Financial highlights

• Q2 net sales grew 20.1% YoY to €32.4m; Q2 EBITDA was €8.9m, down 4.6%, EBIT was €3.7m, down 28.6%, and net profit was €2.2m, down 46.6%.

• H1 EBITDA was €17.2m, down 5.1% YoY; EBITDA margin declined to 27.0% from 34.8%.

• H1 EBIT fell 28.7% to €7.1m, net profit fell 45.9% to €4.2m, and EBIT margin declined to 11.2% from 19.1%.

• H1 personnel costs rose to €37.0m from €27.6m, or 58.1% of net sales vs. 52.9%; other operating expenses were €9.8m vs. €6.9m.

• Growth investment and Spanish platform and acquisition integration/non-recurring costs were over €3m higher YoY in H1; wage inflation and frontloaded growth spending also weighed on profitability.

Outlook and guidance

• FY2023 net sales guidance rose to €125–130m from €120–130m; euro-denominated EBITDA and operating profit are expected to grow from 2022.

• The outlook assumes continued market growth and stable demand across operating countries; acquisitions are expected to contribute most 2023 net sales growth.

• 2023–2025 targets: annual net sales growth above 30%, EBITDA growth above 15%, growing euro-denominated EBIT and increasing dividend per share.

• Acquisitions are expected to weigh on relative profitability short term; acquired businesses are estimated to reach core-business profitability after three years following system implementation.