Nobia's Profits & Sales Continue To Decline

Nobia, the European kitchen specialist and parent company of Magnet in the UK, has published Q4 and consolidated full-year results for the 2024 financial year. 

In July 2024, Nobia took action to 'transition to an asset-light model' in the UK by closing underperforming stores whose leases were up for renewal, along with 'further decentralizing of operations'. In the latest results, it was confirmed that 14 stores had closed during Q4.

January - December, Consolidated: 

• Net sales for the full-year 2024 totalled SEK 10,538m (11,672).
  
  
• Sales declined by -10% (-16) on an organic basis.
  
  
• Operating profit amounted to SEK -827m (-243).
  
  
• Operating profit adjusted for items affecting comparability amounted to SEK 82m (74), corresponding to an operating margin of 0.8% (0.6).
  
  
• Items affecting comparability amounted to SEK -909m (-317).
  
  
• Profit after tax, total operations, amounted to SEK -1,343m (-347), corresponding to earnings per share after dilution of -2.46 SEK (-0.92).
  
  
• Operating cash flow was SEK -652m (-810). 

Q4 Market Overview:

Soft market conditions persist in both the Nordic and UK regions, however with an improvement in the consumer segment while the project segment continued to decline. The improvement in the consumer segment is supported by a rise in consumer confidence driven by decreasing inflation and declining interest rates, which encourage consumers to purchase capital goods such as new kitchens. The project market remains challenging as new housing construction activity remains at low levels across all markets. 

• Net sales decreased to SEK 2,512m (2,642), corresponding to an organic decline of -7% (-23) and operating profit, including a non-recurring goodwill impairment, amounted to SEK ‑575m (-110).
  
  
• Adjusted gross margin increased to 38.7% (38.0).
  
  
• Adjusted operating profit increased to SEK 48m (-32).
  
  
• Adjusted operating profit in the Nordic region amounted to SEK 115m (44) and in the UK region to SEK ‑36m (-38).
  
  
• Items affecting comparability amounted to SEK -623m, of which SEK -478m refer to a non-cash, non-recurring goodwill impairment related to the Commodore business in the UK.
  
  
• Profit after tax, total operations, amounted to SEK -856m (-174) corresponding to earnings per share after dilution of SEK -1.27 (-0.46).
  
  
• Operating cash flow amounted to SEK 138m (-188). In addition, a SEK 190m payment was received, related to the sale-and-leaseback transaction.
  
  
• Amendments of terms and conditions for Group’s long-term funding completed in December.
  
  
• The Board proposes that no dividend shall be paid for the fiscal year 2024.

Q4 UK Region:

Net sales in the UK region amounted to SEK 1,108m (1,063). Sales were unchanged (-21) on an organic basis. The gross margin amounted to 40.8% (43.0) and gross profit was SEK 452m (457).

The gross margin continued to be burdened by underabsorption due to low volumes. Operating profit was SEK -145m (-38). Adjusted for items affecting comparability of SEK -109m (0) related mainly to store closures, operating profit amounted SEK -36m (-38). Adjusted operating profit was positively impacted by ongoing cost reductions, while mix and price combined was slightly negative. Changes in exchange rates impacted operating profit positively by SEK 5m.

The goodwill impairment, related to the cash generating unit region UK and the Commodore business, is included in Group cost and eliminations

Kristoffer Ljungfelt President & CEO, said: 

"During the quarter, we took further significant steps to enhance profitability in challenging market conditions. I am pleased with the improved performance in the Nordic region, which delivered higher earnings and achieved market share gains despite a substantial volume decline in the project market. In the UK, we continued to make progress in transitioning to a new business model, while also implementing additional cost-reduction initiatives during the period.

"Organic net sales for the Group declined -7% driven by the lower project market volumes. Despite the volume drop, our strong focus on margin enhancements and cost-reduction activities strengthened profitability and operating cash flow in the quarter. Adjusted gross margin improved for the fourth consecutive quarter to 38.7% (38.0). SG&A savings, including previously announced cost out programs, amounted to SEK 136m, and accumulated savings since beginning of 2023 now exceeds SEK 500m. Adjusted operating profit improved to 48 MSEK (-32) on the back of the margin enhancements and solid performance in the Nordics. Operating profit, incl. a non-cash, non-recurring goodwill impairment of SEK -478m, amounted to SEK -575m (-110).

"Adjusted operating profit in the Nordics increased to SEK 115m (44) and the adjusted operating profit margin rose to 8.2% (2.8), despite an organic sales decline of -11% due to a continued soft project market. Successful transition of resources to the consumer sales on all Nordics markets drove higher average order values with improved gross margins. The solid performance in HTH Denmark continued with market share gains in consumer and the Nordic supply chain performed well with normalized dispatch reliability and productivity improvements.

"We are making significant progress at our new Nordic manufacturing site, with the industrialization of fully automated production continuing and additional products and components being gradually integrated. A key milestone was reached in January with the delivery of the first assembled kitchens to external customers.

"Net sales in the UK was flat organically, with growth in consumer being offset by decline in project sales. Adjusted operating profit amounted to SEK -36m (-38). The weak market and consequently low production volumes and underabsorption continue to burden the gross margin. The cost reduction initiatives implemented earlier in the year are generating savings according to plan.

"As part of our previously communicated strategy, we are progressing towards an asset-light operating model in the UK, led by our strong and trusted Magnet brand. Consequently, Commodore, our brand serving project customers in London, has been fully integrated into Magnet’s project organization. Additionally, 14 underperforming stores were closed in the quarter. Cost related to this transition, including a non-cash, non-recurring goodwill impairment, was recorded as items affecting comparability in the quarter.

"Amidst an uncertain market outlook, we continue to drive margin improvements by leveraging group scale, capitalizing on our strong consumer brands and executing cost-reduction initiatives, expected to yield another SEK 150m in savings during the first half of 2025. With progress on our strategic agenda, including the launch of production at our new Nordic factory, and the renegotiation of long-term financing terms in December, we are better positioned to navigate soft market conditions and leverage our position as the number one kitchen specialist as the markets recover."

Source : Nobia

Image : Magnet/Nobia

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