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Acquisitions and strong organic growth set new records
Summary of the period
First quarter: January 1st – March 31st, 2021
Numbers in parentheses refers to outcomes during the corresponding period of the previous year.
Significant events during the first quarter
Significant events after the first quarter
There are no significant events after the end of the first quarter to comment.
Words from the CEO
Synergies and business are easy when you have skilled colleagues
Strong demand for our products, some production and delivery challenges due to Covid-19, many internal projects regarding launches, product development, training, new employees, and optimizations as well as mergers of warehousing, logistics and finance in the US and finally a new acquisition completes an intense quarter!
The first quarter's net sales of 134 MSEK meant an increase of 255% compared with Q1 2020, while EBITDA profit increased by 243% to 35.8 MSEK, corresponding to a margin of 26.7%. Adjusted for acquisition costs, we reach an EBITDA margin of 27.4%. Q1 offered strong momentum in the industry despite continued pandemic impact worldwide.
As stated above, we have put a hectic quarter behind us. All companies in our group have had a strong quarter, a development that is largely due to active business development through collaborations between our subsidiaries but also due to our goal-oriented work in recent years that is now beginning to pay off. This correlates well with our goal, which is to grow significantly faster than the industry. During the first quarter, we show organic growth of 25% despite some production and delivery challenges that shifted some major orders, which were originally planned for delivery in the quarter but were just shipped in April.
Our investments in the USA and the timing of them are perfect as several new surveys and market reports confirm the strength of the American pet market. The experts agree that the market will grow for many years to come, both in terms of the number of pets and, above all, the willingness to spend money on the four-legged family members. A clear majority of the new pet owners in recent years have a completely new level of purchasing power, which is why we as a premium producer believe that we are well positioned for the increased demand. We offer high-quality products, with a proven effect, within attractive brands and, above all, we make accessibility easy with our large online investments.
In a short time, we have succeeded with many of our online ventures. A proof of this and a fantastic achievement I dare say, is that our two flagship products, ProDen PlaqueOff® powder and ProDen PlaqueOff® Cat both hold first place on Amazon UK for top product in the Pet oral care category! With a newly hired online manager based in Leeds, we got off to a flying start. Already we have seen several successful contributions and over the year many more will follow, such as improvements regarding Amazon Europe which will be led from the UK. I am impressed and positively surprised by the speed of our digital transformations but feel that we still have most of it ahead of us.
Some projects that I had hoped would be completed during Q1 were, for various reasons a bit delayed, some due to the challenges I mentioned above. However, I can inform you that most projects were completed in April such as; production start at our internal facility in Houston for ProDen PlaqueOff® powder, full integration of Animal Pharm to Stratford regarding finance, warehousing, and logistics, moving to new premises in Malmö and some new additions to the organization, mainly in the USA.
In Q2, we have had several exciting start-up projects, including the launch of the Animal Pharm products on Amazon and Chewy.com, which will be handled by our internal online specialists at Holden2. They will also take over the entire ProDen PlaqueOff® portfolio's presence on Amazon. Another upcoming project starting soon is that our Greek subsidiary will be the first group company to launch Nutravet in a new country. We have hired a dedicated resource for this launch, who during the current quarter will present the concept on the Greek veterinary market. The above projects are all proof of the strong business spirit and the curiosity for new markets that characterizes the entrepreneurs in our organization.
All subsidiaries will launch a number of new products and/or new product lines and I look forward to reporting on their progress in the coming quarterly reports.
During the quarter, we received even more attention in the market from a number of major players who approached us with requests for new or expanded collaborations. I see it as proof that our strategy to grow both organically and with qualitative acquisitions is a success. We are well prepared and have laid the ground to take an even more prominent position in the fast-growing pet market around the world.
A brief update of our markets shows that the USA continues to develop very strongly, despite some coordination and other structural projects. Stratford's takeover of many parts of the operations regarding Animal Pharm was a large project eminently carried out by the parties involved. At the end of the quarter the store and clinic chain increased its activities due to Covid restrictions being eased or eliminated in most US states. From now on we look forward to increasing sales within all channels, and to fully see results from synergy work regarding product and sales collaboration.
At the end of the quarter, we made another acquisition, Rx Vitamins, founded and led by Craig Kisciras. With Rx Vitamins, we add yet another quality addition to our group as both the product range and the organization's expertise are at the highest level. Other companies in the group will be able increase the number of volume deals that Rx Vitamins has so far not been able to focus on.
Despite reintroduced restrictions due to Covid, our companies in the UK have delivered high growth, partly through great success on Amazon and partly thanks to Nutravet. In addition to growing in the UK, Nutravet has managed to get many products approved in South Korea, an already strong market for Swedencare. An initial order has been sent and we expect a second larger order to be shipped already in Q2. The organization has also recruited a well needed Operations Director, who will be crucial in managing Nutravet's future growth.
Also, in the rest of Europe, we have noted growth with record quarters in both Spain and Greece and stable sales in France and the Nordic countries. Regarding France, a major change is taking place now that Hans Persson, to whom we can credit ProDen PlaqueOff®'s success in Central Europe, has decided to retire. Hans introduced the product more than 15 years ago in France as well as on several European markets. Hans has successfully built a large network, which his newly recruited successors will manage and develop.
Moreover, I look forward to our European launch of PetMD® on Amazon, a project that will start in Q2.
As for our other markets, Asia has continued to grow with, above all, a large order to China. For South Korea and Japan, things look good, though we delivered slightly less than usual during this quarter, but this is being remedied in the current quarter. Several new products will be launched in South Korea, and in Japan we will broaden the sales channels for our powder product and launch new flavors of our Dental Bones.
On the acquisition side, we are contacted by many companies, who for various reasons want to be part of our group. We follow the plan laid down and prioritize profitable and growth-driven companies that share our entrepreneurial focus. We are interested in both strong product and brand companies as well as distribution companies in attractive markets. Based on our success in Ireland and Texas, as well as due to some challenges we have experienced in getting the desired volumes on time from our manufacturing partners around the world, we also explore opportunities to grow further in production capability.
I want to express my gratitude for a fantastic organization, amazing customers and for the interest from investors around the world. My hope is that in the coming quarters we all can start to return to a more normal way of living and traveling, allowing more customer meetings IRL!
Håkan Lagerberg, CEO
Malmö April 29th, 2021
The complete interim report is attached to this press release and is available at www.swedencare.se
Swedencare invites shareholders and analysts to a presentation of the Q1 report where CEO Håkan Lagerberg and CFO Jenny Graflind will comment on the report. The presentation will be held today at 2:00-2:30 pm CEST and can be followed via live webinar.
Please use this link to join the webinar:
https://swedencare.webinargeek.com/swedencare-live-presentation-of-our-q1-report-with-a-live-q-a/join/7osdmunb
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