Summary of the period
First quarter: January 1 – March 31, 2022
Numbers in parentheses refers to outcomes during the corresponding period of the previous year.
* Converted to the number of shares after the share split 5:1 that took place in May 2021
Significant events during the first quarter
Swedencare AB (publ) acquires the leading US pet supplement company NaturVet which was completed on February 1, 2022. The purchase price of a total of 4 181 MSEK was paid through a cash payment of 3 750 MSEK and a new issue in kind of shares of 431 MSEK.
Swedencare AB (publ) acquires the Italian pet healthcare company Innovet focused on the veterinary segment which was completed on March 1, 2022. The purchase price of a total of 526 MSEK was paid through a cash payment of 449 MSEK and a new issue in kind of shares of 77 MSEK.
Swedencare AB (publ) carries out a directed new share issue of 35.5 million shares and is thus provided with 3 550 MSEK, which, after issue costs of 16.5 MSEK, provided a net contribution of 3,533.5 MSEK to partially finance the acquisitions of NaturVet and Innovet.
Significant events after the first quarter
There are no significant events after the end of the first quarter to comment.
Words from the CEO
Strong demand in combination with high internal pace in an uncertain environment
High demand for our products, some delivery challenges due to Covid-19, the invasion of Ukraine, many internal projects spanning over our wide product supply, top notch recruitments, several IRL customer exhibitions and finally two transformative acquisitions sum up an intense quarter!
The net revenue of the first quarter of 378 MSEK equals an increase of 182% compared to Q1 2021 and the operational EBITDA-result increased by 158% to 94,7 MSEK, corresponding to a 24,9% margin. The sales of our American acquisition NaturVet are included in the consolidation from February 1st and from March 1st also those of Innovet.
As stated above we now have a very hectic as well as productive first quarter behind us. The majority of our group companies have had a strong quarter, which largely is due to active business development creating collaborations between our subsidiaries but also due to our goal-oriented efforts the past years that are now bearing fruit. To grow significantly faster than the market in general is our explicit goal. During the first quarter we show and organic growth of 7%, which is lower than what we strive for on a yearly basis, but this was expected as we will have a significantly stronger growth during the second part of 2022 mainly driven by Vetio and the third production line in NaturVet. In Vetio´s Canadian facility production will increase significantly and in Vetio´s south facility we also increase production in our new second facility that was completed at the end of last year. Another explanation is that for several of our ”organic companies” Q1 2021 was that year’s strongest quarter because that is when we had something of a ”pop the cap off “-effect after what then was thought to be the end of the pandemic. China is once again affected by mayor lock downs causing a lower organic growth which also is seen in some other export markets. I am satisfied with margin bouncing back from 18,9% in Q4 2021 to almost 25% in operational EBITDA this quarter.
The quarter had a very strong January followed by a more hesitant February, especially for our larger customers due to the uncertain macroeconomic environment. We could clearly see that our products were sold to consumers on a higher level than that of our customers, who hesitated in filling up stock at the same rate. This was probably due to trimming balance sheets in case of increased interest rates and then came Russia’s unjust invasion of Ukraine creating even more uncertainty. These factors affected our sales but I am glad to be able to say that the quarter still ended very strongly and the large costumers, who had made modest orders now are eager to get quick deliveries. This is something of a pleasant problem as you would prefer a more even order flow as we now have not quite managed to ship out all the PO’s in Q1. The other side of the coin for this is off course that the current quarter has had a flying start.
We are still affected by the increased prices for raw materials as well as other material and we continually adjust our prices. Many of the prices were raised in January but for a number of customers, among them the online platforms, the new prices will be in effect from the beginning of Q2. The demand from pet owners has not been affected by the increased prices, as predicted by market experts, since we can see that the demand is the same or even stronger.
Our investments in the US are impressing the market and I can proudly state that there are very few suppliers that can deliver the wide range that we now can offer with our many group companies. During the quarter and specifically at the Global Pet Expo we had numerous meetings with both existing and potential customers who are keen to know what we as a group can offer. We are in the final stages of finalizing a number of large collaborations with both new and existing partners and these will, when set in motion have a positive effect on sales already in 2022 and for several years to come. At the Expo, which was the first in two years, we, among other things, launched a new combined product series within the ProDen PlaqueOff® range with four products for dogs and two for cats and NaturVet launched its new product line Evolutions. These new products aroused plenty of attention and several costumers placed orders on the spot.
Within our group companies it is Pet MD Brands, FAV, NaturVet in the US and Nutravet along with Spain in Europe that have had very strong growth during the first quarter. Vetio as well as a few other group companies are in the process of expanding organizationally to handle the growth as well as to prepare for the customer agreements which now change from pure development to delivery projects and I’m impressed by the huge interest in our advertised positions. We are building a strong team, which will make the most of all the many opportunities we have.
From an organizational and customer point of view our production unit in Ireland will merge with Vetio and be managed by John Kane, CEO of Vetio. John will also be a part of our Group Management as Production Director. Another addition to the Group management is Brian Nugent, who is CCO of the North American veterinary- and online operations. Brian has successfully merged Stratford and Animal Pharm as well as built our warehouse and logistics center where both Pet MD Brands and FAV are located and will now manage these companies as well as Rx Vitamins. NaturVet and SwedencareUSA, who are focusing on Pet Retail will continue to rapport directly to me.
The acquisition rate has been high and there is a large number of entrepreneurs that are interested in becoming a part of the Swedencare family, so we keep exploring many opportunities. If and when we grow further you can be assured that any new aqcuisition made will complement our group and bring something unique to us as we have secured a strong and successful process in evaluating and completing acquisitions.
We have many exciting projects to finalize in the near future and I look forward to meeting customers at the world´s largest Pet retail exhibition, InterZoo in Nurnberg during May and at SuperZoo in Las Vegas at the end of the summer. Even though the quarter had our highest sales and profit ever, you can expect an even stronger continuation where we will grow by each quarter with strong cash flow introducing exciting new products, collaborations, customers and markets.
Håkan Lagerberg, CEO
Malmö May 12, 2022
The complete interim report is attached to this press release and is available at www.swedencare.com
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 10:00-10:30 am CEST and can be followed via live webinar.
Please use this link to join the webinar: https://swedencare.webinargeek.com/swedencare-live-presentation-of-q1-report-with-q-a/join/28lxerlb
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