KH Group Oyj
Stock exchange announcement August 16, 2024 at 8:00 a.m.

Half-Year Report of KH Group Plc 1 January – 30 June 2024

Progress in the strategy, business development predominantly positive

This is the summary of the half-year report for January to June 2024. The full half-year report is attached to this press release and is also available on the Company’s website at. www.khgroup.com.

KH Group, April-June 2024, pro forma

• Net sales amounted to EUR 89.3 (93.2) million.
• The operating result amounted to -0.3 (0.2) million euros.
• KH-Koneet’s net sales were slightly better than in the same period last year and operating profit remained unchanged compared to the same period last year.
• The Indoor Group’s net sales fell significantly and operating profit was below the level of the same period last year.
• NRG’s net sales and operating profit increased significantly compared to the previous year.
• The KH Group has sold its holdings in HTJ.
• Ville Nikulainen took over as Group CEO and Tommi Rötkin as CFO on 1 June 2024.

KH Group January–June 2024, reported IFRS

• Net sales amounted to EUR 167.4 (67.2) million. The figure for the comparative period includes the net sales cumulated in May-June 2023 and HTJ is retrospectively classified as a discontinued operation.
• The operating result amounted to -1.8 (-9.9) million euros.
• The profit for the period amounted to -6.2 (-5.4) million euros.
• Earnings per share (basic and diluted) amounted to EUR -0.07 (-0.06).
• Equity per share amounted to EUR 1.25 (1.51) at the end of the reporting period.
• The return on equity for the rolling 12 months was -18.9% (-10.5%).
• The Group’s cash and cash equivalents amounted to EUR 4.1 million at the end of the reporting period.
• The debt ratio was 239.6% (180.3%) at the end of the reporting period.
• The debt ratio excluding leasing liabilities was 153.8% (109.7%).

CEO Ville Nikulainen:

“I started as CEO of KH Group on 1 June 2024 and Tommi Rötkin as CFO. The implementation of KH Group’s strategy change proceeded as planned and we divested HTJ in June-July 2024. HTJ and the items related to its divestment are reported as discontinued operations. The debt-free sales price was EUR 23.0 million, with KH Group’s share amounting to EUR 13.1 million after deducting net debt and costs incurred from the sale. The cash proceeds from the sale were used to fully repay the parent company’s bank loan after the end of the review period and the proceeds will also be used for measures required by the strategy change.

Our consolidated pro forma net sales and operating profit decreased significantly compared to the previous year. KH-Koneet’s net sales increased moderately and operating profit was at the same level as in the same period. The Finnish and Swedish companies were close to each other in terms of net sales and operating profit.

General market uncertainty, industrial action in Finland and the introduction of Indoor Group’s new ERP system negatively impacted Indoor’s net sales and operating profit. The Asko and Sotka chains both lost net sales and thus profitability. According to statistics from the Finnish Specialty Trade Association ETU, net sales in the furniture market decreased by about 8% year-on-year, and Indoor’s own development continued in the same direction throughout the quarter. Both chains continue to actively implement measures to increase operational efficiency and improve profitability. These measures included increasing footfall and sales, improving conversion rates, strengthening margins and maintaining careful cost control. The new ERP system was introduced in Sotka on March 1, 2024 and in Asko on May 1, 2024.

Nordic Rescue Group’s pro forma net sales and operating profit improved significantly compared to the previous year. Demand for rescue vehicles in Finland and Sweden remains at a good level and production capacities for 2024 are already sold out.

During the financial year, we will continue our development efforts in all our business areas, focusing in many cases on securing net sales and thus operating profit, as well as ensuring operational efficiency. We will continue to drive the KH Group’s strategy change as planned.

On August 9, 2024, the Company updated its previous forecast for net sales and operating profit for 2024. The downward revision of the forecast is based on lower than expected net sales and operating profits of the Indoor Group in both the first and second half of 2024. According to the updated forecast, the Company expects to achieve pro forma net sales of EUR 340-360 million and an operating profit of EUR 4-7 million in 2024 with the current Group structure.

Financial performance

KH Group, pro forma figures

The accounting policies applied in preparing the pro forma figures and reconciling them to the reported figures are explained later in the report under “Pro forma financial information”.

EUR million	4.–6.2024	4.–6.2023	1–6/2024	1–6/2023	1–12/2023
Net sales	89.3	93.2	167.4	187.3	376.9
Proforma EBITDA (1)	7.6	8.3	15.8	16.9	42.0
EBITDA%	8.5%	8.9%	9.4%	9.0%	11.2%
Pro forma operating result (EBIT)	-0.3	0.2	-0.8	1.0	9.1
Operating profit (EBIT) %	-0.3%	0.3%	-0.4%	0.5%	2.4%
Proforma profit before tax	-2.9	-3.1	-5.8	-4.9	-2.7

(1) EBITDA = Operating profit + depreciation

KH Group, April–June, pro forma

KH Group’s pro forma net sales amounted to EUR 89.3 (93.2) million, a decrease of 4.2% compared to the previous year. Net sales increased at KH-Koneet and Nordic Rescue Group and decreased at Indoor Group. The operating result for the reporting period was EUR -0.3 (0.2) million. KH-Koneet and Nordic Rescue Group achieved a positive operating result, while Indoor Group recorded a loss. The parent company’s share of the operating result for the reporting period was EUR -0.6 (-0.8) million. Factors contributing to the parent company’s lower operating costs included the strategy change project ongoing during the comparison period and savings in fixed costs.

KH Group, January–June, pro forma

KH Group’s net sales decreased by -10.6% to EUR 167.4 (187.3) million. Net sales increased in Nordic Rescue Group and decreased in KH-Koneet and Indoor Group. Operating profit was positive in KH-Koneet and Nordic Rescue Group, but negative in Indoor Group. Of the segments, Nordic Rescue Group was able to improve its operating profit year-on-year. The parent company’s share of operating profit for the reporting period was EUR -1.0 (-1.4) million. Factors contributing to the parent company’s lower operating costs included the strategy change project ongoing during the comparison period and savings in fixed costs.

Events after the reporting period

At the end of the reporting period, the parent company had a bank loan of EUR 4.4 million. The bank loan was fully repaid after the reporting period in early July using the cash received from the disposal of HTJ. Following the repayment of the loan, the parent company of the group has no debt-related loans with financial institutions, but has a credit facility of EUR 2.45 million at its disposal.

In the current year, the company will continue to implement measures to improve profitability. The KH Group announced this in a separate announcement on August 15, 2024.

Future prospects

The medium-term objective of the KH Group is to become an industrial group building on the KH Koneet business and to divest other business areas in line with the previous strategy. At the same time, active developments in other business areas will continue. Exit planning and evaluation of exit opportunities for the other business areas will also continue.

In the 2023 Annual Financial Statements release published on March 21, 2024, the Company estimated net sales of EUR 400-420 million and operating profit of EUR 14-16 million for 2024. The forecast did not include the operating profit of approximately EUR 3.7 million from the Indoor Group’s real estate sale transaction in Estonia, which the Company announced on March 21, 2024 at 12 noon.

The Company updated its previous forecast for net sales and operating profit for 2024 on April 30, 2024. KH Group estimated that with the Group structure at the time, it would achieve net sales of EUR 400-420 million and operating profit of EUR 12-16 million in 2024, including the capital gain from Indoor Group’s Estonian real estate sale transaction.

On 7 June 2024, the Company updated its previously published forecast in connection with the divestiture of HTJ. After the impact of the divestiture, KH Group’s pro forma forecast for 2024 is as follows: net sales of EUR 370-390 million and operating profit of EUR 9-13 million including the capital gain from Indoor’s real estate sale in Estonia. The forecast has therefore only been updated by removing the share of HTJ’s pro forma figures in net sales and operating profit for the financial period. Going forward, HTJ’s result for the 2024 financial period and the Group’s capital gain will be reported as discontinued operations.

On August 9, 2024, the Company updated its previous forecast for net sales and operating profit for 2024. According to the updated forecast, the Company estimates pro forma net sales for 2024 to be EUR 340-360 million and operating profit to be EUR 4-7 million under the current Group structure.

Webcast for the results presentation

KH Group will organize a webcast in Finnish for analysts, investors and media on August 16, 2024 at 13:00 EEST. You can follow the live webcast at https://khgroup.videosync.fi/q2-2024.
The webcast recording and presentation materials will be available on the KH Group website later the same day.

KH GROUP PLC

MORE INFORMATION:
CEO Ville Nikulainen, Tel. +358 400 459 343

DISTRIBUTION:
Nasdaq Helsinki Ltd
Important media
www.sievicapital.fi

KH Group Plc is a Nordic conglomerate operating in the business areas KH-Koneet, Indoor Group and Nordic Rescue Group. We are a leading supplier of construction and earthmoving equipment, furniture and interior retailer and manufacturer of rescue vehicles. Our strategy aims to build an industrial group around KH-Koneet’s business. KH Group’s shares are listed on Nasdaq Helsinki.

• KH Group Plc – Half-Year Report H1_2024