Interim Report 9 months - 1 January-30 September 2022

DISCONTINUED OPERATIONS
In this report, ITAB’s Russian operations are recognised as Discontinued Operations in accordance with IFRS 5. Other operations comprise Continuing Operations. Comments and figures pertain to Continuing Operations, unless otherwise stated. Comparative figures in the consolidated income statement have been restated. For more information, refer to “Discontinued Operations” and “Accounting policies” in the interim report.

THIRD QUARTER (1 JUL-30 SEP 2022)

• Net sales increased by 23 percent to SEK 1,750 million (1,425), of which currency-adjusted sales rose by 17 percent.
• Operating profit before depreciation and amortisation (EBITDA) excluding non-recurring items of SEK -1 million (-30) amounted to SEK 223 million (143). 1)
• Operating profit amounted to SEK 163 million (44) and the operating margin was 9.3 percent (3.0). Operating profit was charged with non-recurring items of SEK -1 million (-30). 1)
• Profit after financial items totalled SEK 148 million (36).
• Profit after tax amounted to SEK 101 million (19).
• Earnings per share totalled SEK 0.16 (0.09). 2, 3)
• Cash flow from operating activities amounted to SEK 136 million (-17). 3)

REPORTING PERIOD (1 JAN-30 SEP 2022)

• Net sales increased by 18 percent to SEK 5,166 million (4,365), of which currency-adjusted sales rose by 13 percent.
• Operating profit before depreciation and amortisation (EBITDA) excluding non-recurring items of SEK -29 million (-87) amounted to SEK 534 million (461). 1)
• Operating profit amounted to SEK 312 million (181) and the operating margin was 6.0 percent (4.1). Operating profit was charged with non-recurring items of SEK -39 million (-87). 1)
• Profit after financial items totalled SEK 272 million (117).
• Profit after tax amounted to SEK 185 million (75).
• Earnings per share totalled SEK 0.48 (0.42). 2, 3)
• Cash flow from operating activities amounted to SEK 73 million (-73). 3)
• The equity/assets ratio at the end of the period was 47 percent (45). 3)
• Net debt excluding lease liabilities amounted to SEK 806 million (488). 4)

1) Non-recurring items mainly consist of costs relating to transformation work under ITAB’s One ITAB strategy.
2) In connection with ITAB’s recapitalisation in 2021, the number of shares increased by 115,716,762 to a total of 218,100,192 shares.
3) Including Discontinued Operations.
4) Comparative periods have not been restated related to Discontinued Operations.

SIGNIFICANT EVENTS DURING THE REPORTING PERIOD (1 JAN-30 SEP 2022)

• The acquisition of Checkmark, one of the leading suppliers of retail technology solutions such as checkouts in the Nordic region, further strengthens ITAB’s market position.
• Due to the invasion of Ukraine, a decision was made to discontinue ITAB’s current operations in Russia.
• In connection with the annual financial statements for 2021, the Board adopted new financial targets focused on sustainable growth, increased profitability, and capital efficiency.

President’s comments –
HISTORICALLY STRONG QUARTER WITH INCREASED PROFITABILITY

The year to date has been characterised by even growth, and our implemented price increases and cost-saving measures have strengthened our net sales and earnings, creating better balance between price levels and increased costs. Altogether for the first nine months, our currency-adjusted net sales increased by 13 percent and operating profit (excluding non-recurring items) increased by 31 percent. Operating profit for the third quarter, which amounted to SEK 163 million, is the highest for a single quarter since 2017 and the operating margin for the quarter improved to 9.3 percent. We are achieving success with solutions that help our customers save energy, reduce waste or improve their operating efficiency. At the same time, the 2022 operating year have been characterised by a great deal of uncertainty and sweeping changes in the world around us, which have entailed operational challenges for ITAB. Some of our customers have expressed concern over the current economic trend and its impact on consumer priorities and the market’s development.

Continued confidence from our customers and implemented price increases have resulted in organic growth of approximately 11 percent to date this year. Demand has been even in most of our geographic markets but we are noting reduced sales in the UK & Ireland. All customer groups have performed positively so far this year, and sales to our largest customer group, Grocery, increased approximately 8 percent. Of ITAB’s three solution areas, Retail Lighting and Retail Technology performed especially well during the third quarter.

As we explained in our previous interim report, our margin-strengthening measures, including price adjustments and a continuous review of our cost structure, remain a priority. These measures, together with a more favourable product mix, collectively had a positive effect on the gross margin during the third quarter. Our assessment is that we are now in better balance with the cost increases and rapidly growing inflation that we have seen during the year given current demand. We are also starting to see the results of our initiative for increased capital efficiency through reduced inventory levels. During the third quarter, we had a positive cash flow of SEK 136 million from operating activities.

Adjusted for non-recurring items, EBITDA for the first nine months amounted to SEK 534 million (461), corresponding to an EBITDA margin of 10.3 percent (10.6). Corresponding profit after financial items increased by more than 50 percent to SEK 311 million (204). Adjusted profit after financial items increased by 126 percent to SEK 149 million (66) in the third quarter. Non-recurring items had only a marginal impact on the quarter since the first phase of the One ITAB transformation was completed in the second quarter, and our reported earnings after financial items increased by more than 300 percent to SEK 148 million (36)., concludes President & CEO Andréas Elgaard.

For the full President’s comments, refer to the interim report.

Jönköping, 28 October 2022

ITAB Shop Concept AB (publ)

Conference call on 28 October 2022 at 10:30 a.m. CEST
ITAB arranges a conference call today, 28 October 2022 at 10:30 a.m. CEST, in which Andréas Elgaard, President & CEO, and Ulrika Bergmo Sköld, CFO, present the interim report for the third quarter of 2022 and answer any subsequent questions. Weblink and telephone numbers are available at https://financialhearings.com/event/43991.

The information in this report is such that ITAB Shop Concept AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU Regulation No 596/2014). The information was submitted for publication, through the agency of the contact persons set out below, at 7:00 a.m. CEST on 28 October 2022.
   This report is in all respects a translation of the Swedish original interim report. In the event of any discrepancies between this translation and the Swedish original, the latter shall prevail.