Release Date: April 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Swedencare AB (SWDCF, Financial) reported a solid Q1 with 7% growth, including 5% organic growth.
- The company successfully launched a new brand design for Nature's Global Pet, with a significant in-store launch planned for Q2.
- Swedencare AB (SWDCF) improved its employee net promoter score from 41 to 44, with a higher response rate in their biannual employee survey.
- The acquisition of Summit VET is expected to enhance Swedencare AB (SWDCF)'s presence in the animal health sector, with Summit VET showing strong financial performance.
- Swedencare AB (SWDCF) achieved a record month in March, with significant growth in their dental product category, which grew by 51%.
Negative Points
- Swedencare AB (SWDCF) experienced a decrease in EBITDA by 10% compared to Q1 last year, with a margin of 19.4%.
- Personnel costs increased as a percentage of sales due to cautious sales growth and overtime expenses.
- The company faced challenges with exclusive agreements with major distributors, impacting growth in certain segments.
- Swedencare AB (SWDCF) reported a decline in the Innovate brand by 50% compared to Q1 last year due to high orders in the previous year.
- The company anticipates a potential increase in net debt to EBITDA ratio following the acquisition of Summit VET.
Q & A Highlights
Q: Hakan, you mentioned in the CEO letter that you will achieve double-digit organic growth by the end of 2025. Does that mean for the full year 2025 or just in Q4? How should we interpret the guidance?
A: For the full year 2025.
Q: The EBITDA has been below consensus for four consecutive quarters. Could you help set expectations for operating profit and margins for the year and coming quarters?
A: There have been extraordinary costs and investments, and the organization is now ready for growth. With the expected double-digit growth in the coming quarters, this ratio should improve.
Q: When do you think you will reach the target EBITDA margin of around 25%?
A: I can't specify a quarter, but it should improve quarter after quarter from this quarter. We expect full-year improvement from 2024.
Q: Regarding the acquisition of the Amazon partner for Nature, how will this impact margins, and should we expect an impact in Q2?
A: We are acquiring the stock from our partner, so it won't affect profitability immediately. The project will contribute positively from Q3 onwards, but not significantly impact the margin level.
Q: Could you quantify the sales volume of the 1,400+ Walmart stores in Q2, and elaborate on the magnitude of the launch?
A: I don't have the volume to share, but it will contribute to our double-digit growth in Q2 and beyond. The launch includes 15 to 20 items in an average of 1,100 stores each.
Q: Do you expect double-digit growth in all markets?
A: Yes, in our main geographies, Europe and North America.
Q: How should we consider the margin impact when scaling up the big box business in the second half of the year?
A: It should be neutral to slightly positive in terms of margin impact due to our pricing models.
Q: Should we expect personnel costs and other operational cost ratios to decline in Q2?
A: Yes, I expect them to go down a little in Q2 with increased revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
