windeln.de publishes financial results for the third quarter and nine months of 2020; European business further improved, China business below targets in the third quarter but with stronger fourth quarter
Munich, November 12, 2020: windeln.de SE ("windeln.de", "Group" or "Company"; ISIN DE000WNDL201 and DE000WNDL128) today announced financial results for the third quarter (Q3) and 9 months (9M) of 2020. The company achieved in the 3. Quarter 2020 a turnover of EUR 15.0 million, which is a slight decrease of -2.7% compared to the 3rd quarter of 2020. Quarter of the previous year (EUR 15.4 million in the 3rd quarter of the previous year). quarter 2019) for its continuing operations (i.e. excluding the Bebitus business, which is reported as a "discontinued operation"). In the first 9 months of 2020, sales increased by 17.9% year-on-year to EUR 58.8 million (9M 2019: EUR 49.8 million). The adjusted (ber.) EBIT improved in 3. Quarter 2020 to EUR -3.0 million compared to 3. Quarter 2019 with EUR -3.9 million. For the first 9 months of 2020, the ber. EBIT to EUR -5.5 million (-9.3% in percent of sales) compared to EUR -9.3 million in the first 9 months of 2019 (-18.6% in percent of sales).
DACH and Bebitus Q3 sales increased year-on-year and quarter-on-quarter; China sales in the third quarter below targets, but with a stronger fourth quarter
In China, in the 3. Quarter 2020 achieved sales of EUR 10.2 million, which corresponds to a decrease of -5.3% compared to the previous year (3. Quarter 2019: EUR 10.8 million), which is due to a temporary oversupply of milk formula in the Chinese market and a temporary suspension of the SPDC (duty-free air freight from Germany) shipping process, which will be reactivated in the coming weeks. Marketing expenses and thus the acquisition of new customers were also lower during the transition from the terminated marketing cooperation with LangTao to the local in-house team in China. The 9-month revenue for China amounted to EUR 43.6 million compared to EUR 35.8 million for 9 months of 2019, an increase of +21.8% compared to the previous year (+11.1% excluding the impact of the VAT refund in China of EUR 3.8 million). Business in China accounted for the 3rd year. Quarter 2020 68% of sales (74% for 9M 2020).
Sales in Europe (excluding Bebitus) amounted to 3. Quarter 2020 to EUR 4.8 million. Compared to the same quarter of the previous year, this represents an increase of +3.5% (Q3 2019: EUR 4.6 million). Revenue for the first 9 months of 2020 amounted to EUR 15.2 million compared to EUR 14.1 million in the same period of the previous year, which corresponds to an increase of +7.9%. Several sales campaigns and social media campaigns support the positive development in the German-speaking markets, which 32% of company sales in the 3rd year. quarter 2020 (26% in 9M 2020).
Reported Group sales do not include the Bebitus business in Spain, Portugal and France, which is reported as a "discontinued operation" due to the ongoing divestment process. The Bebitus turnover amounted to the 3. Quarter 2020 to EUR 3.4 million, which represents a growth rate of +12.1% compared to the previous year (9 months of 2020: EUR 9.7 million; +1.7% compared to the previous year). Sales growth at Bebitus was also supported by the positive development of the Portuguese shop, which grew by +27.8% year-on-year in the third quarter. The divestment process of Bebitus is still ongoing.
Improvement in adjusted EBIT in Q3 and 9 months of 2020 for the Group compared to the same period last year, mainly due to an improved operating contribution margin of the European business and lower selling and administrative expenses.
The gross profit margin decreased to 17.1% in the 3rd year. Quarter 2020 (21.8% in 3. Quarter 2019) as a result of discount promotions in China, which were necessary due to the temporary oversupply in the market. The proportion of business customers was also higher than in the previous year. This results in a lower gross profit margin, but also lower marketing and fulfillment costs. The marketing costs amounted to the 3. Quarter 2020 to EUR 0.5 million (3.4% of sales) compared to EUR 0.6 million in the same quarter of the previous year (4.0% of sales). Fulfillment costs decreased to EUR 1.2 million (8.2% of sales) compared to EUR 2.1 million (13.6% of sales) in the prior-year quarter. windeln.de signed a contract with a new logistics service provider for its German warehouse. The move to the new warehouse location is planned for spring 2021 and will further reduce logistics costs in the future.
The operating contribution margin (gross profit less marketing and fulfillment costs) at Group level amounted to EUR 0.8 million (5.5% of sales) in the third quarter of 2020 and was thus 1.4 percentage points above the previous year's level in relative terms (Q3 2019: EUR 0.6 million or 4.1% of sales). In the first 9 months of 2020, the contribution margin increased to EUR 7.2 million (12.2% of revenues) compared to EUR 2.9 million (5.8% of revenues) in the first 9 months of 2019. In China, the operating contribution margin amounted to EUR 0.9 million in the third quarter of 2020 (EUR 1.0 million in Q3 2019) and EUR 7.5 million in the first 9 months of 2020 (9M 2019: EUR 4.0 million). In the Europe segment (excluding Bebitus), the contribution margin improved in the 3rd year. Quarter of 2020 to EUR -0.1 million compared to the third quarter of the previous year (EUR -0.3 million) and to EUR -0.3 million in 9M 2020 (9M 2019: EUR -1.1 million). The contribution margin of Bebitus improved to EUR 0.1 million in 3. Quarter 2020 of EUR 0.0 in the previous year. At the 9-month level, Bebitus' contribution margin improved to EUR 0.3 million in 2020 from EUR -0.1 million in 2019.
The ber. other selling and administrative expenses decreased to EUR 3.8 million in the third quarter of 2020 compared to EUR 4.8 million in the second quarter of 2020. This is mainly due to a one-time gain from share-based compensation in the 2. Quarter 2020. For the 9-month period of 2020, the ber. other selling and administrative expenses to EUR 12.6 million (9M 2019: EUR 12.2 million).
The ber. Group EBIT improved to EUR -3.0 million (-19.9% margin) in the third quarter of the current year after EUR -3.9 million (-25.0% margin) in the same period of the previous year. For the first 9 months of 2020, the ber. Group EBIT to EUR -5.5 million (-9.3% of sales, including EUR 2.8 million positive impact of VAT refund in China) compared to EUR -9.3 million for the first 9 months of 2019 (-18.6% of sales).
Cash outflow in the 3. Quarter significantly reduced; Successful completion of the capital increase in October
In the 3rd In the quarter of 2020, the cash outflow (incl. Bebitus) amounted to EUR 0.5 million and thus improved significantly compared to EUR -5.9 million. in Q2 2020 (9 months 2020: EUR -2.9 million). Net working capital including bebitus amounted to EUR 6.2 million as of September 30, 2020 and decreased by 38.5% compared to June 30, 2020 due to the reduction in storage assets. As of September 30, 2020, the Group had a total of EUR 5.5 million in cash and cash equivalents at its disposal. In October, the Group successfully completed a capital increase with existing and new investors. The placement of 2,821,828 new no-par value bearer shares with a pro rata amount of the share capital of EUR 1.00 each and dividend entitlement from 1 January 2020 ("New Shares") generated gross proceeds of EUR 3,386,193.60 on the basis of the subscription price of EUR 1.20 per New Share. The total amount of the Group's available cash and cash equivalents thus amounted to EUR 8.2 million as of November 9.
Matthias Peuckert, Managing Director of windeln.de, and Nikolaus Weinberger, CFO of windeln.de, commented: "The development of our European business continued to be positive in the third quarter. While sales in China were below target, preparations for the November and December sales events in China have been successfully completed and will pay off in the fourth quarter. Our outlook for the full year 2020 remains unchanged with double-digit sales growth and a moderate improvement in adjusted EBIT. With the capital increase, we have secured further funds to support our growth projects for 2021 in order to achieve our goal of an adjusted EBIT break-even."