windeln.de publishes final financial results for fiscal year and Q4 2019; Examination of possible sale of Bebitus; Change of Management Board in connection with Chinese business
• Revenues of EUR 23.0 million in Q4 2019; +24.5% increase in sales compared to the third quarter of 2019 due to sales promotions in China; Revenue of EUR 82.3 million in FY2019
• Adjusted EBIT -EUR -1.8 million (-7.8% margin) in Q4 2019; positive effect from VAT adjustment of EUR 1.7 million; adjusted EBIT -13.8 million EUR (-16.8% margin) in FY2019
• Available liquidity EUR 8.4 million as of December 31, 2019; lower cash burn of EUR 1.3 million in Q4 2019 due to better operating results, VAT correction and lower net working capital
• Successful completion of the capital increase in February 2020; Gross proceeds of EUR 6.2 million
• Significant double-digit sales growth and significant improvement in adjusted EBIT expected for 2020; Break-even on the basis of adjusted EBIT targeted for Q1 2021
• Examination of possible divestment of the Bebitus shops to achieve the adjusted EBIT break-even target •
Sean (Xiaowei) Wei appointed to the Management Board, responsible for "New Business" in China
Munich, March 18, 2020: windeln.de SE ("windeln.de", "Group" or "Company"; ISIN DE000WNDL201 and ISIN DE000WNDL219) has announced the final financial figures for the fourth quarter (Q4) 2019 and fiscal year (FY) 2019, following the publication of preliminary results on January 22, 2020. The Group generated sales of EUR 23.0 million in Q4 2019. This corresponds to a growth of 24.5% compared to the third quarter (Q3) of 2019 (EUR 18.5 million) due to strong sales campaigns in Q4 2019 in China. In FY 2019, the Group generated sales of EUR 82.3 million (FY 2018: EUR 104.8 million). The adjusted (ber.) EBIT amounted to EUR -13.8 million in FY2019 (FY 2018: EUR 18.5 million) and EUR -1.8 million in Q4 2019 (Q4 2018: EUR -2.5 million), which is attributable to the focus on margins and cost reductions in Europe. Overall, business in China in 2019 fell short of the Group's expectations.
Sales growth in China due to sales promotions in Q4 2019; stable sales in Europe
Sales of the China business amounted to EUR 51.3 million in FY2019 (2018: EUR 56.7 million). In Q4 2019, business in China grew by 45.8% to EUR 15.6 million compared to Q3 2019 (EUR 10.7 million), but was below the Group's original targets. Reasons for this included the subsequent opening of the second bonded warehouse in China, the establishment of a marketing cooperation with Langtao and a lower purchasing volume to protect liquidity. Sales in China accounted for 62% of Group sales in 2019.
Sales in the DACH region (Germany, Austria and Switzerland) amounted to EUR 17.9 million in FY2019 (FY 2018: EUR 24.2 million) and EUR 4.5 million in Q4 2019 after EUR 4.5 million in the previous quarter (Q4 2018: EUR 5.9 million). In the DACH region, sales continued to decline in favor of improved margins. Sales in the DACH region contributed 22% to Group sales in 2019.
Similar to the DACH region, the rest of Europe (Spain, Portugal and France), which is covered by the Bebitus shops, was also affected by the continued focus on improving margins and profitability.
The rest of Europe generated sales of EUR 13.2 million in FY2019 (FY 2018: EUR 23.9 million) and sales of EUR 2.9 million in Q4 2019 (Q4 2018: EUR 4.5 million). Sales in the rest of Europe contributed 16% to Group sales in 2019.
Improved adjusted EBIT and lower cash burn in Q4 2019; Positive impact of VAT correction for China business
In Q4 2019, the Group generated a ber. EBIT of EUR 1.8 million, which is a higher EBIT of EUR 1.8 million. EBIT margin of -7.8%. In FY2019, windeln.de scored a ber. EBIT of EUR 13.8 million (-16.8% ber. EBIT margin). This is a significant improvement compared to the previous quarter (Q3 2019: EUR -4.7 million and 25.5% above). EBIT margin) due to better operating performance and a recognized VAT adjustment of EUR 1.7 million (ber. EBIT effect approx. EUR 1.4 million) for deliveries made in previous years from windeln.de to Chinese customers via so-called freight forwarders.
The Group's available liquidity amounted to EUR 8.4 million as of December 31, 2019 (including capital increase of EUR 12.0 million on March 16, 2020). The change in available cash and cash equivalents amounted to EUR -1.3 million in Q4 2019. This is a significant improvement compared to the previous quarter and is attributable to the improved operating performance, the lower net working capital as of December 31, 2019 and the payment already received in the amount of EUR 0.9 million from the VAT correction. In the current year 2020, the Group received VAT corrections of EUR 0.7 million and expects further inflows from the VAT correction of at least EUR 1.4 million.
Completion of the rights issue in February 2020 with gross proceeds of EUR 6.2 million; Cooperation with Bodyguard and Holland at Home
windeln.de completed the rights issue in February 2020 with gross proceeds of EUR 6.2 million. This is to be used to strengthen the Group's liquidity position, the negative cash flow until the break-even point is reached on the basis of the ber. EBIT, as well as investing in efficiency and growth projects. In order to generate additional revenue from the Chinese business in 2020, the company recently signed two term sheets for cooperation with the two companies Holland at Home B.V. ("Holland at Home") and bodyguardpharm GmbH ("Bodyguard"). With Holland at Home, windeln.de plans to expand its activities to various other important distribution channels in China in the coming months, and through the cooperation with Bodyguard, the product range for Chinese customers is to be expanded to include health and drugstore products. With the opening of the second bonded warehouse in November 2019, windeln.de has built up an efficient setup for these further growth efforts.
Significant revenue growth and improvement in adjusted EBIT expected for 2020; Break-even based on adjusted EBIT targeted for Q1 2021; Sale of Bebitus is being examined
For 2020, windeln.de expects significant double-digit revenue growth and a significant improvement in adjusted EBIT. This is also to be achieved through the new cooperations with Bodyguard and Holland at Home as well as further efficiency projects such as the relocation of the warehouse in Germany and the outsourcing of the IT shop system. Due to lower than planned revenues for the Chinese market in 2019 and the associated lower attachment point for 2020, the company's target of reaching break-even on the basis of adjusted EBIT at the beginning of 2020 had to be postponed to the first quarter (Q1) of 2021. In order to achieve this goal, windeln.de is also examining the possible sale of the southern European business operated by the Bebitus Shops.
Matthias Peuckert, CEO, and Dr. Nikolaus Weinberger, CFO of windeln.de about FY2019: "In 2019, we made good progress in increasing our margins and reducing our cost base. For 2020, we have initiated several measures, the effect of which will be noticeable in 2020 and will improve our business in China and Europe. Supported by the proceeds of the recently completed capital increase, we are confident that we will break even in the first quarter of 2021 on the basis of adjusted EBIT."
Sean (Xiaowei) Wei appointed to the Board
The Company's Supervisory Board has appointed Mr. Xiaowei (Sean) Wei as a member of the Management Board. In his role, Mr. Wei is responsible for "New Business" in China and will drive further growth projects in the attractive and important Chinese market. Mr. Wei has many years of experience in the Chinese e-commerce business and has been appointed for three years.
Supervisory Board Chairman Willi Schwerdtle comments on the appointment of Sean Wei as a member of the Management Board as follows: "With the appointment of Mr. Wei, we have gained a very experienced manager with strong expertise in China as an additional member of the Management Board. With his experience in scaling e-commerce businesses in China, Mr. Wei will further strengthen the important Chinese business and drive the growth of windeln.de in China over the next few years. We wish him all the best for his work in our company."
Selected preliminary key figures for the fourth quarter of 2019 and the 2019 financial year
|Q4 2019||Q3 2019||Q4 2018||2019||2018|
|Revenue (million euros)||23,0||18,5||26,3||82,3||104,8|
|Adjusted EBIT (EUR million)||-1,8||-4,7||-2,5||-13,8||-18,5|
|in % of turnover||-7,8%||-25,5%||-9,7%||-16,8%||-17,8%|
|Available liquidity (million euros)||8,4||9,7||11,1||8,4||11,1|