windeln.de publishes results for the nine-month period and the third quarter of 2019
• Revenues of EUR 59.4 million in 9M 2019 (Q3 2019: EUR 18.5 million) and adjusted EBIT of
EUR -12.0 million in 9M 2019 (Q3 2019: EUR -4.7 million)
• Slight sales growth on a quarterly basis (Q3 2019 compared to Q2 2019) in Europe (+4%); lower sales in China (-16%) due to delayed opening of the second customs warehouse (now in operation) and implementation of strategic cooperation in China
• Available liquid funds EUR 9.7 million as of September 30, 2019 (-EUR -2.4 million in Q3 2019); Cash capital increase with subscription rights planned
• Target to achieve break-even on the basis of adjusted EBIT for the beginning of 2020 depends on financial development in Q4 2019; Sales expectations for full year 2019 lowered
Munich, November 13, 2019: windeln.de SE ("windeln.de", "Group", "Group" or "Company") today published its results for the first nine months (9M) and the third quarter (Q3) of 2019. The Group generated sales of EUR 59.4 million in 9M 2019 (9M 2018: EUR 78.5 million) and EUR 18.5 million in Q3 2019 (Q3 2018: EUR 22.2 million). The adjusted (ber.) EBIT amounted to EUR -12.0 million in 9M 2019 (9M 2018: EUR -16.0 million) and EUR -4.7 million in Q3 2019 (Q3 2018: EUR -4.9 million). Sales development is below expectations, but the Group made further progress in terms of profitability and cost efficiency. In order to strengthen liquidity to finance the operating cash outflow to break-even and to continue its growth strategy in China, the Group plans to increase the existing share capital against cash contribution with subscription rights for shareholders in the high single-digit million euro range.
Sales development in Europe stabilized; China lower but progress on BWH II and strategic cooperation
Sales in the DACH region (Germany, Austria, Switzerland) amounted to EUR 13.4 million in 9M 2019 (9M 2018: EUR 18.3 million) and EUR 4.5 million in Q3 2019 (Q3 2018: EUR 5.7 million). The DACH region contributed around 23% to Group sales in 9M 2019. With sales of EUR 10.3 million in 9M 2019 (9M 2018: EUR 19.3 million) and EUR 3.3 million in Q3 2019 (Q3 2018: EUR 4.7 million), the rest of Europe accounts for around 17% of Group sales (Bebitus shops in Spain, Portugal and France). On a quarterly basis (qoq; Q3 2019 compared to Q2 2019), sales stabilized in the DACH region (+5% qoq) and in the rest of Europe (+2% qoq).
Sales in China amounted to EUR 35.7 million in 9M 2019 and were thus below the prior-year period (9M 2018: EUR 40.9 million) in view of the relatively strong revenue base in Q1 2018. Business in China contributed around 60% to Group sales in 9M 2019. At EUR 10.7 million, revenues in Q3 2019 were below the prior-year quarter (Q3 2018: EUR 11.8 million), which was due on the one hand to the delayed opening of the second customs day (BWH II), which was opened on 4 November 2019, and on the other hand to the implementation of the strategic cooperation with Langtao Trading (Shanghai) Co. Ltd. (Langtao), signed in August 2019, is due. Langtao, with many years of experience in the introduction and distribution of foreign brands on the Chinese market, replaces the existing TMall Partner (TP) and will support the operation of the windeln.de China webshop, among other things, in customer service, brand strategy and marketing planning, etc.
Further improvements to the contribution margin and cost structure
The ber. The Group's gross profit margin (gross profit from sales) increased slightly to 24.0% in 9M 2019 compared to the previous year (9M 2018: 23.8%). However, in Q3 2019, the gross profit margin of 21.7% was lower than in the previous quarter and in the previous year (Q2 2019: 24.9%; Q3 2018: 22.4%)
Selling expenses decreased by 31% to EUR 20.5 million in 9M 2019 (quarterly by 21% to EUR 6.2 million in Q3 2019), mainly due to lower logistics costs (-36%), personnel costs (-29%), marketing costs (-25%) and warehouse rent (-35%). Warehouse rent was further reduced by the successful reduction of legacy inventory, while logistics costs were reduced as more deliveries for TMall customers were shipped from the more cost-effective bonded warehouse in Guangzhou, China. The ber. other selling and administrative expenses in 9M 2019 were down on the previous year at EUR 14.8 million (9M 2018: EUR 17.7 million) and were stable at EUR 5.4 million in Q3 2019 compared to the same quarter of the previous year (Q3 2018: EUR -5.3 million). The operating contribution margin in 9M 2019 was EUR 2.8 million (4.7% of sales) and EUR 0.7 million in Q3 2019 (3.6% of sales), which is an improvement over the previous year despite the lack of contributions from China (9M 2018: EUR 1.7 million; Q3 2018; EUR 0.4 million).
Reported EBIT improved to EUR -12.1 million in 9M 2019 compared to EUR -17.7 million in 9M 2018 (Q3 2019: EUR -4.2 million compared to Q3 2018: EUR -5.2 million). The ber. EBIT amounted to EUR -12.0 million in 9M 2019 compared to EUR -16.0 million in 9M 2018 (Q3 2019: EUR -4.7 million compared to Q3 2018: EUR -4.9 million). The goal, based on the ber. EBIT to reach break-even at the beginning of 2020 depends on the further financial development in Q4 2019. In the 2019 half-year report, a slight increase in sales was forecast for the full year 2019. Taking into account the updated forecasts for the remainder of the year, the Group expects a slight decline.
Cash outflow further reduced and financing planned
In 9M 2019, the operating cash outflow of EUR 10.7 million improved significantly compared to EUR 17.3 million in the previous year. The operating cash outflow in Q3 2019 amounted to EUR 2.1 million and was significantly below the level of Q2 2019 at EUR 3.8 million. The Group's total available cash and cash equivalents amounted to EUR 9.7 million as of September 30, 2019 (EUR 7.6 million as of November 11, 2019) and are thus EUR 2.4 million lower than as of June 30, 2019. In order to strengthen the liquidity to finance the operating cash outflow to break-even, to finance the various growth measures in China and to create strategic flexibility for business cooperations, the Group will implement an increase in the existing share capital against cash contribution in the amount of a high single-digit million euro amount.
The Extraordinary General Meeting of 27 September 2019 resolved (i) to reduce the Company's share capital from EUR 9,963,670 by EUR 6,974,569 to EUR 2,989,101 by means of an ordinary capital reduction by means of a share split at a ratio of 10: 3, (ii) an increase in the reduced share capital from EUR 2,989,101 by up to EUR 10,000,000 to up to EUR 12,989,101 by issuing up to EUR 10,000,000 new, resolved on ordinary bearer shares with no par value against cash contribution with indirect subscription rights for existing shareholders and (iii) resolved to create a new Authorized Capital 2019 in the amount of EUR 6,000,000. The resolutions have not yet been entered in the commercial register. The background to this are actions for annulment, which the company is currently dealing with. The subscription period is to begin shortly after the capital reduction has been entered in the commercial register and the share consolidation has been carried out. Details of the specific volume of the cash capital increase and the subscription ratio will be communicated at the beginning of the subscription period.
CEO Matthias Peuckert explains: "In the first nine months of 2019, we made further progress in improving profitability and reducing cash outflows. In addition, we strategically strengthened our Chinese business, but had a lower contribution from this region in the third quarter. We are now focusing on a successful fourth quarter of 2019 with major sales promotions in China and Europe."
Selected key figures for the first nine months and third quarter of 2019
|9M 2019||9M 2018||Q3 2019||Q3 2018|
|Revenue (million euros)||59,4||78,5||18,5||22,2|
|Rest of Europe||10,3||19,3||3,3||4,7|
|Contribution margin (million euros)||2,8||1,7||0,7||0,4|
|in % of turnover||4,7%||2,1%||3,6%||1,8%|
|Adjusted EBIT (EUR million)||-12,0||-16,0||-4,7||-4,9|
|in % of turnover||-20,2%||-20,5%||-25,5%||-22,2%|