windeln.de with strong financial figures in the second quarter; Financing planned for growth of business in China in the second half of the year

• Revenue (excluding Bebitus) in the second quarter of 2020 EUR 28.8 million (+68% growth compared to EUR 17.2 million in the second quarter of the previous year); Sales in the first half of 2020: EUR 43.7 million (+27% compared to the previous year)
• Adj. EBIT (excluding Bebitus) close to break-even with EUR -0.0 million in the second quarter of 2020 (-0.2% adj. EBIT margin) after EUR -2.4 million in the second quarter of the previous year (-14.0% margin); H1 2020 adj. EBIT -2.5 million EUR (-5.7% margin) after -5.4 million (-15.8% margin) in the first half of the previous year
• Positive effects of Covid-19 in the second quarter with higher online sales and sales of hygiene products from China as well as VAT reimbursement for the Chinese business from previous periods
• Total available funds of EUR 6.0 million as of June 30, 2020; further reduction due to the continuous build-up of inventories for the China business
• Goal of sustainable break-even based on the ber. EBIT at the beginning of 2021 depends on financing in the second half of the year, which is necessary due to the long capital commitment and the establishment of the local team in China

Munich, August 14, 2020: windeln.de SE (“windeln.de”, “Group” or “Company”; ISIN DE000WNDL201) today publishes strong financial results for the second quarter (Q2) and the first half (H1) of 2020. The company generated sales of EUR 28.8 million in the second quarter of 2020, which corresponds to an increase of +68% compared to the second quarter of the previous year (EUR 17.2 million in the second quarter of 2019) and sales of EUR 43.7 million (+27% year-on-year) for continuing operations (i.e. excluding the Bebitus business, which is reported as a “discontinued operation”). The adjusted (ber.) EBIT amounted to EUR -0.0 million in the second quarter of 2020 (Q2 2019: EUR -2.4 million) and EUR -2.5 million in the first half of 2020 (H1 2019: EUR -5.4 million).
From the second quarter of 2020, the company will publish two segments: Europe (which effectively includes business in German-speaking countries) and China. Although both segments are interdependent, this split helps the company to increase transparency, better allocate resources and costs, and thus steer the company towards sustainable profitability.

Strong sales in China in the second quarter with +83% year-on-year growth; Sales in Europe (excl. Bebitus) with +25% growth compared to the previous year; Positive effects of the VAT correction for the China segment

In China, sales of EUR 23.2 million were generated in the second quarter of 2020, which corresponds to an increase of +83% compared to the previous year (H1 2020 EUR 33.4 million; +34% compared to the previous year), including revenue from the new business model with the sale of hygiene products to corporate customers in the amount of EUR 6.9 million in the second quarter of 2020 and the VAT refund for the China business for previous years (revenue effect EUR 2.8 million in the second quarter of 2020 and EUR 3.6 million in the first half of 2020). Excluding the VAT refund for the China business, Group sales would have amounted to EUR 26.1 million in the second quarter (+52% year-on-year) and EUR 40.2 million in the first half of the year (+17% year-on-year). Business in China accounted for around 80% of the company’s revenue in the second quarter of 2020 (78% excluding Chinese VAT refund).
Sales in Europe (excluding Bebitus) amounted to EUR 5.6 million in the second quarter of 2020. Compared to the same quarter of the previous year, this represents an increase of +25% (2. Quarter 2019: EUR 4.5 million). Covid-19, which led to higher demand in March and April, improvements in the new pricing tool Omnia and more supplier-funded promotions are driving this positive development in Europe and the German-speaking markets, which accounted for around 20% of the company’s sales in the second quarter of 2020 (22% excluding China VAT refund).
The published consolidated revenues do not include the Bebitus business in Spain, Portugal and France, which is reported as a “discontinued operation”. Bebitus’ revenue in the second quarter of 2020 amounted to EUR 3.8 million, which corresponds to a growth rate of +28% compared to the previous year. Revenue growth was supported by higher demand from Covid-19 and operational improvements such as the launch of the Pricing Tool Omnia in Portugal. This is also reflected in the higher page views, which have steadily increased since the beginning of the year. The review of the sale of Bebitus has not yet been completed.

Significant improvement in the ber. EBIT in the second quarter of 2020 also excluding the effect of VAT refund from China

The continuous focus on improving profitability is reflected in the contribution margin (the difference between gross profit and expenses for marketing and fulfillment) as an important indicator for the management of the company. While the gross profit margin declined to 23.3% in the second quarter of 2020 due to the business mix with a higher share of business customers (2. Quarter 2019: 25.4%), the marketing costs of 4.6% of sales in the 2nd quarter of 2. Quarter 2019 to 1.6%. Fulfillment costs were significantly reduced from 13.1% in the second quarter of 2019 to 5.2% in the second quarter of 2020. This development is attributable to the business mix, the increased supply from our bonded warehouses in China and lower warehouse rental costs following the reduction in the product range in Germany. Various alternatives are still being examined with regard to the planned warehouse relocation in Germany. The resulting operating contribution margin at Group level amounted to EUR 4.8 million (16.5% of sales) in the second quarter of 2020 and was thus 8.8 percentage points above the previous year’s level in relative terms (Q2 2019: EUR 1.3 million or 7.7% of sales). In China, the contribution margin increased from EUR 1.6 million in the second quarter of 2019 to EUR 4.8 million in the second quarter of 2020, partly due to the refund of Chinese VAT and the sale of hygiene products from China. In the Europe (DACH) segment, the contribution margin improved to EUR -0.0 million (second quarter of the previous year: EUR -0.3 million), although it was negatively impacted by sales of slowly rotating inventories in the first half of 2020. Bebitus’ contribution margin improved from EUR -0.0 million in the previous year to EUR 0.3 million in the second quarter of 2020. According to internal management reporting, margin IV for Bebitus, i.e. the contribution margin after channel management costs, was also positive at EUR 0.1 million in the second quarter of 2020 (after EUR -0.2 million in the previous year).
The ber. other selling and administrative expenses decreased in relation to Group sales and accounted for 16.7% of sales in the second quarter of 2020 (EUR 4.8 million), compared to 21.7% of sales (EUR 3.7 million) in the same period of the previous year. The absolute increase compared to the second quarter of 2019 is mainly due to the compensation related to the VAT refund for the China business and the establishment of the local team in China, which consisted of 41 employees as of July 31.
The ber. The Group’s EBIT margin improved significantly in the second quarter of the current year to EUR -0.0 million (-0.2% margin) after EUR -2.4 million (-14.0% margin) in the same period of the previous year. For the first half of 2020, the ber. EBIT to EUR -2.5 million (-5.7% margin) compared to EUR -5.4 million (-15.8% margin) in the previous year. Excluding the EBIT effect of the Chinese VAT refund of EUR 2.0 million from previous years in the second quarter of 2020 (EUR 2.6 million in the first half of 2020), the ber. EBIT amounted to EUR -2.1 million (-8.0% margin) in the second quarter of 2020 and EUR -5.1 million (-12.7% margin) in the first half of 2020. EBIT calculated in accordance with IFRS improved to a positive EUR 0.7 million in the second quarter of 2020 compared to EUR -2.8 million in the previous year.

Cash outflow in the second quarter increased due to the build-up of inventories in China. Growth in China requires further financing in H2

In the second quarter of 2020, the cash outflow (incl. bebitus) amounted to EUR 5.9 million, mainly due to the build-up of inventories / net working capital for important sales events in the second half of the year in China (11.11., 12.12. and Cyber Week). Building inventory is necessary because selling through the bonded warehouses in China has a long capital commitment of more than 100 days, as products must be ordered, shipped to China, and go through the customs and warehousing process before customer payments can be received. Net working capital amounted to EUR 10.1 million as of June 30, 2020, compared to EUR 4.1 million as of March 31, 2020, i.e. EUR 6 million higher. The total amount of the Group’s available cash and cash equivalents amounted to EUR 6.0 million as of June 30, 2020. Due to the further need to build up inventories, it is currently lower at EUR 3.9 million. The goal is to break even at the beginning of 2021 on the basis of the ber. EBIT remains in place, but is subject to successful financing to further drive profitable sales growth in the Chinese market.
Matthias Peuckert, CEO of windeln.de, and Nikolaus Weinberger, CFO of windeln.de, explain: “We are pleased that sales have developed strongly and that the steps taken to improve our margins have paid off in the second quarter. We achieved significant revenue growth and an improvement in EBIT. The goal of sustainable break-even based on adjusted EBIT at the beginning of 2021, which we have worked so hard towards in recent months, depends on securing further financing, including a possible further capital increase. This is especially necessary in view of the long capital commitment for the Chinese business and the need to build up the portfolio and team in this rapidly changing but extremely attractive market.”

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