windeln.de publishes nine months and third quarter 2019 results
• 9M 2019 revenues EUR 59.4 million (Q3 2019: EUR 18.5 million) and 9M 2019 adjusted EBIT EUR -12.0 million (Q3 2019: EUR -4.7 million)
• Quarter over quarter (Q3 2019 compared to Q2 2019) some revenue growth for Europe (+4%); China revenues lower (-16%) due to delayed opening of second bonded warehouse (up and running now) and implementation of strategic cooperation for China
• Total cash available 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 reach adjusted EBIT break-even early 2020 remains subject to Q4 2019 financial development; revenue target for full year 2019 lowered
Munich, November 13, 2019: windeln.de SE (“windeln.de” or “Group) published its financial results for the first nine months (9M) and the third quarter (Q3) 2019 today. The Group generated revenues 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). Adjusted (adj.) EBIT was 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). Revenues are lower than anticipated but in terms of profitability and cost efficiency, the Group has made further progress. In order to strengthen liquidity to fund the operating cash outflow until break-even and to pursue its growth strategy in China, the Group plans an increase of the existing share capital against cash contribution with subscription rights for shareholders targeted in the high single digit million Euro range.
Revenue development in Europe stabilized, China lower but progress on BWH II and cooperation
In the DACH region (Germany, Austria and Switzerland), revenues 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). DACH accounted for approximately 23% of Group revenues in 9M 2019. With revenues 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), approximately 17% of Group revenues are attributable to Rest of Europe (Bebitus shops in Spain, Portugal and France). On a quarter over quarter (qoq) basis (Q3 2019 compared to Q2 2019) revenues in the DACH region (+5% qoq) and Rest of Europe (+2% qoq) have stabilized.
Revenues in China in 9M 2019 were EUR 35.7 million and therefore lower than in the previous year period (9M 2018: EUR 40.9 million) given the relatively strong revenue base in Q1 2018. China business accounted for approx. 60% of Group revenues in 9M 2019. Revenues in Q3 2019 with EUR 10.7 million were lower compared to the previous year quarter (Q3 2018: EUR 11.8 million), which is attributable to the delayed opening of the second bonded warehouse (BWH II), which was opened on November 4, 2019, as well as the implementation of the strategic cooperation with Langtao Trading (Shanghai) Co. Ltd. (Langtao) signed in August 2019. Langtao, having many years of experience in introduction and distribution of foreign brands in the Chinese market, replaces the existing TMall Partner (TP) and will support the operation of the windeln.de China webshop including customer service, brand strategy, marketing planning etc.
Further improvement on operating contribution and cost structure
The adj. Group gross profit margin (gross profit as % of revenues) slightly increased to 24.0% in 9M 2019 compared to the previous year (9M 2018: 23.8%). In Q3 2019 the gross margin with 21.7% was lower than in the previous quarter and previous year (Q2 2019: 24.9%; Q3 2018: 22.4%) due to the lower revenue contribution from China.
Selling and distribution expenses decreased by 31% to EUR 20.5 million in the 9M 2019 (on a quarterly basis by 21% to EUR 6.2 million in Q3 2019), mainly from logistics costs (-36%), personnel costs (-29%), marketing (-25%) and warehouse rental (-35%). Warehouse rent was further reduced due to the successful disposal of old stocks, while logistics costs were cut as more deliveries for TMall customers were shipped from the lower-cost bonded warehouse in Guangzhou, China. Adj. other SG&A costs in 9M 2019 were below previous year amounting to EUR 14.8 million (9M 2018: 17.7) and with EUR 5.4 million in Q3 2019 stable compared to previous year quarter (Q3 2018: EUR 5.3 million). Operating contribution in 9M 2019 amounted to EUR 2.8 million (4.7% of revenues) and EUR 0.7 million in Q3 2019 (3.6% of revenues), which is an improvement to the previous year (9M 2018: EUR 1.7 million; Q3 2018: EUR 0.4 million) despite missing contribution from the China business.
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). Adj. 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 of reaching break-even on the basis of adjusted EBIT early 2020 depends on the further financial development in the fourth quarter 2019. In the half year report 2019, a slight revenue increase for the full year 2019 was forecasted. Considering the updated projections for the remaining year, the Group now expects a slight decrease.
Cash outflow further reduced and financing planned
In 9M 2019, the operating cash outflow of EUR 10.7 million was significantly improved compared to EUR 17.3 million in the previous year. Operating cash outflow was EUR 2.1 million in Q3 2019 and lower than in Q2 2019 with EUR 3.8 million. The Group’s total cash available was EUR 9.7 million as of September 30, 2019, which is EUR 2.4 million lower compared to June 30, 2019 (EUR 7.6 million as of November 11, 2019). In order to strengthen liquidity to fund operating cash outflow until break-even, to fund the various growth measures in China and to create strategic flexibility for business cooperation, the Group will implement an increase of the existing share capital against cash contribution targeted in a high single digit million Euro amount.
The Extraordinary General Meeting on September 27, 2019, (i) approved to reduce the Company’s share capital from EUR 9,963,670 by EUR 6,974,569 to EUR 2,989,101 through an ordinary capital reduction by way of a reverse share split at a ratio of 10 : 3., (ii) resolved on an increase of the reduced share capital of EUR 2,989,101 by up to EUR 10,000,000 to up to EUR 12,989,101 by issuing up to 10,000,000 new ordinary bearer shares with no par value against cash contribution with indirect subscription rights for existing shareholders and (iii) resolved on the creation of a new Authorized Capital 2019 in the amount of EUR 6,000,000. The resolutions are not yet entered into the commercial register due to shareholder actions that the company is dealing with at the moment. The subscription period should start soon after the entry of the capital reduction into the commercial register and the implementation of the reverse share split. Details on the specific target volume of the cash capital increase and the subscription ratio will be provided at the beginning of the subscription period.
CEO Matthias Peuckert states: “In the first nine months of 2019, we made further progress on improving profitability and reducing cash outflow. We strengthened our Chinese business strategically but had lower contribution from that region in the third quarter. We are now focusing on a successful fourth quarter 2019 with major sales events in China and Europe.”
Select key figures for the first nine months and third quarter of 2019
|9M 2019||9M 2018||Q3 2019||Q3 2018|
|Revenues (EUR million)||59.4||78.5||18.5||22.2|
|Rest of Europe||10.3||19.3||3.3||4.7|
|in % of revenues||4.7%||2.1%||3.6%||1.8%|
|Adjusted EBIT (EUR million)||-12.0||-16.0||-4.7||-4.9|
|in % of revenues||-20.2%||-20.5%||-25.5%||-22.2%|