Side 18
At A Glance Our business Perfomance Highlights ESG Corporate governance Financial statements ESG Statements TCM Group Annual report 2023 18 Business review Reported revenue declined by 3.0% in 2023 to DKK 1,111 million (DKK 1,146 million). The organic growth (i.e. excluding the impact of the acquisition of AUBO Production A/S) in the core business was negative by 15.0% (revenue excluding 3rd party revenue). Revenue in Denmark declined from DKK 1,032 million in 2022 to DKK 943 million corresponding to a decrease of 8.7%. The organic like-for-like decline in the core business in Denmark was 14.2% (excluding 3rd party revenue). Revenue outside Denmark grew from DKK 114 million in 2022 to DKK 169 million corresponding to an increase of 48.6%. The growth was driven by the acquisition of AUBO Production A/S, as the growth in the existing TCM distribution in Norway was negative by 19%. The number of branded stores increased to 110 during 2023, of which 21 were AUBO stores. Reported revenue of DKK 1,111 million was slightly higher than the latest financial outlook of DKK 1,040-1,090 million. The increase in revenue compared to our latest expectations was due to a TCM delivered a significant reduction in the CO2 emissions of the group (scope 1+2) of 36% compared to 2022 better than expected demand development in the kitchen market in Denmark in the latter half of the fourth quarter of 2024. The initial financial outlook for 2023, stated in the Annual report 2022, was DKK 950-1,050 million (excluding the effect from the acquisition of AUBO Production A/S announced in June 2023). Within Svane Køkkenet in Denmark focus was on strengthening the retail network through changes in ownership structures. In Norway the Arendal store closed towards the end of the year. Within Tvis Køkken a new store opened in Lyngby, closing an important white spot on the retail map. As a result of the economic slowdown four smaller Danish Tvis Køkken stores closed during the year, while one store in the Nettoline network in Denmark closed. In AUBO a new store opened in Horsens in the southeast part of Jutland, Denmark. The slowdown in the kitchen market during 2023 impacted both B2C and B2B sales, however the long-term strategic focus on B2B pursued by TCM Group for several years proved its worth, as the strong B2B pipeline build up during 2022 ensured that invoiced sales remained strong in the first half of 2023. Despite the change in sales mix, gross margin remained largely flat, supported by the full year effect of sales price increases implemented during 2022. Full year gross margin was 19.6% compared to 20.1% in 2022. Adjusted EBIT ended at DKK 55.6 million compared to DKK 103.4 million in 2022 and the latest financial outlook in the range of DKK 40-50 million. The improvement in Adjusted EBIT compared to our latest expectations was due to the higher than expected sales in the fourth quarter of 2023. Initial financial outlook for 2023, stated in the Annual report 2022, was DKK 70-100 million (excluding AUBO Production A/S). Innovation and development of new attractively designed products following the latest trends and customer demands plays an important role of the Svane Køkkenet Deco color strategy of TCM Group. In 2023 TCM Group launched new products in all of the four brands, for example 17 contemporary colors across 6 design series in Svane Køkkenet, Trend in Nettoline, Bello in AUBO and the MG30 line in Tvis Køkken. The average number of employees in 2023 was 445 compared to 496 in 2022. During the year the Group adjusted the workforce both in production and sales and administrative functions to mitigate the slowdown in demand. At the end of December 2023, the number of employees was 486. The focus on sustainability and our ESG strategy continued in 2023. Among other achievements TCM Group delivered a significant reduction in the CO2 emissions of the Group (scope 1+2) of 36% compared to 2022. This was another step forward towards the ambition of TCM Group, which is to achieve a CO2 neutral production by 2028. To create full transparency regarding our products environmental impact, TCM Group in 2023 released third party approved and validated Environmental Product declarations (EPDs) for all laminate worktops produced by TCM Group and for the majority of kitchen products produced for and sold through brand Svane Køkkenet, Tvis Køkken and Nettoline. As the first kitchen manufacturer in Scandinavia the EPDs disclose data of all stages of the life cycle assessment. Please refer to the ESG section for further information. 110 Branded stores at the end of 2023
Side 19
At A Glance Our business Perfomance Highlights ESG Corporate governance Financial statements ESG Statements TCM Group Annual report 2023 19 Financial review Revenue Revenue in 2023 was down by 3.0% to DKK 1,111.3 million (DKK 1,146.1 million)*, with an organic decline (i.e. excluding the impact of the acquisition of AUBO Production A/S) of 13.2%. Revenue in the Core business decreased by 1.1%, with an organic decrease of 15.0%, while revenue from supply of 3rd party products decreased by 8.4%, organically -8.4%. Revenue in Denmark was DKK 942.5 million (DKK 1,032.5 million). The organic like-for-like decline was 12.5%. Revenue in Norway was DKK 155.8 million (DKK 97.8 million), up 59.3% driven by the acquisition of AUBO Production A/S. The organic decline in revenue in Norway was 19.0%. Revenue from other countries was DKK 12.8 million against DKK 15.7 million last year. Gross profit - gross margin of 19.6% Gross profit in 2023 was 218.3 DKK million (DKK 230.6 million), corresponding to a gross margin of 19.6% (20.1%). During 2023, and in line with the second half of 2022, the share of lower margin B2B sales remained at historically high levels, as B2C demand remained subdued. Despite this change in sales mix, full year gross margin was largely flat, as the negative sales mix impact was largely offset by the impact of the sales price increases implemented in 2022. Operating expenses - cost ratio 15.2% Operating expenses in 2023 were DKK 169.1 million (DKK 131.1 million). The increase in operating expenses of DKK 38.0 million was primarily due to the acquisition of AUBO Production A/S, combined with higher realized losses and increased provisions for potential losses on trade receivables, DKK 14.8 million in total (DKK 3.5 million). Operating expenses amounted to 15.2% of revenue in 2023 against 11.4% in 2022. Adjusted EBITDA – margin of 7.7% Adjusted EBITDA in 2023 was DKK 85.3 million (DKK 121.3 million), corresponding to an EBITDA margin of 7.7% (10.6%). The decrease in Adjusted EBITDA margin was driven by a lower gross margin and higher operating expenses. Adjusted EBIT – margin of 5.0% Adjusted EBIT in 2023 was DKK 55.6 million (DKK 103.4 million), corresponding to an adjusted EBIT margin of 5.0% (9.0%). The decrease in adjusted EBIT was driven by a lower gross margin and higher operating expenses. Depreciations and amortizations were DKK 31.2 million (DKK 18.0 million), of which DKK 7.6 million relates to the AUBO Production A/S acquisition. Non-recurring items TCM Group presents non-recurring items separately to ensure comparability. Non- recurring items consist of income and expenses that are special and of a non-recurring nature. For 2023 non-recurring items consist of transaction costs related to the AUBO Production A/S acquisition, impairment of ERP Project in AUBO Production A/S, and restructuring costs related to organisational restructuring carried out during 2023. The non-recurring items are specified next page: 2019 ,006.9 2020 ,024.6 Revenue (DKKM) 400 1200 1000 800 600 400 200 0 Reported revenue growth -3.0% 2021 1,108.3 2022 1,146.1 2023 1,111.3 2019 153.6 2020 139.7 Adjusted Ebit (DKKM) 200 220 200 180 160 140 120 100 80 60 40 20 0 Adjusted EBIT margin 5.0% 2021 137.8 2022 103.4 2023 55.6 *Figures in brackets refer to the corresponding period in 2022.
