Axfood AB: Reports Q2-2023 Financial Results

Stockholm / SE. (axf) In a market characterised by a lower inflation rate and focus on price value, Sweden’s Axfood AB delivered very high growth with stable profitability in the second quarter and continued to strengthen its position in all market segments. Growth was mainly driven by Willys, but Hemköp also outperformed the market. Axfood also took several major and important steps in the area of sustainability during the quarter and continued to maintain a high pace of development in terms of laying the foundation for the logistics platform of the future.

President and CEO Klas Balkow’s comments on the interim report for the second quarter 2023 as follows: «The quarter was characterised by an ongoing strong focus on price value and an increased level of activity in the market. In this market, Axfood is maintaining its momentum with a retail sales growth rate of 17 percent in the second quarter, compared with 9 percent for the market. Through increased customer traffic and higher volumes, we maintained a very high growth rate despite a significant decline in inflation. It is clear that with our different concepts, we hold a strong position in a market where price value has become increasingly important.

«Willys continued its exceptional progress and, despite high comparison figures, grew a full 20 percent. Willys is Sweden’s most recommended grocery chain, with high customer loyalty and an excellent platform to build on to further strengthen its position in the long term. Hemköp also demonstrated good growth during the quarter, which was not only higher than the growth rate of the other players in the traditional grocery segment, but also higher than the market’s growth overall. Snabbgross also had a strong quarter, and gained market share in a somewhat more cautious market.

«The significant growth in customer traffic and high growth rate strengthened Axfood’s operating profit, despite high campaign activity in the market and the fact that we have not fully passed on supplier price increases to consumers. Profit was also impacted by operational cost increases, such as higher rent and salary costs. In all, we report an operating margin in line with the prior year.

«We continue to maintain a high pace of development in all areas of Axfood, and a number of large, Group-wide projects are currently under way to further strengthen our long-term competitiveness. We aim to continue to challenge and develop our Group to create an even stronger offering of affordable, good and sustainable food for all our customers.»

Second quarter summary

• Net sales totalled SEK 20,797 million (18,468), an increase of 12.6 percent.
• Retail sales totalled SEK 16,098 (13,803), an increase of 16.6 percent.
• Operating profit amounted to SEK 878 million (789) including items affecting comparability totalling SEK -64 million (-39). The operating margin was 4.2 percent (4.3).
• Adjusted operating profit amounted to SEK 942 million (828), an increase of 13.8 percent. The adjusted operating margin was 4.5 percent (4.5).
• Net profit for the period amounted to SEK 631 million (590) and earnings per share before dilution to SEK 2.93 (2.75).

First half of the year summary

• Net sales totalled SEK 40,049 million (35,061), an increase of 14.2 percent.
• Retail sales totalled SEK 31,323 (26,514), an increase of 18.1 percent.
• Operating profit amounted to SEK 1,573 million (1,623) including items affecting comparability totalling SEK -119 million (143). The operating margin was 3.9 percent (4.6).
• Adjusted operating profit amounted to SEK 1,692 million (1,480), an increase of 14.3 percent. The adjusted operating margin was 4.2 percent (4.2).
• Net profit for the period amounted to SEK 1,103 million (1,272) and earnings per share before dilution to SEK 5.13 (6.02).

Significant events after the balance sheet date

• The current Managing Director of Dagab, Nicholas Pettersson, has been appointed as the new Managing Director of Willys and will as of 1 February 2024 succeed Thomas Evertsson, who has decided to conclude his career as an executive. The recruitment process of a new Managing Director for Dagab has been initiated.