28 October 2024
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Market + Management

Axfood AB: Reports Q3-2024 Financial Results

Stockholm / SE. (axf) Sweden’s Axfood AB announces its interim report for the third quarter and 9M-2024. The Company summarises a quarter with a continued positive trend in customer traffic, increased volumes and reinforced market positions, despite high comparison figures. Profitability was impacted by additional initiatives to strengthen price positions. The quarter was also characterised by a continued strong focus on investments for the future, and the ramp-up for all stores was finalised at the new logistics centre in Bålsta. In addition, the Swedish Competition Authority recently approved the Group’s City Gross acquisition, an acquisition that will strengthen competition on the market and create new opportunities for Axfood.

President and CEO Simone Margulies: «Although comparison figures remained high, Axfood’s growth for the third quarter was in line with the market, with higher volumes and a positive trend in customer traffic contributing to a 3.5 percent increase in retail sales. As a result, we are once again reinforcing our market positions, and conditions to continue challenging and growing.

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President and CEO Simone Margulies, Chief Financial Officer Anders Lexmon (Photo: Axfood AB)

Simone Margulies continues: «The fact that Willys continued to defend its strong position this quarter, with growth of 3.8 percent, is a sign of strength. Initiatives to strengthen its price position had a negative impact on profitability during the quarter in a market with intense competition. These initiatives are implemented to secure the profile with Sweden’s cheapest bag of groceries, and contributes to a continued high level of customer traffic and loyalty as well as a strengthened market position going forward. Through favourable growth of 4.5 percent in like-for-like sales and effective cost control, Hemköp continues to successfully and profitably navigate the traditional grocery retail segment of the market. Our restaurant wholesaler Snabbgross is taking further steps and strengthens its market position. Growth was 5.6 percent in the quarter, with higher volumes and an increased number of customers.

«The establishment of the Group’s new logistics structure continued during the quarter. Towards the end of the quarter, the final volumes of frozen food were transferred to the new logistics facility in Bålsta, which means that the ramp-up for all stores is now complete. We are now in a phase where we will gradually increase focus on operational adjustments to improve productivity and efficiency. Tests are now also under way for the roll-out of e-commerce. In addition, the expansion of the existing high-bay warehouse in Backa, Gothenburg, continued to increase the Group’s capacity and efficiency. Establishing a new logistics structure is an extensive endeavour – one that continued to give rise to additional costs in the third quarter. This is however an important long term shift that will result in cost savings and greater competitiveness over time, as well as an even more efficient and sustainable product supply.

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(Photo: Axfood AB)

«We are delighted to have recently received approval from the Swedish Competition Authority for our acquisition of City Gross, which was eagerly anticipated. We now look forward to taking over as the company’s new owner on 1 November, welcoming our new colleagues to the Axfood family, and starting the work to invest in strengthening the chain’s competitiveness and challenge the leading players in the hypermarket segment.

«This is my first interim report as President and CEO of Axfood. In summary, we have reinforced our market positions despite high comparison figures and intense competition, and taken new steps in our investments in the future, aimed at strengthening our long-term competitiveness.»

Third quarter summary

  • Net sales totalled SEK 20,902 m (20,293), an increase of 3.0 percent.
  • Retail sales totalled SEK 16,427 m (15,873), an increase of 3.5 percent.
  • Operating profit amounted to SEK 1,007 m (1,036). Operating profit in the prior year period included items affecting comparability of SEK -60 m. The operating margin was 4.8 percent (5.1).
  • Adjusted operating profit amounted to SEK 1,007 m (1,095). The adjusted operating margin was 4.8 percent (5.4).
  • Net profit for the period amounted to SEK 715 m (738) and earnings per share before dilution to SEK 3.26 (3.38).
  • On 15 August, Simone Margulies assumed the role as President and CEO of Axfood. On the same day, Shoan Etemadi assumed the role as Managing Director of Hemköpskedjan.
  • In September, a dividend of SEK 4.25 per share was paid out, the second part of the dividend to shareholders totalling SEK 8.50 per share (8.15).

Summary January – September

  • Net sales totalled SEK 62,197 m (60,342), an increase of 3.1 percent.
  • Retail sales totalled SEK 49,217 m (47,196), an increase of 4.3 percent.
  • Operating profit amounted to SEK 2,661 m (2,609). Operating profit in the prior year period included items affecting comparability of SEK -179 m. The operating margin was 4.3 percent (4.3).
  • Adjusted operating profit amounted to SEK 2,661 m (2,787). The adjusted operating margin was 4.3 percent (4.6).
  • Net profit for the period amounted to SEK 1,858 m (1,841) and earnings per share before dilution to SEK 8.54 (8.50).

Significant events after the balance sheet date

  • On 15 October, the Swedish Competition Authority approved Axfood’s acquisition of City Gross. The acquisition will be completed on 01 November.

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