Festi hf.: 2023 Annual report

Net profit of ISK 975 million in Q4 and 3,438 million in 12M 2023

Main results

• Sale of goods amounted to ISK 35,235 million, compared to ISK 31,744 million in the previous year, an increase of 11.0% between years.
• Gross profit from sales of goods and services amounted to ISK 8,109 million, an increase of 1,238 million or 18.0% between years.
• Profit Margins from sales of goods and services were ISK 23.0%, unchanged from last quarter and increases by 1.4 p.p. from Q4 2022.
• Salaries and other personnel expenses increase by 5.9% and full-time equivalents by 4.0%.
• EBITDA amounted to ISK 3,148 million compared to ISK 2,293 million in Q4 2022, increase of 37.3% between years.
• Profit for the quarter amounted to ISK 975 million, or 12.0% of margin and increased by 37.7% from the year before.
• Equity at the end of Q4 amounted to ISK 35,842 million with an equity ratio of 37.3%.
• Net cash from operating activities was ISK 1,933 million or 23.8% of margin, compared to ISK 1,830 million last year.
• Net interest-bearing liabilities decreased by ISK 2,550 million in 2023.
• Profit for the year amounted to ISK 3,438 million and earnings per share ISK 11.3. The company’s board proposes to pay a dividend share of ISK 3 per share or a total of ISK 904 million, which is 26.3% of the year’s profit.

Ásta S. Fjeldsted, CEO of Festi:

"The operating results for the year were good, despite a challenging operating environment. High global commodity prices continued to have major impact on margins, especially in the fuel part of the business. The effects of high Inflation and general wage increases negotiated in the labor market had significant impact on all operating costs. In this environment, focus is on finding ways to prevent price increases from suppliers and on ways to cut operating costs. Commodity prices are expected to remain high while conflict is ongoing in Ukraine and the Mediterranean region, but hopes are that local inflation will decrease as the year 2024 progresses.

Operating profit before depreciation and amortisation in 2023 amounted to ISK 11,015 million (2022: ISK 10,020 million), increase of 9.9% between years. Net profit for the year was ISK 3,438 million (2022: ISK 4,082 million), as high interest rates increased the company‘s financial costs by ISK 1,127 million or 47.2% YoY. Increased business in all retail companies of Festi resulted in improved EBITDA performance, especially in the grocery sector, where turnover increased more than expected.There was an increase in sales in all segments of the business, including number of store visits. The management team continued to focus on lowering operating costs through numerous actions, which also led to better operational results than anticipated.

New executives took on key positions within the group as part of organisational changes earlier in the year: Ýmir Örn Finnbogason took over as Managing Director of N1, Óðinn Árnason as Managing Director of Festi fasteignir and Eva Guðrún Torfadóttir was appointed Managing Director of Bakkinn vöruhótel (due from maternity leave, end of Q1).

Development and expansion of stores continues. The Krónan store at Fiskislóð, Reykjavík, was opened this autumn after major refurbishment, ELKO opened a new larger store in Keflavik Airport, in November and N1 opened a new large service station at Flugvellir 27, Reykjanesbær, at the end of the year.

Digital services are continously being improved, with the recent indroduction of new services in the N1 app, where you can charge your car, order oil changes and tire replacements, and book slots for changing and leasing tires for short term periods, which is a novelty in Iceland as well as an environmentally friendly solution. Krónan has significantly expanded its services to areas where Krónan has no local store, through the Krónan online store and started offering home delivery in Northeast Iceland at the end of the year. It now serves Akureyri, Dalvík, Ólafsfjörður, Siglufjörður, and Húsavík. This expansion is expected to continue in the new year. ELKO‘s new B2B website continues to grow, with B2B sales increasing year on year.

On July 13, 2023 an agreement was reached for the acquisition of all shares in Lyfja hf. which was subsequantely approved at Festi‘s shareholder meeting at the end of the summer. The investigation is in phase II with the Competition Authority, which includes estimating the competitive effects of the merger.

At year-end 2023, the Company is financially strong with a strong equity position and overall is well-equipped to tackle the tasks ahead. Management focus will continue on efficiency and optimisation in 2024, as well as on gaining more synergies within the Group to reduce unit costs and price increases from suppliers.

We are proud of the results achieved in a challenging operating environment, for which we first and foremost thank our loyal customers and dedicated employees across Iceland.", says Ásta S. Fjeldsted, CEO of Festi.

Investor meeting on 8 February at 8:30 GMT.

An investor meeting will be held on Thursday 8 February 2024, at 8:30 am GMT, at the Company´s headquarters at Dalvegur 10 – 14, Kópavogur. Ásta S. Fjeldsted, CEO of Festi, and Magnús Kr. Ingason, CFO of Festi, will present the results and answer questions.

The meeting will be streamed live on the Company´s website where registration for the webcast will also take place: https://www.festi.is/en/cc/results-q4-2023. Participants attending virtually will be able to ask questions during the meeting via the email fjarfestatengsl@festi.is. Answers will be provided at the end of the presentation.

The presentation will be held in Icelandic though all material will be available in English as well.

The presentation material will be available online after the meeting on the Company’s website: https://www.festi.is/en/r/reports-and-presentations.

Attachments

• Festi hf - Company announcement Q4 2023
• Festi hf - Consolidated Financial Statements 2023 - signed
• 5493005OLOCYXGTC7E83-2023-12-31-en