Ekornes QM Holding Group – Fourth quarter and full year 2022 results

16 Feb 2023 08:00 CET

ADAPTING TO CHANGING MARKETS

Highlights

• Q4 2022 operating revenue of NOK 1 076 million, down 8% from Q4 2021 and 5%
from Q3 2022
• Markets retreating towards pre-pandemic levels due to lower consumer demand,
with North America particularly weak for the quarter
• Stressless® revenues down 7% year-over-year, while IMG revenues dropped 12%
and Svane® dropped 8%, although with signs of stabilization towards the end of
the year
• Q4 2022 EBIT of NOK -26 million (89) due to margin pressure from rising costs,
as well as NOK 75 million of inventory write downs, offset by a NOK 31 million
gain from currency exchange contracts.
• Net cash flow from operations was positive at NOK 124 million for the quarter
(125), helped by a working capital decrease of NOK 305 million from the
preceding quarter.
• Order receipts up 18% from Q3 2022 to NOK 1 043 million, but down 17%
year-on-year as economic headwinds and increased cost of living are slowing
demand.
• Order reserve down 6% from Q3 2022 to NOK 751 million

While demand for home furniture increased significantly during the Covid-19
pandemic from 2020 and into the beginning of 2022, demand is now returning to
pre-pandemic levels. This has a negative impact on Ekornes’ sales and order
development. At the same time, cost inflation is putting pressure on margins,
particularly within raw materials and transportation, negatively affecting Group
earnings.

“Ekornes has launched several initiatives to protect profitability and stay
competitive through the Focus 23 program. The objective of the program is to
increase margins and efficiency, reduce the company cost base and to safeguard
cash flow. We are confident that these measures will enable us to weather more
difficult market conditions in 2023 and make Ekornes a leaner and stronger
company ready for renewed profitable growth”, says Fredrik Ødegård Nilsen,
Interim CEO in Ekornes.

To improve margins, the product portfolio will be optimized, and further price
increases will be implemented. Reduction in material and logistics costs will be
targeted through a structured program of renegotiations with suppliers and
partners. A stringent cost improvement program is being implemented with a broad
range of initiatives, seeking to harvest operational synergies across regions
and segments. The operational capacity will be rightsized, and administrative
costs will be trimmed. By the end of 2023, the target of Focus 23 is to reduce
operating expenses by NOK 200 million.

Ekornes has historically handled periods of macroeconomic uncertainties well,
enabled by a robust operating model, strong brands and a comprehensive
distribution network. The measures of Focus 23 will protect long term
profitability while optimizing operations across segments and markets,
positioning Ekornes to maintain a strong market position and customer
attractiveness.

The complete “Financial statements for the fourth quarter 2022” for Ekornes QM
Holding Group is attached and is also available at
www.ekornes.com/en/investor-relations/reports


For more information, please contact:
Fredrik Ødegård Nilsen, CFO and Interim CEO Ekornes AS
FON@Ekornes.com
Tel: +47 70 25 52 00


About Ekornes QM Holding Group
Ekornes QM Holding AS was founded 4 January 2018 with the purpose of acquiring
the Ekornes Group. In May 2018, an offer was made to purchase the shares of all
Ekornes shareholders. The share purchase was completed in August 2018 and the
Group was delisted from the Oslo Stock Exchange in October 2018. Norwegian
ultimate parent company Ekornes QM Holding AS is a subsidiary of Qumei Home
Furnishings Group. Qumei Group owns 94,12% of the shares in Qumei Runto S.à r.l
and Hillhouse investment owns 5,88% of the shares in Qumei Runto S.à.r.l.

Qumei Runto S.à.r.l. owns 100% of the shares in Ekornes QM Holding AS. The
Ekornes Group is the only operational part of the Ekornes QM Holding Group.
Ekornes is the largest furniture producer in Norway and owns the brand names
Ekornes®, Stressless®, Svane® and IMG. Stressless® is one of the world’s most
well-known furniture brands. Production takes place at the Group’s eight
factories, five of which are in Norway, one in the USA, one in Thailand and one
in Lithuania. Ekornes sells its products over large parts of the world, either
through its own sales companies or via importers.

More information:
Access the news on Oslo Bors NewsWeb site

582620_Ekornes QM Holding Group - Financial statements for the fourth quarter 2022.pdf