Festi hf.: Financial results for Q2 2024

Main results

• Sale of goods amounted to ISK 36,037 million, compared to ISK 34,199 million in the previous year, an increase of 5.4% between years.
• Gross profit from sales of goods and services amounted to ISK 8,593 million, an increase of 837 million or 10.8% between years.
• Margin from sale of goods and services were ISK 23.8% and increased by 1.1 p.p. from Q2 2023 and increased by 2.0 p.p. from Q1 2024.
• Salaries and other personnel expenses increase by 6.6% and full-time equivalents by 4.5%.
• EBITDA amounted to ISK 2,915 million compared to ISK 2,562 million in Q2 2023, increase of 13.8% between years.
• Profit for the quarter amounted to ISK 953 million, or 11.1% of margin from sales an increase of 29.1% YoY.
• Net cash from operating activities was ISK 3,063 million or 35.6% of margin from sales, compared to ISK 2,859 million last year.
• Equity at the end of Q2 2024 amounted to ISK 36,105 million with an equity ratio of 37.2%.
• Lyfja hf. will be included in the Consolidation in the second half of the year. EBITDA guidance for the year 2024 is increased by ISK 800 million to ISK 12,300 – 12,700 million.

Ásta S. Fjeldsted, CEO:

Operations for the quarter went according to plan

• The company's operations were good in the second quarter and the results were in line with the company's budget. Profit margins improved for all companies in the Group and increased by 1.1 p.p. between years. Working closely with suppliers to reduce costs, increase of own imports and success in reducing theft from stores are first and foremost yielding these results, as a recent price survey by ASÍ clearly shows for the grocery market. The number of visits to our stores grew from same quarter last year with a good increase in sales volume of most product categories between years.
• The Company's operating profit (EBITDA) amounted to ISK 2,915 million (2Q2023: ISK 2,562 million), an increase of 13.8% from the previous year. Profit for the second quarter amounted to ISK 953 million, an increase of ISK 215 million from the previous year. The outlook for the second half of the year is good. Lyfja joins the group from 1 July and the company's EBITDA forecast for the year 2024 has been raised by ISK 800 million and is: ISK 12,300-12,700 million.

The main projects in the quarter and beyond:

• A great milestone was reached for the Festi group when the acquisition of Lyfja was completed on 10 July. The purchase price of the share capital amounted to ISK 7,117 million. Payment was made in cash in the amount of ISK 5,077 million and in delivery of 10 million shares in Festi with a market value of ISK 2,040 million based on the closing price of ISK 204 on Nasdaq Iceland on 10 July 2024.
• The acquisition offers great opportunities for collaboration, synergy, increased efficiency and growth across the companies. The next weeks and months will be spent synchronizing the companies and getting a grip on the operation of systems, combining operations where appropriate and ensuring that Lyfja achieves even greater success with all the dynamic employees who work there. App and online sales, as well as well-located service stations and our stores all over the country, will play a key role here.
• A new and renovated Krónan store in Grafarholt opened on 11 July and the reception has been great from day one. Krónan at Bíldshöfði will receive a similar overhaul in the third quarter and will reopen before the end of October. 
• Krónan's expansion into the countryside has been very well received, and Krónan's Smart Store began servicing East Iceland during the quarter. The turnover of Smart Store as a whole increased by 35% between years.
• Renovation has begun on ELKO's flagship electronics store in Lindir, which will provide even better access to the experience of new and fun technology for our customers. The formal opening is scheduled for October.
• Ýmir Örn Finnbogason retired as Managing Director of N1 at the end of June and the position will be advertised for applications in the fall.
• The first of seven automatic car washes to be installed this year opened in Mosfellsbær in July. The next stations will open in August and September.
• 20 Tesla fast-charging stations will be ready in Reykjanesbær at the N1 service station at Flugvellir in August. N1 has upgraded fast-charging stations in Hvolsvöllur, Blönduós and Skógarlind and Tesla's construction is starting at service stations in Blönduós and Staðarskáli.

Ahead is an exciting time with Lyfja on board. Emphasis will continue to be placed on improving revenue growth, maintaining profit margins and continuing to work on projects related to the reduction of total unit costs.

Attachments

• Festi hf - Company announcement Q2 2024
• Festi hf - Consolidated Statements for 2024 Q2