Panostaja Oyj Business Review Q3 September 1, 2023 at 10.00 a.m
Panostaja Oyj’s Business Review Q3 November 1, 2022-July 31, 2023
The weakening market environment increases the importance of profitability measures
May 2023-July 2023 (3 months) in brief:
- Net sales increased in three of the four segments. Net sales for the Group as a whole declined by -3% to MEUR 31.5 (MEUR 32.4).
- EBIT improved for three of the four segments. The entire Group’s EBIT improved from the reference period, standing at MEUR -0.5 (MEUR -1.2).
- Grano’s net sales for the review period dropped by -7% from the reference period. EBIT totaled MEUR 0.2 (MEUR 0.3).
- Earnings per share (undiluted) were -1.5 cents (-2.3 cents).
November 2022-July 2023 (9 months) in brief:
- Net sales increased in three of the four segments. Net sales for the Group as a whole increased by 1% to MEUR 102.0 (MEUR 101.1).
- EBIT improved for three of the four segments. The entire Group’s EBIT declined from the reference period, standing at MEUR -0.3 (MEUR 5.8). The EBIT for the reference period includes MEUR 9.4 in sales profit from the SokoPro deal.
- Comparable net sales and EBIT improved across all segments (Grano adjusted based on the impacts of the SokoPro divestment).
- Grano’s net sales for the review period dropped by 0.7% from the reference period. EBIT totaled MEUR 1.8 (MEUR 9.2). Adjusted with the SokoPro divestment, the net sales for the review period climbed by 1.3% and net sales improved by MEUR 2.8 from the reference period.
- Earnings per share (undiluted) were -4.0 cents (3.7 cents).
CEO Tapio Tommila:
“During the third quarter, we noticed signs of slowing financial activity in the development of our operating environment as well as indications of increased caution with regard to procurement decisions among customers. For the duration of the entire financial period, we have sought to drive forward measures that promote profitability across our segments in order to prepare for changes in demand and ensure the necessary flexibility to implement our value-creation plans in the long term.
For our largest segment Grano, the market situation deteriorated in the summer following a favorable first half of the year. Thanks to the measures to restore our sales margins, we were able to safeguard the profitability of our business, but we initiated change negotiations within the company after the review period to secure our competitiveness in the uncertain market situation.
The market environment has been somewhat more challenging than before for our other segments as well, since companies are now more careful about investment decisions and the purchasing power of consumers has weakened. As regards Oscar Software, we have been able to consistently expand the continuously invoiced software business but, due to the slower-than-hoped-for development, we have been forced to adapt the expenditures to secure the preconditions for implementing our strategy. Despite the private business suffering slightly from the decreased purchasing power of consumers, Hygga’s demand has remained stable, with the persistent software business and outsourcing services representing a large share of the company’s overall operations. Our productivity measures for Hygga have been successful, and the shift in profit/loss is good. Design service activity at CoreHW has remained high, but the customers’ aversion to making investment decisions is beginning to show on the market.
Through our efforts to secure profitability, we have strived to build the preconditions to execute our segment strategy in the best way possible and continued to make determined investments in the segments: Among others, Oscar Software’s cloud transition, CoreHW’s product business and Hygga’s software business have progressed well in the financial period.
The number of deals closed in the corporate acquisition market has dropped substantially from the high levels of recent years. For our part, we will continue to actively explore corporate acquisition opportunities in our own target sectors.”
Financial Development November 1, 2022–July 31, 2023
| KEY FIGURES MEUR | Q3 | Q3 | 9 MONTHS | 9 MONTHS | 12 months |
| 5/23- 7/23 | 5/22- 7/22 | 11/22- 7/23 | 11/21- 7/22 | 11/21- 10/22 | |
| Net sales, MEUR | 31.5 | 32.4 | 102.0 | 101.1 | 137.9 |
| EBIT, MEUR | -0.5 | -1.2 | -0.3 | 5.8 | 5.2 |
| Profit before taxes, MEUR | -1.1 | -1.6 | -2.0 | 4.4 | 3.2 |
| Profit/loss for the financial period, MEUR | -1.1 | -1.6 | -2.2 | 4.9 | 3.9 |
| Distribution: | |||||
| Shareholders of the parent company | -0.8 | -1.2 | -2.1 | 1.9 | 1.3 |
| Minority shareholders | -0.3 | -0.4 | -0.1 | 3.0 | 2.6 |
| Earnings per share, undiluted, EUR | -0.01 | -0.02 | -0.04 | 0.04 | 0.03 |
| Interest-bearing net liabilities | 42.7 | 37.5 | 42.7 | 37.5 | 42.3 |
| Gearing ratio, % | 78.5 | 63.7 | 78.5 | 63.7 | 72.8 |
| Equity ratio, % | 39.6 | 41.9 | 39.6 | 41.9 | 39.1 |
| Equity per share, EUR | 0.64 | 0.72 | 0.64 | 0.72 | 0.71 |
| Distribution of net sales by segment MEUR | Q3 | Q3 | 9 MONTHS | 9 MONTHS | 12 months |
Net sales | 5/23- 7/23 | 5/22- 7/22 | 11/22- 7/23 | 11/21- 7/22 | 11/21- 10/22 |
| Grano | 24.9 | 26.8 | 81.2 | 81.7 | 111.5 |
| Hygga | 1.9 | 1.7 | 5.8 | 5.7 | 7.3 |
| CoreHW | 2.0 | 1.3 | 6.4 | 5.4 | 8.0 |
| Oscar Software | 2.7 | 2.6 | 8.7 | 8.4 | 11.2 |
| Others | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Eliminations | 0.0 | 0.0 | -0.1 | -0.1 | -0.1 |
| Group in total | 31.5 | 32.4 | 102.0 | 101.1 | 137.9 |
| Distribution of EBIT by segment MEUR | Q3 | Q3 | 9 MONTHS | 9 MONTHS | 12 months |
EBIT | 5/23- 7/23 | 5/22- 7/22 | 11/22- 7/23 | 11/21- 7/22 | 11/21- 10/22 |
| Grano | 0.2 | 0.3 | 1.8 | 9.2 | 8.7 |
| Hygga | 0.1 | -0.2 | -0.1 | -0.5 | -0.4 |
| CoreHW | -0.3 | -0.8 | -0.5 | -1.0 | -0.5 |
| Oscar Software | 0.1 | -0.1 | 0.2 | -0.4 | -0.5 |
| Others | -0.5 | -0.5 | -1.6 | -1.6 | -2.2 |
| Group in total | -0.5 | -1.2 | -0.3 | 5.8 | 5.2 |
Panostaja Group’s business operations for the current review period are reported in five segments: Grano, Hygga, CoreHW, Oscar Software and Others (parent company and associated companies).
One associated company, Gugguu Group Oy, provided a report for the review period. The impact on profit/loss of the reported associated companies in the review period was MEUR -0.1 (MEUR 0.0), which is presented in a separate row in the consolidated income statement. The development of Gugguu’s net sales and EBIT has been commented on more specifically in the Segments section.
Events after the Review Period
On August 16, 2023, Panostaja announced that its segment Grano will be initiating change negotiations. The change negotiations apply to the entire staff of Grano Group, excluding the subsidiary Grano Diesel. The change negotiations aim to improve the company’s profitability and competitiveness, and to secure future operational capacity in the weakened market environment.
The Board of Directors of Panostaja segment Hygga appointed interim CEO Christoffer Nordström as the company’s CEO on August 14, 2023. Nordström has handled managerial duties for the company since 2010.
On August 31, 2023, Panostaja announced that M.Sc. (Econ.) Heikki Korelin (born 1986) has been appointed as Panostaja’s new CFO and Member of the Board He will assume the duties of CFO in next February, at the latest. Korelin’s current position is Vice President, Group Business Control, at Patria Oyj. An announcement on the current CFO Antti Kauppila moving to other tasks outside the Group was released on June 5, 2023.
Outlook for the 2023 Financial Period
As regards the corporate acquisition market, new opportunities are available and the market is active. SMEs will still need to utilize ownership arrangements and growth opportunities, but the consistently high market liquidity and the high price expectations of sellers, which tend to follow changes in economic trends with some delay, make the operating environment challenging for corporate acquisitions. We will continue exploring new possible investment targets in accordance with our strategy and assess divestment possibilities as part of the ownership strategies of the investment targets.
It is thought that the demand situation for different investments will develop in the short term as follows:
- The demand for Grano, Oscar Software, CoreHW and Hygga will remain satisfactory.
The demand situation presented above involves uncertainties relating to any geopolitical and macroeconomic impacts that are difficult to anticipate. The effects of the war in Ukraine and the related economic sanctions and geopolitical tensions will increase economic uncertainty in Finland and abroad, which may negatively impact segment demand or the availability of materials, and thereby material prices and delivery capabilities. If strengthened and prolonged, the inflation may have a negative impact on the purchasing power of consumers and the willingness of companies to make investments, which may weaken the demand situation of our segments from the estimate provided above.
Panostaja Oyj
Board of Directors
For further information, contact CEO Tapio Tommila, +358 (0)40 527 6311
Panostaja Oyj
Tapio Tommila
CEO
All forecasts and assessments presented in this business report are based on the current outlook of Panostaja and the views of the management of the various investments with regard to the state of the economy and its development. The results attained may be substantially different.
This is not an interim report compliant with the IAS 34 standard. The company observes the six-monthly reporting practice prescribed in the Finnish Securities Markets Act and publishes business reports for the initial three and nine months of each year, presenting the key information on the company’s financial development. The financial information presented in the business report has not been audited.
Panostaja is an investment company developing Finnish companies in the growing service and software sectors as an active shareholder. The company aims to be the most sought-after partner for business owners selling their companies as well as for the best managers and investors. Together with its partners, Panostaja increases the Group's shareholder value and creates Finnish success stories.
Panostaja has a majority holding in four investment targets. Grano Oy is the most versatile expert of content services in Finland. Hygga Oy is a company providing health care services and the ERP system for health care providers. CoreHW provides high added value RF IC design services. Oscar Software provides ERP systems and financial management services.
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