Hi, everyone, and welcome to the Matas Annual Report. Today's call is being recorded. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there'll be a question-and-answer session. To ask a question, please press 5* on your telephone keypad. Speakers, please begin.
Welcome to this call covering the financial year 2023, 2024. This is obviously an exciting day for Matas, a big day, and really a new beginning for Matas Group. On this call, we will cover the numbers for last year and for the quarter. We will look slightly ahead, but at 1:00, we will have our Capital Markets Day and talk in depth about our long-term strategy. We have a short agenda. I will make some comments on the year past and the strategy. I will hand over to my colleague Per to cover the financial results.
I will return with the guidance for this financial year, and we will end up with a short Q&A, only covering the financial results and not so much the strategy going ahead. This was an absolute milestone year for us. It was a record year in terms of results, but it was, of course, a milestone year because of the big acquisition of KICKS Group that we closed in September. That brought us to a position of being the Nordic market leader, if you look across the Nordic market. It... The acquisition was announced in Q2. It closed in on first of September.
We delivered a very strong Christmas in Q3, together, the first quarter together, and in Q4, we have restructured our organization and supply chain and set ourselves up for the future. Looking at the results and looking at sort of underlying pro forma results for the year, 6.1% growth for the total group, driven by Matas as the high-growth contributor, and for the first time, passing the symbolic mark of DKK 1 billion in EBITDA before special items, leading to an EBITDA margin of 15%, for the year, in line with the guidance we gave at closing. It is, of course, a new beginning. We will today be announcing a new strategy. We call it Win the Nordics. It is a strategy that aims to outgrow the market.
It is a strategy that aims to improve margins despite investments in growth, and it is a strategy with capacity investments as well, to create that platform for long-term growth. Looking at the numbers, Matas came out with the revenues of DKK 4.8 billion, in line with guidance. Organic growth for Matas was 7.8%, with growth in all channels, and our profit margins went up, restated from last year. We can cover that in detail, but the profit margin restated from last year. KICKS revenues almost DKK 1.9 billion, 1.6% growth, with the KICKS banner growing and Skincity in decline. We can return to that. And a profit margin broadly in line with last year.
Gross profit margin broadly in line with last year. Leading to those overall results, for the year, with 7 months of KICKS included, of DKK 6.7 billion, leading to 49% revenue growth and the EBITDA margin of 15%. What's more interesting, of course, is the pro forma numbers, the baseline for what we're doing, looking ahead. A total revenues of DKK 7.8 billion, revenue growth of 6.1%, and an EBITDA margin of 14.3%. That is the starting point for our strategic journey. Looking at Q4, Q3 is our biggest quarter, our most important quarter. All eyes in both Matas and in KICKS were on delivering a strong Christmas.
Q4, we have used for making a lot of changes and to set ourselves up for the future in a lot of different ways. We delivered organic growth despite of this, 4.4%, which was exactly in line with our own expectations. KICKS, excluding Skincity, grew 2.3% in local currency, whereas Skincity revenues came down because now we're starting to integrate the offer of Skincity, which has been a loss-making business, into the KICKS offering. We completed a Nordic reorganization. We now have a fully Nordic organization as of April first. We made all those organizational changes in the quarter. We're happy to report that synergy realization is on track with our plans and the ambitions that we set for synergies.
As I mentioned, Skincity is an area where we have decided to let go of some sales that have been loss-generating or empty revenues to instead focus on strengthening the KICKS proposition. The Skincity brand will live on, and we will cover that on the Capital Markets Day. The big event underlying was actually the KICKS warehouse in Rosersberg, which we ramped up and started executing KICKS logistics through the Rosersberg warehouse. This is a major change because it's not just an automation project. It is actually a complete transformation of the way we do supply chain to mimic what we're doing in Denmark and have been doing in Denmark for a long time. That has some impact on stock situation and supply. It was broadly in line with expectations.
There is some moderate impact, and, and that's to be expected to have some temporary impact, when you do these kinds of things, but we're in good control with that. The Matas Logistics Center, our other big investment, that we will be constructing throughout the year, to open in, in the spring of next year, is on track and on budget.
As we look to our Capital Markets Day, I just wanna look back for a brief moment at what we have achieved over the last six years, as we have executed first, the Renewing Matas strategy, a successful digital transformation, taking the company from being a conventional retail chain with almost all sales from physical stores, into being a true omni-channel company with massive online growth, 600% growth in the period, taking online to 26% of revenues in a very short period. And of course, digital revenues got a boost from COVID. And we saw that there was a big chance that we would suffer a backlash, as many digital companies did after COVID, if we didn't do something new.
So back in August of 2021, we announced the Growing Matas Group strategy, and the core of that is an assortment expansion to really offer our existing members a much wider choice online, and make online and the stores work together to offer that to all our customers. That has also been a very successful growth strategy. And that, of course, finished with the acquisition of KICKS, meaning that we are now in a position, with pole position, if you will, to start growing as a joint company, being active in four markets under two banners, Matas and KICKS. And this is what we will cover in detail at our Capital Markets Day. What are our key messages? KICKS and the acquisition of KICKS, and the formation of the Nordic Matas Group unlocks long-term, profitable growth, potential, and opportunity, for our company.
We see a big, dynamic, attractive, and relatively unconsolidated Nordic beauty and wellbeing market. A market that grows above and beyond GDP. Very dynamic market. Lots is happening with consumers and the players in the market. We have a vision to build from that pole position, from that strong starting point, and to really strengthen our position in all markets, all channels, and across a number of categories that we consider to be core beauty and wellbeing categories. What we're really doing is taking the model that we have refined over the last few years in Denmark, and which KICKS has also been refining in Sweden, Norway, and Finland over the last few years, and really take that quite unique business model that we have, a business model that is quite hard to copy, and we will scale that model across the Nordic markets.
So, we're not doing something completely new. We're not sort of changing who we are or what we're doing. We're actually doing exactly what we have been doing for the last six years in one market, and now doing it in four markets, together, KICKS and Matas. We will outline six priorities, six strategic priorities, to make sure that we can outgrow the market pace, and that we can realize synergies and scale effects to also improve our margins, even though we invest margin in growth. It is all driven by a seasoned Nordic executive team, that those of you who participate at the Capital Markets Day will meet later today, a team with a proven track record.
This leads us to a midterm financial ambition of reaching above DKK 10 million in the financial year 2027-2028, with an EBITDA margin before special items between 15%-16%. We will keep gearing between 2-3x EBITDA, and, we will continue our policy of paying out a dividend, of above 20%, as we, as we look ahead. And with that, I will hand over to Per to cover the financial results for the year.
Thank you, Gregers, and I will cover 2023, 2024. I know a lot of interest is in the journey that Gregers just announced, but let's just look at the numbers that we just released this morning. So, from a revenue and gross margin perspective, we closed the year with DKK 6.7 billion, just in line with our guidance, and a gross margin of 45.9%. Those numbers we have restated, which is then forming the base for the future of the DKK 7.8 billion, as Gregers already alluded to earlier, and a gross margin of 45.8%. These numbers have been restated, and you can find all that in our annual accounts.
In terms of Q4, so what actually happened in Q4, as Gregers said, you know, Matas grew organically 4.4%, but as you'll also see, that we, we actually got a higher gross profit, which is basically linked into a quarter where we did a lot of stuff in terms of restructuring, getting ourselves ready for the future. So, we also had slightly lower pressure in the market as we normally have, and you'll immediately see that on our margins. But overall, again, we're reporting 67% growth for the quarter, including KICKS on top. So, let me take you to our costs, and this is more informational. This is the cost base as we move forward. We closed with roughly DKK 2.1 billion in costs for the year.
If we do that from a pro forma perspective, we are at 2.5, which is founding the base for the coming year. In terms of Q4, really, you know, numbers including KICKS as well, and what is driving our cost comparing to previously, also from a Matas perspective, is really starting to add the competencies and the people we need for the journey ahead of us, and also when we look at the performance for the quarter and the high growth on e-com, we also have incremental costs in terms of, you know, transportation and the searches that we do online. But overall costs, again, in line with our expectations.
That moves me into the EBITDA, and as you'll notice, and as Gregers said, you know, a proud moment for us to beat the DKK 1 billion mark for the first time, delivering the 15% EBITDA margin, as we already guided on previously. If we do that on a pro forma basis, basically including KICKS for another five months, so a full year of KICKS, we'd be looking at roughly at DKK 1.1 billion with a 14.3% EBITDA margin, which will be our starting point. In terms of Q4, again, 27% uplift in our EBITDA with the inclusion of KICKS. And one thing you will notice there is, of course, the low margin or lower margin compared to the historical margin of Matas.
Q4 is really the softest quarter in KICKS, and of course, that also has an impact on the overall business from an EBITDA perspective. Having said that, as I just said before, all in line with our expectation as we have delivered in accordance with our guidance. Which leads me to our inventories and one of the key elements of our working capital, of course. As you'll see, we have an increase compared to last year. Roughly DKK 140 million is coming from existing business. Part of that is, of course, we are now growing Matas with 8% on a quarter-by-quarter basis, leading actually to the fact that we need more inventories.
From a percentage perspective, that is also increasing a little bit, and that is a reflection of the assortment expansion, and also reflecting that we are getting ready for further expansion of our assortment. So, it's a little bit changing the model as compared to the past years in terms of how we run inventories. In terms of KICKS, that is reflecting their inventories, which we didn't have last year, of course, and it also reflects that in the initial phase of Rosersberg, we had to make sure that we had sufficient stock in our new facilities, and that is, of course, also built into that number. Which leads me to our cash flow for the year.
Of course, you know, comparing to last year, we generated roughly DKK 200 million more in operating cash flow, also adding KICKS into our business. Working capital, slightly, investing more in working capital. That, of course, is driven by the inventories, but also a little bit of timing in terms of when we do promotion campaigns and is supported by our, suppliers. You know, more campaigns in recent quarter, which basically led to slightly higher, receivables. Again, a question of timing in terms of payments and campaigns and so forth. CapEx, of course, high investments linked into the especially the MLC, our logistics center in Matas, which is according to plan, as Gregers just said, we're delivering in accordance with the budget.
There's a little movement in terms of 2023, 2024, timing-wise, in terms of, the actual cost, so roughly in the range of around DKK 100 million is moving into next year. Doesn't change the plans, doesn't change delivery and timing of, of the project, and still on budget from a cost perspective. Then, of course, we have the special items, which we already talked about, the DKK 100 million this year, roughly DKK 50 million coming from the transaction, the acquisition of KICKS, and the remaining is linked into the integration, all in line with our, with our plans. And then last but not least, you know, of course, the acquisition of KICKS. And that brings me then to the final slide before I'll hand over to Gregers in terms of our gearing.
And as you'll notice, we are at 2.8 at end of fourth quarter. Basically reflecting, as you saw from last year, where we go down in Q3 and we go up in Q4, and that is basically linked to 2 items, of course. Q3 being very cash generative, with the high revenues in that quarter. And secondly, in Q4, that's where we do the restatement or have a relook at our leasing commitments, and the adjustment of that, of course, also plays a role in our overall gearing level. So the 2.8 again, in line with our expectations, and again, within the guidance that we've set between 2 to 3.
I think previously we said we'll be at the high end, between 2.8 and 3, and we are delivering at the 2.8. So, we are in good shape for the coming year. And with that, Gregers, I'll hand over to you, in terms of the guidance for next year.
Thank you, Per. As we look into next year, it will be our first year of being fully together with KICKS, having built the Nordic organization, having lined up plans for how we want to execute in the different market, and of course, having taken out synergies. We still have work to do as we look to 2025, 2026, which is when we expect synergies to be fully in. So, and this is of course all related to our pro forma performance in 2023, 2024. So, keep that in mind as you look at the guidance. Underlying revenue growth, constant currency neutral compared to last year, 4%-7% growth is what we will be expecting.
That is a growth ahead of where we see the market growing already next year. And EBITDA, an ambition to improve our EBITDA margin compared to the baseline of 14.3 to between 14.5%-15.5%. And CapEx, as Per mentioned, it will be a big CapEx year of both running our ordinary maintenance and expansion CapEx. But of course, the big chunk of that, DKK 325 million, is to pay the last part of the Matas Logistics Center. Take into account exchange rates, the currency effects, this would imply 3.2%-6.32% growth with the current expectations for FX.
With that, we have covered the financial year. At 1:00 P.M., we will be hosting our Capital Markets Day to discuss our strategy, our growth strategy in more detail. There will be an opportunity to meet the entire management team and listen in and ask questions in detail about our strategy and about our long-term ambitions. For now, we will open up for questions relating to the year.
We'll now start the question-and-answer session. If you do wish to ask questions, please press 5 * on your telephone keypad. If you wish to withdraw it, you may do so by pressing 5 * again . There'll be a brief pause while questions are being registered. The first question will be from the line of Kristian Godiksen from SEB. Please go ahead. Your line now will be unmuted.
Thank you. Good morning, guys. A couple of questions initially here. So, maybe just first, just to clarify, you mentioned in the presentation, or you write in the presentation, that you have synergies above DKK 140 million... DKK 140 million in 2025, 2026. Is this an upgrade from the DKK 100 million, or is this unchanged based on you include the DKK 40 million in standalone improvements in that number? Yeah, that will be the first question.
It's unchanged, so it's DKK 100 million in synergies and DKK 40 million in standalone improvements, of which, of the DKK 40 million, some is already in the base because of, some of that has been taken, already in, in the last, financial year. So no changes to what we communicated, at closing.
Okay, got it. And then maybe taking something in advance here. I guess at the CMD later today, will you comment a bit more on the revenue synergies, as well as that to be expected?
That is to be expected, for sure.
Including the-
And why we believe in our... Why we believe that we have an opportunity to outgrow the market will be a central theme for the CMD and what are the building blocks of that ambition.
Okay. Sounds good. Look forward to it. And then, then maybe secondly, I was wondering if you could give some kind of a breakdown on the revenue growth guidance here for this current financial year in terms of on a per banner basis.
So we don't, we don't guide per banner, and we don't guide per channel. This is an overall guidance for the group. And this reflects, of course, we have plans for what we want to do in the individual markets, but the dynamics in each individual market are actually quite different. And sometimes opportunities might arise to grow faster or roadblocks might come up, and there will, for each market, also be differences in whether stores are driving the growth or online. So really, what we think is the right way to guide is to guide for the total group and the total group ambition. So, that's what we've chosen.
Okay. So, maybe I can't lure you into maybe elaborating a bit on some of those different growth perspectives in the various markets. Just curious, obviously, to where you see growth coming from and where the pockets might be to end in the higher end of the range versus the low end of the range.
I think the only thing I can give is that if you look back at the past year and look to Denmark, you see that Matas has grown 7.8% way above market last year, driven by assortment expansion. You can't extrapolate that into next year, but you can take from that that a lot of our growth comes from executing our strategy, not relying on local market dynamics. And of course, in Matas, we have good momentum on the assortment expansion. In KICKS, we're only just getting started next year.
Good. Great. Well, then maybe just final question before I jump back to the queue, maybe comment a bit on the network expansion. You state that you want to, or you have a growth lever called Refresh, Upgrade, and Open stores. So wondering, what is the growth contribution you build in from this growth lever then?
So, we haven't put a number to that. We do see opportunities, and we will talk about that in on the CMD. So, we do see opportunities for gradual store expansion, but this is a topic we will cover in the CMD. Having said that, this is primarily a digital ambition. This is an ambition to do what we have done in Denmark, to increase the offer to our existing members. So, that much I can't say at this stage.
Okay. Thank you.
Thank you, Kristian. The next question will be from the line of Sebastian Grau from Nordea. Your line now will be unmuted.
Good morning, Gregers and Per, and thank you for taking my questions. And also congrats on the strong results here. Per, maybe you could start by expanding a bit on the financial cost in Q4, so fairly high at DKK 58 million. Is this the number to extrapolate on going forward, or how should we think about that line?
Hi, Sebastian. No, I think, if I look at the financial cost for the fourth quarter, that's partly impacted by exchange matters, currency adjustments, which is a non-cash item, but it's linked into the way that we have structured the loans inside the group. So if you exclude that, the financial cost of the quarter is roughly DKK 40 million, and the cost of the financial items is linked to basically the, you know, the interest rate.
... our gearing, and it is 2.8, as you saw in the previous slide, and it is, and it's also linked into, you know, the cost of our leases. So, when I take all that together, and if you're looking for a number going forward, all depending on the three items, you know, a number between 35 and 40 is probably the better run rate.
Perfect. Makes great sense. Thank you. And then next question on the 2024-2025 guidance. So, eight point two billion DKK top line at the midpoint and a 15% EBITDA margin at the midpoint. How much of the total 140 million DKK cost synergies from KICKS are baked into this number?
Well, what we've said about synergies, as you know, is that they will be fully phased in by 2025, 2026. We've also said that part of the 14 standalone are already in the base, but we don't give a specific number to how much synergy impact there will be for the coming year. So the coming year, and as we look ahead, we of course look at all the margin improvement opportunities that we have, including synergies. And then as you can tell from our short and long-term guidance, we also will reinvest into getting that growth faster than the market. So, that is kind of the conceptual thinking, but we don't break it down.
Okay, that's fair. And then just my last question, can you confirm on the sort of long-term guidance here? Is this a... Is the way to think about this is that this is an organic growth guidance, meaning that there's no sort of significant M&A penciled into the DKK 10 billion? Is that the
That's correct
... the right way to think of it?
That's correct.
Perfect. Yeah. Okay, great stuff. Look forward to seeing you later.
Thank you, Sebastian. The next question will be from Kristian Godiksen from SEB. It will be a follow-up. Please go ahead. You'll now be unmuted.
Yes, thank you. Then maybe on the profitability side, you guide on the EBITDA margin, but as you know, I prefer the EBIT, so maybe could you elaborate a bit on what to think about the depreciation and amortization?
I think that's a topic better covered at the CMD-
Yeah.
So we'll, we'll return to that.
Yeah. Okay. And then maybe, on the CapEx, you referred to, obviously the MLC, but also, IT project. Is that the consolidation of the IT infrastructure between KICKS and Matas, or what is that referring to?
Yeah, so, you wanna do this one?
Yeah, I think it covers, you know, the normal investment, both Kristian in terms of, you know, how do we continuously drive our digital agenda, and how do we continuously improve the way that we face ourselves towards the customers to create the best customer experience. So, that's a big element of our investments. And then there is, of course, also as we put the companies together, some investments to make sure that we get on the same systems and so forth. But predominantly the investments we have in excluding MLC, of course, is linked into the investments in the market, in creating the best possible customer experience.
Okay. Okay. And then maybe just last question before we head to the CMD from my side. So mechanically, it seems like based on the guidance that you will end below the midpoint of the net debt to EBITDA guidance you have. So, I was just wondering what your view would be on a potential share buyback?
So, we'll refer you to the capital allocation policy that we still have a capital allocation policy of paying out excess cash and a minimum of 20% of net adjusted profit after tax. So, this is in line with our historical practice. But having made sure that we keep our gearing between 2x-3x, and of course, that we have taken advantage of the investment opportunities that are out there. So, we have announced today that the board proposes a dividend payment of DKK 2 for this year. So, that's as concrete as we can get at this point.
Okay. Okay, look forward for more details later then. Thank you.
Thank you, Kristian. As a reminder, please press 5 * to ask a question. There will be a brief pause while new questions are being registered. As no one else has lined up for questions, I'll hand it back to the speakers for any closing remarks.
Thank you so much for joining the conference call on the year. We look forward to seeing hopefully most of you at the CMD here in Copenhagen, either in person, it will also be live streamed, and materials for the CMD will be uploaded to our website at 1:00 P.M., for those of you who can't participate or want a sneak peek. Look forward to meeting you all. Thank you very much. Thank you, operator.