Hello, good morning, from Helsinki and welcome to Kamux quarterly result presentation. My name is Juha Kalliokoski. I'm CEO and Founder of Kamux.
Good morning. My name is Marko Lehtonen. I'm Kamux CFO.
There you can see agenda for today's presentation. Firstly, Q1 in brief. Secondly, financial development. Thirdly, strategy, outlook, and financial targets. We summarize those. Our vision is to be number one used car retailer in Europe. As we see, it's this. Our vision is very realistic. We are already the third largest seller of used cars in Europe. The table includes European operators that focus on sales of used cars. Our revenue increased 13.11% to EUR 237.3 million, and last year it was about 210 million EUR. Our gross profit increased by 4.6% to EUR 24.3 million.
Adjusting operating profit was at previous year level and EUR 5.7 million. Like-for-like revenue increased nicely. It was +8.6%. Our international operations are strengthened. Total revenue in Sweden grew by 21.3% to EUR 18.4 million, and in Germany by 7.3% to EUR 22.9 million. Marko tell later more about the segments reporting and external sales of those countries. The war in Ukraine has had a significant impact on demand in all countries. In Sweden, gross margin development was good. It increased 26.6%, and in Germany 89% in Q1. The market for used cars contracted significantly in Finland and in Sweden.
In Finland, nearly 10% and in Sweden, about -15%. The market contracted also in Germany, but less, about 7%. January and February were still relatively normal, but the war in Ukraine that began at the end of February had a significant impact on demand. Consumers are concerned about inflation in general and fuel prices in particular. Also, the public discussion regarding higher interest rates is also worrying. As we have said since Kamux was listed, it is good that there is specialization in the market. Kamux has shown the way and been the front runner as a specialist in sales of used cars.
It's exceptional that such a large market has been so fragmented, and it's both natural and expected that we are starting to see competitors focusing on the same market. Strong revenue growth despite the declining number of sold cars. Average prices of sold cars have risen. The share of EVs and rechargeable hybrid cars has increased by approximately 40%, and their average prices are higher. Operating profit was at the previous year level. The higher average margin of cars sold was not sufficient to cover the negative impact of the decline in the numbers of cars sold. Investments in line with our growth strategy continued and burdened the operating profit. I'm not satisfied the number of cars sold decreased in Finland. In Sweden and in Germany, the number of cars sold increased.
The number of EVs and hybrid cars sold increased by almost 40%. Sales of integrated services progressed. Sales increased by 26.6%. We can be satisfied with the sales of integrated services. In Finland, the renewed Kamux Plus service in particular was sold well, penetration 27%, and previous year Q1, 20%. In Germany, sales of financial services were clearly higher than in Q1 2021. Last year it was 20% and now penetration was 27%. Sales has already begun at the Malmö megastore. The official opening is this weekend on May thirteenth to fifteenth. The stores in Nyköping and Kalmar will open in September 2022. The Petikko store in Vantaa will move to larger premises during May. The Pori store moved to larger premises in April.
The Oulu store has opened at the end of February. Marko tell about the financial development.
Thanks, Juha. Firstly, I think it's useful to describe the situation and environment we were having. Of course, we grew internationally in a difficult environment. As Juha was telling, Swedish and German markets declined in quarter one. Of course, the Ukraine war and the fuel prices were in the center point of the consumer focus. However, our gross margin improved in Sweden and Germany, and the group's gross margin per car was EUR 1,554, and the increase of 8.9% compared to the previous year. That of course we can be happy with the trend.
When we think about the funding, the situation still is that the cash is relatively expensive and we have organized our funding so that we are not keeping an ample amount of cash at hand, but instead, we have organized our financing through different limits and longer term financing arrangements. We have also now strengthened our funding in this first quarter, so we issued EUR 50 million commercial paper, and we finalized the Oulu project. After finalization, we raised EUR 50 million, a 15-year long-term loan for this property. Return on equity was 19.5%, and it was down from the previous year, and equity ratio was 46.4% and slightly improved from the previous year.
Earnings per share was 0.11 EUR, an increase of 21.6% from the previous year. I want to underline that our strong balance sheet is the backbone of the growth strategy. If you think about the key figures, I will not repeat all of them, as Juha was already going through them, but I will pick a few. Our gross margin, EUR 24.3 million, was 10.2%. We can see that the gross margin was impacted by higher prices, although the margin per car in EUR was growing. Integrated services developed well and grew faster than the revenue, and the penetration of financial services increased everywhere. When we see the revenue from integrated services was 11.8% and 5% from the revenue.
The EBIT level operating profit was 5.7%, being on the last year level. Of course, our green investments for growth were weighing on operating profit. We were also raising the inventory level ahead of the summer season, and that had an impact on the inventory turnover, which was 56.7 days, being 54.3 days the previous year. If we go a bit deeper to the markets and start with the Finnish segment, the revenue was increasing 4.4% compared to the previous year, being EUR 153 million. Of course, our vehicles sold were decreasing by 9.6%, but the higher average prices boosted the sales. There, of course, the centerpiece is the car mix, what we had.
Of course, now, especially, after the war in Ukraine started, the demand was peaking for the plug-in hybrids and electric vehicles, roughly 40% peak there. That of course had an impact as well. Gross margin decreased to EUR 17.8 million being 11.6%, and the decrease was coming purely for the margin from the cars. That was decreasing. In this situation, our inventory mix was not optimal, meaning we didn't have exactly so much plug-in hybrids and electric vehicles, which were most demanded by customers. Of course, our purchasing operations are constantly on the pulse looking to buy cars that meet the demand. Here, of course, the change was very sudden due to the situation in Ukraine. Operating profit decreased by 7.4% compared to previous year and was EUR 7.7 million, or being 5% from the revenue. Revenue from the integrated services increased to EUR 9.9 million , being 6.5% of the revenue. Revenue from the integrated services developed well, particularly the penetration of renewed Kamux Plus service and financial services also grow strongly. Revenue increased as a result of higher average car prices and successful sales of integrated services. If we go to Sweden, we had a very strong revenue growth in the first quarter in Sweden. The total revenue increased by 21.3%, being EUR 48.4 million
It is good to remember that the total revenue is also including the deliveries to other Kamux companies. At the same time, the external revenue growth was 30.7%. Gross margin increased to EUR 4.8 million or being 6% of the revenue. Of course, gross profit and also on absolute terms and relative terms were improving from the previous year, so we can be satisfied with that trend. Operating profit increased compared to the previous year and was EUR 0.2 million or 0.3% of the total revenue. Revenue from the integrated services increased to EUR 1.4 million or 2.3% of the external revenue. With the integrated services, Kamux Plus and also financing developed favorably.
Revenue growth was driven by higher average prices for the sold cars, opening of new showrooms and sales growth of like-for-like showrooms. If we move to Germany, so we had a good growth of gross profit and revenue in the first quarter. Corona pandemic didn't strongly impact per se the operations. We had still the 2G operation model in Germany in the first quarter, meaning that for the customers either vaccination or recovery certificate was required, but that didn't have a major impact to the business. What was having impact was that the corona infections or absence of leave were of course high in this first quarter.
In Germany, the total revenue increased 7.3% compared to the previous year and was EUR 22.9 million. As I was explaining, this total turnover includes also the deliveries to other Kamux companies. The external turnover grew 40.3%. Gross margin increased to EUR 1.6 million or being 7.1% of the revenue, and the operating loss decreased compared to the previous year and was -EUR 0.5 million. Gross profit and operating profit improved both in absolute and relative terms, and of course, in about this trend, we can be satisfied. Revenue from the integrated services increased to EUR 0.5 million or 2.4% of the external revenue.
Of course, we saw in the first quarter a sharp recovery both in penetration and turnover of integrated services. As I was explaining, in the last year in Germany, due to the corona pandemic, the demand for the financial services was declining, and they were staying relatively low for a long time and started slowly to recover in the last quarter of last year, but now the recovery was very strong from 20%-27%. In Germany, revenue growth was driven by higher average prices of sold cars, opening of new showrooms and sales growth of like-for-like showrooms.
In January, we also received a decision regarding the purchase case we had in Germany, and we will continue our efforts to recover our loss or collect the debt there, but we have not booked anything into our books due to the uncertainty of this case. If we go to the balance sheet side, still in the first quarter, the purchasing market remained tight due to the long delivery times for the new cars, and especially availability of plug-in hybrids and electric vehicles was particularly tight. Of course, competition about those vehicles in Europe is currently high. The net working capital continued to be affected by the exceptionally high car tax liability in Finland, which was related to the system reforms of the Finnish Customs, which happened in first of January 2021.
That has been driving the net working capital lower last year, but that situation has now stabilized, and that is also driving why in the first quarter, the net working capital was a bit higher compared to the inventory growth. Net cash flow from the operating activities is directly impacted by the change in inventory. That is the most dominant factor there. Of course, we can see that there has been no normal cyclicality this year. In this market, the rapid inventory changes are not possible in the same way as they were before.
The operating cash flow from the operating activities was EUR 11.3 million negative, and the biggest factor there was the change in working capital, minus EUR 16.5 million. In the first quarter, our investments were EUR 1.4 million, of which EUR 1 million went to tangible investments, mainly to finalize the Oulu mega store and processing center, and EUR 0.3 million to intangible investments, mainly to our digital projects. This Oulu store is now complete, and we have not announced any new strategic store projects. About our dividend from 2021, annual general meeting decided that the dividend of EUR 0.20 per share will be paid, and for now first installment, EUR 0.08 has been paid at the end of April.
The dividend is in line with the new strategy with more retail earnings to use to finance our growth. Targeted dividend payout ratio is at least 25% of the result. If we move to our strategy outlook and financial targets, I would like to once more repeat that in our strategy period, 2021- 2023, Kamux sees a huge market opportunity as a strongly digital and international retail chain and accelerates growth. The profitability development is built on business growth and scalability during the strategy period. Here in the center point, of course, is our seamless omni-channel customer experience, and we believe that it is very important that the customer...
We can offer the customer a choice how they do their purchasing path, meaning, which digital channel they want to use or if they want to visit the physical stores. Of course, where we have been putting a lot of effort is to really enhance and improve the digital path, especially in this customer journey. In the centerpiece, of course, is our Kamux Management System, and there, of course, the vision is to offer the customer European-level stock.
If we capture shortly what has been happening with our strategic agenda, and as we have been dividing the strategic agenda into four pieces, and if we start with the seamless omni-channel customer experience and services, the most significant development there is, of course, the Kamux Plus 2.0, which is the new, more enhanced and extended service which we have been launching in Finland, and that has been very well received and also the penetration rate has been improving. Utilizing data and leading with the knowledge, Kamux Management System is now implemented in all operating countries, which is now a joint platform enabling better utilization of data and data-driven pricing, sales, purchasing, and of course the vehicle data.
For example, the data collection, so we collect approximately 150 data points per vehicle that we have. Of course, that is a massive amount of data when we sold last year over 68,000 cars. If we go to efficient processes, scalability, and store strategy, there has been a lot happening. We opened now the Malmö store in Sweden, and we announced a new store in Kalmar to be opened in September. In Finland, uncertain are moving into large premises in line with the new strategy we have.
In developing capabilities and continuous learning, the personal training was still focusing on managerial leadership skills, but we have also developed and made available for all employees training related to electric vehicles, which is very strongly growing segment at the moment. About the financial targets for the 2021-2023, revenue growth of 20% annually increasing adjusted EBIT and adjusted EBIT margin over 3.5%, return on equity over 25%, and target to distribute dividends at least 25% of net profits. I would like to remind that quarter one is never the best quarter if you think about the full year targets, and especially the spring, summer season is of course very important for us.
If we look directly the first quarter, so our revenue growth was 13.1%, adjusted operating profit was last year level, EUR 5.7 million, adjusted operating profit margin was 2.4%, return on equity 19.5%, and dividend for the year 2021 was 41%. Outlook for 2022 is that we expect the revenue to be at least EUR 1.1 billion and adjusted operating profit to increase from the previous year. Although Kamux business is not exposed to immediate Russia-related risks, Russian military actions in Ukraine have caused a significantEUR 48.4 million ty across Europe. The situation may have an impact on people's consumption behavior and purchasing power, which may also create uncertainty regarding Kamux outlook for 2022. I summarize everything.
In the quarter one, our revenue increased by 13.1% to EUR 237.3 million. Our gross profit increased by 4.6% to EUR 24.3 million. Our adjusted operating profit was at previous year level and was EUR 5.7 million or 2.4% of revenue. Like-for-like showroom revenue grew by 8.6% and international operations strengthened. Total revenue in Sweden grew by 21.3% to EUR 48.4 million and in Germany by 7.3% to EUR 22.9 million. The war in Ukraine has had a significant impact on demand. Thank you very much for your attention, and we are happy to answer your questions.
Thank you, Marko. We have a couple of questions online. First one is related to integrated services. Does last year's increase of total revenue help with higher integrated services revenue this year? In other words, do you get any recurring revenue on your existing revenue mass, or is the integrated services revenue purely transactional fees, i.e., one-time revenue?
Depending on the financial service provider or depending on the market where we operate, we have different contracts. In some contracts, we get the financial income. Now we talk about the financial income. We get the income immediately when we sign the contract. With some providers and in some markets, the financial income is more coming over the contract period. Meaning when the customer is paying, we are also getting our share of that. There are different models, but the answer is yes, there is of course also impact from that.
Thank you. It's a mix. Another question related to integrated services. They grew strongly during quarter one. Do you see that the growth level of integrated services will remain high also in the coming quarters?
I cannot speculate about the coming quarters or what the level would be, but as I was saying that, after corona pandemic, in all countries, penetrations were decreasing, so meaning the customer demand for these services was decreasing. It was improving faster in Sweden and in Finland, and it was improving slower in Germany, but now of course in the first quarter, very strongly. That is the picture what we see at the moment.
Thank you. One further question. Can you disclose the mix of electric vehicles and hybrid vehicles in your inventory? What is, or what would be the optimal inventory mix today between electric vehicles and. Now there's a term here I don't quite understand. It's ICE. I wonder whether it's between electric vehicles and hybrid versus traditional cars.
There is big differences between country by country. What kind of cars the customers want. Of course, in Finland and in Sweden, we are very happy to buy hybrid cars and electric cars. It's a bit balance between those and of course the demand all dealers are interested in to buy about hybrid cars and electric cars, and that's why it's not so easy to buy those. Still, it's very important to remember how big is the fleet in every country of petrol and diesel cars. Those are still the biggest sales of the used cars.
Thank you. I think we have around the same topic, so in terms of the number of electric and/or hybrid vehicles in the inventory, versus regular cars. Is it something that you can say how much is there or?
Mm
Is it something that it's complete, totally or at all the time changing of course?
Of course, we want increase those EVs and hybrid cars, but it very important to remember that every car have the right price. It doesn't matter it's the gasoline car or a diesel car, and still it is available to sell if the prices are right. We buy today car, and we sell today car. It is daily trading business what we are doing. It doesn't go so that we changed to all cars are hybrid or EV cars. Of course, we can and want to sell those, but still most of the cars are fueled cars, the gasoline and diesel cars.
Another question relating to inventory turnover. Inventory turnover days was relatively high. Are you confident that this ratio will reduce during the year?
With 56 days, of course, we cannot be satisfied with that level. As I was saying that, the purchasing market, it is tight. Of course, if look historically back, usually we had a relatively strong fluctuations of the inventory level between the quarters. Basically now, since corona pandemic started, these fluctuations are not so strong. For example, now we really had to start to more increase the inventory level for the summer. I cannot speculate when this will surely normalize, but this is the environment where we are now and what we need to react on.
Thank you. A question on competition. Some of Kamux's competitors are loss-making and cash burning. With financial market conditions tightening, has Kamux witnessed a change in behavior of such loss-making peers? If not, do you expect any change of behavior anytime soon? This probably relates to more international competition.
Mm.
If looking for international competition overseas and in Europe, of course, there has been relatively dramatic news. But I would say that currently the news are more dramatic. I would say the daily business operation. I don't think that we have seen any big impact on there yet.
Yeah.
Of course, that will be seen in the coming months, yes.
What we say about Kamux, we are the profitable growth company. This is very, very important for us that we at the same time grow but make also the profit.
Thank you. A further question on competition. It seems your competitor, Saka, continue to grow in Q1 in spite of the soft market. Can you talk a little bit about the dynamic among independent dealers in the Finnish market? How concerned are you about Saka's progress?
As I mentioned it, we knew it's normal that so big market which are the used car market that there is coming specialist on the used car market, and now we see, for example, Saka. It's good the whole business segment that there are possibilities for the customers when our consumers buy a car from the different dealers. The markets are so big that there are possibilities for many companies to grow.
Very good. A further question on competition, seems to be a topic today. More about competition in Germany. Do you see a change in the competitive environment, for example, from AUTO1 in Germany?
The first answer is not really. If thinking about the German market, it is huge, over EUR 80 billion. Of course, we are currently operating on Northern Germany, mainly on Greater Hamburg region. If I think about the daily business or daily operations, yes, of course, we can see their advertisement. We can see some locations they have, but I wouldn't say that has been really impacting a lot to our business. That I don't see.
When we think about the consumers, because AUTO1's Autohero makes only the online sales, and we have also stores.
Mm-hmm.
This is different differences between Kamux and Autohero and the owner is the AUTO1.
Okay. Thank you. There are no more questions, online.
Thank you. Have a nice weekend.
Thank you.