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Bilia AB
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[Audio Gap] 2021. My name is Kristina Franzen, and I'm the CFO of Bilia. And together with me, I have...
Per Avander, Managing Director for Bilia.
We would actually put all of you on mute while we are talking, and then we will open up for questions after some highlights that will be provided of you. So we will then put you on mute now until we have finalized the highlights.
As Kristina said, we start with some highlights. And after that, we can have the question and answer. And I start. We report operating profit of SEK 574 million for quarter 2 this year compared to SEK 335 million last year. It's an improvement of 71%, the second best quarter ever in Bilia, only SEK 3 million if we discount from the record quarter 4 2020. The margin was 6.1% compared to 5.0% last year. The biggest improvement came from Norway with an improvement on SEK 143 million. The EBIT was SEK 236 million this year compared to SEK 93 million last year. Once again, a new record for a quarter in Norway. We split our business in 3 business areas: Service Business, Car Business and Fuel Business. And today, we focus on service and the Car Business, and I'll start with the Service Business. And as we often say, indeed, that's the most important area we have. The result was SEK 326 million compared to SEK 281 million, an improvement of SEK 45 million. All markets had a better profitability, but Norway stands out with a good growth in the quarter. For us, it's really important with how many working days we have for the quarter or for a month. And this quarter, we had 1 day more in Sweden, Germany, Belgium and 2 days more in Luxembourg and same days in Norway. We had a growth in all our markets, and Norway stands out there with 23% in growth; Sweden, 3%; and West Europe, 9%. But bear in mind that some weeks last year in West Europe, we had closed down our workshops. In Sweden, you can say maybe why only 3%, but we had a weaker demand in our body and paint shops in the quarter. And it was the same in the quarter 1 in Bilia in Sweden. The reason for that is it's not so many traffic gain in the bigger cities in Sweden. So therefore, it's less accident in -- so we have a weaker demand. To get loyal customer service subscriptions and tire hotels is really important business in our Service Business, and now we have 124,000 service subscriptions. And we have close 400,000 tires. We store them in our tire hotels. If you go over to the Car Business, we had a profitability of SEK 280 million compared to SEK 56 million last year. For new cars, it was SEK 126 million and for used car SEK 154 million. It's a new record for used car. The last record, it was quarter 3 2020 with SEK 137 million. We delivered 10% more used cars, and still we had a really strong margin in the used car business. Reason for the strong margin for used car is how many cars we have in stock and the turnover rate. And we have a really high turnover rate of the stock for used cars for the -- nowadays, and we have a good balance in all our countries when we talk used cars in stock. New cars, we delivered 41% more compared to the last year. And for everybody, you can see this figure is high. But if you compare it to 2019 instead, it was 4% minus. It's easier to understand the business if we talk 2021 to 2019 here. In order intake, we have an improvement of 40%. But compared to quarter 2 2019, it was 1%. The backlog of new cars was still high at 13,500, and it's a little bit over the last year and in similar level from the beginning of this year. Okay, Kristina.
If we look at the cash flow, we had a really strong operational cash flow for the quarter, almost touching SEK 1 billion. It was SEK 986 million. That also meant that we did not use our available credit limits with the banks, Nordea and DNB, at the end of the quarter. On the contrary, we had SEK 845 million as a receivable towards the bank, and that's a level in line with last year but below the SEK 1.8 billion we had on cash on hand by the end of the year. And the reason for the lower cash on hand is, of course, that we do have a higher working capital given the higher activity in the business but also that we had made payments for 3 different acquisitions, being the Toyota dealer, Telemark, and the Porsche acquisitions in Sweden and then a smaller tire company. So those payments have been done. All in all, it means that we do have a net debt amounting to SEK 380 million, and that still means that the level of net debt-to-EBITDA is on a really low level, 0.2x, which we are very happy about, of course. By the -- July 1, we have also then made payments for 2 further acquisitions. So that would, of course, for the third quarter affect the cash position in some aspects.
Okay. We have acquired a lot quarter 1 and quarter 2, 6 different companies. And if I start with Porsche. We took over the company in May. So we had 2 months with Porsche in South Sweden now. And what we can see now, the implementation, the integration is so important for us. But we can see now we deliver and follow the plan we had set up for ourselves. We took over in May Funnemark's Toyota business in Norway. And same as Porsche, we follow our plan there. City Däck Öresund AB, it's a tire company we took over 1 month ago, and it's a really exciting area. Maybe you'll remember we took over a company, En Bättre Däckaffär, a tire hotel with strong concepts. Now we can put them together, City Däck with -- includes a tire agency, tire hotels. And we have as well acquired a company in Norway, Felgteknikk AS rim repair. So now we can have a stronger concept and more focus, and we can have -- start a new department in Bilia. First of July, we took over Mercedes in Stockholm and took over Mercedes in North Sweden. Today, North Sweden is really exciting and a good market, improving market, I would say. Together with Mercedes passenger cars and light commercial vehicles, we have a new business area, trucks. And in Bilia, we had, 20 years ago, trucks. And for us, it's a new business area. What we can see is a stable market and loyal customer, a big potential in the Service Business. Maybe we can start and develop new business areas, concepts. And I think we can put in some of the processes we have in our Service Business into the truck business as well. The total market, 2021, BilSweden, association from the different brands, they changed the forecast from 300,000 to 315,000 new passenger cars to Sweden. It's a rather good market, I can say. The last year, it was 292,000 new cars. Norway, the forecast there is 149,000. Last year, it was 141,000 cars. I guess -- and my manager in Norway say to me that it's maybe a little bit low market. His guess is around 160,000. So it will be a really, really strong market in Norway. West Europe, Germany, off and see 3.5 million cars. It was under 3 million the last year, and the tempo in the market now is 2.8 million cars. Belgium off a little bit, over 500,000 in the market, new cars. The last year, a little bit over 400,000, and the tempo now is around 450,000. In Luxembourg, a small market for new cars, the tempo now is 50,000 cars. It was 45,000 last year. But the premium segment, we are there with BMW, is doing better in the market. So BMW has increased their market share both in Belgium and Luxembourg, and they are #1 when we are talking premium brands.
During the second quarter, all our facilities have been opened, meaning that there has not been any close down of facilities that we have had during the most recent quarters due to COVID-19 restrictions. However, in most of our countries, we have had restrictions when it comes to how many people that are allowed to be inside the facilities at the same point in time. We do not see that, that has had any major effects on our operations, though. What we have continued with, of course, during the quarter is to still have the security for our customers and our employees as one high priority. And that we will continue with going forward as well until we see that it's more stable situation for the spreading of the virus. During the quarter, we have, of course, had costs under focus. But compared to last year, we have had costs on a more normalized level compared to what we had last year when we actually pulled the brakes very hard due to the uncertainty about the spreading. It means that we have been running projects more on a normal basis, we have done new employments when needed, and we have continued to make acquisitions and develop the business in different manners. The main difference is probably compared to the previous years, that we have had less of travel compared to prior years, and that is probably something that we believe would stay also for the future. But all in all, we are still less people, adjusted for acquired businesses, than we were last year, about -- a little bit less than 70 people less in total. And also then, during this quarter, we have not had any financial support from any government. So no people working part time due to the COVID. For the first half year, we have received SEK 2 million in support in relation to the operation in Western Europe. And that was then during the first quarter when there were close-down restriction in those countries.
Okay. The last, if we are looking forward, quarter 3. We have huge respect still for corona and what will happen with Delta in our countries. But if we look in the funnel, we can say we see a good demand in the Service Business, still a good demand for our used car business, and what will happen in the really, really strong market on new cars in Norway. And we have a change from the 1st of July, the taxation of company cars in Sweden. What will happen? Cheaper cars will be more expensive for the drivers, not so much, SEK 600 to SEK 800. And the more luxury cars will be a little bit cheaper. And now all brands and dealers, they are thinking what will happen after the summer. But we measure how many customer we have into our showrooms, and we can't see they -- it's going down for the moment. So let us see what's happened there. It was all from Kristina and I, and now we can start questions.
Yes. And then we will ask then everybody...
Yes.
[Operator Instructions] [Foreign Language]
Then I think all the lines are open again. If there is anyone that wants to put a question, you're most welcome.
This is Mika from Handelsbanken. Can you hear me?
Yes. We hear you, Mika. Hello?
Absolutely, Mika. We can hear you loud and clear.
Can you open up a simple -- the order backlog in new car business, what kind of costs you have there. It seems the sort of your average sales prices, of course, have been clearly increasing. So have you sold much more the sort of clearly more expensive electric vehicles and so on? So could you open up the pricing development going forward? Do you still expect the sort of favorable trend to continue also in the coming quarters? And then about sort of that order backlog, is there already a lot of cars that can be delivered not until in 2022? Or what kind of delivery times you are facing right now?
Yes. You are right, Mika. It's a lot of plug-in hybrids in the backlog, and the pricing is much higher there. So I guess around 40%, 50% of the backlog is plug-in hybrids for the moment. And we have the problem with the semiconductors. So we have a delay. We can't say when we can deliver the cars. The normal -- normally, we can deliver when the customer, we call it, builds the car, and we tend to deliver it to the manufacturer. It takes often 2, 3 months. But now maybe it can take 3 to 6 months instead. So we are not sure how many cars we can deliver in quarter 3. And sometimes, we try to sell the car again. What I mean by that, so the customer -- we call the customer and say, if you take off this option, we can deliver the car faster to you. So we have a huge job to do with our customers when we talk to backlog.
Because of the delay in...
Yes. Delay on semiconductors, yes.
Yes. So that delays -- we'd still be able to do it, though.
Yes. Yes.
Okay. And then maybe continue with the used car business. What kind of inventory levels do you have there in different countries? Do you expect the sort of the favorable margin trend to continue also going forward?
You mean if -- what the -- if we are happy with the level of inventory in old [indiscernible]?
Of used cars.
Exactly. So what kind of used car inventory? If you have that. And then you said that the sort of your inventory turnover has been favorable. So normally, it means that your margins are quite decent. So could you elaborate a bit more on the sort of inventory levels right now in different countries?
Yes.
Okay, okay. It's not -- your question we were talking so much about. But what I can say is, we have delay on new cars, we will have a lack of used cars in quarter 3 and quarter 4, and then the margin is going up also. So one example, we took over 1st of July Mercedes-Benz, and they have problem with the semiconductor but, as well, some components. So there, we can see a lack of used car already. So yes. So I guess we will have a really good margin in quarter 3 and quarter 4 as well.
So if any, Mika, it would be a risk because we have the too low inventories, right, not the other way around.
Okay. Okay.
No.
Okay. Yes.
We have some salesmen where we -- they are purchase managers today. So we are trying to purchase from private customer used cars. So we need more cars for the moment.
Are there any questions from anyone else?
Hello. This is [ Hans Westerberg ]. I had a question regarding your acquisitions. First, the potential to achieve some synergies. And the second part of the question is the potential for further synergies.
Yes, yes. Often when we acquire a company, we can see they often have a strong new car business and spare parts. And we say we like it because our own business is used car and workshops and where we can put in our teams to help the new company we take over. One example is the Toyota business. The first acquisition we made, it was South Sweden, the second in middle of Sweden and third in Stockholm. And we have 3, 4x the profitability today if you compare to when we took over each company at that time because, what I said, workshops and used cars. From the beginning, when we take in a new brand, we don't have so much synergies, but now we have acquired 2 different companies when we talk Mercedes. We can find some synergies, but all departments we centralize. So we have some synergies in IT, in purchase department. Payroll is another. So -- but we don't have a figure we can go out with today.
Right. So we don't really keep those figures [ handy ] to anyone.
Yes, yes. And the third question from you, it was, yes, if we go win with a new brand, okay, we see -- can we be bigger? Can we be bigger in Sweden? Can we go to abroad, Belgium, Luxembourg, with Mercedes, Porsche? So we hope we can be the bigger partner with the 2 strong brands.
Anything else from anyone? No? No questions? So then I think we end here, obviously. And of course, if there are questions coming up later, you are most welcome to either call myself or call Per. Then we thank you for listening in and...
Thank you very much and have a nice summer.
Yes. Nice summer. Take care. Bye-bye.
Bye-bye. Bye-bye. Thank you.
Bye bye.