TCM Group Management, a wood kitchen cabinets company, has released its Interim Report for Q2 2024, highlighting organic growth in sales and improved earnings despite challenging market conditions.
In the report, TCM Group demonstrates resilience and adaptability in the face of a difficult economic environment. The company achieved organic sales growth, driven primarily by a strong performance in the B2C segment, which saw a year-on-year increase of over 25%. Despite a slowdown in the B2B kitchen market, overall revenue for the quarter grew to DKK 332 million, up from DKK 256 million in Q2 of the previous year.
CEO Torben Paulin: "Sales in the second quarter have developed positively despite the anticipated weak B2B kitchen market. Organically, sales grew by 5% year-on-year, supported by a growth in B2C sales of more than 25% y-o-y. As expected, B2B sales declined in the quarter due to the slowdown in the Project sales market. Overall, revenue in Q2 was DKK 332 million compared to DKK 256 million in Q2 last year. Sales in Denmark, which accounts for 80% of the Group's revenue, increased by 15%, with an underlying organic growth of 6%.
Overall, the gross margin increased to 21.5% in Q2 compared to 20.2% in the same quarter last year. The growth in margin was driven by the inclusion of AUBO sales (AUBO Production was acquired in Q3 of 2023) and an increase in the share of higher-margin B2C sales in the turnover.
Adjusted EBIT in Q2 was DKK 28 million compared to DKK 22 million in Q2 last year, with an adjusted EBIT margin of 8.4% compared to 8.7% in Q2 last year. If the amortization of intangible assets recognized as part of the AUBO acquisition is taken into account, the underlying adjusted EBIT margin improved from 8.7% in Q2 last year to 8.9% in Q2 this year.
Free cash flow was DKK 26 million, compared to DKK -2 million last year, due to higher earnings and a significant improvement in working capital. Leverage decreased further to 3.20 (down from 3.73 in the previous quarter), well within the agreed covenants.
In the second quarter, TCM Group continued to expand its Danish footprint by adding two new AUBO-branded stores. As part of TCM Group's journey towards creating full transparency of our products' environmental impact, we released third-party approved and validated Environmental Product Declarations (EPD) for the AUBO brand in the quarter. This means that all brands are now covered by EPDs.
As stated in Company Announcement No. 193 dated August 15, 2024, we adjust the financial outlook for 2024 for the TCM Group with respect to sales and earnings. Our financial outlook for full-year revenue for 2024 is now in the range of DKK 1,125-1,200 million (previously DKK 1,000-1,150 million) with earnings (adjusted EBIT) in the range of DKK 70-90 million (previously DKK 55-85 million). The outlook for adjusted EBIT includes an expected positive effect from the adjustment of the contingent consideration related to the acquisition of AUBO Production A/S in the range of DKK 3-5 million."
Source: TCM Group