First quarter highlights
- Net sales increased by 30.7 percent to 419 MSEK (321 MSEK same period last year)
- Net sales growth adjusted for exchange rate differences at 33.8%
- Contribution margin after fulfillment cost increased to 29.0% (28.7%)
- EBITDA amounted to 27.3 MSEK (28.7) including 13 MSEK in transaction cost related to the listing (non-recurring cost). EBITDA-margin at 6.5% (9.0%)
- Adjusted EBITDA amounted to 40.3 MSEK (31.8), adjusted EBITDA-margin of 9.6% (9.9)
- Operating profit (EBIT) at 16 MSEK (18), a margin of 3.9% (5.6%)
- Adjusted EBIT margin at 29 MSEK (21) gives a margin of 7.0% (6.5%)
- Net profit for the period after taxes at 6.4 MSEK (10.2)
- Earnings per share SEK, before and after dilution at 1.24 SEK (1.89)
- Cash flow from operating activities at 45 MSEK (30)
Events during the first quarter
- In January Adams Matkasse launched a flexible meal kit solution with more than 30 recipes to choose from
- Linas Matkasse launched a mini grocery in January, offering add-on products in addition to mealkits
- A new board was elected the 24th of January
- On the 29th of march LMK Group was listed on the Nasdaq First North Premier Growth Market
- The Group acquired the remaining 41.52% percent of the shares from the founder and CEO of RetNemt and amortized the associated vendor debt, in accordance with what was pledged during the listing process
- On March 31, 2021, the bond was revoked in accordance with what was pledged during the listing process
CEO comments from Walker Kinman: “Continued solid growth”
The first quarter of 2021 was an eventful quarter for LMK Group with the IPO on Nasdaq First North Premier Growth Market as the main event. Following an intensive and exciting period during the listing process, the distribution of shares took place on 29 March 2021, bringing in over 2000 new shareholders. The IPO marks the first step on a journey of continued growth, where we will continue to deliver profitable growth through inspiring meals that simplify customers’ everyday life, and through innovation and operational excellence.
The positive trend from 2020 continued in the first quarter where we saw good momentum in terms of customer acquisition, growth, and profitability. Total net sales for the quarter amounted to SEK 419.5 million, representing an increase of approximately 34% organically compared to the same period last year. We continued to see a strong underlying demand for our flexible meal kit offering, which is reflected in the numbers of deliveries as well as active customers during the quarter, with 29% and 21% growth compared to last year, respectively. Furthermore, the number of customer acquisitions increased by approximately 50% during the first quarter 2021 vs 2020. The fact that deliveries to a larger extent contains more add-ons and increased number of portions than previous year, increased the average order value (adjusted for exchange rate differences) by 4.1%, which further contributed to net sales growth.
Focus on personalization is showing results
One of LMK Groups differentiating strengths is the high contribution margin and the efficient processes that contribute to a higher adjusted EBIT compared to competing services. At LMK Group, we are focused on maintaining high margins while increasing product flexibility and conducting activities to increase customer loyalty. For example, we have increased the number of deliveries produced on customer unique production lines to 49% compared with 32% in corresponding period last year. This is expected to increase as we shift customers from previous fixed menu subscriptions to our flexible offering.
The contribution margin amounted to 29.0%, an increase of 0.3ppt compared to the corresponding period last year, driven by sourcing productivity offset by higher production costs. The higher production costs are related to increased recipe flexibility – in line with our strategy to drive personalization which strengthens our competitiveness and increases customer loyalty while targeting a broader addressable market.
In early January we achieved yet another important milestone with the launch of our fully flexible meal kit offering for Adams Matkasse in Norway. We are very satisfied with the positive reception received to date. Since the launch, over a third of all customers of Adams Matkasse are now actively selecting recipes – enjoying the possibility to tailor their own meal kit from a selection of 35 recipes.
LMK Group is a foodtech company, and our focus has always been to innovate and push boundaries to improve the customer experience. In January, we rolled out an extended offering on the Swedish market for customers of Linas Matkasse with a complementary range of selected groceries with the focus on breakfast and snacks. This is something we have been offering to Norwegian customers since 2018 and during this time, we have witnessed a positive impact on customer loyalty. Our long-term assessment is that around 10 percent of the deliveries that are made will utilize this add-on on a weekly basis – increasing the average order value and contributing to growth via higher loyalty.
Sustainability at the core of LMK Group’s business model
LMK Group has a clear goal of being a leader in delivering locally grown food and I’m proud that we have a leading position in this field, which is also appreciated by our customers. One example of an activity to improve our sustainability footprint during the first quarter is that we through close dialogue with one of our suppliers in Norway were able to replace plastic packaging of grated cheese. This reduces the amount of packaging material used for only one product with the equivalent of 2 tonnes of plastic per year.
Also, we have recently decided to work for the European Chicken Commitment initiative to be implemented by the year 2026. ECC is a European initiative to push the development of animal welfare with a number of requirements for chicken breeding that must be met by 2026. For us at LMK Group, it is about being clear in our requirements and expectations towards our chicken suppliers by adding ECC as part of our supplier policy.
Investments for the future
In Q2 2021, we have continued to see high customer activity and continued growth. However, we face somewhat tougher comparable figures driven by the first wave of Covid-19 in 2020. Furthermore, we will continue to invest in improvements to increase product competitiveness and have recently initiated optimization of our delivery model, which will lead to changes to delivery options in Sweden and Norway during the second half of 2021. This is expected to strengthen our competitiveness but also have a slightly dampening effect on the margin in the upcoming quarters.
Activity has also been high in Denmark, with RetNemt now under full ownership of LMK Group. We have accelerated our plans to integrate RetNemt with the rest of the group, focusing first on increased capabilities through the implementation of our technical platform.
We are only in the beginning of our journey where we will continue to innovate in the meal kit space and are focused on a significant increase in personalization to drive competitiveness and customer loyalty. At the same time, we are confident that the shift from offline to online sales, which has accelerated during the pandemic, will continue post Covid-19. LMK Group stands stronger than ever, and we are looking forward to the easing of restrictions and life returning to normal.
I would like to take the opportunity to welcome all new shareholders and thank all our employees, suppliers and partners for the hard work over the past months.
Report presentation
CEO Walker Kinman and CFO Erik Bergman will present the report in a conference call and webcast today 19 May at 10:00 CEST. The presentation will be held in English and will be concluded with a Q&A session.
To participate via telephone please dial-in on the numbers below:
SE: +46 8 5055 8352
NO: +47 2350 0236
DK: +45 7872 3252
UK: +44 3333 009 269
US: +1 833 526 8380
Link to webcast: https://tv.streamfabriken.com/lmk-group-q1-2021
