Axfood AB: Reports Q4 and FY-2022 Financial Results

Stockholm / SE. (axf) Sweden’s Axfood AB grew more than twice as much as the market in both the quarter and the full year, which further strengthened its position. This is evidence that Swedish consumers, who have less to spend due to historically high inflation, appreciate the Group’s offerings. This is especially the case for Willys, which aims to deliver Sweden’s cheapest bag of groceries.

Commentary by the President and CEO

President and CEO Klas Balkow’s comments on the year-end report for 2022 as follows: «2022 was a turbulent year, to say the least. In a challenging time for households, more and more customers have come to appreciate our offering, and all of our concepts strengthened their market positions. I am proud of how we navigated this market, with a high degree of commitment and with our sights set on ensuring high accessibility of affordable, good and sustainable food. Overall, this has led to Axfood’s retail sales increasing a full 18 percent during the fourth quarter, compared with a growth rate of 8 percent for the food retail market as a whole. The Willys low-price concept reported a record-high growth rate of 23 percent during the fourth quarter, thereby growing three times more than the market.

«Our strong sales growth resulted in an increased operating profit excluding items affecting comparability during Q4-2022. The growth has compensated for our higher costs, primarily the continued price increases by our suppliers that have not yet been fully reflected in consumer prices. The higher share of sales of campaign products, as well as increased costs for fuel and energy, also had an effect on our margin.

«While simultaneously managing the current market situation and higher customer traffic, we also maintained a high tempo and reached new milestones in our investments in the future. After the wholesale conversion last spring, the integration of the acquired company Bergendahls Food was completed during the fourth quarter in connection with the conversion of the City Gross cash register system. The new, larger nationwide warehouse for fruit and vegetables in Landskrona opened during the quarter to further develop and streamline logistics operations. The establishment of the new, highly automated logistics centre in Bålsta also reached a new milestone during the fourth quarter, when the first deliveries from suppliers were received.

«We’re leaving a successful year behind us and starting the new year with a number of proactive initiatives. In 2023, we will speed up the rate of new store establishments further, expanding the store network by an 10-15 new stores, the majority of which will be Willys stores. Investments in 2023 are expected to amount to SEK 1.8 bn to SEK 1.9 bn. Axfood is in a strong financial position, and the Board of Directors will propose a higher dividend of SEK 8.15 per share to the Annual General Meeting, a dividend payout ratio that is in line with previous years.»

Fourth quarter summary

  • Net sales totalled SEK 19,740 m (17,062), an increase of 15.7 percent.
  • Retail sales totalled SEK 15,180 (12,875), an increase of 17.9 percent.
  • Operating profit amounted to SEK 502 m (739) including items affecting comparability of SEK -232 m (86). The operating margin was 2.5 percent (4.3).
  • Adjusted operating profit amounted to SEK 734 m (653), an increase of 12.3 percent. The adjusted operating margin was 3.7 percent (3.8).
  • Net profit for the period amounted to SEK 353 m (608), and earnings per share before dilution amounted to SEK 1.62 (2.90).

Summary January-December

  • Net sales totalled SEK 73,474 m (57,891), an increase of 26.9 percent.
  • Retail sales totalled SEK 55,721 (49,815), an increase of 11.9 percent.
  • Operating profit amounted to SEK 3,101 m (2,704) including items affecting comparability of SEK -129 m (14), net. The operating margin was 4.2 percent (4.7).
  • Adjusted operating profit amounted to SEK 3,229 m (2,690), an increase of 20.1 percent. The adjusted operating margin was 4.4 percent (4.6).
  • Net profit for the period totalled SEK 2,370 m (2,094) and earnings per share before dilution amounted to SEK 11.04 (10.20).

Significant events after the balance sheet date

  • The Board of Directors proposes an increased dividend of SEK 8.15 per share (7.75) to be split into two payments, SEK 4.15 per share in March 2023 and SEK 4.00 per share in September 2023.

Investments and store establishments 2023

  • Investments in 2023 are expected to amount to between SEK 1,800 m and SEK 1,900 m, excluding acquisitions and right-of-use assets.
  • During 2023, Axfood plans to establish 10-15 new stores.