STARK Group back on growth track, delivering increased profit 2017/2018
Today STARK GROUP announced results for the fiscal year 2017/18, showing an organic net sales growth of 3.8% and organic growth in EBITDA of 10.3%.
"In a year marked by a change of ownership, internal reorganisation and the divestment of Silvan as part of the implementation of the new strategy, we are very pleased to report organic growth in three out of four countries while at the same time improving margins and earnings. This is a remarkable achievement" says STARK GROUP CFO Sisse Fjelsted Rasmussen and continues:
"It is satisfying to see that our strategic initiatives to drive profitable growth are working, and in total, we have increased our Nordic market share to around 12% during 2018,"
In reported numbers, STARK GROUP net sales were €2,206 million in 2017/18 against €2,214 million in 2016/17 impacted by currency headwind from the SEK and NOK.
Reported EBITDA rose to €173 million in 2017/18 against €43 million, affected by a one-off gain from the sale of properties no longer related to the on-going business. EBITDA adjusted for one-offs increased to €101 million representing organic growth of 10.3%.
The increase in earnings was driven by improved gross margin reflecting sourcing benefits and better country mix as well as optimisation and streamlining of headquarter functions.
Strong development in Denmark and Sweden
STARK GROUPs largest markets, Denmark (42%) and Sweden (26%), delivered a strong development supported by positive market conditions.
In Denmark, reported net sales increased 1.4% to €924 million while the organic growth was 3.7%. In Beijer Byggmaterial in Sweden, the reported net sales rose 2.5% to €575 million corresponding to organic growth in local currencies of 7.4%.
In Norway, STARK GROUPs smallest market accounting for 6% of total sales and where the 14 branches are operated under the Neumann brand, net sales decreased 6.4% to €144 million, corresponding to a negative organic growth of 1.6%.
STARK Finland, accounting for 26% of total Group net sales through 27 branches, reported a decrease in net sales of 4.3% to €563 million as a result of a management decision to discontinue unprofitable branches and customers in line with the new strategy. Adjusted for closed branches, organic growth was positive with 1.9% in line with the market development.
"We expect to be able to continue the good momentum of profitable growth in the coming year as STARK has a strong standpoint and the overall market development continue the positive outlook even though we begin to see the growth flattening out. We currently see some consolidation taking place in the industry within our region. As a market leader we will have a disciplined approach but naturally explore and consider such opportunities for value creating M&A activities supporting further growth and margin benefits through scale benefits," says Sisse Fjelsted Rasmussen.
Subsequent to year end, STARK GROUP has completed two bolt-on acquisitions in Trelleborg and Stockholm in Sweden, adding total net sales of around €73 million. Beijer Byggmateriel is now the largest player in the greater Stockholm area.