New Wave Group AB reported a profit against a loss in the first quarter. Sales grew 12 percent in the first quarter.

New Wave Group, based in Kungälv, Sweden, owns a wide range of apparel brands, including Craft, Cutter & Buck, Ahead, Orrefors, and Kosta Boda.

First-quarter highlights:

  • Net sales amounted to SEK 1,261.6 million, which was 12 percent (7 percent in local currencies) lower than last year (SEK 1,440.9 million);
  • Operating result amounted to SEK 100.1 (-24.1) million;
  • Result for the period amounted to SEK 67.7 (-36.9) million;
  • Earnings per share amounted to SEK 1.04 (-0.54);
  • Cash flow from operating activities amounted to SEK 367.2 (114.6) million;
  • Equity ratio amounted to 56.9 percent (46.8 percent); and
  • Net debt to equity ratio amounted to 37.3 percent (74.6 percent).

Comments from Torsten Jansson, CEO, are as follows:

Yet Another Record Result
Despite that the pandemic has continued and that several countries have had hard restrictions, we deliver a new record result in the first quarter. COVID-19 means that several of our businesses keep experiencing problems due to canceled events, basically no activities for clubs and associations, elite sports without an audience, lack of conferences and kick-offs etc. This lead to decreased net sales, but we still delivered a fantastic result.

Net sales decreased by 7 percent in local currencies (12 percent in SEK) to SEK 1,261.6 million. We saw a continued recovery in the US and Canada. Sweden also had a strong development while the rest of Europe continued to lose sales, except Southern Europe which experienced growth.

Operating Result
Thanks to a continued significantly lower cost level and a very strong gross profit, the operating result increased by SEK 124.2 million compared to the previous year and amounted to SEK 100.1 million. It is also interesting to compare with the first quarter of 2019 when the operating result amounted to SEK 46.0 million. This was the highest result we have ever had in the first quarter – and now we doubled it in the first quarter of 2021. The highest operating margin we previously had in the first quarter was 3.4 percent and this also more than doubled to 7.9 percent, a new all-time high for the first quarter. I am also glad that all our operating segments improved their results.

Operating Margin Rolling 12 Months
The operating result for rolling twelve months’ amounts to SEK 670.2 million and net sales to SEK 5,919.4 million, which shows a continuing rising operating margin now amounting to 11.3 percent.

Balance Sheet and Key Figures
The balance sheet has continued to strengthen and is today very strong. The equity ratio amounts to 56.9 percent and the total equity of the Group exceeds SEK 4 billion. Net debt to credit institutes has in one year decreased by SEK 1,369.6 million, from SEK 2,145.5 million to SEK 775.8 million. Net debt/EBITDA, a key ratio I do not really think fits in at all with New Wave Group since we can always create large cash flows quickly, now amounts to 1.0 (excluding leasing). Net debt in relation to equity is down to 37.3 percent. These are all incredibly strong numbers that we are proud of and they give us great comfort and large maneuvering space for the future.

The Future
In the short term, it is still hard to predict and much is dependent on the development of the pandemic, vaccination rates in different countries as well as, if and when restrictions and recommendations can be relaxed, for example, let audiences return to sports and events. However, we expect it to be more relaxed during the third and fourth quarters, but the second quarter is still hard to assess due to restrictions, lock-downs and recommendations.

When the pandemic has decreased, we will have high organic growth and we enter that phase significantly more efficiently and with lower costs. During the pandemic, we have seen how strong our brands, products and companies are and the fact that we also have a strong balance sheet and management resources for new acquisitions, if the right object appears, does not make the future prospects worse.

A good example of the Group’s strong brands is the fact that Craft, during April, has signed a five-year contract with the Norwegian Ski Federation, meaning that the skiers of the world’s most successful national cross-country ski team will race and train in Craft apparel as of 2022.

Finally, I would like to both praise and thank our employees and organization that did a terrific job during 2020 – and have started 2021 even stronger! Thanks!

Photo courtesy New Wave Group