Nepa to 'Shift Focus from Growth to Profitability'

Stockholm, Sweden-based brand tracking and consumer science specialist Nepa has reported net sales up 10.7% (constant currency) in the fourth quarter of 2019 and 7.5% in the full year; but also an increased loss (EBIT) for both periods - a statistic its new CEO is determined to change.

Net sales in the fourth quarter were SEK 70.5m ($US 6.8m), and gross profit increased 6.1% (constant currency) to SEK 54.0 ($US 5.23m), while EBIT was SEK -5.3m ($US 0.51m). For the full year, net sales were SEK 263.1 ($US 25.5m) gross profit SEK 202.0 ($US 19.6m) and EBIT losses rose 72% to SEK -22.9m ($US 2.22m).

During the fourth quarter, the company moved its global marketing function from the US to Sweden, and its Norwegian operation was combined with that in Sweden; while P-O Westerlund was appointed as CEO, Ann-Christine Fick CFO and Michael Wallin in the new role of Head of Investor Relations.

Westerlund says the organisation was 'set-up for a higher growth rate than we achieved', with Q4 specifically 'burdened by costs aiming at simplifying our organizational structure and adapting our cost base, for example by downsizing the US operations and by combining the Norwegian and the Swedish organizations'. He continues: 'Since I took over as CEO at the end of January this year, we have shifted focus from growth to profitability. We will, of course, continue to grow, but this will be done with profitability'. Costs will be reduced by SEK 11m as a result of measures taken in the light of the Covid-19 threat, including terminating contracts for employees on probationary period, 'radically' reducing the number of consultants, and agreeing a salary cut of 20% for group management.

Westerlund says he is 'determined to achieve the goal that Nepa will be profitable this year', and intends to be more 'investor-friendly', with gradually increased transparency in financial reporting. The latter includes the immediate introduction of new segment reporting, which breaks down figures three ways: by revenue type, solution and country. The last of these shows that Sweden accounts for 64% of net sales, while Finland provides 13% and the UK is the fastest growing region with an increase from 10% to 12% of the total during the year. Westerlund concludes: 'If we try to look beyond the current Corona-related concerns, Nepa has a fantastic potential to show both growth and profitability in the years to come. I look forward to leading the company to deliver our potential'.

Web site: www.nepa.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.