Interim report January - June 2016

SUMMARY FOR THE SECOND QUARTER, 1 April - 30 June 2016 1)

● Revenue increased 3 per cent to SEK 1,573 M (1,527). Excluding the acquisition
of Opus Equipment, revenue rose 1 per cent. Adjusted for currency effects and
calculated on the comparable number of workdays, revenue increased 3 per cent.
Sales in comparable units rose 6 per cent.
● EBITA amounted to SEK 189 M (224) and the EBITA margin amounted to 12 per cent
(15).
● EBIT amounted to SEK 161 M (197) and the EBIT margin amounted to 10 per cent
(13). MECA’s export business to Denmark had a negative impact of SEK 4 M (neg:
10) on EBIT. EBIT was negatively impacted by non-recurring effects of SEK 9 M
(neg: 1), of which SEK 7 M (0) impacted the gross margin.
● The gross margin amounted to 53.6 per cent (54.7).
● Earnings per share, before and after dilution, amounted to SEK 3.02 (3.74).
● Cash flow from operating activities rose to SEK 228 M (137), of which
discontinued operations comprised a negative SEK 2 (neg: 45).
● Net debt at the end of the period amounted to SEK 1,684 M (1,841), compared
with SEK 1,626 M at year-end.

1) During the first quarter of 2015, the last two stores in Denmark were
discontinued and the Danish store operations are presented in the 2015-2016
interim reports according to the rules on discontinued operations in IFRS 5. The
Danish store operations were previously included in the MECA segment. With the
exception of cash flow and net debt, all amounts pertain to continuing
operations.

CEO’s comments

The Group continued to grow but the result was burdened by Mekonomen Sweden

The result in the second quarter did not meet our expectations, mainly due to
weak profitability in Mekonomen, while MECA and Sørensen og Balchen had a good
development in the period. During a period characterised by reorganisation and
system changes, Mekonomen Sweden lost revenue and market share and reported a
weak gross margin. A package of measures is launched to increase sales and
reduce costs. The weakened NOK has also contributed to negative effect on the
Group’s profit in the quarter. EBIT for the quarter was SEK 161 M, compared with
SEK 197 M in the second quarter 2015.
We see potential for a growing overall market. For Mekonomen Group, the main
potential for a stronger market is linked to a growing fleet of cars aged three
years and older when the cars enter and become part of our core business model.
The growing fleet of cars and completion of changes initiated in Mekonomen
Group, particularly those linked to the Swedish operations and the announced
group-wide structure projects, provide a solid platform for future profitable
growth.

Favourable underlying growth
Mekonomen Group’s total sales rose 3 per cent in the second quarter. Sales in
comparable units increased 6 per cent, primarily driven by sales to affiliated
workshops. The sales development was particularly strong in MECA’s Swedish and
Norwegian operations. Sales of spare parts from our proprietary brand ProMeister
continued to perform positively during the quarter.
Mekonomen Sweden affected by organisational changes
The work with the organisational change and the new store data system, initiated
at the end of 2015, has not produced the desired effect. This work has taken
much energy and negatively impacted sales, resulting in Mekonomen Sweden
reporting negative underlying sales growth for the quarter. Now we take powerful
action to deal with the changes that we want to implement. We are convinced that
the new working methods of increased local responsibility and presence among
customers is the right model for the future with the aim to increase the sales.

In parallel with the completion of the organisational change, we also implement
an efficiency and cost-rationalisation program for Mekonomen Sweden which is
expected to generate annual savings of SEK 25 M from 2017. The cost of the
program is expected to have only a marginal impact on EBIT for 2016.

Reduced loss in Denmark
Our focus to cost efficiently driving increased sales in Denmark continued and
the loss in the second quarter fell to SEK 4 M. The loss has more than halved
since year-end 2015 but it is never satisfying with a loss and we are working
impatiently ahead with turning the business.

Focus on profitable growth and innovation
In the second half of 2016 is the growth continued our most important focus area
and we see the greatest potential for increased sales in our core business with
workshops and other B2B customers. Prioritised is also the implementation of the
saving program in Mekonomen Sweden and in longer term the efficiencies to be
achieved with the new central warehouse structure.
In Sweden, personal car leasing have had a strong development and the automotive
industry itself believes that the proportion of personal leased cars, as part of
new car sales, can be as much as 50 per cent by end of the year. Thus, Mekonomen
Group chooses becoming the first player in our industry from the independent
side to launch our own offer directly to end users, Mekonomen Car Leasing.
I have great reliance to Mekonomen Group is on track with the ongoing change
process and in combination with favourable market conditions going forward, I am
confident about the future.
Magnus Johansson

President and CEO

For further information, please contact:
Magnus Johansson, President and CEO, Mekonomen AB, tel: +46 (0)8-464 00 00
Per Hedblom, CFO Mekonomen AB, tel: +46 (0)8-464 00 00

This information is information that Mekonomen AB (publ) is obliged to make
public pursuant to the EU Market Abuse Regulation and the Securities Markets
Act. The information was submitted for publication, through the agency of the
contact person set out above, at 07:30 a.m CET on 26 August 2016.