Review by the CEO

Strong start to the year – the record streak continues

Q1 2023, 9 May 2023

The year started strong as an excellent EBIT margin of 7.8% was reached in the seasonally weakest quarter. This is the highest profitability level in the history of the company for this quarter. At the same time, it is the fourth consecutive quarter of improving profitability in both absolute and relative terms. The positive profitability development is due to three main factors, the most important one being the structural changes in our portfolio. The other two factors include the company’s flexible business model, which enables adjusting to a rapidly changing market environment, and the significant scale benefits from central purchases.

Supported by the good profitability development and strong cash flow, we have continued to pay off the debt, and the targeted level of net debt ratio to operational EBITDA was achieved, which is now under 2.5. With a solid cash flow and the excellent result from last year, we also return to paying dividends. Dividends shall be paid in two instalments this year. The target is to continue paying increasing dividends.

The profitable growth strategy, which is based on good return on equity and acquisitions-powered growth, has proven its effectiveness. The market environment is continuously evolving, and the impacts to decision-making are constantly evaluated and reviewed. The higher cost of money sets tougher requirements for the return on equity but, at the same time, the availability of acquisition targets has improved and valuations have decreased to some extent. This enables moving into the next phase of fully implementing growth driven by acquisitions. The higher risk factor, which is always connected to strong growth, can be managed by specifically acquiring companies with strong cash flows in all markets and by being increasingly selective when creating new concepts.

Market demand has remained at a good level. At NoHo Partners, we believe that the cultural transformation in the restaurant market continues and compensates for the pressured purchasing power. The demand in the second quarter is essentially impacted by the weather in spring and early summer. For the remaining part of the year, the outlook is cautiously optimistic. The order book for corporate events looks good for the autumn and the restaurant operations at the Helsinki Expo and Convention Centre will give a significant growth boost in the second half of the year. The fundaments of the company’s balance sheet and performance are solid and we are getting ready to define the targets for the next strategy cycle and continue evaluating growth opportunities in domestic and international markets.

Aku Vikström
CEO, NoHo Partners