CEO’s review: January-June 2024

“The first half of 2024 was moderate for Wetteri in a historically difficult market situation that turned out weaker than expected. As a result of mergers and acquisitions, the Group’s net sales increased by 42 percent from the previous year and amounted to EUR 275.7 million. Adjusted EBITDA settled at last year’s level at EUR 10.8 million. Adjusted operating profit decreased from the corresponding period last year and was EUR 3.2 million. During the review period, Wetteri’s performance was affected by the difficult market situation, general economic uncertainty and weak consumer confidence. After the review period on 23^rd August, Wetteri updated its financial guidance for 2024 due to the temporal transfer of the profit and turnover effects of the planned new acquisitions, as well as the weaker-than-estimated market situation of new cars.

In January-June, Wetteri’s net sales increased in all segments, most significantly in the passenger cars segment, whose net sales increased by 53 percent from the corresponding period of the previous year and amounted to EUR 186.0 million. The number of used cars invoiced increased by 85 per cent from the previous year. The soaring growth is possible by Wetteri’s self-sufficiency in used cars: for every new car sold, Wetteri gets a used car in exchange. Wetteri’s high-quality and versatile range of replacement cars can respond well to market demand. The order backlog of new passenger cars at the end of the review period was EUR 36.5 million. The profitability of the passenger car business was weakened by the costs related to mergers and acquisitions as well as financial expenses. The turnover of heavy equipment increased slightly from the previous year’s January-June and was EUR 38.6 million. 72 new trucks and 176 used trucks were invoiced. In January-June, the turnover of maintenance services increased by 47% to EUR 49.3 million.

There is a playoff going on in the automotive industry. The market situation is as weak as in the recession of the 1990s, and the transformation of the industry has forced many operators to choose between closing the business and selling it. Importers reorganize their dealer networks and centralize representations to the largest operators. Consolidation will continue, because in the automotive sector, size is strength. It is estimated that in three to five years there will be only a few companies trading in new passenger cars in Finland. The automotive playoff is a key driver of Wetteri’s growth, and the company continues to purposefully implement its growth strategy.

In the spring, Wetteri launched an efficiency program to improve profitability and save costs. The program includes measures, for example, to reorganize operations and improve the efficiency of administration. With regard to the premises, the possibilities for combining functions have been studied and the use of the premises has been enhanced. The use of labour has been adjusted with various measures. Annual savings of EUR 4 million are sought. It is clear that the improvement in profitability resulting from acquisitions will not occur in a short period of time, but Wetteri is determined to take all the necessary steps needed to realise the synergy benefits. Thanks to the acquisitions that Wetter has already implemented, the company has grown into a nationwide automotive operator with an extensive service network and even stronger multi-brand expertise. The nationwide presence makes Wetteri an interesting partner for importers, as evidenced by the addition of new brand representations during the past year. Multi-brand representation is a major contributor to organic growth.

The forecast for new passenger car registrations in 2024 has been lowered from about 80,000 to 75,000 passenger cars, which is significantly below the long-term average. In last few years, the Finnish car fleet has aged, and now there is a great need for its renewal: emission reduction targets will not be achieved with the current car fleet, in addition, modern equipment is needed improve to traffic safety. In the coming years, the car market has accumulated pent-up demand and strong organic growth potential. Increased availability of new cars is likely to increase demand. In the automotive sector, demand for new cars is expected to pick up already during the rest of the year. Moderate growth has been seen in both the European and domestic automotive markets. The automotive industry predicts a growth of about 10% in the new car trade next year.

This year, Wetteri has continued to promote its growth strategy, and the focus has been on heavy equipment. In early 2024 Suur-Savon Auto and Suvanto Trucks Oy became part of Wetteri. With Suvanto Trucks, Wetteri gained know-how in the purchase of van trucks as well as procurement channels. In May, Wetteri signed the first import and resale agreement in its history with Sany earthmoving machines. In June, the company strengthened its heavy equipment business by acquiring Lahden Rekkapaja Oy, which specializes in truck superstructures, and by opening exchange truck sales points in Joensuu and Kuopio. In late summer, we opened a used car centre in Vantaa in accordance with the Wetteri Premium concept, which allows us to meet the growing demand for high-quality exchange cars in the Helsinki Metropolitan Area. Wetteri’s position is strong in a market that is turning to growth.”