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Investment Drives Further Sales Growth at Nepa

September 4 2017

In an interim report, Stockholm-based research firm Nepa has announced net sales up 9.4% in the second quarter to SEK 55.0m (US$6.91m) and up 16.7% in the first half of 2017 to SEK 106.1m (US$13.33m). Planned investment dragged on profitability as the company seeks rapid growth.

Fredrik ÖstgrenAlthough gross profit increased by 11.5% in the first half to SEK 77.2m, heavy investment in growth dragged EBIT down to SEK -12.1m in the first half (from +3.6 a year earlier) and SEK -7.4m in the second quarter (+5.6). First half EPS was -1.82 (from 0.22 a year earlier).

Nepa says the second quarter saw its selection as the first non-US-based partner in Facebook's MMM Partner Program - giving it direct access to detailed data on all advertising campaigns on Facebook, Instagram and Audience Networks. Leadership was strengthened with the appointments of former Ipsos Loyalty USE COO Ken Peterson as MD for Nepa USA; and former dunnhumby CEO Simon Hay and Babson College, Boston Professor of Marketing Anne Roggeveen as board members.

The firm has also (in August) launched a new version of its ActionHub platform, which merges behavioral data and customer feedback data to help clients 'turn the voice and the footprints of the consumer into financial KPI's and provide it to the right stakeholder in real-time'. The platform now covers the entire customer experience, says the firm, and makes data driven marketing available 'for personnel working close to the customers'. New features include closed-loop-feedback for store managers and department heads on customers who have had a negative store experience; an 'Outside draw' application helping store managers to understand how to attract consumers from local competitors; a real-time user experience dashboard; and marketing mix modelling using the data from Facebook.

Meanwhile Nepa's sales representation in the USA has expanded to to Miami, FL and Denver, CO. In addition to the States it has a local presence in Denmark, Finland, India, Norway, Sweden and the UK.

CEO Fredrik Östgren (pictured) cites strong 2016 comparatives, and substantially higher personnel costs due to planned investments in the firm's product organization, US and UK offices, as reasons for the negative earnings figures, but states: 'we show increasingly strong net margins on the Swedish market and client orders during the late summer are back to normal'. He adds: 'With several new product updates we are now in an exciting and intense sales period equipped with an enhanced product offering'.

In March, Nepa reported a 'fantastic year' in 2016 in which net sales grew 19.4% to SEK 184.4m ($US 20.6m). Sales increased steadily through the four quarters of 2016 - and have risen every quarter since 2006. Sales growth was especially strong in Finland (+37%) and the UK (+31%).

The company is online at www.nepa.com .

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