Nepa Makes Headway on Profit Goals

Stockholm-based brand tracking and consumer science firm Nepa has announced net sales up 3.8% (constant currency) in the first quarter to MSEK 69.4m ($US 7.4m), with EBIT loss slashed from MSEK -3.3m to just -0.3m. The company has also moved quickly to off-set possible damage from the pandemic.

Gross profit increased by 1.6% (constant currency) to MSEK 52.2, while earnings after tax moved into the positive at MSEK 400k (previously MSEK -3.6m).

Nepa has offices in Norway, Finland, Denmark, the UK, the USA and India and helps clients to improve customer experience, marketing and sales. This quarter saw P-O Westerlund appointed as CEO on January 26th, Ann-Christine Fick as CFO; and Michael Wallin as Head of Investor Relations. The firm was chosen to provide lifestyle and clothing brand GANT with brand tracking in all its major markets; and has taken a number of steps to address costs due to the pandemic, including termination of employees under probationary period, termination of consultant contracts, and salary reductions of at least 20 percent for group management. Since the end of March, more than 120 employees in Sweden and Finland have reduced working hours while a number in Sweden have been made redundant; and Nepa Finland has received a grant from government agency Business Finland to cover parts of salary costs.

Westerlund (pictured), who said last month that the firm had 'shifted focus from growth to profitability', notes that Q1 earnings before and after tax were both positive for the first time since 2017, stating: 'It is the 56th quarter in a row that we are showing growth, but for the first time ever personnel costs fell, by 2.8% in the quarter - the overall decrease will be much larger in Q2. The decrease is a result of the increased focus on profitability that applies from this year'. Covid-related cost-cutting measures are expected to reduce costs by approximately SEK 35m on an annual basis from Q2, but Westerlund says the company is 'well prepared to take further action if necessary'. However, he points out that Nepa has around 60 percent of its revenue recurring based on long-term contracts, giving confidence for the long-term; and believes that with life returning to a new normal and not the old, 'the need for support in decision-making should increase, which gives me reason to have a positive view of how demand for our services should develop'.

The company is online at www.nepa.com .