I am opening a dedicated forum thread for Martela here. We have the honor of organizing a fully virtual Annual General Meeting (AGM) with Martela, where the temporary act’s pre-meeting procedure will not be applied; instead, voting and the right to speak can be exercised directly via the live webcast So, if you are a shareholder, be there or be square!
NOTE! The right to participate in the meeting belongs to shareholders who are registered in the company’s shareholder register on March 8, 2021.
This company has had tremendous interest. As a potential turnaround company, Martela would be interesting if the company could get its act together and turn a profit, even if just barely, with the help of efficiency improvements and the receding of the pandemic. The current stock price, however, is a bit too high for that.
A new extensive report on Martela was published today, which you can read here:
Indeed, the foundation has been laid for an earnings turnaround, but it still requires revenue growth. In the private sector, there were signs of demand recovery in Q2, but Martela’s business is known for its poor forward visibility. The company has a chance to prove itself in H2. Earnings will grow rapidly if revenue recovers, but in our opinion, the reward/risk ratio remains too thin due to the high-risk profile.
Why doesn’t Martela have an online store? At least in our company, we don’t have time to wait for some furniture consultant’s coffee breaks just to get the basic office needs sorted.
It’s the same for private customers. Many seem to appreciate Martela, but buying is made unnecessarily difficult. It feels like they don’t even want to sell goods to private customers.
Streamlining the sales process would also save working hours for Martela.
Well, that was an interesting piece of news that certainly surprised me.
Isku Interior is a direct competitor to Martela, so from an investment perspective alone, this move seems surprising.
Our morning report has more comments on the matter.
Let’s revive this potential turnaround company (or rather, its thread) a bit. At the current share price, P/B is 1, P/S is 0.11, and the partial explanation for the earnings turmoil (but only partially, as it was in the red even before) by the coronavirus crisis is appealing in light of the numbers.
Isku’s cornering of the market was an interesting move. Both have suffered during the coronavirus crisis, but Isku’s finances, based on Finder’s data, seem to be on a fairly stable footing. Could Martela + Isku together potentially be much more than separately? I would say probably? At what price would the current owners be willing to sell? No idea.
I have an image of Martela (I have not used/bought their products) as a company that makes quality products, but whose marketing is non-existent.
I personally bought a small position in Martela during the tax-loss selling week because I see great potential for the company if marketing can be improved. The option of a possible takeover by Isku is attractive. However, the risks are significant, and for example, a share issue is possible, so my own position is small - only 1.5% of the portfolio.
The turnaround is progressing nicely. The company’s market value, which has been suppressed to approximately 13 million, will likely exceed 100 million this year. Profitability is improving. Once the balance sheet is further strengthened, things will be good.
We are indeed at an exciting point with the stock. The cost structure has been trimmed and operations streamlined, so if revenue can be pushed back above EUR 100 million, profitability will significantly improve.
The guidance of over 10% revenue growth is certainly a strong statement for the current year. The CEO has recently changed, so at this stage, it’s not yet known how cautious/optimistic the approach to guidance will be.
The latest report has just been published and is available for premium members. As usual, the report summary will be available for everyone to read in tomorrow’s morning briefing. A video might also be in order tomorrow
I immediately mixed up the realized operating profit from memory with the forecast and realized profit before tax. Well, mistakes happen to those who do things
@Thomas_Westerholm good analysis of Martela. Because of this cornering of Isku, I became more interested in this turnaround. When one looks at Ikea’s turnover and profit and compares it to the combined Martela + Isku, it’s almost half smaller?
In the company’s last financial year 08/2021, IKEA Oy had a turnover of EUR 380,601,000 and a profit of EUR 16,045,000. The company’s net profit margin was 4.2%.
Source: Kauppalehti
The turnover of Isku Interior Oy (1831497-2) was 87 million euros in 2020 and it employed 443 people. Turnover decreased by 13.1%. The operating loss was -5.2 million euros and the operating profit margin was -6.0%. The company’s equity ratio was 28%.
Source: Asiakastieto
When you combine Martela’s ~€100m forecast with that, it clearly falls behind market leader Ikea. Why would the competition authority interfere with that?
Hello @BWM
You are absolutely right that the combined entity would still be a clearly smaller player than IKEA. In such a situation, the million-dollar question is how competition authorities define market shares. Companies certainly order from IKEA as well, but the company’s focus is primarily on consumer sales. If consumer sales are included as part of the target market relevant to companies, this would certainly not cause problems. On the other hand, if market shares are viewed from the perspective of work and learning environments, the story is quite different. Below is a screenshot from Martela’s 2017 annual report.
Based on that, IKEA would satisfy a rather moderate share of the Finnish office and public furniture market. Is my assessment too cautious regarding the possibility that the FCCA (Kilpailu- ja kuluttajavirasto) could become difficult based on this? Perhaps. But a definition narrower than the overall market size, for example, scuttled the Pihlajalinna-Mehiläinen merger when the FCCA examined it through the market size of private healthcare, not the entire market.
Regarding the corner, it is also good to emphasize that nothing will happen against the will of the Martela family, as they still have a clear majority of votes through the K-shares with a higher number of votes.
Absolutely, and comparing it to the aforementioned merged company is, at best, like comparing apples to hazelnuts. As a result of lower barriers to entry, the market economy normalizes excess profits more easily in this market. The point, however, is that I don’t think KKV’s (Finnish Competition and Consumer Authority) interpretations and decisions should be taken for granted.
Refueling continues.
Isku-Yhtymä Oy’s ownership in Martela Oyj’s shares exceeded the 10 percent flagging threshold as a result of share trades made on March 10, 2022.
January-March 2022
Revenue was EUR 27.0 million (19.9), change 35.9%
Comparable operating result was EUR 0.1 million (-1.4)
Operating result was EUR 0.1 million (-2.0)
Operating profit margin was 0.4% (-10.1%)
Result for the period was EUR 0.0 million (-2.3)
Earnings per share were -0.01 euros (-0.56)
Outlook for 2022
Martela Group's full-year 2022 revenue is estimated to grow by more than 10% from the previous year, and the operating result is expected to be positive.
So, if you are a shareholder, be there or be square!
