Wulff-yhtiöt Oyj - (Workplace products, staffing services, accounting firms, etc.)

[Otto_N]

Now that we’ve received @Olli_Koponen’s fresh company update on Wulff, and I believe the company is in an interesting situation, let’s open our own thread.

Here’s the latest update for those interested, and I won’t bother referring to it any further.

Katseet eteenpäin - Inderes

---

Off-topic, I’d like to mention that Wulff caught my eye and entered my portfolio for monitoring due to an interesting setup. Although I slightly lightened my trading position on Friday, I took some back this morning, now that the market is also starting to wake up. Even though the valuation is slowly starting to correct, the market was surprisingly cautious about the company for a long time and certainly still is.

---

When evaluating Wulff, I used Inderes’ optimistic and pessimistic views as a reference and tried to form my own perspective from them. I’ll include the latest view here, and the one from February before the corona pandemic. As you can see, forecasts have been cut for a reason, but on the other hand, there’s also the potential if the company exceeds these forecasts. I consider this quite possible, especially for next year, but I am cautiously optimistic for 2020 as well.

---

The most interesting part of the company is definitely hygiene products. There’s no information on how their increased sales affect the results. In the first quarter, we already saw a slight improvement in margins, and I hope this trend continues.

I also believe that something that could be called Wulff’s competitive advantage helps in product sales. When going through the company’s materials, long-standing customer and personal relationships often emerge. Some of Wulff’s customers have been with them for decades. I think that the corona pandemic and the increased demand for hygiene products came as a surprise to many companies, and in this situation, a familiar supplier can be used. The annual general meeting materials provide a small sample of Wulff’s partners. Of course, this represents the spearhead, and the story doesn’t tell what kind of service package is involved. In any case, it shows that the customer base is relatively broad. At least I had the impression that the company primarily serves SMEs (small and medium-sized enterprises).

[Otto_N]

Wulff Entre (exhibition business) is getting a new CEO.

https://www.wulff.fi/tiedote/tomi-hilvo-wulff-entren-toimitusjohtajaksi/
Tomi Hilvo, Master of Social Sciences, 50, has been appointed CEO of Wulff Entre and a member of Wulff Group’s executive board starting August 3, 2020. He joins Wulff from the position of CEO of Dingle Oy, a company specializing in digital marketing. At Wulff, Hilvo will lead and create growth and innovate new solutions for the trade fair and event services industry. Hilvo has had a diverse international career; prior to Dingle, he served as CEO of the BtoB event concept company Management Events Oy from 2007-2014. Under his leadership, Management Events grew rapidly in Europe and Asia.

Elina Pienimäki, CEO of Wulff-Yhtiöt Oyj: “Wulff Entre’s strategy aims for profitable growth and internationalization. I am delighted that we were able to get Tomi Hilvo to lead our international trade fair business. He is a passionate reformer who involves people and drives growth, sharing Wulff’s values. Hilvo’s internationalization of a Finnish service concept played a significant role in Management Events’ strong growth. He achieved this growth by leading people and encouraging them to do their best. Hilvo’s experience and expertise complement both our group’s executive board’s knowledge and Wulff Entre’s team of professionals.”

Tomi Hilvo: “Restrictions due to the coronavirus have changed the behavior of people and businesses. The threshold for people to meet on digital platforms has lowered, and trust in quality interaction through digital tools has significantly increased. At the same time, the uniqueness, significance, and value of face-to-face meetings are understood even better. The best operators will offer their customers both the highest value physical encounters and various innovative hybrid solutions in the future, and we are developing such solutions as well. Wulff Entre’s team is an enthusiastic and idea-rich group of top professionals. When there is a strong desire to succeed and serve customers, it is possible to grow and create new things even in challenging conditions. It is wonderful to start work in August in this industry, in this company, and with these people.”

---

An interesting appointment because by chance I just answered a Messukeskus (Exhibition Centre) survey regarding autumn trade fairs and the coronavirus. The same survey also inquired about virtual trade fairs.
I myself am somewhat of the opinion that it could certainly work in some fields, but by no means in all.
On the other hand, didn’t some entity successfully organize virtual general meetings as well

Wulff definitely has good things going on. I somehow have the feeling that they won’t dwell on the current situation and wait for it to pass. Instead, they will adjust their product mixes accordingly and possibly start offering customers other possibilities besides traditional trade fairs in their exhibition activities.

Companies like Wulff probably always have something to prove to the market, and thus the multiples remain low. Now, however, I think Wulff has a management that could perhaps also change the company’s profile in the eyes of investors.

[Fisu]

Who will admit to digging up loose change from the bottom of their pocket and destroying an iceberg?

[Torniojaws]

Wulff’s stock is almost at buying prices again I bought it once at €1.39 and the dividends have been quite good, with a nice return of around 6%. Especially if they make a move next spring and pay a dividend of €0.130 for 2020, as this year is their 130th anniversary.

[Otto_N]

Suurimmat omistajat

Wulff’s largest owners, and no major changes. It’s perhaps noteworthy that Varma left itself a pot of about 67k. My own assessment of Varma’s sales is that management was aware of them and perhaps were ready to buy the entire pot if needed. However, Wulff’s free float is so small that it’s difficult to get such a large amount onto the market. Varma is also a Wulff customer, so it’s good if they remain owners as well.

Currently, the price has settled around €1.5, and I’ve always added a little on dips. Q2 will undoubtedly be quiet for trade fairs, but that shouldn’t come as a surprise to anyone. I’m more interested in whether margins have improved with hygiene products and how demand has generally been met. Or rather, how products have been sold to existing customers.
Regarding trade fairs, various variations can also be seen for the autumn. At least from the comments of the new head of the trade fair division, it was perceptible that Wulff would also be ready for those. Here, as an owner, potential additional sales are good, which at least previously improved the margin.

[Otto_N]

Wulff has apparently also expanded into food products. Beverages, bars, etc. have been available before. It’s starting to look like quite a general store Well, I kind of expected that trend when Lauri Sipponen joined the board.

[SijoitusSeppo]

Wulff issues a positive profit warning, stock price surges by approx. +20%
https://www.wulff.fi/tiedote/wulff-nostaa-arviotaan-koko-vuoden-2020-liiketuloksesta/

EDIT: A bit disappointed I didn’t get it into my portfolio. This was already on my watchlist, but since 100% is already invested in stocks, I would have had to sell something to get this one.

[Otto_N]

@SijoitusSeppo already sent out a positive earnings warning. What a great performance from Wulff! I kind of expected a positive earnings warning, but I wasn’t entirely sure how the Q4 fairs would affect it. It was a really big surprise that they were able to give a positive earnings warning already now, when a fairly large part of their business, i.e., fairs, is practically on hold.

Here’s a bit of reflection on hygiene products and Wulff as their seller. I copied this from the opening of the thread:

@Otto_N

Definitely the most interesting part of the company is hygiene products. There’s no information on how their increased sales affect the result. In the first quarter, we already saw a slight improvement in margins, and I hope this trend continues.

I also believe that the sales of these products are helped by something that can be called a competitive advantage for Wulff.
When you go through the company’s materials, long-standing customer and personal relationships come up in many places. Some of Wulff’s customers have been with them for decades. I personally think that the coronavirus and the increased demand for hygiene products came as a surprise to many companies, and here they can use a familiar supplier.
The annual general meeting materials provide a small sample of Wulff’s partners. Of course, this is the cream of the crop, and the story doesn’t tell what kind of service package they are involved with. In any case, you can see that the customer base is relatively wide. At least I had the impression that the company mainly serves SMEs.

The company has apparently indeed received sales for hygiene products thanks to long customer relationships, and otherwise, from what I’ve followed Wulff’s operations, they have responded very well to demand. If there are heatwaves, they sell fans; if it’s berry picking season, they sell buckets, etc.

It will be interesting to see how things progress. The demand for hygiene products is unlikely to decrease as long as there is coronavirus. Fairs will surely start gradually with certain restrictions. If Wulff continues to perform in the same way, this will provide good support for next year.

[Otto_N]

I added a bit of Wulff at 1.82.
For the company, Q2 and Q4 are the two important quarters for trade fairs. Now, a positive earnings surprise was given, even though Q2 is practically lost and there is considerable uncertainty regarding Q4.
In other words, the company must have a really good visibility after H1 on how hygiene products are selling/what contracts have been signed.

The same can surely be said about the other threat that is brought up regarding Wulff, namely remote work.
I personally don’t believe this is as big a threat to Wulff as perhaps thought. First of all, contracts are on average 3 years long. Although remote work will certainly increase, I suspect that here too it will be noticed that working at the workplace has its advantages for the company (group dynamics, etc.). And so, I don’t believe this will cause Wulff significant customer attrition.

Well, but these are just my own reflections with a relatively big disclaimer. Let’s wait for @Olli_Koponen’s company update.

[Otto_N]

Tuloskasvua koronasta huolimatta - Inderes

[Otto_N]

Hi @Olli_Koponen

I don’t know if you had an interview scheduled with Wulff CEO Elina Pienimäki in connection with the earnings release, but I have a few questions (of course, if you yourself feel it’s necessary to bring these matters up).

The first relates to Wulff’s strategy to grow also through acquisitions. The company bought its own shares in the spring, and the release also referred to acquisitions.

My question is whether Wulff is aiming for an acquisition or what is happening on that front in general.

My second question relates to Wulff Entre.
A new CEO was appointed for Entre, and the release mentioned various possibilities for organizing trade fairs. The release seemed to talk about so-called hybrid models, and I understood that it could be, for example, virtual trade fairs or similar. (The release was probably linked a bit higher up in this thread.)

The question is whether there has been demand for such services among customers and what Wulff’s role would be in the concept. Of course, I’m also interested in the overall outlook for trade fairs.

In addition, a question about Hygiene products. How is demand distributed, and what proportion comes from contract customers and what from other customers, for example, through https://www.wulffinkulma.fi/?

Thank you,

[Olli_Koponen]

Hi and thanks for the good questions.

There is no official interview scheduled now, but I will try to ask as best as I can.

Regarding acquisitions, companies rarely comment before they happen. These are usually actively sought, but rarely is more information extracted from this.

For trade fairs, different implementation models are certainly being sought, and hybrids refer precisely to a combination of virtual and traditional fairs. However, these are very much dependent on the industry for which the fairs are organized. Something about the prospects for trade fairs is probably already mentioned in the report, but this is certainly the biggest question mark at the moment.

[Otto_N]

Ok, thanks.

Yes, acquisitions are rarely commented on. The idea here was that sometimes one can try to deduce something even if a direct answer is not obtained

The biggest question is indeed related to trade fairs. On the other hand, the fact that a positive profit warning was issued at this stage tells me something.
Either that there is a fairly good view of the trade fairs and/or the company has practically opened up a new market (hygiene products), and the weakness in trade fairs this year does not weigh much.
I have thought that trade fairs are a fraction of normal this year, but hygiene products will provide good support for profitability next year, just as you wrote in the latest report.

Well, on Monday we will be a little wiser.

[Otto_N]

Wulff Q2: Kaikilla mittareilla hyvä tulos - Inderes

Revenue did exceed my (and Inderes’) forecasts.

[Pohjolan_Eka]

@Otto_N

Revenue did exceed my own (and Inderes’) forecasts.

The company issued a negative profit warning in March, and then when this negative warning did not fully materialize, they had to issue a positive one. This strong result might have surprised them as well.

[Otto_N]

I thought it was completely clear after Q1 that Wulff’s hygiene side was pulling its weight and improving profitability. This was certainly clear to management, judging by the share purchases.
My own thought on why I got involved with Wulff was that a practically new market opened up for the company. The company was also well-positioned for the situation when a need arose for existing customers.

However, I have now disengaged from Wulff, at least for a while.

[Pohjolan_Eka]

@Otto_N

In my opinion, it was clearly visible after Q1 for Wulff that the hygiene segment was doing well and improving profitability. This was surely clear to the management, judging by their share purchases.

Now, looking closer at the timeline, a negative profit warning was issued at the end of March, and at the end of April, the negative outlook was confirmed in the earnings report. Management purchases began immediately after the earnings report, and only after the insider purchases had been completed was it “noticed” that the interim report’s forecast was completely wrong, leading to a positive profit warning. In between, a share buyback program was also started and stopped. This looks like a fairly typical case of corruption, sometimes seen in smaller companies. If it was clearly visible after Q1 that the result would be this strong, a profit warning should have been issued immediately.

[Rahaviisas]

Management probably has an almost real-time view of that sales improvement. Insider information should be disclosed immediately without delay. These always look pretty outrageous in hindsight.

I personally followed management’s purchases and now sold them without much analysis.

[Otto_N]

Yes, it’s really difficult for an outsider to assess at what point visibility has been good enough to take a stand on it.

Now we’ve seen a lot of “positive surprises” because for many companies, the market environment was seen as much more negative in March than it is now. I would be surprised if the same trend didn’t continue this earnings season.

[Peesari]

I just read Wulff’s earnings report almost word for word, and having followed the company for a longer time, I dare to disagree with you. First of all, the previous Q1 earnings report was published right in the middle of the worst corona crisis. At that time, world markets were -30% and everything seemed to be collapsing. For example, the exhibition business was described as follows:

“The demand for the services of Wulff Entre, which provides contract sales, planning, and project management for international exhibitions, has decreased due to the corona situation. Exhibitions have been postponed and canceled. This weakens the Wulff Group’s comparable operating profit in 2020.”

In addition, the significant MWG exhibition in Barcelona had just been canceled. Wulff’s stock was also historically very cheap at that time (1.37 EUR). There was certainly a great upheaval within the group at that time.

“The company acquired new suppliers, products, and sold hygiene products suitable for exceptional circumstances and needed by customers. A significant portion of the second quarter’s net sales came from hygiene products.”

Finding hand sanitizers and masks, having read about the infamous mask deals, was certainly not an easy and certain process. Amidst this turmoil, management bought historically cheap shares while Varma dumped them on the market.

In addition, according to the latest earnings report, the company has saved 0.7 million euros in personnel costs (e.g., due to temporary layoffs). These are also quite significant figures as they directly affect the bottom line.

If after Q1 the company had known that the Q2 result would be this strong, the company would have needed quite a gift for prophecy. Wulff’s positive earnings warning was issued at exactly the same time as all other earnings warnings on the Helsinki stock exchange. Most likely when the Q2 figures came out.

Furthermore, it is still not certain (though probable) that Wulff’s result will exceed the previous year’s result.