Rosendahl Design Group A/S Annual Report 2023 • Management’s Review Development in Activities and Finances 2023 proved to be a year that, in essence, followed the downwards tendencies of the second half of 2022. The entire year of 2023 was heavily influenced by the effects on the global economy following first the continuance of the Russian aggression in Ukraine and later the intensified conflict between Israel and Hamas in the Middle East. Conflicts with enormous impact on the International trade and supply chains, and which have both directly influenced important financial factors such as inflation, rising interest rates, currency stability, and consumer behavior. For Rosendahl Design Group, heavily increased interest rates have had a significant effect on this years finacial result. The same applies to currency fluctuations – not least the rising dollar against the fall in Norwegian and Swedish currencies, creating a perfect storm between our purchase currency and our billing currency. At the end of the year, increased freight rates and delay on goods have incurred as a result of the Huthi attacks in the Red Sea. Closer to home, consolidations, store closures, and bankruptcy among retail customers in core markets continue to influence turnover in the Scandinavian markets. Consumers remain cautious, and consumption seems focused around fast moving consumer goods and the experience industry. While performing according to budget for most of the year, Christmas sales dropped unexpectedly, most likely due to the escalation of war in the Middle East in late October and the following drop in consumer confidence. Combined with a cautious purchase strategy that resulted in stock shortage on certain goods at the end of the year, the last two months of 2023 contributed significantly to the disappointing result. THE 2023 RESULT Based on the tendencies in the second half of 2022, projec- tions by Rosendahl Design Group were that both revenue and EBITDA decrease slightly compared to 2022. Total turnover was expected in the region of DKK 500 M and an EBITDA around 6%. Rosendahl finished the year with a revenue of DKK 464 M, while EBITDA ended at DKK 21 M. The factors influencing the 2023 result adversely were many; failing Christmas sales, significant increases in the company’s interest rates, increases in freight rates, and increased commodity prices. Combined with an unusual pressure on prices due to large stocks in the market in general as well as increased cost prices due to last year’s challenged supply chains, our margins suffered. Despite hedging, it has not been possible to cover the full risk on the increase in the dollar. Solvency and working capital are both improved during 2023 as a consequence of the reduction of our stock with approxi- mately DKK 100 M. Our focus for the coming year is continued improvement of working capital and cash flow through tight planning of procurement and a strong focus on turnover rate and trading conditions. Overall the capital structure is sufficiently robust and our focus remain on profitable growth, improved efficiency and better cash conversion. Rosendahl Design Group finished the year with a result signifi - cantly lower than expected, however – on a positive note – also with a heavily reduced stock level while we enter 2024 with a more robust capital structure, a new bank agreement and a positive outlook to the future. 18
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