Sats ASA (SATS) Earnings Call Transcript
April 30, 2024
Earnings Call Speaker Segments
Good morning, everyone, and welcome to SATS Q1 Q&A session. Sondre and Cecilie have just presented the SATS first quarter financial results, and we are now ready to answer all the questions you may have.
[Operator Instructions] Is there any questions this morning? No?
Seems like everyone is connected now. As Jonas introduced, this is a Q&A session, so we are ready to answer any questions if you have. Not a very vocal group here today.
Can someone confirm that you hear us? Yes?
Ulrik, go ahead.
Yes. Congrats on a solid quarter. So I was wondering a bit about Denmark. We saw quite a strong margin development there in Q1. Could you elaborate a bit on sort of what kind of measures you've taken in Denmark over the last quarters to sort of ensure this strong performance?
So of course, the strong performance in Denmark is partly affected by the extraordinary COVID compensation that we got. It was delayed from 2020 and amounts to around NOK 18 million. So if you deduct that from the results, we still see a positive development over time in Denmark. We work with the operations, getting the number of members up. We also closed unprofitable clubs during the year and in this quarter. So that, of course, has a positive impact on development, and we expect to see a positive development going forward as well.
Thank you, Ulrik. Any further questions this morning?
Doesn't seem to be, so we will have -- yes, sorry. Petter?
Actually, I was a bit late to the call, so sorry for that. And it might be that my questions have all been answered. But can you shed some light on the development in Sweden and how you see that? Looking at the different segment, you could argue that Sweden is slightly on the soft side versus what Norway see. So some comments regarding that would be helpful. And again, sorry if that has already been answered.
Yes. I can answer that. Thank you, Petter. When it comes to the development in Sweden, we are happy to see a revenue growth of 8%. Of course, revenue development is in our business. The consumer industries is a mix of -- or is a result of volume and price, and we are optimizing for revenue. So we have done -- measure it on the membership pricing side, which will affect volumes somewhat, and that's what we have seen. At the same time, we see that more members in Sweden are buying memberships that gives access to classes, so that meaning higher price memberships. That's also driving price upwards and, hence, resulting in a good revenue development. And then when it comes to the operating result, Sweden is the country where we have opened most new clubs. And as Cecilie showed in the financial part of the presentation earlier today, you can see that the mature clubs has a somewhat better profitability than the newly opened clubs. So we are still working to bring the newly opened clubs in Sweden up to a level of the mature portfolio. And then we will also see profitability improving in the Swedish market. So we are happy with the revenue development, and we will see improvements going forward. And we will continue to invest quite heavily in the product offering to our Swedish members.
Great. Any further questions?
I missed the start of this call, so maybe this question has been answered, but I'll try anyways. The cost of the Swedish party, was that booked in Sweden? Or has that been booked across all geographies?
This -- it was actually a Nordic party, so the cost for that is booked according to the participants per country, and that's -- the size of the country is representative. So they all get their fair share of that cost.
Yes. But would you characterize that as an annual event going forward? Or is this something special that you had in Q1 this year?
No, it will not be an annual event to this -- to the system. It will probably happen again, but this is not something that will be scheduled as recurring, even though we will gather all our stuff from time to time, for sure.
And another question. If you look at the membership base where you see it from now, how should we think about seasonality going into Q2 and Q3? Are we going to see maybe more aggressive members? Or should we expect a normal seasonality here?
I think you should expect normal seasonality. But as Sondre has said just before you came, at SATS, we are now looking more to optimize for revenue, which means that we want to take out higher price for the broader and more extensive product offering that we have. And that means that we have to maybe propose some volume, but still see a healthy revenue growth. But seasonality will be the same as we've seen historically.
If I could just follow up on that question from Ole Martin. You talked about higher prices. The price increases, they have been done now for 2024. Or are there more to come?
No, we haven't performed the annual price adjustments that we normally do. So -- and they come in gradually throughout the quarter. So from next quarter, you will see sort of the full effects of the price adjustments that we have done.
Is it possible to quantify how much of the price increases were affecting this quarter in percentage terms?
I would say that 75-ish of the full effect is in the first quarter. What we're lacking is the sort of the map adjustment, the last one, where we increased those members with the lowest price.
Any further questions? If not, I suggest we leave it there. Thank you all for joining the call this morning, and we wish you all a healthy and happy Tuesday. Thank you.
Thank you.
Thank you.
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