Hawesko Holding SE, a leading player in the wine retail and e-commerce industry, reported its financial results for the first half of 2024, covering the period from January 1 to June 30. The Group’s performance reflects the challenges posed by a weak consumer demand environment across its major segments: E-Commerce, Retail, and B2B.
The holding operates mainly in Central and Eastern European countries through its daughter companies, such as: Hawesko, Jacques', Wein&Co, Vinos, Wir Winzer, Wein Art, Wein Wolf, Tesdorpf, Enzo.de, Global Wine, etc.
The company’s financial metrics reveal a decline in sales and earnings, coupled with efforts to maintain profitability through cost control and strategic adjustments.
Sales Performance Across Segments
Hawesko Group recorded total sales of EUR 294.2 million in the first half of 2024, a 5.0% decrease compared to the previous year's EUR 309.6 million. The decline in sales was driven by subdued customer demand across all three key segments:
- E-Commerce: Sales in the E-Commerce segment fell by 4.5%, affected by lower transaction volumes and reduced average sales per order. Customer purchasing behavior was influenced by the European Football Championships in June, as well as a general trend towards price sensitivity, with customers opting to experiment with different wines to maintain stable bottle prices.
- Retail: The Retail segment managed to maintain sales at nearly the same level as the previous year, despite challenges such as lower foot traffic due to regional flooding in Germany and Austria early in the year. This segment benefited from an increase in average bottle prices, which helped offset some of the decline in sales volumes. However, the European Football Championships also dampened demand in this segment.
- B2B: The B2B segment experienced the most significant decline, with sales dropping by 10.0%. Contributing factors included a marked decrease in customer demand, particularly due to ongoing price negotiations with major food retailers in Germany, which led to delivery halts. Additionally, cautious consumer behavior in Austria, Switzerland, and the Czech Republic compounded the decline.
Operating Results and Profitability
The Group’s operating result, adjusted EBIT, stood at EUR 9.9 million, reflecting a 26.1% decrease from the previous year’s EUR 13.4 million. This drop was primarily due to the decline in sales, although the company’s gross profit margin improved by 1.1 percentage points to 44.8%, thanks to strict cost management and improved margins in the E-Commerce segment. Operating EBITDA for the period was EUR 22.4 million, down EUR 2.7 million from the first half of 2023.
Despite the decrease in sales, Hawesko Group implemented several measures to contain expenses, including reductions in marketing, freight, and logistics costs. Marketing expenses, for example, were optimized in the E-Commerce segment, particularly by reducing printing costs for promotional materials. However, these cost-saving measures were not sufficient to fully counteract the impact of lower sales on overall profitability. The operating EBIT margin for the Group fell to 3.4%, down from 4.3% in the previous year, although it showed slight improvement in the second quarter due to earlier cost-cutting measures.
Structural Adjustments and Segment Reallocation
During the first half of 2024, Hawesko Group made two significant structural changes aimed at enhancing segment transparency and financial reporting.
- The Wine Company, whose business is being phased out due to unsustainable economic prospects, was recognized as a discontinued operation under IFRS 5. This adjustment led to a reclassification in the consolidated income statement to improve year-on-year comparability.
- Reallocation of IWL Logistics: From June 2024, the logistics company IWL was reallocated from the E-Commerce segment to the Other segment, retroactively effective from January 1, 2024. This shift aligns with changes in segment management responsibility and is designed to improve internal reporting and transparency.
Financial Highlights and Net Income
Hawesko’s financial results also highlighted a EUR 0.8 million reduction in financial results, primarily due to higher interest expenses on borrowed capital and lease financing. Tax expenses for the period were EUR 1.9 million, down from EUR 3.1 million in the previous year, resulting in a tax rate of 31.8% relative to earnings before taxes.
The Group’s consolidated net income attributable to shareholders fell to EUR 3.7 million, down from EUR 6.5 million in the first half of 2023. Consequently, earnings per share decreased to EUR 0.41 from EUR 0.72 in the previous year, based on an unchanged share count of 8,983,403.
Conclusion
Hawesko Group's first half of 2024 was marked by a challenging market environment, with declining sales across its key segments. Despite these headwinds, the company managed to maintain a strong gross profit margin through cost management and strategic adjustments. However, the decline in overall profitability highlights the ongoing challenges in the wine retail and e-commerce sectors. The structural changes implemented during the period are expected to enhance transparency and operational efficiency, positioning the Group for better performance in the future.