Claranova expects profitability to improve this year

April 2, 2023April 6, 2023 GaryPageau Claranova, PlanetArt

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PlanetArt parent Claranova reported revenue for the first half of the fiscal year (July 2022-December 2022) of €315 million, up 12% at actual exchange rates. This performance was driven by double-digit growth in all business segments. But Claranova reported a net loss of for the first half of €4.5 million

Pierre Cesarini, CEO, Claranova

“Our Group succeeded in returning to growth in H1 2022-2023 by delivering record sales despite adverse market conditions for the sector as a whole caused by pressure on raw material prices, increased transport costs and inflation, particularly in the United State,” says Pierre Cesarini, Chairman and CEO, Claranova. “These record sales were made by rebuilding our customer acquisition channels for PlanetArt and the strength of the SaaS business model, whose development is continuing for Avanquest.

“Over the period, our profitability remained at a good level, reflecting marketing investments made in the first half in order to offset the seasonality effect of our businesses and to lay the foundations for a more profitable second half.”

The company is expecting growth in annual revenue of 10% and an improvement in EBITDA of between 25% and 30% for FY 2022-2023.

As announced earlier this year by the company, performance was temporarily impacted by marketing investments during the year-end holiday season to support growth in the second half and increased production costs. However, EBITDA remains strong with €17m at December 31, 2022, compared to €22 million one year earlier. Based on the above and a net financial expense of €12m, Claranova reported a net loss of for the first half of €4.5 million, the company said.

The group’s financial position remains solid, with cash and cash equivalents of €121 million, supported by a very robust cash flow of €15 million and following the holiday season, net cash flow from operating activities at a very good level of €48 million. Financial debt amounted to €186 million, reflecting the loan obtained to acquire pdfforge, resulting in pre-IFRS 16 net debt at December 31, 2022 of €65m.

The company said the “group will reap the full benefits in H2 of the marketing investments destined to drive growth in business in the coming months accompanied by a significant improvement in margins.”

Confident in its ability to return to its normative margin, Claranova is expecting growth of 10% in revenue and an improvement in EBITDA by 25%-30% for FY 2022-2023.

In €m	H1 FY 2023	H1 FY 2022 Restated basis⁴	H1 FY 2022 Reported basis
Revenue	315	280	281
EBITDA	17	22	23
EBITDA margin (% of Revenue)	5.5%	8.0%	8.2%
Recurring Operating Income	14	19	20
Net financial income (expense)	(12)	(11)	(11)
Net Income	(4.5)	3.7	4.3
Net cash flow from (used in) operating activities	48	52	52
Of which Cash flow from operations before changes in working capital	15	21	22
Closing cash position	121	152	152

PlanetArt improved profitability

In H1 2022-2023, PlanetArt’s personalized objects e-commerce division confirmed its return to growth with €255 million in revenue, up 12% at actual exchange rates.

This increase validates the new customer acquisition strategy adopted by PlanetArt’s teams in a sector where marketing restrictions linked to Apple’s deployment of App Tracking Transparency (ATT) are continuing to have an impact, the company said. The positive impact of alternative marketing channels introduced several months ago (TikTok, Instagram, YouTube, etc.) by PlanetArt’s teams is good news for the group’s prospects for a return to growth.

EBITDA in H1 2022-2023 amounted to €13m while also illustrating the impact on the division’s fixed costs and the significant pressure on prices (raw materials, transport) and the inflationary trends in the United States.

These different developments, however, should help the division return to a path of sustainable revenue growth, the company said. Similarly, the stabilization of customer acquisition costs combined with increased marketing investments in H1 will mitigate the seasonality effect of the business and significantly improve the division’s profitability starting in H2 2022-2023.