«The fact that we were able to close the 2021 business year with an EBIT of almost CHF 73 million makes us proud.»
Markus Bernhard, CEO
The mobilezone Group remains on a steady path to success and can look back on an outstanding performance in the 2022 fiscal year. Increases in market share in both Germany and Switzerland, coupled with high profitability, contributed to an organic, currency-adjusted growth of 7.5 per cent. Group sales increased to CHF 1.0 billion. We were able to increase our operating profit or EBIT to CHF 70.6 million and the net profit to CHF 54.5 million. These results were achieved despite the negative foreign exchange impact of CHF 2.7 million on EBIT and CHF 1.6 million on net profit. Not only did we achieve good financial results, but we also made further progress in the area of sustainability.
The Board of Directors will propose a dividend of CHF 0.90 to the General Meeting in April, which is an increase of CHF 0.06 compared to the previous year, reflecting the company's strong financial performance.
mobilezone has continued to make strides in both Germany and Switzerland, where it is regarded as a healthy, modern and forward-looking business.
We closed the first half of 2022 with yet another record result – both in Germany and in Switzerland. This was particularly encouraging, because the second half of the year tends to be more profitable with Black Friday, Cyberweeks, Christmas and the annual Apple launch event. The second half of 2022 also went well for us. Although our Swiss accessories business was 9.5 per cent behind the previous year mid-year, we were able to finish the year on a strong note with sales of CHF 24.9 million, representing a 4.2 per cent increase compared to the previous year. This was largely due to a very strong performance in the second half of the year. Similar to the previous year, 2022 was a very demanding year for our employees in Switzerland and Germany. In Germany, our employees were busy working on the development of the new
e-commerce platform. Group-wide, our employees found it challenging to communicate availability information to our customers due to the limited availability of various smartphone models.
Over the last three years during the COVID-19 pandemic, we have demonstrated that we have a resilient business model.
China's zero COVID strategy had an impact on the production of the latest generation of Apple devices, especially the iPhone 14 Pro and Pro Max models, which in turn impacted our stock availability. By keeping customers well informed about availability, we were able to mitigate the impact of this to a large extent. Our customers are also feeling the effects of high inflation in Germany: People keep their mobile phones longer and sometimes switch to cheaper models. In Switzerland, we have not seen any negative effects of the relatively low inflation – on the contrary; customer traffic in our shops has increased.
The question about the company's purpose is currently a hot topic in the economy. How would you describe the purpose of mobilezone in an elevator pitch?
The purpose of our company has remained unchanged since its founding almost 25 years ago: to offer customers the best deals in the telecommunications market in Switzerland and Germany. This, combined with the motivation and skills of our employees, is the basis for long-term economic success. In addition to cost leadership and efficiency, environmental and social responsibility are also key pillars of our thinking.
mobilezone shares are highly popular with investors, and their value has risen by 12.7 per cent over the past year. Why are the shares so popular?
mobilezone shares have risen by more than 50 per cent since the summer of 2021. Investors have thus rewarded our operational performance and the confirmation of our resilient business model. Telecommunication products and services are always needed; there is a reason why they are part of essential services. Over the last 10 to 15 years, we have proven to be a stable dividend-paying company, being one of the top-performing companies in Switzerland with an annual dividend yield between 5 and 7 per cent. Our shares are also very stable, which can be attributed to the following: In January 2021, we divested our highly volatile wholesale business in Germany. The fluctuations in margins and the lack of transparency were not easy for our investors to understand. As a result, we are in a much more stable situation today. Confidence in our shares has also been boosted as more analysts are now covering us. This is certainly also due to our active communication with analysts and financial journalists. In the autumn, we bought back 770,865 shares as part of our share buyback programme 2022-2025.
At the upcoming General Meeting, we will propose the cancellation of these shares through a capital reduction, which will reduce the number of outstanding shares from today's 44 million by 1.8 per cent.
Our objective is to keep delivering strong financial results and market performance. Our active cost management, which is a key part of our strategy, coupled with our focus on growth and increasing margins across all financial KPIs, provides a solid foundation for our continued success. Takeovers can also strengthen our position.
Our goal for the coming years is a sustainable increase in dividends, combined with share buybacks. We will propose a dividend of CHF 0.90 to the General Meeting in April, representing an increase of 7 per cent.
You are committed to continue increasing the EBIT margin steadily in the coming years. What measures do you intend to take to achieve this in view of the intense competition?
The competition is indeed very fierce. The market we operate in is saturated and competitive; it is not a growth market. This makes very consistent cost management all the more important. We want to grow especially in the service business. In Germany and Switzerland we are doing very well as mobile virtual network operators (MVNO) with HIGH and TalkTalk. With the acquisition of the Swiss company Digital Republic at the beginning of 2023, we were able to further strengthen our position in the MVNO market in Switzerland.
TalkTalk has done very well in fierce competition. At the end of January 2023, we had 70,000 postpaid subscription customers in Switzerland. Since the end of 2020, we have more than doubled our customer base. We are able to add a few thousand new customers every month. We have a long-standing, very motivated team at TalkTalk who put their heart and soul into their products every day.
Even in times when online business is booming, mobilezone continues to rely on its dense network of shops throughout Switzerland. You have also convertet all your shops by the end of 2022. What measures are planned to further enhance the shopping experience in the shops?
In our Swiss retail business, we achieved stronger growth than expected in 2022. We added a total of 437,000 mobile and fixedline contracts, representing an increase of 39,000 contracts or 9.8 per cent. I am very proud of the sales performance we have achieved in Swiss retail over the years. This cannot be taken for granted and is only possible thanks to our very strong sales team. The shop network is continuously being optimised, and new locations are added where viable and practicable. Nevertheless, we expect the number of our shops to remain stable over the next few years.
We plan to continue growing in the double digits in the accessory segment in both Germany and Switzerland. At CHF 3 million, the sales generated in Germany are still comparably modest. But with the launch of the new shop technology for the two online platforms, Sparhandy and Deinhandy in the first half of the year, we are well positioned to gain market share quickly in Germany as well. In Switzerland, we are working on significantly expanding our product range, particularly regarding tablets and watches. The range of accessories, including cases and covers, will also become more varied in line with current trends and needs.
In the past, we have addressed topics that can be considered part of sustainability, but without defining any KPIs, targets or conducting measurements. In short, we were not strategic in the area of sustainability. This changed in the summer of 2020, when we developed our sustainability strategy and defined our focus areas.
A lot has happened in this area since then. Employees and managers in all business units in Germany and Switzerland are working on sustainability issues and implementing measures. As the Group and Management Board, we are committed to sustainability by firmly incorporating it into our corporate strategy. We have recently established a Sustainability Committee, which is strategically embedded in the Board of Directors and supported directly by the Sustainability Body and business. In addition, part of the remuneration of the members of the Management Board is based on employee and customer satisfaction. In September 2022, the mobilezone Group was admitted as one of about 140 companies into the sustainability indices of the Swiss stock exchange SPI ESG and SPI ESG Weighted. The indices introduced at the beginning of February 2022 facilitate more transparency for investors who want to invest in the shares of Swiss companies with a standardised and well-founded sustainability profile.
In December, we conducted our employee survey for the second time. 90 per cent of our employees are satisfied and would recommend mobilezone as an employer. We routinely seek feedback from our customers on their satisfaction after most transactions. We were able to improve both employee satisfaction and customer satisfaction. We are in the process of collecting data for a Groupwide assessment of our carbon footprint. A project is also underway in Switzerland to further reduce plastic in packaging used for delivery. With HIGH green, the mobilezone Group has embarked on a project to launch its first "green" mobile subscription in Germany. And we have been successfully selling used and refurbished smartphones under the jusit brand for over two years. Details can be found in our sustainability report from page 33 onwards.
The sale of used mobile phones is an important part of our sustainability strategy. We are convinced that it is right to conserve valuable resources and to use the latest generation of high-quality smartphones for as long as possible. I am impressed by the demand for this type of service. The challenge lies in being able to buy back enough smartphones in Switzerland so that we have enough devices available through jusit. In contrast, the majority of our competitors buys their devices abroad. The refurbishing business is a solid and meaningful complement to our core business, but it always has to make sense commercially as well.
Growth and gaining market share are at the core of your strategy. Where do you see opportunities for further growth?
We do business in Germany and Switzerland. These are cultures that we do understand. We believe that there is enough room for further growth in both countries. In recent years, we have been able to grow our business organically and through company acquisitions. This will continue with a clear focus on increasing margins in each business area. One of our goals is to further develop recurring revenue streams (MVNOs, airtime, fleet management), which currently generate around CHF 108 million.
mobilezone's most important business continues to be the sale of mobile and fixed-line plans (Internet and TV). How have the sales figures developed?
In our core business of mobile and fixed-line contracts (Internet and TV), we achieved record sales figures in both Switzerland and Germany. In Switzerland, we concluded a total of 437,000 contracts (previous year: 398,000). In Germany, we were able to increase the number of contracts concluded by 7.1 per cent to 1,091,000.
What are your priorities in 2023 for the mobilezone Group in general, and the Swiss business in particular?
We have strengthened our market position by growing sales in Switzerland and Germany in 2022. We aim to capitalise on this momentum and continue our growth trajectory. While we anticipate intense competition in our core business of mobile and fixed-line contracts, we remain confident in our ability to sustain mid-single digit growth. We have also set ambitious targets for our accessories business in both Germany and Switzerland. The focus in e-commerce in Switzerland is on TalkTalk, jusit and the newly acquired Digital Republic.
A few weeks ago, you announced that you would be stepping down as CEO of the mobilezone Group in mid-2024, and that you intended to continue supporting mobilezone as an operational delegate of the Board of Directors. What prompted you to take this step?
I will be 60 next year and will have been CEO for 10 years and have been operationally active in the company for 17 years. We have an established, well-diversified management team in both Germany and Switzerland, led by Wilke Stroman, Roger Wassmer and Andreas Fecker. I remain motivated and committed to helping mobilezone reach its full potential, even after the move to the role of operational delegate of the Board of Directors. My main tasks will be the strategic development of mobilezone, M&A activities, investor relations as well as business reviews of the operational performance with the management in Germany and Switzerland.