"The results in Switzerland, with an EBIT of CHF 31 million, were simply excellent."
Markus Bernhard, CEO
On the whole, we are very satisfied with the financial results, in light of the circumstances.
With an EBIT of a little more than CHF 31 million (2019: CHF 26 million), the results in Switzerland were simply excellent and by far the best in the company's 20-year history. On the whole, the result in Germany was not satisfactory. The restructuring, one-off expenses and the pandemic had a very significant impact on the result. As a consequence, we achieved an EBIT of CHF 12 million (2019: CHF 29 million). We are confident of achieving a recovery in the brick-and-mortar, indirect B2B business in spring 2021 with mobilezone Handel in Germany.
We are satisfied with our online business in Germany and were able to continue expanding and effectively consolidating it by concluding 567,000 in fiscal year 2020, a 4.6 percent increase. We launched pricezilla.de – a new online platform – in the fourth quarter of 2020. We want to further develop our online strategy with it in Germany, and by reaching new customer groups, exploit the existing potential in the areas of mobile phones without contracts and connectivity products.
The coronavirus had a significant impact on the economy last year. How did the pandemic affect the mobilezone Group, and how do things look today?
The coronavirus had a significant impact on our business in fiscal year 2020. After
mobilezone Group's promising start to the year, and with the most important key performance indicators higher than the previous year's numbers up to mid-March of 2020, this encouraging development was abruptly cut short by the coronavirus lockdown in the middle of March. The pandemic burdened our business in the first half-year in particular. In the second half-year, our online business in Germany and especially the Swiss business developed very positively. However, after struggling in the first half-year, the indirect B2B business in Germany was unable to overcome the impacts of the pandemic on the results in the second half-year either. The Swiss retail business saw a decrease in customer traffic of around 20 percent in November and December 2020, also due to the increased measures from the federal government and the individual cantons.
With the closure of many retail businesses and the requirement to work from home, the second lockdown in Switzerland, which began in mid-January 2021, actually reduced customer traffic in our shops by 30 percent compared to the previous year. Nevertheless, business in the Swiss retail trade – when it comes to our EBIT in the first two months – is only slightly below the previous year's strong performance. Customers visit our 123 shops with more purpose and the intention to buy.
The pandemic showed us that we have a resilient business model. When the first lockdown began in mid-March, we were ready for home working right from the first day. Going forward we will remember that video conferences via Teams, Zoom or Skype are part of everyday life and simplify our communication with internal as well as external contact persons, particularly in exchanges between Germany and Switzerland.
On 13 May 2020, mobilezone was one of the first SIX-listed companies to adjust its financial targets for 2020. What is your assessment here?
We actually communicated our financial guidance for 2020 and 2021 very early; it was two days after the end of the lockdown. We experienced huge support for this, both internally and externally. Ultimately, with an EBIT of CHF 44 million, our estimate – without expecting a second wave – was slightly above the given range of CHF 38 to 43 million.
In the 2020 semi-annual report, you said that you see the year 2020 as a transition year in which the companies within the Group are to be clearly positioned and their respective profiles refined. Where are you with this consolidation process?
Our restructuring measures were completed with the sale of the repair business in Austria in December and the sale of the wholesale business in Germany at the end of January 2021. We are now optimally positioned with regard to our core business and are not planning any more changes in the rest of fiscal year 2021.
You make the majority of the revenue in the Swiss business in your 120+ shops. The coronavirus led to a country-wide lockdown in the spring. Did you take any measures, for example in connection with investments in the online business?
During the 8-week lockdown in Switzerland as of mid-March, we were still able to keep 24 of our 123 shops open, but with reduced business hours. In the process, we adhered to the ordinance issued by the Swiss Federal Council, according to which shops in the telecommunications sector were able to remain open. During the lockdown, a drop of 61 percent was measured in customer traffic in the open shops. The tougher measures as of November 2020 had much less of an impact on our business.
By 2022, we want to present all of our 120 shops in Switzerland in the newest layout. We remodelled 20 shops in fiscal year 2020. We are planning on renovating around 45 shops in 2021.
We are planning to expand the online business in 2021 and 2022, both in Switzerland and Germany. We are creating additional jobs in Switzerland and continue to invest in technology.
mobiletouch, the subsidiary of mobilezone, reported that repairs decreased by 57 percent in the first half-year of 2020. What were the reasons for this, and how does the repair business look today?
The pandemic had a significant impact on the repair business, both in Switzerland and in Austria. Many of our partners had to close some of their shops. We were able to sell the business in Austria in December 2020. In the meantime, the Swiss repair business has recovered, and we are confident that we will achieve a positive result during the course of fiscal year 2021. The Swiss repair business is an important pillar of our value-creation chain in the Swiss business model. Besides the traditional repair business, used, repurchased smartphones, for example, are being reconditioned and integrated back into smartphone circulation with our jusit brand that was launched in the summer. The used smartphones are sold on www.get-jusit.ch as well as offline in selected mobilezone shops. Smartphone circulation is one of four focal topics within our sustainability strategy.
You have already mentioned that you sold the repair business (mobiletouch Austria) in Austria at the end of 2020. Is the sale connected to the shrinking repair business?
As part of continuing efforts to focus on our core strategy and business activities in Switzerland and Germany, we sold our Austrian repair business to an investor from the industrial sector. In contrast, the repair business in Switzerland is strategically very important to us, and we will stick with it in the future, too.
In the semi-annual report, you expressed confidence in connection with the B2B business. Has this been vindicated?
The Swiss B2B business "survived" the pandemic unscathed and achieved an excellent result. We were able to expand further, especially our service business with fleet management and Device as a Service. The B2B business in Germany also suffered a great deal in the second half-year due to the shop closures of our retail partners. mobilezone does not operate any of its own physical shops in Germany.
Various acquisitions were in the foreground in past years – the topic of market share gains is firmly anchored in the strategy. However, you said in the semi-annual report that no expansions are planned in Germany in the next one to two years. How are you planning to expand despite this?
Following the three acquisitions in Germany since 2015, we have used the year 2020 to consolidate and reorganise the business activities. We are planning to grow online. In the past, we utilised our core competence in the mobile phone card business to sell contracts via our online platforms. At 567,000 (previous year: 542,000) activated contracts, we are the number 1 in Germany in the indirect online business.
We launched pricezilla.de in November, a new brand for products related to mobile phones and connectivity, and for the first time, we are offering products such as tablets, wearables, Bluetooth speakers, headphones, earbuds and airpods or accessories such as plugs and cables, docking stations, smartphone cases and screen protectors from a great variety of manufacturers without a mobile phone contract. With the new brand, we intend to further advance our online strategy and reach new customer groups.
Last year, B2B sales activities in Germany were consolidated under the umbrella of mobilezone Handel. Can you make an initial assessment?
It will soon be six years since we acquired einsAmobile GmbH in March 2015 and significantly expanded the business in Germany by buying TPHCom at the beginning of 2018 and SH in mid-2019. The businesses were mostly organised autonomously. By consolidating the B2B business areas of the individual companies in the mobilezone Handel company, we have arranged our organisation in Germany more efficiently. The result is that processes in the organisation are simplified, any duplication of efforts is avoided if at all possible, and at the same time, we make significant cost-savings. We sold 75 percent of the shares in einsAmobile GmbH with the remaining wholesale business area in January 2021.
At the end of 2020, you appointed Jens Barth to the Group management as Chief Digital Officer. What are your expectations of this new addition to the Group management?
With Jens, we have a proven digital expert in our ranks who will decisively codetermine the online strategy of the mobilezone Group. With his more than 20 years of experience in the telecommunications market, he will strengthen our online business even more and make an important contribution to our growth strategy.
In many ways, we will continue to be very agile in the market and do everything possible in our day-to-day work to effectively strengthen our strategic pillars:
- growth, or rather acquiring market share
- strengthening and expanding the online presence
- expanding our portfolio of B2B and B2C services
- strengthening the drive-to-shop strategy in Switzerland as part of the omnichannel strategy
- developing recurring income
- continuing an attractive dividend and distribution policy
- dedicating ourselves to sustainability and continuing the sustainability strategy
You have already mentioned the sustainability strategy. Everyone is talking about sustainability. Many companies are developing a strategy and executing measures in this area. What does the mobilezone sustainability strategy look like?
The topic of sustainability is not just limited to ecological issues, it also covers economic and social concerns. In this regard,
mobilezone has already been sustainable for a long time – with fair and modern working conditions and remuneration, modern workplaces and attractive fringe benefits for employees. We have been training apprentices in the company since 2001. In addition, we launched a trainee programme in 2020 that has brought more young talent into the company.
We already reported on the topic of sustainability in the 2019 annual report, but decided to tackle the topic more strategically during the course of this year. Consequently, we founded a project team during the first lockdown. It surveyed our employees across the Group as well as the most important external stakeholders in a materiality analysis. In addition, the team investigated the different business activities of the company in an impact analysis concerning the topic of sustainability and also conducted a workshop with management. In the process, the impacts in our supply chain were brought up, and we discussed what potential influence mobilezone has there. The sustainability strategy of mobilezone resulted from this, based on the four focal topics of employees, customers, smartphone circulation and environmental management. It was always important for us to remain close to the core business with our strategy. Another of our key objectives was to prepare our sustainability report in such a way as to ensure that our sustainability data is clear, transparent and available to our shareholders, analysts and other interested parties. With this in mind, we decided in favour of reporting according to GRI standards. You can see the result from page 28 onwards.
Speaking of sustainability: In September, you launched jusit, the first Swiss product brand for used smartphones. Is that a project with a positive impact on the supply chain in terms of smartphone circulation?
Yes, from the viewpoint of sustainability, it makes sense to keep mobile phones in circulation for longer. We have already been taking back no longer needed smartphones for many years in order to have them tested, cleaned and repaired by our own certified and manufacturer-authorised technicians. The devices come from our business area, but also from shop customers from whom we buy back old smartphones for the salvage value. With jusit, we established the necessary brand to achieve our objective of expanding our position as the number 1 in the area of used smartphones. That is ecologically and economically very sensible.
We rolled out the physical offer in ten of our more than 120 mobilezone shops through to the end of 2020. The plan is to equip other shops with the jusit offer by the end of 2021.