Q1 2O22
INTERIM FINANCIAL REPORT
4 May 2022 | Company Announcement No. 716
2
HIGHLIGHTS
02 Executive Summary
03 Financial Highlights
4
BUSINESS UPDATE
04 Business Update
07 Revenue Review
12 Profitability
15 Cash Flow & Balance Sheet
16 Financial Guidance
19 Sustainability
20 Other Events
21 Contact
22
FINANCIAL STATEMENTS
22 Financial Statements
26 Accounting Notes
35 Disclaimer
Our equity story
Pandora is a cross-generational brand with unmatched recognition that gives a voice to
people’s loves. Our jewellery is crafted and hand-finished to the highest ethical and
environmental standards at our state-of-the-art crafting facilities in Thailand and made to
inspire women to collect, create and combine genuine jewellery at affordable prices.
Pandora’s strategy focuses on delivering sustainable and profitable revenue growth
building on the vast untapped opportunities within our existing core business. A strong
cash generation and attractive cash return will remain.
CONTENTS
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
2 | 35
EXECUTIVE SUMMARY
Strong growth in Q1 - record first quarter revenue
Highlights
• Strong 21% organic growth in Q1 2022 - equal to 18% vs Q1 2019
• Execution of the Phoenix strategy is progressing as planned with Q1 revenue growth in all product platforms
• Moments continue to deliver strong results driven by the base portfolio and supported by new products such
as the Padlock concept – another innovation within the Moments platform
• Collabs were very strong supported by a successful Marvel launch in February
• Efforts to establish new platforms continue. Pandora ME up 132% vs Q1 2021 and reached 3% share of
business. Getting ready for next step in the global sequential roll-out of Brilliance
• Broad based organic growth across key markets vs 2019 - China continue to be a headwind
• US grew 7% (62% vs Q1 2019) – strategy on plan with acquisition of 32 franchise stores mainly located on
the West coast of US as wells as entering new partnership with Macy’s
• Strong performance across key European markets, all delivering double digit positive organic growth vs 2019
• Online also continued the strong performance with organic growth up 155% vs Q1 2019 (down -17% vs Q1
2021 due to COVID-19 store closures last year)
• Solid EBIT margin at 23.0% - absolute EBIT up 45% from Q1 2021
• In line with normal seasonality, cash flow was negative in Q1 2022. Cash flow in Q1 was negatively impacted
by a deliberate increase in inventories. Leverage ended at 0.9x NIBD to EBITDA
• During Q1 2022, DKK 2.7 billion was distributed to shareholders
• All business with Russia and Belarus has been suspended. These markets account for approx. 1% of revenue
Despite negative impacts from the war, cost inflation, potential impact on consumer demand due to inflation and
higher interest rates as well as COVID-19, organic growth is now expected to be 4-6% (was 3-6%) while EBIT margin
guidance is unchanged at 25.0-25.5%. The financial guidance for 2022 is subject to elevated uncertainty.
In spite of inflation and increasing interest rates, consumer demand generally remained healthy during April. Revenue
growth in Q2 will face a tougher comparison base than Q1, due to less COVID-19 lock-downs and stimulus packages
in the US.
Alexander Lacik, President and CEO of Pandora, says:
“We are very pleased with the strong start to the year delivering record revenue for a first quarter. All our product
platforms support the growth in Q1, as our ability to continuously offer new innovation pays off. Execution of the
Phoenix strategy continues at high pace and I am encouraged by the growth opportunities we have ahead of us. For
the last two years, we have invested in building a stronger organisation, and this is increasingly visible in the numbers
and how we drive the company forward.”
Financial overview:
DKK million
Q1 2022
Q1 2021
FY 2021
FY 2022 guidance
Revenue
5,689
4,500
23,394
Organic growth, %
21%
13%
23%
4-6%
Sell-out growth incl. temporarily closed stores, %
17%
21%
20%
Operating profit (EBIT)
1,310
903
5,839
EBIT margin, %
23.0%
20.1%
25.0%
25-25.5%
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
3 | 35
FINANCIAL HIGHLIGHTS
DKK million
Q1 2022
Q1 2021
FY 2021
Financial highlights
Revenue
5,689
4,500
23,394
Organic growth, %
21%
13%
23%
Sell-out growth incl. temporarily closed stores, %
1
17%
21%
20%
Earnings before interest, tax, depreciation and amortisation (EBITDA)
1,772
1,416
7,838
Operating profit (EBIT)
1,310
903
5,839
EBIT margin, %
23.0%
20.1%
25.0%
Net financials
-10
-92
-461
Net profit for the period
995
628
4,160
Financial ratios
Revenue growth DKK, %
26%
8%
23%
Revenue growth, local currency, %
22%
13%
24%
Gross margin, %
76.0%
76.3%
76.1%
EBITDA margin, %
31.1%
31.5%
33.5%
EBIT margin, %
23.0%
20.1%
25.0%
Effective tax rate, %
23.5%
22.5%
22.6%
Equity ratio, %
28%
41%
38%
NIBD to EBITDA
0.9
0.6
0.4
Return on invested capital (ROIC), %
49%
29%
59%
Cash conversion incl. lease payments, %
-110%
-65%
88%
Net working capital, % of last 12 months revenue
3.5%
-0.4%
-5.0%
Capital expenditure, % of revenue
2.8%
1.9%
2.7%
Stock ratios
Total pay-out ratio (incl. share buyback), %
277%
-
115%
Dividend per share, proposed, DKK
-
-
16
Dividend per share, paid, DKK
16
-
15
Earnings per share, basic, DKK
10.5
6.3
42.1
Earnings per share, diluted, DKK
10.4
6.3
41.7
Consolidated balance sheet
Total assets
19,419
19,211
18,542
Invested capital
12,684
11,675
9,884
Net working capital
871
-76
-1,181
Net interest-bearing debt (NIBD)
7,157
3,735
2,882
Equity
5,526
7,940
7,001
Consolidated statement of cash flow
Cash flow from operating activities
-1,111
-316
6,228
Capital expenditure – total
158
88
641
Capital expenditure - property, plant and equipment
83
35
341
Free cash flow incl. lease payments
-1,442
-586
5,137
Free cash flow excl. lease payments
-1,168
-359
6,128
1
Sell-out growth only include sell-out from all concept stores including partner owned, and Pandora online. Other points of sales are not included in sell-out growth.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
4 | 35
BUSINESS UPDATE
All concept platforms support record-breaking first quarter revenue – execution of Phoenix continues
Pandora had a good start to the year delivering a solid revenue performance in Q1 2022, with organic growth of 21%
vs 2021 (18% vs 2019). Especially the performance in Europe was strong, as all key markets saw double digit organic
growth vs both Q1 2021 and Q1 2019. In Q1 2021, Pandora had 30% of its store base temporarily closed due to
COVID-19. The good start to the year came against a backdrop of continued COVID-19 disruption in China and the
war in Ukraine. In Q1 2022, Pandora did not see any major impact on performance following the war, but has
suspended all business with Russia and Belarus. Combined, Russia, Belarus and Ukraine accounted for roughly 1% of
revenue in 2021.
The strong growth in the quarter was supported by Pandora’s biggest platform, Moments, which delivered sell-out
growth of 17% vs Q1 2021. The performance was boosted by a very strong Valentines collection as the campaign
“Little acts of Love” was very well received. Pandora introduced the Padlock concept as part of the Valentines offer,
and encouragingly two of the products from the Padlock offering was in top five best selling items in the quarter. The
Padlock concept is another element on Pandora’s journey continuing to grow and innovate the Moments platform -
a key pillar in Pandora’s Phoenix strategy.
Collaborations had a very strong quarter and was up 41% vs Q1 2021. On February 17, Pandora launched its new
collaboration with the Marvel franchise featuring various superheroes such as the Incredible Hulk and Iron Man, as
well as motives like Thor’s Hammer and the Infinity Ring. The Marvel collaboration is building on Pandora’s strong
relationship with Disney and proved an imminent success in the quarter. Marvel alone accounted for 3% share of
business and has so far been outperforming the initial launch of both Star Wars and Harry Potter. Among the product
heroes is the Infinity Ring, for which 17,000 customers have signed up on a waiting list. Marvel did well across all key
markets, but especially in the US market it was well received. Marvel is designed to engage and introduce existing and
new consumers into the Pandora brand.
Style and Upstream Innovation also delivered strong growth of 11% in the quarter vs Q1 2021 with all sub-platforms
delivering positive growth in the quarter. Pandora ME grew 132% vs Q1 2021, ending at 3% share of revenue in the
quarter.
Pandora Brilliance delivered DKK 9 million revenue in Q1 2022. Pandora is currently preparing for the sequential global
roll out later this year using the learnings from the UK test launch. No new initiatives or tests were conducted in Q1
2022.
Overall Valentines is the key trading event in Q1, and Pandora saw solid performance across its key markets. Overall,
Pandora saw roughly 30% stronger Valentines performance than last year, and especially Love motives trade well
during Valentines.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
5 | 35
REVENUE BY GLOBAL BUSINESS UNITS
DKK million
Q1 2022
Q1 2021
Sell-out growth
vs 2021
Share of
revenue
Moments and Collabs
4,197
3,252
20%
74%
- Moments
3,602
2,866
17%
63%
- Collabs
595
386
41%
10%
Style and Upstream Innovation
1,492
1,249
11%
26%
- Timeless
945
826
5%
17%
- Signature
396
364
5%
7%
- ME
142
58
132%
3%
- Brilliance
9
-
-
0%
Total revenue
5,689
4,500
17%
100%
Personalising the consumer journey continues
Personalisation is one of the growth pillars in the Phoenix strategy, aiming to drive a more seamless and personalised
customer experience. A key element in this journey is the new store concept, called Evoke, which Pandora is currently
testing across its key markets. So far, Pandora has opened five concept stores on the Evoke concept. Today Evoke is
being tested in London, Milan, Rome, Guangzhou and Hamburg and initial results are positive. In-store, Pandora see
consumers have more interaction with perimeter walls and operationally Evoke seem to do well during peak trading
events, which is a key parameter for success. Pandora plans to roll out further seven stores in Q2 2022 in US, China,
Italy, and Germany to test the concept further.
Evoke is designed to make consumer’s shopping more intuitive and will improve speed of service, enabling customers
to easily explore, find and try on products. Additionally, Evoke make it easier for consumers to navigate in Pandora’s
various product platforms. Evoke is designed to cater for omni-channel capabilities such as Click and Collect (C&C)
which Pandora now offer in the majority of concept stores in its key markets. In Q1 2022, Pandora tested its ability
to offer 2-hour C&C service in the UK during Mother’s Day allowing consumers to pick up their order within 2-hours.
During this offer, C&C accounted for 21% of online revenue in the UK compared 10% for the full quarter, proving the
demand for high quality omni-channel offerings. Overall C&C was 12% of total online revenue.
In Q1 2022, Pandora test launched its new loyalty programme, My Pandora, in France before rolling it out to more
markets in 2023. The test launch in France is being conducted online and in 20 stores, and is so far off to a good start.
Around 50,000 consumers have signed up the first four weeks after launch. My Pandora will further improve Pandora’s
access to quality consumer data and with the new loyalty programme, Pandora will be able to target the consumers
directly with content of their interest. To further accelerate our journey within data, personalisation and digital,
Pandora has decided to create a digital HUB in London, as a way to attract further digital and marketing talent to
Pandora.
Pandora continue to evolve and assure consumers are engaged with the brand and Marvel is an example of this.
Through relevant brand content, Pandora established itself as the go-to Marvel brand hub for Marvel fans. Leveraging
hype and buzz within these communities, Pandora successfully captured the hearts and minds of new and existing
consumers. Pandora saw a record breaking organic reach with 40 million impressions across social platforms and 16
million engagements the first month after launch. Marvel alone drove twice the web and email traffic as Star Wars
during pre-launch, and reached more than 1 million views on TikTok in the first 24 hours.
The pandemic continues to impact Thailand, especially the outbreak of the Omnicron variance, and during Q1 2022
Pandora has kept significant precautionary measures in place to mitigate risks. At the end of Q1 2022, 1,200
Executive
summary
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highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
6 | 35
employees in Thailand were in COVID-19 related quarantine. During the quarter, Pandora deliberately invested in
building further inventories and production capacity to mitigate the risk of potential future disruptions to the supply
chain
Inflationary pressure
From a cost perspective, Pandora see inflationary pressure across its profit and loss, impacting EBIT negatively by
approximately DKK 100 million in 2022 vs the original guidance. Despite being a fairly energy light company, Pandora
see increased cost vs original plan of roughly DKK 25 million from energy usage across its production facilities in
Thailand, offices across the world and retail stores. Additionally, increased freight cost and oil prices expect to drive
another DKK 25 million in transport cost. Finally, Pandora see increased cost from higher raw material prices. Pandora’s
main raw materials are silver and gold, which accounts for roughly one third of cost of sales. As Pandora hedge silver
and gold, immediate price movements will not impact Pandora’s performance materially before 12 months out in the
future. For 2022, the price of silver is locked at a hedged price of roughly USD 25.1oz, which is a minor increase vs
original guidance and drive a headwind of around DKK 15 million. Price movements in other raw materials such as
Iridium, Copper, Palladium and Rhodium will impact the cost of sales faster, and based on current levels, Pandora
expects a DKK 35 million headwind from other raw materials in 2022. There are several mitigating actions to cover
higher cost prices, and Pandora has historically been successful in mitigating cost increases through efficiency and
cost savings initiatives. This work continues and Pandora still see some opportunities in this area. For this reason
Pandora is also confident that it can deliver on its 2022 EBIT guidance despite these additional headwinds.
COST EXPOSURES (DIRECTIONAL)
Actuals 2021,
DKK million
Price in guidance
Estimated impact vs org. guidance, DKK
million
Energy (gas, oil and electricity)
1
95
25
Silver & Gold*
1,825
15
- Silver
1,582
25.1 USD/oz
- Gold
243
1,833 USD/oz
Other raw materials
120
35
- Iridium
25
6,100 USD/oz
- Copper
50
0.31 USD/oz
- Palladium
45
2,100 USD/oz
Total
2,040
75
Other
Actuals 2021,
DKK million
Estimated impact vs org. guidance, DKK
million
- Transport cost
700
25
Total
2,740
100
1
Energy exposure is a mix of gas, oil and electricity and the DKK 25 million impact is based on the development seen in oil and gas prices
*For silver and gold it is the hedged price impacting 2022
Performance metrics
COVID-19 continues to impact performance KPI’s. Especially when comparing vs Q1 2021, the performance need to
be interpreted with care as temporary store closures distort the year over year performance. On average around 30%
of the stores were temporarily closed in Q1 2021, mainly in European markets. In Q1 2022, Pandora will therefore
provide details vs 2019 to provide a more clean view of the underlying performance.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
7 | 35
REVENUE REVIEW
Solid growth results in historical high Q1 revenue
The revenue growth development can be illustrated as follows (supplementary comments follows below):
Q1 2022 growth composition vs Q1 2021
Organic growth was up 21% in Q1 2022, (18% vs Q1 2019), mainly driven by sell-out growth of 17% vs Q1 2021.
Organic growth was further fuelled by network expansion of 2pp, and 1pp from Takeovers of franchise stores where
no goodwill was paid, contributing with +3pp of organic growth from network development.
Forward integration supported total revenue growth in local currency with 1pp driven by store acquisitions, mainly in
US. This in line with the full year guidance. Pandora finally saw a FX tailwind of 4pp, mainly from a favourable USD
development leading to a total revenue growth of 26% in Q1 2022.
*Sell-out growth incl. temporarily closed stores, %
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
8 | 35
REVIEW OF REVENUE BY CHANNEL
Growth driven by physical stores following COVID-19 lockdowns in Q1 2021
The growth composition between channels have changed compared to Q1 2021. In Q1 2021, Pandora saw an average
of 30% temporary store closures, which drove consumers from the physical network into the online channel. In Q1
2022 the pattern changed, and consumers went back into the physical stores, which were almost fully open the entire
quarter. Pandora’s own and operated concept stores delivered organic growth of 65% vs Q1 2021.
Online continued to perform strongly vs 2019 levels, but as expected the revenue level was down vs Q1 2021 due
COVID-19 lockdowns last year. Online organic growth was around 155% vs Q1 2019 and the main contributor of
growth from a channel perspective vs 2019. Across most markets, Pandora see a greater acceptance of the online
store as a path to purchase, which is not only a general market trend, but also a testimony to the digital investments
made during the last couple of years.
Organic growth in Pandora’s wholesale business was up 14% vs Q1 2021, while third-party distribution grew 9%,
following higher sell-in and replenishment - a natural consequence of the stores closures last year. Russia, Ukraine
and Belarus are all distributors and combined these markets dragged down total organic growth with 1% in Q1 2022.
Excluding these markets, third-party distribution would have been up 48% vs Q1 2021.
QUARTERLY REVENUE DEVELOPMENT BY CHANNEL
DKK million
Q1 2022
Q1 2021
Organic
growth vs 2021
Share of
Revenue
Pandora owned
1
retail
3,925
2,956
25%
69%
- of which concept stores
2,445
1,381
65%
43%
- of which online stores
1,219
1,417
-17%
21%
- of which other points of sale
261
158
61%
5%
Wholesale
1,567
1,365
14%
28%
- of which concept stores
833
689
23%
15%
- of which other points of sale
734
676
5%
13%
Third-party distribution
198
179
9%
3%
Total revenue
5,689
4,500
21%
100%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
Executive
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highlights
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
9 | 35
REVIEW OF NETWORK DEVELOPMENT
Network expansion still planned for 2022
Pandora suspended business with the distributors in Russia and Belarus during Q1 2022 following the Russian invasion
of Ukraine. The 153 concept stores and 66 other points of sale in those markets are no longer considered part of
Pandora.
Net of the stores removed from the Pandora network in Russia and Belarus, Pandora has closed net 34 concept stores
in Q1 2022, and 74 net concept stores vs last year. As communicated at the Capital Markets Day on 14 September
2021, Pandora sees significant opportunities to expand the store network and expects to have more concept stores
in 2023 than today. The first steps in increasing the store network are planned for 2022, as Pandora expects to open
net 50-100 concept stores.
In Q1 2022, Pandora furthermore acquired 32 concept stores in US and 5 in Canada from Ben Bridge, allowing Pandora
to fully access the Californian market in which 20 of the concept stores are located. This is the first phase in
establishing a strong position on the West Coast of US. In addition to this, Pandora also entered a partnership with
Macys to open 28 shop-in-shops in 2022. Pandora values Macy’s as a strong partner to increase brand accessibility
in the US and accelerate the footprint growth in the market.
Number of points of sale
1
Q1 2022
Q4 2021
Q1 2021
Growth
Q1 2022
/Q4 2021
Growth
Q1 2022
/Q1 2021
Concept stores
2,432
2,619
2,659
-187
-227
- of which Pandora owned
2
1,464
1,423
1,394
41
70
- of which franchise owned
637
700
755
-63
-118
- of which third-party distribution
331
496
510
-165
-179
Other points of sale
4,006
4,154
4,050
-148
-44
- of which Pandora owned
2
357
334
253
23
104
- of which franchise owned
3,168
3,255
3,243
-87
-75
- of which third-party distribution
481
565
554
-84
-73
Total points of sale
3
6,438
6,773
6,709
-335
-271
1
Please refer to note 14 in the accounting notes section for more details.
2
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
3
As of Q1 2022, Pandora has excluded 153 concept stores and 66 other points of sales from third-party distribution related to Russia and Belarus
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
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REVIEW OF REVENUE BY KEY MARKET
Strong growth in most key markets
Pandora’s biggest market, the US, continued to grow and was up 7% vs Q1 2021, which translate into 62% organic
growth vs Q1 2019 or a 3-year CAGR of 17%. The growth in Q1 2022 was supported by the Marvel collection, which
was launched in February and very well received. The US performance in Q1 is in line with the expectations laid out in
the guidance for 2022. As previously communicated, a slowdown of the US market is expected in 2022 following the
impact from among others the stimulus checks implemented by the US government in 2021. The stimulus checks
were initiated in March 2021 and Q2 2021 was the strongest quarter in Pandora US last year and thereby the toughest
comp base. Data indicates that the overall US jewellery market has grown 11-18% in Q1 2022 and thereby above
Pandora US. However, data also suggest that the affordable jewellery market has been growing much slower than the
overall jewellery market.
In Q1 2022, Pandora set the first corner stone in increasing its footfall and increase brand awareness on the West
coast of US, getting access to 20 stores in California by acquiring its biggest franchise partner Ben Bridge. In total,
Pandora acquired 37 stores from Ben Bridge of which five are located in Canada. With this acquisition, Pandora gets
a stronger foothold on the West Coast of US, enabling further network expansion and the opportunity to create a
more seamless omni-channel experience. The acquisition is expected to drive roughly DKK 170 million incremental
revenue on a full year basis, converting wholesale revenue to retail revenue. Furthermore, Pandora entered a
partnership with Macys, another enabler of fully utilising the opportunity for the Pandora brand in US. The long-term
aim is to double the US business vs 2019 and 62% organic growth vs 2019 this quarter is an encouraging path towards
this goal.
The performance in China continue to be unsatisfactory and negatively impacted by COVID-19. Pandora’s Chinese
stores were formally open most of Q1, but traffic into stores was down -50% vs 2021, as many stores are located in
cities impacted by the pandemic and China’s “zero-COVID policy”. The situation worsened during March as China
went into hard lockdowns in certain cities. Performance in China in Q1 2022 therefore continued to be weak and
organic growth ended at -18% vs Q1 2021 translating into -57% vs Q1 2019. The key trading event in China was
Chinese New Year. Pandora saw some strong traction during this event, driven by not least a few China specific designs
celebrating the year of the Tiger. Pandora aim to bring more Chinese relevant designs to the market in the future,
however first step in the China strategy is to reposition the brand. The first significant steps in this reposition has
however been further postponed until market conditions stabilise. The purpose of the investment is among others
to drive traffic to the stores, which makes little sense when street traffic is impacted by COVID-19. On April 7, Irving
Holmes Wong joined the company as new General Manager for China. Pandora’s long term ambition is to triple the
China business vs 2019
Key European markets had a phenomenal performance in Q1 2022 with all four markets delivering double digit
organic growth vs both Q1 2021 and Q1 2019. Pandora is very pleased to see its more established markets, UK and
Italy, both delivering more than 30% organic growth vs 2019 in Q1. This is a testimony to the development of the
brand, which Pandora has undertaken in these two markets for the past many years, cementing their position as
market leaders in the respective countries.
France is back on a growth track and is up 35% vs Q1 2021 (16% vs Q1 2019), while Germany is up more than 40% vs
both 2021 and 2019. Both markets are less penetrated and have a lower brand awareness than UK and Italy. The two
markets have been undergoing a turnaround of the brand focusing on reducing the number of promotional days,
creating an updated media model and improve operational efficiency. These step changes were vastly finalised in
2021, creating a strong baseline of opportunity in 2022, which is visible in the strong performance here in Q1 2022.
For the third quarter in a row Germany is up more than 30% vs 2019.
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
11 | 35
The Australian market delivered flat organic growth vs Q1 2021 and 2019. Australia saw COVID-19 negatively
impacting performance in Q1 2022, as travel and quarantine restrictions impacted traffic negatively. Traffic in
physical stores were down approximately -20% in Q1 2022 vs 2021. January is the key holiday season in Australia,
and fear of infections impacted traffic negatively. This drove consumers online and Australia had 11% online organic
growth in the quarter. Online growth was supported by a successful C&C performance, which contributed with 20%
of online sales; the highest share in all of Pandora’s key markets.
Finally, it is worth noting that Pandora’s business outside the seven key markets was also strong in Q1 2022 - delivering
35% organic growth vs Q1 2021. The growth was in particular supported by the two biggest markets in Rest of
Pandora, Spain and Mexico, which both delivered more than 50% organic growth. In Q1 2022, Spain had a revenue
the size of Germany while Mexico accounted for roughly DKK 175 million.
QUARTERLY REVENUE DEVELOPMENT BY KEY MARKET
DKK million
Q1 2022
Q1 2021
Organic growth
vs 2021
Share of revenue
US
1,650
1,391
7%
29%
China
254
281
-18%
4%
UK
808
587
32%
14%
Italy
586
440
33%
10%
Australia
245
243
0%
4%
France
262
194
35%
5%
Germany
273
191
43%
5%
Total top-7 markets
4,077
3,326
16%
72%
Rest of Pandora
1,612
1,174
35%
28%
Total revenue
5,689
4,500
21%
100%
Please refer to note 3 in the accounting notes section for details on sell-out growth per key market.
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12 | 35
PROFITABILITY
Strong profitability continues
As illustrated above, the underlying EBIT margin in Q1 2022 is significantly stronger than last year, mainly a result of
strong operating leverage.
In Q1 2021, the EBIT margin was supported by DKK 98 million from government support and rent concessions related
to COVID-19, elevating the EBIT margin last year by 2.0pp.
In Q1 this year, the EBIT margin was negatively impacted by a few non-recurring factors. Firstly, the Russian invasion
of Ukraine has forced Pandora to suspend all activities with the Russian and Belarus distributors. This has led to a
write-down of the trade receivables towards the Russian distributor of around DKK 55 million. As in Q3 and Q4,
Pandora took significant precautionary measures in Thailand due to COVID-19 and in Q1 2022, the additional cost
amounted to approx. DKK 30 million. This included setting up temporary on-site lodging to mitigate the risk of
infections. Pandora anticipates to continue taking certain pre-cautionary measures in Thailand during the rest of
2022. Finally, the EBIT margin is temporarily dragged down by 0.8pp due to inventories bought back in connection
with taking over franchise partners.
Adjusting for above, the underlying development of the EBIT margin shows an improvement of 7.6pp of which 5.3pp
is driven by operating leverage following the solid revenue growth in the quarter. Furthermore, the EBIT margin is
improved by efficiency gains in the gross margin, as both lower promotional levels, favourable channel mix and higher
production volume (cost per unit decreased) improved the underlying EBIT margin by roughly 2pp.
The EBIT margin was negatively impacted by rising commodity prices (mainly silver) leading to a headwind of around
-1.9pp. This is partly offset by favourable foreign exchange rate developments (mainly USD and Thai baht) of around
1.4pp. The headwinds from rising commodity prices are expected to impact Q1 and Q2 the hardest, and gradually
ease off during Q3 and Q4.
In absolute terms, EBIT increased 45% from DKK 903 million in Q1 2021 to DKK 1,310 million in Q1 2022.
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GROSS MARGIN
In Q1 2022, the gross margin remained strong and is roughly unchanged vs Q1 2021 at 76.0%.
Pandora continued its significant measures to protect employees and production in Thailand from COVID-19
impacting gross margin negatively by 0.5pp, please also refer to the EBIT margin section above. Furthermore, Pandora
recognised a temporary additional drag of around -0.8pp due to take-over of inventory at wholesale value from
acquired franchise partners (including Ben Bridge). Finally, gross margin is dragged down by increasing commodity
prices, which had a negative impact of -1.9pp, mainly related to silver.
The above headwinds were offset by favourable FX development, mainly from Thai baht and USD of 1.0pp.
Additionally, the gross margin was positively impacted by lower promotional activity (more full-price sell-through)
and a favourable channel mix with more sales coming through physical O&O stores. Finally, Pandora see a positive
efficiency impact from higher production volume.
GROSS MARGIN AND GROSS PROFIT
DKK million
Q1 2022
Q1 2021
Growth
Revenue
5,689
4,500
26%
Cost of sales
-1,365
-1,065
28%
Gross profit
4,324
3,436
26%
Gross margin
76.0%
76.3%
-0.3pp
OPERATING EXPENSES
Total operating expenses was DKK 3,014 million in Q1 2022, up 16% in constant foreign exchange rates vs Q1 2021,
while the OPEX ratio decreased from 56.3% in Q1 2021 to 53.0% in Q1 2022.
Marketing expenses increased vs Q1 2021, as overall activity level is up following the store closures in Q1 2021.
Furthermore competition has increased, which also put pressure on the cost for the best marketing spots. As
expected, the Q1 2022 marketing ratio ended at 13%, in line with last year and in the low end of the 13-15% guided
range for full year marketing expenses.
Sales and distribution expenses was up 16% in constant foreign exchange rates vs Q1 2021. In Q1 2021, Pandora
received government support and rent concessions of DKK 98 million. Pandora has not received any material
government support in Q1 2022. Furthermore sales and distribution expenses are negatively impacted in Q1 2022
by a one-off provision related to a trade receivable towards the Russian distributor of around DKK 55 million.
Adjusting for these one-offs, sales and distribution expenses are up 5% or DKK 83 million in constant foreign
exchange rates. The remaining increase is mainly related to the expansion of the Pandora Owned store network.
Administrative expenses increased by 4% in constant foreign exchange rates compared with Q1 2021. As a share of
revenue, administrative expenses dropped 1.8pp to 9.0% in Q1 2022.
OPERATING EXPENSES
DKK million
Q1 2022
Q1 2021
Growth in
constant FX
Share of revenue
Q1 2022
Share of revenue
Q1 2021
Sales and distribution expenses
-1,760
-1,471
16%
30.9%
32.7%
Marketing expenses
-745
-578
24%
13.1%
12.8%
Administrative expenses
-509
-484
4%
9.0%
10.8%
Total operating expenses
-3,014
-2,533
16%
53.0%
56.3%
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FINANCIAL EXPENSES AND TAX
Net financials in Q1 2022 ended at a cost of DKK 10 million, in large driven by losses on foreign exchange rate hedges
and IFRS 16 related interest on lease payments, partly offset by favourable foreign exchange adjustments to trade
receivables and net working capital items.
The effective tax rate ended at 23.5% for Q1 2022, in line with guidance of 23-24% for the full year 2022, and above
the Q1 2021 level due to non-deductible costs in China and Panama (cluster head office for Latin America).
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CASH FLOW & BALANCE SHEET
Net working capital increases as the deliberate inventory build-up continues
The net working capital ended at 3.5% of the last 12 months revenue in Q1 2022 compared with -0.4% in Q1 2021.
The increase was mainly driven by a deliberate inventory build-up. Pandora has increased inventories during 2021 and
continued this into Q1 2022 in order to mitigate risk of stock outs and disruptions in the supply chain. The inventory
has increased by more than DKK 1 billion the past year and more than DKK 0.5 billion in the quarter alone. Pandora
plans to continue increasing inventories during the rest of 2022, resulting in a negative impact on cash conversion in
2022.
Trade receivables in absolute amounts are up vs Q1 2021 reflecting an increase in wholesale revenue vs Q1 2021.
Wholesale Days Sales Outstanding (DSO) ended at 28 days up 3 days vs Q1 2021 and continue to be at a healthy
level. Total DSO, including retail receivables, ended at 12 days by the end of Q1 2022, same level as Q1 2021.
In line with normal seasonality, cash conversion was negative in Q1. Free cash flow incl. lease payments ended at DKK
-1.4 billion corresponding to a cash conversion of -110% in Q1 2022. The cash conversion was, however, more
negative than normal seasonality due to the above mentioned inventory build-up as well as a significant increase in
cash tax payments . CAPEX ended at roughly 3% of revenue in Q1 2022, up 1pp vs Q1 2021. Pandora expects CAPEX
to increase during the rest of 2022 targeting full year CAPEX at around 6% of revenue.
The improved underlying performance and a continued low invested capital are all positively impacting ROIC. ROIC
ended at 49% in Q1 2022, up 20pp vs Q1 2021.
NET WORKING CAPITAL AS A SHARE OF THE LAST 12 MONTHS’ REVENUE
Share of preceding 12 months' revenue
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Inventories
14.4%
12.8%
14.4%
11.8%
12.3%
Trade receivables
3.2%
4.3%
3.6%
3.2%
3.1%
Trade payables
-10.2%
-14.0%
-11.0%
-10.3%
-11.8%
Other net working capital elements
-3.9%
-8.2%
-6.7%
-4.9%
-4.0%
Total
3.5%
-5.0%
0.2%
-0.3%
-0.4%
The financial leverage, NIBD to EBITDA excl. restructuring costs, was 0.9x by the end of March and in the middle of
the capital structure policy range of NIBD to EBITDA between 0.5 and 1.5x. The increase in financial leverage from
0.4x in Q4 2021 is not least driven by the DKK 2.7 billion cash returns to shareholders.
In Q1 2022, Pandora lifted EPS by 67% vs Q1 2021 to DKK 10.5. This is driven by the record breaking revenue in the
quarter which drives operating leverage. Pandora target an EPS approaching DKK 60 by the end of 2023.
Balance Sheet
Total non-current assets increased to DKK 13.0 billion at the end of Q1 2022 (2021: DKK 12.6 billion), mainly due to
an increase in right-of-use-assets as a result of new leases and lease renewals and an increase in deferred tax assets.
By the end of Q1 2022, equity in Pandora amounted to DKK 5.5 billion compared to DKK 7.0 billion in 2021. The
decrease was primarily driven by payout of DKK 2.7 billion to its shareholder through a combination of dividends and
share buybacks, partly offset by the profit of the quarter.
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FINANCIAL GUIDANCE
Sustainable and profitable growth to continue
Following the strong performance in Q1 and a renewed outlook for 2022, Pandora updates its financial guidance to
“organic growth of 4-6%” (previously “3-6%”) and “EBIT margin of 25-25.5%” (unchanged).
During Q1 2022, the business environment worsened considerably thereby increasing the risk for 2022 compared
with the original guidance. Negative impacts from the war, cost inflation, potential impact on consumer demand due
to inflation and higher interest rates as well as COVID-19 are all adding pressure to the rest of 2022. Despite these
headwinds, Pandora expect to deliver organic revenue growth in line with or above the original guidance and will
manage the cost of the war as well as the cost pressure from higher inflation within the current EBIT margin guidance.
The new guidance is based on certain directional assumptions for organic growth, as illustrated below:
REVENUE GUIDANCE
The organic growth guidance can be illustrated as follows:
Q1 2022 performance was better than assumed in the original guidance, among others, due to less impact from
COVID-19. The original guidance assumed a high single digit negative impact in Q1 2022 from COVID-19 (equal to
negative low single digit negative in full year 2022) in the low end of the guided range. This did not fully materialise,
as the negative effects was mainly visible in China only. However COVID-19 continue to impose a risk for the rest of
2022. Furthermore, the updated guidance assumes a risk that inflationary pressure will have a negative impact on
consumers demand. This is obviously associated with high uncertainty. Together with COVID-19, this is expected to
impact organic growth negatively with low single digits.
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As a direct consequence of the war between Russia and Ukraine, there is a negative impact of 1% on revenue
imbedded in the new guidance, which was not assumed in the original guidance. This assumes no reported revenue
in Russia, Belarus and Ukraine during the remainder of 2022.
The expectations for Pandora US remains unchanged to deliver between high single-digit negative and slightly positive
in 2022. This equals an organic growth CAGR in the low teens to high mid-teens compared to 2019.
Based on a strong Q1 2022, Pandora raises its expectations to the organic growth in Rest of world compared with the
original guidance. The new guidance assumes “Low teens” positive growth for Rest of world, corresponding to high-
single digit growth for rest of year. The tailwind from COVID-19 closures in 2021 is included in the “Low teens”
assumption.
PROFITABILITY GUIDANCE
Pandora experience inflationary pressure across the value chain, which combined with other one-off items drive an
additional roughly DKK 200 million in cost vs the original guidance. At current levels, Pandora still expects to mitigate
these incremental costs within the EBIT margin guidance of 25.0-25.5% in 2022.
The DKK 200 million are driven by inflationary pressures from energy prices, other raw materials and transportation
adding a total of around DKK 100 million. Furthermore, write-down of the trade receivable towards the Russian
distributor and increased cost in Thailand mitigating COVID-19 disruptions adds another DKK 100 million.
Current foreign exchange rates, if unchanged, are estimated to have a favourable impact on the EBIT margin in 2022
of approximately 0.8% vs 2021. This corresponds to a 0.3pp tailwind vs the original guidance assumptions.
Commodity price, mainly from silver prices, are expected to negatively impact the EBIT margin in 2022 with -1.0%,
which is the same as in the original guidance.
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2022 GUIDANCE - OTHER PARAMETERS
The updated guidance for store network development is net 25-50 other points of sales net openings (previously
“50-75”). The guidance of 50-100 net concept store openings remains unchanged from previous guidance and
excludes Russia and Belarus. CAPEX is unchanged from previous guidance and expected to end at around 6% share
of revenue following investments into opening new stores, store refits, investments in the production facilities in
Thailand and IT. The effective tax rate is expected to be 23-24%, up from 22-23% prior years and unchanged from
previous guidance.
FOREIGN EXCHANGE AND COMMODITY ASSUMPTIONS AND IMPLICATIONS – AS OF APRIL 29, 2022
Average 2021
Average 2022
2022 Y-Y Financial
Impact
USD/DKK
6.29
6.95
THB/DKK
0.20
0.20
GBP/DKK
8.65
8.88
CNY/DKK
0.98
1.06
AUD/DKK
4.72
5.00
Silver/USD (per ounce)
21.1
25.1
REVENUE (DKK million)
Approx. 1.300
EBIT (DKK million)
Approx. 300
EBIT margin (FX)
Approx. 0.8%
EBIT margin (Commodities)
Approx. -1.0%
CAPITAL STRUCTURE POLICY AND CASH DISTRIBUTION
At the end of March 2022, Pandora’s leverage was 0.9x NIBD to EBITDA, in the middle of the capital structure policy
of 0.5-1.5x, up from 0.4x by the end of December 2021. The increase is due to normal season as well as the DKK 2.7
billion pay out to shareholders, of which DKK 1.6 billion came from an ordinary dividend of DKK 16 per share. The rest
came from share buybacks. In total, Pandora plan to pay out DKK 5.3 billion to its shareholders in 2022.
At Pandora A/S’ Annual General Meeting on 10 March 2022, it was resolved to reduce the Company’s share capital
with a nominal amount of DKK 4,500,000 by cancellation of 4,500,000 treasury shares of DKK 1. The share capital
decrease was announced in the Danish Business Authority's IT-system on 10 March 2022 and the 4-week notification
period expired with no objections. The Board of Directors therefore on 8 April 2022 resolved to effect the share
capital reduction. After reduction of the share capital, the Company’s share capital is nominally DKK 95,500,000,
divided into shares of DKK 1.
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SUSTAINABILITY
You find the company’s sustainability targets in our annual sustainability report on pandoragroup.com.
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OTHER EVENTS
OTHER IMPORTANT EVENTS IN Q1 2022 AND AFTER THE REPORTING PERIOD
At Pandora A/S ’ Annual General Meeting on 10 March 2022, it was resolved to reduce the Company’s share capital
with a nominal amount of DKK 4,500,000 by cancellation of 4,500,000 treasury shares of DKK 1. The share capital
decrease was announced in the Danish Business Authority's IT-system on 10 March 2022 and the 4-week notification
period expired with no objections. The Board of Directors therefore on 8 April 2022 resolved to effect the share
capital reduction. After reduction of the share capital, the Company’s share capital is nominally DKK 95,500,000,
divided into shares of DKK 1.
Pandora announced on 1 April 2022 that Irving Holmes Wong will join the company as Senior Vice President & General
Manager of the Greater China cluster, reporting to Chief Commercial Officer Martino Pessina. Irving Holmes Wong
joined Pandora on 7 April 2022.
FINANCIAL CALENDAR 2022
The expected dates for publication of financial announcements in 2022 for Pandora A/S are as follows:
16 August 2022 Interim Financial Report for the second quarter/first six months of 2022
08 November 2022 Interim Financial Report for the third quarter/first nine months of 2022
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21 | 35
CONTACT
CONFERENCE CALL
A conference call for investors and financial analysts will be held today at 11.00 CET and can be joined online at
www.pandoragroup.com. The presentation for the call will be available on the website before the call.
The following numbers can be used by investors and analysts:
DK: +45 78768490
SE: +46-4-0682-0620
UK: +44-203-7696819
US: +1 646-787-0157
Please use PIN: 837462
Link to webcast: https://streams.eventcdn.net/pandora/2022q1
ABOUT PANDORA
through 6.
Headquartered in C openh agen , Denmark , Pandora employs 27,000 people worldwide and crafts its jewellery at two
LEED-certified facilities in Thailand using mainly recycled silver and gold. Pandora is committed to leadership in
sustainability and has set science-based targets to reduce greenhouse gas emissions by 50% across its own
operations and value chain by 2030. The company is listed on the Nasdaq Copenhagen stock exchange and
generated sales of DKK 23.4 billion (EUR 3.1 billion) in 2021.
For more information, please contact:
INVESTOR RELATIONS
John Bäckman
VP, Investor Relations, Tax & Treasury
+45 5356 6909
jobck@pandora.net
CORPORATE COMMUNICATIONS
Mads Twomey-Madsen
VP, Corporate Communications & Sustainability
+45 2510 0403
madt@pandora.net
Kristoffer Malmgren
Director, Investor Relations
+45 3050 1174
kram@pandora.net
Johan Melchior
Director, External Relations
+45 4060 1415
jome@pandora.net
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FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
DKK million
Notes
Q1 2022
Q1 2021
FY 2021
Revenue
3
Cost of sales
-1,365
-1,065
-5,590
Gross profit
Sales, distribution and marketing expenses
-2,505
-2,049
-9,939
Administrative expenses
-509
-484
-2,026
Operating profit
Finance income
Finance costs
-98
-109
-613
Profit before tax
Income tax expense
-306
-182
-1,218
Net profit for the period
Earnings per share, basic, DKK
Earnings per share, diluted, DKK
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
DKK million
Q1 2022
Q1 2021
FY 2021
Net profit for the period
Other comprehensive income:
Items that may be reclassified to profit/loss for the period
Exchange rate adjustments of investments in subsidiaries
Fair value adjustment of hedging instruments
-384
-417
Tax on other comprehensive income, hedging instruments, income/expense
-39
Items that may be reclassified to profit/loss for the period, net of tax
-129
Items not to be reclassified to profit/loss for the period
Actuarial gain/loss on defined benefit plans, net of tax
Items not to be reclassified to profit/loss for the period, net of tax
Other comprehensive income, net of tax
-129
Total comprehensive income for the period
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CONSOLIDATED BALANCE SHEET
DKK million
Notes
2022
31 March
2021
31 March
2021
31 December
ASSETS
Goodwill
9
Brand
Distribution
Other intangible assets
Total intangible assets
Property, plant and equipment
Right-of-use assets
10
Deferred tax assets
Other financial assets
Total non-current assets
Inventories
Trade receivables
7
Right-of-return assets
Derivative financial instruments
5,6
Income tax receivable
Other receivables
Cash
Total current assets
Total assets
EQUITY AND LIABILITIES
Share capital
Treasury shares
-4,458
-92
-3,416
Reserves
Retained earnings
Total equity
Provisions
Loans and borrowings
10
Deferred tax liabilities
Total non-current liabilities
Provisions
Refund liabilities
Contract liabilities
Loans and borrowings
10
Derivative financial instruments
5,6
Trade payables
Income tax payable
Other payables
Total current liabilities
Total liabilities
Total equity and liabilities
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
DKK million
Share
capital
Treasury
shares
Translation
reserve
Hedging
Reserve
Dividend
proposed
Retained
earnings
Total
equity
2022
Equity at 1 January
-3,416
-110
Net profit for the period
Other comprehensive income, net of tax
Total comprehensive income for the period
Share-based payments
-163
Purchase of treasury shares
-1,239
-1,239
Proposed dividend
-1,516
Dividend paid
-1,516
-1,514
Equity at 31 March
-4,458
2021
Equity at 1 January
-93
Net profit for the period
Other comprehensive income, net of tax
-300
-8
-129
Total comprehensive income for the period
-300
Share-based payments
Equity at 31 March
-92
-84
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CONSOLIDATED STATEMENT OF CASH FLOW
1
Cash comprises cash at bank and in hand.
The above cannot be derived directly from the income statement and the balance sheet.
DKK million
Notes
Q1 2022
Q1 2021
FY 2021
Operating profit
Depreciation and amortisation
Share-based payments
Change in inventories
-354
-355
-799
Change in receivables
-77
Change in payables and other liabilities
-1,811
-1,441
Other non-cash adjustments
Interest etc. received
Interest etc. paid
-100
-61
-468
Income taxes paid
-733
-155
-832
Cash flows from operating activities, net
-1,111
-316
Acquisitions of subsidiaries and activities, net of cash acquired
8
-291
-14
-66
Purchase of intangible assets
-65
-50
-289
Purchase of property, plant and equipment
-99
-60
-296
Change in other non-current assets
Proceeds from sale of property, plant and equipment
Cash flows from investing activities, net
-447
-117
-631
Dividend paid
-1,514
-1,479
Dividend paid – withholding tax
Purchase of treasury shares
-1,239
-3,325
Proceeds from loans and borrowings
Repayment of loans and borrowings
-29
-3,004
Repayment of lease commitments
-274
-226
-991
Cash flows from financing activities, net
-256
-7,484
Net increase/decrease in cash
-355
-689
-1,887
Cash at beginning of period
1
Exchange gains/losses on cash
Net increase/decrease in cash
-355
-689
-1,887
Cash at end of period
1
Cash flows from operating activities, net
-1,111
-316
6,228
- Interests etc. received
-1
-
-3
- Interests etc. paid
100
61
468
Cash flows from investing activities, net
-447
-117
-631
- Acquisition of subsidiaries and activities, net of cash acquired
291
14
66
Free cash flow excl. lease payments
-1,168
-359
6,128
Free cash flow incl. lease payments
-1,442
-586
5,137
Unutilised committed credit facilities
2,269
6,998
6,023
Executive
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
26 | 35
ACCOUNTING NOTES
NOTE 1 – Accounting policies
The unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34
‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (IASB) and adopted by the
European Union and additional Danish disclosure requirements for interim financial reporting of listed companies.
The accounting policies applied are consistent with the accounting policies set out in the Annual Report 2021.
Due to rounding, numbers presented throughout this report may not add up precisely to the totals and percentages
may not precisely reflect the absolute figures.
Pandora presents financial measures in the interim financial report that are not defined according to IFRS. Pandora
believes that these non-GAAP measures provide valuable information to investors and Pandora’s management when
evaluating performance. Since other companies might calculate these differently from Pandora, they may not be
comparable to the measures used by other companies. These financial measures should therefore not be considered
a replacement for measures defined under IFRS. For the definitions of other alternative performance measures used
by Pandora which are not defined by IFRS, refer to note 5.6 in the consolidated financial statements in the Annual
Report 2021.
New standards, interpretations and amendments adopted by Pandora
Pandora has adopted all new or amended standards (IFRS) and interpretations (IFRIC) as adopted by the EU and which
are effective for the financial year beginning on 1 January 2022. The implementation of these new or amended
standards and interpretations had no material impact on the financial statements for the quarter.
NOTE 2 – Significant accounting estimates and judgements
In preparing the consolidated interim financial statements, Management makes various accounting estimates and
assumptions, which form the basis of presentation, recognition and measurement of Pandora’s assets and liabilities.
All significant accounting estimates and judgements are consistent with the description in the Annual Report 2021
to which we refer.
Due to the Russian invasion in Ukraine, Pandora has assessed the impact of the overall uncertainty on both markets.
As Pandora has limited presence in both markets, the impact on the financial statements is insignificant.
NOTE 3 – Segment and revenue information
Pandora's activities are segmented into two reportable segments (Global Business Units), each responsible for the
end-to-end performance of products. One Global Business Unit is responsible for Moments and Collabs, while the
other drives the newer collections and innovations.
The two operating segments include all channels relating to the distribution and sale of Pandora products.
The non-unit driven revenue, comprising mainly of franchise fees, is allocated to the different revenue categories
proportionately.
Management monitors the profitability of the operating segments separately for the purpose of making decisions
about resource allocation and performance management. Segment results are measured at gross profit as presented
in the table below.
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
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SEGMENT INFORMATION
DKK million
Moments and
Collabs
Style and
Upstream Innovation
Group
Q1 2022
Revenue
4,197
1,492
5,689
Cost of sales
-1,057
-308
-1,365
Gross profit
3,141
1,184
4,324
Operating expenses
-3,014
Consolidated operating profit (EBIT)
1,310
Profit margin (EBIT margin)
23.0%
Q1 2021
1
Revenue
3,252
1,249
4,500
Cost of sales
-795
-269
-1,065
Gross profit
2,456
979
3,436
Operating expenses
-2,533
Consolidated operating profit (EBIT)
903
Profit margin (EBIT margin)
20.1%
1
The ‘Garden’ collection has been re-allocated from Style and Upstream Innovation to Moments and Collabs in Q2 2021. Comparative figures for Q1 2021 were
restated accordingly.
REVENUE BY GLOBAL BUSINESS UNITS
DKK million
Q1 2022
Q1 2021
1
Sell-out growth
vs 2021
Local currency
growth
Share of
Revenue
Moments and Collabs
4,197
3,252
20%
25%
74%
- Moments
3,602
2,866
17%
22%
63%
- Collabs
595
386
41%
49%
10%
Style and Upstream Innovation
1,492
1,249
11%
15%
26%
- Timeless
945
826
5%
10%
17%
- Signature
396
364
5%
5%
7%
- Me
142
58
132%
141%
3%
- Brilliance
9
-
-
-
0%
Total revenue
5,689
4,500
17%
22%
100%
1
The ‘Garden’ collection has been re-allocated from Style and Upstream Innovation to Moments and Collabs in Q2 2021. Comparative figures for Q1 2021 were
restated accordingly.
Goods transferred at a point in time
5,672
4,485
Services transferred over time
17
16
Total revenue
5,689
4,500
Executive
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
28 | 35
REVENUE DEVELOPMENT IN THE KEY MARKETS
DKK million
Q1 2022
Q1 2021
Sell-out growth vs
2021
Growth in
local currency
US
1,650
1,391
0%
10%
China
254
281
-31%
-18%
UK
808
587
45%
32%
Italy
586
440
35%
33%
Australia
245
243
-2%
0%
France
262
194
33%
35%
Germany
273
191
88%
43%
Total top-7 markets
4,077
3,326
13%
17%
Rest of Pandora
1,612
1,174
32%
35%
Total revenue
5,689
4,500
17%
22%
REVENUE BY CHANNEL
DKK million
Q1 2022
Q1 2021
Growth in
local currency
Retail physical stores
1
2,706
1,539
71%
Retail online stores
1,219
1,417
-17%
Wholesale and third-party distribution
1,764
1,544
10%
Total revenue
5,689
4,500
22%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
The use of sales channels for the distribution of Pandora jewellery depends on the underlying market maturity and
varies within markets but is consistent when viewed between segments.
NOTE 4 – Seasonality of operations
Due to the seasonal nature of the jewellery business, higher revenue and profits are historically realised in the fourth
quarter.
NOTE 5 – Financial risks
Pandora’s overall risk exposure and financial risks, including risks related to commodity prices, foreign currency, credit,
liquidity and interest rates, are described in the disclosures in note 4.4 in the consolidated financial statements in the
Annual Report 2021.
Net interest-bearing debt amounted to DKK 7.2 billion at the end of Q1 2022 (2021: 2.9 billion) corresponding to a
financial leverage of 0.9x (2021: 0.4x). The increase in net interest-bearing debt is mainly driven by cash returns to
shareholders (DKK 2.7 billion) and an increase in net working capital (DKK 2.1 billion).
Outstanding committed loan facilities (end of March 2022)
Available facilities
DKK million
Maturity date
Drawn amount
DKK million
Available
liquidity
Revolving Credit Facilities
7,066
April 2026
4,797
2,269
Total
7,066
4,797
2,269
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
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NOTE 6 – Derivative financial instruments
Derivative financial instruments are measured at fair value and in accordance with level 2 in the fair value hierarchy
(IFRS 13).
See note 4.5 to the consolidated financial statements in the Annual Report 2021.
NOTE 7 – Trade receivables
NOTE 8 – Business combinations
In Q1 2022, Pandora took over 37 concept stores in US and Canada in 2 business combinations. Net assets acquired
mainly consist of store properties, inventories and related liabilities. The total purchase price for the acquisitions was
DKK 291 million. Based on the purchase price allocations, goodwill was DKK 194 million. Goodwill from the acquisitions
is mainly related to the synergies from converting the stores from wholesale to Pandora owned retail. Of the goodwill
acquired, DKK 194 million is deductible for income tax purposes.
Cost relating to the acquisitions was immaterial and has been recognised as operating expenses in the income
statement.
Contribution to Group revenue and net earnings from acquisitions for the period 1 January – 31 March 2022 was
DKK 31 million and DKK 10 million respectively. On a pro forma basis, if the acquisitions had been effective from 1
January 2022, the impact on Group revenue and net earnings for the period 1 January – 31 March 2022 would have
been approximately DKK 56 million and DKK 18 million.
ACQUISITIONS
DKK million
Q1 2022
FY 2021
Distribution rights
-
13
Property, plant and equipment
90
84
Inventories
78
34
Assets acquired
168
131
Non-current liabilities
43
50
Payables
2
-
Other current liabilities
27
27
Liabilities assumed
71
77
Total identifiable net assets acquired
97
54
Goodwill arising on the acquisitions
194
12
Purchase consideration
291
66
Cash movements on acquisitions:
Cash acquired
0
-
Net cash flow on acquisitions
291
66
Business combinations after the reporting period
No acquisitions, to an extent of significance to Pandora, took place after the reporting period.
DKK million
2022
31 March
2021
31 December
Receivables related to third-party distribution and wholesale
540
672
Receivables related to retail revenue sales
250
337
Total trade receivables
790
1,009
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
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NOTE 9 – Goodwill
DKK million
2022
31 March
2021
31 December
Cost at 1 January
4,418
4,247
Acquisition of subsidiaries and activities in the period
194
12
Exchange rate adjustments
48
159
Cost at the end of the period
4,660
4,418
No impairment indication was identified based on the information regarding the market and the forecast. The latest
impairment test was carried out 31 December 2021 and the test confirmed a substantial headroom between the
carrying amount and the value in use. All the assumptions used are as described in the Annual Report 2021.
NOTE 10 – Assets and liabilities related to leases
Amounts recognised in the balance sheet:
RIGHT-OF-USE ASSETS
DKK million
2022
31 March
2021
31 December
Property
2,586
2,507
IT
3
3
Cars
14
14
Other
8
8
Total right-of-use assets
2,610
2,532
Out of the total increase of DKK 0.1 billion in right-of-use-assets in the period 1 January – 31 March 2022, DKK 0.3
billion relates to renewals of lease contracts and new leases, partially offset by decrease of DKK 0.2 billion as a result
of depreciation and currency exchange movement. The development in right-of-use-assets is further affected by
the timing of renewals of lease contracts and new leases including the negotiation of more favourable leasing terms.
LEASE LIABILITIES
DKK million
2022
31 March
2021
31 December
Non-current
1,768
1,724
Current
907
886
Total lease liabilities
2,675
2,610
Lease liabilities are recognised in loans and borrowings in the balance sheet.
Amounts recognised in the income statement:
RECOGNISED DEPRECIATION ON RIGHT-OF-USE ASSETS CHARGED TO THE INCOME STATEMENT FOR THE PERIOD
DKK million
1 January –
31 March 2022
1 January –
31 March 2021
Property
262
293
Cars
2
3
Other
1
1
Total depreciation on right-of-use assets for the period
266
297
OTHER ITEMS RELATING TO LEASES
DKK million
1 January –
31 March 2022
1 January –
31 March 2021
Interest expense
-28
-24
Total interest for the period
-28
-24
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
31 | 35
Costs recognised in the period for short term and low value leases were DKK 12 million (2021 Q1: DKK 12 million).
Expenses are recognised on a straight line basis.
Total cash outflow relating to leases was DKK 398 million for 2022 (2021 Q1: DKK 312 million). This comprises of
fixed lease payments in scope of IFRS 16 of DKK 274 million (2021 Q1: DKK 226 million), variable lease payments of
DKK 84 million (2021 Q1: DKK 50 million), interest paid of DKK 28 million (2021 Q1: DKK 24 million) and short term
and low value leases of DKK 12 million (2021 Q1: DKK 12 million). Payments related to variable leases and short term
and low value leases are not included in the lease liabilities.
Due to COVID-19, repayment of certain fixed leases were negotiated and agreed with landlords and deferred by
approximately DKK 67 million in Q1 2021. In addition, Pandora received rent concessions from landlords in Q1 2021
amounting to DKK 16 million, which was recognised under Sales and Distribution expenses in the profit and loss
statement. Overall financing cash flow was positively impacted by DKK 83 million due to rent relief and rent deferrals
in 2021. The impact in 2022 is insignificant due to limited COVID-19 impact.
NOTE 11 – Trade payables
The Group generally accepts that vendors sell-off their receivables arising from the sale of goods and services to the
Group to a third party. Pandora has established a supply chain financing programme where vendors can sell off their
receivables from Pandora at attractive terms, based on invoices approved by Pandora, but at the bank's sole dis-
cretion. Pandora is not directly or indirectly a party to these agreements. The amounts payable to suppliers included
in the supply chain financing programme are classified as trade payables in the balance sheet as well as in the cash
flow statement (working capital within cash flow from operations) and amounts to DKK 71 million at 31 March 2022.
NOTE 12 – Contingent liabilities
Reference is made to note 5.1 to the consolidated financial statements in the Annual Report 2021.
NOTE 13 – Related parties
Related parties with significant interests
Other related parties of Pandora with significant influence include the Board and the Executive Management of this
Company and their close family members. Related parties also include companies in which the persons have control
or significant interests.
Transactions with related parties
Pandora did not enter into any significant transactions with members of the Board or the Executive Management,
except for compensation and benefits received because of their membership of the Board, employment with
Pandora or shareholdings in Pandora.
Executive
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4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
32 | 35
NOTE 14 – Store network, concept store development
1
Total concept stores
O&O concept stores
Number
of concept
stores
Q1 2022
Number
of concept
stores
Q4 2021
Number
of concept
stores
Q1 2021
Growth
Q1 2022
/ Q4 2021
Growth
Q1 2022
/Q1 2021
Number
of concept
stores
O&O
Q1 2022
Growth
O&O
stores
Q1 2022
/ Q4 2021
Growth
O&O
stores
Q1 2022
/Q1 2021
US
391
388
391
3
0
224
37
45
China
209
214
228
-5
-19
191
-5
-25
UK
208
211
216
-3
-8
176
6
38
Italy
146
146
146
0
0
107
0
0
Australia
124
125
123
-1
1
43
0
4
France
120
122
120
-2
0
78
0
2
Germany
133
135
137
-2
-4
130
-2
-4
Total top-7 markets
1,331
1,341
1,361
-10
-30
949
36
60
Rest of Pandora
948
1,278
1,298
-177
-197
515
5
10
All markets
2,432
2,619
2,659
-187
-227
1,464
41
70
1
Includes 7 key markets measured on revenue for FY 2021. All markets with 10 or more concept stores can be found in the Excel appendix uploaded on
www.pandoragroup.com
NOTE 15 – Commodity hedging
It is Pandora’s policy to hedge at least an average of 70% of the Group’s expected gold and silver consumption based
on a rolling 12-months production plan. The below table illustrates the timing of the hedges related to the purchase
of silver for production, i.e. excluding the time lag effect from inventory to Cost of sales (when the product is sold).
The time-lag from use in production to impact on Cost of sales is usually 2-7 months.
HEDGED AND REALISED PURCHASE PRICES (AT USE OF THE SILVER AND GOLD FOR PRODUCTION)
USD / OZ
Realised in
Q1 2022
Hedged
Q2 2022
Hedged
Q3 2022
Hedged
Q4 2022
Hedged
Q1 2023
Gold price
1,820
1,818
1,795
1,853
1,954
Silver price
26.04
25.23
23.87
23.69
24.77
Commodity hedge ratio, %
Realised
70-100%
70-90%
50-70%
30-50%
NOTE 16 – Subsequent events
As described in “Other events” in the Management review, Pandora is not aware of events after 31 March 2022, which
are expected to materially impact the Group’s financial position.
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
33 | 35
QUARTERLY OVERVIEW
DKK million
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Financial highlights
Revenue
5,689
9,011
4,728
5,155
4,500
Organic growth, %
21%
10%
14%
84%
13%
Sell-out growth incl. temporarily closed stores, %
17%
11%
5%
62%
21%
Earnings before interests, tax, depreciations and
amortisations (EBITDA)
1,772
3,267
1,393
1,762
1,416
Operating profit (EBIT)
1,310
2,678
957
1,301
903
EBIT margin, %
23.0%
29.7%
20.2%
25.2%
20.1%
Net financials
-10
-211
-137
-21
-92
Net profit for the period
995
1,904
635
992
628
Financial ratios
Revenue growth, DKK, %
26%
14%
16%
79%
8%
Revenue growth, local currency, %
22%
11%
15%
85%
13%
Gross margin, %
76.0%
75.7%
75.5%
77.1%
76.3%
EBITDA margin, %
31.1%
36.3%
29.5%
34.2%
31.5%
EBIT margin, %
23.0%
29.7%
20.2%
25.2%
20.1%
Effective tax rate, %
23.5%
22.8%
22.5%
22.5%
22.5%
Equity ratio, %
28%
38%
40%
44%
41%
NIBD to EBITDA, excl. restructuring costs
1
, x
0.9
0.4
0.5
0.4
0.6
Return on invested capital (ROIC)
1
, %
49%
59%
48%
44%
29%
Cash conversion incl. lease payments, %
-110%
147%
53%
98%
-65%
Net working capital, % of last 12 months revenue
3.5%
-5.0%
0.2%
-0.3%
-0.4%
Capital expenditure, % of revenue
2.8%
2.4%
4.2%
2.7%
1.9%
Stock ratios
Total payout ratio (incl. share buyback), %
277%
143%
211%
76%
-
Consolidated balance sheet
Total assets
19,419
18,542
18,173
18,277
19,211
Invested capital
12,684
9,884
11,141
11,136
11,675
Net working capital
871
-1,181
50
-57
-76
Net interest-bearing debt (NIBD)
7,157
2,882
3,819
3,005
3,735
Equity
5,526
7,001
7,322
8,130
7,940
Consolidated statement of cash flow
Cash flow from operating activities
-1,111
4,073
885
1,586
-316
Capital expenditure (CAPEX)
158
215
201
138
88
Capital expenditure, property, plant and equipment (CAPEX)
83
146
96
64
35
Free cash flow incl. lease payments
-1,442
3,941
502
1,278
-586
Free cash flow excl. lease payments
-1,168
4,221
744
1,522
-359
1
Ratios are based on 12 months’ rolling EBITDA and EBIT, respectively.
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
34 | 35
MANAGEMENT STATEMENT
EXECUTIVE MANAGEMENT
BOARD
4 MAY 2022 | INTERIM FINANCIAL REPORT Q1 2022 | COMPANY ANNOUNCEMENT No. 716 | page
35 | 35
DISCLAIMER
This Company announcement contains forward-looking statements, including, but not limited to, guidance,
expectations, strategies, objectives and statements regarding future events or prospects with respect to the
Company’s future financial and operating results. Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain
words such as "expect", "estimate", "intend", "will be", "will continue", "will result", "could", "may", "might" or any
variations of such words or other words with similar meanings. Forward-looking statements are subject to risks and
uncertainties that could cause the Company’s actual results to differ materially from the results discussed in such
forward-looking statements. Prospective information is based on management’s then current expectations or
forecasts. Such information is subject to the risk that such expectations or forecasts, or the assumptions underlying
such expectations or forecasts, may change. The Company assumes no obligation to update any such forward-looking
statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-
looking statements. Some important risk factors that could cause the Company’s actual results to differ materially
from those expressed in its forward-looking statements include, but are not limited to: economic and geopolitical
uncertainty (including interest rates and exchange rates), financial and regulatory developments, general changes in
market trends and end-consumer preferences, demand for the Company’s products, competition, the availability
and pricing of materials used by the Company, production- and distribution-related issues, IT failures, litigation,
pandemics, and other unforeseen factors. The nature of the Company’s business means that risk factors and
uncertainties may arise, and it may not be possible for management to predict all such risk factors, nor to assess the
impact of all such risk factors on the Company’s business or the extent to which any individual risk factor, or
combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
Accordingly, forward-looking statements should not be relied on as a prediction of actual results.
