Europris Asa

And welcome to the Europris presentation of the second quarter results and highlights. The numbers are out and of course also the integration plan for ÖOB and today is an important milestone for Europris. With the acquisition of ÖOB that was completed on the 2nd May, we are on an important pathway to creating a Nordic champion within discount variety retail. This is an important historic date for the Europis Group, the biggest acquisition we've ever done, and we are moving Nordic. Really pleased to present today both the numbers, but also the integration plan and our ambitions for the new group. Joining me on stage today is, as always, CFO Stina Birge, who will present the financial details. And today we also have a special guest star in the Vice President Strategic Projects, Andrea Sjåset, who will present the details of the integration plan with ÖOB. At the end of the presentation, we will have a Q&A session, which will be managed by ER officer Trine Englöcken. And we will start with questions from the live audience before we take questions from the web, and you might send in your questions as we speak. Before we start, I would like to thank DNB for hosting today's event. It's always a pleasure to be here, and I'm looking forward to participate on the consumer conference you hold on the 20th of August. Good morning and welcome to the Europris presentation of the second quarter results and highlights. The numbers are out and of course also the integration plan for ÖOB and today is an important milestone for Europris. With the acquisition of ÖOB that was completed on the 2nd May, We are on an important pathway to creating a Nordic champion within discount variety retail. This is an important historic date for the Europis Group, the biggest acquisition we've ever done, and we are moving Nordic. Really pleased to present today both the numbers, but also the integration plan and our ambitions for the new group. Joining me on stage today is, as always, CFO Stina Bire, who will present the financial details. And today we also have a special guest star in the Vice President Strategic Projects, Andrea Sjåset, who will present the details of the integration plan with ÖOB. At the end of the presentation, we will have a Q&A session, which will be managed by ER officer Trine Englöcken. And we will start with questions from the live audience before we take questions from the web, and you might send in your questions as we speak. Before we start, I would like to thank DNB for hosting today's event. It's always a pleasure to be here, and I'm looking forward to participate on the consumer conference you hold on the 20th of August. ÖB will of course take center stage on this day and in the presentation. But before we have a look at the integration plan and our financial targets, we will have a close look at the second quarter. As I said, the most important highlight of the second quarter is that we acquired ERB. And in just a few minutes, André will present the details of the integration plan, but I'm really happy to say that we have had a very good start to the integration project. The teams are connecting very well, and it's been a pleasure to see how good start they have gotten off to. And we are eager to continue the work after summer holiday. When we look at the second quarter, we had total sales of 3.1 billion, an increase of 34.6%. ÖBE was included from May, and excluding the acquisition, the organic growth was 3% in the quarter. Group EBIT was 339 million. That was a reduction of 23 million from last year. ÖB had a negative EBIT of 16 million. And the organic decline was 8 million. It's no doubt that we have a tougher economic climate affecting both businesses and also the consumers. And in the retail landscape we are experiencing right now, where consumers are more price conscious, that is a difficult landscape for the consumers, but also for our business. This landscape provides opportunities for discount writer retailers like Aeropolis. We offer good value for a wide range of essential products, but we have also seen that we have to adapt our concept and our marketing to the new and changed behavior of the consumers. For a longer period, Autopis has observed that goods with higher price points lose relative to cheaper products in sales. We have also seen an increasing share of private label sales, and we have seen an increasing share of campaign sales. This is, of course, a testament that the customers are becoming more price conscious. And in such an environment, it's important that we adapt our concept, we adapt our marketing to the product that the customers are looking for. And we have seen over time that we get more and more customers to our stores, but the shopping basket isn't getting any bigger. This means that the consumers are spending their money very wisely. They're careful with the spending and we have to be very sharp on price and also on campaigns to attract customers in such an environment. So we have to adapt to what the customers want. And we see that our customers are very price sensitive and that they also are planning their purchases well in advance. As one of only two retailers in Norway and actually one of 12 in Europe, Europis has been recognized as one of the climate leaders by Financial Times and Statista. This list covers more than 600 European companies that are contributing to the green transition. The ranking is based on several factors, including reduction in greenhouse gas emissions over a period of five years, its transparency on scope three emissions, and it's also on disclosure efforts such as the CDP reporting and climate goals anchored in the science-based targets. And I'm really proud, and the whole organization in Aurope is working on sustainability, is extremely proud that our work has been recognized. And of course, it's a long journey ahead of us, but this gives us new energy and motivation to keep working on the important job we have ahead of us to reach our ambitious climate goals. And with that, I will actually leave the stage to Stina, who will present the financial details.

Thank you, Esben. Before I dive into the numbers, I would just like to highlight that following the acquisition of ÖAB, we have divided the group into two reporting segments, segment Norway and segment Sweden. Segment Norway is the group as it was prior to the acquisition, meaning it comprises the Europris operations and the pure play companies. while segment Sweden is the ÖB operations. And when we talk about organic change, that is the group excluding structural impacts from this acquisition, meaning that the organic change is the same as the change for segment Norway. And for segment Sweden, we have included numbers for May and June. Then diving into the second quarter, group sales were 3.1 billion with a reported growth of 34.6% and an organic growth of 3%. The gross margin was 41.9%, down by 2.6 percentage points. And including the ÖOBN numbers have a dilutive effect on the gross margin. And if we exclude the effect from segment Sweden, then the gross margin actually increased by 0.2 percentage points, or up by 0.4 percentage points if we also disregard the unrealized impact from currency hedging. The OPEX to sales ratio was 23.6%, up 2.1 percentage points. Also here, the ERB figures have an impact as they have a higher OPEX to sales ratio, and the organic change was an increase of 1.2 percentage points. Group EBIT was 339 million, representing an organic decline of 2.2%. And the net profit to parent was 266 million this year compared to 260 million last year. And there are two impacts I would like to highlight from the acquisition. The first is a fair value assessment of the option that led to a gain of 32 million. And the second is a remeasurement of the initial 20% stake, which resulted in a gain of 17 million. Now, on the other hand, we had an unrealized loss of interest rate swaps of 1 million this year compared to a gain of 22 million last year. And for the first half, I would just like to remind you again that for EOB, it's only May and June figures that are included. And group sales were 5.1 billion, up 21% reported, but 3.9% increase organically. The gross margin was 42.4%, down 1.6 percentage points. And again, this is due to the dilute effect of including the OAB numbers as the organic gross margin was roughly on a par with last year. The OPEX to sales ratio was 25.9%, up 1.8 percentage points, and organically up 1.6 percentage points. The group EBIT was 445 million, meaning an organic decline of 9.2%. And the net profit to parent was 313 million, down from 331 million last year. And the two effects that I mentioned for the second quarter related to the Bay acquisition, the 32 and 17 million, they also impacted for the first half year. But in addition, there was a loss of 16 million on the initial 20% stake up until the point of takeover. And when it comes to unrealized effects from interest rate swaps, there was a gain this year of 6 million, which was lower than the gain of 17 million last year. Cash from operating activities were 208 million, on a par with last year. Negative net change in working capital is normal and related to seasonal fluctuations. The net change in cash was negative with 547 million, an improvement from the negative 593 million last year. In the second quarter, we paid a dividend of 523 million. And the financial position is solid. And net debt excluding lease liabilities was 1.5 billion, down from 1.6 billion last year. And the cash and liquidity reserves increased from 1 billion to 1.4 billion. And this is from taking on an overdraft facility in ÖAB of 400 million SEK. I would also like to mention that last year in June, the group entered a financing agreement with a three plus one plus one year. And the first of these plus one options has now been exercised. Then looking at the second quarter for segment Norway. Sales were 2.4 billion, up by 3%, and the Avropilis chain had a like-for-like growth of 1.1%. There were two extra sales days in the quarter, but this was offset by negative timing effects from an earlier Easter. And seasonal items sold well, with the exception of garden furniture. And if we look at sales from products with a price point above NOC 1000, these sales had a decline of 23%, and they constituted 5% of the total sales. And for the remainder, 95% of products with a price point below NOC 1000, sales improved by 4%. The pure play companies had sales of 131 million, slightly down from last year as sales growth for Strikkemekka was offset by decline in Lekerkassen. The gross margin was up from 44.5 to 44.7% and the EBIT was down with 2.2% as higher OPEX and lease depreciations offset the sales growth and the improved gross margin. OPEX grew by 8.6% in the second quarter, which was in line with expectations and the communication provided when we gave the figures for the first quarter. Looking at segment Sweden, again, numbers have been consolidated for May and June. And sales for these two months were 0.7 billion with a gross margin of 32.4% and a negative EBIT of 16 million. For the full first, second quarter, all three months, the chain had a decline in like-for-like sales of 3.5%. And this was due to lower sales of non-food categories, including seasonal items. And to align numbers to group accounting principles, some one-off effects were booked prior to the Europris ownership period. And these had a total negative EBIT impact of close to 50 million. And for the first half year in full for ÖB, sales were 2 billion, down by 2.1%, with a gross margin of 31.2%, a decline of 3.2 percentage points. And of this, a 1.2% decline was from the mentioned one-offs. There was also a negative impact from product mix with a higher share of consumables as these items on average have a lower gross margin than the non-food product range. And the EBIT excluding one-off impacts was negative with 105 million for the first half compared to a negative 45 million last year. And with that, I will hand it back to Espen and André to go through more details on the ÖAB.

Thank you, Stina. It's time to have a closer look at Öbea and the Swedish operations. And I'm looking forward to give you some more details on the integration plan and also on the financial ambitions we have for the company. Before we dive into the details and I leave the floor to André, I will give you a short introduction. With the acquisition of Öbe, we are creating a Nordic champion in discount variety retail. Both Öbe and Europis are market leaders in their respective segments with the potential to together create a truly Nordic position for Europis and Öbe. And Öbe is the perfect fit for Europis. The assortment overlap is huge and the product and concepts are very similar. In addition, we share the same values and we have the same business culture. It's been a pleasure to see how quickly our teams have connected and how they have started to engage and work together. You truly see that it's the same spirit and the same type of people in the company. And we see operational synergies across the concepts and also by sharing of best practices. And we also see significant synergies throughout the value chain and then especially from sourcing. And Örby has some core strengths that we will continue to build on, and that will be important building blocks in the new out of this group. They have a profound history in wholesale and retail and coupled with a very long and rich history, which is very much similar to the same of Avropeis. So we have been on the same journey, going from a family-owned business and also going through acquisitions and growing from wholesale into retail. ÖB has a leading concept in discount writer retail with an extremely strong price position in the Swedish market and among the consumers and also well known for their broad assortment. And they have a solid footprint with 94 stores across Sweden with the potential to grow. They have a customer club with more than 2 million members. And they have a strong retail culture built on solid values, which is shared by Europris. All of this is a very good starting point for the important job we have ahead of us. But ÖB also has some challenges that must be addressed. In the Swedish variety retail market, which has grown by double digits in the couple of last years, ÖB has had flattish revenue development. Sales of consumables have increased, putting pressure on the gross margin and leaving ÖB in a more competitive landscape when it comes to pricing, as they have been fighting with the larger grocery retailers. They lost the ownership they used to have on seasonal goods and also some non-food categories, where other market players have taken market shares and grown. And while competitors have invested into their concepts, Ölby has been underinvested due to several reasons. They have had weak profitability, causing some liquidity strains. And of course, also the unclear ownership situation we've had over the past year has been negative for the company. But despite all these challenges, we believe that ÖB has the potential to regain both growth and profitability. And we believe that with the transition plan we have created, we will be the perfect partner to restore profitability and also sales growth in ÖB. And our ambition is to grow sales in ÖB by SEC 1 billion and restore healthy profit margins by 2028. And this profitable growth journey will be fueled basically by three key initiatives. It's about category harmonization and joint sourcing. It's about improving the customer experience. And we have to strengthen the execution across the value chain. Now I will soon leave the floor to André, who will give you some more details on these three initiatives. André joined Europis back in March this year, so he's a new employee to Europis, but this doesn't mean that he's new to the concept of Europis. André was part of the team that was engaged by Nordic Capital back in 2012 to create a business plan for Europis after they acquired the company. And after that, he has worked several years in consulting and also into retail businesses. He has experience both from strategy work. He has worked as category director and also as a general manager. So a very wide expertise. And I'm truly impressed by the way that André has swiftly gotten into both the Swedish and the Norwegian organizations. Just impressive. And really happy to have you on board, André. And the stage is yours.