Europris Asa

Good morning, everyone, and welcome to Avrupa's presentation of the results for the fourth quarter. Joining me on stage today, you will see CFO Stina Byhre, who will present the financial details later on. And as always, ER officer Trine Engløken will manage the Q&A session at the end of the presentation. We will start with questions from our live audience today, and then we will continue with the questions from the web. And please feel free to type in your questions as we speak. And today we present the results for the fourth quarter, which for most retailers is the biggest quarter of the year. And from the first analyst reports this morning, I can see that the reactions are a little bit mixed. And to some extent, I actually agree to that. Norway came in a little bit soft, slightly below expectations, while Sweden surprised on the positive side. And for both segments, I would actually urge everyone to take a step back and look at the full year figures for 2025, which we also report today. Sweden has been a lot of hard work with limited results up until now. And of course, it's great to see that we have finally green numbers in Sweden. Looking at the whole year, we still see that it's a long way to go before we have the financial results that we have set as our ambition. So it's continued to work hard in Sweden. We still have a lot of work to do. But of course we now go into 2026 with more self-confidence. We see that the plan we have made is right. The customers are responding. And of course that is positive for the progress we will make in 2026. Looking at Norway, it's been a fantastic 2025. We have really demonstrated our position as a seasonal leader in Norway. We're taking market shares. We are actually growing more than the market without compromising our high margins. I think the efforts we have done in Norway is great, and that is a good foundation to build on also in 26. We have done small twists and tweaks to the retail machinery of Aeropeace, and that works. It's appreciated by the customers, and we have made good progress. But with all that said, it's time to look at the biggest quarter of the year. But as always, the most important quarters, they are still ahead of us. It's still a lot more work to be done. But when we look at the results for the fourth quarter, total sales were up by 5.3%. In constant currency, the growth was 4.1%. Gross margin increased, the OPEX to sales ratio decreased, and that is a good mix, and contributed to an increase in EBIT of 8.6%. When we look at the full year, the figures are not fully comparable year over year, as ÖB is included for four more months in 2025. But in total, the sales increased by 16.7%, while the net profit was down by 2.8%. And the latter, that represents the turnaround process we are in, in Sweden. Stina will provide more details on the financials later on in just a few minutes. In the fourth quarter, once again, Europe demonstrates its position as the seasonal leader in Norway. I'm really pleased with the performance we have made. In the fourth quarter, what we say in Norway, the season day comes as Perler på ons Nord. It starts with Halloween, then you continue with the Black Week, and then you have Christmas. And we were really good prepared for that. We had good campaign plans. We had all the products available. And we have a lot of consumables at affordable price points for the price conscious consumers. So it was a well executed season and quarter for the Norwegian market. And the thing about 2025 and also the fourth quarter was that all the growth was driven by an increase in the number of customers. So the footfall increased and the growth we have seen has been purely driven by So increasing customer base, that is a good start and a good fundamental to build on. And it's really pleasing to see that the results we have achieved in Norway this year have not come on the expense of Sweden. We've put a lot of work into Sweden, but still Norway continues to deliver. When we look at Sweden, I guess that most, at least analysts, have their questions and focus for the moment. We're beginning to see some positive effects from the turnaround process we have started. The Christmas season was executed very well, as well as the Black Week, and the seasonal range we introduced is the same as in Outer Peace, that was well received by the customers. And the really positive thing, I think, about Sweden this time is that the stores, they look better than ever before. The store performance, the tidiness, the way they present the campaigns, the season, that has been really excellent. So much better than before, and we see that the results and the efforts are paying off. The existing customers of ÖB are actually spending more and more of their money in ÖB, so we are finally seeing an uplift in the basket, and that is the true evidence that we have been looking for, that we have been struggling to see in the beginning of the year, that we do a lot of changes, we see that the customers change their behavior, but they don't spend more money in the stores. Now we see an uplift in the basket, that gives us confidence that they believe in the plan, they like what we're doing, and they are willing to spend more money with Oilbear. Customer traffic was still down in the fourth quarter as in the rest of the year and that is of course a challenge and in order to take that customer traffic back we need to remodel the stores. That is becoming more and more clear and we see already some good results from the four pilots we have done. We opened in the first pilot store before summer. We have opened three more in the second half of 25, and we see promising but slightly mixed results from these stores. The sales uplift is between 5 and 15%, varying with store locations, demographics, and also the competition in the area. The gross margin improvement in the stores is between 2 and 4 percentage points. And what we were looking for was, of course, to see sales increase. We were looking for an increase in the gross margin and, of course, increased footfall and increased basket. And the remodeled stores are ticking off all these boxes, and that is very promising. And we are now planning to upgrade 35 to 45 stores in both 2026 and 2027. It's going to be a busy year. It's an ambitious timeline. But we are front-loading these projects into 2026 because the job has to be done anyways. We'd rather get a good start than putting this ahead of us. And the results so far, they give us more confidence in the turnaround plan we have made. So everyone wants to know how these remodelings will impact profits in 2026. And based on the estimates we have from the four pilots, we see that the stores needs to be closed for a period of two to three weeks during the remodeling. And that will lead to lost sales during this period of around 2 million per store. In addition, we see that sales and margins is expected to be lower than normal prior to the closing because we are selling out discontinued goods. An estimated lost gross profit as a consequence of the closure and the downselling is one million per store. The remodelings will be carried out by Ölbæk store staff and the estimated additional OPEX per store is 1.1 million. The estimated CAPEX for fixtures and fittings is estimated at 2.5 million per store. So that was the store economics, the negative side. But of course, there's also the positive side of the remodeling. So when we have remodeled the store, you should expect a ramp-up period of 12 months. And within that 12-month period, we expect the sales growth to be in the range 10% to 15% per store, the improvement in gross margin to be 2% to 3% percentage points. And this store remodeling alone is not enough to make us on the 2028 targets, but it's an important measure to do. And combined with other initiatives you do with product assortment, with how we execute campaigns in season, this will bring us to the 2028 targets. We will hold back on larger scale marketing activities until we have done remodeling, but we are doing the remodeling in geographic areas, starting with Gothenburg and Stockholm, so we can start marketing in these areas as soon as we have upgraded all the stores. In sum, you should not expect the remodelings to contribute positively to the EBIT in 2026. You should expect the same results in 2026 as you saw in 2025 for Sweden. We are convinced that the remodeling will bring us to profitable growth in Sweden from 2027 onwards. And I can tell you that yesterday we opened the first three remodeled stores in Sweden in 2026. We have an ambitious plan with 43 projects. The first three were opened yesterday and the opening days they were really fantastic in all three stores. And I know that the project teams, they would like to celebrate. We are really satisfied with the job they've done. But, you know, they cannot rest because already next week we start the next three projects. It's a business schedule, but it's going to be a lot of fun to follow these stores throughout the year. And when we presented the turnaround plan for ÖOBE back at the second quarter in 2024, we focused the initiatives we had around three key focus points. It was the category harmonization and the joint sourcing. And on this we have done quite a lot. We have introduced more or less the full range of out-of-place non-food products in Sweden. We have introduced the same seasonal assortment, and we are doing joint sourcing on several grocery categories. So a lot of work done, still more to be done, but this was an important start to align the concepts. And then we are working to strengthen the execution across the value chain. And most importantly we have implemented the same structure for campaigns and seasons as in Norway. We have introduced the same ERP system as in Norway. We have upgraded data warehouse and now we are working on systems for supply of goods and also the campaign management. And we are sharing best practice and of course doing also management training and culture building across the two countries. On improving customer experience, which I think, honestly, is the most important part, you need to invite customers into an inspiring shopping environment. And we've done, firstly, a small fresh up of the shopping shops in all the stores. And now we're doing the store remodeling, which is the big shift we need to do in order to attract new customers into the stores. I know they have worked really hard. It's a lot of things that is done. There's still a lot of work to be done ahead of us, but we are very confident that we are well positioned to reach our target of 5 billion sales and a 5% EBIT margin in 2028. With that, I will leave the floor to Stina to present the financial details.

Thank you, Espen. I will start with the segment Norway and the performance for the fourth quarter. Sales reached almost 3.4 billion, an increase of 4.6%. The sales uplift for the Averupris chain was entirely from higher footfall. And once again, the chain has proven itself as a relevant seasonal destination. Two new stores were opened in the quarter. the pure players had sales of 402 million, up 2.1% excluding Lundhjem that was divested in the beginning of 2025. The gross margin last year was high at 46.1%. And excluding unrealized currency, there was a relatively moderate decline of 0.3 percentage points. And this was impacted by product mix with a higher share of sales from consumables. At first glance, the OPEX growth of 10.6% seems high. But keep in mind that all sales growth is volume driven. And there are eight more directly operated stores. And a third element I would like to highlight is timing. Sometimes it doesn't have much effect and other times it has a large impact. And therefore, it's also important to look at development over time and not just in one quarter isolated. And I will come back to the full year performance on the next page. All in all, this accumulated to an EBIT of 648 million, slightly lower than last year with a decline of 2.6%. But if we look at the full year, EBIT was close to 1.5 billion, reflecting an increase of 10.2%. It was good top-line development with sales of 10.6 billion, a growth of 7.2%. As in the fourth quarter, sales increase was entirely from higher footfall. Over the past years, customers have grown more price conscious, and Everpris is a highly relevant concept. We are known for good campaigns, attracting customers seeking a good deal, and we offer good private label products, giving customers value for money. Category upgrades are also important to stay relevant and up to date, and the home and interior category that was upgraded showed good development. During the year, a total of eight new stores were opened. Two were closed, but one of these we do hope to be able to relocate, but we are pending permits. The pure players had sales of 828 million, up 2.6% excluding Lunehjem. It has been a challenging year in Norway for knitting. It impacted strikkemekka, while Lekerkassen had sales growth in its main market, Norway. The gross margin was upheld at 44.7%, excluding unrealized currency. This means an increase of 0.2 percentage points. The OPEX for the full year was up 7.1%. And in addition to annual wage growth and inflation in general, OPEX was impacted by volume-driven sales growth. This affects handling costs and distribution costs. We have also made strategic investments in building inventories in the stores, and this has contributed well to the sales performance, but it also has given some one-off costs in OPEX regarding handling and distribution. Further, there was a higher number of directly operated stores, which obviously also adds to the OPEX. And in a year with such good performance, variable remuneration was also higher than in the year before. And while the development in the fourth quarters of 25 and 24 were impacted by timing, the full year showed an OPEX to sales ratio that was on a par with the previous year. And all in all, I think it's fair to conclude that 2025 was a good year for Segment Norway. Moving to Segment Sweden and the fourth quarter performance. Sales were NOK 1.2 billion. In local currency, the ÖAB chain had like-for-like sales growth of 3.8%. Product range for Christmas was to a large extent harmonized with that of Avropris and it showed a good uplift compared to the year before. But it still is a relatively small share of total sales. The solid campaign execution continued also in the fourth quarter. Footfall, however, continues to decline slightly and there is a need to attract new customer segments. The gross margin was 34%, up 1.6 percentage points excluding impact from unrealized currency. The gross margin in 24 was negatively impacted by clearance sales. In 2025, there was a positive product mix from improved margins on the seasonal range. And on the other hand, there was a negative mix impact from a significant increase in share of sales from campaigns. And they have, on average, a lower margin. But it's still an important investment in ensuring customer satisfaction and loyalty over time. We want our customers to get what they came for and not leave disappointed. The lower OPEX was from IT projects and integration costs last year, and also timing. And EBIT was 30 million, an improvement from the EBIT loss in the fourth quarter previous year. The group had ownership of ÖAB for four more months in 2025, making comparisons between the year relatively meaningless. For the full year both years, the ÖAB chain had a small like-for-like growth of 0.6%. Slightly lower footfall was offset by a lift in the basket value. And the four stores that were remodeled in 25 showed positive signs on important KPIs. And we look forward to getting more speed on the store openings in 2026. And for the full year, the segment had an EBIT loss of 157 million. To sum up, the financials for the fourth quarter for the group combined can be described as a good conclusion to a solid year. Sales were 4.6 billion, a growth of 4.1% in constant currency, with a gross margin just above last year and a slightly lower OPEX to sales ratio. And the EBIT was 677 million, up 8.6%. For the full year, the group had sales of 14.9 billion, with an organic sales growth in constant currency of 5.7%. Four more months with ÖAB ownership had a dilutive impact on the gross margin and the OPEX to sales ratio. EBIT was 1.3 billion, up 6.6%, while net profit was down 2.8%. And I would like to mention that finance costs were impacted by unrealized losses on interest rate swaps in 2025. while there were positive accounting effects from the acquisition of ÖAB in 2024. And combined, these two elements had a pre-tax negative change impact between the years of 54 million. For the full year, cash from operating activities were close to 1.5 billion, roughly on a par with last year. The net change in cash was 384 million, mainly from higher use of credit facilities to support Swedish operations. And when exiting the year, net debt was 4.3 billion, or 858 million, excluding lease liabilities. And cash and liquidity reserves were 2.1 billion. And then I will give it back to Espen to go through the dividend and outlook. Thank you.

Thank you, Stina. And as Stina has explained, the financial results for 2025 has been good. And that allows us to continue the annual increase in the nominal dividend per share. The board of directors proposes an ordinary dividend per share of NOC 3.75, an increase of 7.1% from last year, and the payout ratio is 75.4% of net profits. So continued distribution of dividend that is positive. When we look at the outlook, Europis has shown that we have a very strong concept. We have outperformed the market in Norway and we have a very solid position in Norway. Retail statistics in both Norway and Sweden has been positive for 2025. And with decreasing inflation, also with increasing real wages and the outlook also for continued reductions in the interest rates, that provides a positive outlook for the market we are operating in in 2026 as well, both in Norway and in Sweden. The integration of ÖBE is progressing as planned. We have told you about the remodeling program and the effects we expect from that. And we are also doing category upgrades and continue to develop the concept in Sweden. And for Sweden, as I said, you should expect the same operating profits in 26 as you saw in 2025. But we remain very confident on the long-term targets we have set for ÖBE. With that, I will actually invite Stina back on stage, and we will take the questions from the audience first, and then we will continue with the web. A very silent audience in the room today, so maybe you should take some from the web, Stina.

There are some questions on the web. Ole Martin Vestgaard is the first out. Can you break down the like-to-like growth in Norway into contributions from price, footfall and average basket size?

Both for the fourth quarter and the full year, the sales growth in Norway was entirely from footfall.

And what was your consumable share in Q4 for Norway and Sweden separately?

Share consumables in Sweden was 31% and in Norway it was 52%. So it was actually slightly up in both in Sweden and a little bit more up in Norway.

And how does the full year 2025 Consumables share compare with the full year 2024?

It was flat in Sweden. There the consumable share is higher. Maybe I said the opposite actually on the fourth quarter. I said the non-food share. And the consumable share for the full year in Sweden was 73% flat compared to 24 and 25 was flat. And then in Norway it was 54% up around the percentage point.

There appears to be some variations in sales performance among the upgraded stores in Sweden. What characterizes the stores showing the strongest uplift and what characterizes those performing below expectations?

It's right that we see a variation in the results and you know it's still it's only four pilots but what we can see is that the stores that are opened in the cities where it's you know more crowded and you know not that easy to get attention from the market they are actually growing low below what we see in more you know smaller cities and the rural areas so you know When you open an Aubert, or we also see that in Norway when we open an Aurope store, it's much easier to get attention when you are in a smaller place than what you can do in the bigger city. And that's why we are doing now the remodelings in clusters. So we are doing the stores now in Gothenburg and Stockholm this year in order to be prepared to do more marketing activities because that is needed to be seen in the bigger markets.

And how much extraordinary cost related to the turnaround has there been in Sweden in 2025?

Well, we upgraded four pilot stores, and we have given numbers for those. And we have had some costs also related to the IT projects. So some costs, but we will always have... We are now in a transition period, so it will be very difficult. I think the important thing is, if you're looking for guidance, is also to look at the bigger picture, where we say that Sweden we expect to be on a par with 2025 and 2026.

Given the stronger knock against the US dollar and lower purchasing prices in China, should we expect gross margin improvement in 2026?

I think the very easy answer to that question is no. And that might be a little bit arrogant, so I'll try to elaborate a little bit. If you look historically, the knock-on dollar has gone up and down. And actually, for Avirapit's case, the gross margin has been surprisingly and boringly stable during that period. And you have to remember that the gross margin is the factor of the input cost and also the sales price. And when you say that automatically change in the currency and also the cost in China should directly lead to a better margin, then you just take the full market and the competition out of the map. And that doesn't really work. Because factors like currency and the raw material costs and also the factory capacity in China, that affects all retails in the same way. And that's not the competitive edge. And that means that these things will always be taken out in the price. The only way you can increase your gross margin is by doing something better than your competitors. That means you have to work really hard to improve. For us it's the private label share, it's the product mix work on that, the way you balance your campaigns and all these things is what we have done over the past years to lift our gross margin from the levels we had before the pandemic to where we are today. So that's a lot of hard work and you need to improve your competitive edge. Currency doesn't improve your competitiveness. That is the same for everyone.

OPEX in Norway was somewhat elevated in Q4. Were there any special items affecting this and how should you think about the OPEX outlook for 2026?

Well, I think I tried to explain it during the presentation. You need to look at it for more than just one quarter in isolation. And we will continue to work hard in maintaining the OPEX. We have the one-off buildup of inventory in stores we will not do again. That's an investment. But apart from that, I think I explained during the presentation.

And the next one comes from Håkon Fugle regarding the consumer share in Norway for Q4. Is the development of product mix seen in the market as a whole or related to the price alone?

It's a bit difficult to answer for the entire market as I don't have full insight into that, but I think over the past years when consumers have become more price conscious, this has also been good for our concept. We have been very relevant on many of the products that people need, and instead of buying these products elsewhere. They have bought them at Avropris. So we have tried to kind of build our campaigns and offering also to adapt to the customer sentiment and that has impacted the mix of consumables and also private labels.

And how did ÖAB perform compared to the market in Q4?

Well, we don't have the full market figures available yet, but what we have seen at least up until the fourth quarter is that Erby has underperformed. It has been a strong market in Sweden, but I would believe that the like-for-like performance we delivered in the fourth quarter is actually at least closer to the market development.

And a question from Jørgen. Evropace has outperformed the variety retail index in 10 out of the last 12 years. Why do you think Evropace has been constantly able to do that? And do you believe these dynamics will continue in the coming years?

I think why we have done is that we are never satisfied. We always try to be a little bit better in everything we do. And we're twisting and tweaking on the retail machinery, always trying to do a little bit better. And that is in the true core corporate philosophy and you know cultural abilities and that will never stop and I think you know we always have to strive to be better and when we evaluated the Christmas season you know the first week in January we have the full list of things we can do better and we have that every year and every year it's the best Christmas ever so you know that's the way you have to do it and you just have to continue keep working.

Then we have one last question from Philip Jerke. Given the focus on volume growth in Q4, how should we think about pricing in 2026?

We will stay competitive. It's a bit difficult question. I think we will just focus on doing everything a little bit better all the time. And I think we will continue to see the same development that we saw during 2025. I would believe, but it's always difficult when you talk about the future. I don't know, Espen, if you want to add.

No, nothing to add to that. It's only hard work. That's the only thing that gives you results. That was the last question. Okay, thank you, and see you next time, and that will be on the 23rd of April.