Europris Asa

My name is Espen Eldahl and as always joining me on stage today will be CFO Stina Byhre who will present the financial details and after the presentation we will host the Q&A session which will be managed by ER officer Trine Engløken and please feel free to type in your questions as we speak. Before I start, I would like to make a special welcome to the guests we actually have physical present today. It's very nice that people still show up to these kind of events. That is appreciated. And I would also like to thank Pareto for hosting the presentation today and the investor meetings we have later on. I know it's a busy morning. The second quarter reporting season is kicking off today and I guess that also many of you have started summer holidays. We're going to start it maybe today or tomorrow. So let's get started and jump into the numbers. Total sales in the second quarter were 3.7 billion. That is a reduction of 2.8% and down 1.1% in constant currency. As we explained when we presented the first quarter this year, the timing of Easter has a major impact on the sales in the first two quarters this year. And while the early Easter boosted sales in the first quarter, it has a negative impact of around four and a half percent points in the second quarter. So in order to evaluate us, you should look at the results for the first half, and we are now going to do that. So when we look at the results for the first half, we deliver a sales growth of 3.8% and 4.4% in constant currency. Norway continue to deliver a very strong performance with the like-for-like sales growth of 5.7%. And in Sweden, we have a like-for-like sales growth of 1.5% points in local currency. Note that Sweden was negatively impacted by the temporary closure of 24 stores during the store remodeling program we are running in Sweden at the moment. The gross margin has improved. That is mainly driven by product mix changes in Sweden following the integration actions we are doing and some unrealized currency effects in Norway. EBIT for the first half were 465 million, a solid increase of 20.7%. And Stina will provide some more details on the financials, both on the quarter and the first half in just a few minutes. I'll give some operational updates on Norway and also on Sweden. Starting with Norway, I'm really pleased to see that we continue the strong performance for out of this in Norway. Once again, we deliver profitable sales growth and the growth this year is volume driven by high footfall to the stores and also a volume led basket growth. And so far this year, we actually see volume growing more than sales and that is caused by the average price per item has actually been reduced. And this puts some pressure on the operating costs as cost for distribution and handling of goods are impacted by the high volume. and the reduction in price per item is caused by more price conscious consumers. We have said that for quite some time that we expect consumers to remain price conscious and in the first half our sales growth is driven by campaigns and also by private level products with very low price points. So you see that the consumers are acting and today in today's market they are seeking value for money. And it's very comforting to see that our low price concept remains relevant for the consumers in these days. We are still gaining new customers to the Adropis concept. And Adropis is also an important seasonal destination and the Easter season and also the spring summer season has been important drivers for the sales growth we have delivered so far this year. When we turn to Sweden, the turnaround project in Öreberg is all about creating a more healthy and profitable sales mix towards more non-food and seasonal goods. And we see that the results we have in the first half really makes us confident that we are on the right track. We have been able to shift the assortment towards more non-food items and seasonal goods, and the Swedish consumers have welcomed the upgraded assortment very much. 10% sales growth is what we see both in the second quarter and the first half from the non-food product range, which is now more or less fully harmonized with what we see in our pries. We have deliberately done less promotions of very low-margin consumables at the expense of giving more space in the advertising to seasonal goods and non-food, as we want to establish Ölby as a destination for these products. That has, as expected, had a negative impact on sales, but had a very positive impact on the gross profit in the first half. And the stronger non-food offering that supports the gross margins and will be crucial to attract new customers going forward, but also to increase the longer term profitability of the company. Erbe is not about making a turnaround just by increasing sales. It's also about making a product exchange towards higher value items, which gives more profitability for the company. And we are on the right track. The other big thing we're doing in Sweden is of course the store remodelings and they are key to re-establish ÖLB as a relevant and attractive shopping destinations for a broader customer group than we have today. And so far this year we have remodeled 24 stores which together with the four pilot stores we opened last year brings the total of modernized stores to 28. and that is a massive project to complete for a company like Odea that has been used to doing maybe one or two projects during the half year. I'm very pleased to see that the projects have been managed very well. Every single store has been finished according to plan and this upgraded store continues to deliver higher sales and better margins than the rest of the chain. So we see good effects from the project and they have been managed in a very good way. When we look into the second half, we're planning for another 10 store upgrades per quarter and the remaining store base will be upgraded next year. While these projects, of course, are exhausting, they also create a great deal of energy and spirit into the organization. We use the store employees to perform the projects, and that creates an ownership and also the sense of knowledge to the new concept that is extremely important to build the corporate culture we want. So doing these projects the way we're doing them also helps building the team spirit and the culture in the company. and I've shown you this slide before and this is about the big plan we presented back in 2024 and I'm coming back to that because as you know we have combined our sourcing efforts together with Europis and ÖOB and we have come a very long way in harmonizing the non-food assortments and we see that this has been well received by the customers and it's also supporting the margin uplift we see in ÖOB this year which has been significant We also made operational improvements and making sure that we execute the concept in a much better way than before. And I'm really proud to say that the store standards that we see and the operational standards we see in ÖLB these days have never been better. So they're making good progress. And now we're moving forward at speed to improve the customer experience with an ambitious store remodeling program. We have now remodeled 28 stores. More to come in the second half this year and the remaining store base next year. And thus we'll be supported by nationwide marketing when enough stores have been upgraded. I'm very pleased with the progress we have made in Sweden and remain very confident in the targets we have for 2028 of 5 billion in sales and a 5% EBIT margin. With that, I will leave the floor to Stina to present some more on the financial details.

Thank you Espen. and good morning to everyone. I hope you're enjoying your summer and I also hope you keep practicing your rowing skills ahead of Saturday. Due to the different timing of Easter between the years, focus should be on the development for the first half where figures are comparable. To briefly sum up the second quarter for segment Norway, sales were on a par with last year including the estimated negative impact from Easter of 5.5 percentage points product mix with a higher share of non-food and private labels had a positive impact on the gross margin and when accounting for the higher operating expenses EBIT was lower than last year Moving on to the first half, where figures are comparable, it can be summed up to a sales-driven increase in EBIT. The Avdopolis chain had like-for-like growth of 5.7%, mainly from higher footfall, but also from a volume-led growth in the basket. We still see growth in private labels and campaigns, in addition to good development for seasonal items. And these elements all reflect the relevance of the concept. And the pure players had growth of 3.9% related to Lekerkassen. The gross margin was 44.2%, up 0.2%, but down 0 percentage points, but down 0.4 percentage points, excluding impact from unrealized currency. And growth in private labels have a positive impact on the gross margin, while higher campaign sales have a dilutive impact. The OPEX increase of 7.5% reflected the volume driven sales growth as this increases handling costs both at logistics center and in stores. And it also increases distribution costs as more trucks are needed to move the volumes and combined with higher costs for the transportation in itself. and while inflation is above 3% in Norway and the wage growth even higher, the average price per item for Evrepris is down. And this means that there is no price benefit in the sales growth and the volume growth is actually higher than the sales growth. And while volume growth is positive and welcomed, it does put pressure on the cost development. And all in all, this accumulated to an EBIT of 573 million, corresponding to a growth of 7.1%. Sales for segment Sweden in the second quarter were 1 billion NOK, a reported decline of 9.6% and 3.9% in local currency. and the lower sales were due to the timing of Easter and the temporary closure of the 15 stores that were remodeled in the quarter. And in addition, the deliberate changes to the campaign program with less of very low margin consumables and more of non-food and seasonal items. It had a negative impact on footfall and thereby sales, but it contributed to the margin improvement. And it is an important part of the journey to attract new customer groups and profitable growth long term. Operating expenses were impacted by the store remodelings and the EBIT loss of 34 million was in line with last year. Sales for the first half were 2 billion NOK, a reported decline of 1.5%, but up 0.7% in local currency. And this includes impact from the closure of the 24 stores that were remodeled during the first half. Product mix with a higher share of sale of non-food had a positive impact on gross margin, which increased to 33.1%. The operating expenses were impacted by costs related to the store remodellings this year, while last year was impacted by the ERP project. EBIT loss of 107 million NOK this year was an improvement from the loss of 149 million NOK last year. As mentioned, due to the timing of Easter, second quarter figures are not directly comparable and one should focus on the first half results. But to briefly sum up, the second quarter showed sales decline, a higher gross margin and lower EBIT, with a net profit apparent of 245 million, corresponding to an earnings per share of 150 million. And for the first half, sales for the group were 7 billion, up 3.8% and 4.4% in constant currency. The margin improved to 41%. And as the sales and margin growth offset higher operating expenses, EBIT grew by 20.7% to 465 million. Net profit to parent increased to 249 million, corresponding to an earnings per share of 1.52, up 27%. The cash flow for the first half shows improvements from operations, with last year impacted by inventory buildup. The group is investing more related to the story modelings in Sweden and also the upgrade of the pick and mix candy stands in Norway. The financial position and liquidity is good with net debt of 5.1 billion and 1.6 billion excluding lease liabilities and cash and liquidity reserves of 2.3 billion. And then I will hand it back to Espen for the outlook.

Thank you, Stina. I'll also summarize. We have delivered a very good start to 2026 with continued profitable growth in Norway and good traction on the turnaround process we are doing in Sweden. In the market, we still expect consumers to remain price conscious, and Europis and ÖLB are both well positioned with the relevant product offering to benefit in the market where consumers are seeking value for money. When we look at the macroeconomics, that is still a quite mixed picture. In Norway, inflation remains above target with possibility of further interest rate hikes in the second half. While in Sweden, the inflation and possibilities for interest rate hikes are lower. Consumers in both countries are expected to get real wage growth this year and we believe that should be supportive for retail sales. With that we will actually invite Stina back on stage and we will open up for the Q&A session and as usual Trine we will start with the questions from the audience in the room if any.