Kamux Oyj

Very good mid-morning to everyone. My name is Katariina Hietaranta and I'd like to welcome you to Kamuks Corporation's Q3 results presentation. After the presentation, we shall take questions first via the teleconference line and then from the audience as well as via the chat. So please feel free to use those. Now I hand over to CEO Tapio Pajuharju and CFO Jukka Havia to present the results.

Thank you, Katariina. Welcome on board. And I think today we have not one of our best quarters. And I think the headline tells it quite straight and fair. But I think behind the headline, we have a lot of good actions, good things happening on the marketplace. And today we'll have a deep dive on where we are, where we are heading and what do we have in the plans to make it better going forward. We'll have a deeper look on the Q3. Then we'll have a couple of events and actions we have done after the quarter. We'll have a highlight on the market positioning, look at how we've been implementing our strategy. Jukka will have a deeper dive on the financial development. Then we'll go through the targets, guidance and outlook going forward. And then we have time for questions and comments at the end. All in all, I think we had a bit of a tough quarter, and on the top line, we were unfortunately giving in almost 1% on the top line, and a steady journey in Finland and Germany, but not offsetting the issues we had in Sweden. Cross-profit decreased. Adjusted operating profit decreased. Like-for-like sole room decreased. So not good in that respect. But then on the adjacent services and a couple of other areas. And when we go through the countries, I will share some of the highlights where we are very happy and very proud of. And then I think we can have an action plan how to address the issues we had very soft on the quarter three of 24. After the period, we did a couple of issues which are strengthening our capabilities in the sourcing arena. One, we acquired the Webcars logistics from Sweden. One of our long-term partners and also a couple of guys from Kamux been in that one. They are very good in sourcing cars from Sweden, selling them to Finland, Central Europe, Baltic states, and then lately also for Sweden. And we are very happy to have the team on board. We are integrating them together with our purchasing team in Sweden, in Germany, and in Finland. And I think we used to be One of the customers today, we are the prime customer, but for sure we continue independently and service also the other customers. We intend to increase the volume quite a bit, and I think that will help our issues in Sweden going forward as well. Then in terms of the visibility and having a grip on a newer fleet, more green fleet and well-maintained branded cars, we made a long-term strategic partnership with Sektö Automotive. We'll have access now to roughly 3,500 cars on an annual basis. 65-70% of that is personal cars, rest is vans, and we will fit the vans for our Kamuks Works in Finland. and then the personal cars into our fleet in Finland, mainly skewed towards the capital region where we've been a bit substandard. So that's helping in that respect quite a bit. And on our worth the trust and selling the transparency and higher value and better quality cars, this will have a major step forward. Then on top of that, in our toolbox, we didn't have the leasing opportunity for the vans. Together with sector, we have that available. And now we have a three-month visibility of what is coming on the marketplace, and then we can be preparing for the actions based on that. So, for example, if there will be suddenly 150 Volkswagen hybrid then most likely we will tune down the sourcing of that model in other channels. And on top of the cars and the two stores, which both are in the capital region, one in Friisila, one on the Ring Road 1, in a very prominent place, we will get 14 colleagues and very experienced employees. And I have had the luxury to meet the guys and the ladies, and a good addition to our skill set and team in that respect. Then on the used market in all of the arenas doing rather okay, but there are certain pockets of where the sourcing has been really difficult and different, so all the markets are a bit different. And then also during the period, it's not been the same. And when we entered the period in Finland, we had small lack of certain cars that was prevailing until end of the quarter and towards the end of the quarter we were okay. Sweden we have had other issues, Germany we have had plenty of cars and doing okay. Still the new car sales is impacting the whole network and the whole value chain and then going forward if we continue seeing numbers like this that means that both Finland and Sweden start to import a lot of cars and the magnitude is getting bigger. We've been beefing up our capabilities of importing the cars big time but what we see we need to continue in that and doing that in a multiple of maybe two or three going forward if this continues on this level. Then when having a look on the graphs, then on the top line first, we were not landing where we wanted to be. We were a bit shy on the value development, more on the volume development, and especially on the profitability, a major drawback compared to where we wanted to be, and clearly behind even Q3 of last year, and only slightly ahead of 23. So not very happy, and that's why we have actions and activities ongoing to boost the profitability. On the volume of cars, I think we did a decent job on Finland, Germany as well. Sweden is where we had the most drop and I will dive deeper when we have the Sweden page on that one, obvious reasons. On the other hand, very happy that we took the strong medicine and now we are on track on that one. But it had a very big impact on the quarter numbers and especially at the end of the quarter activities and top line volume as well. Camux Plus doing solid and I think we've been doing it well. Same applies for the insurance sales and the finance sales improving and we're very happy we've been maintaining and increasing the margin on the financing services. Camux Plus in Sweden with the new team, we have a bit of a new start training and onboarding to get back on the old numbers. We are doing it, but it will not happen overnight. It will take minimum one quarter to get closer to the numbers where we were. And I think the team is working on that. But we do understand that this is a very important part of our value add. Can, in the optimal circumstances, double the metal margin? That's what we are trying to establish. Then on the store network, a lot of things happening. Starting in Finland, we've been moving into new premises in Hyvinkää. We left the old premises for works over there. Klaukkala and Tornio are being closed. Then two sector showrooms are currently converted into Kamuks. One on the Ring Road. One is already looking like a Kamuks from the outside. In indoors, still a lot to do. And then we are... moving into new premises in Kokkola, larger, clearly more modern and fit for us. And at the same token, we are merging the Ylivieska store to Kokkola. Sweden, we've been upgrading our Sundsvall, Helsingborg and Halmstad store. We've been closing Buuro's, Nortelli and Heron City. And Gävle, we are currently out of the current rental agreement. We are doing house hunting on that area and most likely returning, but only when we find an optimal location. Then in Germany we have closed Lübeck, Kaltenkirchen, which were substandard on the profitability and sales. We have opened Sears, Harn, but later when we go look at the German numbers, we were a bit undermined in certain stores and that was visible on our top line development in Germany. Finland is in a way a bit twofold, and I think starting with the good news, and I think in our plan and strategy, we say that we will need to increase the average sales price of our cars. We need to have younger fleet, lower mileage, more electric and hybrids. Those we can say, well done then out of then, and an excellent job and major, major move. At the same token, unfortunately, we have forgotten a bit on our bread bread and butter which is in the way the combustion engine diesel and petrol cars in the price range between five to fifteen thousand euros or maybe even seven to fifteen thousand euros those been difficult to source and on the other hand we were too keen to sell the the younger, better fleet, and that's where we got the hit, and that's visible on the volume. Having said that, we have actions and activities to improve that. That's an area where we used to be very strong and will be strong again on that respect. Then on the cost-related issues, I think we have some I call them a bit of a culture-related. When we've been moving to the higher average price, we've been not able to obtain relative metal margin improvement. At the same time, we've been sticking to the absolute, and that's something we have now addressed. And then when we have been importing more cars, not all of the cost has been fully integrated into our value chain, and that's why we're getting a small hit on the car cost going forward. On the offering and the availability it's been improving and our game especially on the capital region when we see what is currently happening now doing better and also most of the regional city stores we are doing okay and we are on a steady path in Finland and I think when having a look how our people are reflecting and what is the spirit, Finland is doing okay. Sweden, I think we had a plan. We had a good medication, but then still we found areas where we need to give a stronger medication, especially in the area of trading. And we are very good trading with the customers. When then we learned out our dealer sales were not all very good and very profitable for the company and that's something we stopped completely during during the period we've been now gradually restarting in an auction platform and very selected limited dealers and now doing clearly healthier business and we went into that far that we had a daily monitoring of every single transaction done on an online and putting them on green, yellow and red. And we started with all the colors of the rainbow. And today we have only green and it looks very good. But it was a big, big step on the organization and took a big hit on the top line. Actually, the metal margin per car sold increased very nicely and became healthier, but the volume took a big drop on that respect. But I think now we're on a good track and we know what to do. At the same time, we had a bit of an incremental inventory, which we've been dieting and going forward in a very healthy platform in Sweden. Germany, I think it's been a very solid, very safe journey, but we were lacking the volume. And then on the areas where we could have increased, we didn't have the manpower, which is in a way our own goal. Now we have addressed that, that's going to be okay. Then I think one thing where we are very unhappy and it happened. In Germany, there's been a car dealer and car business related frauds. mainly on the cyber security and these type of things. We became victim of one of those and I think Jukka may dive a bit deeper on that one. Costed us 300,000 euros and then lesser learned and that's where we are. Anything else you would like to say on that?

Well, not really. I think in all of these cases it's very much out in the public that cyber security and all of these phishing and email frauds are happening. In our case as well, this is a case which has affected other car operators and dealers and used cars operators in Germany as well. So we are not the only victim. But unfortunately, even if we have various controls and double checks and triple checks in this case, the people affected and the people that were involved didn't follow our own processes. But now we're going to make sure that the systems will force all the people to sort of operate in just one way. And that's going to be the medicine in this case.