Kamux Oyj

Good morning. My name is Katariina Hietaranta, and I'd like to welcome you to Kamuxi's full year 24 results presentation. We'll have our CEO, Tapio Pajuharjo, and CFO Jukka Havia presenting the results, and after the presentation, we'll have a Q&A session. Thank you. Go ahead, please.

Thank you, Katariina. Welcome on board. I think the headline says it all. It was not an easy journey on the last quarter, and the full year also was challenging. On the top line, we got hit, and then also on the profitability. The ones who monitored the market in our operating countries, I think understand that the markets were not normal. And then I think towards end of the year, since October, both November and December were very exceptional. And then on the performance, I would say that whether half is market related, half is our own game, but there is own game we need to also improve, but the markets were not normal on the last quarter. That's in a way fair to say. And I think we'll dive deeper on those ones. And today we'll have the Q4 in details. Then we'll review the market position and look at the highlights and lowlights. And then the changes in our showroom network. We'll review the countries by each of them, and then we'll have a bit of a strategy look. Jukka will go through the financial development targets, and then we share the outlook, and then we have time for questions and comments at the end. So let's get going. All in all, I think on the top line, we were struggling, but that was not the main struggle. I think the main struggle was on the profitability. And in all of the markets, the way to operate and obtain metal margin was the most challenging. On our adjacent services, we did a decent and good job, but the metal margin was the one which was in a way hurting the most. Then there were a couple of cost elements which also impacted unfortunately, unfavorably on that one. Then on the offering we have, I think you will see that the inventory levels on the value terms were higher. And that's one of the challenges we had as our Kamuks game. Later, when we have a look on each of the market, it seems that we had difficulties of obtaining lower priced petrol driven cars whereas we were a bit heavy on the higher priced and especially on the hybrids and EVs where we also had a good performance but I think we were lacking the performance and the pieces of the lower priced petrol vehicles in all of the markets especially in Finland that was one of the main drivers for the performance. Then on the positioning, we still remain number one on the domestic marketplace. Sweden, we are on the top seven position. Germany, we are unchanged on that one. The markets are not equal. There were a lot of changes on the market by market. And I think towards the end of the year, most of you who've been monitoring, you've been seeing what's happening in the new car business. what has been happening in the offers and the interest rates, and then how some of the players have been slashing both new and unused cars to the markets, mainly in Finland and Sweden. Germany, roughly the same elements, but not to the same extent as in Finland and Sweden. Then on our team, we have strengthening our team. We have Jonah Clark joining us on the 15th of April, the recent announcement. We have Juha Kalliakoski joining the team 1st of March as a COO, and he will take care of the operative selling and buying and inventory management in Finland, then for Sweden and Germany. That in a way enables the rest of the management team to work on the speeded up execution of the strategy. So we have more scale and scope for the strategy execution, and then for Johan's term, productivity improvement on the selling, buying and inventory management on the consequent markets. Johan Kemppas joined us lately on January the 1st. He was onboarding during the latter half of December, an excellent strengthening to the team. Then beyond the management team, we also have very good capable players joining in Germany. We have Sebastian Janik, who is our new head for international sourcing in the group. We have Mikael Ungerer, who is our new sales director in Germany, very capable individuals both. Then we have Joni Tuominen helping the Finnish operation as a COO, and then a couple of other additions to the team. So we have strengthened our team, making a speedier execution of the strategy, which in the current climate is definitely needed to become successful and become profitable again. The picture is roughly like in the figures. The pillars tell the same. Top line was not the main challenge. The main challenge was profitability, mainly driven by the metal margin adjacent services doing a steady job. What I think we were lacking a bit on the volume, and that's why the insurance and finance were delivering not as good as in the past. number of cars sold, we got hit on all of the markets, and I think on the value terms, Camus performed rather well and actually was strengthening the game. On the pieces terms, even in Finland, we were lacking the pieces, and that's where we had an issue. I think we've been learning how to sell EVs, we've been learning how to sell luxury cars, we've been learning how to sell right-priced cars, but then we were lacking the economy-level petrol cars in Finland. Roughly the same in Sweden. Germany, we had a good offering, but we had other issues on Germany. Adjacent services, Kamux Plus, very steady, good development on that one. Financial as well, but then we were hurt by the volume and also the insurance, the same game. Store count, we've been changing and optimizing store count. Finland, we've been opening Hyvinkää with very good results. Klaukkala and Tornio closed. We have obtained new showrooms in Espoo, one in Friisila, which is going to be our flagship store for the capital region. And then we got Petikko from Stecto as well, which is going to be our works flagship for the capital region. And then closing Ylivieska, combining that to Kokkola, and then we were at the very year end on the last week of December, closing Konola and opening in Herttoniemi, which is our now largest showroom in the eastern part of Helsinki, and a very good start with that one. Sweden, we've been upgrading our premises in Sundsvall, Helsingborg, and closed Nordköping, closed Burås, Nortellie, Hedon City, and then Gävle and Uppsala also closed. While we do that, we've been upgrading our Gothenburg store. It's now, according to the Camus concept, we've been now loading it with the cars, and seems to be delivering a very good promising game in Gothenburg. And that's our largest store in Sweden. Germany, we have opened Sirshahn, we have closed Lübeck and Kaltenkirchen, which were loss makers, and then we are having plans to open one or two stores during this year in areas where Camux is not present for the time being. Finland, and I think we did a good game on the general thing, but we were lacking the lower price. And with the lower price, I mean 7,500 to 15,000 euro petrol engine cars. And I think that tells a bit about the consumer confidence. That's where the high demand is. The mobility for the people is what it used to be. They need to find an alternative car with a used car. but they were not able to spend on the 35 to 40k which seems to be now the most difficult one not the most expensive not the cheapest but on that level and then especially the petrol engine car seems to be one we have been rather good in EVs we're also having a good game on the on the margin with the EVs hybrids the same but then on the on the price level between 35 to 55 that's where we've been struggling a bit and then the capital region game we only get it better towards the very end of the year and the results are not, we are not happy with the results in Finland. On the other hand we know what to do and we've been addressing that will not happen overnight but we'll get it better on the Finnish marketplace. Then where we have, I would say, success, which is also indicating about future, gives a bit indication on the customer satisfaction. We've been going up. We've been going gradually up. We already now know how it's going to be looking in the month of January. We continue on the very same trend. We have not been doing that with the cost. We've been doing that with our training and service. So in that respect, we are on a good trajectory on the customer service. Sweden, and I think when we had storm and turbulence on the market, I think the last two months in Sweden were maybe even tougher than in Finland. Two of the main players on the Swedish marketplace, one with both on the used cars and new cars, were slashing inventory like no tomorrow. And then even the largest player on the used car market had a very, very I would say, dynamic and aggressive actions, which were gradually hitting the market and hurting everyone on that platform. So we are not any better, not worse, but the market was really challenging on the Swedish game. What do we see in Sweden? We still have stores which are performing extremely well, but then on the other hand, we have stores which are clearly off the chart, and we need to help them to become profitable faster, and we have all the means to make it happen. And I think we believe we can make Sweden profitable with Johan on the team. We have a good grip on that. Will not happen overnight, but can be done. Johan has been joining us officially 1st of Jan. We see the strong grip and strong experience in that respect. And now I think we are building up a team who can make it happen on that respect. And especially in the used car business, now we have a team who can deliver as well. We'll take time, but we'll get there. Germany, we've been doing actually rather steady journey and a very, very good gradual step towards profitable growth. Then on the month of December, we were hit with the volume and that then became a deal breaker for making it happen. Then it's good to remember, and I think Jukka will share it in more details, when we go through the profitability and especially the way we distributed the financial services, sales-related profits. Now it's been distributed equally on a quarterly basis based on the time when we've been selling those and not the way we used to do that on the 23 when we posted all of that in the month of December. So that's the big delta on the profitability of that one. Germany, I think most of the people who follow car industry know Automotor und Sport, also outside of Germany, highly respected media. They do mystery shopping, and I think, at least to my knowledge, this is the first time we've been awarded two rewards from Automotor und Sport. One in Hameln, which is, I think, maybe not the largest store, but one which we've been renovating, making it very Kamuks-like. It's an old Audi Hangar, but now delivering excellent profitability, excellent customer service, and also being recognized by the local media over there. Job well done. And the same in Dyre, which is our first store in the south. They've also been doing an excellent job. And this is Mystery Shopping, and as you can see, it's a small amount of stores who've been awarded on this one. And this reflects the grip we have in Germany. And I think going forward, we're going to see the similar type of execution in other stores as well. So we are on top of the game in that respect. Then I think our vision is unchanged. We are just on the podium. We are hanging in. We need to figure out how to speed it up. And we were lacking the volume growth. And I think Jukka will dive deeper on that one. Then on the... 24, we were executing the project core. And on the project core, the ones you remember, we had two paths. One is the productivity, which is mainly the way we operate on people-related. That is fully in the pocket. Then the other half is car-related. That is not fully in the pocket. And we have some tail coming through for the second half of this year. Everything is going to be completely on the car-related cost. and then in order to improve and speed up the strategy execution we have selected actually four points we're going to be putting a lot of energy and effort one is pricing and I think on the pricing we realize with our volume both when buying and when selling every single euro counts And we've been realizing and monitoring our way of pricing the cars, the way of buying the cars. We leave money on the table, that money we want to have in the pocket of the company and distribute it on the bottom line. That's what we're going to be working very diligently and hard on that. Then our offering, I think in general we had a good grip on our offering, but we did not foresee the change towards the lower end so fast, and we didn't see the change towards the petrol engine driven fast enough, and we were lacking the inventory. When we found out that that's the name of the game, we were late on the game and had difficulties of sourcing them. When having the opportunity to source, the margins were not even close to the CAMUX standard margins. We elected not to do it. That's something we need to do clearly ahead of the game going forward. And then I think on the, what we call KMS, our ERP system, the process is excellent, but it has to be beefed up a bit so it's flagging up things earlier and people are following the discipline to the full and that's where we are working. So these are the four points we are operating. And inventory management, which is one of the core competencies, we've been rather okay when you take a time-lapse of 120 days. But during the 120 days, you have multiple things you can do. And I think we're going to do more dynamic inventory management, which is also reflecting on the pricing. And as a result of that, we're going to be able to have better metal margin going forward. Then I think I will pass it on to Jukka.

Thank you, thank you. So I'm going to go through some of the key numbers and metrics from the group total perspective, so consolidated numbers. And like Tapio stated, of course, we did have really difficult last quarter of 24, and we had all kinds of challenges in all the markets, but that was especially linked to the profitability, because the top line, the revenue, was actually quite close to where we landed in 24 years. And the real challenge has been on the cross-profit. The cross-profit was down by about 15% on average, the whole group, per car sold. And that's quite a major decline, and that had the consequences for EBIT as well. The other challenge, on top of the fact that the margins were squeezed, is the fact that we have been on purpose driving the inventory value, the average price of the cars up, especially in Finland. And we ended up the year, if you compare end of December 24 to end of December 23, having an inventory which is in Germany and Finland about 20% higher than it was a year ago, while in Sweden, both in pieces and in value, we actually draw the inventories down. And that, of course, has led to the fact that the returns on the invested capital have gone down, even if we sort of have tried to match the demand of the marketplace. Like Tapio stated, we ended up having a mismatch and the mix we had on the inventory was not optimal. EPS, the net result of the net profit and earnings per share for the last quarter was 50% down from what it was in Q4-24, and the same applies for the full year. So the full year 24 EPS landed eventually at €12 per share, while it was 24 in 23. And finally, we did, like we have announced earlier, we did go through a refinancing process. So that was finalized. And at the end of the 24, the debt on the balance sheet that was refinanced, we have three plus one plus one year debt facilities in place. So we have the ammunition. However, of course, now we have to be careful managing both the balance sheet as well as the profitability going forward. Looking at this from a pure number perspective, these are the tables. In the middle you see Q4. On the right-hand side you see the full year. The revenue for the full year for the second time in a row was just above 1 billion euros. There's a little bit of a growth in value, so 1%, close to 1%. However, the further down you go, the P&L, the worse it unfortunately looks. And for example, for the Q4, so even if we were only down by 2% in euro terms in revenue, the cross-profit went down by 22%. And adjusted operating profit for Q4 was 0.7 million, while we had 5.5. So there's a major decline. And that, of course, affected the full-year profitability as well. So end of the day, the full-year adjusted EBIT was 11.6 million. That's 1.1% of the revenue. Finally, inventory turnover, of course, when the inventory value went up, we were not able to sell. was also about 20% worse than what it was a year back. So we ended up having on group average 55 days of inventory outstanding, while it was 46 a year ago. So towards the end of 24, a lot of these metrics went unfortunately to the wrong direction. The equity ratio was quite close to where we were, so that's still around the 50% mark. And now here you see for three years, 22, 23, 24, end of the quarters, networking capital on the left-hand side, inventory on the right-hand side, and the inventory value went up by almost 12%. driven by Finland and Germany, so even if in Sweden inventories declined, still we had much more capital tied in, and that then of course led to the fact that we also had end of the year more debt, interest bearing debt on the balance sheet. And that is the key driver, the change in inventory is the key driver for the fact that the cash flow for Q4 and cash flow from operating activities, which you can see here on the left-hand side, was 14.8 million, still clearly positive, but if you look at what we had, 23 and 22, there's a major decline. So now the capital is tied on inventories, and now into the 25, we then have to manage the inventory turnover is one of the key metrics and part of these focus points that Tapio mentioned in the strategy execution. And that applies to all of our markets. And that then leads to the dividend proposition. The board of directors have yesterday decided to propose to the AGM, the AGM will be held end of May, 22nd of May, that we would pay a dividend of seven euro cents per share. out of the 12 euro cents EPS, which would imply about 58 percent payout ratio, so that it would be paid in the autumn and so that it would be paid based on board's discretion and its maximum seven euro cents. So in reality it's anything between zero to seven euro cents and it's up to the board of directors to decide in autumn 25. So that is the proposition towards the AGM to come. Last year, so from financial year 23 results, we paid out 17 euros per share, quite close, same type of payout ratio, but it was split into two tranches. The first tranche was paid after the AGM in springtime, and the second tranche was paid in the autumn. Now the proposition is to pay all of it out end of the year, the second half, and secondly so that it would be fully at the discretion of the board of directors. And with that said, I think going forward, Tapio, you maybe can jump into the long-term perspective.