Kamux Oyj

Hello. Welcome to Kamuks' Q1 results presentation. We shall first have Tapio Pajuharjao, CEO, presenting the results, and thereafter we shall take a Q&A session. And to begin with, we'll take questions from the teleconference line and then continue via the chat and with the audience here at the studio. Thank you. Go ahead, Tapio, please.

Welcome on board. I think the headline tells a lot about it, not one of our strongest quarters, and I think I will share on the journey what has happened and where we are heading, and just bear with me. All in all, I think we'll have a look on the first quarter, then we'll have a look on the market position, then look at the network development, then we'll go through country by country, what we've been doing, how we've been implementing strategy. Then we'll have a look on the financials and then we'll have a look on the long-term targets and the way forward. So all in all, top line took a small dent. On the other hand, both the cross profit and adjusted operating profit took a bigger dent. And that's mainly because of the margin delivered by the cars. And I will have a more detailed analysis on that one. Then integrated services actually behind the scenes, even though with the dropping volume, delivered rather good and solid performance. And then the cash flow, when we've been able to sell not so well-fitting cars, converting that into cash, we are ready for the season to come with a strong cash pool in that respect. Then on the customer level, and I think that's the front where we've been doing good, and we're actually at par with the long-term target on the NPS 60. We have variances country by country, Finland ahead of the game, Sweden slightly behind, and Germany very close to the par on that respect. Then I think it's on the marketplace, and I think most of you have been following what is happening with the market. The three markets where we operate, all being a bit soft. There is development on the number of pieces sold. That's mainly driven by the consumer-to-consumer sales, especially in Finland and Sweden. Germany is a bit more even, and then the organized car dealers have been having flat. with the exception of some of the dealers doing a good job on the entry-level price points and even going below their normal average price point on that respect. Finland, Kammox remains to be number one on the marketplace and doing a solid job on the sales. On the other hand, we've been having difficulties on the entry-level combustion engine cars, which have been now doing extremely well, and then having difficulties of obtaining those, and those you need to obtain as a trade-in or then buy from the local market. Those are not the ones you can import from Europe or Sweden in that respect. Sweden, we've been going down and I think the volume drop is bigger than our store count has gone down roughly 26%. We are now on the top eight position in the Swedish marketplace. The ones who've been following the Swedish marketplace, there are actually quite a lot of changes on the top players, the way they perform. The ones who have access to used cars, because they sell new cars or they have a leasing pool, those have been doing good. The ones who need to be sourcing the cars from the market have been suffering and have been changing the focus on the older cars and the higher mileage cars in that respect. Germany, we are such a small player that we've not been impacted by the market. It's mainly on our own game and I will share a bit more in detail how we've been playing the game in Germany. So the pillars tell it all, a bit of a dent on the top line, but a big dent on the profitability, mainly driven by the margin delivered by the cars. And then looking ahead on the marketplace, we are going towards the season. So we have Q2, which is traditionally strong and then the Q3 really strong. And then I think our issue started to happen on the fall of 24. And we started to address those already on the last quarter. And that's why the Q4 numbers were already not where we aim to be. And this is a bit of a reflection and transition from the Q4 to Q1 going forward. Number of cars sold. I think we've been trying to get the Finland on the lower average price. We've been doing good step, but not big enough step on that respect. We got a bit of a hit on the number of cars. Then on the actual net sales, not so big hit. Germany, roughly the same as Sweden. We got hit both on the volume as well as on the value on that respect. Adjacent service is actually doing rather good, very solid performance on the Camux Plus, solid performance on the finance penetration. And as you have seen, there'll be a lot of interest offers, both from the used cars as well, especially on the new cars. We've been not participating on that one. We've been maintaining solid grip on the financing. took a bit of an initial hit on the financing in Finland, but gradually getting the penetration good and also improving our earnings potential with both of the products we have on board. Showroom network we have been adjusting in Finland. Mantsella has been closed. We are building up the new showroom in Jyväskylä to be opened in the later fall. It will be what is mega-sized, but for our size in the central part of Finland, will be the largest used car store in the central part of Finland. And then by the end of this week, we are closing a very small shop in Savonlinna and transferring the business to adjacent stores over there. I think that news was open earlier today. Sweden, we are going through the assessment of the store network. We have a number of stores which are not making the benchmark as we speak. We have a program to improve them. If they do good, then we continue. If not, we need to consider exiting and closing. And then at the same token, we know that we are not having enough presence on the greater Stockholm area and still northern part of Sweden is not ideal for us. Northern part is good for the sourcing market and as well as doing business for a certain type of vehicles which we have in our offering. Germany, rather static. We are now opening beginning of July in Schwerin. Schwerin is the first one on the ex-eastern part of Germany. It's northeast from Hamburg. We found a location which is a very good location. High traffic next to hypermarkets, next to other stores. And we're going to be one of the only games in town on the used cars. What we have learned on the eastern part of Germany, you can obtain a very good adjacent service penetration over there, and we already have team members in the team who are running the show over there, and they've been part of the design work, so we should be having a good opening phase in Germany. Finland, we have a bit of a mixed bag. We have extremely well-performing stores with a steady and static look on the offering, and then we have the other part as well. Where we've not been doing a good job is the fit with the market. Towards the end of last year, we were beefing at our EVs, our hybrids, and the, I would call, higher offering, above €30,000. That has been difficult for us. not the top end, but in the mid price point. And that's where we've been having a lot of issues, how to get that sold in the manner we would like to do. And that's why we got the hit on the profitability, on the margins. we have good grip on most of the things and what we have seen January, February really difficult and really challenging, March starting to creep in with a solid margin improvement both on the sales and the margin and I think going forward we now have found a remedy how to tackle that. We have also change of the leadership. We have a new captain for Team Finland. Joni Tuominen started on the April of the 16th as an interim CEO for Finland and taking over the position from Jani. Joni has been with us as a COO for Finland since beginning of the year prior to Kamuksis been working with Rapala and Fiskarsson has brought in a lot of good tools how to take the business forward. Sweden, we've been having a difficulty of getting the activity level high with the new team. We've been closing six showrooms. Now we are at 17. Half of the stores in good shape with good management. Half of the stores still learning how to do the business and how to make it work. We also have a bit of a lack of cars per store in Sweden. Sourcing is being challenged over there. Now we are getting grip on the sourcing. We have a good offering. The ones who've been following the Swedish marketplace can also see what is happening on the local offering. Now it's improving towards the summer season. Offers are there. And the export of the cars from Sweden for Europe and for Finland has been more difficult. So hence the local market is now easy to handle for the local. On the other hand, the export cars what we've been importing both to Finland and to Germany is not equally optimal with the stronger crown over there. Johan is beefing up the organization. We have simplified and made the sales organization and the sourcing organization more direct. We have a new team member as the sales director for Sweden, started beginning of last month. And then at the same time, you may remember, we're both Webcars, the sourcing organization from Sweden. So we have integrated Kamuk Sweden and Webcars sourcing. So we share the same tools, same platform, same market. And at the same time, we have the Finland-Sweden team up in Ullebore. So they belong to the same pool and they organize the Swedish sourcing in that respect. So a good move, very good ammunition and good tools and good potential going forward. Germany, I think the same issue with the long day stock, which we've been gradually addressing and getting it on the right size, right offering. We are so close of making black numbers and we are missing 20 to 30 cars a month to make it work. Then I think on the adjusted EBIT last year, you may remember we changed the way how to report the financial gains on the finance we sell as a third party. That way we have a bit of a different policy how to book them for this year. But I feel rather good about the team in Germany and the ones who look at the offering we have. It has been changed. It's truly differentiated and now delivering a good metal margin, also good traction in the marketplace. So I think we are in good shape in Germany in that respect. I think the marketplace, I think you've been following what is happening in the marketplace. The car industry has not been easy to do. Business has been going, but the profitability of the industry has not been strong like it used to be in the past. Gradually coming back and finding ways how to deliver margin and how to beef up the adjacent products to help on the lost margin in that respect. What we've been doing, and I think basic things, but we need to do the basic things right, and we are back to basics in most of the things. The first one is more data-driven pricing, and do it fast, do it roughly right, and not to try to do a mega deal on that risk, but both for the sourcing and both for the selling. And I think when we have the right price for the right car, we can sell it very fast with a good margin. On the other hand, we should not go for off offering and focus on the core offering. And that's where we have had a bit of an issue on how to manage the offering, how to be early enough on the right track. And now we have data in place, we have system in place and we have people who are addressing it. There is a transition, how to make it happen. Now we are going through the transition. We're having a better grip on the offering. And I think going forward, we have both the data telling from the history, our own data, market data, and then the instinct, what is happening in the marketplace, better in the game in order to manage the inventory going forward. We operate with our own ERP. KMS may be most likely one of the best ERPs in the car industry. On the other hand, if you operate that with multiple ways, not easy to manage. We've been limiting the way to how to use KMS. We've been introducing new controls and new policies. And system says no to many things when it says yes in the past. And we have a better grip and control on the business going forward. Inventory management, we have a new, more centralized way of addressing the inventory. When looking at the history, most of our stores have been good in the inventory management, but not all. And for the rest of the stores, the system will help them to manage the inventory better, acting faster, both on the physical product, how to display that, but also on the pricing and also on the location of the inventory. And that's where we are working. diligently, very pragmatic hands-on grip on the inventory management, a more central support than in the past. Then on the strategy, no changes on this one. The left-hand side, we seem to be doing rather okay. On the other hand, on the right-hand side, we still have things where we need to improve. Some of the stores do excellently, but not all. And we need to help everyone to perform, everyone to follow the good learnings and the good process we have in Kamuks. And that's where we have work to do and we are addressing that going forward. and we call it One Camuks Fast Lane, and that's where we have a very systematic process and a monitoring of it, and it's been doing good going forward. Then on the team, as you see, I'm here alone today. Jukka has started on the iLOG. Enel Sinton is joining us 1st of August. Very happy to have Enel joining us. In between, it's not visible for the audience, but we have Mikko Kettunen, very experienced helping hand for the interim period. And I'm very happy to have him supporting us during the transition. Joni Tuominen has assumed the role for a captain of Finland. Johan is onboarding and doing a good job in Sweden. Joanna Clark is joining us as a chief people officer day after tomorrow, so the 15th. Then Juha Kalliakoski is back in the operational role. And I'm very happy for Juha being on board. We were looking for this type of a talent on the marketplace. Juha took the, I would say, big step and helping us on the operational mode. And together with the team, we've been seeing what can be done, how it can be done, and we are on a good track. Jarkko Lehtismäki on top of the digital and IT work has been on the sourcing side and also developing the KMS going forward. And then for the data and the car flow, Altti has been helping us. And I think on the SNOP that goes hand in hand with the logistics and especially now when you need to import more of the cars, the time to market is of essence and we still have a lot of days we can cut from the logistic work on that one and I think we have now good track and good monitoring and actually it doesn't cost a lot when you make the capital cost in the equation faster is also much better on the margin on the profitability even if you pay maybe 10 or 20 euros more per car when you get it fast you are much better off on that one. On the financials let's have a look on that one. As said, sales volume took a small dent. On the other hand, profitability both for the cross-profit and the adjusted profit, a big hit. And it's mainly because of the active inventory management. We've done that in order to have an offering suitable for the market going forward. And then at the same time, organizing funds for the offering. Now we have a good cash flow, which will enable us to buy the cars needed for the future. On the comparison, I think if you would have a deeper look, yes, on the cost level, we are okay. On the people-related and the store-related, on the car-related, we still are above our target position and gradually coming in and landing towards second half and end of second half on the target on the car-related cost. And then what we have on the one kamuks is coming on top of that. Networking capital is doing good, and now we've been going down on the inventory. And now I think the average price, we try to get the number of cars up, but the average price should go down in order to match better with the market demand. And especially this is now applicable for combustion engine, i.e. small petrol cars, diesel cars and everything in between. And I think in the past we cut the chain on a certain price point, which was maybe too high. Now we continue until a lower price point. And that's also very good for the profitability. And actually the relative profitability is improving when we do that. This is just an illustration on the incremental cash generated, and I think that's in a way coming to the need and in order to make the offering even more attractive going for the Q2 and Q4. Dividend, I think that is unchanged and then subject to board approval later in the year. Now we're going to be paying the proposed dividend on this one. And we will have the AGM actually next week on May 22nd close to airport in Helsinki. So the ones who are in the vicinity, feel free to come on board. Please have a look on the pre-election and also how to participate on the team. That's available on our website, so please have a look. Then I think our long-term targets are unchanged. We're aiming for the 100,000 cars. We still have a lot of work to do on that one. And then the 1.5 billion revenue, adjusted debit margin. We have a long way to go, but I think we have tools and actions in place to improve that substantially going forward. On the NPS, we are actually today at par with the plan, even though we have differences market by market. So on average, we are on that one. E-NPS is improving. I think some of you have been wondering about the turnover of our people. It's now steady and going forward, and I think we are in a good grip on that one as well. Outlook, we remain on the same outlook. We understand that the start of the year on the first period has not been good and actually making it more complicated. But looking at the seasonality, looking at what is happening on our game, how the margin improvement, how the selection improvement is coming into play, I feel rather confident that that can be done. But I think it's in a way clear that with a very soft and bad results on the Q1, the complexity is higher and also the risk factor is slightly up in that respect. Then just a repetition on this one. And I think going forward, we need to change the game. We need to make the company profitable, get Finland back to profits, improve Germany and help them to grow the needed 20, 30 cars on the volume and then make Sweden on the black numbers. And I think that's where we have a crossroad and we need to step on the gas with the ones who are preforming and then consider what to do with the ones who are in a difficult position, whether to help them or whether then to gradually consider closing some of the stores. So now I think it's time for questions and comments, so please feel free. And I think we have the chat function available, and then we have the telecommunication line, and then we have the live audience in the studio. Please go ahead.

Yes, and the plan was to take the questions first from the teleconference line. Let's see if there are any. And it looks like we have no questions.