Kamux Oyj

Good morning. My name is Katariina Hietaranta, and I would like to welcome you to Kamuksi's quarter two results webcast. Our CEO Juha Kalliokoski and CFO Enel Sintonen shall present the results first, after which we shall have a Q&A session. For the Q&A, we shall first take questions via the teleconference and then move over to the chat line in the webcast. Please go ahead, Juha.

Thank you, Katariina. Good morning. Let's get started. Here is our agenda for today. As usual, we will begin with an overview of the quarter. Then take a look at the market development before looking at each operating country separately. Then Enel will present our financial development in more detail. And as usual, we will finish with the Q&A session. There was a significant shift in demand between powertrains in Q2, affecting especially demand of diesel cars. In this situation, we focused on inventory turn. We were able to grow both the number of cars sold and revenue, while the market declined in all operating countries. However, we were tightened as the selling prices of diesel cars decreased due to the low demand. This led to gross margin decreasing from 24 million euros to 20.8 million, mainly due to the lost margin in diesel cars. Even though our costs were 0.8 million lower, this was not enough to keep the adjusted EBIT at the last year level. And it decreased to 0.6 million euros. Revenue from integrated services was 12.8 million euros, which is 5.8% of total revenue. Our customer satisfaction was again at an excellent level. NPS for the whole group was 66 in the quarter. Towards the end of the quarter, consumer confidence started to improve. However, this was not yet visible in used car sales. The used car market conducted during Q2 in all our operating countries. Sweden was down by 1.4% and Germany by 3.2%. In Finland, the total market was down by 2.4% for the quarter. Within the quarter, especially May, was very, very challenging. In Finland, the market declined 7.2%. The good news of the quarter was that we reclaimed our position as the largest seller of used cars in Finland in terms of number of cars sold. This applies to both to the quarter and the first half of the year. In Sweden, despite the difficult market, our volumes grew and we gained some share. And in Germany, where the market also contracted, our share remained small. In terms of new car registrations, the number of new cars registered across Europe grew by 5.7% during the first half of the year. There were some changes in the showroom network during the quarter. We decided to tighten our showroom network in Germany and closed two showrooms in the Hamburg area. Aresbuk and Stare were closed at the end of June. The cars and salespeople from these showrooms moved to the Nettelfeld showroom. There were no changes in the network in Finland and Sweden. We evaluate our network continuously to check it against current and future capacity needs. Thanks for the short term nature of our lease agreements, we are able to make changes in the network relatively flexible. Now we will look at each country in turn. In Finland, the number of cars sold during Q2 was at last year level. Average prices were slightly lower and therefore revenue decreased 1.4%. Our focus was ensuring sufficient inventory return. The weakened demand of diesel cars had a significant impact on sales prices and thus margins. We are not satisfied with the penetration rates of integrated services, which have decreased. The penetration rates for integrated services decreased. Customer satisfaction on the other hand is in an area where we continue to do well. In Finland, NPS for the quarter was 68 and for the month of June it was as high as 70. Here are some recent examples of our marketing activities in Finland. At the end of May, we had an advert on the front page of Helsinki Sanomat telling about the high net promoter score and recommendations we had received in Finland. Kamuks Finland has also been the official advertising partner for MTV's World Rally Championship broadcasts. This partnership included a strong presence at the World Rally Championship event in Jyväskylä with Camux branded vehicles. In Sweden, our performance was relatively good and we are getting back on track. However, there is still a lot to do. The Swedish market also contracted and competition remained tight. The Swedish krona declined during the quarter, impacting sales inside the Swedish market negatively. We were able to grow, however, and the number of cars sold increased significantly, getting closer to 24 figures. There were headwinds with the declining demand of diesel cars in Sweden, as in all our markets. However, thanks to the volume increase, external revenue grew by 40% and gross margin also grew. Penetration rates of insurance services and Kamux Plus improved. Niklas Eriksson has now been heading the team in Sweden since early April and it has been good to see how he has taken ownership of the business and the team is working well together. In Germany, we continue to have challenges. However, we continue to focus on inventory management and operational execution. The market contracted also in Germany. The headwinds against demand and pricing of diesel cars affected our German business even stronger than in Finland and Sweden. Even though sales of used EVs is increasing in Germany, it is still a very small part of our business. However, the number of cars sold in Germany grew. The average price of sold cars was lower than prior year as planned and thus the revenue growth was at 15%. Adjusted EBIT decreased as a result of the low margin of diesel cars. As mentioned earlier, we closed two showrooms at the end of June, centralizing our Hamburg area operations in the Nettelfeld showroom. And now I hand over for Enel more details in figures. Here you are.

Thank you, Juha. Summarizing our financial performance in the quarter, Juha already referred to many of the numbers. Sold volumes and revenue grew, and growth was generated in Sweden and Germany. Sudden shift in demand for different powertrains urged us to accelerate inventory turn. That was a choice we did. and that required us also to adjust pricing, especially for diesel passenger cars and also hurt our margins. It was the single biggest reason for decreased profitability, breaking the trend of four consecutive quarters of improved margins. In Sweden, a number of financial ratios, sold volumes, revenue as well as gross margin improved. Our work on business fundamentals and daily operating practices started to show also in financials. In Germany, volumes grew. However, profitability continued to be at a low level, and we relentlessly continue working on with the solutions and with the improvements. Inventory management continues to be our profitability and throughout the year inventory levels have solidly followed seasonal cycle. Inventory turnover in days show improvement. When we look at the operative cash flow it reflects most part inventory cycle. Cash released from networking capital was 12.3 million euros to comparable period. Our cash balance at the end of the quarter was 8.8 million euros and we have 15 million euros available unused credit facilities. Net debt was very much lower compared to last year and it is now 49.5 million euros level. Equity ratio was close to 50 percent level. And here are our key numbers. As said, revenue grew, gross margin declined. All major categories of operating expenses declined compared to previous year. And return on equity and equity ratio improved slightly. Looking at the figures, when we had a market of sudden shift in power trains, we turned our focus into inventory turn. We ensured right size of inventory and solid financial position. We can see here trend in volumes. Volumes increased in a quarter driven by focus on inventory turn, as said. And you can see here the growth in Sweden and Germany were substantial. Finland was at the previous year level. However, we of course every day remind ourselves that our volumes few years back remind us of the capabilities we have and also the ambition to go back to growth continues to drive us. Our integrated services revenue declined slightly and that slight decline spread across different services. Here we can see revenue trends from quarters and recent years and drivers of the trends were underscored earlier and we are set firmly focused to regaining volumes and improving profitability. Cash flow minus 10 million euros in H1 and it was seasonal build-up of our inventory. That was the key driver and we can see also here the inventory increase about 20 million affecting the cash flows. We are satisfied that we both started and also closed the quarter with the right size of inventory. Our outlook for 2026 remains unchanged. We expect adjusted operating profit for 2026 to increase from the previous year.

And back to you, Juha. Thank you, Enel. Our long-term targets are still the same. However, we have started working on updating our strategy and as part of the work, we will also review our targets. We will be getting back to this towards the end of the year. We continue to perform well in customer satisfaction and have achieved our target. For Q2, the group NPS was 66, which is excellent. ENPPS is at 19 as it was also in Q1. Here is our current management team. Tuli Kiiski joined us last week as chief people officer. Tuli comes from the Suvia group, where she was working as an HR director and a member of the management team. Tuuli has a strong track record in developing and leading HR functions in multi-site organizations. She is also experienced in developing supervisor work and building and implementing consistent ways of working with employee well-being as a priority. So I believe that Tuuli is a very good addition to our management team. Our ongoing focus areas remain the same, except with even more focus on inventory return and health. There is still a lot to do and we continue to work on these basics on a daily basis. Our vision also remains unchanged to become the number one used car retailer in Europe. And now it's time for questions.

Thank you, Juha. Thank you, Enel. So, Sed, we shall begin with the questions via the teleconference line.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Maria Wickstrom from SEB. Please go ahead.

Yes, hello, this is Maria Wikström from SCB. I have three questions and I'll take them one by one. I'd like to start with your guidance for this year. What makes you confident that you are going to reach an improving adjusted EBIT for the year when you are currently 1.3 million behind last year?

Thank you for this first question, Maria. Our view is based on our current estimates. Obviously, Q3 has a very important part to play in being in the outlook and reaching our outlook. but also very important when we go to Q4 that we go with the right inventory, with the right mix, with the right capacities. So this is very important. Also, when we look back last year, H2 was Edith, unfortunately, was also historically at the low level. So we keep our estimates and also when we look at certain trends here, we are keeping our guidance outlook unchanged. But we, of course, a lot of work is to be done and the actions also.

Thank you. And my second question is a bit more on the inventory positioning. As to me, it shows a bit that every time when there is a shift in consumer preference in the market, Kamuk's inventory ends up being on the wrong end of the... How would I describe it? The inventory is not optimal, I mean, for the current customer trends. And yet you have very short inventory turnover cycle. So you would think that you could adjust your measures quicker than it actually shows in the profitability. So can you a little bit describe what have you now done in your inventory management when you have seen that there is less demand for If you look back many quarters what we mentioned with Enel that we focused on

Profit level, margin level per car. And when this Iran war started and we saw how much the demand for the diesel cars decreased and the inventories increased, we made decisions. Now we changed our focus. It's more important to push the inventory out, those diesel cars, and take less margin profit. The other option that you are waiting and wishing at some point after some months the diesel car demands and prices are going up and you get more margin. And this was the reason why we focused a lot of turning the diesel cars down. Now, and what happens, for example, in Finland, the level was 8,000 used passenger car diesels available in the Finnish market, and it increased over 12,000 units, it means 50%, and at the same time happened this demand went down. But now we see that the demand went up, and also the diesel car levels, available cars are coming a little bit down.

And one follow-up on that answer that if you describe, could you describe that how has your metal margin per car developed month by month over the Q2?

I think that we didn't open month by month. It's quarter-based, but especially May, as I mentioned, that in Finland it was minus 7.2% the total market in used cars. It was a very challenging month. And compared to Germany, for example, it was April when the market was down over 10%. and those were the challenges that we had in the market. And now when we look at the inventories and what happened, I would say that I made the same decisions that we made in the spring.

Thank you. And then my final question is that I can see that your personal count in Finland is down to five employees. Do you think that there is a risk that it's difficult to get growth in the market when I would think that your sales force is declining at the same time?

Yes, thank you for this question. So, yes, we are down with our employee numbers, but I would like to say that it is, when looking back a comparable period, we had a number of changes and a number of initiatives to more towards stabilization of our employee number and also costs. What we see currently, it is, we have very... Jani Koivu, Aino Hokeberg Of course, we also continue working with that. So personnel is something. But I would say that a number of personnel is not something that would, how to say, reject growing or would make growing more difficult. So, yeah.

And if I continue shortly, we focused also very heavily on helping our employees as sellers to sell more, how to sell more products per person. And also the demand in the company increased.

Thank you. I have no further questions. I believe we have some further questions from the teleconference line.

The next question comes from Jonas Heija from OPP. Please go ahead.

Hi, good morning. It's Jonas Heija from OPP. First of all, you mentioned the diesel cars being particularly problematic during the quarter. But if we exclude diesel cars, how did the metal margin develop in other powertrains versus last year?

We haven't really published by powertrains but what we've said is that the decline in diesel margins is the single biggest explanation for the decline in gross margin and metal margin overall for the quarter.

Yeah, and then when we think about the group level, when the Germany and Swedish business increased and there the metal margin or gross margin is lower level, it puts it down the whole group as a gross margin side. Okay, thank you.

And then secondly, regarding the Swedish corporations, your earnings there improved in the first year with higher volumes. How would you comment the outlook for the second half? How do you expect earnings to develop and how do you see the long-term profitability outlook in that market?

I can take this question. Thank you for this question. We are not disclosing markets separately, but maybe something I can tell that we have worked a lot on fundamentals in Sweden, also working practices and strengthening our own performance. So our market position, I think that... We first need to look what we do. The market is not, how to say, restricting us to grow. So it's all about us and doing the better job there. We also, despite we have discussed internally that we see in many ways that we have strengths in the performance. However, we also recognize that we can see volatility there. because we still need to have more quarters behind us with solid, strong performance. But we are confident with the way of working and Niklas Eriksson taking over as a new managing director. We are confident that we are going to the right direction.

Okay, thank you. And then finally, just to recap, you have the strategy process ongoing. Should we expect the results to be communicated after Q3 results or sooner?

We believe that we are coming out in the Q3.

Yeah, about that time. So you should not expect to have any new strategy information before Q3 results.

All right, thank you. That's all from me.

Thank you. So I understand we have no further questions from the teleconference, so we shall move on to the chat. And we have a question from Rauli from Inres about whether is the current average selling price level in Germany expected to remain also during H2?

We focus in Germany on that time a little bit lower categories. Of course, when we started to increase our EVs part in Q2, very late compared to Finland and Sweden. And if we can be successful in that part, it can be a little bit higher compared to Q2.

Although of course in Germany the EV, used car EV, the growth figures are high but the base numbers are still very very small particularly compared to the other markets. Rauli is continuing on Germany so what kind of impact do you expect from the store closures in Germany to volumes and earnings?

Thank you, Rauli, for this question. So, as I said, we closed two stores in Hamburg area. Those two stores, Ahrensburg and Stade, were very close actually located to our Nedefels store. So what we did was that we... and transferred our operations, cars, personnel over this Netherfield site. We had overcapacity there, so it was a very good fit and consolidation. We are not disclosing separately our store performance. However, I must say that what I can say, both stores did not have, the operations were below, clearly below the capacity, which means that You know, taking those to a profitable way or turn to profitable was difficult. So both stores were already long term negative in operating results. So we expect like positive impact, but we are not disclosing like separately.

Rauli is further asking, with the tight competition in EV sourcing markets, are you able to currently do healthy margins there?

Of course we focus a lot of the purchase channels and looking where we can make the good business with us. I don't see the huge problems with the purchase of the EVs because those cars are still available and the competition compared to powertrains is not different in EVs.

Right now we have no further questions on the chat, so it looks like we're getting ready to close. I'm just sort of trying to hold on if someone's still pushing for further questions, but nothing's coming up. So thank you for today, and I wish everyone a good rest of the day. Thank you.

Thank you.

Thank you.