Axfood AB (publ)

Good morning, everyone. This is the Axfood first quarter 2025 telephone conference. And with me today are Simon Margulis, president and CEO, and Anders Lexman, CFO. In the investor section of our Axfood.com website, you will find the presentation material for today's call. We encourage you to have that presentation at hand as you listen to our prepared commentary. After the presentation, we will be taking questions. And a recording of this call will be made available on our website. I will now hand over to the words to Simone. So please go to page number two.

Thank you, Alex. And good morning, everyone. With a focus on the customer meeting and further volume growth, we continue to strengthen our market position in the first quarter of the year with Willys, Hemshop and Snabjos. We reported a stable earnings performance and maintained a high level of activity in areas that are strategically important for increased efficiency and market presence. A number of activities have also been initiated to strengthen Citygross, which we acquired on November 1st last year. In terms of logistics, the productivity of our recently completed logistics center in Bålsta is continuing to improve. And now we have also initiated plans to expand capacity and efficiency in the southern parts of Sweden from 2030 and onwards. We will of course cover all these areas in today's presentation, but first let us turn to page 3 and today's agenda. I will start with a brief market overview and then I will give you a review of our first quarter performance and strategic agenda. Following that, Anders will take you through the financials. And lastly, just a brief summary from me before we open up for questions. Turning to page four, but let's go straight to page five and take a look at the developments during the first quarter. Food retail market growth was 1.9% in the first quarter. Growth was impacted by a negative calendar effect of minus 2.3%, given leap day last year and also time on Easter. Following a period of low inflation, Statistics Sweden reported that food price inflation was once again on the rise in the first quarter, reaching an analyzed rate of 3.8%. This is due to various global factors, including shortages in the supply of raw materials, climate change, and geopolitical turbulence. Adjusting for calendar effects and inflation, market growth amounted to 0.4%. Growth in Axos retail sales amounted to almost 16%. We clearly gained market share and that was true also if we exclude Citigrass as the adjusted growth was 3%, driven by a positive trend in customer traffic and increased volumes. Retail sales growth over a two-year period amounted to 24%, almost three times the rate of the market, Also here, our growth, excluding city growth, exceeded that of the market. In e-commerce, growth amounted to 4.1%, which compared to market growth of 2.2%. Excluding city growth and this continued business mid-last year, our sales were on par with the prior year. We are now on page six. Growth in consolidated net sales amounted to almost 4% during the first quarter and despite the negative calendar effect. Higher volumes in Willys, Hemsköp and Snabgross was the main driver behind this. Sales in Citigrass amounted to just over 2 billion SEK. On a group net sales basis, the contribution from Citigrass was 290 million SEK or just over 1% due to internal eliminations in Dagab. So please go to the next page, number seven. Group operating profit amounted to 719 million SEK and the operating margin was 3.4%. Operating profit includes items affecting comparability of minus 38 million SEK related to city growth. Adjusted operating profit, which excludes items affecting comparability, amounted to 757 million SEK and the adjusted operating margin was 3.6%. Operating profit in Willys and Daga have increased, while profits in Hemshep and Snabros declined somewhat. Citigrass had a weak start of the year, and I'll get back to this development shortly. The Axford Group adjusted operating profit, excluding Citigrass was higher than in the prior year, and the corresponding operating margin was unchanged. We maintain significant focus on productivity and cost efficiencies. With our structure and investments in our operations, we have a solid foundation for operational excellence. And during the first quarter, we also initiated work to improve efficiencies in our support functions across the group to further increase our competitiveness. Let's go into a little bit more detail, starting with Willis on page eight. As I just mentioned, sales growth for Willys was strong in the first quarter at 3% and clearly above the rate of the market. In addition, Willys is back to earnings growth as operating profit increased compared to the prior year and amounted to 495 million SEK, which corresponded to a flat operating margin of 4.3%. The higher profit was mainly driven by increased volumes, a stable gross margin development and good cost control. Turning to page nine. Willys is Sweden's most recommended grocery chain and holds a unique position of the market. Growth in the first quarter was driven by positive trends in both customer traffic and loyalty. In total, the amount of members in Willys Plus loyalty program increased 5.1% year-on-year on a net basis to more than 3.8 million. In terms of loyalty, the number of members making a purchase also increased 3.4% year on year. So strong trend in both attracting new members and increasing the number of active members. We also see even stronger brand perception as measured by consumer consideration and preference. We have shown these charts before, but they are worth showing again with updated figures as these metrics really display how strong the Willys brand is among consumers. We're now on page 10. It is evident that price value and low prices are still very much in focus for our customers. Just over the last few years, these factors have really become top of mind for people when deciding which store to do their grocery shopping in. Price value even surpassed location as the single most important factor a couple of years ago, a historic change which is still true today. The discount segment has been the market's fastest growing segment for a long time. And in terms of the demographic profile of shoppers, there is a clear preference among younger customers and families with children. And we interpret this as a good sign for future growth and potential. In addition, the discount segment is still relatively small in Sweden when compared to markets in many other countries. So to put this into context for Willys, we see considerable possibilities to continue expanding the chain, adding more stores at a rapid rate. Let's turn to page 11 and the Hampshire segment. With an attractive offering in the traditional grocery segment of the market, HempShop also performed strongly in the first quarter, with a retail sales growth of 3.1%, and life-for-life sales growth were very similar at 2%. Both numbers clearly above the market, which primarily was driven by increased volumes from a higher number of customer visits. Total net sales for HempShop increased 5.1%. Operating profit amounted to 94 million SEK and the operating margin was 4.6%. The margin was somewhat lower than in the prior year. However, it was still a very good level compared to the recent year. While higher sales volumes had a positive impact on earnings, a somewhat lower gross margin impacted negatively. There were also some effects related to new establishments. Turning to page 12. With Citygross, Axfood has established a presence in the hypermarkets, an attractive segment that over time has become a larger share of the Swedish food retail market. Citygross has faced some challenges in the recent years, and the trend the first quarter was also weak. On a like-for-like basis compared to the year earlier, when Axfood was not the full owner of Citygross, retail sales were down 3.3%, In total retail sales decreased 3.8%, mainly due to volume declines and the closure of one store. The adjusted operating profit was negative and amounted to minus 80 million SEK, mainly explained by the weak growth in like-for-like sales. Items affecting comparability pertain to a structured cost, including costs related to closing the store in Bromma in Stockholm, ahead of concept change to Willis. And the adjusted operating margin was minus 3.9%. We are now on page 13. As previously communicated, this year will be a transitional year for Citigrass, and the initiatives that we are now implementing will take time to yield results. We maintain a high activity level to strengthen the chain by revitalizing the concept and brand, improving the customer offering, implementing a chain management structure and streamlining operations. A new communications concept and a stronger, more affordable customer offering were recently launched. We are also implementing structural measures, including conversions to the stores in Borlänge and Roma to Wille stores. And giving our experience, expertise and capacity, we see considerable opportunities to turn Citygross into a profitable company at some point in the second half of 2026. Turning to page 14. In the restaurant and café segment, Snabgross continued to deliver strong growth of 5.2% despite the continued weak market. Sales were up 4.1% on a like-for-like basis. A higher number of customer visits had a positive impact on sales. Unlike the food retail market, the overall calendar effect did not impact the outcome since the negative effect of the lease date in the preceding year is deemed to have been offset by a positive calendar effect related to Easter. Operating profit was basically in line with the prior year and amounted to 25 million SEK, corresponding to an operating margin of 2%. While increased sales and stable gross margin trend had a positive effect on earnings, new store establishment and investment in expanding Snuggles Club negatively impacted the earnings trend. Moving on to page 15 and Dagav. Dagav's net sales increased by 3.5% with sales to Willys, Hemsworth and Snabros driving the increase in the quarter. Operating profit increased to 287 million SEK and the operating margin was slightly higher than at 1.5%. The earnings trend was primarily due to the positive sales growth. The gross margin declined slightly, which was partly offset by lower cost as a result of the progress made in the logistics restructuring. Let's go to page 16. During the quarter, the implementation of e-commerce flows at the logistics center in Bålsta was completed, marking the end of the ramp up for the facility. Productivity and efficiency improved during the quarter, thanks to a focus of optimization. And from the second quarter of 2025, previously announced efficiency improvements of 200-300 million SEK on an annual basis are expected to be realized, contributing to a continued cost savings and improving Axfood's competitiveness. In addition to investments in Bålsta, the expansion of the 16 high bay warehouse in Backe, Gothenburg, and the optimization of the fruit and vegetable warehouse in Las Krona are in their final phases to increase capacity and streamline operations. We are now on page 17. In recent years, we have had a very strong growth in Daga through organic volume developments and expansions, including the acquisition of Bajendals Food. With the logistics center in Båsta, we have secured capacity and efficiency to handle volumes in the middle and northern parts of Sweden. Now and naturally, we're planning for the next steps in the development on our logistics structure to create additional capacity and efficiency also in the southern parts of Sweden and from the year 2030 and onwards. The plan is to establish a new automated logistics center in the Gothenburg region, but first and foremost, we'll replace our existing warehouse in Bakka. However, we are also analyzing how to handle volumes among the other warehouses in the southern Sweden. These initiatives will create a modern and highly efficient infrastructure to secure capacity and growth and contribute to strengthening our competitiveness. While it's still early days, we will provide more details in the coming quarters and initiate negotiations with relevant parties and stakeholders. Turning to page 18, now it's time for Anders to walk you through the financial development So please go to the next page, number 19. Anders, please go ahead.

Thank you, Simone. So we are now on page 19. In the first quarter, cash flow from operating activities was 463 million SEK lower compared to the prior year. The relatively weak cash flow from operating activities compared to last year was mainly due to a strong working capital performance last year, which was boosted by accounts payable related to Easter. The cash flow from investment activities was minus 400 million SEK, slightly lower compared to last year. We saw a lower pace in warehouse investments, but a higher pace in store modernizations. The cash flow from financing activities was in line with last year. The higher dividend and amortization of leasehold debt was offset by a higher usage of credit facilities. So then please turn to page number 20. The net debt has increased during the last two quarters due to the acquisition of Citigros. In addition to the loans raised for the acquisition, net debt also increased with the Citigros leasehold debt of approximately 2 billion SEK and the dividend paid out in Q1. This is also reflected in the higher net debt ratio. At the end of the first quarter, we utilized approximately 3.3 billion SEK of our credit facilities, approximately 2.5 billion SEK more than in the first quarter last year, and 400 million SEK more than in Q4. The equity ratio was lower than December 2024 and amounted to 16.8%. The lower equity ratio compared to Q1 last year was a result of the Citigroup's acquisition. The decrease in the first quarter was in line with previous years and is also seasonal effect from dividend paid. The total investments excluding leasehold and acquisition for the first quarter amounted to 373 million SEK. During the first quarter, we established two new Group 1 stores. In Q1 last year, we didn't establish any stores. So then please turn page to page number 21. Looking at capital efficiency, we had a negative development of the rolling 12-month networking capital. The impact of the city goes acquisition is expected to increase the KPI with approximately 0.3 percentage points on a rolling 12-month basis. We also saw a negative effect from the last year all-time high accounts payable balance in March. Capital employed has increased over the last years, mainly due to both the acquisition of Berendals Food and Citygross, as well as the investments in Bålsta. The level of capital employed, however, decreased in Q1, mainly as a result of the dividends. Due to the decrease in capital employed, the return on capital employed increased somewhat to 16.8% compared to last year. And thereby, Simon, I am done with my part, so I hand over to you again.