Axfood AB (publ)

Good morning. So this is the Axfood second quarter 2025 telephone conference. And with me today are Sinéad Margulis, president and CEO, and Anders Leksvon, 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 the presentation at hand as you listen to our prepared commentary. After the presentation, we will be taking questions. The recording of this call will be made available on our website. I will now hand over the word to Simon, so please go to page number two.

Thank you, Alex, and good morning, everyone. We summarized a strong second quarter with growth that significantly exceeded the market development. We have a continued momentum in Viljus, Hemköp and Snabjos, and through affordable and attractive offerings, more customers are choosing to do the grocery shopping in our stores. In addition, the investments that we made in automation and logistics in recent years are now contributing to efficiency and competitiveness for the group. At the same time, strategic initiatives are ongoing to further strengthen our presence and the market positions of our retail chains. Also during the quarter, we made important progress in sustainability, including the inauguration of Sweden's largest solar park. So let's turn to page three and the agenda for today's presentation. I will start with a brief market overview and then I will give you a brief review of our second quarter performance and strategic agenda. Following that Anders will take you through the financials. And lastly, just a 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 development during the quarter. In the market, competition remains intense across all segments, and the consumers continue to focus on price, value and affordability. We are convinced that this will continue also going forward, considering the increased price awareness among consumers in general. With our group's business model, with different concepts in collaboration, in combination with a wide and affordable assortment, we have the right conditions in place to continue to navigate a dynamic market. The market growth in Sweden food retail was 6.2% in the second quarter. And growth was impacted by a positive calendar effect of 1.2% from the timing of Easter. Statistics Sweden reported that the annualized rate for food price inflation was 5.4% in the April to May period. This was somewhat higher than in the first quarter this year. However, on a sequential basis, compared to the level at the end of the first quarter, the price development was relatively stable. Growth in Axos retail sales amounted to almost 23%. Excluding Citigrass, which was acquired in November last year, growth amounted to 9%. As such, our growth was clearly above the rate of the market, both including and excluding Citigrass. And volume growth from increased customer traffic and new store establishments, as well as pricing and positive mix were all factors contributing to this development. In e-commerce, growth amounted to 12% compared to market growth of 8%. Excluding Citygross and the discontinued business Middagsfrid, our sales grew 6%. We are now on page 6. Consolidated net sales grew strongly in the second quarter by just over 9%. driven by continued momentum in Viljus, Hemköp and Snabjörgs. Sales in Citygross amounted to more than 2 billion SEK. However, on a group net sales basis, the contribution from Citygross was 364 million SEK due to internal eliminations in Dagab. Please go to the next page, page 7. Group operating profit increased to 934 million SEK and the operating margin was higher at 4.1%. Operating profit included items affecting comparability of minus 25 million SEK related to city gross. Adjusted operating profit, which excludes these items, also increased to 959 million SEK and the adjusted operating margin reached 4.2%. The development was primarily a result of increased customer traffic, strong growth and efficiency in logistics. Overall, the profit development in absolute terms was driven by Willis and Dagab. However, Hemsköp and Snabgross also reported increased profits year on year. So the earnings performance was well balanced the quarter across our reporting segments. Citigroups had a negative impact on the growth profit development, however, to less extent than in the first quarter. During the quarter, work to streamline our support functions was completed, entailing the removal of 100 existing positions during the second half of this year. This will lead to cost savings of approximately 80 million SEK from next year, 2026, which create conditions for us to continue to invest in price value and the competitiveness of our chains. We continue to focus on efficiency and costs in internal processes and procurement. With our structure and the investments in operations, we have a solid foundation for operational excellence. Now let's go through the development segment by segment, starting with Willis on page 8. Willis demonstrated a particularly strong performance in the second quarter, with growth of 10% significantly outpacing the market. Willys holds a unique position in the market and continues to be Sweden's most recommended grocery chain. In addition, the brand always comes out great in customer service, measuring brand equity. Growth in the second quarter was driven by a positive trend in both customer traffic and loyalty. In total, the number of members in the Willys Plus loyalty program increased to almost 3.9 million. Earnings grew and amounted to 565 million SEK, which corresponded to a stable operating margin year on year of 4.5%. The higher profit was mainly driven by increased volumes and a solid cost control. Let's turn to page 9 and Hemköp. Hemköp also performed strongly in the second quarter, with retail sales growth of almost 6%, which was in line with the market. and like-for-like sales growth of almost 5%. This was primarily driven by increased customer traffic and a higher average ticket value. Total net of sales for Hampshire increased 6%. Operating profit increased to 97 million SEK. The operating margin was higher at 4.7% and it is a clear evidence of Hampshire's positive development in the recent years. The higher profit was mainly driven by increased sales, a stable gross margin and a solid cost control. Turning to page 10. Citigrass has great potential and gives us presence in the hypermarkets, an attractive segment that Axos previously has not been operating in. This year is a transitional year and we are working according to our plan to strengthen Citigrass for the future. We expect to achieve profitability with Citigrass at some point in the second half of 2026 and today we are reiterating that target once again. We maintain a high activity level by revitalizing the concept and brand, improving the customer offering, implementing a chain management structure and streamlining operations. In late April, a new communication concept and a stronger, more affordable customer offering were launched to contribute to Citigrass competitiveness on the market. Also during the quarter, the store in Bromma in Stockholm was closed ahead of concept change to Willys. And as a reminder, structured measures like this is to create a healthy core in Citigrass that the chain can further grow from. Overall sales growth in the second quarter amounted to 2.6% in total and 3.5% on a like-for-like basis. The chain reported an operating loss of minus 20 million SEK in the quarter. This was mainly due to a negative gross margin development following the recent initiatives to strengthen the price position. Items affecting comparability pertain to structured costs, including closing down the store in Borlänge, also ahead of concept change to Willis. The adjusted operating margin was minus 0.9%. Moving on from Sittergross and now we are now on page 11. Snabbgross continued to deliver strong growth of 6% despite a continued weak cafe and restaurant market. Sales were up almost 5% on a like for like basis. Increased customer traffic had a positive impact on sales in addition to a higher average ticket value. Unlike the food retail market, the overall calendar effect related to Easter is deemed to have been negative. Operating profit was higher than in the prior year and amounted to 96 million SEK, corresponding to a higher operating margin of 6%. The increase in profit was mainly driven by higher sales, a stable gross margin and solid cost control. Next page, page 12 and Dagab. DAGAV's net sales increased by 8%, with sales to Willys, Hemsköp and Snabjörs driving the increase in the quarter. Operating profit increased to 298 million SEK and the operating margin was higher at 1.4%. The performance was primarily due to strong sales growth and lower cost levels due to efficiency improvements in logistics operations. The operating profit was however negatively impacted by a lower gross margin and this was a result of increased market investments to support Dagab's customers in this highly competitive food retail market. The logistics center in Bålsta is now fully operational since a couple of months and focus in on optimization to continue to improve productivity and efficiency. As previously communicated, Dagab is also planning for the next steps in the development of the logistics structure to create additional capacity and efficiency in the southern part of Sweden from the year 2030. And we will come back to this in the months ahead. Moving away from segments, and we are now on page 13. Renewable energy is one of our major focus areas for reducing our climate impact. In April, we officially opened Sweden's largest solar park in Hallstavik in Uppland, which we established in collaboration with the solar energy company Light. Our electricity mix has for a long time consisted of almost only Swedish renewable energy. But with the new solar park, we are adding additional capacity to the electricity grid. This helps to increase the conditions for green transition, while also creating predictability in our own energy supply. The PAR consists of approximately 100,000 solar panels in capacity that enables output of approximately 64 MW or 63 GWh annually, which corresponds to around 15% of our electricity consumption. In addition, we have in recent years established Sweden's largest rooftop solar power facility at the logistics center in Bålsta, and a large solar power facility on the fruit and vegetable warehouse in Landskrona. Also during the quarter, the phasing out of fossil fuels in transport continued through increased use of renewable fuels. Emissions from our own transports decreased sharply by 20% compared to the previous year. Turning to page 14. Now it's time for Anders to take you through the financials. So please go to the next page, number 15. And Anders, please go ahead.

Thank you, Simone. During the first half of the year, net sales for the group increased by 6.6% to approximately 44 billion SEK. Including Citigrass retail sales increased by 19.3%. Excluding Citygross, the increase was 5.9%, which was higher than the food retail market in total, where growth amounted to 4.1%. Operating profit excluding items affecting comparability increased 3.8% to just over 1.7 billion SEK. The operating margin excluding items affecting comparability decreased with 0.1 percentage points to 3.9%. where the CityGross acquisition impacted the margin with minus 0.3 percentage points. Next page, number 16. During the second quarter, the cash flow was 39 million SEK and compared with last year, 213 million SEK higher, mainly due to a strong underlying cash flow supported by a positive contribution from networking capital. and the reversal of the negative calendar effect from the first quarter. We also saw a strong underlying operating cash flow for the first half year. The negative cash flow from investment activities of 475 million SEK in Q2 was somewhat higher compared to last year. We now have a higher pace in investments in our retail operations and a lower pace in automation investments since we now are through with our investments in the fulfillment center in Bålsta. Thanks to the strong operating cash flow, Axford has reduced the utilization of credit facilities during the second quarter. By the end of Q2, Exxon utilizes approximately 2.5 billion SEK of our credit facilities compared with 3.3 billion by the end of Q1 and 2.9 billion SEK at the end of last year. And then please turn to page number 17. The net debt has increased since the acquisition of Citigroups in Q4 last year. In addition to the loans raised for the acquisition, net debt also increased with the Citigrass leasehold debt of approximately 2 billion SEK. During July, Exford has successfully refinanced the existing revolving credit facility. The new RCF amounts to 4 billion SEK, where 1 billion have a tenor of three years and 3 billion SEK have a tenor of five years. The conditions in the new agreement are in all essentials unchanged compared with the old facility. The equity ratio amounted to 18.2%, which was lower than December 2024. The lower equity ratio compared to Q2 last year was a result of the Citigrass acquisition. The decrease during the first six months was in line with the previous years and is a seasonal effect from dividend paid. Total investments excluding leasehold and acquisitions for the first six months amounted to 844 million SEK. Year to date, we have established six new Groupon stores in comparison to four new Groupon stores during the same period previous year. We have also increased our store modernization somewhat compared to last year. And we are now on page 18. When we look at the capital efficiency, we had a negative development in our rolling 12 months networking capital. As I have mentioned before, the impact of the Citigrass acquisition is expected to increase the KPI with approximately 0.3 percentage points on a rolling 12-month basis. Capital employed has increased over the last years, mainly due to both the acquisitions of Bergendals Food and Citigrass, as well as the investments in Bålstan. The level of capital employed, however, decreased during the first half of 2025, mainly as a result of the dividend. Due to the decrease in capital employed, the return on capital employed increased somewhat to 17% compared to last year. And thereby I have come to the end of my presentation and I have hand over to you, Simon, again.