Axfood AB (publ)

Good morning. This is the Axfood Year-end Report 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. A recording of this call will be made available on our website. So with that, I will now hand over the words to Simone. So please go to the queue. Go ahead, Simone.

Thank you, Alex. And good morning, everyone. We report another quarter of above market growth and stronger market positions for all our retail chains. By leveraging the strength of our business concept, we are also preparing for the future and investing in strategically important areas to continue attracting more customers, become even more efficient and strengthen our competitiveness. On this slide, you see some highlights for the quarter, highlights which we will cover during the course of this presentation. Turning to page three. So now, as usual, I will start with a brief market overview and the review of the quarterly development. Let's go to page four. Market conditions in Swedish food retail continue to be characterized by a high activity level in the quarter with intense competition and continued high price awareness among consumers. Overall market growth amounted to 4.5%. Statistics Sweden reported that the annualized rate for food price inflation was 3.5%. This level was somewhat lower on a sequential basis, and in absolute terms, the overall price level was quite stable. Growth in Axwood's retail sales amounted to 8.7% and 5.3% excluding city gross. Our growth was thereby once again above the rate of the market, both including and excluding city gross. Volume growth from increased customer traffic, strong customer loyalty and new store establishments contributed to the development. We have a long history of market share gains. With the Q4 performance, we have outperformed the market every quarter this year and are reporting our 11th consecutive year of market share gains. We are now on page 5. Consolidated net sales for Axel grew 4.4% in the quarter, with higher volumes and positive trends in like-for-like sales in all our retail chains. We acquired Citigross in November 2024, so during the fourth quarter we started analyzing their performance. However, only two months of the quarter, which is clear when you look at their comparison figures. So please go to the next page, number six. Group operating profit increased to 860 million SEK, and the operating margin was higher at 3.8%. Operating profit included items affecting comparability of minus 30 million SEK related to Slittergross. Last year, items affecting comparability pertained to a re-evaluation of our previously minority stake in Slittergross. Operating profit and margin on an adjusted basis, which excluded items affecting comparability, also increased. Adjusted operating profit was 873 million SEK and the adjusted operating margin amounted to 3.8%. The improved profitability was primarily driven by high sales volumes and good growth in both total and like-for-like sales, a stable gross margin trend and effective cost control. In 2025, we increased our focus on productivity and costs and implemented measures to improve efficiency within and between the group support functions. In the fourth quarter, we saw some effects from these measures through cost savings, not only in the various businesses, but also in joint group functions, which partly explains the positive profit development there. Let's now turn to Willis and page seven. Willis continued to outperform the market in the fourth quarter. Growth primarily came from higher volumes as a result of an increased number of customer visits and new store establishments. Willys continues to attract new members into its customer loyalty program, Willys Plus, and sees strong loyalty among its customers. Earnings grew to 467 million SEK, which corresponded to a stable operating margin of 3.7%. The increase in operating profit was primarily driven by the increased sales volumes, a stable gross margin development, and good cost control. Moving on to Hemshop and page 8. Hemships retail sales growth in the quarter exceeded that of the market. Hemships of volume growth, driven by increase in customer traffic, and in addition, a higher average ticket value, impacted the sales development positively. Operating profit was higher at 78 milliacek, and the operating margin also increased to 3.5%. The increase in operating profit was mainly driven by the increased sales, a somewhat high gross margin, and solid cost control. Earnings in the prior year was impacted by new store establishments. Turning to page 9. Citigröss demonstrated a positive performance during the fourth quarter. The financial comparison figures here obviously refer to the two months period November to December 2024. However, to give you a better understanding of Citigröss' underlying sales performance, sales growth numbers are calculated with the full October to December period 2024, in the comparison base. While total growth was impacted by store closures, like-for-like growth was solid and amounted to 3%. Citygross reported a profit for the quarter of 28 min on an adjusted basis, corresponding to an operating margin of 1.2%, with positive contribution from its like-for-like growth. In addition, structure measures and efforts to streamline operations contributed to the development. As a reminder, the fourth quarter is generally a strong quarter for hypermarkets. On a reported basis, operating profit amounted to 40 million SEK, which correspond to an operating margin of 0.6%. This included the items affecting comparability I just mentioned, which refers to structural measures, including discontinuation costs for stores and sales clearance within the non-food assortment. Turning to slide 10. Our restaurant wholesaler Snabjos delivered growth of 6% in the quarter, on both a total and like-for-like basis. Higher volumes through increased customer traffic had a positive impact on sales, in addition to higher average ticket value. In terms of profitability, the quarterly development was weak. Operating profit amount 35 million SEK, corresponding to an operating margin of 2.5%. A lower gross margin associated with temporary market investment was not fully offset by volume growth, which had a negative impact on the earnings development in a very competitive market. Next page, number 11. During the year, Dagab has developed the group's assortment of affordable, good and sustainable food, with a continued focus in the fourth quarter on ensuring that our chains can provide Swedish customers with a competitive offering. Dagab's fourth quarter net sales increased by almost 5%, driven by sales to Axel's own concepts. Operating profit amounted to 340 million SEK and the operating margin was 1.5%. Operating profit was negatively impacted by a low gross margin due to market investments and negative mix effects. The logistics center in Bålsta along with the High Bay warehouse in Backa and automation of fruit and vegetable warehouse in Lanskrona has significantly increased Dagab's capacity and efficiency in logistics. Work continues to optimizing our new logistics structure And later on in the presentation, I will come back to the next significant investment in our logistics structure, the facility in Kungsbacka that we plan to establish to increase capacity and efficiency also in the southern parts of Sweden. But before that, it's time for our CFO Anders to take you through the financials. We are now on page 12, but please let's go to the next page, number 13. And Anders, please go ahead.

Thank you, Simone. Net sales for the group increased by 6.1% to approximately 89 billion SEK, including city gross. Retail sales increased by 16.4% and excluding city gross, the increase was 5.9%, which was higher than the food retail market in total, where growth amounted to 4.5%. Operating profit excluding items affecting comparability increased 7.4% to almost 3.7 billion SEK. The operating margin excluding items affecting comparability remains unchanged at 4.1% where the Citigrass acquisition impacted the margin at minus 0.2. Then please turn to page number 14. During 2025, the cash flow was 345 million SEK, which was almost 300 million higher compared to last year. We saw strong underlying operating cash flow from both for the fourth quarter and the full year, mainly due to a strong operational performance boosted by positive working capital changes. Last year was impacted by negative calendar effects in working capital. The negative cash flow from investment activities of 1.7 billion SEK was substantially lower than last year, as last year was impacted by the city-gas acquisition. Excluding the city-gas effect, we have a higher pace in investments in our retail operations and a lower pace in automation investments compared to last year, since we now are through with our investment in the Bålsta logistic center. By year end, Exfood utilized approximately 2.7 billion SEK of our credit facilities compared to 3.1 billion SEK by the end of Q3 and 2.9 billion SEK at year end 2024. We are now on page 15. During the last couple of quarters, we have seen a positive trend in the net debt development. The net debt increased with the acquisition of Sittegross in Q4 last year and the dividend paid in March but is now below 2 and excluding IFRS 16 just below 0.5. The equity ratio amounted to 21.2% which was higher than last year and above the year end target of 20%. Total investments excluding leasehold and acquisition amounted to 1.7 billion SEK In 2025, during the year, we established nine new group-owned stores, three fewer stores compared to the previous year. Our investments in store modernizations have increased compared to last year. Please then turn to next page, page number 16. When we look at the capital efficiency, we had a negative development of our rolling 12-month net working capital. The impact of the Citigrass acquisition has increased the KPI with approximately 0.3 percentage points on a rolling 12-month basis, which implies a positive underlying development. Capital employed has increased over the last years, mainly due to the acquisitions of Bergendal Food and Citigos, as well as the investments in Bålsta. The level of capital employed increased slightly during 2025, mainly as a result of increased leasehold debt and equity. Due to the increase in capital employed, the return on capital employed decreased to 15.5% compared to last year, despite an improved operating profit. And thereby, I have come to the end of my presentation and hand over to you again, Simone.