BHG Group AB (publ)

Hi and welcome. My name is Gustav Orn, CEO of BHG. I'm here together with Jesper Flemme, CFO, to present our Q1 report. We will also be available after the presentation to do our best to answer your questions. Slide two, please. We are happy to present the strong start of the year for BHG. In the last quarter of last year, we showed a small growth after a long period of declining sales. And now in the first quarter of 2025, we report a strong organic growth of 8% and all three business units showing growth versus previous year. Based on our available data points, we are confident that we have taken market share during the quarter. Earnings also continue to improve now with a six consecutive quarter of profitability improvements year on year. This quarter, all business units show improvements in earnings. In this quarter, the first quarter of the year, which is also the smallest quarter of the year, we see a positive development in earnings, going from a small loss last year to a significant improvement and reporting an adjusted EBIT of 21 million SEC on group level. The improvement in earnings comes primarily from top line growth and having direct selling costs and SG&A well in control, creating leverage from top line and improving profitability. We report a cash flow of minus 103 million SEK following the normal seasonal pattern in line with last year's cash flow. I would also like to mention that during the quarter, the outcome of the arbitration proceedings with IP Agency was announced. The arbitration was decided fully in accordance with BSG's claim. BSG to pay 2.5 million euros for the remaining 30% of the shares in IP Agency. This being far from the claim demand from the minority owners of 18 million euros. BHG has also received €4 million in contractual penalties as part of the arbitration award. After the quarter, BHG has finalized the sale of the IP Agency business back to the founders in accordance with earlier communicated process and terms. The primary reason for exiting IP Agency was the company not fully operating within BHG's strategic focus. Slide three, please. A few words about market development. It is, as you can understand, a very mixed and complicated picture. The market in the first quarter remains challenging, but with signs of market recovery that we started to see in the second half of last year have continued to strengthen during the first quarter of this year, and we see increased demand in some, but not all, of our main markets. The strongest recovery we unchanged see in our largest market, Sweden, where these data points come from. In short, disposable income is strengthened primarily through inflation in control, interest rate levels coming down and government subventions to stimulate demand and consumption. consumer confidence on the other hand which has been on a long and steady improvement for almost two years has taken a hit in the beginning of this year most likely driven by geopolitical and financial unrest it should be noted that this graph is before the latest turmoil following liberation day with a tariff and the fault with the tariffs and the following stock market crash On this subject, I should say that we have very limited exposure to the introduced and then postponed tariffs, and we have a very limited sale to the US. Basically, only Nordic Nest selling for a few million SEK over their international site. However, even if the effect from the tariffs is very limited for us, there will be effects also on our business. The main questions and effects we see are in short. how will the political and financial uncertainty affect consumer sentiment historically has driven savings and reduced consumption that is most likely also the effect now but to what extent is still very hard to estimate reduced capacity constraints in china and other regions in asia where we have production This should, over time, most likely have a positive effect on production prices from that region. Most likely, shipping prices will also be affected. How? Still too early to say. And the risk of Asian production initially produced for the US market, now directed to the European market as a consequence of the US tariffs, driving supply and having a negative effect on consumer pricing. And finally, the currency effects, where there are several different effects, both positive and negative, and Jesper will try to explain this further in a few minutes. So, in summary, we see positive developments of disposable income from macro factors as interest levels, transactions in the housing market, and in some markets as Sweden, also government subventions as in Sweden, the increased route of draw, The main question now is how this will balance against the negative effects of consumer confidence from the geopolitical unrest. Slide four, please. If we take a look at the development in our categories in the Swedish market, where we have the best data points, looking at the sales trend from Statistics Sweden or Statistiska Centralbyrån, We see a gradual improvement of sales in our categories all through last year that now continues into the beginning of this year. Our outlook is continued gradual market recovery in 2025, driven by disposable income. With that said, it needs to be highlighted that the uncertainty has increased substantially with geopolitical and financial unrest as the main drivers. which makes it difficult to estimate the risk of setbacks and recovery speed. Sweden leading the way, but with the same tendency, but from lower levels and with some time lag in most of our markets. Slide five, please. As mentioned, we have since the extreme growth during the pandemic operated in a very challenging market, and we saw growth for the first time in two years in the last quarter of last year. Now, in the first quarter of this year, we see significant strengthened sales development with an 8% organic growth. Slide six, please. Strong growth in the first quarter of the year. Let me try to clarify further where this growth comes from. From a geo perspective, the main growth comes from Sweden being the main growth driver. This is also the market that we as mentioned see leading the market recovery. We also see a strong sales development in Norway and Germany. It's somewhat more surprising as these markets that would be from our data points regard as still being challenging. From a category perspective, the main growth comes from continued recovery in capital intensive categories, an improvement that we have seen since the second half of last year. We also see strong development in important categories as furniture, home decor, bathroom and garden. where we are ahead of last year. Slide seven, please. If this was primarily reporting and looking backwards, I will take a few moments to speak more about where we are and the strategic plan we have looking forward. As mentioned in the last quarterly call, we are in the final stages of what we have called the restructuring phase. and are now entering the next phase that we have named the profitable growth phase. Let me try to summarize this. We are a group of online businesses joined as one group and together we are the leading e-commerce company in the Nordics targeting consumers. We focus on the home and household market and we have exited businesses focusing on other categories. We are present in a large and growing market driven by external macro trends and with a low online penetration compared to most other categories and more importantly compared to other more online mature markets such as the UK and the US. We are now well positioned leaving the restructuring phase where we have focused on consolidating our business to fewer and larger platforms and focused on efficiency, cost reductions and creating scalable solutions. one year ago we redefined our financial targets focusing on growth at least in line with the market and reaching the five percent pre-pandemic levels of profitability in the first phase and then the seven percent even margin we have in our financial targets the main components of our strategy boils down to achieve growth through continued organic expansion Group-driven strategic initiatives and using both on M&A as a growth lever in new categories, geographies and customer segments. Take and secure lead in key categories using a combination of our multi-destination, multi-banner strategy. and the combo of dropship-based and inventory-based business models to provide the best offer to the consumer of own and external brands, thereby serving multiple customer segments. Using the asset-like and scalable online model with low fixed cost and a core focus on cost control to enable the best offer to the consumer, and as a consequence of continued increase in price transparency for the consumer enabled by various online tech developments, we believe that price pressure and margin pressure will most likely continue to increase over time and low cost structure will be the key competitive advantage to enable the best offer to the consumer. The generated cash flow will be used to reduce inept debts, but also to fuel strategic initiatives and M&A. Slide eight, please. Before I leave it to Jesper, a few words about the more immediate future and the tactical focus of this year. To secure that we take our share of a gradually improving market, which means that we are back to focus on market share, we must secure that we grow faster than the market. To ensure that we maintain the cost levels we have worked so hard to achieve and thereby realize the cost leverage with growing volumes. Something we are pleased that we managed to achieve in the first quarter. Strengthen and secure our focus on customer satisfaction. Coming out of the restructuring phase, we have increased our focus on providing a positive customer journey through all customer touch points in all entities. With that, I would like to leave it to Jasper to take us through the numbers.

Thank you, Gustav. And slide nine, please. For the second consecutive quarter, we saw organic growth and the growth rate improved significantly compared to previous quarter. Net sales increased by 10 percent, reaching 2.2 billion SEK and organic growth was 8.2 percent. From a geographical perspective, we continue to experience favorable growth in our largest market of Sweden, driven by all three segments, but mainly value home. Also Germany noted strong performance driven by premium living through Nordic Nest, as well as successful geographical expansion in home improvements. Category wise, we saw a broader recovery in demand and achieved growth in most of our core categories. Turning now to page 10 and profitability. Profitability improved significantly compared to last year. Adjusted EBIT amounted to 21.2 million SEK in the quarter, corresponding to an EBIT margin of 1.0%. All three segments are profitable in the quarter and contributed to the 22 million SEK improvement over last year. The stronger SEK affects our segments differently. Value home has a positive effect because with purchases in US dollars, while premium living has negative effect as a result of large share of sales outside Sweden. The group as a whole is negatively affected. Move on to slide 11 and the EBIT bridge. We improved our EBIT margin by 1.0 percentage point in the quarter, mainly by reducing and leveraging our fixed costs. Organizational costs have decreased by 8 million SEK and DNA by 10 million SEK compared to the corresponding period last year. Another positive in the quarter is marketing costs, which has been improved through increased efficiency, mainly in the value home segment. The lower product margin was primarily driven by high comps in home improvement, mixed effects from increased sales of outdoor furniture and both high campaign pressure and currency effects in premium living all in all our ebit margin amounts to 1.0 percent in the quarter slide 12 and cash flow please cash flow from operating activities amount to minus 103 million sec driven by a negative working capital development in turn driven by inventory buildup ahead of the outdoor season. The right hand graph showing the development in liquidity walks us through the starting period position of 473 million SEK, deducting the cash flow from operations and the impact of investing activities. And finally, adding the financing activities which are primarily related to utilization of our revolving credit facility and amortization of leasing liabilities. but also include interest payments. Bringing us to the period end, 418 million SEK of liquidity at hand. Slide 13, please. The group's net debt amounted to 1.3 billion SEK at the end of the quarter, and net debt in relation to LTM-adjusted EBITDA ended at 3.9 times. On top of our liquidity at hand, we had unutilized credit facilities at the end of the quarter of 600 million SEK. Acquisition related liabilities amounted to 349 million SEK at the end of the quarter. Cash flow wise, 149 million SEK will be paid out this year, including 27 million SEK regarding IP Agency. Worth noting is that IP Agency has subsequently, after the end of the period, been sold for 5 million euros corresponding to 54 million SEK. With that, I will hand it back over to you, Gustav, to summarize and conclude.

Thank you very much, Jasper. Let me try to summarize this. The market has improved in the first quarter with strength and demand, and our outlook is unchanged that the market will continue to gradually improve during the coming year. With that said, the market uncertainty has significantly increased during the last few weeks. We see strong growth and profitability improvements in all three business units in the first quarter of the year. Our tactical focus for the coming year is unchanged, focused on growth and market share and to secure our cost levels to drive profit through cost leverage and maintain an increased focus on the consumer. We have worked hard and we now have a well-defined plan and a strong position leaving the restructuring phase. We are confident but humble entering the next phase of profitable growth to capitalize on the gradually improving market. Thank you very much for listening and now happy to do our very best to answer your questions. Thank you.