BHG Group AB (publ)

Hi and welcome. My name is Gustav Ord, CEO of BHG. I'm here together with Jesper Flemme, CFO, to present our Q4 and year end report. We will also be available after the presentation to do our best to answer your questions. Next slide, please. This time, let me first take the opportunity to summarize the full year. Super proud of the year's achievement in 2025. We have delivered on what we set out to do. Entering the year, we defined three core tactical focuses. And now summarizing the year, I can firmly say that we have delivered on all three of them. One, we have taken market share in a gradually strengthening market. The market has improved during the year, but I can with confidence say that with plus 9% organic growth, we have grown more than the market and taken market share. Two, we have managed to maintain our cost levels and with growth at the main lever, we have improved our profitability with more than 50% versus previous year. And three, we have continued to improve on the customer experience across our destinations. Next slide, please. Back to Q4. With a well-executed black month as the main growth driver, we have for the second consecutive quarter delivered double-digit growth with a plus 10% growth in the quarter and continued growth in all three business units. We are confident that we have outgrown the market also in the fourth quarter. In the quarter, we also report a significantly improved profitability, reporting 158 million SEC in earnings, which corresponds to a 48% improvement versus previous year. The improvement in earnings comes primarily from top-line growth in combination with a strengthened product margin, as well as direct selling costs and SG&A well in control. Of course, we are very happy about the growth in the quarter, But I would also like to highlight the improvement in product margin, where the team has done a great job in an unchanged price challenging market. Our focus on price matching and unique assortment has enabled an improvement in gross margin. We report a strong positive cash flow of 371 million SEC in the quarter, an improvement versus previous year and following the normal seasonal pattern. Summarizing the year, we are super proud that we have been able to reduce our inventory at the same time as we have driven 9% organic growth. Next slide, please. Strong growth in the third quarter. Let me come back to market and the market outlook in a minute. But first, let me try to clarify where the growth comes from. From a geo perspective, the main growth comes from Sweden being our largest market and continue to lead the way in market recovery with a 10% growth in the quarter. Disposable income is on the rise and a fairly stable housing transaction market gives positive momentum. We also unchanged see a strong sales development in the important markets of Norway being super strong with a 16% growth and Germany with a 6% growth. Germany still a challenging market, but where we see positive signs and growth primarily driven by successful geographic expansion in many of our entities. The most challenging of our key markets is unchanged Finland, which trails our other markets in recovery. Considering this, we are proud to report growth and are confident that we have taken market share also in the Finnish market. From a category perspective, the main growth comes from continued strong sales development in the bathroom category as well as in the furniture segment driven primarily partly by our revamped entry-level assortment in HFM in combination with the well-executed campaigns in value home during the black month period. We also, and more surprisingly, saw strong growth in the garden category. In the garden category, Quarter experienced strong sales development and big volumes of big ticket items as auto mowers. Considering this was late in the fall, it is very surprising to see a strong development in this category. This driven by a tech shift in auto mowers from sling based to satellite based navigation and thereby enabling new brands primarily from China to enter the market. The new market entrance main sales driver being significantly lower entry level price points, and with new lower price points, the addressable market for this type of products expands considerably. Next slide, please. Coming back to the market and our outlook, our view is that the market continued to strengthen during the fourth quarter and it has strengthened gradually during the whole year with some minor differences between the quarters. Looking forward, we have a positive outlook for the market also for the coming year. The key drivers of demand in our categories is disposable income and housing transactions. If we start with Sweden, which is our largest market, given what we know, we expect to see substantial improvements in disposable income for our key target group in 2026, primarily driven by tax income reductions, including the job-skatteavdrag and other tax benefits in combination with the VAT reduction on food. The result is a substantial increase in disposable income that we are confident will have a positive effect on demand in our categories. The other key driver of demand in our category is the number of transactions in the housing market. This has developed positively the last two years, and we assess that it will be further fueled in 2026 by the easing of the amortization rules in April of this year. VSG also benefits from the structural migration from offline retail to the online channel. In our categories, as well as compared to other more online mature markets, penetration is still low and we foresee several years of the online channel growing faster than physical retail. Also, with the introduction of AEI enabled search, the advantages of buying online versus physical retail is even further improved, which we believe will continue to increase the online penetration even further. In short, we have a continued positive outlook for demand in 2026. Next slide, please. Looking forward, we are since one year now out of the restructuring phase and we're firmly executing our strategy for profitable growth. Our growth drivers is driven by two layers of external growth factors. As mentioned, the total market is back in growth mode, online penetration still low in our categories and set to continue to increase. On top of these two external growth drivers, we have three layers of internal growth drivers, operational excellence, strategic initiatives, and M&A, which I will expand on in a minute. Next slide, please. The first and most fundamental growth layer, operational excellence, the daily grind of being a retailer, the constant work of assortment, product and pricing, a tireless job being executed every day by management in our group companies. As a retailer, never to forget, you are never better than your offering to your chosen target group. Regardless of who else, without the right product and the right price, you will never win. Customer acquisition and making sure that the customer you acquire gets a positive experience all through the customer journey and thereby securing customer retention. Efficient data-driven customer acquisition has over the last years been primarily about optimizing for the Google algorithm, but is now increasingly also about optimizing your business with the AI-driven language models as ChatGPT. This is something we're currently focusing a lot of our thoughts and efforts on, and we can already now see the benefits of these efforts. In this layer of growth, we also add the important growth levers of category growth and product expansion, as well as geo-expansion into new markets and customer segment expansion. How can we extend our target group? In all our businesses, we are driving at least one of these growth drivers and in many, two or three in combination. Next slide, please. The second growth layer we call strategic initiatives. This is strategic development areas that we have identified where we from group try to support our businesses to secure competitiveness. These areas vary over time and during the reconstruction phase, there was, as you know, much about consolidation and inventory reduction. Now, in the current phase, our main focus lies in the key priorities of unique assortment, cost structure as a strategic advantage, AI and data, and additional revenue streams with a current focus on retail media. Let me take a minute to expand on these four strategic initiatives to secure competitiveness and growth in our platforms. Unique assortment. Historically often referred to as private label. Uniqueness in offering is the only way to secure not selling the exact same product as your competitors, only competing with price. Uniqueness is a key driver on quick pricing power as it is the only way to avoid direct price competition and secure gross margin improvements. In the changing AI landscape and with the introduction of AI agent-based buying, uniqueness in assortment also increasingly becomes strategically important to long-term secure a strong and relevant position. Cost structure as a strategic advantage has historically been a part of how BHD sustains market leadership and has helped us to stay profitable also in challenging times. but not only seeing cost structure as a way to increase profit, but also as a way to secure strategic advantage. A superior cost structure is what enables the best offer to the consumer. And over time, this will be the strongest competitive advantage you can have. Long term, those who can afford to give the best offer to the consumer and still make a profit will be the winners. AI and data. Between our platforms, we have vast amounts of data, and with the use of AI, we are working on how to leverage this to drive growth, efficiency, and customer experience. We have already implemented several AI initiatives and have even more in the pipeline. We today use AI-powered tools for tasks such as product upload, customer service, marketing, and CRM. And there's a large number of tools already available through external services that we utilize. But maybe even more exciting is the work that we are doing to develop tailor-made AI agents at surprisingly low cost levels to enhance customer experience and growth as well as driving efficiencies. And last, additional revenue streams. Basically, using the traffic we have to our site to create new revenue streams. Our current focus lies within retail media, using the traffic to our sites to sell media, primarily to our existing suppliers, but also externally. This is something we are already doing primarily in the Big Helmet platform, but where we are now taking the next step to professionalize and expand this to more of our platforms. Next slide, please. The last growth layer is M&A. M&A is and has always been a key part of driving growth and profitability for BSG. We have been less active with this through the consolidation phase, but now with a stronger financial position, it is back up in focus. Our current M&A strategy is built on the foundation of bolt-on acquisitions to fuel growth, largely through assortment expansion in our existing platforms with limited risk. This rather than larger platform acquisitions. A more proactive approach where we have done the job to define what we are looking to acquire in what platforms acquisitions are valid and what M&A targets we are looking for. Staying strategically and financially disciplined with a number of preset criterias in terms of business models and profitability levels to be in place if an acquisition is to be considered. Thanks. And with this, I will leave it to Jasper to deep dive on the numbers. Thank you, Gustav.

And slide 10, please. With Q4 and therefore the full year behind us, we can conclude that 2025 represented a significant step in the right direction towards delivering profitability in line with our financial targets. We have now improved profitability for nine consecutive quarters and delivered growth for the past five quarters. For the full year, organic growth amounted to 9.4% and adjusted EBIT margin came in at 3.7%, an improvement of more than one percentage point. This underlines what Gustav has already said, we have clearly entered a phase of profitable growth. Turning now to page 11 and sales development. We are pleased to deliver double-digit organic growth again this quarter, building on last quarter's momentum. Net sales increased by 5%, reaching 3.0 billion SEK, and organic growth was 10.7%. From a market perspective, we continue to perform very well in our largest market, Sweden, where we grew 10%. Among other major markets, Norway delivered the strongest performance during the quarter. Across the segments, Value Home stands out with organic growth of 16%, driven by a very strong value proposition in sofas and beds. Turning now to page 12 and profitability. As already said, profitability has improved year on year for nine consecutive quarters. This quarter earnings improved by 51 million SEK or 48% year over year, driven by strong growth, improved gross margin and effective cost control. Adjusted EBIT amount to 158 million SEK in the quarter, corresponding to an EBIT margin of 5.2%. Most notably, all three segments improved both earnings and margin compared to last year. Moving on to slide 13 and the EBIT bridge. Our EBIT margin improved by 1.5 percentage points in the quarter. As has been the story throughout the year, also in this quarter, the improvement in profitability is driven by strong growth combined with solid cost control, providing scale on fixed costs as well as by efficiency gains in direct selling costs. In addition, we saw a positive contribution from product margin this quarter. After margin headwinds in the first three quarters, several initiatives started to pay off, including improved planning for the Black Mouth campaign period and more efficient price matching. That said, gross margin management is continuous work. Price pressure will not disappear and we remain focused on striking the right balance between growth and profitability. All in all, our EBIT margin amounted to 5.2% in the quarter. Slide 14 and cash flow, please. Cash flow from operating activities amounted to 371 million SEK, driven by EBITDA and a positive working capital development, in turn driven by reduced inventory levels in line with our seasonal profile. The right hand graph showing the development in liquidity walks us through the starting period position of 473 million SEK, adding the cash flow from operations and the impact of investing activities, and finally deducting the financing activities, which are primarily related to amortization of both the revolving credit facility and leasing liabilities, but also include interest payments. Bring us to the period end, 301 million SEK of liquidity at hand. Slide 15, please. The group's net debt amount to 1.0 billion SEK at the end of the quarter and net debt in relation to LTM adjusted EBITDA ended at 2.4 times, meaning that I, for the first time in many years, can add in line with our financial targets. A quick reminder on seasonality. Our working capital position is typically strongest at the end of Q4 and then reverses in Q1, which means leverage and cash flow will temporarily move in the opposite direction. On top of our liquidity at hand, we have unutilized credit facilities at the end of the quarter of one billion SEK. Acquisition-related liabilities amount to 236 million SEK at the end of the quarter, of which we assess 85 million SEK to be paid in 2026 and another 26 million to be paid in 2027. With that, I will hand it back over to you, Gustav, to summarize and conclude.

Thank you very much, Jasper. Next slide, please. now let me do my best to try and summarize this we are proud all we have achieved in 2025 we have delivered on what we set out to do driving nine percent organic growth maintaining our cost levels and thereby summarizing a plus 50 profitability improvement over the full year In the quarter, we have delivered double-digit growth with growth and profitability improvements in all three business units and a total of 48% profitability improvement. The market has improved in 2025 and we have a bright outlook also for the coming year, driven primarily by increased disposable income. The structural shift from offline to the online channel we assess will continue and now further fueled by AI-based search, giving even further advantages for online-based buying. We have a clear and defined strategy in place that we are firmly executing on with focus on operational excellence, a number of defined strategic initiatives and further fuel by M&A to continue driving profitable growth. I am more confident than ever that we are on the right path to achieving our targeted profit levels of first 5% and then onto the 7% EBIT margin we have in our financial goals. I would like to end this presentation by inviting you all to Digital Capital Markets Day on the 19th of March. There we will have plenty of time to expand on the group strategy and the long-term development. Looking forward to see you all. Thank you very much for listening. And now with the support of Jesper and Jacob, we will do our very best to answer your questions. Thank you.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Nicholas Ekman from DNB Carnegie. Please go ahead.

Thank you very much. Can I start asking you, when you talk about a positive outlook for 2026, first of all, I assume that this is also a reflection of your current trading here in January. Otherwise, you wouldn't say that. And can you elaborate a little bit on the strength of a potential sales in 2026? Because now you've had strong growth for a couple of quarters on very easy comparisons, but you now start to face much tougher comparisons in the year ahead. So do you think that there's still a potential for you to continue to grow around 10% or are you expecting a slowdown simply based on the tough comparisons? Thank you, that's my first question.

Thank you, Niklas. Gustav here. First, I should say that I will not comment on current trading, and you know that. And as you also know, we don't do any forward-looking statements. But I think it's relevant to sort of conclude that we now had five quarters of growth, and we should also highlight that in the Q4, and now it was the first quarter where we actually were meeting growth as well. So as you say, the comps are getting tougher, but they were quite tough now also in the last quarter of 2025, and we still delivered the 10%. So looking forward, yes, with what we see in disposable income improvements and housing transactions, which we believe will happen with the easing of the amortization, we still have a positive outlook. But as I said before, we don't give any guidance on levels of that, and it's also very hard to do. But we have an unchanged, very positive outlook looking forward into 2026, and we believe in continued growth, both in the market, and our ability to continue to over deliver in terms of taking market share.

Very good. Thank you. Can I continue on margins? You mentioned here your 5% margin targets from your last capital markets day. I'm just curious now, you've seen a margin improvement of more than one percentage point in 25. If that continues in 26, you should be able to reach it by the end of 26. Do you think that's likely? And is that Would you say that that is your ambition, or do you think that it will take a little bit longer?

As you know, we don't give any forward-looking guidance, but I think we come back to the fact that we have now delivered profitability improvements for nine consecutive quarters. So we are definitely on the right path to achieving the 5% and then on to the 7%. We have not defined exactly when.

Fair enough. Fair enough. Thanks. um third question here on on resumed mna as you mentioned here you're now finally down to your target of net debt below 2.5 times ebitda but that's in a seasonally strong quarter i guess from a cash flow perspective um if you resume mna are you willing to go temporarily above 2.5 times again or are you assuming now a more prudent approach to mna going forward

I think we should start by saying that we're super happy that we are a capital structure goal. So happy with that. We should also say that we remain when it comes to M&A. I think we have defined a very clear strategy where we're talking about bolt-ons for the platform acquisitions and where we also have defined how to stay financially disciplined, make sure that we remain prudent within these levels.

And as you said, Niklas, you know that leverage will likely be higher at the end of Q1 due to seasonality.

But I think we should say that we are on a path to lower our net debt level and we aim to continue that path. Then there could be exceptions for smaller acquisitions within that path. But the path to continue to lower it is unchanged.

Very clear. Thank you. And just a final question. I note that your non-controlling interests have been quite significant, both in Q4 and in previous quarters. It was 15 million in this quarter. 52 million for the full full year and that's around one quarter of your earnings that goes to non-controlling interest why is this number so high given that your you have a full ownership of the vast majority of the assets simply because of the only company being reported as a non-controlling interest being 31 have had a fantastic 2025 and it is a fantastic business that has developed from

Some 100 million in turnover in 2018 to above 1 billion last year. So it's a fantastic business. They had a fantastic 25. But their share of the group will likely come down as the rest of the group is improving faster.

Very clear. Thank you so much for taking my questions.

Thank you.

The next question comes from Benjamin Wahlstedt from ABGSC. Please go ahead.

Hello, good morning. A couple of questions for me as well. So first of all, Value Home reported the best product margin in quite some time, and I was wondering if you could give any additional flavor about this. Are we seeing a positive FX impact already, or is this purely a higher private label share?

Gustav here. Hi, Benjamin. I would say it's a combination of the two. There is an FX effect from the lower US dollar that has a positive effect in value home. But we've also, as you know, worked very hard on our unique assortments. And it's one of our key strategic initiatives going forward. And I think that work in value home, where we have the biggest share of unique assortment, is also paying off in this quarter.

And as Gustav said, it's roughly half a percentage point in value home, but it's an inevitable effect on the group.

So half a percentage point from FX?

Yes.

Yes, perfect. And then I was wondering if you could say anything more generally about what you've seen in terms of the competitive pressure or campaign pressure, perhaps. Premium living also reported a strong gross margin, and that's typically the most campaign sensitive segment, right?

Price pressure is always tough. We're living in a very price competitive world. We have price transparency, if anything, increasing. So I think the result of our increased product margin is the result of a really good job working price matching and working with our unique assortment. But I would not say that the price pressure has eased in any way. As we have said in the past, there was a period where there was a lot of excess inventory in the market and then price pressure was higher. But I think since the normalization of price pressure of inventory, we have roughly had the same and high price pressure.

Perfect. And then maybe finally, I understand that it's still early days, but I would like to ask for your views on AI shopping. We're asking you to drill down a bit into that. You've been fairly explicit in that you've previously strived to own Google Search. And now you note that Google Search is gradually being replaced by GPT Search or AI Search. And my question is, how will you win GPT Search? Is it possible to win GPT Search in the way you've won Google Search previously?

Yes, we believe so. And as I mentioned, we're spending quite a lot of time and resources on right now on something we call AI visibility, which is basically optimizing traffic acquisition for the AI based language model searches, both chat GPT and others. We are doing that and we have a number of criteria that needs to be fulfilled in order to improve on that. But we should also say that the main criteria for Google search, which is basically having data, having well-structured data, having that well-structured data available, is also valid for AI-based searching. But we have a program which we're running through all our businesses right now of how we can improve on AI visibility. We're seeing good progress on that. And there was a small test recently where we came out on top. I think the only ones we had ahead of us were actually the pharmacies. But after that, Big Hama was the first mentioned business when it came to AI visibility. So we're doing a lot of job on there and there's definitely things to be done. And we have a good confidence that we could be strong also in this field, just as we have been and are on Google.

Perfect. Thank you very much. That's all I had right now. Thank you.

The next question comes from Daniel Schmidt from Dansky Bank. Please go ahead.

Yes, good morning Gustav and Jesper. Coming back maybe to the margin question earlier and your target of reaching 5%. If I remember correctly back in May 24 when you had the last CMD, you did mention that you should get the 5% without the help of the market. Now we have seen market support in the past couple of quarters and you expect that to continue to be the case for 26. Isn't it very reasonable that you should get to 5% in 2026, or am I getting anything wrong here?

I don't think you're getting anything wrong, but we don't want to give any market forward-looking guidance, as you know. I don't plan to do that now either. But we are definitely, as you say, we see market normalization, and we think we have the market now to achieve the 5% and then move on to the 7% that we have in the financial targets. But we are continuously working on improving on all numbers in our profit and loss from growth to margin, direct selling costs and SG&A in order to reach the five. But we are at large on the plan, but we don't disclose when we are to reach the 5%.

Is there any sort of external factors that have changed a lot, you think, since May 24 in terms of competitive pressure, price pressure, anything like that, that you can't really control?

I think the only thing I can think of is AI-based search, and potentially with what we see right now, price transparency that continues to develop in the direction of increased price-price transparency, and that drives price pressure.

Okay. And then maybe just also coming back to the Swiss market, and you're right about it, and of course we had the hike in Rote, and now sort of that's being normalized back to 30% as first of January and you mentioned that it has had a positive impact but not a decisive impact. How do you measure that? Is that sort of something that you're very sort of confident that that didn't have a big impact or is that a guesstimate or how do you think about that?

It would always be a guesstimate based on data points, but this is our best guesstimate. And I think it's important to say that it has had a positive effect, but it's also important to acknowledge that we estimate that roughly 50% of our sales and assortment is valid to the route of drag. So the majority of our business is clearly unaffected. And I should also mention that the positive development we see right now is not only in Sweden. We see a stronger positive development in the Norwegian market and also positive developments both in the rest of Europe and Germany, which makes us conclude that the root has an effect, but it's not material and it stands for a fairly small part of our assortment.

All right. Okay, good. And just maybe for Jesper, could you repeat, maybe I missed it, what you did and what you said about earnouts. Was it 85 million I think you wrote in 26 and then another, what was the number for 27?

26 million for 27.

Okay, and out of the total then that gets you to 110 or something like that, that leaves another to 120 million.

5 and is that all in 28 most likely in 28 yes yeah okay thank you so much guys thank you very much thank you as a reminder if you wish to ask a question please dial pound key 5 on your telephone keypad the next question comes from johan fred from seb please go ahead

Yes, good morning, guys. Thank you for taking my questions. A first one on the trading in the quarter, as you don't comment on any forward-looking trading updates. So you stated that market conditions strengthened during Q4 and that last month was record-breaking. How did December trade relative to November and October?

So in the fourth quarter, we saw a good November and a somewhat smaller October and December in line with each other.

And I think we can mention that what is happening in the market is that November is sort of stealing sales from October and December because of the very strong campaign message there. So especially I think what we're seeing currently, and I think that's in most categories, a lot of the historical sort of Christmas shopping that was done in December has now been moved to the black month period of November.

Got it. Thank you. And returning to premium living, organic growth was the slowest out of the group. Could you elaborate on sort of the sales development for the segment during the quarter? And given the very strong margin reported in Q4, was there a tradeoff between sort of higher profitability and growth?

I think we should say that the sales pattern was similar to what I just spoke about and maybe even stronger in this category where there's quite a lot of gifting, where sort of sales has moved from December to November. So that same pattern is relevant here. And with that said, there's always a trade-off between margins. volume and we always try to strike that balance right i must say that i'm very happy with the margin development in premium living because that is the the one business unit where we have had the toughest in the quarters before this in achieving the margin levels we wanted to achieve so very happy with achieving those margin levels and being able to sort of reverse the trend on product margin and that always comes with some sort of of uh

uh effect on volume and i think we should also remember that last year we had a very strong development in premium living in this quarter very clear thank you and and returning to the question around margins and you've maintained cost levels in 2025 um just sort of a housekeeping question what do you expect for for cost inflation in in 2026 on on personnel logistics marketing etc what are your basic functions

Our base assumption is that cost increase will be in line with inflation.

On all items, including marketing?

I mean, I think roughly it will be in that level on all items, yes. There'll be a little bit less on lease cost because that is not increasing as much and probably a little bit more on others. But what we're making sure is that we maintain the cost levels we now have worked so hard to achieve and make sure that they do not grow more than inflation and thereby get leverage on profitability from growth.

Got it. Very clear. And the final one, if I may, on gross margins. So, of course, the stronger SEC versus the dollar and the euro should be a tailwind in 2026, assuming, of course, their current ethics rates hold. Could you, by any chance, sort of quantify the impact on gross margin year-over-year from favorable FX? And when, in terms of timing, do you expect to see this in the numbers?

I will not quantify the effect, but if I give you any numbers, the total volume purchased in US dollars is roughly 60 million US. And the effect falls into mainly Q2 and Q3.

Got it. Thank you so much. You have to ask, right? Those were all my questions for now. Thank you so much.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Thank you very much for listening in. Thank you for valuable questions as well. Looking forward to see you all on the Capital Markets Day. Thank you very much.