BHG Group AB (publ)

Welcome to BHG Q3 Report 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Gustav Orn and CFO Jesper Flemm. Please go ahead.

Good morning and welcome. We are here to present the third quarter from BHG. I am joined today by our CFO Jesper Flamme. I will start and then Jesper will take over and take us through the financials. I will summarize and then both of us together with Jacob Nulin, head of IR, will be available to answer your questions. to report another strong quarter for BSG with solid growth, improved profitability and continued progress on our strategic priorities. Most importantly, we are demonstrating that our business model can deliver profitable growth while maintaining tight cost control. Next slide, please. Let me start with a key message of this quarter. Our strategy is working and the results are becoming increasingly visible. We have now delivered 12 consecutive quarters or three full years of year-on-year profitability improvement in every single quarter. I must admit that we're somewhat proud of that. We're also proud to report double-digit growth and a plus 30% profitability increase in this quarter. And importantly, all three of our segments contribute to both growth and improved earnings. What is particularly encouraging is that growth is translating into higher profitability, demonstrating the scalability of our operating model. We continue to execute on our strategy, and it is encouraging to see that we, with our focus on AI, are making tangible progress. We have moved beyond experimentation and piloting and are now seeing measurable benefits in both customer experience and conversion, as well as in operational efficiency. Next slide, please. Looking at the headline financials, we delivered a strong quarter across all three CREE measures, sales, earnings, and cash flow. Net sales reached 2.9 million SEK, reported net sales growth of 11.7%, of which 9.3% was organic. Adjusted EBIT increased by 32% to 122 million SEK, an improvement of almost 30 million compared with last year. This corresponds to an adjusted EBIT margin of 4.2, an improvement of 0.7 percentage point versus last year. We also delivered strong operating cash flow of 92 million SEK, almost 40 million higher than last year. For us, the important point is the combination of these results. We are growing, we are improving margins, and we are generating cash. We have demonstrated that this is a structural development rather than a short-term recovery. Next slide, please. Turning to growth, we have now delivered eight consecutive quarters of positive organic growth. And as you can see from the chart, the growth rate has remained strong with 9.3% growth in the third quarter. What makes this particularly encouraging is the broad-based nature of the performance. As mentioned, all three segments contributed positively and all our major markets grew. We saw particularly strong sales development in Norway and Eastern Europe. On market development, we unchanged believe that two underlying important drivers remain in place for future growth. First, we expect the underlying markets to continue their recovery driven primarily by growth in disposable income. And second, we see further structural growth from increasing online penetration, both from the continuation of the long-term shift for physical retail to online that we have seen over the last plus 20 years. This primarily driven by the convenience of buying online and where online penetration is still low in our categories. We also believe that AI will accelerate that development by making online shopping the best alternative for buying complex products. Already now, and with the support from AI, the best advice you will get online from AI rather than from sales staff in stores. Next slide, please. Our strategy is working. This slide is particularly important because it illustrates the longer term development of the group. Looking beyond individual quarters, the trend is clear. Over the past three years, we have consistently improved profitability and our rolling 12 months adjusted EBIT margin has now reached 4.1%. And we are on a good trajectory towards our short-term financial target of 5%. There will naturally be quarterly fluctuations, but the underlying direction is encouraging. This improvement has not come from one single initiative. It's the combined result of strengthening our commercial execution, simplifying the structure and organization, improving operational efficiency and maintaining the strict cost discipline. Next slide, please. One of the most important elements of our strategy is building a more scalable business model. And this slide provides a clear illustration of the progress we have made. Since we came back to growth in the fourth quarter of 24, our rolling 12-month sales have increased by 12.5%. During the same period, our organizational costs have increased by only 1.7%. In other words, sales have grown approximately seven times faster than our organizational cost base. And this is exactly the type of operating leverage we are working super hard to achieve. We have simplified the group, we have reduced complexity, and we have established clear accountability within our platforms. And as a result, we are now able to support significantly higher sales volumes without a corresponding increase in cost. and our ambition is simple and clear, to grow faster than our cost base, consistently and sustainably. Next slide, please. Let me briefly highlight three areas where we continue to execute on our strategic plan. First, AI. This is an area where we are moving quickly and where we already are seeing measurable business impact. We focus on AI from three perspectives. AI agents. where we now have nine agents in production. And as an example of measurable improvements, I can mention at Big Hema, our AI-powered product guidance solution that we call Fråga Bo, is now delivering approximately 3.5 times higher conversion among customers using the service. And at Nordic Nest, our AI customer service agent Nest Store is now handling more than 40% of all customer service tickets. And these are just two concrete examples of how AI can improve both the customer experience and operational efficiency. And we are following a strategy to trial and pilot new ideas across the group and scaling what works. But also what we call AI ways of working, how we use AI in all aspects of our daily work to take better decisions and become more efficient. If AI agents has been a focus for us in 25 and 26, AI in ways of working is super high on our agenda for 26 and 27. Another area within AI that is currently of great importance to us is what we call AI visibility. We all know that search patterns online are changing at a super high pace and being visible on the LLMs is already of high and will be of even higher importance. To accelerate and measure the progress on AI visibility across the group, we have introduced a common AI visibility progress protocol consisting of 22 defined criterias across four areas against which every company's progress is measured monthly. And as a result, we are pleased that as late as last week, Big Hama won the 2026 Swedish SAO Award for AI Search Visibility. Top best AI visibility across all categories in our home market of Sweden. Second, unique assortment. We continue to focus on and continue to strengthen our differentiated product offering. The logic is straightforward. By offering a product that are unique, we reduce direct price comparison from the price matching algorithms that are putting our gross margins under pressure. And at the same time, by working more directly with manufacturers, we can improve our product margins by taking out the middleman. This is a super important priority for us as it enables securing a long-term differentiated strategic position while at the same time also improving our long-term profitability. And third, M&A. With a much stronger financial position, our focus remains on selective Bolton acquisitions that strengthen our existing platforms. A good example is the acquisition of Hillerstor, which we finalized in the third quarter. It adds a well-known Swedish brand in a large and attractive category and enables our ambition to increase our share of unique assortments. And with that, I will leave the word to Jasper to go through the financials.

Thank you Gustav and please turn to slide 8. Net sales grew by 11.7% to reach 2.9 billion SEK with strong organic growth of 9.3%. Value Home delivered its strongest growth so far this year at 20.5% with strong furniture sales. Premium Living also delivered double-digit growth against strong comparison last year. Home improvement grew organically by 3.9% against 14.1% last year. Bathroom sales last year partly benefited from the higher root tax deduction, making the comparison more challenging. Looking at geographies, all our major markets grew with particularly strong sales growth in Eastern Europe and Norway. Our largest market, Sweden, grew by 4%. Adjusted EBIT increased by 32% to 122 million SEK with an adjusted EBIT margin of 4.2%. All three segments contributed to the higher profit. In Value Home, strong sales growth helped offset the pressure on product margin and the adjusted EBIT margin improved to 6.0%. Trimming Living delivered the largest margin improvement from 2.2 to 3.8% supported by growth and effective cost control. In home improvement, earnings also increased with a solid margin of 4.6%. Moving on to slide 10, an EBIT bridge. Our EBIT margin improved by 0.7 percentage points compared with last year. Starting with product margin, A stronger margin in home improvement helped offset currency pressure in value home and the Group's product margin remained stable. Last mile delivery cost had a negative impact on the margin, mainly due to higher fuel prices. At the same time, we continue to benefit from our improved cost structure and good cost control with sales growing faster than our organizational costs. All in all, our EBIT margin reached to 4.2% in the quarter. Moving on to slide 11 and cash flow. Cash flow from operating activities amounted to 92 million SEK in the quarter compared with 52 million SEK last year, mainly driven by higher EBITDA. Working capital had a negative impact of 150 million SEK, broadly in line with last year. This follows a normal seasonal pattern as we build inventory ahead of Black Month. Turn to the graph on the right operating cash flow for the first nine months amount to 380 million SEK. This covered both investing and financing activities and our cash balance increased from 301 million SEK at the beginning of the year to 454 million SEK at the end of September. Slide 12 please. Turning to our financial position. Our leverage ratio was 2.1 times at the end of September compared with 3.4 times at the same point last year. Net debt amounted to 1.0 billion SEK down from 1.2 billion SEK a year ago. Both lower net debt and higher earnings contributed to the improvement in leverage. We also had 800 million SEK in unutilized credit facilities at the end of the quarter. With that, I will hand back over to you, Gustav, to summarize and conclude.