Bilia AB (publ)

Thank you very much for that and thank you for the introduction and welcome to BILIA's first quarter results presentation with the CEO Per Wander, CFO Kristina Fransén and I, Carl Fredrik Gewitz. We also have our Deputy CEO Stefan Nordström in the room. Good results with sales in line with the company collective consensus and operational EBIT 3% above consensus. The agenda today, Per will start with the current situation in the car industry and go through the numbers. Kristina will dive into our financial situation and I will conclude with an outlook for the coming quarter. So let's start and I'll leave the word to Per.

Okay, thank you very much Carl Fredrik. And we go to the current market situation in the car industry. There is a very good and strong demand in the service business, especially for body and paint shops with quite long booking times. The fleet business has still a stable demand for new cars in Sweden. The private consumers are more wait and see and instead use cars. The ordering intake of new cars in Belgium and Luxembourg had a good year 2023, but now we see a little bit lower demand for all brands. norway we see and feel and feel a science of better business climate the demand for new cars are growing good booking times in workshops the consumer index is better from month to month and there is a discussion about lower interest rate in the end of this quarter the demand for used cars are in a good level in Sweden and Norway, and we see higher prices for all cars, except fully electrical vehicles. I'm still aware we will see a lack of used cars in stock this summer because we deliver too few new cars in the car industry. We see a lower interest of fully electrical vehicles. Not in Norway, where 90% of all new cars still are electrical. Many governments removed the climate bonus They are still really expensive and luxury, and the development for range, charging, go fast, but there is a need and demand for a cheap car, and maybe it will come in the end of this year.

Okay, we go to the next slide.

Net turnover decreased organically by 6%, explained by low deliveries of new cars, especially in Sweden, and norway we report the result of 333 million swedish crowns with a margin of 3.6 percent we had a better earnings in western europe and louvre in sweden and norway compared to the last year remember that the eastern was this year in the end of mars and cost many working days in norway three and a half day and in sweden three days in mars

I will come back to Norway on the slides for service and car business.

On this slide, you can see the quarter one profitability from 2020 to 2024 in each country. And in the middle, we have Norway and the challenging situation. On the left hand side, you can Sweden, which has a stable situation. the right hand side you can see western europe and the positive development year over year take the next one we go over to the important service business as i mentioned there is still a good demand in the service business in all countries we have an organic group of eight percent a really really strong figure We reported profitability of 281 million crowns compared to 297 million crowns last year. There are a few reasons why we report a slightly lower result. As I mentioned, less working days due to Eastern. We had less to do in our delivery workshops in Sweden, Norway, due to fewer new cars to deliver compared to the last year. As I mentioned last quarter, we implement a new workshop concept for Volvo in Sweden and start up a new dismantling and body and paint shop in Norway. The margin in Norway is below our target. Improvement activities are in place and we start to see some results.

The car business.

Deliveries of new and used cars adjusted for divested and acquired operations were 18 respectively, 2% lower compared to 41 last year. For the car business, we reported a result of 76 million crowns compared to 158 million crowns last year. Low underlying deliveries of new cars is one reason for the low result, especially in Norway with a drop of 57%. In the used car business, we reported a result of 69 million crowns compared to 82 million crowns last year. Norway and Western Europe reported a better profitability. The order intake of new cars adjusted for quiet operations were 13% higher compared to the last year. In Norway, we see and feel a little bit better business. The order intake in quarter one were 50% better But bear in mind, last year was really weak. But in March, we saw a little bit over 900 new cars, which is a really strong figure in a historical perspective. And the order backlog on new cars on a normal level and increased under the quarter with 300 units. Go over to this.

Thank you, Per. So let's then turn to our financial position. During the first quarter, we did generate a strong operational cash flow of 400 million kronor, which was some 700 million kronor higher compared to last year. Cash flow has been and will continue to be an important focus area for us. We have, during the quarter, expanded our operations by acquisition of businesses. We have added free facilities to Jaguar and Land Rover. two located in sweden and one in norway we have also expanded our extend business by taking over four facilities from the importer two located in sweden and two located in norway finally we have bought out the last 10 percent minority shareholding in our operations in belgium and luxembourg and going forward this operation is fully owned by vivian This together with the payment of the last installment of last year's dividend resulted in a utilization of our credit facilities of just below 1.4 billion SEK out of our total credit limit of 2.3 billion SEK. During the first quarter, we also renewed our credit facilities with the banks at similar conditions that we had on the previous credit limit. The length of the renewed facility is three years with a possible extension by one plus one year. So in total five years and a maturity in March 2029. Our net debt increased by some 200 million kroner and the relation to EBITDA was 1.5 times. It was an increase by 0.2 times compared to the end of 2023. but remains on a solid level, well below our target of 2.0 times. The proposed ordinary dividend to today's annual general meeting is 6.66 per share to be paid through four installments. The proposed dividend is lower in per share compared to last year. However, it corresponds to around 64% of the earnings per share that we reported in 2023. This is the dividend proportion that is in line with the previous year. It is above the target to distribute at least 50% of the earnings per share. And it's also in line with the operational cash flow that was generated by us in our operations during last year.

So, Carl Fredrik, with that, I think we move over to... Thank you for that outlook for the coming quarter, starting with the service business. Even in a high interest rate environment, our customers continue to service and repair their cars, and we see that to continue in the Q2. We have continued to see good booking times ahead across the business. An early Easter meant fewer working days in Q1, and we will see them coming back in Q2. As Per mentioned earlier, some of the improvements activities in Norway we have implemented have started to show a small effect. I come back to Norway in a second. In Q1, the service business represented 76% of our operating profit. In the used car business, we foresee activity remain on good levels in the coming quarter. To repeat what we have said last quarters, consumers choose to keep their old cars or buy a cheaper used cars. it comes to prices for used cars we see touch higher prices at a stable level during the coming quarter still we could see some reduction in prices for certain models when it comes to new cars like we said in outlook for the first quarter private customers have been restrained or in the wait and see mood and until we see a rate cut the majority of private customers will remain on the sidelines but We believe we can sense a small glimpse of light in the private market compared to last quarter. Also, bear in mind that when we see a rate cut, there's a big demand among especially private customers. In addition to that, we're likely to see an acceleration of more campaigns from different car manufacturers due to a lower financing cost in, for example, private leases. We see order intake from fleet customers to continue at a stable level. No trend shift here. And it's also fleet customers ordering the majority of EVs at the moment. Moving over to Norway, conditions are perceived to be slightly better, especially in relation to new cars. We consider us to be well positioned with historically low inventory levels associated with both new and used cars. At the same time, like I said earlier, cost reductions and improvement activities have been implemented, which are successfully materializing. We also expect a continued good market conditions or market situation for used cars in the quarter. However, new cars business is expected to be demanding in terms of results in the coming quarter as well, as a result of still relatively low delivery volumes. which we hope can improve during the second half of the year. Moving over swiftly to acquisitions, we foresee the activity level in the M&A market to continue, perhaps slightly slower in Q2 with clearly higher financing costs compared to one or two years ago. Like we said before, we want to be part of the ongoing consolidation, but at the same time remain financially strong would any unexpected happen. That finalizes our fourth quarter presentation and we can open up for questions.

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 Simon Ayers from DNB Markets. Please go ahead.

Good morning, guys.

So I have a few questions for you. I'll start with the first one. So encouraging to see that the order intake now actually went positive, at least driven by Norway recovering here following seven quarters with negative growth here. Do you think this is a turning point, or is this mainly reflecting a recovery in a very weak Norwegian market? I also see that it's specified that Sweden and Western Europe is still negative, but do you expect this figure to be negative for the group again in Q2, or should we expect positive order intake here for the remainder of the year? So that's my first. Yes.

We see in Norway it will be a little bit better and better. If you go back one year ago, it was really, really bad order intake in Norway. So as I said, be careful because what I said in Mars, a little bit over 900 cars is a really good figure for us. It's 11,000 new cars in the Norwegian market. It's really good if you look in the past. We see it slightly better and better. And you can see we delivered not so many cars and it's the same for all in the car industry in Norway. So therefore we can see we have lack of used cars. And when you have lack of used cars, the customers start to buy new cars. So if we can have little bit lower interest rates. So we have a little bit more better campaigns for private leasing in Norway. We see better and better, month over month.

I think also we can see that the campaign for the manufacturer has improved. So the activities for all the manufacturers are also higher in Norway now compared to last year. So perhaps if we add that as well.

Because when they had lack of components and the demand was higher than the production, today it's the total opposite. So for us as a dealer, it's a really good phenomenon when they start to reduce the price with really good campaigns.

so it's a positive trend yeah yeah yeah if nothing else okay yeah that's clear and then just uh on the same topic there could you just give us sort of an update on so you have introduced a few new brands this year and some mna and how is sort of that developing and a more detailed question maybe but how has the reception of the e-expert been for the volvo brand in the nordics

I didn't really, what was the first question?

Yeah, so it was, you know, you have extended your partnership with Xpeng. Yeah, and new brands in Nissan, if I'm not mistaken. How has that went so far?

Yeah, yeah. If you start with Nissan in Sweden, it's a bit complicated because they changed first of January this year to be a pilot for agency models. So it's not easy to have in place the administration system for the salesman and everything. So I would like to say the order intake is not so high for the moment for Nissan and for the rest of the dealers in Sweden. If we go with the XPeng, the order intake is much better in Norway compared to Sweden because the market is much bigger in Norway. And now we will launch the G6, the SUV now, with the right price, both in Sweden and Norway. So we see that the order intake will increase a lot this summer, I guess.

And the last question... EX30 reception.

Yeah, not the right level when we are talking. ordering take in Sweden, but much better in Norway. In Norway, we have a really, really good price compared to Sweden. It's 100,000 louvres price in Norway compared to Sweden. But now, as Stefan mentioned here, we have a campaign now with a really good private leasing in Sweden. So let's see what happens now with the price over 5,000 crowns per month for private leasing. It's a really good price.

Okay, that's very clear and thank you. Interesting to see that the Western Europe actually have the highest earnings in your car business in this quarter with a 4.2% margin. Is it one of this or is this sort of the trend that you expect to be on for the remainder of this year?

We can see that BMW It's a strong brand both in Belgium and Luxembourg. They are number one when you're talking market share in Belgium of all brands bigger than Volkswagen and they are number two in Luxembourg after Volkswagen. So and we can see BMW AG in Munich they put a lot of efforts into Belgium and Luxembourg market. So we have a really strong position there and we have the right brand, we can say.

Yeah, and we have in Luxembourg, we're also situated in our new, big, fine, nice site. So I think we have a really, really good position in Luxembourg market. And when you combine it with the things Per mentioned, that they are number two in the total market and have a really strong position. So I think that that is really helping this.

So the effect I assume that the trend there is there's no change. I should expect that to continue them going forward as well.

I think that we have a common goal together with BMW to continue to be number one in Belgium. We will do our part in that and they will do their part and to be the number one premium brand in Luxembourg is the same. We will fight for that every day.

Okay, that's very clear. And then just one final housekeeping question on the end there. So the financial cost was actually pretty high in this quarter. Could you just give us some indication on a good run rate for the remaining quarters of this year, just to get that figure somewhat correct?

So, and as you saw then, I mean, the reason for the higher finance cost or finance debt is the increased interest rate, right? So I would... expect that that would be sort of the run rate going forward.

Okay, that's very clear. Okay, thank you. I will leave the line open for all the questions.

Thank you, guys. Thank you, Simon. Thank you.

The next question comes from Mats Lis from Kepler Tjevro. Please go ahead.

Yeah, hi. Thank you. Well, a couple of questions. on service there in sweden i mean i saw the avatar improved year over year and i guess that's in spite of lower new car delivers so it's quite and also i mean you mentioned the easter impact in sweden as well could you give some flavor there why you are sort of improving seems a good yeah one reason is we have had really good

times, we have in the biggest subsidiary company, Bila, the Volvo and Nissan business, we have put in and employed more mechanics. You may remember, Matt, we talked many years ago about we have empty lists in our business. Let's hope they are more mechanics.

We need that in place now in some of our workshops when we made the change.

We changed the concept, do you remember? Yeah, we talked about that when we go back a couple of quarters. And now we see in some of the sites, it's working now.

Great. And the outlook going forward seems quite confident. I mean, you mentioned the Easter impact, the long lead times in the body shops and so on. Should we expect it? Well, is the trend... momentum improving or is it sort of a normal seasonal improvement in the second quarter? I guess you have service to be implemented after the winter season and ahead of the driving season and so on.

Yeah. As you know, the winter, we have a winter long time this year. So many customers, they wait with the change tires to April. And what we've seen with both the M-Paint group, as I mentioned today, there is no book in time. And we try to employ more body mechanics and paint mechanics. So it's a really good situation in Sweden.

I would say the book in time in Sweden is good, the book in time in Norway is good, the book in time in Western Europe is also good. I think now the opposite, then you have one part is seasonality. I think we have managed the majority of the winter tie change, not all yet, but a majority of them I think is done. We still have a bit left, but then it's like good booking times in both service and body shop.

And then we have an acquisition we have done, often with a lower margin, but we have the Business Excellence team, a centralized team. They help the new companies in Tbilisi with the right processes and concepts, and it goes better and better.

Then moving to Norway, the Norwegian market is somewhat soft still, but what about the market shares you have? Do you see opportunities now? You mentioned the new Volvo offering there. Do you expect to gain some share?

Yeah, I think we can take some market shares with XPeng and now we took over Kristiansand and we took over directly from XPeng to outlets in Oslo area. So we built up our network in Norway now with XPeng and XPeng is a really good business for us. If you take our other brands, stable market shares for Toyota, often with 10%. Stable market shares for Volvo, 6-7%. And we were a little bit slow with campaigns, you can say, for BMW. But now we have right pricing to the market. One example is The smallest SUV we have, BMW X1, it's over 500,000. So we are under the limit for VAT now. So we have strong campaigns as well from BMW.

Okay, great. Thank you. I guess that's all from me. Thanks a lot.

Thank you, Mats.

The next question comes from Andreas Lundberg from SEB. Please go ahead.

Good morning and thank you. For the used car, used car mardin were down and gross mardin was down despite decent pricing. What was the reason for that?

It was a really good quarter for Norway and a stable quarter for Western Europe. And we had a drop in Sweden. And it was our biggest subsidiary company, Volvo Nissan. Because we could see all dealers except Delia, they built up a stock of used cars in the end of last year. it was 14 000 used cars in stock for volvo dealers in sweden and the normal is 10 000 and so when we started in january many started a lot of campaigns so and it's a transparent pricing today so when one dealer start with the campaign for for xc60 for example everybody have to follow that So the price declined a little bit in January and in February. Now much more stable market and we can see for instance that the petrol and diesel engine is increasing the price now. So stable margin in March but not in the beginning of January and the whole fall of February. It was one reason. Another it was because we stopped to sell Renault and put in Nissan instead. We sold out a lot of demonstration cars and many of them, it was fully electric Megane in Sweden and cost a lot of money to change them, to sell them and put in Nissan instead. And we had a lot of rental cars in Hertz. So we changed them there as well. And it cost a lot of money when we changed for Lundstrand. So there is some reasons in the beginning of this year in Sweden.

Thank you. And what about the residual values and any things you've taken there? Any effects of these cuts on EV pricing? on your residual values?

You have to be careful with the residual values when you're talking fully electrical cars today because nobody knows what price will be in the future and you have seen the Tesla they're changing the price up and down a lot and we can see for our brands as well Mercedes-Benz today it's much lower price today if we compare one year ago for fully electrical cars. So you have to be careful to have residual values for fully electrical vehicles.

But when we see the question, we have nothing now because when we take the residual values for Mercedes, it's Mercedes taking the residual values. the end up taking the receipt of that news and to take the value. So after that perspective is only when we only when we talk about the Volvo and that's so far quite small. And when we come to electrical vehicles so far, more like you need to be careful, but not now.

It's limited volumes for from Volvo.

And it's in any way.

But maybe you have read in the newspaper that the finance company like Santander, ALDE and the other, they are really frustrated because they have a lot of residual values for Tesla and it's really costly for them.

We have much less of those type of rates in our balance sheet compared to what we had like 10 years ago.

But all of your commitments, for example, on civil violence, how much is related to EV cars?

If I guess, it's only maybe 1%, not 1%.

I can check that.

Yeah, but it's not so many cars.

Gotcha. And also last question on the Volkswagen deal you recently made here in Sweden or Stockholm. Can you give more flavor on what you have done so far and what are your intentions with Volkswagen in Sweden? Thank you.

Yeah, it's the east side of Stockholm. It's Haninge and it's Skoda in Nacka. So we cover the east side of Stockholm. So we will be a bigger part with Volkswagen Audi, Cupra and Skoda in the future. So we double our volumes now. We had Norrköping, Nyköping since one year ago. So we hope we can acquire more in the future so we can be bigger for Volkswagen Audi. and it's a really strong brand and and as you can see in the newspaper they they put a lot of efforts for for fully electrical vehicles but in the same time now they they launch to go on pass off with the plug-in hybrids with the diesel engines so they are over all sorts of over the engines you can say now so it's a really strong brand for us And we hope we can put in our centralized business excellence team in the workshops and help them with a little bit better processes and concepts in the future. And for us, it's really good to have two different companies now, so we can start to find some synergies now. as well.

And they are very strong on light commercial vehicles as well. The market share of Volkswagen Havla around 30% over time. So that is really also interesting.

And then we originally said we had an expected takeover date the 2nd of April. That's what actually did the 2nd of May. due to a little bit later decision from the competition authority. So we're not yet there. We'll be within short time.

Next week. What would you say, Volkswagen, is it easier, more difficult, or the same compared to other brands to integrate in your business?

No, it's not more difficult. What we say now, it's better for us to build up a sort of a cluster because it's a big brand. So together, the four brands and five brands with light commercial vehicles, so they are 25% together. So maybe it's better to build up a sort of a cluster for Volkswagen, Audi, Seat, Skoda and light commercial vehicles.

that's what we are thinking about in the future instead to integrate 100 into bilia so we built up a cluster for for for these brands and all the volkswagen network in sweden how much is run by themselves and i do know their intentions about the retail side thank you

owner is porsche holding and and porsche holding took over the importer side as well now in sedertälje they are of the total retail they are around 40 percent 40 45 percent but it's many smaller family companies and and they are a little bit late into the consolidation we can see You have another big family companies, Tovek, but many they have business in two, three different cities, and they have a turnover of a little bit over 100 million euro, up to 200 million euro.

Cool. Thank you so much, guys. Thank you, Andreas.

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

Thank you for that and thank you for listening. Please revert to us if you have any further questions. Have a good day.

Thank you very much.