7/18/2024

speaker
Carl Fredrik Heves
Director of Investor Relations

Thank you very much and welcome to Bilja's second quarter result presentation with the CEO Per Wander, CFO Kristina Francén and I, Carl Fredrik Heves. The agenda today, we will start with the current market situation in the car industry. I will go through the Q2 numbers. Kristina will then go through the financial situation. I will conclude with an outlook for the coming quarter and the rest of the year. So by that, let's start. I'll leave the word to Per-Avander.

speaker
Per Avander
Chief Executive Officer

Thank you very much, Carl Fredrik. And we start with the current market situation in the car industry. There is a very good and strong demand in the service business with quite long booking times. Our customers take care of their cars, both for service and different repairs, as workshop repairs and body and paint shop repairs. The fleet business has still a stable demand for new cars in Sweden. The private consumers are more wait and see and buy instead used cars. Many brands have started a lot of activities and campaigns, for example, aggressive pricing of private leasing. Order intake of new and used cars in Belgium and Luxembourg had a good year 2023, but now we see a slightly lower demand and activities for all brands in Western Europe. In Norway, we see and feel signs of a better business climate. The demand for new cars are growing. Good booking times in workshops. Consumer index is better from month to month. Our brands have started many good and strong campaigns in the Norwegian market. The demand for used cars are on a good level in Sweden and Norway, and we see stable prices for all cars except fully electrical vehicles. The stock of used cars are on a good level, however, a little bit on the low side. For many smaller dealers with brands that have a low market share, it's a really tough and challenging market situation with many bankruptcies. Please go to the next slide. Net turnover increased organically by 8%, explained by higher deliveries of used cars and growth in the service business. We report the result of 410 million Swedish crowns with a margin of 3.9%. We had better earnings in Norway, same level as last year in Western Europe, and lower in Sweden, explained by weaker earnings in the car business. Next. On this slide, you can see the quarter two profitability from 2020 to 2024 in each country. And in the middle, we have Norway, and there you can see we have had a good improvement. On the right-hand side, you can see Western Europe and the positive development. We go over to the important service business. As I mentioned, there is still good demand in the service business in all our countries. We have an organic growth of 8%, a really strong figure. We report a profitability of 292 million crowns compared to 275. according to last year. There are several reasons why we report a higher result. One is we had one working day more in the quarter. Another is we have a strong growth and better efficiency in the Norwegian workshops. And we have a growth of 15%. Good booking times in all our countries. We can employ more technicians. We go to the car business. Deliveries of new and used cars adjusted for acquired operations were 2% for new and 13% for used compared to the quarter two last year. The new and used cars we reported a result of 155 million crowns compared to 198 last year. One reason for the lower result was facility costs and another was new efforts like new brands as Nissan, Xpeng, JDR and Land Rover. In the used car business, we reported a result of 90 million crowns compared to 101 million crowns last year. The run rate is in line with full year 2023, which was 327 million, which is a good level. Norway reported much better profitability, but a little bit weaker in Sweden and Western Europe, explained by Louvre margin. The order intake on new cars adjusted for quiet and divested operations were 8% higher compared to the last year. In Norway, we see and feel a little bit better business. The order intake on new cars in quarter two were doubled compared to the last year. But bear in mind, last year was a really weak year. The order backlog on new cars a little bit on the weak side, especially in Sweden. Thank you, Per.

speaker
Kristina Francén
Chief Financial Officer

Let's have a look at the financial position. Here, during the second quarter, we generated a strong operating cash flow of around 420 million kronor, which means that for the first half year, We have generated more than 800 million kronor compared to some 200 million kronor last year. Cash flow has been and will continue to be a focus area for us going forward. We will continue to work on inventory management, including the turnover rate of new and used cars. But we do also focus on other parts of working capital to be as efficient as possible in these times when financing costs are higher than we have had during the past years. During the quarter, we have expanded BILIA. We have made payments for acquisitions amounting to some 160 million kronor. The new company that has been added to BILIA in the quarter is a Volkswagen dealer, BIL AB Åbo Odesson, which has five facilities located in Stockholm. With this acquisition, we have doubled our market share in the Volkswagen brands in Sweden. We have also taken over the importing operations for Jaguar and Land Rover in Sweden and Norway. This imported business is conducted through a joint venture. As such, it is not consolidated into our income statement or balance sheet, but rather reported as a financial asset and included according to the equity method in our financial statements. During the second quarter, we have also made the first payment of last year's dividend. which was decided by the annual general meeting to amount to 660 kronor per share to be paid in four installments. The remaining three installments will be made in July, October and January next year. So at the end of the second quarter, we utilized a little more than 1.5 billion SEK of our total credit limit of 2.3 billion SEK. This credit limit was renewed during the first quarter this year with an updated maturity date in March 2029. So our net debt at the end of the quarter consequently amounted to 2.7 billion SEK, which was around 300 million SEK higher than in December 2023. The ratio in except EBITDA remain at the stable and solid level of 1.6 times. This ratio was higher than in December 2023 when it was 1.3 times, but remain well below our financial target of 2.0 times and give us room for further acquisitions for the remainder of the year. So I think that is where we are in terms of our financial position at the end of this

speaker
Carl Fredrik Heves
Director of Investor Relations

Perfect. Thank you, Kristina. I will move over to the outlook for Q3 and the remaining of the year, starting off with the service business. Even if the last quarter was characterized by high interest rates and seen as a very tough economic period, especially for private consumer, it was one of the best quarters ever for our service business. We see the stable demand to continue in Q3, Q3 in the service business, and we have and continue to see good booking times ahead across the business. In Q2, the service business represented 64% of our operating profits. Moving over to used cars, we foresee activity in the business to remain on good levels, and we see prices stable during the coming quarters. We actively work to strengthen our offering within used cars and will continue to do so also in the coming quarters. When it comes to private fleet in new cars, we have for several quarters commented that private customers have been restrained or in a wait and see mood when it comes to buying new cars. Even if this is still the case and it takes time for rate cuts to have an effect, we now see some improved activity among private customers. This, in combination with a belief in a more positive economy and a lower interest rates going forward, we are cautiously optimistic about new car sales during the fourth quarter of 2024. Like Per said earlier, we already see campaigns from the car manufacturers, but we expect to see even more campaigns due to lower financing costs in, for example, private leases, which will drive activity among our customers. We also think that there is a big pent-up demand among especially private customers. And swiftly on fleet, order intake continue at a good stable level and no trend shift here. On existing businesses, we work with all our operations at all the time to further improve profitability and customer satisfaction. We do this with support from our own business excellence team, whose main task is to assist Velia's existing and new operations to increase profitability. We have intensified this and will in the coming quarters work hard to improve newly acquired businesses as well as existing businesses lagging our own standards. Over the last two years we have acquired seven companies that we will and are very eager to lift the BILIA standards. Then finally, just a heads up, we are arranging a Capital Market Day this year, 8th of November. Invitations will come to investors, analysts and media after the summer. focus obviously on strategies the service business circularity mobilia care and of course displaying our our car brands and doing test drives we will also show you an updated result on our service business study where we compare fully electrical cars with traditional cars and how that affects our service business but we will come back with invitation when it comes to the cmd This finalizes our second quarter presentation and we can now open up for questions.

speaker
Operator
Conference Operator

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

speaker
Carl Fredrik Heves
Director of Investor Relations

Thank you for that, crystal clear. And thank you for listening to our Q2 presentation. And from all of us at Wilja, have a great summer.

speaker
Per Avander
Chief Executive Officer

Bye-bye.

speaker
Operator
Conference Operator

Thank you.

speaker
Carl Fredrik Heves
Director of Investor Relations

Thank you.

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