Bilia AB (publ)

Thank you for the introduction and welcome to Bilja's first quarter result presentation with CEO Per Avander, CEO for Christina Franzen and I Carl-Theréke Gevitz. We also have our Deputy CEO Stefan Nordström with us today. We're happy to present another solid result and a strong cash flow in the quarter. And the agenda you recognize Per will start to go through the current situation in the car industry followed by Q1 numbers. Then Christina will go through the financial situation and I will conclude with an outlook. So let's start and I'll leave the word to Per

Avander. Thank you Carl-Theréke and next slide. Yes, there is good demand in the service business in Norway and Western Europe with good booking times. In Sweden, we have seen a little bit weaker demand especially in body and paint shops. But now we are in the middle of the important tire season. And we have much better booking times. The fleet business has still a stable demand for new cars in Sweden with the market share around 60%. Many brands started in the end of last year strong campaigns, big discounts and attractive private leasing offers. In Q1 the demand and the order intake from private consumers has been much better. In Norway, we see and feel signs of a better business climate. The consumer index, you can say the household's confidence is on a better level. But in April it drops again. The demand for new cars is growing, good booking times in workshops and our brands have more for the moment strong campaigns in the Norwegian market. The demand for used cars are on the good level in Sweden and Norway and we see stable prices for all cars except fully electrical vehicles. In the same time, we see lower prices of fully electrical used cars and it takes longer times to sell them. The stock of used cars is on a good level in all our countries. There has been a lot of discussion of different business models. Four or five years ago, it was really popular to test subscription, car sharing, agency model. One example is Lincoln Co. They only sold the cars through a subscription model. Now they are going over to traditional wholesale model. We have now an agreement for the Lincoln Co. in five of our locations and start to sell them in quarter two. Still we see agency models from some manufacturers, but the feeling is more that we are going back to what we had in the past. Some manufacturers hesitating and pushing introduction of agency model into the future. Next slide, please. Net turnover increased organically by 1% explained by higher deliveries of new used cars and growth in the service business. We report a result of 344 million with a margin of 3.5%. We had better earnings in the service business with a higher margin. We had lower profitability for new cars, especially in Sweden and Norway. Next, please. On this waterfall chart, you can see the different business areas. All the earnings improvement is coming from the service business and less result, both new and used cars. Next slide. On this slide, you can see the quarter one profitability from 2019 to 2025 in each country. And in the middle we have Norway and there you can see some improvements. On the right hand side, you can see Western Europe delivering at a really strong level. Sweden deliver lower earnings due to the car business. Next, please. We are moving over to the important service business. As I mentioned, there is a still stable demand in the service business in all countries, countries except body and paint shops in Sweden. We have an organic group for the group of 5% in the quarter and Norway as much as 16%. We report a profitability of 310 million. It is 81% of the group earnings. We improved the margin from .9% last year to .2% this year. As you can see on the right hand side, it's 29 million better than last year. There are several reasons why we report a higher result. One is good booking times, especially in Norway and Western Europe. Another much better efficiency and solid improvements in the Norwegian workshop. And this higher result comes despite one working day less in Sweden and Western Europe for the quarter. Next, please. Deliveries of new and used cars adjusted for acquired operations were 2% higher for new cars and 8% higher for used cars compared to quarter one last year. For the car business, we reported a result of 57 million compared to 76 million last year. And the profitability for new cars in Sweden and Norway were on a low and negative level. The main explanation for that is lower gross profit margin and less bonus from the different manufacturers. For used cars, we reported a profitability of 55 million compared to 69 million last year. In a historical perspective, it's a good level. As I mentioned in the beginning, the stock of used car is on a good level in all our countries. We started in the beginning of this year some campaigns, so we have reused the stock of used cars in the quarter, especially in Sweden and Norway. In historical perspective, we are now in the strong period for used cars. Our customers are more active and often change used car in the spring. The order intake of new cars adjusted for acquired and divested operations were 31% higher compared to last year. As I mentioned, we have seen a little bit better activities in all our countries. We have in the quarter increased the backlog of new cars with 3000 units since the end of quarter four. Now we have a more normalized level with a little bit over 14,000 new cars and it's the same level as quarter one last year. Go over to Christina.

Thank you, Per. So some words about our financial position. During the quarter, we had continued to have a high focus on cash flow and we generated an operating cash flow of around 450 million kronor, which is equal to some 1.6 billion kronor on a 12-month rolling basis, which means that we are basically in line with last year's generated cash flow. Per just mentioned that we, as of December 2024, consider the inventory of used cars to be on a high level. So during the first quarter, we have decreased our inventory of used cars and we do now consider the inventory to be on good levels in all our countries. So that we are very pleased with. During this quarter, we have also made the fourth and final payment of last year's dividend of 660 kronor per share. That means that we have made a payment of 165 kronor per share or some 150 million kronor. We have also acquired a new BMW operation in Varbäy in Sweden for a payment of some 60 million kronor. Our net debt, excluding IFRS 16 debts, are at the end of the quarter, amounting to just below 2.8 billion kronor, which was some 120 million kronor below our net debt as per December 2024. Our ratio of net debt in relation to EBT, excluding IFRS 16, was 1.4 times, which is unchanged compared to December 2024. And therefore, we are also in line with our financial targets to have a ratio below 2.0 times. During this quarter, we did issue a new bond amounting to 800 million kronor with a maturity term of five years. This bond was raised to refinance our bond loan of 500 million kronor, which is maturing in October this year. But we will also use it for general corporate purposes, which includes -to-day business, but also acquisition and investments for continued growth for the future. After the new bond issue, we did utilize some 860 million kronor of our total credit facilities with the banks amounting to 2.3 billion kronor. And then finally, this afternoon, we will arrange our annual general meeting. And one of the agenda points for that meeting is to decide about the proposed dividend for 2024, amounting to 5.60 kronor per share to be paid in four installments. So I think that was some words about our financial position. And with that, I will leave the word to you, Carl.

Thank you very much. And let's look into the outlook for the next quarter. The internal work to improve profitability and efficiency in our operations is very much ongoing. This means extra effort making sure newly acquired businesses as well as existing businesses perform according to BILA standards. Furthermore, capital allocation, balanced and sufficient inventory levels are high priority across our organization. Looking at the service business, the recurring and improved result in our service business, we think, proves resilience in this business. We see demand continue in the coming quarter across our business. In Q1, like Per said, the business represented 81% of our operating profits. As I said earlier, our primary focus is to work with efficiency and profitability and above all, in our service operation, where we see most opportunities for continued improvements. Used cars, like Per said earlier, the demand in the quarter for used cars was divided, stable demand for hybrid and traditional cars, but lower demand for electrical cars except Norway, of course. We see that continuing Q2, but do expect more campaigns to increase demand for electrical cars. The activity level in our used car business, we think, will remain on good level. Our inventory is now back to satisfactory levels and we always work to strengthen our offering within used cars and we'll continue to do so also in the coming quarter. It is difficult to assess the impact of on demand for new cars in the coming quarters given the uncertain environment. Having said that, we are experiencing an improved order intake for new cars. We see campaigns continue during 2025, which we think will support private consumption, this in combination with a rather big pent up demand. We see order intake from fleet customers continue at a stable level, so no trend shift here like Per said earlier. And maybe most important, we believe that our customers will continue to service and repair their cars in the coming quarter. Per touched upon the models, we see an increased interest in adapting and developing the traditional wholesale model again across our brands. The dealer and aftermarket network has yet again proven to be a competitive advantage for most car manufacturers. Across our 177 facilities, we will continue to work hard to make sure our customers are treated well and are happy. And we believe over time this will create higher value for our shareholders. This finalizes our first quarter presentation and we can now open up for questions please.

Next question, please dial pound key six on your telephone keypad. The next question comes from Andreas Lundberg from SEB. Please go ahead.

Good morning everyone. Thanks for taking my questions. If I start with a new car operation, you talked about decent orders in the first quarter. Have you been able to deliver on that already or is that in the backlog?

We increased the backlog as you can see. So we haven't yet delivered the cars. So we will deliver them now in quarter two.

Given the uncertainty you talk about and the world turmoil out there, can you perhaps share some light on consumer behavior in March, April? Thank you.

Yeah, you talk order intake or you're talking about that. Yeah. And the customer behavior. Yeah. Still stable demand from the fleet business. Little bit lower in April for private consumers we can see. But there is not yet a problem for us. So if you look into the April this year and April last year, we are not finished yet with April. But I think we will sell a little bit more new cars in April this year compared with last year. But we are humble what will happen in the future in May and June. Nobody can say what will happen in the car industry in the future.

And could you also talk about you mentioned the profitability with new cars. I think you said lower gross margin. Can you share more light on the drivers for the new car profitability?

Yeah, it's a little bit different for our countries. Some manufacturers they go for lower margin from the beginning and more bonus. It's one explanation why we have lower gross margin for new cars and drop a little bit in the new car sex.

But I think Andreas, I mean it was when it comes to the used car we had a little bit lower gross margin. So when it comes to the new car it's very much about the lower turnover.

Yeah, but what we can see is a little bit different. If you look at the profitability for Western Europe it's really strong still.

But if you take the Swedish market Andreas Stefan, you can say that the change in new cars is lower deliveries. So that is the majority of the change for the Swedish market is fewer deliveries of new cars. So it's more like that. And then if you talk about the used car then it's a margin thing. A little bit lower margin in the used car business. So I think that is the reason.

Okay, so in Sweden it's more like a fixed cost effect from lower deliveries. Got you.

Finally before

I.

But we can see a change from our manufacturers because they are under pressure. So they try to change the margin from the beginning to more bonus in the system.

And now you receive less bonuses. Do you understand it correctly? Because of lower deliveries or?

Yeah, due to lower deliveries then it's less bonus. When you have lower deliveries. But I think the change Paris is talking about is over time. It's nothing quarter to quarter. It's more like they want to change into more bonus, a little bit less margin. But that is a journey over time. Now I would say if you take the big drop in Sweden then it's fewer deliveries. And

manufacturers try when they launch a new fully electrical vehicle often they give us a lower margin for them. But as Stefan said it's over time. But we can see a change if you go back to two, three years ago.

And lastly now you're prioritizing efficiency gains. You mentioned that several times within the service. How is the M&A market look like at the moment? Potentially, what are you looking for?

Andrea, it's called Fredrik here. I think the M&A market is still quite active. It's an ongoing consolidation with focus towards the bigger players. And I'm pretty sure it will continue to do so. As always, we are prudent. We are cautious. But we of course look at what comes through.

OK, that's fine for now. Thank you so much.

Thank you, Anders.

The next question comes from Mats Lys from Kepler Shuvru. Please go ahead.

Hi, thank you. Coming back to the Farseis business there in Sweden, earnings are quite limited there in this first quarter. I guess you have the improved order intake to deliver in this going forward. But have you sort of planned any efficiency measures to adjust capacity there to four, four? Or is it more volumes to fill out the capacity going forward?

We took off a lot of salesmen when we dropped in the sales for new cars to go back one or two years ago. So we tried to hire people again, salesmen again in quarter four and quarter one. But now we are more a little bit in the wait and see mode and see what happens in the future. But we don't think we will close down a lot of showrooms in Sweden. So still we use every showroom we have.

Good. Then in Western Europe you perform well. I guess you have integrated Luxembourg business there. Is this a trend or is it someone else included also? Can you say something about that?

It has been a really strong market for us. And BMW, they are number one in market share in Belgium and often top three in Luxembourg. So we have really strong brands with BMW and Mini in Belgium and Luxembourg. And we feel and see that it's a good market still there. We sell a lot of expensive cars in Luxembourg, BMW. And we improve the service business, the workshop if you see. We had a profitability of 22 million in the quarter now and compared to last year 21. But if you go back and see what we had in the past, now we have acquired a company and a minus result. So we improve the existing business what we have in Belgium and Luxembourg.

Great, thank you. And well, good progress there in the service business and in Norway especially. Do you expect to see some sort of Easter impact there? I mean it's the Easter change quarter year over year. Or is it as always a pretty good quarter to be expected here in the second quarter? I mean ahead of the driving season and so on.

Yeah, it's tough with the Easter in Norway as you know. So the last year we had more of it in March and now we have it in April. But we can see the growth in the business quarter over quarter. And we have seen the last year we have a lot of improvements. Because we have sort of a centralized business excellence team helped the different workshop managers. We have a program ongoing now. So we see improvement from quarter to quarter in the Norwegian market.

Good. And finally there, I mean you mentioned the acquisition there of the BMW dealer in the first quarter. But is it still sort of a focus on integrating the existing acquisitions you have made in recent years? Or do you see opportunities now

coming

up given the somewhat soft car sales, well, car markets?

There is a lot, what Carl-Friere mentioned, a lot of companies for sale. But we are a little bit careful for the moment now. And we have made a lot of acquisition and we have started some new business areas. Rim repair and dismantling business. We are quite new in the business there. So we can improve what we have more to find a lot of acquisition for the moment. But maybe it can happen in the future. We are

very much focused on making the ones we have acquired better. That's what we talk about, internal efficiency, etc.

etc. Okay, great. Thank you.

Thank you.

Thank you. More questions at this time. So I hand the conference back to the speakers for any closing comments.

Alright. Thank you for that. Thank you for listening. And please come back to us when you have further questions. And wish you a good day. Thank you very much.

Bye.