Bonava AB (publ)

Good morning everyone and very welcome to the presentation of Bonava's first quarter 2024. My name is Anna Falk Filund and I am head of investor relations here at Bonava. And with me here today, I have our CEO, Peter Wallin, and our CFO, Lars Ingman, who will take you through the highlights of this report. As always, we will end with a Q&A session, and you can already now start to type your questions online. If you participate through the phone, you will be able to ask your questions by dialing star five. So with that short introduction, I leave the word over to you, Peter.

Thank you very much Anna and good morning everyone. Sitting here in a chilly Stockholm morning. But I'm very happy and pleased to report the first quarter together with the team here at Bonova. So if we just start the introduction by looking into the market. I would like to, so I'm quite glad to still note that we gradually see an improvement of the market conditions. We see an increasing interest in showings. Search on the website and then actually then converting these leads to sales. And it's the consumer segment that is showing the most increase in all markets. If we dig in a little bit deeper and into the specific markets, the most notable change is in Sweden. The Swedish market continues to improve, albeit from a very low level of course. The level of activity is still the highest volume in the Baltics and in our German markets, with Finland being the least positive sign. So it's still a very deep frozen environment in the Finnish market. We are talking about the consumer market and the consumer segment as being the more fluent segment and the most improving segment. The investor segment is a very important segment for us over time and of course in the Western market it's still challenging on the basis of yield requirements and production cost increases that has escalated. We are seeing an increased interest but it will require some more time before it will filter through into deals made and starts made. If we look into the trading of Bonava in the first quarter, as you all know, the first quarter is a small quarter proportionately if you look on the full year. the most impact we have in the last second half of the year, normally as you know. So we have a low volume of recognized units. Lars will describe sort of the changes compared to what we reported in conjunction with the Q4, but we are coming in a little bit lower than what we had assumed. We see an improvement in underlying gross margin to 10.2%, reported 10.4%. The 10.4% is still impacted by a very selective price reductions and a very active sales process. We have done a lot when it comes to increasing efficiencies at Bonava and you can see that also on the costs which are now lowered by 21% year over year and then we have a very large restructuring and efficiency improvement in Germany ongoing as you know and that is only a limited impact of that in the first quarter that will increase throughout the 2024. So that is why we see that we will see full impact from the savings from Jan 1st on a full year basis. Also very happy to report a significantly reduced debt to 4.3 billion, which is halved compared to a year ago. And this is down by roughly 600 million compared to year end. It is of course the new issue that was closed and reported during the first quarter. That is one of the reasons, but also that we are working a lot with improving cash flow. So we did expect a negative cash flow in the first quarter. We are coming in a little bit better than that actually. and all other conditions in the financing package that we have sort of talked about and reported over the first quarter is fulfilled. So all in all a small quarter, but I think it shows that we are taking the first step according to plan, in the plan that we have. So for me I feel reassured by the first quarter. If we look into the starts, we are starting 281 homes for consumers during the first quarter. One of the projects is the Forest Gate, which is a very nice project in a very good commuter hub environment in Vilnius. That's 101 housing units. In Germany, we are continuing the development of a large investment in Ritteslag in Berlin and it's only six single-family houses depicted here but the investment is very large and it contains all kinds of different types of products so overall we are moving well into that investments Last but not least I also want to talk about the Tallinn projects 81 units I will not pronounce the name I will do all the Estonians sad if I try that but it's a fantastic project hitting in on also on a very strong sustainability part so I'm really happy to see this in in Tallinn. And of course as always you will find all our projects depicted on the website. I would also like to sort of hint a little bit into the future by turning into Uppsala. This is in conjunction with the old university part for the education of teachers, that is why it's called Seminariet. And we are now planning to build a neighborhood of 113 units and we will do the first sales start the upcoming weekend on Sunday. It will be sunny weather and it's actually more than 160 customers that have announced that they would like to go and visit this sales opportunity. So it is a great interest and that relates to the 66 we are starting right now. Also in Düsseldorf, Germany, we are preparing to starting up a project, also that part of a greater investment. In total 550 homes in this investment. And here we are working in the different types of sectors, namely the B2B and then B2C as well. And here we have the opportunities to actually do one of the pipeline projects for investors, as I alluded to in the start. With that, I turn over to you Lars, please.

Thank you, Peter. Good morning, everyone. I will now try to take you through the Q1 figures. I start with a slide about the recognized units in the quarter. In Q4-23, we estimate 436 units to be completed during the first quarter. The actual completion, you can see here, is 372 units. And of that, 107 still remain unsold at the end of the period. We also reduce the inventory with 127 units. And in addition to that, 35 units were sold but not recognized in the quarter. So all in all 357 units recognized in the quarter. Here this slide summarizes the development of the inventory of unsold completed units starting at the end of 2023 with 505 units in the inventory And we add the 372 completed units in the quarter, which 265 were sold during the quarter. And we also sold off 127 units from the inventory. So we're ending the period with inventory of unsold completed units per Q1 of 485 units. Continuing to the next slide and based on the 357 recognized units over handed over to customers in the quarter we reached a neck net sales of 1.3 billion compared with the last year of 1.9 million if we look at the on the gross margin The reported margins were well above last year. We have 10.4% versus last year of 8.8%. And sales and admin expenses down with 41 million or 21% compared with last year. And this is, of course, due to the implementation of the cost reduction program last year. and despite the low revenue the negative operating profit decreased compared with last year from the 20 minus 28 to 22 million kronor and and this is of course primarily due to the higher gross margin and the lower selling and admin expenses and you can also see that the net financial items were 111, it's higher versus last year, which is related to the higher underlying market rates and also higher interest margin this year. Going to the next slide. Here is a summary of the operating profit and the margin for the group in total and also per business units in the quarter and per ruling 12 months. Here you can see that the development in the quarter was very positive in Germany, stable in Baltics, but more challenging in Sweden and most challenging in Finland. And in total, this comes as no surprise to us and are in line with the current plan. And you can also see the rolling 12 months outcome is in line. It's almost flat versus calendar year 23. When it comes to the cost reduction plan, we are on track. The target remains to reduce the overhead and the in-ride costs with net of 600 million with a full effect during 2025. Let's move then to the business unit starting with Germany. Here we recognize 187 unit to consumer and the net sales figures increased and by that with up to 941 million or around 32%. Also the gross margin were up from 11.1 to 11.4 and selling expense was down from 69 to 60. And with that in mind, the operating profit increase from 240 significantly to 48 million. And you can see on the right side, we started 40 units, which was up even if it's from low volume from the 26 last year. And you can also see increase in the number of sold units in the period compared with last year then. So 115 and this year 146. Continue then to Sweden, which is the next one. Here is the net sales, 160 million, significantly down from last year, based on 53 recognized units in the period. The gross margin was 6% and the selling and admin expense was reduced from 38 million to 29 million. And so in summary, the operating profit was negative with 19 million and the lower outcome comes as no surprise also here to us but was in line with our plan and we started here you can see this we started zero units in the quarter but but increased the number of sole units with 236 percent continue then to finland here we meet the tough market and the business volume was low with 18 recognized users to consumer in the quarter with a net sales of 43 million and a negative gross margin with 4 million. And here the gross margin was negatively impacted by other operating costs, which is related to the low business volume. And in total, the negative operating profit of the 27 million was still slightly above last year. And also here, the weak performance in the quarter was not a major surprise to us, but was close to the plan. Continues then to the Baltics. The Baltics, the number of recognized units increased to 99 and the net sales for flat versus last year and the gross margins was slightly below last year. And in total, the operating profit was in line with last year, 8 million versus 10. And in the Baltics, we also see an increase in both started with 46-47% and also sold units up with 23%. Going to the next. This graph summarizes the completion and corresponding sales per quarter for the consumer units. So the left bar representing the number of completed units during the first quarter this year, and the other bars indicate the expected completion and the actual sales status per each quarter. And the total sales rates on the ongoing production was in total 54%. On the next slide, we continue with the investor market. And there's the completion per quarter for the investor markets. And the current business units, Germany and Finland, have expected completion to investors during 2024 and 2025. If you see this slide, here is the sum of the total number of building rights. 28 500 distributed between the business units and the tentative project starting year plus distribution of units between b2b project and b2c project here you can recognize that the cash flow before before finance was stronger versus last year it was 483 million versus last year, 963 million. And the main driver for the improvement is the changes in the working capital items, mainly due to the housing project sales exceed the investment in the quarter. Continue to the next slide with a summary of the debts or the reduction of the net debt. As we started the Q1 23 with 8.1 billion in net debt and at the end of Q1 24, we ended with 4.3 billion. This is almost a reduction of 50% in net debt. And also during the last quarter of this Q1, the net debt was decreased with 700 million. And the decrease is mainly due to the lower bank debt and reduction of the housing company debt. This slide summarizes the external financing facilities for the end of March, totalling of 5.7 billion, with 900 million undrawn for the end of March. As Peter mentioned, the financial package was implemented during March, including bank loan, bond and the right issue of 1 billion. And the current agreement we have with the banks and the financiers in total are signed until March 27. In February, Bonava published new updated financial targets regarding operating margin and return on equity, and at the same time we also introduce a financial framework with two key metrics net project assets to exceed net debt and equity equity to asset rate ratio to be above 30 percent and on here in this slide describes how the net project assets are defined and calculated and as you can see On the left side, both targets were fulfilled at the end of the quarter. So with that said, back to you Peter.