Corem Property Group AB (publ)

thank you very much and good morning everyone and thank you for joining us for this q1 presentation like just said i'm jens matisse and i'm the ceo of scandic and together with me we have our cfo pierre christiansen let's uh let's go into the highlights of this quarter please page go to page two Looking at the quarter, we are off to a good start to this year with stable growth and solid results. Revenue, they grew by 3%, and adjusting for currency effects, organic growth was close to 5%. We operate with high efficiency and very good cost control, delivering a result and margin in line with last year. Market conditions, they remain positive overall, and we continue to see good demand across our markets, although development varies somewhat. Cashflow improved during the quarter, and our financial position remains strong, giving us a solid foundation going forward. The second quarter has started well. Business and books are at good levels, supported by strong leisure demand, stable business travel, and a solid event calendar. Despite the ongoing geopolitical uncertainty, we do not currently see any direct impact on demand. So all in all, we are entering the peak season with good momentum. I would also like briefly to comment on the strike that has been underway in the Norwegian hotel sector since Sunday. Based on our current assessment and experience from the similar situations in the past, we do not expect this to have a material impact on our financial performance. All our hotels are open and we are monitoring development closely and have mitigation plans in place should this situation become more prolonged or extensive. Please turn to page three. We deliver a solid result in the quarter with an adjusted EBITDA of 105 million Swedish kronor corresponding to a margin of 2.2%. The result and profitability were in line with last year, supported by high operational efficiency and good cost control. At the same time, the quarter was impacted negatively by a few factors, including the early Easter and also higher energy costs due to the cold weather in the beginning of the year. Also note that the first quarter last year was supported by a one-off in Denmark of 43 million, which was offset by the contribution from the Dalata Management Agreement in this quarter. So I'm pleased with the performance in most of our markets. Looking at Finland, demand improved towards the end of the quarter with more stable occupancy and pricing. At the same time, we are currently renovating our largest hotel and Congress center in Helsinki, which was a key reason for the lower result year-on-year. All in all, we deliver a solid result while continuing to develop the business at a good pace with high efficiency and disciplined cost control. Of course, Pierre will take you through more of the financials later on in this presentation. Please turn to page four. You have seen this before, so here you see the development in occupancy, average room rates and REVPAR for the Nordic markets, indexed to 2019. Overall, the Nordic hotel market had a positive start to the year, with both occupancy and average room rates increasing, resulting in stable REVPAR growth for the quarter. Again, note that the early timing of Easter had a negative calendar effect in March, particularly in Sweden and Norway. In Sweden, the market developed well with high occupancy and moderate price growth. Norway also continued to perform positively despite tough comparables from last year when the World Ski Championship was held in Trondheim. Denmark remained strong, supported by high levels of international travel and a solid event calendar in Copenhagen, resulting in strong growth in both occupancy and room rates. Finland continued to lag with a more cautious market sentiment, although both occupancy and prices improved compared to last year. So overall, the Nordic hotel market remains healthy with stable underlying demand and positive momentum. Please turn to page five. Turning into Ireland and the UK, overall market conditions remain positive across both Ireland and the UK. with continued good demand and a solid start to the year. In Ireland, performance was good with both Dublin and the regions achieving solid REVPAR growth. The UK was stable across both London and the regions. Looking ahead, expectations for the second quarter are positive across both Ireland and the UK. So overall, these markets show stability and the latter is performing well, broadly in line with or slightly ahead of the market. Please turn to page 6. This slide shows our hotel pipeline at the end of the quarter, including the Latas pipeline. In total, the pipeline comprises 22 hotels and over 5,000 rooms. For the rest of the year, we plan to open eight new hotels, including several Scandico hotels, supporting our expansion in the economy segment. Overall, we are developing the portfolio at a good pace, which creates strong conditions for higher growth going forward. Please turn to page seven. Let's take a look at how we continue to develop the portfolio. As you can see on this slide, we continue to expand the ScandiGo brand at a good pace. During the quarter, we opened our first ScandiGo hotel in Norway, centrally located in Oslo. This is an important milestone as we continue to scale the brand in attractive city locations. We also highlight the agreements for the Scandic Go Hotel that we signed in Tromsø and in Stavanger. These hotels were signed earlier and were also communicated in Q4 presentation. So all in all, this just reflects the strong momentum we're seeing in Scandic Go with high interest and a growing pipeline. In addition, through the latter, we have added the new Meldron Hotel in London with around 370 rooms planned to open in 2029. This will be the seventh hotel in London and further strengthen the position in a very attractive market. Please turn to page eight. During the quarter, We took another important step in our sustainability work with our climate targets now validated by the Science Based Target Initiative. This confirms that our targets are aligned with the 1.5 degree pathway and reflects our ambition to reach net zero emission across the value chain by 2050. It also strengthened our sustainability profile and supports the increasing demand for sustainable solutions from our guests and corporate customers. Please turn to page nine. Let me give you a brief update on the Dallata acquisition. The process is progressing well and remains fully on track with completion expected in the second half of 2026. Once the restructuring is complete and provided we exercise the option to acquire the largest wholesale operations, we expect to operate the largest markets using the same COO-led structure already in place across Scandic. This leverages our established structure to drive scale, efficiency and strong local execution. As part of this, the current COO of the latter will continue to lead the operation in these markets and will be joining Scandic's executive committee once the carve-out process is completed, while the current CEO will remain with the business for a transitional period. At the same time, the business will continue to be led by the experienced local teams, ensuring stability throughout the restructuring process. Overall, we see strong collaboration and a very good progress. With that, I hand it over to Per. Please turn to page 10.

Thank you, Jens. Good morning, everyone. I will now go through the Q1 financials. Please turn to page 11. Looking at the first quarter, we saw good organic growth of 4.7%. Top line faced some currency headwinds of minor. Good results, better than last year in Sweden, other Europe, including Dalata. Norway was negatively affected by the early Easter and the world championships in cross-country skiing last year. The lower results in Finland compared to last year mainly due to softer prices, cold weather and the renovation of our largest meeting and Congress hotel. In the quarter, we saw increased cost for electricity and heating of around 40 million due to the very cold weather that lasted for quite a long period. We have seen a good start for Dalata. The contribution from the management contract was 56 million on top line and 50 million on EBITDA. Group cost in line with same quarter last year, efficiency improvements, balancing the inflation and salary increases. And just a reminder that last year we had a non-recurring item in Denmark of 43 million related to government support during the pandemic. In total, we saw a result of 105 million and a margin of 2.2% in line with last year's margin. All in all, a stable result in line with last year if we exclude currency effect, the LATA and the one-off. Please turn to next page. We had a strong cash flow of more than 2.2 billion on a rolling 12 basis. Investments in line with plan we deliver on our portfolio strategy. Free cash flow improved clearly in the quarter and totalled to 1.1 billion on a rolling 12 basis. Please turn to next page. We have a strong financial position, net debt of 510 million, meaning a leverage of 0.2 times. compared to last year when the leverage was 0.4 times. We're in a good position to support the portfolio growth agenda and also the acquisition of the Lata Hotel operations. All in all, we deliver a solid quarter. We have a good momentum ahead of the larger important coming quarters. And now I'm back to Jens and turn to page 15, please.

Thank you, Per. Let's move to the next page. Let me briefly sum up and give you a few comments on the outlook. We are off to a good start to the year with stable growth and solid results. Market conditions remain positive and we continue to see good demand across our markets. The larger delivered a strong quarter with performance slightly ahead of last year and the acquisition is progressing according to plan. Collaboration is strong and we are quite impressed by how well managed the business is. There are clear similarities and also, you know, between the two companies, our, let's say, giving the strong platform that we have both in Scandic and Bellata. And it's looking positive that we can build on that going forward. Looking ahead, the second quarter has started well. And the booking situation is good, supported by strong leisure demand, stable business travel and also a solid event calendar. This gives us good visibility into the peak season and we expect both occupancy and room rates to be slightly higher than last year in the second quarter. Scandic is in a strong position with good momentum, a robust financial position, and clear opportunities to drive further growth and profitability. With that, I hand it back to the operator for the Q&A session. Thank you.

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 Alice Beer from ABG Sundahl Collier. Please go ahead.

Good morning, Jens and Per, and congratulations on the start to a strong year. Just firstly, you flag highly shared demand in a stable corporate environment for Q2. Given that several European corporates are beginning to tighten travel budgets and macro uncertainty, could you give us just a sense of the corporate-to-leisure mix in your current bookings and whether you see any softening on the corporate lead times or cancellation rates?

Yeah, absolutely. Thank you for that question and good morning as well. No, I think we see quite a lot of stability in this area and there has definitely been a change in corporate traveling for the last, I would say 10 years or so. We have seen that people, the inbound airline traffic has gone down, but at the same time we have been growing our business. And it's clear that people, maybe they might travel less with the airlines, but once they travel, they also tend to stay longer and thereby also using hotels. So for us, you know, the stability in the corporate traveling has been fairly strong and stable during the last years. So we do not see a high increase or even no decrease either in the corporate segment. The growth is more driven still by a larger increase in the leisure segment, leisure traveling. But it's also more and more difficult to really compare what is corporate, what is leisure, because people are using our online channels. They book more directly. So eventually we really can't see whether it's purely corporate, purely leisure. So that is something we just need to mention. But all in all, I think it's very stable in that segment.

Okay, thank you. And then on Finland, I mean, the market grab part was at 9%, yet your sales in the region fell 2% on a comparable basis. Is Scandi losing share in Finland, or is this entirely explained by renovations or meeting segment weakness? Could you just expand on Finland, please?

More than half of the, actually almost two-thirds of these results come from one single property that we are renovating at the time being. So we are doing quite a lot of stuff. We actually use this opportunity in the market to invest quite a lot in the strong portfolio we have. uh to be able to even gain further shares in that market once the the market rebounces so we are we are really preparing ourselves for something which we believe in the future will be a another strong market like we have seen in the rest of the the scandinavian countries so so we are preparing for that so that that is partly uh some of the reason okay and how long will this renovation go on how long with this If you take the biggest, the Congress Center that we are renovating, then we actually renovating the rooms now in different phases. And that will last until the latter part of the year. So it's like early December until we are totally done with that. So we have simply taken that out. We are taking less rooms during midsummer. So we are doing most of the rooms now in the spring and in the autumn. And then we renovate the Congress part of it during the midsummer, where that is Congress slow. So we try to not take a whole hotel out in the same period, but try to balance so that we have more rooms available during the summer.

Okay, perfect. And then on to Norway, the margins.

No, but I think you can also add to the revpar comparison that we are, you know, we have not had 12 months of the breakfast excluded yet. So, of course, comparing rates, that could be also a factor that puts a bit pressure on our rates compared to last year because we have the breakfast excluded. So, don't forget that part.

Yeah, that's a good point. And if I move on to Norway then, margin was slightly down here. Was this due to cost-facing mix, or is something more structural? And how confident are you that Norway's margin would recover throughout the rest of the year?

We think Norway has really been strong the last years. We are facing a comparison with last year where you had the World Cup in cross-country skiing, which of course led to a lot of high prices. So looking at the quarter, that had an impact on Norway. Looking ahead, we look into a very stable situation. Q2 and a strong summer. So all in all, that was part of it. And of course, like Per was mentioning, I think when you look at this result, which we are very satisfied with, a strong result, it also included an increased cost of energy and heating of a total of 40 million that we managed to handle in three in other, let's say, initiatives. So underlying, you can say, if you look away from the 40 million, we're actually doing a better result in the different markets on the results. So yeah, we did have some tailwind on the heating cost. And that is not because of the prices. That's because of the consumption.

OK, great. Moving on then. The buybacks were paused since the lot announcement. leverage asset to temporarily spike. At what leverage do you feel comfortable reinstating buybacks? Do you have any framework for resuming these returns?

I think if you looked at the debt situation we are now in a really good position. We will go in and conclude the deal with conduct around the latter in the second half of the year. And of course, that will increase the debt during a period. And then I guess coming out from That period, you know, a year or two later, I guess they could be starting to discuss buybacks again, dependent on how the share price looks at that point. So I think it's too early to give any guidance around when and at what levels we will do buybacks.

Thank you. And just one final question for you then. Have you learned anything new about the lot operations that changes your view on the CapEx needs? Could you expand a bit on the profile of near-term and long-term needed investments there?

No, we think it is exactly like we have said before, you know, it's a very strong young portfolio. So we believe that the CapEx need for maintenance CapEx will be lower than Scandic and thereby supporting, you know, that we are looking into some years with lower CapEx spend, which is very positive. I think overall, the latter is just like we see already now, you know, both the quarter was good and the outlook looks positive. And of course, when looking at the future on the latter, we are actually more optimistic now than ever. We think there's a lot of good synergies and we are very optimistic about what lies ahead of us with that transaction. So of course, both Pandux and us are very keen on getting this done with this Carver process. And we continue with high speed on that. So all in all, it looks very positive.

Okay, thank you. That was all for me.

Thank you.

The next question comes from Jamie Rollo from Morgan Stanley. Please go ahead.

Thanks. Good morning, everyone. I've got a few questions on the latter and then one on operating costs. Just on the latter, the statement says strong first quarter with year-on-year improvement. Could you please quantify what its revenues were up? and also how those profits perform at the dilatory level, of course, not at your fee contribution. And then the statement also says, should we seek to exercise an option to acquire its hotel operations? Obviously, we understand there is an option, but you've not mentioned it before, and just then you sounded very confident this will go ahead. So why have you apparently changed the language, and is there a risk? that the deal does not go ahead, and if so, what could cause that? Thank you.

Firstly, I guess we cannot comment on the details on the Dallata top line or the profits, given also that we have Pandocs and us, both two listed companies. We are only commenting on the management contract, the 56 million and the 50, but we can say that they have a good start. That's what we can say on that one. And on the restructuring and the CARVAT process, everything goes according to plan. We have the agreement with Pandox to go through with this, but to be, I mean, it's not done yet. So of course, we're just from a formal perspective, having this sentence in the CEO statement to say that it's of course subject that the deal goes through, but there's no negative or any change than before. So we're still very positive that the deal will go through.

Okay, and so when do we get the FY25 sort of performer base figures for Dilata? Will that be at the second half of completion?

When we have completed the deal, we will of course consolidate Dilata's result into Scandic, the operational result into Scandic, and also give you the performer results so you can do good comparisons for the previous periods.

Thanks. And then just on the operating costs, if we adjust for the latter and the provision last year, it looks like there's about 2% operating costs inflation in the first quarter. That's excluding rent and D&A. But about half that seems to be the energy costs, which I guess is more winter skewed. So just really wondering what the underlying Scandic level of operating cost inflation is and particularly because currency was about a 2.7% for headwind to revenue so I guess that 2% may be more like four and a half percent on constant currency so how should we be thinking about the cost for the rest of the year thank you

Yeah, it's a complex question with a lot of things there. But I think overall, if you look at the operating cost, I think we're on a balanced level on salary increase expectations. Even the strike in Norway is not about the salary levels, it's about other things. So we expect the salary levels to be balanced as well as the inflation. haven't seen any uh you know uh big changes on the the incoming inflation uh to to uh to our operating cost yet so it will be balanced uh so so uh the salary levels will be probably around three percent in average for the nordics and and then inflation you know uh between one and two percent i would guess uh as a assumption so so no change to that yet uh of course as i said we haven't seen any effects on on the conflict in the Middle East. That could, of course, translate to price increases over time. But right now, we haven't seen anything from that yet.

Okay. Thank you very much. That's all for me. Thank you, Jamie.

The next question comes from Adela Dashian from Jefferies. Please go ahead.

Morning, gentlemen. Just two questions from me. First, if we move back to the Finland commentary, when should we expect Finland to return to becoming a positive contributor again? Like, what's the time horizon on that, specifically now after getting comments on the renovation initiatives over there? Because you did mention that there was improvements towards the end of the quarter, so just wondering when we should start to see an inflection point, really.

And thank you for that, Adela. And starting with Finland a bit, you know, I think we do all we can on preparing ourselves for actually a bounce back. You can say we are renovating hotels still. We believe this is yet to become a strong market. finland is actually contributing on a year-on-year basis positively to our numbers so it's a positive result but of course it hasn't the same levels as they used to have in finland so we are we are earning less in finland today than we did prior to the the war and pandemic and all of that looking back versus 19, where the rest of Scandic is up a lot, and that's driven by the other markets. So we are preparing for that. We cannot say it's very much linked to, of course, the war between Russia and Ukraine that has a huge impact, has had that since the beginning. But we see small signs of Finland recovering. We saw that the last part of Q1 was better than the beginning. we also see that the the the when we look into the summer and of course how we will benefit from some of these renovations that also has at least not a negative outlook so we we we see it it looks like it has stabilized and and and of course we when when the market starts to turn uh we will have quite a a strong conversion of those results due to the impact on on the leases right now where we are hitting a lot of the the guarantee leases It was also important and positive to see a note this morning coming out from Finnair. They actually mentioned that they have a growth. They start to see growth in their business, which has been, of course, important for us that you have infrastructure in place. So it's important that Finnair has... steadily and slowly start to move business from the Asian market into more other markets. And that is positive for the Finnish hospitality sector, that that infrastructure is in place and very positive to see that they are starting to grow. That will also help us going forward.

Okay, great. Thank you so much, Janss. That's good color. And then second question was on the energy costs. You quantified the headwind here in the first quarter of the year. How should we think about the facing for the remainder of the year?

I think it was purely linked, and here you can add a few maybe comments there, but it was really linked to, you know, we have a hedging on the energy costs, so it's not a price issue for us. It was more the consumption, and that was linked to especially Jan and Fip, which was very cold in the Nordics. And we had like minus 20 some degrees in certain parts of the region. And of course, the consumption was higher. Looking ahead, we do not expect any price and cost increases on energy. And we also saw that March was, compared to last year, stable. So I don't know.

But as you say, it was the very long and very cold period that put pressure on that. And I guess we We want our guests to have a comfortable climate and that had to be balanced with the cost of this. So it was probably one of the longest and coolest winters in a couple of years so that we don't expect it to happen again. But of course, it's not in our control, but we will, of course, try to give it guests also a comfortable climate. and our co-workers. So I think that was the decision here to make sure that we had a good stay for them and also balancing it. And as Jens said, it's not mainly a price issue, it's a volume issue. So we expect everything to go back to normal once now when we're in normal temperatures in the Nordics.

And of course, there's both energy and heating. So we are really looking at both. And despite what has happened so far with the Middle East, we haven't had that impact. But of course, we are carefully monitoring what is happening, whether that will change or have an impact on us going forward, but not on the price on the heating.

Okay, great. Thanks for that clarification. That's all for me.

Thank you.

The next question comes from Andre Joulard from Deutsche Bank. Please go ahead.

Good morning. Thank you for taking my question. First one is about revenues. Could you give us some more color between the split between room revenues and restaurant revenues, which are slightly down? Is it coming from the different accounting of the breakfast or something else? That's my first question. Second question is about the cash flow. I was looking at the tax paid, which were positive in Q1 versus largely negative last year, and the evolution of the working cap, which are the two main differences. Could you give us some more color about the rest of the year? Thank you very much.

Yeah, but a bit on, thank you for the questions. I think when you look at the, we definitely, like Per was mentioning earlier on, we need like a role in 12 with the breakfast excluded, which we started in last summer, before we have full comparison year on year. And we have It is a very positive story, which I have to say. We are selling more rooms without breakfast in the room price, and then they buy the breakfast as a separate thing. and that has been really meeting our expectations and also delivering quite a strong high conversion into the restaurant still so we are not losing that business but of course it's moving a bit you know between the two then of course as we mentioned this is a very small quarter it is the the smallest quarter in the year as you all know and then then of course when you have like uh changes in some of the meeting between the you know one hotel that are undergoing renovation in finland etc it has an impact shortly on that so so meeting business is also part of that so meeting in overall is slightly down uh but when we look you know on like for like comparable numbers, it is really fairly stable. So the growth is more on the room side and that's driven both by actually a bit of uplift in the corporates, but a lot on the campaigning and leisure segments.

And around the tax, we saw a little bit lower tax and also a positive effect from getting some tax back from the Swedish tax authorities regarding the previous year. And that was a little bit of opportunity coming into the coming years. So a little bit as a So one off from the past, we might see a little bit lower tax rates the following year, dependent on the ability to use the accelerated depreciations in some of our properties that we haven't used before. So a little bit positive, maybe not major coming forward. And of course, when we go into the The last acquisition, that will be a completely different setup with the Irish business with much lower tax rates. So I think for this year, you can expect a little bit lower tax in percentage than we had had before. But I think that the cash effect is also a little bit of a one-off versus last year, where you got a little bit money back from the tax authorities.

When you say slightly lower tax rate, do we talk about 1-2% or something more significant?

Probably around 1% if you look at going forward.

Okay, very clear. And regarding the change in working cap, anything specific to mention?

No, it's more positive timing effect. If you compare to the Q4, it probably looked a little bit negative and then now it looks a little bit positive. So more timing effects than the structure effects.

Okay, very clear. Thank you very much. Thank you.

The next question comes from Artem Prokopets from UBS. Please go ahead.

Good morning. Thank you for taking my questions. I have three, please. So I think you mentioned that there is no direct impact from the conflict in the Middle East. But do you see any perhaps indirect impact, either positive or negative? Maybe in a way airlines behave or rerouting of travel, cost impact, inflation, maybe traveler sentiment, etc.? ?

Yeah, but thank you for that question as well. And also good morning to you. I think you absolutely, if you go really deep into the numbers, you see that there are small effects and changes in some behaviors. We got, for instance, some cancellations some group business from the Middle East area. We got some cancellations when this conflict started. So, of course, we have had some small changes. On the other hand, we also got some other kind of business in because it is maybe that people cannot really fly they are not really flying into the middle east right now so a lot of the people that were tend to go to the middle east uh they they really don't go as long as we have this conflict i have friends personally lives living in in in dubai and then i know that that you know there's like no tourists in in in dubai right now so of course then that might also be an opportunity that that the people they they they shuffle around and we do get requests in for the summer for group business that were intended to go to the middle east that now looks at alternatives into europe so yeah we we might see that we are lacking some business from from that area but we're also getting other business so that's why it is on on fairly small numbers um so so it's not having a a negative impact in in total figures

Okay, thank you. And my second question on business rates. Could you please share your estimates of the impact of this increase in business rates in the UK in the coming years? Because I'm not sure it is anyway in the public domain.

No, but I think we mentioned in the last quarter, you know, you mentioned the exact numbers in the last quarter.

And I think, I mean, what we said is, of course, the increase that comes from 2025 to 2029. And we're going from a level of around four, four and a half million sterling to around nine when we look at that until 2029. So that's how we have seen it. Of course, there's still a debate around the rates in itself, but this is how we have interpreted the levels. So a little bit from four to almost double it. So until 2029.

Thank you. And lastly, on lease liabilities, how do you expect the lease liabilities to increase when Scandi expands? And if Skandik acquires a lot of hotel operations, would it be in line with room count or differently?

You're taking RFI 16?

Yeah, but I think, I mean, yeah, it's a little bit, I mean, we will not guide on that at this point. Of course, there is a... different types of contract in the deal. Some that will be with Pandox and some with the other landlords. So, of course, it will be dependent on the rate as well as the duration of these leases. So, I think we will come back to that when we are concluding the deal. So, I think it's too early to give guidance on that.

Okay. Thank you very much. Thank you.

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

Thank you very much and thank you all for listening in. And if anything pops up, you know where to find us so you can always reach out. Otherwise, we wish you all a fantastic day out there. Take care.