Embellence Group AB (publ)

Thank you very much and very welcome to the Q4 report for the M-Balance Group. As you heard, I'm Michael Lander, the chairman, and I'm standing in today to ensure that Karin is also getting the support as you should as a CFO and interim CEO to be two people on the call. So let's look then at what we achieved during the fourth quarter of the business. It was a strong quarter with solid sales growth and a continued margin improvement. Net sales ended at 202 million Swedish krona, which was up 12 million krona versus the previous year, and an EBITDA of 28 million, which also was a growth of 5 million Swedish krona versus the previous year. And it was good to see that we continued our journey of improving our EBITDA margin at 1.7 percentage points higher than the previous year, ending at 13.9% for the quarter. So that meant a sales growth of 6%, the majority of which was from our organic growth. We did get some help from exchange rate with 1% growth. What is good to see is that our efforts over the last year or so of continuously working on efficiencies is paying dividends in terms of our gross margin improving. The gross margin, in fact, improved three percentage points in the quarter to 60.7. And that was a combination of efficiency improvements in our production part, as well as some product mix effects helping us to drive that improvement. You will see as we talk more about the segments that our manufacturing segment that has been performing very well with Lotta Samuelsson and her team winning market share in a challenge European wallpaper manufacturing business. and doing that with good margins. And then on top of that, we had Artscape, our window film brand that did have a very strong quarter in the US. It was partly helped by some earlier than expected big orders from one major retailer, but even without those orders, it was a continuous strong performance and a return after a slower Q3 for Artscape. What was not so strong was our three major wallpaper focused brands. They all have still a soft quarter in terms of the retail channel that continues to be important for those three brands of Brostapeter, Wall & Deco and Colon Sun. But their direct-to-consumer part showed good, promising levels of growth, despite being still, as we have communicated at our Capital Markets Day earlier this year, too small a share of our current sales. Totally, with big efforts continued to drive that future growth in all our brands, both in terms of how we structure our sales and also what we do in product development, we did see an EBITDA margin improvement, as I said. And we continued with a strong cash generation that mirrors the full year. So if we go then and look at the segments, Brian's segment did show a 2% growth, but that was really driven by the strong quarter from Artscape. And if you look at the Artscape order situation, You have been, if you've followed Emblem's group, you know that we have a number of large retailers in the US taking the lion's share of those window films, although we are growing direct-to-consumer fast also within Artscape. And one of those large do-it-yourself chains was placing an order earlier than expected and earlier than normal in historic years for the new season to come. We're very happy with that choice because of two reasons. One, it was a strong boost for our Q4 and it's always better to have a sale early than potentially not at all. But secondly, we're also happy that it came because as you are well aware, the world is in the US especially the US retailers are now generally worried about what will be the impacts on their business from various tariffs as implemented by the new government in the US and that means that that same retailer and other large retail chains and Q1 are very hesitant and therefore it was good to have already gotten this big order in Q4. Generally, we see continued strong mix driving improved gross margin in the brand segment. As I mentioned, the team in the manufacturing segment is doing a great job in winning market share in what is a tough market for various producers. We're also taking steps to continue to win for the future, both in becoming more efficient for our own brands, but also being an even better potential supplier to other brands by investing in both additional digital printing capacity in Borås for the Borås Tapetfabrik, but also in investing in more efficient and sustainable equipment that I will come back to later on. We are seeing efficient improvements. One part is, of course, as you would expect, some economies of scale of better utilizing the capacity we have. But the team is also working on both waste reduction and other efficiency measures. So that also continues to drive an improved gross margin. If we then look at the subsets of the brands part. You can see that the business development in many ways was similar to what we've seen in the rest of the year with Artscape being the winning player from our brands during 2024. But that's also as always compared to a relatively seen weaker 2023. Overall, an okay performance of the wallpaper brands and of Papalina, our rug company, and we are seeing some light in the end of the tunnel in the very soft Swedish retail market, hoping and seeing the signs of that improving. The UK home market, where we also have a listed peer competitor, the Sanderson Group, we can see on their numbers and our numbers that we are outperforming what is a very weak UK market. We have a lot of things to improve in our wallpaper brands in terms of which channel to win in, but we're taking those steps, and as I mentioned, our direct-to-consumer sales, albeit from a very low level, is showing very good growth, and that's something that we will continue to invest in and drive. And as you know, as we have communicated that in an official press release, we have a new CEO joining us in May who comes with a strong digital background. We're, of course, not waiting for him and his competence within a digital direct consumer, but we are taking a number of steps already since sometime in 2024. but dialing up those efforts now in the beginning of 2025 as well. If we then go and look at the full year and how we performed as a total for the full year, you can say that on the sales growth in the year was strong from seeing what we've seen in historical past But really, 5% is not the levels we want to be. We expect to continue to grow that growth percentage as we win in more growing channels like hospitality and direct to consumers. But what was strong in the year was the gross margin improvement. So despite a moderate sales growth, we did pick up in gross margin with 1.9 percentage points, closing in on the 60% level. And I am convinced that all the efforts we are doing, we will be seeing a good economies of scale effect coming across also on our gross margin efforts with both a better efficiency in our plans and a well-invested setup. That meant also that we have for the year an EBITDA increase of 22%, which is very nice to see. So that despite efforts to drive future growth more consistently, we are being able to see the top line growth fall through on a bottom line improvement. And in fact, that bottom line improvement meant a two percentage point pickup to 14.4%, starting to move towards our long-term growth target of having a beta margin over 15%. As I mentioned, the full year had a very strong operational cash flow, which Karin later on will talk more about. But then let's look a little bit then on some of the most exciting things, because as a product company doing great interior decoration products, it's always good to get to see a little bit what we're doing. So in Artscape's reality, we continue to win market share in the window film segment. And in fact, in premium window films, we define the segment in the US. We're also seeing continued strong growth in direct-to-consumer, both directly from our own webpage, but also in an Amazon vendor direct model that we use. What we did mention, and I've already commented on it, but it's worth noting, is this US customer placing a large order, which will mean a softer start in a like-for-like comparison in 25Q1 than we had then previous year. If we move on to Colin Sun. Colin Sun participated just here some weeks ago at the important Paris Deco Off Fair. We did that in a very smart way. Marie Carlson, head of Cologne Sun and creative director of the team, made sure we were seen in the right place, connecting one of the big launches we did with the place we were at. So we had an apartment across the Jardin du Palais Royal where we, at the same time, in a very nice way with our long-term design partner, Ardmore, launched a new Jardin-related product, the Baobab tree collection. A number of designs based on the South African tree of life. And I know that Marie and Fi Hassed, the founder of them, Aardmoor has for many years thought about a collection like this where we truly celebrate the traditional African design with the skill set and artistry of those artists that work at Colman Sun. We're talking about several hundreds hours of hand-painted designs that have gone into creating this luxurious collection that will hit the market in Q2. If we then move on, because not only Kohl & Son was present in Paris, it was also the Boreas Tapeter team. And there the theme is with the fantastic heritage that we have with Boreas Tapeter. And maybe some of you who know me know that I'm from the very south of Sweden, so you might believe that my excitement over the Österlen collection, which is a region in the south of Sweden, is due to where I'm located. But I can assure you it is more due to the fantastic way that this collection that was introduced at the Paris Deco really captures what Borås Tapeter has done in defining Swedish Almöge, the typical style of Swedish homes, with a new collection to create future design icons for the Borås Tapeter brand. So that's the land collection, which has 12 patterns. Really, when I listened to the team that has brought it to life with Sissa Sundling and her team of skilled artists and designers, What they've done there is they've combined very colorful patterns with flowers like cress, clover, bluebells, and anemones, but also added in a smart way patterns with petite flowers and more traditional Alamogu-style striped patterns so that you can really capture an entirety of a home. One of my personal favorites is the crest design, which Sissa herself was inspired from her own garden. And I think there will be a lot of favorites. It's just hit the markets here since about a week and a half ago. And early indications are a very, very positive reception of these designs. If you then go to what has happened in Borreos Tapetrofei, So in our factory in Borås, we have over the last eight months, I would say, really dialed up some of those investments that we are convinced will bring those both efficiency gains and new technologies into the company that we need for the future growth. So what we have done is we've invested in a new paint mixing line, a color mixer, which enables much more speedy, but also much more sustainable handling of the mixing for traditional print. We've also increased our digital printing capacity and added additional capacity in that future also growth area. And in general, we will see that our CAPEX levels, which have historically been extremely low and in 2024 was around 2%, will for the year 2025 more go towards three percent as we dial up the focus on setting the factory up for the future and then to return back to low two percentage points type of capex with that i hand over to Karin who will walk you through some of the financials a bit more in detail

Thank you, Magnus. I believe Magnus already covered sales in great detail. We had a growth of 6% and I will therefore focus on the profitability. The gross margin improved to 60.7%, three percentage points during the fourth quarter. Part of this is product and channel mix, but we also see improvements in operational efficiencies primarily from manufacturing. The EBITDA margin was 13.9% and the operating cash flow 38 million. Looking at the full year, we have a gross margin of almost 60%. This is an improvement of one and a half percentage point. in 2024 and an EBITDA margin of 14.4% compared to 12.4% last year. And you can see that we are delivering profitable growth. As we said during the Capital Markets Day, we add and we will continue to add resources in primarily sales and marketing. However, we also drive operational efficiencies in our OPEX that contribute. We're driving efficiency improvement actions in several important back office areas, for example, IT and finance. And the purpose with this is both to step up quality and at the same time increase productivity. One of the most recent example is consolidation of finance for all the Swedish legal entities into one site. We generate cash and we doubled our operating cash flow in 2024 to 113 million compared to 65 last year. Looking at the long-term development, it's good to see that we are back after the weaker Q3 on our growth journey towards our financial targets of delivering 1 billion in sales in 2028. We also deliver one of the strongest quarters ever when it comes to actual EBITDA that is reported to 28 million SEK in the quarter. And looking on the operating cash flow and balance sheet a bit with the operating cash flow best ever of 113 million kronor we have doubled it since 2024 and the main contributing factors is an improved EBITDA of course we also paid less tax mainly due to we made a higher share of the profits in entities with lower tax rates in 2024 compared to 2023. In 2023 the working capital development was not as good and we are now back on a better level compared to prior year. We recommend a dividend of 1.25 kronor per share in 2025. This is in line with our policy of paying a dividend between 30 to 50% of our net income. Or if you actually do the math, it's slightly above, but we rounded it to a good number. The leverage has improved during the year from 1.7 to 0.7 of net debt to EBITDA. We chose not to do a dividend in 2024 and have, among other things, utilized our improved financial position to repay the costly outstanding loan in US dollar from a couple of years back. This will give us lower interest expenses and reduce currency fluctuations. This was also the first step in our ongoing plan to improve the total group financing. We want a better flexibility, efficiency and cost level for the total group financing. And with this, I hand back to Magnus to summarize and conclude.

Thank you very much, Colin. As you understand from current, we are working on our total balance sheet set up and we will come back with news on what that will look like in very close future. If you look at them, what we've done in the last few years as a company and also reminding ourselves of what we presented at the capital markets day in May, you can see that since 2020, the company has had a cargo growth of 8% per year. Of course, that means that you could consider the target of hitting the one billion sec as almost conservative, but we have wanted to reestablish the fact of having a mental mindset of beating our targets rather than not reaching them. If you look at the EBITDA development, a 58% growth over these four years with a cargo of 12%, you clearly, as you will also see on the next slide, that we are in a good momentum to be able to achieve the long-term target of above 15% EBITDA. So if we go to the next slide, you can see that after a dip during the late 2022 part and early 2023, we have been moving the company in the right direction and we feel very confident that the direction that we will continue to move our EBITDA will be continuing in the trajectory as you see. So then in closing and summarizing what has been an eventful year with significant building blocks. One of the bigger steps was the clarity that we hopefully created and will continue to try to reiterate and make even clearer is the brand focus strategy that we have as a group and how we truly want to make the brands we own today five brands and in the future more. We have brands that have fantastic legacy history with strong design skills and a driven setup where we do need to improve our sales efforts in the more growing channels of direct to consumer and hospitality as our historical legacy channel of traditional retail is under pressure. But with that brand focus strategy, we also clarify that there will be a number of things that we want to create, as Karin was mentioning, some strength in efficiencies by utilizing a better and stronger group wide back behind the scenes setup. And that will continue as we now roll into 2025. We did show a solid sales growth and nothing amazing, but still nice to see after a weaker 2023. What it was very good to see was the continued journey of efficiency improvement and better economies of scale delivering a gross margin improvement. And also that this totally fell down to a good EBITDA margin of 14.4, taking steps towards the above 15% EBITDA margin target. These investments that we're doing in our plans and improving them is a focus and also a commitment on delivering those growths in a cost efficient way in the future. And as I've already mentioned, the focus on the winning in winning channels and growing channels is increasing significantly in the company. uh if we look at 2025 we definitely have a very exciting year ahead we have very strong motivated brand teams and they have some very exciting new product launches to roll out we are adding staffing and funds into our d2c and hospitality efforts and we have a number of efficiency improvement projects underway both in the back end and in production as well as in sales We then, although Karin is doing a fantastic job as interim CEO, we are convinced that the strength of two leaders together with the brand management will be even stronger. So we have a new CEO, Johan Amgen, joining us May 1st. And all of that means that the board is very convinced of the direction the company is taking with firm and clear steps. We will see a slower Q1 if you compare it in the quarters over the year. It's the Q1 that will be slower than the average of the quarters due to the big facing of the artscape order that was in Q4 rather than Q1. But we remain very confident on the journey and our growth plans for 2025. And with that, I also want to pass on my thanks to everybody in the company that now, as we are undertaking quite a big shift in focus, clarifying the strategy since the capital markets day in the spring, and then moving with a lot of improvements in both back end and front end. Everybody is doing that in a very good way. I also want to pass on my thanks to Ole Svensk, who has been the CEO for many years, as he has now decided to do other things. We wish him all the best in his future endeavors. And with that, we open up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Benjamin Wahlstedt from ABGSC. Please go ahead.

Good morning, guys, and congratulations on a strong year. A couple of questions from me. First of all, ArtScape growth was impacted by a large customer order. Is there any way you could add some color to this or quantify the impact? Did this lead to any sort of order delays in Q3? Any color is helpful here. Thank you.

So thank you, Benjamin. As you correctly noted, we had a weaker Q3 in last year for Artscape. So part of it was a stronger Q4 was partly thanks to that weaker Q3. But the big part was also then, as I said, anticipated one of large order. So if you would have looked at a more without that one order, you would have seen Artscape performing more or less like it was after the nine months in terms of growth numbers. rather than the 50 plus that we had in the fourth quarter. So we will see that similar impact then not taking place in Q1 in 2025.

Perfect, thank you. I also know your SG&A costs were slightly higher in Q4, growing by 10% year-on-year excluding DNA. Is this symptomatic of the new strategy with a larger focus placed on organic growth? or rather a result of the large order in Artscape, please?

It's a combination of both. There is a minor effect of a continued focus on the driving growth with the right staffing, but the majority is not just Artscape, but more of a one-off nature. So we will continue to see a well-managed SG&A expense, but there is, as noted several times by both Karin and myself, a number of initiatives within the sales and marketing, they are not adding that type of percentages though. So there was more related to one.

Thank you. And then perhaps finally for me, before I let someone else go, on the external manufacturing segment, you comment, Karin, on struggling European producers allowing you to take market shares abroad, or that's how I interpret the statement at least. Could you share what portion of external manufacturing sales are attributable to non-Swedish customers please?

I can step in there because we don't share that data. Even some of the Nordic customers that we have actually have historically been using other European manufacturers in other parts of Europe than in the Nordics. So even some of the gains we're getting with the Nordic customers we have is due to the struggling European competitors in the business of producing.

Perfect. Thank you very much. I'll get back in the queue.

The next question comes from Marcella Klang from Handelsbanken. Please go ahead.

Good morning, Karin, and good morning, Magnus. Thank you for a very good presentation. Let's continue with the manufacturing for other producers. And you also mentioned some Nordic producers moving production from European players to your factory. Do you see this as more permanent move from them? And how do you balance both the competitive situation and the effect on your growth margin?

So if you take, it's not producers, it's brands or various brands that have historically several of these brands haven't been manufacturing themselves. So they've always gone to other suppliers. And what we're doing in winning share there is that we are getting more and more efficient, which enables us to make sure that we can have an OK margin as you do as a producing entity versus the type of margins you have as a brand. But what has happened is that historically we wouldn't have been winning these businesses because we would have chosen not to win them at the type of margins as other suppliers of manufacturing capacity were prepared to sell. now those prices have been going up and so with a total offer which isn't just price based it's the quality of what the team can deliver in boros it's the lead times it's the flexibility and the competence in interpreting designs in a finished product so we're not just winning it on price but partly we were not winning partly due to price previously Now, when the price picture for other manufacturing entities around the world or around Europe is increasing, we're taking some share. Overall, the manufacturing segment is still by far our lowest gross margin part, but it is, of course, contributing in factual numbers, although at lower gross margin than the rest of the group.

And what is the effect on your margin target on the beta level? Is that also lower in beta? Does it contribute?

It's accretive. So as we are able to be very efficient in our back end and we have had and Lotta and her team had a lot of skills and we weren't with the capacity we had in some of our traditional printing. But as well on our digital printing, our first and foremost focus is to be a fantastic internal supplier to the rest of our brands. But with that and doing a better and better job, we are still able to very efficiently also then be able to produce more for others. So it is accretive to EBITDA, although at a significantly lower average gross margin, it still contributes to the total journey of bringing our EBITDA margin over 15%.

Thank you. And would you be interested to maybe acquire some of these brands in the future since you already are manufacturing them?

I think it's all about when you look at a brand, you need to know what it is you're acquiring. And we are, of course, looking at many various companies around. The key is that you need to be sure why you would acquire it and how you would run it better. We are not interested in a type of just adding things for the sake of adding and we need to be convinced that we can run that entity better and drive more or that that brand entity would bring some things that we otherwise feel we couldn't do ourselves. So They would, of course, be part of a total evaluation of what could be interesting to own, but it's not a given. I wouldn't say there's even a given advantage just because we today are the producer of those products. We will look at any entity as a standalone logic for what we would do with it once we had acquired it.

And how do you choose which, basically, competitors you choose to produce for from the competitive side of things?

First of all, we do need two paradigms. it will be the brands choosing us because in the end the brand choose who manufactures so it's not that we are picking and choosing it's them but then we always before we even entertain the discussion of potentially manufacturing for somebody we do a full evaluation of what is the fit how professional is that company and what's the financial situation of it how strong are they as a ongoing customer we are not interested in being out hunting for temporary short-term businesses what lot on the team is doing in a good way is creating long-term relationships by offering a wider service so we're not gonna we're not running around trying to get volume into our plans we are trying to create long-term relationships where hopefully both us and the brand see this as beneficial in a way that you know brings advantages to both if there would be any strategic issues in our view every discussion on any new brand is taken at ambulance group level before we commit to becoming a partner of those brands

Thank you. And then a question regarding your EBITDA margin target. Since you're so very close to the announced EBITDA margin target, would there be something for the new CEO possibly to increase that?

I think you always first have to beat something before you talk too much about increasing it. We're not beating it yet. I have a personal experience of it's much better to mentally create the possibility to hit certain targets. We already at the capital markets, they were clear that we felt that the EBITDA margin target was closer to that at hand than reaching one billion in SEC. And then you need to prove it for a while that it just didn't for once one quarter hit it on a rolling 12 month basis. But you have a considerable timing showing that the trend is there. And then in a future, it may be a capital market say there might be other things communicated.

Thank you. So we know what we have to look for in the future capital markets, both an increased EBITDA margin target and maybe some acquisitions. A final question from me. You mentioned the tough UK market where you're outperforming your competitors. How do you make

this success what is what is your edge there and do you see any kind of improvement signs of improvement in this market in 2025 yeah we do we we saw even at the very end of q4 even if it doesn't look very impressive in the numbers we're seeing some light at the end of the tunnel as always you need to be careful so it's not another train coming to hit you in the face that's why we're not too bullish on the uk market but there are a number of good signs that hopefully the uk market has and that's not only in the wallpaper but interior decoration expectation and building trends are finally going slightly in the positive direction so we do believe we've seen it bottoming out how quickly it truly improves we will have to perform and see and see how the market goes but it seems like it's bottoming out Now it's up to us not to use the classical excuse of it's a tough market. Maybe we've done that a little bit too much, to be honest, and we need to win more. And that is something that is obvious for Marie and her team at Kowloon Sun being in the home market. It's not something we're happy with our performance. So we cannot only blame the market. But the way to do it is, of course, with great designs, the design icons we have, the new products we're bringing, but also with a better service offer in terms of totally meeting the expectations of both those architects, interior decorators, hospitality and consumers wanting to have a premium product, which is the range we're playing in. So seeing light at the end of the tunnel, it feels pretty sure about that. How good it will be, we need a few months of consistent, strong performance in the market and from ourselves before we can be too bullish.

Thank you so much. That was my last question.

Thank you.

The next question comes from Benjamin Wallstedt from ABGSC. Please go ahead.

Hello, back again. One or two more please. So you talk about your own successful campaigns at Paris Deco Off and I was wondering what were your overall impressions with the fair? Can you say anything about, you know, was there more or less retailer slash decorator traffic versus last year for example?

When talking to Maria and Lasse, who were there with their teams, it's clear from their side that there is energy again. In terms of number, there were a number of players that did similar things like us, maybe were slightly outside the traditional areas and did some quirkier things like we being in an apartment and taking over a shop to do a pop-up store, etc. And I think generally it is one of the industries where the fairs are trading quite well. I mean, knowing from other companies I'm involved in that a lot of traditional business fairs are really struggling at the moment in the interior decoration, the big ones are holding up. There is tougher times for a number of the interior decoration and furniture fairs in local markets, like in Sweden and et cetera, the smaller local ones, but these big international ones are actually seeing some very good participations still, but similar levels in the past, but with a bit more energy and smile in a number of the brands.

Perfect. Sounds pretty optimistic. On the, I think it was the last slide, you mentioned potentially added staffing in DTC and hospitality. And I was wondering if you could elaborate on the magnitude here or on the costs related to this place.

We're going to be calm to say that we are going to see good economies of scale still on our OPEX because we're doing some savings on efficiency gains in other parts. So there will be additions. We're not going to load up with hundreds of people. We're talking about a number of skilled people already having been brought in some of them in some of the numbers from late last year. and for example also a CEO coming in with a very strong background with that but there will be a number of key additions but we're talking of relatively few people so overall no worries in terms of total opex growth perfect thank you and then final one I promise the DDC part of Bråsta Peter you know that it has more than

than doubled in sales during 2024, and I appreciate that that's from a low level. I was wondering, you also sell Colon Sun DTC, and I was wondering if you could share anything similarly as it relates to this brand as well?

Yeah, generally you can say across all our brands our share of DTC is too small and we were a few years maybe a little bit too late to realize what was the development of the traditional retails challenge. They are challenged also in 2024 and we believe they will continue to be challenged in 2025. We have, so to speak, woken up and smelled the roses and there is more and more efforts being done. It's clear that Pappellina and Borås Pappeter are further ahead. Artscape is picking up. Wall & Decker will never be a D2C-focused brand because it's few consumers that want to have that type of design and setup logic, so that will be relatively small. And I think the single biggest upside for us now professionalizing and getting more drive will be in cold and sun that has the lowest percentages of DTC. Although we don't share them, I can say they are by far the lowest out of those brands.

Perfect. Thank you very much. That's all for me.

Thank you.

The next question comes from Daniel Schmidt from Danska. Please go ahead.

Yes, good morning, Magnus and Karin. Just a couple of questions from me. Magnus, you mentioned that you are seeing light at the end of the tunnel when it comes to the Swedish market, which rhymes well with comments from other peers within home interior like Big Hema, Rust and so on. They've said the same thing lately. And they've also maybe shown it already in their Q4 numbers since late last year at least. What do you think is sort of the historical lag between these companies and your business? Do you have any sort of view on that?

Yeah, due to the fact that we have had such a big exposure also in Sweden and specifically in Borealstapeter towards what has been a dwindling retail channel, we have been faced with two things. One, that time lag, as you mentioned, Daniel, that just because consumers are starting, there is always some inventory in the retail channel, but also because several of those retailers have been, so to speak, closing shops. So for a while they have been selling out their inventory levels or moving them. So we've seen a slower due to two reasons, our exposure to traditional retail and the slow market with a delay anyway. So, you know, very difficult to give an exact amount of months, but we would be disappointed if we didn't see it from Boga Ostapeter, a pickup starting to happen already now in the beginning of 2025. in growth due to both what we are improving, but also from the market partly improving in the big home market.

Yeah. I was just also thinking maybe Magnus and Karin that do you have any sort of view on how the consumer acts in a turning market? Are they sort of, first of all, wanting to buy a carpet and a mirror and then later in the cycle you decide to buy new wallpaper.

I think you're absolutely right that there is historical indications that have been clear that if you would have had the same exposure for example to direct consumers so you truly didn't see this time lagging effect and you would compare a wallpaper direct-to-consumer focused company with a smaller interior decoration, there would be a little bit those effects. But I think the clear case here, it's not that difficult to see. There has been direct to consumer digital focused players doing a good job in taking shared from traditional. We have grown as well, but not fast enough considering our positions a few years ago. I'm very confident with the skill sets we're adding that we will take our fair share and hopefully a bit more. of that growth journey as it's moving. But you're right that there is going to be earlier indication of smaller things happening and it's when there is more apartment changes and other things going because I think we should be careful of not focusing too much on the pandemic when everybody was sitting home with now everything going on with a more normal reality interior decoration in the form of either painting or putting up new wallpapers should be a slight time lag in effect in terms of pickup versus a smaller interior decoration.

Another question, you've done a terrific job at improving the profitability and come up several times today already that you're quite close to reaching your target and I hear what you say you want to beat it and all that before you decide to do something different. But if you compare the profitability that you're about to achieve or the level you're at now with other competitors in the market, I assume it's quite a good profitability. That's just my guess already. Where do you think the optimal value creation equilibrium lies when you look at ambulance a couple of years out is it to sort of have a profitability slightly north of 15 and then just really push the accelerator on on organic growth or is it far higher in terms of reaching better profitability yet to come i think in the end investors are more interested in a true a beta falling through because in the end you can play around a lot with percentages of doing things

That being said, it's clearly you want to have high teens and you want to aim towards the 20 over a longer period of time if you have strong brands at premium positioning. So brands like Cold & Sun and Wall & Deco should get there. Borås Tapeter has also some more medium-priced products and so does Papalena and Artscape. Brands playing at different positions, but definitely in the high teens is something which I think should be realistic, but it's real monetary EBITDA in the end that will judge the success. And driving top line growth is key for achieving both the EBITDA margin, but also for, as I've said, as a CEO myself, And I feel Karin and all the brands responsible. And I know you want shares that you only in growing companies with top line, do you get excited if you work there over a long period of time? Because it creates opportunities for everybody working within the company. It creates opportunities with those partners you work with and hopefully create shareholder value as well. As long as you make sure that it delivers a beta margin and a beta in real monetary terms.

Yeah. Thank you. Thanks a lot for a very comprehensive presentation as well. Very good. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

In the meantime, Karin, if there are no further questions, you could maybe capture, I think there's been some written ones if they haven't already been answered.

Yes, Magnus, we have a number of questions around the manufacturing and the margin contribution. I believe they have been elaborated on, but we have one question here from Fredrik Skoglund, the traditional retail channel. Could you discuss more what you saw during 2024 and what is your view into 2025 in terms of demand and growth?

Thank you very much. So if you look at it there and for the rest of you, I would split it in two types of traditional retail. So I would go to the wallpaper oriented first because it's slightly different from what we do in Papalena and what we do in Artscape in terms of retailers we play with. So if you take the traditional retail channel in the wallpaper strong brands, the core chunk of our business. They have been struggling throughout 2024 because what you have seen is a combination of relatively general tough consumer markets plus that consumers have been taking a greater share of purchases in a direct-to-consumer approach, thereby a double hit for a lot of these retailers. So you've seen companies folding shop completely. You've seen retail chains with many locations reducing their locations. And the trend is not very different from a lot of other industries that, so to speak, mediocre players that didn't offer a strong expert advice because in the wallpaper type of retail channel, the players that truly continue to thrive are those that truly offer expert advice on how and what to do and also potentially offer advice and recommendations on who could do it for you if you're not one of those truly do-it-yourself persons who want to paint and who want to put up wallpapers so there you can say that the players that were just and let's say relatively mediocre showrooms for brands but with little expertise in-house they continue to struggle the players that continue to be a fantastic expert when you go there they give you all the recommendations of what you need to do and they provide you with a little bit of help in all the steps and you can go back and get advice on how to do things etc they will be continuing to be a winner, but they will be fewer. So the traditional retail will continue to shrink in 2025. I have no doubt about that. There will be some of those players that will do better now because some of their mediocre competitors in the same cities have fallen along the wayside. But overall, The writing is on the wall. It is a slowly but surely diminishing channel. I don't think it will be as fast diminishing as it's been a few years because some of the lesser performers have now fallen along the wayside already.

Okay, I believe that was the last question. So from myself and Magnus, thank you very much for listening in.

and yeah we look forward to invite you to our q1 uh follow up as well and soon having you on joining karen but then the q1 will also be myself and kari and exciting times ahead so look forward to talking to you soon