Embellence Group AB (publ)

Papelina is the brand that has the highest share of online sales of our brands and we expect this development to continue in the coming quarters since we're actively working on refining our platform with new features and more content. This will build an even stronger connection with consumers and builds loyalty and ultimately a more robust business model. We are gaining market share with the brand and are also continuing to expand more broadly internationally where we in the quarter changed our distribution model in North America, which was launched in the end of April. This has started out well and we have participated in a few fairs and we'll continue with this going forward where the next big fair is already in the beginning of August in New York. This is also the brand where we hire new personnel in marketing and e-comm and brought in a new managing director during second half year of 2025. And the new team led by Henrik Andersson is performing well. So we expect that the growth will continue for the brand going forward both domestically and internationally. Borås AP Fabrik reported an increase of 14% in the quarter. We are gaining market share in both digital and traditional printing driven by continued strong demand across our core segment. Growth is coming from both existing customers where we're deepening in our relationships and from new customers. The focus here is on developing new materials and substrates, but also on broadening our product offering overall. This allows us to meet the wider range of consumer needs while also strengthening our brand's portfolios with new and exciting products. Over time, these initiatives support the build out of a broader brand portfolio and creates a stronger foundation for continued growth across the group. If we move on to our strategic focus areas, these remain unchanged and they are working well for us. If we start off by focusing on the DTC channel, this is a channel that is strategically important for us at this delivers higher margins. It acts as a growth accelerator and it enables a closer and more direct relationship with our consumers. More than 50% of our growth in the next years should come from the channel, and we see that all brands are delivering double-digit growth. Papelina, as I said before, is standing out in the quarter with 130% growth, and this gives us confidence that the investments we're making in both the consumer experience and digital capabilities are generating results. In end of April, Borås Tapeto also transitioned to the new platform, meaning four out of our five brands now operate on the same platform. While this creates operational efficiencies, the more important benefit is the opportunity to deliver a significantly improved consumer experience across our portfolio. Our focus is not only making it easier to shop, but on creating a more inspiring and engaging brand experience. We continue to invest in storytelling, richer content and enhanced product presentation and a more seamless customer journey from inspiration to purchase. At the same time, we are expanding our marketing mix and reducing reliance on individual channels by building a broader ecosystem of consumer touchpoints. As digital advertising cost continues to increase, the ability to engage consumers through multiple channels become increasingly important. Through stronger content creation, improved customer journeys, and a more diversified approach to marketing, we are creating a more relevant and engaging experience for consumers while strengthening the long-term economics of the brand. Ultimately, these investments are about building stronger consumer relationships, increasing engagement and conversion, and creating sustainable growth. Our second strategic focus area is to expand internationally. All our brands continue to focus on international markets, and in the quarter, we deliver growth across all major export markets. In parallel, we are actively working to optimize our sales networks. This means that we are reviewing our current setup, and where needed, we are replacing selected distributors, retailers, and agents. The focus here is to ensure we have the right partners in place in each market, improving market coverage, strengthening customer relationships, and ultimately creating better conditions for sustainable growth over time for our brands. In the quarter, we changed the distribution model for Papalina in North America, a rather large intervention, I would say, which has had a great start, and we expect this to continue going forward with an increased focus on the market with both more agents and more presence on fairs across the country. We have also started a broader review of our distribution network for both Wall & Deco and Colon Sun, where we're making adjustments to have the right setup to deliver growth. The third focus area is strengthening our presence in the hospitality channel, which remains strategically important, both as a growth driver and as a way to increase brand visibility and build long term relationships with professional customers. The channel provides larger projects, recurring business and valuable reference installations that support growth across our brands and sales channels. During the period, we continue to strengthen the commercial organization with clear responsibilities and dedicated resources focused on hospitality. We have also expanded and strengthen our network of agents and partners in key markets to increase our market presence and improve access to architects, designers and project stakeholders. At the same time, we have further developed our service offering, improving project support and creating a more professional and scalable approach throughout the customer journey. These initiatives strengthen our competitiveness and position us for continued growth within the hospitality segment. If we then turn and look at some of the brand-specific happenings in the quarter, we can start out with Borås Tapeto, where we, in the beginning of May, launched our first window film collection as a new product category, featuring a curated selection of some of our most popular wallpaper designs adapted for glass surfaces while maintaining the same design expression as our wallpapers have. Initial customer feedback has been highly encouraging with particular appreciation for the product's premium quality and that we can offer our wonderful designs as well in a new category for homes, hotels and offices around the world. Window films provides privacy without compromising natural lights, making it an elegant and practical alternative to curtains or blinds. It's just a peel without adhesive and can easily reposition or remove whenever needed. Shown on the left is the Rosenvinge design, which is based on one of Boråstabetos most iconic heritage designs. The pattern here was recreated from an oldest known wallpaper in the Nordic region, dating back nearly 500 years and was originally discovered in the ceiling of a historic building in Malmö in the south part of Sweden. Today, this piece of wallpaper history has been reinterpreted as window film, bringing a pattern to glass surfaces while preserving its original character. On the two smaller images in the middle of the slide, we see two wallpaper murals, one called Blue Bell Magic, which is a hand-painted mural created for children's rooms, broadening the current offering for families. And we also see Dawn Forest from the Soft Blur Collection, which is designed to meet the growing demand for calm and harmonious interiors, combining hand-painted artistry with soft, timeless expressions. The design features delicate hand-painted watercolor foliage cascading across the wall. Moving on to Papelina, we continue to strengthen the brand awareness and stakeholder engagement through physical activations, industry collaborations and international design events. At three days of design in Copenhagen, Papelina hosted a pop-up presenting selected pieces from the autumn-winter collection in an inspiring Scandinavian setting. In parallel, Papelina participated in the Atlanta Market, one of the leading home and lifestyle trade events in the US. And together, these activities strengthened our international presence and supported our continued growth in key markets. In the quarter, we also introduced a mini-drop featuring six new colorways of our iconic Vera pattern, building on one of Papelina's most recognized designs. Vera was also launched in a larger area rug format, expanding its application across a wider range of living environments, including dining areas, living spaces, and outdoor settings such as Pechos. By continuously evolving our existing icons, rather than replacing them, we strengthen long-term relevance and build on the heritage that has made Papelina a trusted and recognized brand. For Artscape, we launched three new window film designs on Artscape's website. And on the slide, you see two of them, the Metropolis and the Sunshine design. And we also in the quarter launched nine new designs of bird deflectors, expanding our offering from the original square design into different themes, such as flowers, birds, Celestial themes and circles. Bird deflectors are designed to bring a sense of nature to your window and combines bird-friendly function with botanical beauty, creating a vibrant display that helps birds recognize glass more easily. And with that, I'll hand over to Karin for some more information about our improved cash flow.

Thank you, Johan. The operational cash flow was strong in the quarter. 21 million kronor compared to 16 million prior year despite a lower operating result. It's primarily the working capital development that has improved this year compared to last, and it's mainly due to three reasons. First, the largest impacts come from accounts receivables, which was reported at 93 million kronor compared to 112 end of first quarter. The difference compared to last year is mainly timing. This year the months and invoices were paid and received prior to end of quarter while we had an opposite situation last year. Secondly, We have built inventory, which ended at 160 million kronor, up 6 million from last quarter. This is a normal seasonal pattern where we build inventory before closing our factories for a couple of weeks during the vacation period. And we had a similar effect last year. Third, we have a negative effect of lower accounts payable. If you remember, in the end of first quarter, we reported that we built inventory to prepare for a change of raw material supplier in Borås Tapetfabrik. These invoices have been paid in second quarter. Towards the second half of this year, we anticipate to come down to normal inventory levels again. During the quarter, we made a dividend of 1.5 Swedish kronor, an increase versus last year when we paid 1.25 kronor per share. In total, the dividend payment was 35 million kronor. Despite the increased dividend payment, the financial position remains strong and our net debt to EvitDA is 0.7 compared to 0.9 last year. And with that, I hand over back to Johan for a closing comment and outlook.

Thank you, Karin. So in summary, Q1 was a quarter which we're not satisfied with, and we saw a sales decline of 6%. Although majority of the decline was linked to last year comparison numbers for Orgscape, which included a refresh with one of our larger do-it-yourself customers. Papalina and Bostapetfabrik grew double-digit in a quarter, while the other brands had a weaker one. We continue to have a high exposure to the traditional retail market, which remains affected by challenging market conditions. To reduce this dependency, we are actively executing on our strategic priorities to further diversify both our sales channels and revenue mix. The investment in our growth areas are beginning to deliver results, where Papelina is leading the way with 130% growth in the DTC channel. And in the quarter, we also launched a new platform for Borås Tapeta. So now we have launched four out of our brands on the new platform, which provides a good foundation for future growth. In the quarter, we also had our new managing director, Jelena Ford, join the business for Kål & Sann, and she has had a good start in the first couple of months with the business. Looking ahead, we remain focused on our three strategic priorities to further diversify our sales and channel mix, accelerating direct-to-consumer sales, expanding internationally, and increasing our presence in the hospitality channel. We continue to see positive momentum in both D2C and international sales. This, combined with our portfolio of brands, enhanced digital platforms, and clear commercial priorities gives me confidence in our ability to deliver sustainable long-term growth. And with that, I'll hand over to questions.

Now we will open the Q&A session. If you would like to ask a question, please dial pound key 5 on your telephone keypad. If you would like to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Benjamin Walstedt from ABGSC. Please go ahead.

Good morning. Startinging off with Wall and Deco. You state in the CEO statement that the commercial execution was not strong enough and the group resources have been reallocated. Could you elaborate a bit on that? Where did you go wrong in commercial execution and what does the reallocation involve in terms of costs or headcount or anything like that? And when do you sort of expect this to materialize in?

Thank you very much Benjamin. So with Wall & Echo we have had a bit of time now when we have seen that performance has not been in line where we want it to be. We have now taken a decision to proactively allocate different resources from a group level. This is resources that we have within the group today, so there is no additional cost linked to more people linked to this, but rather it's a reallocation of time spent with personnel to now focus more on Wall & Echo to make sure that we come back to our ambition levels. When it comes to commercial execution, I think it's multiple different factors that are included in what we do. Everything from how we talk to customers, to train people, to make sure that we are actively prioritizing the right way to do things and being more out in the market and have more more coverage in the market. So it's not an easy answer to just say this is the one thing that we do because it's multiple different factors that we are focusing on.

Perfect, thank you. I was wondering as well if you could give us an update on Colin Sun's trajectory into H2. You commented that you expect a more limited impact from the organizational changes in H2 and I was wondering if this is likely to be more of a Q3 thing, or if it's rather like a Q4 consideration. Thank you.

Yeah, thank you very much for that one. So when it comes to Colen Sun, what we did do in Q1 was that we actively took a few proactive commercial decisions that we knew would affect the sales in the short term, but they were absolutely the right ones to do in order to set us up for long-term development and position the brand in a better way. We believe that these will have limited impact in the second half of the year linked to the first one. So this is spread both between Q3 and Q4. So it's not like it's going to happen only in Q4, but we see a limited effect also from Q3 and Q4 onwards.

Perfect. Thank you. I was wondering as well, I believe a few quarters back you said you would update on the DTC share on a biannual basis, meaning every two quarters. I can't find any disclosure in this report. Did I miss it in the beginning of the presentation?

No, we have not disclosed. We disclosed last time we did when we did our Q4. We reported the amount of sales when it comes to e-com as percentage of our total branded sales, which at that time was 8%. We have not disclosed any numbers in this quarter. When it comes to the e-com numbers, as we talked several times, it is one of our biggest growth areas, and we believe that more than 50% of our growth In the next coming years, we come from the channel and we see that we are performing well for all brands. Papelina standing out with 130% increase, but we have more brands that are doing good within the channel as well. But we can also say that as we grow, we will share more numbers linked to this. It's still a small portion of the business, but as it grows and becomes a bigger part of our business, we'll share more numbers more regularly with you.

All right, so if you don't wish to give an update for Q2 LTM, then I take it. I was wondering if you could perhaps share an approximate growth rate for Boroasta Pieters DTC nonetheless. I understand it's early days. This was upgraded in April, but considering the strong Papalina growth, it could be informative, I believe.

I think when it comes to Bostapetto, I think it's important to remember that when it comes to Bostapetto, we have an isolated challenge linked to the Swedish traditional retail market. We do see that we have growth in all other international channels and also from the D2C. So I think it's really an isolated challenge linked to that one. When it comes to the DTC part, it is still a small portion of that business, so it doesn't fully compensate yet for the full decline in the quarter of traditional retail. But of course, as we grow the international sales and the DTC channel, they will have a better effect on the overall sales long term.

Thank you.

We can also say, I mean, I think also linked to that, usually when you do changes linked to platforms, you have a bit of a hiccup when you go live. There is always a bit of child diseases and all that linked to where you go live. Now, what we have done now during the last nine months was that we have launched four new sites. So we learned a lot during those phases. So when we first did our first one, we had probably a bit more hiccup. And then in the later end, we have not had so many. The good part with Bostapeto was that it has started well for us, so we do see that it has a good increase. We're not calling it out as a 100% plus increase as Papelina, but it is going well for us.

Thank you. I was also wondering about the SG&A costs. I was surprised by... Let's see how to phrase this, how little negative leverage she got given the top line development. Was there any costs of a one-off nature in the comparable quarter or anything like that that might disturb the comparison?

Hi Benjamin, Karin here. Yes. As Johan said, we had some limited restructuring costs for Colin Sundy's quarter, but if you remember in the comparison quarter, we had restructuring cost of Papelina with the resignation of a managing director and move of the head office from Falun to Borås. Then I also need to remember to remind you that part of our operating expenses are driven by volumes and activities, which means that lower sales also to some extent limit the operating expenses.

All right, some restructuring costs. An office move, good. Final one for me then. You say you're gaining market share both in digital and traditional wallpaper in the Tapgat Sabrik segment. I was wondering what's your understanding of the digital print wallpaper market growth in the quarter and also perhaps what was the growth in the traditional wallpaper market?

Yeah, thank you. So when it comes to traditional and digital printing, digital printing is still very low compared to traditional printing. At the same time, it has higher increase of growth than we see on the traditional printing. So I think that's the dynamic behind those two. And I think looking at digital printing across the globe, that is a printing technique that is starting to grow very well for a lot of players out there. But it's still a very small portion of our business.

And any views on the market growth?

We don't share the numbers in particular, the split on digital versus traditional, but overall the growth in the quarter for Borås Tapeten Fabrik was 16%, right?

Alright, so it's more of a, like, the market can impossibly grow this fast, so we must have taken market share. That's sort of the thinking.

Yes, I mean, we see that we are growing both with existing and new customer, which means that if we attract more customers to come into us, that means that we are gaining market share. If we see that our existing customers are growing, then we see that we're taking market share on that one as well. So yes, we are gaining market share in the manufacturing segment.

Perfect. That's all I had for now. Thank you very much.

Thank you.

So we have no more people in the phone queue. We have a couple of questions here. First one, Johan, in your written Q2 report, you write extensively around traditional retail channel. Can you give an indication of what percentage of sales that comes from this channel?

So we're not sharing in the numbers linked to different channels for our different brands. What we can do say is that a big portion of Borås Tapetos business comes from traditional retail. We are market leader within the channel. We have a good share within the business and very good relationship with our clients. Although we see that that particular part of the market is and has been under pressure, it's not only linked to wallpaper sales. I think that goes to several different industries. And I think what we are doing in parallel is that we're, of course, making sure that we get back to growth. At the same time, we are putting a lot of focus on our focus areas linked to internationalization. link to the DTC channel and link to the hospitality channel. They are still a bit too small in the quarter to compensate for the decline that we have in retail, but as they grow, they will take a bigger portion of our sales.

Second question here is about Wall and Deco, which you elaborated a bit on with Benjamin. But how confident are you that this is not loss of market share and how relevant are international sales for Wall & Deco, Johan?

So I think if we look at Wall & Deco, it is a premium brand for us that has a very good positioning within Italy and globally. The majority of the business of Italian of the wall and echo business is in Italy, but we do have a great portion also that comes outside of Italy. We have a few big big markets such as the dark area is working well for us and we have a few other ones out there as well. What is also important to know with wall and echo is that we do have a lot of focus also on the hospitality channel so it's both mixed on if you divide it up in both geographies, Italy is a big portion and then you have retail within that and then you also have the hospitality channel which is spread across the globe. When it comes to the hospitality channel I think it's important to understand from that one that A lot of the projects are a bit longer lead times. Some projects can last for quite some time. Some are very quick, but some takes a bit of lead time, which is making it a bit harder to also track it completely. So sometimes we have You know, a hospitality project that actually come through retail and sometimes it comes through interior decorators and sometimes it comes from architectural firms and sometimes direct. So I think it's just a bit harder to just track it exactly what is what when it comes to the business. So that's how that is done. When it comes to the performance, I think it's clear for us that there is a bit of explanation linked to the market, but we don't really want to focus too much on what's happening in the market because Globe is very big. There is a lot of white space, not only linked to retail, but there are several different geographies where we are not performing well in. And I think That's why we have from a group level taken the actions that we need to speed up our commercial activities and make sure that we do it in a more structured and commercially driven way. So that's why we have allocated different resources linked to this to make sure that we turn this around.

And this was all questions. I hand back to Johan to say a final comment before we close the call.

Well, thank you very much. And the only thing I want to say then is thank you very much for this and wish everybody a good summer whenever that comes for people. Thank you very much.

Welcome to the Imbalance Group Q2 2026 report presentation. For the first part of the conference call, participants will be in listen-only mode. During the Q&A session, participants can ask questions by dialing pound key 5 on their telephone keypad. If you are listening via webcast, you can submit written questions using the form below. Now I will hand over the conference to the speakers, President and CEO Johan Engrin and CFO Karen Lydian. Please go ahead.

Thank you very much and welcome to Ambulance Group's interim report for the second quarter of 2026. My name is Johan Angren and together with me today is Karin Lidén who is our CFO. Today, we'll start by going through the development in the second quarter, and then we will follow up sales performance across our brands and our strategic focus areas. And since we are a group of several brands, we will then look at some of the brand and product highlights for the quarter. And after that, Karin will go through cash flow in more detail, and then we will end up with a summary. So let's start to look at the business and what we achieved in the second quarter of the year. Q2 was a challenging quarter where we delivered a net sales of 181 million Swedish krona, which is an organic sales decline of 5% and an additional percentage point in FX, which in total is a decline of 6%. This is, of course, something that we are not satisfied with. Worth noticing, although, is that last year's comparison numbers were inflated by a larger artscape refresh with one of our larger do-it-yourself customers in North America, which didn't happen this year, which affects the comparison numbers. Another thing that stood out in the quarter was Bråstapeten, which declined in the quarter, and here we have an isolated challenge linked to the Swedish traditional home market in retail, but where the rest of Nordic and all other international markets and channels grew. We are and we have historically been too largely exposed to the Swedish traditional retail market. As a result, even when we maintain our market share, softer demand in this channel has a direct impact on our sales development. We are not satisfied with the performance in the traditional retail channel but we are encouraged by the continued growth in both international markets and the direct-to-consumer channel for the brand. At the same time, these growth areas still represent the relatively small share of the brand's total sales to be able to fully compensate for the decline in the traditional retail channel in the quarter. Expanding our international presence and increasing our direct to consumer channel remains two of our key strategic priorities. We are therefore confident that we are focusing on the right areas and that our actions will strengthen the brand and support growth going forward. In the quarter, we continued to deliver double-digit growth for our manufacturing unit Båstad Petfabrik, and also Papelina grew double-digit driven by our strategic focus areas of internationalization and direct-to-consumer. As some of you might recall, Papelina was the brand that first launched our new DTC platform roughly a year ago in the summer of 2025, and this is also the brand where we now accelerate the fastest in the DTC channel. In fact, Papelina grew 130% in the channel in the quarter, We expect this positive development to continue and remain focused on building the brand both domestically and internationally. In the quarter, Jelena Ford joined as new managing director for Col & Son. This follows the change in leadership that I initiated in Q1 and during the quarter we have continued the restructuring of our sales channel. Under the previous leadership team, there was insufficient focus on international sales and on developing our other channels with hospitality and DTC. And this is now being addressed by the new management team with a clear focus on international expansion and channel diversification. As previously mentioned in our Q1 report, we took a few decisions that have a negative impact on sales in the short term. However, these decisions are necessary to improve the overall quality of the business, strengthen the brand and create a more sustainable growth over time. I'm confident that the new management team will deliver long term results and that the impact of these actions will be more limited in the second half of the year compared to the first half. If we continue to look at our gross margin development for the group, we improved the margin to 62.3, which is an increase of 0.4 percentage points compared to last year. One of the main drivers behind this development is our strategic focus area on increasing the share of direct to consumer sales that has a better gross margin than other channels. This margin is secretive for us also on an EBITDA level. However, we need to remember that DTC sales also means higher digital marketing costs and increased freight costs in relation to sales, which comes lower down in the P&F. In parallel, we're actively working with our product mix and introduction of new products and designs, which also supports the gross margin development. This is primarily driven by Borås Tapeto in the quarter, where we introduce trade-up alternatives in the portfolio to more premium products, which have a positive effect on gross margin. This is a core part of our strategy and will remain a priority going forward. As such, we expect continued development in our gross margin over time. These two positive drivers are partially offset by having a higher share of manufacturing sales, which we've said in earlier calls have a lower gross margin on average. We continue to invest in a limited number of strategic initiatives that are closely linked to our focus area with a clear emphasis on platforms and systems that enhance the consumer experience. In end of April, we launched our new direct-to-consumer platform for Borås Tapeto. So during the last nine months, we have implemented four new sites and are now live with four out of our five brands on a new platform. These new platforms sets the base for continued growth. And now we've also launched Borås Tapeta. We can start to spend more time on optimizing our flows and strengthen our capabilities through additional system and functionalities to further improve the consumer experience. Overall, these strategic investments combined with a volume decline and restructuring costs at Coal & Sun resulted in a lower EBITDA margin of 12.6% compared to 13.5% last year. At the same time, we strengthened our financial position during the quarter. Net debt in relation to EBITDA is now 0.7 versus last year when it was 0.9. And we improved our cash flow to 21 million Swedish krona, mainly driven by changes in working capital, which Karin will provide more details on shortly. If we then move on and look at the sales highlights in the quarter. As mentioned before, it was a challenging quarter, which we're not satisfied with, although the numbers are a bit deflated and driven by ArtScape. Looking at their first half year numbers for the brand, overall ArtScape delivered a solid Q1 with 10% increase organically, although it had a big currency impact in Q1. The currency effect is now more normalized, so the decline in the quarter is driven by the refresh, which last year happened in Q2. We are continuing our focus on sales diversification, and the DTC channel continued to accelerate in the quarter, although from low levels. Another important milestone during the quarter was the successful launch of a new ERP system with the brand. The implementation was completed without disrupting day-to-day operations, which is a good achievement for a lean organization. ERP projects are often viewed as back-office initiatives, but they are a critical neighbor for scalable growth. The new platform gives Artscape a stronger foundation for inventory management, order processing, financial reporting, and future integration with customers and partners. This is particularly important as Artscape grows its direct-to-consumer business and increases its operational complexity. A modern ERP platform helps ensure that the company can manage that growth efficiently and with improved visibility across the business with full EDI flows set up to strengthen the company's ability to work seamlessly with key customers, suppliers, and supporting the future expansion. As mentioned in the start of the call, Bråsta Peter, our largest brand, had a challenging quarter in the traditional retail market in Sweden, and the overall decline for the brand was 7% to 61 million Swedish kronor. The challenge here is isolated to the Swedish traditional retail, whilst the rest of Nordic, where specifically Norway stood out, and all other major international markets groups. As mentioned earlier, we are and have historically been too largely exposed to the Swedish traditional retail market, which we're actively working to offset with our strategic initiatives. During the quarter, we upgraded our direct to consumer platform, which created a stronger foundation for future growth in the channel. We also refined our marketing approach, placing greater emphasis on brand storytelling and adopting a more differentiated and holistic investment model across channels and touchpoints. As consumer acquisition costs continues to rise across many digital platforms, our focus is on improving the effectiveness of our marketing investment. We have started to see encouraging early results from these initiatives and believe they will continue to strengthen the brand, improve customer engagement and support future sales growth, which overall helps diversifying our sales between channels. Wall and Deco continue to face challenges in the quarter. The Italian home market is under pressure with consumer confidence among the lowest in Europe, creating a difficult environment for interior decorating brand. At the same time, traditional retail channel continues to face structural pressure with lower demand and reduced activity. While market conditions remain challenging in Italy, we also recognize the fact that our commercial execution has not been where it needs to be. As a result, we have increased the commercial focus on the business and allocated additional resources and capabilities from the group to strengthen execution, improve sales effectiveness and support future growth. As part of this effort, we are also reviewing and strengthening our international sales network, including targeted changes to our agent structure in selected markets to ensure better market coverage, higher commercial activity and closer alignment with our growth ambitions. Wall & Deco remains a highly differentiated premium brand with long-term potential, and our priority is now to improve commercial performance, increase market penetration, and ensure we capitalize more effectively on the opportunity we see across both existing and new customer segments. Papelina delivered another quarter with double-digit growth and grew by 27%, and we expect good development to continue for the brand. The growth is mainly coming from our strategic focus areas of direct-to-consumer, which is a channel that starts to perform very well for us, and as mentioned before, we grew 130% in the channel in the quarter. Papelina is the brand that has the highest share of online sales of our brands, and we expect this development to continue in the coming quarters since we're actively working on refining our platform with new features and more content. This will build an even stronger connection with consumers and builds loyalty and ultimately a more robust business model. We are gaining market share with the brand and are also continuing to expand more broadly internationally, where we in the quarter changed our distribution model in North America, which was launched in the end of April. This has started out well, and we have participated in a few fairs and will continue with this going forward, where the next big fair is already in the beginning of August in New York. This is also the brand where we hire new personnel in marketing and e-comm and brought in a new managing director during second half year of 2025. And the new team led by Henrik Andersson is performing well. So we expect that the growth will continue for the brand going forward both domestically and internationally. Borås Tapetsabrik reported an increase of 14% in the quarter. We are gaining market share in both digital and traditional printing driven by continued strong demand across our core segment. Growth is coming from both existing customers where we're deepening in our relationships and from new customers where we are expanding our reach. At the same time, we are putting significant efforts into product development. The focus here is on developing new materials and substrates, but also on broadening our product offering overall. This allows us to meet the wider range of consumer needs while also strengthening our brands portfolios with new and exciting products. Over time, these initiatives support the build out of a broader brand portfolio and creates a stronger foundation for continued growth across the group. If we move on to our strategic focus areas, these remain unchanged and they are working well for us. If we start off by focusing on the DTC channel, this is a channel that is strategically important for us as it delivers higher margins, it acts as a growth accelerator, and it enables a closer and more direct relationship with our consumers. More than 50% of our growth in the next years should come from the channel, and we see that all brands are delivering double-digit growth. Papelina, as I said before, is standing out in the quarter with 130% growth, and this gives us confidence that the investments we're making in both the consumer experience and digital capabilities are generating results. In end of April, Borås Tapeto also transitioned to the new platform, meaning four out of our five brands now operate on the same platform. While this creates operational efficiencies, the more important benefit is the opportunity to deliver a significantly improved consumer experience across our portfolio. Our focus is not only making it easier to shop, but on creating a more inspiring and engaging brand experience. We continue to invest in storytelling, richer content and enhanced product presentation and a more seamless customer journey from inspiration to purchase. At the same time, we are expanding our marketing mix and reducing reliance on individual channels by building a broader ecosystem of consumer touchpoints. As digital advertising costs continues to increase, the ability to engage consumers through multiple channels become increasingly important. Through stronger content creation, improved customer journeys, and a more diversified approach to marketing, we are creating a more relevant and engaging experience for consumers while strengthening the long-term economics of the brand. Ultimately, these investments are about building stronger consumer relationships, increasing engagement and conversion, and creating sustainable growth. Our second strategic focus area is to expand internationally. All our brands continue to focus on international markets, and in the quarter we deliver growth across all major export markets. In parallel, we are actively working to optimize our sales networks. This means that we are reviewing our current setup, and where needed, we are replacing selected distributors, retailers, and agents. The focus here is to ensure we have the right partners in place in each market, improving market coverage, strengthening customer relationships, and ultimately creating better conditions for sustainable growth over time for our brands. In the quarter, we changed the distribution model for Papalina in North America, a rather large intervention, I would say, which has had a great start, and we expect this to continue going forward with an increased focus on the market with both more agents and more presence on fairs across the country. We have also started a broader review of our distribution network for both Wall & Deco and Colon Sun, where we are making adjustments to have the right setup to deliver growth. The third focus area is strengthening our presence in the hospitality channel, which remains strategically important both as a growth driver and as a way to increase brand visibility and build long-term relationships with professional customers. The channel provides larger projects, recurring business and valuable reference installations that support growth across our brands and sales channels. During the period, we continue to strengthen the commercial organization with clear responsibilities and a dedicated resources focused on hospitality. We have also expanded and strengthen our network of agents and partners in key markets to increase our market presence and improve access to architects, designers and project stakeholders. At the same time, we have further developed our service offering, improving project support and creating a more professional and scalable approach throughout the customer journey. These initiatives strengthen our competitiveness and position us for continued growth within the hospitality segment. If we then turn and look at some of the brand-specific happenings in the quarter, we can start out with Boråsdapeto, where we, in the beginning of May, launched our first window film collection as a new product category, featuring a curated selection of some of our most popular wallpaper designs adapted for glass surfaces while maintaining the same design expression as our wallpapers have. Initial customer feedback has been highly encouraging with particular appreciation for the product's premium quality and that we can offer our wonderful designs as well in a new category for homes, hotels and offices around the world. WindowFilms provides privacy without compromising natural lights, making it an elegant and practical alternative to curtains or blinds. It's just a peel without adhesive and can easily reposition or remove whenever needed. Shown on the left is the Rosenvinge design, which is based on one of Boråsabettos most iconic heritage designs. The pattern here was recreated from an oldest known wallpaper in the Nordic region, dating back nearly 500 years and was originally discovered in the ceiling of a historic building in Malmö in the south part of Sweden. Today, this piece of wallpaper history has been reinterpreted as window film, bringing the pattern to glass surfaces while preserving its original character. On the two smaller images in the middle of the slide, we see two wallpaper murals, one called Blue Bell Magic, which is a hand-painted mural created for children's rooms, broadening the current offering for families. And we also see Dawn Forest from the Soft Blur Collection, which is designed to meet the growing demand for calm and harmonious interiors, combining hand-painted artistry with soft, timeless expressions. The design features delicate hand-painted watercolor foliage cascading across the wall. Moving on to Papelina, we continue to strengthen the brand awareness and stakeholder engagement through physical activations, industry collaborations and international design events. At three days of design in Copenhagen, Papelina hosted a pop-up presenting selected pieces from the autumn-winter collection in an inspiring Scandinavian setting. In parallel, Papelina participated in the Atlanta market, one of the leading home and lifestyle trade events in the US. And together, these activities strengthened our international presence and supported our continued growth in key markets. In the quarter, we also introduced a mini-drop featuring six new colorways of our iconic Vera pattern, building on one of Papelina's most recognized designs. Vera was also launched in a larger area rug format, expanding its application across a wider range of living environments, including dining areas, living spaces, and outdoor settings such as Pechos. By continuously evolving our existing icons, rather than replacing them, we strengthen long-term relevance and build on the heritage that has made Papelina a trusted and recognized brand. For Artscape, we launched three new window film designs on Artscape's website. And on the slide, you see two of them, the Metropolis and the Sunshine design. And we also in the quarter launched nine new designs of bird deflectors, expanding our offering from the original square design into different themes, such as flowers, birds, celestial themes and circles. Bird deflectors are designed to bring a sense of nature to your window and combines bird-friendly function with botanical beauty, creating a vibrant display that helps birds recognize glass more easily. And with that, I'll hand over to Karin for some more information about our improved cash flow.

Thank you, Johan. The operational cash flow was strong in the quarter. 21 million kronor compared to 16 million prior year despite a lower operating result. It's primarily the working capital development that has improved this year compared to last, and it's mainly due to three reasons. First, the largest impacts come from accounts receivables, which was reported at 93 million kronor The difference compared to last year is mainly timing. This year, the months and invoices were paid and received prior to end of quarter while we had an opposite situation last year. Secondly, We have built inventory, which ended at 160 million kronor, up 6 million from last quarter. This is a normal seasonal pattern where we build inventory before closing our factories for a couple of weeks during the vacation period. And we had a similar effect last year. Third, we have a negative effect of lower accounts payable. If you remember, in the end of first quarter, we reported that we built inventory to prepare for a change of raw material supplier in Brås Tapetfabrik. And these invoices have been paid in second quarter. Towards the second half of this year, we anticipate to come down to normal inventory levels again. During the quarter, we made a dividend of 1.5 Swedish kronor, an increase versus last year when we paid 1.25 kronor per share. In total, the dividend payment was 35 million kronor. Despite the increased dividend payment, the financial position remains strong and our net debt to EBITDA is 0.7 compared to 0.9 last year. And with that, I hand over back to Johan for a closing comment and outlook.

Thank you, Karin. So in summary, Q1 was a quarter which we're not satisfied with, and we saw a sales decline of 6%. Although majority of the decline was linked to last year comparison numbers for ArtScape, which included a refresh with one of our larger do-it-yourself customers. Papalina and Bostapetfabrik grew double-digit in the quarter, while the other brands had a weaker one. We continue to have a high exposure to the traditional retail market, which remains affected by challenging market conditions. To reduce this dependency, we are actively executing on our strategic priorities to further diversify both our sales channels and revenue mix. The investment in our growth areas are beginning to deliver results, where Papelina is leading the way with 130% growth in the DTC channel. And in the quarter, we also launched a new platform for Borås Tapeta. So now we have launched four out of our brands on the new platform, which provides a good foundation for future growth. In the quarter, we also had our new managing director, Jelena Ford, join the business for Col & Son, and she has had a good start in the first couple of months with the business. Looking ahead, we remain focused on our three strategic priorities to further diversify our sales and channel mix, accelerating direct-to-consumer sales, expanding internationally, and increasing our presence in the hospitality channel. We continue to see positive momentum in both B2C and international sales. This, combined with our portfolio of brands, enhanced digital platforms, and clear commercial priorities gives me confidence in our ability to deliver sustainable long-term growth. And with that, I'll hand over to questions.

Now we will open the Q&A session. If you would like to ask a question, please dial pound key 5 on your telephone keypad. If you would like to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Benjamin Walstedt from ABGSC. Please go ahead.

Good morning. Startinging off with Wall and Deco, you state in the CEO statement that the commercial execution was not strong enough and that group resources have been reallocated. Could you elaborate a bit on that? Where did you go wrong in commercial execution and what does the reallocation involve in terms of costs or headcount or anything like that? And when do you sort of expect this to materialize?

Thank you very much Benjamin. So with Wall & Echo we have had a bit of time now when we have seen that performance has not been in line where we want it to be. We have now taken a decision to proactively allocate different resources from a group level. This is resources that we have within the group today, so there is no additional cost linked to more people linked to this, but rather it's a reallocation of time spent with personnel to now focus more on Wall & Echo to make sure that we come back to our ambition levels. When it comes to commercial execution, I think it's multiple different factors that are included in what we do. Everything from how we talk to customers, to train people, to make sure that we are actively prioritizing the right way to do things. and being more out in the market and have more coverage in the market. So it's not an easy answer to just say this is the one thing that we do because it's multiple different factors that we are focusing on.

Perfect, thank you. I was wondering as well if you could give us an update on Colin Sun's trajectory into H2. You comment that you expect a more limited impact from the organizational changes in H2 and I was wondering if this is likely to be more of a Q3 thing, or if it's rather like a Q4 consideration. Thank you.

Yeah, thank you very much for that one. So when it comes to Colen Sun, what we did do in Q1 was that we actively took a few proactive commercial decisions that we knew would affect the sales in the short term, but they were absolutely the right ones to do in order to set us up for long-term development and position the brand in a better way. We believe that these will have limited impact in the second half of the year linked to the first one. So this is spread both between Q3 and Q4. So it's not like it's going to happen only in Q4, but we see a limited effect also from Q3 and Q4 onwards.

Perfect. Thank you. I was wondering as well, I believe a few quarters back you said you would update on the DTC share on a biannual basis, meaning every two quarters. I can't find any disclosure in this report. Did I miss it in the beginning of the presentation?

No, we have not disclosed. We disclosed last time we did when we did our Q4. We reported the amount of sales when it comes to e-com as percentage of our total branded sales, which at that time was 8%. We have not disclosed any numbers in this quarter. When it comes to the e-com numbers, as we talked several times, it is one of our biggest growth areas, and we believe that more than 50% of our growth In the next coming years, we come from the channel and we see that we are performing well for all brands. Papelina standing out with 130% increase, but we have more brands that are doing good within the channel as well. But we can also say that as we grow, we will share more numbers linked to this. It's still a small portion of the business, but as it grows and becomes a bigger part of our business, we'll share more numbers more regularly with you.

All right, so if you don't wish to give an update for Q2 LTM, then I take it. I was wondering if you could perhaps share an approximate growth rate for Boråsta-Peters DTC nonetheless. I understand it's early days, this was upgraded in April, but considering the strong Papilina growth, it could be informative, I believe.

I think when it comes to Båstadpeto, I think it's important to remember that when it comes to Båstadpeto, we have an isolated challenge linked to the Swedish traditional retail market. We do see that we have growth in all other international channels and also from the DTC. So I think it's really an isolated challenge linked to that one. When it comes to the DTC part, it is still a small portion of that business. So it doesn't fully compensate yet for the full decline in the quarter or traditional retail. But of course, as we grow the international sales and the DTC channel, they will have a better effect on the overall sales long term.

Thank you.

We can also say, I mean, I think also linked to that, usually when you do changes linked to platforms, you have a bit of a hiccup when you go live. There is always a bit of child diseases and all that linked to where you go live. Now, what we have done now during the last nine months was that we have launched four new sites. So we learned a lot during those phases. So when we first did our first one, we had probably a bit more hiccup. And then in the later end, we have not had so many. The good part with Boråsdapeto was that it had started well for us. So we do see that it's a good increase. We're not calling it out as 100% plus increase as Papelina, but it is going well for us.

Thank you. I was also wondering about the SG&A costs. I was surprised by... Let's see how to phrase this, how little negative leverage she got given the top line development. Was there any costs of a one-off nature in the comparable quarter or anything like that that might disturb the comparison?

Hi Benjamin, Karin here. As Johan said, we had some limited restructuring costs for ColonSunday's quarter, but if you remember in the comparison quarter, we had restructuring cost of Papelina with the resignation of a managing director and move of the head office from Falun to Borås. Then I also need to remember to remind you that part of our operating expenses are driven by volumes and activities, which means that lower sales also, to some extent, limit the operating expenses.

All right, some restructuring costs. An office move, good. Final one for me then. You say you're gaining market share both in digital and traditional wallpaper in the Tapgat Fabrik segment. I was wondering what's your understanding of the digital print wallpaper market growth in the quarter and also perhaps what was the growth in the traditional wallpaper market?

Yeah, thank you. So when it comes to traditional and digital printing, digital printing is still very low compared to traditional printing. At the same time, it has higher increase of growth than we see on the traditional printing. So I think that's the dynamic behind those two. And I think looking at digital printing across the globe, that is a printing technique that is starting to grow very well for a lot of players out there. But it's still a very small portion of our business.

And any views on the market growth?

We don't share the numbers in particular, the split on digital versus traditional, but overall the growth in the quarter for Borås Tapetfabrik was 16%, right?

Alright, so it's more of a, like, the market can impossibly grow this fast, so we must have taken market share. That's sort of the thinking.

Yes. I mean, we see that we are growing both with existing and new customer, which means that if we attract more customers to come into us, that means that we are gaining market share. If we see that our existing customers are growing, then we see that we're taking market share on that one as well. So yes, we are gaining market share in the manufacturing segment.

Perfect. That's all I had for now. Thank you very much.

Thank you.

So we have no more people in the phone queue. We have a couple of questions here. First one, Johan, in your written Q2 report, you write extensively around traditional retail channel. Can you give an indication of what percentage of sales that comes from this channel?

So we're not sharing in the numbers linked to different channels for our different brands. What we can do say is that a big portion of Borås Lapettos business comes from traditional retail. We are market leader within the channel. We have a good share within the business and very good relationship with our clients. Although we see that that particular part of the market is and has been under pressure, it's not only linked to wallpaper sales. I think that goes to several different industries. And I think what we are doing in parallel is that we're of course making sure that we get back to growth. At the same time, we are putting a lot of focus on our focus areas linked to internationalization. link to the DTC channel and link to the hospitality channel. They are still a bit too small in the quarter to compensate for the decline that we have in retail, but as they grow, they will take a bigger portion of our sales.

Second question here is about Wall and Deco, which you elaborated a bit on with Benjamin. But how confident are you that this is not loss of market share and how relevant are international sales for Wall & Deco, Johan?

So I think if we look at Wall & Deco, it is a premium brand for us that has a very good positioning within Italy and globally. The majority of the business of Italian of the wool and eco business is in Italy, but we do have a great portion also that comes outside of Italy. We have a few big big markets such as the Dach area is working well for us and we have a few other ones out there as well. What is also important to know with Wall & Deco is that we do have a lot of focus also on the hospitality channel so it's both mixed on if you divide it up in both geographies, Italy is a big portion and then you have retail within that and then you also have the hospitality channel which is spread across the globe. When it comes to the hospitality channel I think it's important to understand from that one that A lot of the projects are a bit longer lead times. Some projects can last for quite some time. Some are very quick, but some takes a bit of lead time, which is making it a bit harder to also track it completely. So sometimes we have You know, a hospitality project that actually comes through retail and sometimes it comes through interior decorators and sometimes it comes from architectural firms and sometimes direct. So I think it's just a bit harder to just track it exactly what is what when it comes to the business. So that's how that is done. When it comes to the performance, I think it's clear for us that there is a bit of explanation linked to the market, but we don't really want to focus too much on what's happening in the market because Globe is very big. There is a lot of white space, not only linked to retail, but there are several different geographies where we are not performing well in. And I think That's why we have from a group level taken the actions that we need to speed up our commercial activities and make sure that we do it in a more structured and commercially driven way. So that's why we have allocated the different resources linked to this to make sure that we turn this around.

And this was all questions. I hand back to Johan to say a final comment before we close the call.

Well, thank you very much. And the only thing I want to say then is thank you very much for this and wish everybody a good summer whenever that comes for people. Thank you very much.