FM Mattsson Mora Group AB (publ)

Varmt välkomna till FN Mattsson Groups presentation av andra kvartalet 2024. Vi som presenterar idag, det är i vanlig ordning jag, Fredrik Skarp, som är koncernchef och vd. Bredvid mig har jag min kollega Martin.

Hej, jag är Martin Gandersson, CFO för koncernen.

And those of you who are familiar with us will recognize this image that we are a company that focuses on mixers and bathroom products and kitchen products within six different product brands, which is what is visible to our customers. Six product brands that give us both a good breadth and good depth to process different customer segments and geographies. If we take a closer look at the development during Q2 2024, we can see that there has been a continued challenging market situation due to the conjecture we have, and which we have also had with us for a while. If we look at sales development in Q2 2024 compared to Q2 2023, We noticed that we decreased it by almost 3% and then we see some differences in our two different segments that we reported within the Nordic business that went down a little more. We decreased it by 4.5% while our business outside of the Nordic, called International, had a small decline of 0.6%. This lower sales also affects our EBITDA margin, which reached 11% during Q2 this year. If we compare that with Q2 2024, it is a small decline from 12.7%. But we can also note that we see an improved gross margin during the second quarter, which is a result of purchase effectiveness and a better product mix. But what also affects the margin in this quarter is that we have a higher sales cost, which is a result of us making active decisions to try to move forward our market positions. We also have slightly higher deductions from various investments we have made in recent years. What also feels good in a tough situation is that we continue to show a strong cash flow for the company. And of course, there are a lot of thoughts and challenges about the market situation and the connection that we have had with us for a while, where there has been a high interest rate and high inflation, which has affected the activity level among our customers. We continue to observe the behavior of our customers and it is a relatively weak demand. This applies to all our countries and our different customer segments that we work with. Then there are some differences between the brands and our geographies. We can see here in the second quarter that it was a bit tougher in our Nordic business, but overall it is still a tough market for us. Vi tycker också att vi har en förhoppning om att det ska kunna börja vända även om det är från låga nivåer. Det som händer kring ränteläget och inflationen är såklart positivt för hela branschen och vi hoppas att vi ska kunna börja se fler ljusglimtar här under andra halvåret men ändå så är vi inställda på ett fortsatt tufft konjunkturläge här under resterande 2024. And what we are working a lot with in this situation is to continue to see what growth opportunities there are and be good at capturing them with our various offers we have. But of course, we also need to continue to work with internal efficiencies to pair this situation with sales, so that these points are still at the top of the agenda when we enter the autumn. Then there is of course a lot to take with us, and a part of what we are talking about is that we have a somewhat improved gross margin, a strong cash flow, and I think that as a business and our brands we are well equipped for the future. We can note that all of our product brands are very well invested in i sin produktportfölj och ligger bra till utifrån den både kravbild och de olika behov vi ser ifrån. We work with different customer groups, both on the private and professional side, but it does not feel safe and good for the future that our brands and assortments are in good shape for the coming quarter and 2025. During this second quarter, we have also made two important launches for us to move forward our Our positioning towards customers and an important hotbed base that we have launched here and is very much aimed at the more private markets in the Benelux region, but also other selected international markets. A series that is very much about new design and a price picture that we think fits well from the customer groups we are targeting ourselves towards. We are also doing a good update and launching the next generation of our lead-free series Moremix, which is aimed at the Nordic professional market and retail. Two important product launches that we believe in for the future. It feels positive and exciting. Then I'll hand it over to Martin, who will go into more detail about how the figures looked during the quarter.

Thank you, Fredrik. Here you can see the figures for the second quarter, with turnover, a decrease with Circa 3%, men för att kompensera för det har vi haft högre bruttomarginal. Som Fredrik nämnde, det beror både på vår produktmix som varit mer gynnsam och att vi har jobbat med effektivt inköp för att få ner våra kostnader. Samtidigt har vi haft högre omkostnader som har orsakat något lägre ebitdalmarginal och Fredrik har förklarat att vi har haft A higher activity in sales, for example, several industry fairs that do not happen every year that we have had at the beginning of the year, both the first and second quarter. And also investments in research and development, with a number of larger launches that we have made over the past year. We are now writing off these costs, which gives us new opportunities to sell these products to customers as well. And if we look at the first half of the year, the picture is about the same. There is a 5% decrease in sales, but an improvement in the gross margin, and that is during the second quarter that we have achieved. And also, the same trend for both quarters and the same explanations that we have talked about. Men väldigt glädjande att se hur starkt kassaflödet har varit. Det har varit starkt kassaflöde under en lång period. En viss tipp under 2022 när vi byggde lager på grund av pandemin. alla utmaningar med leverantörer under den tiden men vi har successivt minskat lagnivån och nu är den på en nivå som vi tycker är are sustainable and sustainable for us to continue to be able to deliver to our customers with high delivery precision but not bind too much capital. So that contributes to this very positive cash flow. Och vi har en stark balansräkning med fortsatt hög soliditet och minskad netteskuld på grund av det högre cancer flow that we have achieved through the activity. And also because we have divided our allocation this year, so it takes place in two steps. The first was in May and the second in November. And then we reconnect to our goals. Yes, long-term goals that apply during a conjucture cycle. We have not achieved the goal of organic growth, which is 5%. We have been up there. Tidigare konjunkturcykeln, men nu är vi på minus 5,7 för året. Och ebitda-marginalen, som sagt, är något lägre än... Last year, we were about 10% against the target of 15%. Last year, we have divided out about 72% of the results after the tax, and our strong balance sheet and cash flow have given us the conditions to be able to maintain the allocation level that we have had earlier. Vi ser också att vår soliditet är klart över målet, som också är mycket glädjande. Nu lämnar jag över till Fredrik igen.

Ja, tack Martin. Vi fortsätter jobba verksamheten utifrån den strategiplan vi har jobbat med en längre stund. I feel that it gives us a clear direction of what we want to achieve. We have five strategic targets that we plan and try to deliver on in the business. It is of course very much linked to customer service, how our brands and our products should be. adapted to the different needs and wishes out there. And as I said, I think we stand very strong there and have invested in a proactive way during the last period here, so it feels very safe and good. Then, as I mentioned earlier, the whole sustainability issue and the work is incredibly important to us for several reasons, and we continue to work on it, closely linked to how our products meet and meet the requirements that exist in the market. This is an area that we, week after week, notice is getting higher and higher on the agenda with our various customers, both in Sweden and abroad. And it feels completely right and right to continue to focus on that, of course. Then, with digitalization, a lot happens there, both how we can improve customer experience with digital aids, which simplifies and improves our sales opportunities. but also how we can work internally to create efficiency and quality when we handle different amounts of data, which is actually just getting more and more. Then from a tough industry, normally, and now it is also a challenging connection, the work is to work with different forms of efficiency efforts, of course high on the agenda, It has done a very good job, I think, with storage optimization as an example to adjust the levels, but also, of course, to look at our working methods and what different things we take and spend our time and money on, and we will continue to need to have Highly on the agenda, of course, we think we always have, but now, especially in this current situation, we continue to move forward with the various initiatives. And then, fifth and most important, of course, we have employees who come to work every day and are willing to give their brain to fulfill the different goals and initiatives we want to run the business. Så det känns tryggt och stabilt att vi fortsätter jobba utifrån den planen och jag tycker den hjälper oss framåt i många olika frågor. Sedan om vi ska börja runda av själva andra kvartalet och sammanfatta det så är ju som sagt ett konjunkturläge som It has been a challenge for a longer period and we have noticed that in several different ways. The assessment right now is that it will continue to be a tough connective state. Hopefully maybe a little more light flashes here during the autumn and into 2025 with a calmer inflation and interest rates that are on their way down, which hopefully creates a little more investment value in our Both the professional market as well as the consumer market. I think it's important to highlight that we are in a industry and a niche where we assess that in all of our countries there is a great underlying need to constantly renovate and upgrade their bathrooms and kitchens, both for consumers and in more public contexts. and also the need for new buildings with homes and properties. So I think it's important to have that in mind and go through this period and make sure that we are in the right position when things start to go wrong. And I think that's the job that has been done to strengthen the various brands and product portfolios we have. And then I think that in a tough situation, we deliver relatively good margins. We are not really at the goal we set up, but I think there are reasons to explain that. So I think that we, after the circumstances, perform really well. It also feels nice to have a cash flow that is so stable and strong in these times. So we'll take that with us in the coming quarter here. And those were the pictures that Martin and I were going to share with us and talk about today. And there are opportunities to ask questions. And then there will be a small hand symbol on your screen that you can press on. If you want to ask a question, we will take the questions in turn and order how they come in. And I think we had a hand that stood up here just now.

So here you go. Yes, I think that was a question from Mats Liss. Welcome, Mats, to ask a question.

I have to unmute, as they say. But anyway. Hi, Mats Lys here, Kepler. A couple of questions. First, you talk about the gross margin being improved, and that is positive, of course. What effects does it have? Is it a mix of prices, or how should we look at that development in the future?

Ja, det är mix. Man kan säga de marknader där vi har the right margin has performed the strongest, which has contributed, but also that in the same market, with the same brands, we have made more effective purchases, so we have been able to reduce certain costs for products. som innebär såklart högre marginal och de är färre. For the future, it is something that we continue to work with, trying to optimize our purchase and strengthen the margin, have a little more premium offer, so we are carefully optimistic that we can Åtminstone behålla och förhoppningsvis höja marginalen ytterligare lite grann.

Tack. Jag tänker också andra halvåret är ju normalt lite lugnare. Semesterperiod här i tredje kvartalet och sen är det väl lite julhelger där i Q4. Hur ska man... Yes, it sounds a bit like it's a normal mousetrap season and then you hope a bit that regular interest rates give support to different businesses, so to speak. Is that how you see it?

Yes, I think so. We are a rather traditional industry and we have been through these different semester periods in Sweden and abroad. And it's rolling on according to the plan. We assess that the level of law with our larger customers, for example, is well balanced out of the demand that exists. It's about the same behavior. Then there is the connectivity situation, which is a worrying challenge for everyone. But I think it's more of a higher portion of optimism in terms of the fact that we have received a rate reduction and that it is being advertised a little more. This contributes to more optimism in investing here, so hopefully we can see a little higher activity here in the second half of the year. But at the same time, we have to remember that if you look at the construction real estate market, it is on quite low levels that we are talking about, but we hope that it will start to turn something up here in the second half of the year, but still continue to be a tough market.

Thank you. Then, yes, the storage levels you were talking about. The cash flow is, as usual, strong, and your storage level, is there more space there to handle, contribute to a better cash flow, or do you have a level that you are satisfied with now? It can't do much more.

Vi är nöjda med nivån som det ser ut just nu. Yes, we see disruptions in deliveries from Asia, which means long periods, and we have had to adapt during the last few months after them. So with the situation we have right now, we think we have a good level. På lång sikt ska vi jobba med det. Det är ett viktigt område och det kan vara vissa förbättringar vi kan göra där men inte något som vi förväntar oss inom det närmaste året. Vi är ganska nöjda med nivån just nu.

Ni har betalat ut tillägg till köperskilling på Aqualla Brassware. Kan du uppdatera lite hur mycket som är kvarstår i form av tilläggsköpsskillningar?

Vi har betalat den sista delen av tilläggsköpsskillningen för Koala i början av året eller under andra halvåret. Andra kvartalen menar jag. Och vi har inga andra transaktioner med tilläggsköperskilling som inte har betalats. Så ja, inga skulder för det.

Thank you. On the other hand, you have a very good starting position. The finances are strong. The market has been a bit tough for many others as well. Are there opportunities out there to grow the business? Or do you want to get things done first and then take the next step some time in the future?

There are definitely opportunities and we work actively with it. We think that we have a structure in the company and a way of working that definitely allows us to add more acquisitions and we work actively with it. We have not come to the point where we have att vi fått ihop det med någon men vi jobbar aktivt med frågan och som du säger Mats så har vi en stark finansiell ställning också som möjliggör det här så det är fortsatt högt på agendan framåt.

Okej, tack så mycket.

Ja, tack. Okej, har vi någon fler fråga så får ni gärna trycka på handknappen. Det verkar inte vara så, utan då får Martin och jag tacka för oss idag och att ni har lyssnat på vår presentation kring andra kvartalet. Vi tar tillfället också här och marknadsföra nästa kvartalsrapport som vi har och det är den 15 november. Så jag hoppas att vi ses då och fram till dess ta hand om er. Ha det så bra. Tack och hej.