Getinge AB (publ)

Thank you and good morning everyone and of course from our side thank you for joining today's call. As you've heard I have our CFO Anders Lexman with me and we are here to present to you the Axfoods Interim Report for the first quarter 2023. And in the investor section of our website you will find the presentation material for today's call and the recording as usual will also be made available after the presentation. But with that, let's get started, and please turn to page number two. Here you'll find the agenda for today. We will first have a brief market overview, and then I will go through our first quarter performance. After that, Anders will take you through our financials. And following Anders' part, I will talk about the progress we are making with the new and highly automated logistical center in Bolsta outside Stockholm, which of course is a part of our strategic agenda. And then the outlook for the year and a quick summary before we open up for questions. Now, please go to the next page, page number three. And let's now turn into the first quarter's development for the market as a whole and for Axford. So, again, turn page and we are now on page number four. The market growth amounted to 19%. 0.2% during the first quarter, entirely driven by higher prices, and consequently growth has been significantly weaker than the overall food price inflation. Like the rest of Europe, inflation in Sweden remained very high during the first quarter. As a result of external factors such as the effects of the pandemic, climate change and the war in Ukraine, the entire food supply chain has faced enormous cost increases over the past year. And in Sweden, we have been hit particularly hard also due to the weaker Swedish corona. According to Statistics Sweden, consumer prices on food increased approximately 20% in the first quarter compared to a year ago. Higher costs for food, along with higher costs for electricity and fuel, for example, are rising interest rates have created a challenging scenario for many households. And our focus is to protect consumer interest, and we are working hard to mitigate the cost pressure. But gladly, we have seen prices of certain raw materials declining for some time, and the pressure faced by many of our suppliers has begun to ease. And we are now working intensively together with our suppliers to ensure that this is also reflected in the prices to our consumers, and actually, which has already started to happen in certain categories, such as dairy, bread, and fruit and vegetables. Although many factors could still impact the situation, these are nevertheless positive signals. And our hope is that now food price inflation has peaked. With that, go to next page, page number five. And in this challenging time, it is clear that a growing number of consumers are choosing to shop with us, particularly at Willys. That is clear proof that what we do is appreciated, and this enabled us to further strengthen our position during the first quarter. In total, we grew approximately 20%, which was double the rate of the market. In e-commerce, our sales declined almost 5%, which was less than the market, where the decline rate was minus 14%. If we exclude the divested matatese, our sales actually increased by 2%. So in that, we are clearly outperforming both on the total market and online. Please take next page, page number six. And if we look at our sales, our consolidated net sales for Axfood grew 16% during the first quarter. This increase is attributable to high food price inflation, but also increased in new customers. The share of retail sales in e-commerce was 5.8%, which is clearly higher than the overall market. Now, I will go through sales by segments in more detail shortly, but before that, go to the next page and pay attention. Let's look into our operating profit. In total, group operating profit amounted to 695 million SEK and the operating margin was 3.6%. The reported operating profit includes item effect and comparability of minus 55 million SEK related to the restructuring of our logistical operations and the transition to the new logistical center in Bålsta. Also, I would like to remind us that the prior year period included, among certain costs, a capital gain of 221 million SEK for the divestment of mat.se. And all items affecting comparability for the first quarter and prior year comparisons are included in the DAGAP segment. The adjusted operating profit, which excludes items affecting comparability, increased approximately 15%. The increase was mainly the result of strong growth and effective cost control. However, earnings were negatively impacted by the fact that we have not fully passed on our suppliers' price increases to our consumers. We also had a higher market investment in both our store chains and in Dagab, which resulted in higher share of campaigns. Higher rental and electricity costs also had a negative impact on our profit. And as you may know, rents for the vast majority of our stores and warehouses were indexed up from January 1st, based on the inflation rate as of October last year, which is in line with the contractual terms, which are basically standard for the commercial leases. The adjusted operating margin ended up at 3.9%. Now, let's move on, and we are now on page number eight, and I would like to cover our segments, and we'll start with Villis. Net sales growth for Villis amounted to a full 24%, and like-for-like retail sales increased by almost 22%. The exceptionally strong development was attributable to pricing and volume growth from increased in-store customer traffic. The positive trend in cross-border shopping continued, and Eurocash sales increased. With that said, comps were tougher than before as the first quarter last year was only partly affected by the pandemic-related restrictions. Also, the first quarter is usually a seasonally weaker quarter for the border trade. Our operating profit increased 24% and amounted to 454 million, corresponding to an operating margin of 4.3%. The very strong growth in like-for-like sales compensated a lower gross margin as continued price increases by suppliers were not fully reflected in price of consumers. Also, higher share of campaigns as well as higher cost for rent and electricity negatively impacted the profit. Let's move on now to page number nine. And Vili's momentum is very strong, and it has a been clear for some time now that many of our customers are returning for their grocery shopping to Willys, as a growing number of consumers have come to appreciate the chain's offering over the past year. And on this slide, you see a chart with a number of new members in Willys Plus, our loyalty program, by month, rolling three month averages. New memberships picked up significantly from August last year, and went from around 25,000 a month to basically double that to around 50,000 or so. The total numbers of members now in the Villis Plus program is now approaching 3.4 million. And with the ambition to offer Sweden's cheapest bag of groceries and various types of loyalty-promoting activities, Villis is establishing a position as the obvious choice of food store for an increasingly broader consumer base. As a testament to its success, Willys has been the most recommended chain in the Swedish food retail market now for three years in a row. We're now leaving Willys, and let's go now to page number 10 and look into Hemship. Our net sales growth for Hemship amounted to 14%. In terms of retail sales growth, Hemship once again displayed a solid performance, slightly stronger than of the market, and continued to gain shares in the traditional grocery segment. In total, retail sales, which includes Tempo, increased by 11% and 9% on a like-for-like basis. The development in the larger stores in central urban locations was more favorable than development in stores in residential areas and in the Tempo chain. The operating profit for Hemshöp amounted to 71 million SEK and the operating margin was 3.9%. Similar to the situation for Willys, but of course at a different magnitude, the growth in like-for-like sales offset an overall negative impact on profits from inflating less than the suppliers, a higher share of campaigns and increased costs for rent and electricity. If we continue with Hemsjöp, and please turn to page number 11, and Hemsjöp continues to develop its concept, strengthening its sustainability profile and invest in an increased presence and modernization of existing stores. And these investments are clearly generating results for Hemsjöp, and it's clear that Hemsjöp is also attracting now more price-conscious consumers through some of their campaign activities, not at least Alte Brapris. Let me now comment on Snabgross, so we now move on to page 12. Snabgross delivered a strong start to the year. Sales increased 23% in total and 19% on a like-for-like basis. The development was mainly due to the recovery of the café and restaurant market after the pandemic, as well as food price inflation. And Snabgross has also continued to make progress with the Snabgross Club member concept. However, more challenging comps now and a weaker restaurant market resulted in a weaker volume trend, particularly towards the end of the quarter. Operating profit amounted to 30 million SEK, corresponding to an operating margin of 2.6%. The strong growth was offset by negative product mix effects, costs related to new stores and marketing for Snabb Growth Club, as well as higher costs related to rent and electricity. Please now turn to page number 13, and we'll look into Dagab. Net sales for Dagab increased 18% in the quarter, mainly attributable to the sharp increase in sales to the store chains. Dagab's result was impacted by cost-effecting comparability, which I mentioned before, and the operating profit amounted to 207 million SEK. The adjusted operating profit amounted to 261 million, and the adjusted operating margin was 1.5%. The higher profit was primarily driven by the strong growth, and productivity was good despite all the destructuring operations. However, the profit was impacted negatively by increased market investment to support DAGAS customers, and higher logistical costs as a result of lower delivery reliability, mainly due to high volatility in demand. So with that, I would like you to turn page, go to page number 14, and I will hand over the voice to Anders. So, Anders, please go ahead.

Thank you, Claes. And then we are on page 15, and let me begin with the cash flow for Q1. If we compare with last year, the operating cash flow was 948 million lower mainly due to inventory buildup ahead of Easter and also higher inventory due to the restructuring of the logistic operation with the new logistic center in Bålsta. We also had a couple of high invoices in Q4 related to automation investments, which was paid in the first quarter. The dividend paid out and the negative changes in working capital was supported by higher utilization of our credit facilities. At the end of Q1, we utilized approximately 1.5 billion SEK of our credit facilities compared to approximately 1.7 billion last Q1. Please turn page to page number 16. Looking at the financial position, the net debt has increased compared to Q1 last year due to higher leasehold debts connected to the new logistics center in Bålstan. Compared to year-end, the interest-bearing loans increased due to the dividend payout and the increase in net working capital. The equity ratio is fairly stable over the last couple of years, however, improving slightly from Q1 last year, which was negatively affected by the bridge financing of the Bergendal acquisition. Total investments excluding leasehold for the first quarter was in line with Q1 last year. However, the investment in the retail operation was higher, and at the same time, the investment in wholesale was lower. We have a high ambition of new store establishment this year, and we have already established four new group-owned stores in Q1. We also at the same time see a lower pace in investments related to the new logistics center in Bålsta. And then let's turn page to page number 17. As I mentioned before, the cash flow for Q1 was negatively affected by the development of the change in working capital, which also had an impact on the net working capital as percentage of group sales. A reversal of this effect is partly expected in the next quarters. Also, we continue to focus on payment terms on both accounts receivable and accounts payable. The capital employed has increased over the last years, mainly due to the recognition of leasehold debt. we have had a diluting effect on the return on capital employed. However, at the end of the first quarter, the capital employed was in line with year end 2022, and we don't expect to see any major further increase in the near future. And thereby, Claes, I hand over to you again.

Thank you, Anders, and we're now on page 18, but let's now right away go to page number 19. We have a couple of strategic focus areas, and here you can see them. And we have, as you know, a full agenda for 2023 to continue to develop Axfood and all our businesses. Today I will focus on one of these strategic focus areas, namely supply chains, so please go to page 20. In parallel with managing the prevailing inflationary environment and changing customer behavior, we are continuing our work to become even more efficient and reduce our costs. And all of you that is following the webcast, I hope now that you can see a video playing. With respect to the overall efficiency and reducing cost, we are now carrying out the largest logistic investments in the history of our group to improve the competitiveness of our own concepts and our wholesale customers and offer a more comprehensive and affordable assortment. And the most significant of our logistic investments is a new logistics center in Båstad, which is now in operation. And in early February, we made the first deliveries from Båstad of products from the dry assortment. This was of course a big milestone, one of many, and a fantastic achievement considering the complexity of this project. And right now, over 170 stores are receiving daily deliveries of a total of approximately 2,800 pallets of goods from Bålsta. And the deployment of Bålsta is a work in progress that will continue throughout 2023 and into 2024. with the addition of deliveries from the refrigerated and frozen range, as well as e-commerce, and a gradual increase in customers receiving deliveries. And we are now on page 21. Our outlook for the year is unchanged, and it covers investments, items affecting comparability, and new store establishment. And as for the latter, We are accelerating the pace compared to previous years. So far, we have opened up four new stores, all of which are Willys. And please turn now to page 22 and the last slide of today's presentation. Let me sum up. Food has probably never attracted as much attention as it is now attracting to the consumers in general, which we have a great understanding for. As a food retailer, it's therefore more important than ever before that we are able to ensure our offering is relevant and competitive. With our various concepts, we once again succeeded in gaining market shares and attracting even more customers during the quarter. It is our outstanding employees who make this possible every day, which I'm incredibly thankful for. We also continue to invest in our offering and efficiencies and made major strides in our long-term focus on logistics, which will ultimately allow us to become even more competitive. And the power and agility we have developed in recent years are competitive advantages. They allow us to create value for all our stakeholders, to maintain a strong financial position, and to continue investing to be a leader in affordable, good, and sustainable food. With that as a summary, I would like to hand over to the operator to open up the line for questions. Thank you.