H & M Hennes & Mauritz AB (publ)

My name is Josef Ahlberg and I'm Head of Investor Relations. We welcome you here today for our six month report for 2024. Those of you who are here in the room are of course welcome, but today we have also invited participants over webcast. So for the first time we will be webcasting this event today. So warm welcome. We will start with the presentation of the second quarter by our CEO, Daniel and our CFO, Adam Carlson. We will then answer your questions. After the press conference, there will be individual interviews with the media as usual. And with that, please, Daniel, welcome to the stage.

Josef, and good morning. Good morning to all of you here in this room, and also good morning to all of you joining us via the webcast today. In the second quarter, we take another step in showing that we are on the right track. We closed the second quarter with the strongest profit that we have seen in many years. We gradually improved our sales strength, we strengthened the gross margin, and we continued to have good cost control throughout the quarter. The spring and summer collections have been very well received by our customers, which can be seen in the improved sales trend throughout this quarter. We are seeing growth across all our customer groups and we see a positive trend across all our geographical regions. I am very proud of all our colleagues who have contributed to a very strong result in the second quarter. We have had full focus on executing on our plan to strengthen the H&M brand in the quarter, and I will return later on to talk more about that and more about the investments we were making to strengthen H&M. But first, I will hand over to you, Adam, to take us through the financial results for the second quarter.

Thank you very much, Daniel. Good morning, everyone. First, some comments on the sales development for the second quarter and the six months of 2024. Do we need some help with the We're good to go. Thank you. The H&M Group's net sales in the second quarter increased by 3% to 59.6 billion, and in local currencies increased by 3% compared with last year. Net sales in the six-month period increased by 1% to 113.3 billion SEK. And in local currencies, net sales were in line with previous years. sales development gradually strengthened during the second quarter and as daniel mentioned the spring and summer collections have been very well received which is reflected in the improved sales trend We have seen a positive trend in all regions during the quarter, enabled by our strong customer offer. And to highlight some of the markets, we have seen strong improvements. We have Central Europe with Germany. We have Eastern Europe with Poland that continues to grow. And in Asia, we have India, Korea, and Japan that are also growing rapidly. We also saw an improvement in the sales trend in North America. We're not fully where we want to be, but our plan for the US with improving the customer offer and optimizing the flow of garments is starting to give effect. And if we move away from sales and start to look at profit and gross profit and gross margin, Gross profit for the second quarter increased by 11% to 33.6 billion, and this corresponds to a gross margin of 56.3%. The improvement work throughout the supply chain and the cost and efficiency program and more normalized external factors that influences the purchasing costs resulted in a stronger gross margin in the second quarter of 2024. Selling an administrative cost, SG&A expenses developed well during the quarter with good cost control. For the six-month period, selling an administrative cost increased by 1% in SEC compared with the same period last year, and in local currencies, these expenses were in line with last year. And this is thanks to good operational cost control combined with the cost and efficiency program that was initiated during the end of 2022. And I would say despite then the inflationary pressures that we see, we were able to keep the cost base growth low throughout the quarter. The program's actions had already started to have an effect from the second quarter of 2023. And in the first half of 2024, the remaining parts of the cost and efficiency program were implemented and the cost of the program are now essentially taken. Operating profit for the second quarter increased to 7.1 billion, and if we adjust for the one-time cost associated with this program, it was 7.3 billion, corresponding to an operating margin of 12.2%. And if we zoom out and look at the trend for profitability, we are doing the quarter delivering on all components of our profit improvement plan. We see positive sales development. We see strong gross margins as well as good operational cost control that all had positive impacts on the operating profit. And as the picture shows, we are in a strong trend with the fourth consecutive quarter of improved margins on a rolling 12 basis. Moving on to stock, the stock in trade decreased by 1% to 38.5 billion and the currency adjusted the stock in trade increased by 2% compared to previous year. We see the composition of the stock to be very strong with a very high share of current season garment. The stock in trade represented 16.3% of rolling 12-month sales and a strong development despite the conscious decisions relative to last year by for more sales growth looking ahead. The investments in the supply chain and the integration of the sales channels continue to contribute, and with a higher share of nearshoring, a more flexible supply chain and more purchasing in season, we see that we are well positioned to continue to improve the stock to sales development. However, a reminder that we continue to plan for extended transport time due to the connection of the situation in the Red Sea. So overall, earnings improvements combined with the strong development we've had over the inventory levels led to a very strong cash flow generation for second quarter. And similar to the operating margin, we are in a very positive trend, increasing cash flow generation. For the second quarter, cash flow from operating activities amounted to 12.6 billion, an improvement of 5.1 billion compared to 2023. which continues to enable our increased investment ambition. For the six-month period, investment into the core business amounted to approximately $4 billion, and looking ahead, we see that our strong financial position enables us to further increase the pace of investments, and we foresee that the CapEx for the year will land within the range of $11 to $12 billion as previously communicated. This is much driven by the increased investment rate in our store portfolio. We have also, as a final remark, commented on the sales condition to reach the 10% margin for the year. And to give some context to that, I can give two examples of factors that we've seen that may impact us. We've had, during the second quarter, a spike of the cotton prices, our most important material. And also a reminder that, of course, the strengthening of the SEC compared to euro, us being a company with a higher share of cost in Swedish crowns versus selling, may have a negative impact on the translation effect and thereby the profits in Swedish crowns. So that was it for this. And thank you very much. And over to you, Danne.