H & M Hennes & Mauritz AB (publ)

Good morning and a warm welcome everyone. Today we present the fourth quarter and the full year results for 2025 for the H&M Group. My name is Josef Wahlberg and I'm Head of Investor Relations. Before I hand over to our CEO Daniel Hervére, let me briefly outline today's agenda. As per usual, Daniel will start with a high-level overview of the quarter and the full year. This will be followed by a more detailed financial review from our CFO, Adam Karlsson. Daniel will then highlight strategic progress, priorities going forward, and Adam will share a financial outlook. We will close the conference with a Q&A session where Daniel, Adam and I will be available to answer your questions. So with that, please welcome Daniel.

Good morning everyone, both those of you joining us here and those of you joining us online. Today I'm concluding my second year as CEO of the H&M Group and with that I feel confident that we are on the right track. I want to start by saying that the progress that we saw in the third quarter has continued into the fourth quarter across several key areas, even though the world around us continues to be uncertain. Sales in the quarter increased by 2% in local currencies. We increased our operating profit by 38% in the quarter, corresponding to a margin of 10.7% for the quarter. This increase was mainly due to a further strengthening of our customer offering, as well as maintained good cost control and an improved inventory efficiency. Looking at the full year 2025, it shows a solid progress across all our key areas and we continue to strengthen our foundation for future profitable growth. The sales trend was positive over the year as a whole and profitability strengthened during the second half. For the full year, sales increased by 2% in local currencies and our operating margin increased to 8.1%. Earnings per share increased by 5% during 2025. And according to the first preliminary figures, we see that we have reduced our CO2 emissions in scope 3 by 30% compared to the base year 2019. Overall, these results confirm that we are making a solid progress towards all our important long-term targets. I will now hand us back to you, Adam, and you will take us through more of the financial numbers, and then we come back to the strategic outlook for 2025.

Thank you, Daniel, and a warm welcome and good morning, everyone. As Daniel highlighted, we have a strong foundation to build on as we have made solid progress during the year. So let me take you through some of the key financial developments for the fourth quarter and the full year. In the fourth quarter, sales increased in local currencies by 2%, and for the full year, sales also increased by 2% in local currencies, confirming a stable underlying trend. We saw sales increasing across a vast majority of our regions in both Q4 and the full year. Online continued to perform well. The sales development should also be seen in the light of 4% fewer stores compared to last year. And we have now also concluded our closures of Monkeys physical stores. As we're showing a stable trend in the underlying sales performance, the appreciation of the Swedish crown has negatively affected the reported numbers versus last year, and with a currency translation effect as big as 7% during Q4. And given the current FX situation, this effect is expected to be even more negative in the first quarter of 2026. The positive gross margin trend that we saw in the third quarter continued into the fourth quarter with 130 basis points year-over-year improvements. After this strong second half year, we reached a gross margin of 53.4% for the full year. The majority of this development was supported by our improvement work in our supply chain, where the sourcing excellence work and the initiatives drives gross margin improvements. External factors affecting gross margins were positive in the quarter. In the fourth quarter, selling and administrative costs decreased by 3% in local currencies compared to the same quarter last year. As mentioned, cost control is and remains an important focus across the organization. And just to highlight a few of the key drivers behind our improved cost-based route 2025, I like to mention logistic efficiencies. We have continued ongoing renegotiations of lease agreements. We have strengthened our indirect sourcing and also found more effective and efficient ways to use our marketing resources. Operating profit increased significantly in the quarter and operating margin 424 was 10.7% compared to 7.4 during last year, an improvement of 330 basis points. For the full year, operating margin increased to 8.1% compared to 7.4% last year. And with a strong profitability improvement in the second half of 2025, the long-term rolling 12-month trend continues in a positive direction towards our long-term profit targets. This development comes as we sharpen focus on our core business as Daniel was outlining, strengthening product, our experience, our brand, and with a firm focus on cost control. Inventory productivity improved during the year, and we ended the quarter with a stock in trade in relation to sales of 15.5% compared to 17.2% last year. This improvement reflects the strengthened demand planning capabilities, more efficient buying and overall good stock management. The composition of the inventory is good. Looking at the long-term trends for gross margin and stock in trade relative to sales, we continue to strengthen both of these measures during 2025 and particularly in the second half. Looking at the graph, you see the dark gray line representing the quarterly gross margin and the light gray line representing the stock in trade versus sales development. And as you can see, the gross margin trajectory continues towards what we have previously discussed as normalized levels. Leverage has been maintained inside the H&M Group's net debt to EBITDA ratio, and that is one to two times. In the fourth quarter we proactively secured a long-term financing with an eight-year 500 million euro bond at attractive terms under our EMTM program and with that we have continued high degree of financial flexibility and liquidity buffer and that makes us able to navigate the volatility and set us up to be well positioned for capturing future opportunities. Cash conversion remains strong and it's helped by active working capital management where we have seen good progress. And in order to distribute surplus liquidity and thereby adjust the company's capital structure, a share buyback program was initiated in November and it was concluded by the 23rd of January. The Board of Directors are proposing a dividend increase to 7.1 SEK per share for 2025. And if approved by the AGM, it will be split into two installments in May and November, as in previous years. So before handing back to you, Daniel, to summarize, we strengthened our gross margin in the second half. We improved inventory productivity and we delivered strong cost control. Together, these factors supported a significant improvement in the profitability for the quarter and enabled a positive margin development for the full year. So with that, I'll hand back to you, Daniel. Thank you.