Humble Group AB (publ)

Good morning, everyone, and welcome to Humble Group's presentation for the third quarter of 2025. Many thanks for taking the time and calling in on this presentation. My name is Noel Abdayem, and I'm the new acting CEO of Humble Group. With me today, I have the group CFO, Johan Lennarsson. Good morning, everyone. For those of you who don't know me from before, I am the founder of the Humble Co., which is part of the group. and I have been part of Humble for many, many years, not only in the management team, but also as part of the board. I know the group inside out, and I have had a long relationship with many of our entrepreneurs. To those of you calling in for the first time, welcome, and thank you for joining the Humble journey. There will be a Q&A at the end of this presentation. Let's dive into the quarter. The third quarter marks a clear step forward for Humble Group, where we can see resilience and a solid organic growth, with revenue reaching almost 2.1 billion SEK. We are delivering a strong cash flow generation, and I must say that I am proud to be part of a group that consistently delivers impressive growth numbers, and this quarter is not an exception. We've seen steady growth across all our key segments, which really demonstrates the strength of our business model, even in the challenging market environment. It shows that our diversified structure, our strong local teams and our focus on long term innovation, service and brand building are working. Despite the external headwinds, we continue to deliver solid results and we're building a stronger foundation for sustainable growth ahead. Profitability and cash flow remains key priorities for us, and we have taken some steps in the right direction. Our financial position continues to strengthen, but we are not where we want to be yet, and we are fully committed to improving further. Let's dig a bit deeper into the numbers. Over to you, Johan.

Thank you, Noel. Our net sales for the quarter amounted to nearly 2.1 billion SEK, And we can happily conclude that our last four months figures passed an internal milestone of 8 billion SEK this quarter. But the sales in the quarter corresponded to a total growth of 10% organically, and we had a negative currency impact of minus 3%. The underlying growth was mainly shown in our Nordic distribution segment where we had a strong demand for our customer offering. The segment grew their net sales by 86 million for the quarter. We also saw a strong increase in sales of our confectionary products in the future snacking segment who grew net sales by 40 million SEK and comprising a total growth of 17%. Looking at the sustainable care segment, the overall net sales development decreased by 1%. But please bear in mind that we had a negative currency impact here of minus 5%, meaning that the underlying organic growth for this segment was 4% for the quarter. Looking at quarter nutrition, we see that we have a a fine recovery from previously some tougher periods in the Q4 last year and especially Q1 this year. But we now start to see that orders is being a little bit more normalized and we look forward to what we can achieve in the fourth quarter. So looking at the profitability, our gross profit amounted to 636 million for the quarter, corresponding to an increase of 28 million versus last year. The gross margin declined, decreased to 30.4% from 31.2% in the same quarter last year. The overall margin development was mainly impacted by a negative currency impact of in total 22 million crowns for the quarter. And this comes from, we have a natural currency exposure in the quality nutrition segment where we have an exposure towards the Australian dollar, where we have a negative impact of 8 million crowns. And we also have a, another natural exposure in the sustainable care segment, where we have our largest group company, Solent, a UK-based retailer company, where we had a negative gross margin, gross profit impact of minus 12 crowns. Moreover, we also saw that we had a little bit unfavorable product mix in one of our strongest growing segments in order distribution. which led overall to a challenge to maintain the gross margin that we had in the previous quarter last year. But bottom line is we see this as a temporary mix effect and not a structural change in the underlying profitability of the group. If we continue looking at the underlying profitability, we adjusted EBITDA for the quarter amounted to 143 million crowns. corresponding to a beta margin of 6.8%. And we have previously invested heavily in sales and marketing in order to support our top line growth. And this has also shown results leading to increased sales. But this have also a negative contribution on the quarter with an increase in these investments of 22 millions. And to be clear, We're not satisfied with the overall margin and profitability development. And by saying that going forward, we shift our focus from top line investments to increase the margin expansion and trying to do our best in order to increase the profits from our subsidiaries, including also our hero brands. That being said, we will still invest in marketing, but we will increase our focus to ensure that we have a satisfying return from the investments that we're doing. Previously during the quarter, we've also communicated that we launched an efficiency program. We recognize the cost efficient cost provision of 52 million crowns during the quarter. This includes also an provision for severance pay to the former CEO of 12 million crowns. But our expectation is that this efficiency program will contribute to the profitability in the next coming months, next 12 months with around 80 million crowns.

Thank you, Johan. Let's talk a bit more about our segments. Starting off with future snacking, we continue to see a strong net sales growth driven by an increased demand from our customers and the profitability is developing well and in line with our expectations. Our arena confectionery business is performing strongly and our main focus ahead is to fully utilize all available production capacity. We believe that the global Swedish candy trend is here to stay, and we want to make sure that we capitalize on it. At Grans, which is one of our main production facilities for candy, we have finalized the lease agreement for the new factory. This is a really exciting project that will form the foundation for a significant increase in our candy production capacity, and we expect the new factory to be up and running by mid-2026. We have already started discussions to fill up the new capacity and it feels very promising. If we dig a bit into our brands in the segment, the True Company continues to expand its product range and the rollout of the True Dates is going according to plan, with strong traction in Scandinavia, Germany and many other European markets. We have also received our first listings in the US at the popular chain Sprouts and have a very interesting dialogue going on with some of the leading retailers in the US. I must say that I'm impressed of our ability to grow in the US without spending a fortune on marketing. Next up is our sustainable care segment where the net sales were in line with the previous quarter. We're finally starting to see a recovery in the UK, where sales have been somewhat slower in earlier quarters due to challenging market conditions. But we are now back in line with previous years, which feels great. Combined with the strong cost control, this has contributed positively to the overall profitability for the quarter, and we continue to drive product innovation to regain our growth. Our licensing business, where we partner up with international brands, is also growing well and continues to deliver solid and satisfying results. We've also seen new product launches from the Humble Co., where the product range has expanded and the new rebranding is driving increased consumer engagement. And finally, the partnership with Bablana, which we first announced at the Capital Markets Day about a year ago, has now turned into reality. We have already launched a few product lines within Oral Care and are happy to announce that our diapers have just hit the shelves at Dagab in Sweden, which includes popular retailers such as Hemshub, Willys and Citygross. I really think that it's fantastic that we managed to replace some of the world's strongest brands with our innovations. If we continue to the quality nutrition segment, we have delivered a strong underlying growth with net sales up 11% in the quarter. The gross profit was however negatively affected by currency movements and we did also increase our marketing spend during the period. Initiatives that have not yet shown full results and we're currently evaluating and adjusting these marketing investments moving forward. Our drink line has not yet reached its full potential, which is of course disappointing, but the goal is to have production fully up and running by early 2026. We're finalizing negotiations with many brands that want to move their production into humble. On a positive note, we continue to see strong momentum in the sports nutrition category, particularly within the production of bars and protein powders. finally we have the nordic distribution segment where we continue to see a strong demand and our work with solid cost control has developed the profitability and kept the margin stable looking ahead our company privab has signed a new warehouse contract which will enable us to expand even faster starting january 2026. for those of you who are not familiar with privab it is one of our largest distribution company with more than 2 billion second annual sales