ITAB Shop Concept AB (publ)

Welcome to ITAB Group Q2 Report 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, President and CEO Bjorn Borgman and CFO Andreas Helmarsson. Please go ahead.

Good morning, everyone. Thank you for joining and welcome to this Q2 call. We will color a little bit outside of the lines today since this is my first quarter. We will start with a short introduction and then my take on Q2. I will then leave for our CFO Andreas to give more context. This will clearly be the meaty part of the presentation. And then we're going to wrap up with a short summary of the first impressions and priority going forward after being with the business for the first two months. But let's get this show on the road. Introduction. Why did I get the board's confidence to lead the ITAB group? This is at least my take. I'm coming from a similar role with HL Display. I've been with that business for 11 years, the last six as CEO. The HL business is very similar to ITAB when it comes to its customer base, geographies, and also the business model running. So a lot of things for me are very similar in ITAB as they were in HL. The track record in HL was strong. We delivered the last eight years with consecutive years with profit growth. And then we've had a successful acquisition journey as well. of 12 add-on acquisitions. So I think that mirrors quite well what ITAB was looking for. Before this, I spent 12 years with a company called Rekid within the FMCD business. So delivering things to grocery retailers, primarily in Europe and North America. So in total, 23 years of grocery retail experience, which is a core business for ITAB. So I think this gives a little bit of background to why I'm here talking to you today. But let's focus on what we have in front of us. Q2, quarter of stability, probably a small step forward versus both last year and Q1. Looking at the earnings in line with last year, some strong development in Nordics, France good from a lube base last year, and also US good from a lube base in general, but a few shining stars. More challenging business in Italy, UK, and of course, the Middle East from a macro perspective. When it comes to EBITDA profitability, slight steps forward versus last year, both on EBITDA and profitability. Synergy realization from the HOI acquisition is generally on track and I'm quite confident that we will deliver on the synergies we set out to deliver. That is partly offset though by a little bit of volume decline and price adjustment delay. So clearly we had input price increases in the first half of the year and the delay between getting the price adjustment from our suppliers and reflecting with our customers we see now both in Q2 and we're going to see it partly in Q3 as well. But both from a top line perspective and a profitability perspective, this breaks a little bit the negative rolling 12 trend we have. So we are cautiously happy with that. Looking at the cash flow, this looks to be challenging, but this is really driven by the change in sales volume between Q1 and Q2 this year. On top of that, we had a fairly back-heavy Q2, which reflects exactly this cash flow difference. So looking at working capital, it's in line where we were last year. So not so much drama as it might look like on that aspect. So that's really the fly into the quarter. I'm going to leave for a CFO Andreas to try to put some more meat on the bones here. Andreas, take it away.

Thanks Bjorn. Good morning, everyone. And finally, I have to say H&Y acquisition is now fully annualized and we are only using formal numbers when going back to Q1 2025 or earlier in our historic comparisons. Zooming in on Q2, we do see stable sales and profit development, as mentioned. Adjusted a bit in Q2 at 180 million, see it relative to 175 in Q2 last year. Despite sales being down versus last year, and we experienced some cost inflation on the market, we have managed to sustain margins due to synergy execution. Net profit is significantly up from 21 million SEK last year to 61 million SEK this year, driven by lower restructuring costs, lower financial expenses and more optimized tax returns. Net debt has been lowered by 553 million SEK since last year, but is up since Q1 driven by higher sales impacting accounts receivables and working capital negatively, as mentioned by Bjorn. Looking at the quarterly development over time, sales in Q2 was stable and sales has been stable with Q1 as the exception impacting on rolling 12 figures. Although a majority of this effect and the decline in rolling 12 is related to currency and especially euro impact processing. Gross margin has improved slightly in Q2 and also a beta margin, despite the recent cost increases and lower volume into our factors. Net sales by customer group in Q2, adjusted for currency, show strength in our core segment's grocery and whole improvements. and this is a trend that is also confirmed when looking at market and retail statistics. Grocery is normally more stable and holding up better in times of market uncertainty and we do see the US-Iran conflict still causing some uncertainty in the market on cost inflation but also from an economic outlook perspective causing project commitments to be delayed. At the same time, efficiency and loss prevention solutions are driving growth in pockets for us, and we see strong interest into our offerings in both guides and gates and self-checkouts, where we see there are a pipeline of opportunities in cross-selling these solutions to legislation-wise also growing. We continue to see a mixed development in sales across our key markets. Northern Europe, with especially Nordics, sustains its strong performance from Q1. Southern Europe is now also up in Q2, which is great to see. Very strong developments from key markets such as Spain and France, despite Italy remaining negative across most customer groups, although we did see some positive signals in Q2. The French market is more due to local dynamics in the grocery market, where we've been able to capitalize on this due to local production capacity in customer relations, while Spain is more driven by recent wins in specialty retail, but also the key customers in the grocery segment are investing. UK, which is down, is a market where we're exposed to project fluctuations a bit more than other regions. And some of our key projects on this market has been pushed into Q3 and Q4. Looking at our EBITDA bridge quarter on quarter, we see the sales volume is impacting a slightly negative. that procurement synergies are mitigating recent cost increases on fry energy and select categories such as powder and SG&E synergies are pushing back labour inflation and having a positive impact on profits. Next wave or SG&E synergies are planned for execution during Q3 and Q4 later this year. We expect to see a larger impact from margin mix onwards as some of input cost inflation we have seen has not been possible to handle internally through rerouting or efficiencies and will result in price increases starting to have effect in Q2. Our operating cash flow for Q2 came in at minus 112 million while rolling 12 is positive at 914 million. This has impacted negatively in the quarter by working capital development and especially accounts receivable due to a sales increase of 272 million between Q1 and Q2. No growth in overdue. It's more similar to the seasonal pattern we normally see in this business. Although we expect working capital to be higher in Q2 and Q3 due to this seasonal pattern, we see that the strengths of our new group will help us to maintain a higher capital efficiency over time through procurement power, financial market attractiveness, and consolidation of inventory and supply chains. Net debt now at 2.4 billion, down 553 million since last year, but up from last quarter driven by working capital increase of 340 million, as just mentioned. In Q2, we estimate that we are 50% into the execution of our synergy program. The total synergy potential remains, where we have communicated 30 million euros per year on an annualized basis with full effect in 2027. Synergies come 20 million from cost efficiency and 10 million from commercial synergies. We have planned for the next waves of our SG&E and cost savings initiative to take effect during Q3 and Q4, further lowering our cost base in front of 2027. And the commercial pipeline for cost selling has also gained traction, where we see that order levels are growing in line with expectations for Q3 and Q4.

Thank you, Andreas. And I think the last thing you elaborated on that the order book for cross-selling synergies looks really strong for the back end of the year. And I think that's reassuring on the sales synergy side. If we step into a little bit of reflection on my first two months with the business. A few things. Clearly, stepping into these kind of roles is always intense. It's been a very intense onboarding, visiting all the major sites in Europe, meeting employees, customers, and visiting more than 200 stores together with our teams and together with customers. So really good base to understand the business. What is reassuring with What I find here, really engaged, experienced team across the group, an impressive local customer focus, and I think this is one of the key strengths of the group. Long customer relationships and great reviews from our key customers when I meet them. So this we should be reassured about. Also, the strong and future-proof strategic position, I think, gives me a lot of confidence. There are two pillars here of our strategic position I would like to stress. First one, and this is building on the legacy ITAB strengths, leading shop fitter with position of strength in retail tech to support stable grocery market. And there are a few things here that are important. Leading shop fitter from a size perspective, we are the biggest shop fitter in this space. From a position of strength, having a position of strength in retail tech and loss prevention is really important because in the future, grocery stores will contain more tech and loss prevention will continue to be or will increase as an investment area for grocery retailers. And then the grocery market to conclude, this is a stable market growing in line with GDP. So to have this position is really, really good from a business perspective. Secondly, coming in to a large extent through the HNY acquisition, we have a unique market coverage and design capabilities to support what I call here branded specialty retailers. Examples like Ralph Lauren, Pandora, Victoria's Secret. retailers with few stores per market running global execution. So clearly these customers wants to have international concept and design support and then local project management and installation delivery. And here the new ITAB group can offer this like no one else in the market. Competition here is usually local or fragmented. So this is a strategic pillar that we thanks to the HNY acquisition will continue to build into the future so I think here we should be really happy looking at opportunities there are significant opportunities to be better together as a group we have local sub-optimization in this business many of our markets are run to a large extent in isolation. And clearly this leads them to higher costs, but also low utilization given the project nature of the business we have. So big opportunities to bring this together by lowering our cost base and creating a more flexible cost structure to be able to support this fluctuating business much better. and then what I see when I've been out in the market that there is a potential to increase our focus on profitability and capital efficiency. We have quite a lot of volume focus locally to fill our local factories and if we can decouple this you can also make much better decisions and have much better focus on profitability and capital efficiency. So that's a little bit of the learnings I have for the first two months. Where does this leave us in the midterm and going into the second half of the year? Clearly, from a group perspective, we will have focus on profitability ahead of growth. This is across both the commercial operation, our supply chain, and also on a group level. There are Selected things we need to do in all these pieces to address profitability in a stronger way. And then I think linked to that, we need to lower the cost structure to mitigate this project fluctuation I spoke about, which will also give us the opportunity to challenge low profitability business we have in pockets in the group. If we do this at the same time as we leverage the mixed effect in line with our positional strength and strategy to develop retail tech loss prevention and service offer, which we need to drive hard, this will also strengthen our profitability. And lastly, to continue to have laser focus on delivering the 30 million of synergies from the acquisition. This should get us in the midterm close to our targeted 7% to 9% EBIT margin. That's the focus from a mid-term perspective. Clearly, as we do this, we need to continue with balanced investments to further strengthen our leading positions in retail tech and the global specialty retailers. So that's a little bit of an overview of the focus we have when we go into the fall and start to plan for 2027. But I'm going to wrap up here. Thank you for your attention, and I think from here we go to questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Eric Sandstedt from Kepler Shoebrew. Please go ahead.

Hi, I'm Erik Sandstedt with Kepler. Thanks for a very good and informative presentation. A few questions from my side. First Björn, you mentioned that you're emphasizing profitable customer projects in your prepared remarks here and I know you elaborated on it but where Do you see perhaps the biggest sort of upside over the coming one to two years? Should we think about it as a further penetration of retail technology or is it a stronger service offering, more selective approach to bidding for projects or anything else? I'm just a bit interested to hear more about that.

No, but I think we have a lot of capacity production capacity across the group. We are working hard to fill this capacity and by doing that we get into small fragmented projects that that is not very profitable and adds a lot of complexity into our business. If we can manage our cost structure in a different way. This would allow us either to win some of these projects at better profitability or choose to run other projects and exactly as you say, grow within retail tech and loss prevention, which is our strategic focus.

Great, thanks. And then you mentioned in the report that you see potential for more synergies rather than fewer relating to the H&Y acquisition. Where would that come from?

I think we spoke a little bit about the commercial synergies today that we see that the outlook for half two when it comes to cross-selling looks promising but then I think it's also natural when you make an acquisition like this that you know You put synergy targets upfront, but then now we are almost a year and a half into this. We learned a lot of things and clearly there is, you know, there will over time be more synergies identified as well, but we are not at that stage yet.

Understood. And to follow up on that, and this is subject to me understanding your comments correctly here, but you mentioned that the order book for cross-selling opportunities in the second half looks quite promising. At the same time you talk about customers remaining in a bit of a wait-and-see mode given the geopolitical backdrop. How should I reconcile those two comments? It's a cross-selling opportunity then specifically relating to the H&Y acquisition rather than a broad-based Outlook in terms of the order book.

That is correct. We wouldn't make this comment if it had a broad impact of the business. This is connected to synergies and clearly the sales synergies. And what we see is that our H&Y part of the business are more successful in selling the ITAB part of the assortment we look at for them to cross-sell than we... we had hoped for and especially looking into the second half of the year.

Great, thanks. And then just a couple of final questions more relating to the quarter here. Also just wanted to confirm that I got it correctly. But are you talking about the timing lag here between higher input cost and pricing adjustments? And if so, Q2 took more of a hit here but you look at it more favorably for the second half of the year ie the timing between pricing and inflation.

Yeah, and I think, you know, we don't like this, but this is the world we live in. The timing between when we get cost increases into our business and when we're able to reflect it with our customers, there is a lag here that is somewhere between three and six months. So clearly, you know, Q2 is hit by this. We will see some effect of this also in Q3. When we come to the end of Q3, we should have reflected this across our customer base.

Perfect, thanks. And then just finally, a bit specific perhaps, but in terms of the tax rate, it remains quite high. I know we've spoken about this on earlier calls, but could you just help us how to think about the path to normalization here?

Andreas? Sorry, I missed your question. Was it the tax rate?

Yeah, the tax rate remains quite high and we've spoken about the path to normalization in earlier calls. Just wanted to get a recap of that.

Historically, we have been around 30% and I think we are closer to that. Although we know that we are positively impacted by some of the profits we have in countries where we've been loss making historically and have and have tax assets. I think you should look at this optimisation on tax over a two-year period where We need to optimize our debt structure, and that takes a while. You shouldn't do that too quickly. So we're taking it step by step. We're taking a big step in 2026 versus 2025, which is visible in the numbers. So this is in line with our expectation and with some further improvement, which will remain for the coming 18 months.

Perfect. Thank you very much. That's all I had. Thanks.

Thank you. Thank you.

The next question comes from Carl Johan Bonnevir from DNB Carnegie. Please go ahead.

Yes. Good morning, Bjorn and Andreas. A couple of questions for me as well, please. Continue to do very well in the grocery segment. Any particular things going on there that is driving it or is it just a more natural as you describe it ongoing business with that kind of customer?

No, I think it's a strategic position of strength for the group. We have really strong products in retail tech and loss prevention that is primarily for grocery or near grocery customers. We expect to see growth in this space ahead of growth for the group going forward as well.

I noticed in the presentation pack you talked about The Grocery Retailers Increasing Their Scope of Sales Post-Euroshop. Maybe give us an update of what you really felt that you got out of Euroshop and how your position has maybe changed or strengthened after it.

I think Euroshop was a big investment and was fantastic. I hadn't joined the business, but to see how the new ITAB group came together and showed the leading position in the market, I think was really impressive. When it comes to results out of Euroshop, the sales process, for these things is quite long. It can be six months to a couple of years. So clearly, the short-term result is going to be limited. What you do is you kick off projects, then you do pilots, then you do small store testing, and then you get into rollouts where you really start to see the effect. But looking at where we are, we have a little bit more than 300 active opportunities coming out of Euroshop that we are tracking currently. When we assess them today, this is about €50 million of additional business. So clearly there's a strong focus from the group and hard work to convert this over the next 6 to 36 months, I would say, which is the realistic timing it takes to really get this into real scale rollouts.

Excellent. That sounds very encouraging. And when you look at those opportunities, is that what you described in the grocery segment that maybe the customers are looking to make use of your in more and more segments rather than maybe just one or two verticals? or is it new customers that you see behind it?

It's a little bit of both, but clearly we have Contact and business with almost every grocery customer in Europe. So it's not new business, but it's new areas in the store and especially I think in the checkout area where there's a lot of labor costs sitting and where a lot of the loss prevention work is done where we see significant interest. And this is clearly in line with our strategic focus as a group as well.

Excellent. I see you talk about measures for long-term profitability enhancement in UK, Italy, and Turkey in the report. I guess Turkey you have talked about before. To some extent, UK and Italy are new to this framework. What are you targeting, and is there something we should be worried about here?

No, not at all. I think this is a part of ongoing business, but clearly as we are bringing HNY into the business and as we made acquisitions in the past, how we consolidate businesses and how we address different markets, this is ongoing work always. Right now, we have low sales performance and impacting profitability in these two markets, but it's not primarily linked to short mid-term actions.

And I guess with HNY now you have really a point of strength if you combine Italy, France and Spain. Is that a huge opportunity for further optimization when you're looking at from a group structure or looking at maybe your sources of potential future cost synergies and these kind of things or are it mainly towards maybe optimizing in smaller markets where you don't really have the critical mass in the same way?

No, I think we need to address this on a group level. But I think in general, clearly to work better together between markets and making sure that we lower our cost base and be more flexible when it comes to where we produce and how we support projects will will have good impact both on our ability to scale and deliver, but also the profitability of the business.

And when you try to sum that up, it sounds to me that you are talking more about continuous improvement than maybe driving group-wide efficiency programs. Is that a good way of looking at it?

I think there are things we need to do on a group level to consolidate this, but my key focus in these businesses is that business needs to be run close to customers, and that's where we need to do a lot of this work.

Perfect. And Andreas, just a question on the working capital cash flow as well. Is it fair to assume the same kind of working capital cycle as we saw last year where you really had the big relief in Q4, so the cash flow in this year as well is going to be very much the same as Q4?

That's a reasonable assumption. This is a pattern we've seen across both Legislative and Legislation Y and our sector colleagues. So it's part of a seasonal pattern starting with the retail trade being very low in December and hence all the projects or many projects are peaking in September, October leaving us with a cash release in December.

And when you look And when you look at the working capital asset, what happened in say Q2, is there a lot of delayed projects in there maybe affected what's happening in the Middle East or something like that that is impacting it as well? Or is it just normal business as usual in and out?

Yeah, I would say if you look at our Q2 sales versus our Q2 sales, we're up 272 million across the quarters. And I think that's what's also reflected in the accounts receivables. If we assume in on inventory and accounts payables, We normally have a strong peak sales period in September and October, so there's a build-up of inventory prior to the vacation period in July and August, but that's currently paid for by by Account Payables so the real impact is in Account Receivables going from sales quarter on quarter and then what's normally happening in Q3 is that the prolonged sort of manufacturing cycle over the vacation period to be able to handle the project peaks in September October that results in a negative sort of impact on working capital for Q3 or at least normally in line with Q2 but that's what you see and then you have the release in Q4 but We're obviously working with sort of tools to try to mitigate these peaks and so over time.

Excellent. So basically an ongoing project rather than some sort of structural headwind hitting you.

That's correct.

Excellent. Thank you very much and all the best out there.

Thank you.

The next question comes from Anton Lund from SB1 Markets. Please go ahead.

Hey, guys. Can you hear me? Yeah. Very good. Congrats on your first report, Bjorn. Just one question for me. Southern Europe grew 6%, I believe, year over year. But you mentioned that production was impacted by the summer heat. Can you just tell us whether this had a material impact on sales in the quarter?

No, I think it's not a material impact. It's a small impact in June. But clearly, as we see, the heat wave in Southern Europe is continuing. And when we start to get above 40, 43 degrees, we find it difficult to run summer factories during daytime, especially where we have public coating capabilities, which are really 50 to 100 meter long ovens that creates unbearable working conditions that we need to take action. So I think it's a small impact to the quarter, but we are struggling partly with this also into July.

Okay, so this might have a big impact on Q3 numbers then?

I don't think it will have a massive impact, but you know,

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Yes, we have a couple of written questions. The first one is on the synergies. You've now realized 50% of the targeted synergies. What are you targeting by the year end 2026 in terms of percentage realization?

I think What we've said is that in Q4-27 we will have an annual impact of 30 million and we're currently in Q2-26. We're now halfway into the program and we're halfway into the synergy realization and I think that's the guidance I've been given historically as well that you can expect the synergy realization to come sort of linearly across this period of implementation and there's no reason for us to change that view currently.

Can you quantify the upside potential to the synergy chart given in your comment, Jørn, that you see more synergies ahead rather than fewer?

No, but I think this is linked to the sales aspect of things. It looks promising for the fall, but I think The sales synergies can come and go, but I think the cost synergies is what really stays with the business. And my comment is primarily linked to sales synergies in the back end of the year. And I think Andrea's comment is more linked to how we realize cost synergies up until the end of 2027.

Okay, and then the final question that we have gotten is regarding the timing aspect of cost inflation versions, price adjustments. I think you've answered it to some extent, but the follow-up there is, will the net effect be negative, or do you expect to turn net positive in Q3 and Q4?

No, I think we will gradually close this gap during Q3 and then it will be neutral for Q4. Then as alluded to, we need to have a stronger profitability focus and clearly pricing is an element of that.

Okay, thank you. Then no further written questions, so I'll hand over to you, John, for any final remarks.

Thank you everyone for your attention and we wish you a great summer and looking forward to have you back for Q3 reporting. Thank you very much.