JM AB (publ)

and analytical presentation regarding the first quarter of 2024. My name is Johan Skoglund, CEO at JM, and I will present the first part, then our CFO Tobias Bjuling will present the second part, and then we are ready to answer some questions. Welcome, let's get started. If we look at the first quarter and the number of employees, we have a turnover of almost 13 billion SEK, a balance balance of 16.3 billion SEK, a construction portfolio of 38,300 homes, and a number of employees of 2,131. We have reduced the number of employees in the past year to 240 people. The stock market value is 12.6 billion. If we look at the picture, we see that we have 20% of the turnover in Norway, 12% of the turnover in Finland and 68% of the turnover in Sweden. Half of that is in Stockholm and half in Riks. The revenues, as I said, went up to 3 billion compared to 4 earlier. We also see that the result has decreased to 160 million compared to 417 earlier, a margin of 5.3. And considering the market, I think it is still very good. I have been the CEO here for 22 years and worked at J.E. with 38 years and I have not seen such a slow market since the beginning of the 90s. It has been going on for a long time and has been tough for a few years. We can still generate results of 5.3%. The result for the tax decreased to 128 million SEK and the result per share was 1.20 SEK. The withdrawal of own capital rose to 2.3% compared to 16.8%. Weak cash flows from ongoing operations of minus 949 million SEK. According to IFRS, the income rose to 2.8 billion SEK. Sold properties, 480 compared to 479, but I'll get to that later. We have greatly improved sales for private and housing customers. Not so many startups. We have two startups in Stockholm with 145 properties. We have also reduced the number of homes in ongoing production to 5,068 compared to almost 7,000 earlier. This is due to the fact that we have a more resilient market, we have sold less and can not start as much. We have also added an incredibly nice building rights portfolio of 38,300 housing rights. We also see that there is an increased demand for activity, especially on the Swedish market. We have seen this since December 2023. As the Riksbank has announced that there will be an increase in inflation, we see that customers have been more willing to sign contracts early. This improved sales will enable us to have a greater number of production starts during the year. We will start more here before the end of the year. And as I mentioned earlier, we have started two projects in Stockholm during the first quarter. A little lower income, lower results and marginals for the entire company. This is due to the fact that we have made price reductions in a number of projects and a slightly higher cost level in many projects. But the percentage of sold and booked housing in relation to the ongoing production rose to 55%, where we had 54% in the year shift, where we often want a normal level somewhere between 60-65%. And on the 16th of April, JM's board of directors, Micke Åslund, the new CEO of VD & Co. from June 1st, 2024. The board has made a very good choice and Micke Åslund will be a very good CEO of JM in the future. If we look at Stockholm, we earn 116 million SEK Q1 2023, and now it's minus 47, so that's a clear decrease. The Riksdag also goes down to 17 million compared to 126. Norway is doing better, with a margin of 10.1% and an income of 17 million SEK. Finland has a margin of 6.7% and an income of 26 million SEK. And real estate development is still doing very well, generating 104 million SEK. This is a total of 160 million SEK and 5.3% in margin. If we look at the prices on the second-hand market, we see that they have still moved away a bit in Stockholm. We see that the prices have gone up mainly in Stockholm and actually throughout Sweden. However, we see that the prices have dropped somewhat in Uppsala, Västerås, Örebro. Otherwise, we still see an improvement, mainly in Stockholm. We see an improvement in Oslo as well, and a little more delay in Finland. The sales that I mentioned, there we can see that we sold 479 homes in Q1 2023, but the 218 homes, it was a rental rights project. So if we look, that is, a private person, a private customer, we see that there was a strongly improved sales. I will come to that later when I look at the different business segments. However, if we sell a little worse, we can't start as much, but we hope to be able to have many more starts during Q2, Q3, Q4, then during the rest of 2024. If we look at what we have started, we have partly started Ture Torn, which is located in central Sollentuna. We sell for an investment of 62,500. Of the 70, we have booked 29, so here we have a pre-booking rate of 41%. And I have to say that it is very good. Our business model is doing well. The willingness to sign early has increased, so 41% booked sells in Sollentuna Center for 62,500 per square meter. We have started one more project, Central Nacka, Vattentornet Södra, 75 homes. There was an impact level of 66,500. And here we have booked and written a pre-agreement on 45 of the 75. So here we have booked 60% before we start. It's almost as if you know in that project that they may not have been a little careful with the pricing. So in new projects we have a very high rate of booking. I mentioned that 55% of the bookings were in ongoing production, where we would like to be at 60-65% and we had 55% earlier, so the curve points a little upwards. We also feel that the market has taken a look here under Q1 when it comes to sales. If we look at the properties we have in production, we have topped about 6,000-7,000 properties in ongoing production, and now we have 5,068 properties in ongoing production, so it is a little lower than we normally have, but we still see that it is somewhat increasing compared to earlier. Less properties in ongoing production, the 5,000, but what is still good, if you compare it with During the change of year, we had sold 54% and 52% and booked 2%. Now, per last March, we have sold 51% and booked 4%. That's twice as much bookings compared to the previous quarter. What is also exciting is that in the unsold housing balance calculation, when we had 235 apartments per year shift, and now we only have 145. So we have been good at selling before the housing ends in the balance calculation. However, the number of unsold homes in the final project has gone up from 308 to 397. This will be important because we will continue to have a good impression when it comes to sales when we get closer. project at the end and when they go into the balance calculation. But still happy that it has gone down from 235 to 145 pieces. If we look at the different business segments in Stockholm, the revenues have decreased from 1.1 billion to 900 billion. Worse results, lower marginals, minus 47 and minus 5.3 percent. On the other hand, Q1 last year sold 51 homes and has now sold 168. The sales to private customers in Stockholm have increased by almost three times. There we also feel that Stockholm is falling out during this quarter and it will look better in Stockholm during the rest of the year. But lower income levels, lower margins, two starts as I mentioned in Nacka and Sollentuna. We continue to see that the supply of newly produced homes is very low. And the customer's willingness to sign a contract has increased early. We have also acquired 220 buildings in Sollentuna center, where we started 70 of them. So the hope is that the market has changed and it will continue to look better in Stockholm. If we then look at the GDP, we see that the revenues decreased from 1.1 billion to 600 million. The result is 17 million compared to the 126, which is a low margin of 2.9%. This is also very exciting when it comes to sales. In Q1 last year we sold 113 homes and now we have sold 172. So this is sales up 60%. But in general, a slightly lower income level and lower margin. We have sold well, but there were no starts in the quarter. We also see that the supply of newly produced housing is low, with exceptions for Gothenburg. We also see that the willingness to sign early in the project has increased since Q4 last year. Norway, where the revenues increased from 632 to 690, better results, also 70 million and marginals of 10.1%. I think that during all the years I have worked, it was the first time that the best marginals in Norway were compared to other countries and business segments. Sold 62, rented compared to the 77. Prices have gone up in Norway by almost 5%, but we also see a good margin and a stable income level. We have also sold some land, pre-developed land, for housing projects in the Oslo area. We continue to see sales of newly produced housing low, but demand for our housing has increased. The sales that I mentioned is at a level with earlier this year and cash flows are charged by investments in this market that has been sold, which will give cash flows during the second quarter. But Norway is a stable market with increasing prices, but it will still be a challenge, not the current trend in Norway, but stability. Finland has decreased revenues from 439 to 388 million, slightly lower results compared to the year before. But still a good margin of 6.7%. We have sold well, we sold 20 homes in the previous year and sold 78. But then we have also sold 50 homes to JV, MLNJM and an external investor. There is still a low number of transactions on the market. We have no starters, but we will have starters in Q2 here in Finland. So I think Finland is still stable, but quite challenging, and we will mainly run project investors in Finland during the year. Very strong results in real estate development, the 104 million compared to 104 earlier, but we also see that there were reduced revenues due to the sale of the rental price project quarter 8, which was carried out Q1 2023. We also see that the result is at a level with previous years and it is also due to index regulation on the purchase difference in the ongoing office project K1. We also have production in three rental rights projects, Dyrverskulle, Igelsta, Södertälje and Flora in Gärfälla. But as you also saw, we have sold Dyrverskulle to external investors after the end of the quarter. It also feels good to be able to sell it with a small result of 3 million, Dyrverskulle, which we sold here now, sent a press release yesterday. Byggrättsportföljen fortsatt väldigt fin och minskat lite i Stockholm men där har vi 13 700 byggrätter, Malmö Lund 3800, Göteborg 3600, Uppsala 4300, något färre i Norge 6200 och något lägre i Finland 6700. Vi har fortsatt varit ganska försiktiga med att förvärva mark under den här perioden. Vi har förvärvat mark i Sollentuna. Det är ett projekt där vi kan förvärva och samtidigt starta samtidigt och det har haft bra as I mentioned at the beginning, with the first stage. I'm done with the first part, so I'll hand over to Tobias.

with investments in land, so we have limited new acquisitions. But we also have very few start-ups in the quarter, so the balance of export assets is in line with what we had at the beginning of the quarter. We have 22,700 building rights in the balance sheet. And given that we have as few starts as we have now, it gives us a high recovery time. But that does not mean that we think we have overinvested in our land, but when the starts start, we will soon see that we are back at a recovery time that is at a level with our value for 5-6 years. Johan mentioned it, it's a pleasure that we have reduced the number of unsold apartments in the balance sheet and both the number and the value have gone down. We have a positive cash flow from both the finished apartments in this quarter. Looking at the cash flow, there is a big difference to what it looked like in Q1 last year. You should remember that we received a good payment during the project, especially in property development during Q1 last year. This year, given that we have fewer startups and that we have not yet been paid for land sales in Norway, we have a high capital bond in the moving capital. The joy here is that we see a positive cash flow from net investments in housing rights associations. And that we still come out of the quarter with a positive cash flow. Our payment readiness is what we are focusing on right now. We have a solidity of 52%, which is very strong, so we still have a very strong balance sheet. The available liquidity is over 3 billion. But what you see in the quarter is that the cash has decreased thanks to the negative cash flow. We still have an unused RCEF of 2.4 billion SEK, and the total used RCEF is 2.6 billion SEK. When we look at the various result components in the housing business, we see that we have a lower processing and a lower cost-based effect compared to previous quarters. We get a positive evaluation effect in the quarter, I'll come back to that. And given that we have sold off so many of our pre-sold and unsold properties, we get a positive sales effect, which is also very pleasing. And we see that our prices are breaking on the market. When we break down the evaluation effects, you can see that we have a negative effect in Stockholm, and we have continued to make price adjustments in projects that are approaching completion. The joy is that we have positive evaluation effects in other business units, and land sales in Norway have a positive effect there. And that was actually my last picture, Johan.

I'll pass it back to you. Thank you. Can I say something about sustainability? We have made a decision to introduce climate-improved concrete with a 20% reduction in climate impact in our projects. And that means that we don't use cement as a binding agent, but instead have potash or other waste products from the industry. So it feels very good. It gives an effect of 3 kg of carbon dioxide per BTA. With more climate-improved concrete, we have also decided to install solar cells in all new production of Swedish rental rights projects that will generate 80-115,000 kW per year and project. On April 13, the EU has made a decision on the Energy Performance of Buildings Directive. which demands reduced energy consumption in new buildings. This means that there will be a new national legislation within two years, which means that we must have even lower energy consumption in our houses. But we have very low energy consumption in our houses, as we often notice in all of our homes, so it will not have much impact on us. We have also made a decision to have fossil-free workplaces. till 2026, och det kan jag säga, det har JM redan idag på alla våra arbetsplatser. Då har man mer elektrifierade maskiner, elektrifierade transporter, och så använder man HVO as fuel instead of diesel. Hydrated vegetable oil. We are already in place with those parts. We are not really in place, because we will see what the national legislation looks like, but it will probably require solar cells on all of our projects, not just on the rental rights from 2028. So it's good to put tougher requirements on sustainability, because it may be one of the more important issues in the future. As you know, we had the most satisfied customers in Norway in 2023, and the project that had the most satisfied customers was the project outside of Trondheim. It's fun that we ended up at Palplats in Sweden, so we continue to feel that we have a stronger market and many customers want to buy from us. As both me and Tobias mentioned, we still have a lot of nice buildings in attractive locations. We haven't been able to make any major purchases during this period. We see good long-term conditions. Boverket tror att vi behöver någonstans 60 000-70 000 bostäder till 2030. Jag kanske tror att det behövs 50 000-60 000. Förra året startade vi väl 25 000 bostäder. Jag tror att prognoserna för i år är 17 500. Så det kommer ju att vara få starter i år. Det kanske är tråkigt för många som behöver en ny bostad, men för oss på JM kan det ju vara bra eftersom vi har möjlighet att ta marknadsdelar under den här perioden. Sustainable social development, as I mentioned in the picture before, there will be new requirements from the EU and there will be tougher requirements when it comes to national legislation, and I also think the basics are very good. It feels like we are at the forefront of these issues, so this will not mean great costs for JM, but it means that we can deliver an even better product to our customers. Vi har sett en avvaktande bostadsmarknad under en period, och det kanske den är fortfarande. Men vi ser ju också att vi har ju sålt drygt tre gånger bättre i Stockholm än vi gjorde kvartalet Q1 2023. Vi har sålt mycket bättre i Riks, 60 procent bättre. Och jag tror att det har bottnat ur nu, att det kommer se lite bättre ut under resten av året. I takt med att Riksbanken kommer sänka räntorna så kommer det också göra skillnad för våra kunder. Now time for Q&A's. Thank you.

may press star and 1 on their touchdown telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star followed by 1 at this time. One moment for the first question, please. And the first question comes from Markus Henriksen from AVG Sundal Collier. Please go ahead.

Thank you very much. Good morning. I have a question first about sales. You sold about 280 apartments in the quarter, and that's up both sequentially and year-over-year. I'm also trying to understand the trend in sales. Is it that April is better than March, and March is better than February, something that you can help us with there, and even if it differs between the regions?

There is actually no major difference between February and March. On the other hand, in April, if we have Easter and Easter holidays for a few weeks, then April can generally be a little worse than when we have Easter week. Otherwise, one can say that there has been a gradual improvement since December on all markets in Sweden.

Thank you for that. You raised a relatively large capital increase in the quarter, and you explained it very clearly, I think. But from what you know today and what you see, do you think that we will see an improvement during the year and that we can bring it back and affect the net debt positively? And then also a question on the size of the net debt. What are you actually comfortable with? Now it's at 2.7 billion. You had a net cash for a year ago. How do you think about that?

When it comes to Rødeskapitalbindningen, if we get started, we will get a positive cash flow from that. If we get our sales up and can start more, it will have a positive effect on the cash flow. We also have payments from driver's debt that will come in the second quarter, and also the land we have sold in Norway will come in the second quarter. Vårt stora kontorsprojekt har en lite baktung betalningsplan, så det finns positiva signaler på kassaflödet. Vad är det för svar på din fråga?

Yes, och bara en uppföljning på K1. Förväntar ni er en successiv ökning här nu under resten av året, eller är det sannolikt med en större summa i Q1 2025?

Yes, we see that we will get a higher payment at the end of this year.

Perfect, thank you. The last question, the competition is at 2,100 starters for 2024, compared to 1,600 last year. What are your thoughts on the potential starters for this year? And how do you respond to the IRIS rights project relative to the housing rights project?

As for the start, as you mentioned, we started 1,600 homes in 2023 and we plan to start more homes in 2024 than we did in the previous year. There will be a mixture of ownership rights, rental rights and housing rights. We will try to start another rental rights project in Sweden and a few in Finland during this period. We are probably positive for both Sweden and Norway, maybe a little more challenging Finland, but if you look Å på Q1 den här så har vi ökat försäljningen med 3,3 gånger i Stockholm och med 60 procent i Riks. Så man känner väl starkare att det har bottnat ur i Stockholm och kommer gradvis att se en förbättring i Stockholm. Men det kommer vi nog se i Riks också.

Jättebra, tack så mycket.

And the next question comes from Simon Mortensen from D&B.

Please go ahead. Thank you for that. I was wondering if you could tell us a little bit about the tax, which has a 38% tax in the quarter, if you can give some details on that.

Yes, it's the new rules for interest rate restrictions that affect the tax. When the interest rate is too high in relation to the moving profit, you can't withdraw the entire amount from the tax and it gets an effect in this quarter.

Thank you. And if you can comment on the disabled residents in the project and the geography of these, and give a description of how you think about these in connection with future starts.

If I understood the question correctly, it says unsold housing in the geography. No, but it's a mix. We have some unsold housing in Gothenburg, Uppsala, Örebro, Västerås, Stockholm. Nothing down in Skåne, or very little in Skåne, but between Sweden, Stockholm and Gothenburg.

And how is the situation with 397 unsold projects and future starts, will that be a challenge?

No, but we have sold well when it comes to when they go into the balance sheet and we will have pressure to sell these just under 400 homes as well. I think it will give the possibility that we will be able to start more homes this year than we did last year.

I was sitting on this stand yesterday. Is it possible to include GILD in the project and that you just book three months in the fall?

We did not release the GILD figures.

It was such a loud noise. Was it the sale at Dyrverskulle? Yes. No, but it gives a little positive result, 3 million, but we did a download on that property also per year shift. So then the download was in line with the value we get today.

Okay, thank you, that was mine.

The next question comes from Erik Granström from Kanji, please go ahead.

Thank you very much, and good afternoon. I would like to start by thanking you, Johan, for this 86th report, but also for the other 85 reports. Maybe especially the earlier 80 reports that we have had the pleasure of following. But with that, I would like to ask a few questions. The first one was about the supply. How would you say that this sale that you are reporting now in Q1 stands against the finalizations that you have made? In other words, is it a high proportion of price-adjusted, finalized housing that has been sold in Q1, or is it above all housing in a very early stage that has been sold?

It's a mix, but we have sold away well from projects that we have made price adjustments in. I would say that a large part of it is from projects in our price adjustments. But it is also good to meet these two projects, Ture Torn and Vattentornet Södra.

Okay, and how do you assess the profitability in the projects you sell now in early stages that have started relatively recently compared to, for example, your target that you have had before? Can you say something about how you see that profitability in today's market?

No, but I would say that it's an okay margin for when we start. It might be a little worse than what we started three years ago, but it's still good.

Okay, thank you very much. And then I thought I'd come in a little bit on property development again. K1 is of course a very large part, if I understood it correctly, of the results that You report, but it's not easy to follow this. Last year, you were at about the same level in Q1 as you are this year. And then Q2, Q3 and Q4 were quite low. To now return again. How should we look at this? Is there any seasonality? Or what can you help us a little with how you see the coming quarter or maybe for the whole year?

I'll start trying, Tobias. You'll see if I'm wrong. If you look at it, we don't have much seasonally emphasized on the K1 during the rest of the year. And we don't have that many other projects either that are going on. They are approaching completion. So it will be more of an even income on the K1 during 2024 than it was in previous years. Are you with me, Tobias? So much we can say.

Yes. Okay. Then I thought I'd take a look at this with how the financing is going today and how banks see the degree of booking, would you say, today compared to, if we can say, a more normal market if we go back a few years. Is there any difference in how banks see building credit today when it comes to the degree of booking compared to earlier?

For us, there hasn't really been any major difference. And we don't want to start projects with too low a booking rate. As I mentioned, we had 41% booked and 60% booked for the two projects we started. And then there is no question for the banks. On the other hand, one might say that banks are a bit more in the limelight now than they were before when it came to booking levels. We have noticed that this is mainly due to smaller companies and other competitors. A bit more in the limelight than before, but so far we have received credit for the projects we have started.

Okay, thank you very much. Those were my questions.

And the next question comes from Camille from Praxis Partners. Please go ahead.

Hi, I have two questions, if I may. Firstly, on cash flow, could you please provide color on why cash flow operations remain very weak for the last couple of quarters, despite a high number of finished products and little new parts? One, have you thought that you will generate a lot of cash in cash environment? And secondly, I would like to come back to the building rights valuation. In the annual report, you disclosed sensitivity tables, indicating that since the reality state prices started coming down by around 10% to 15%, you instead increased your selling prices by around 15%, which is quite the current market value of the land bank. Could you please provide rational data with the audit committee evaluated the big discrepancy between your internal assessment and the external evaluator assessment and whether you have challenged the external assessor on the assumptions they made in the report.

Let's start with the cash flow question then. In general, since we have started less units than in previous years, we have a lower cash flow from operations. Basically what we do is we finance new land with our own balance sheet and when we start the project we can transfer the land into production then we get financing from the land on production start. So that's why it's so important for us to keep the production start so up to keep a good cash flow in from operations. That's the general answer on the cash flow if you look at the last five or so quarters. And then regarding the land bank valuation, yes, we do an external valuation and yes, we question that valuation and we take a more prudent view in some cases than the external evaluator has done. So that's basically wherever we feel that the assessment of the variation of the land is lower than the external variation, we have taken the lower number. So that's how we've done the the the land evaluation and then i think you're referring to the annual report regarding the the risk assessment in in uh in the land and where we have a higher price um but that's not directly related that's just a risk analysis not directly related to the to the evaluation of the land so that's a different uh so that's comparing apples and pears um but um could you just explain because if i take your 2020 uh annual report

and look at census fee tables and assuming that the selling price actually declined, your market value of the land bank, given the assessment that you made back then, would be much lower. How come you needed to increase the assumption by 15% selling price to justify the value of the land bank?

Well, like I said, that's two different things. And if you read into the annual report, and I will be happy to discuss it after the call with you, but you see that that's a risk assessment and not directly related to the land evaluation. So the land evaluation that we have done and the market value with excess value and the land bank is, from our point of view, a prudent evaluation of the land bank.

Michael, thank you. And the next question comes from Jan Eerfeld from Kepler Scheffel. Please go ahead.

Okay, good morning. Then I would like to hear from you about the price reductions made in the project. What magnitude is it? Is it 5-10% or do you have any other figures there?

It's a little different, between 0 and 15% if you want to generalize a little.

Okay. And then you mention a land sale in Norway. Has it had any impact on Resultatet i Norge?

Ja, den ligger med i resultatet. Den har haft en positiv effekt i kvartalet. Kassaflödet kommer i Q2.

Kan ni säga någonting om hur stor vinsten från den är?

Nej, vi anger inte exakta belopp.

Men det är ett materiellt belopp i alla fall?

Absolut.

And then I would also like to hear about the index regulation you mentioned in the private development. Has it affected the profitability of the project?

Yes, we have given an index and we get better paid for that entrepreneur, so that has been positive for JM.

Okay, and then the last question here. It's not easy to know when we get back to 4000 homes.

The market gives political uncertainty with more. But we will see. There may not be a new fight, but there will be a slow recovery in the housing market. And it has already started, as I mentioned earlier. Probably in 2024 it will be a little better than 2023, then in 2025 it will be a little better than maybe in 2026. What should we say? Should we guess on Tobias? 2027, back to the 4,000, 2026? Yes, I don't think so. It's hard to promise anything. It's about how the market develops. We have a very nice portfolio and a lot of detailed plans. If the market recovers, we'll be able to get back to it eventually.

Do you have any limitations in the planning process? Can you start tomorrow, for example, with these projects?

Vi har ett projekt där vi väntar på bygglov i Mörby centrum i Danderyds kommun, där vi egentligen har kunder och allting klart, men där bygglovet har blivit överklagat. Så det är väl det enda myndighetsbeslut vi har. Men annars tittar man historiskt på JM så har vi ju For this year and next year, an unusually large number of projects with finished detailed plans. And now that it has been a tougher market, we put more effort into creating finished detailed plans so that we can start more when the market eventually turns around and becomes even better.

And the last question is how many starts can the organization have? How do you dimension the organization today?

Den bemanning vi har idag, vi har minskat med 240 som jag sa, men så skulle vi kunna starta någonstans 3 000-3 500 med dagens bemanning.

Okej, tack för det och jag tänkte passa på att tacka Johan också för ett antal fina år och många bra diskussioner vi haft. Tack för det.

Tackar.

As a reminder, anyone who wishes to ask a question may press star followed by one at this time. Seems there are no further questions at this time.

Thank you very much. I thank Tobias and I for the presentation and for all the good questions. I also want to thank all investors, analysts and all other listeners who have had Thank you for listening to us during all the years. This was my 86th report that was left. It has been a pleasure and very fun every time. I think I will miss it a bit in autumn, but Tobias and Micke will be here and they will make it even better. So thank you very much for all the years, everyone who has listened. Thank you for today. Goodbye.