JM AB (publ)

Hello and welcome to the presentation of JM's annual report for the first nine months of the year. I am JM's CEO and my name is Mikael Åslund. With me is our CFO Tobias Bjurling. The revenues for the last 12 months are decreasing. They are now up to 12.5 billion. Sweden's business consists of 69% of the company, and 31% of the turnover comes from Finland and Norway. Unfortunately, we have continued to reduce our staff. Among other things, we have now, in quarter three, put a curfew on about 150 employees in production in Sweden. So now the staff strength goes up to 2010 people. The stock value was yesterday also 12.5 billion, just like the turnover. In summary, we see that revenues have decreased to 9.1 billion SEK from 10.4 last year. The turnover has decreased to 424 million SEK and the margin has decreased to 4.6%. The result per share is now up to 3 SEK compared to 8.9 SEK last year. And the loss of own capital is still low, now 0.6%. On this watchful market that we are working on, I am still positive that we are delivering a positive result. We also had a positive cash flow in quarter three due to an increased number of project launches, as well as a few sales of properties in Norway and Sweden. This also means that we are on a positive cash flow during the first three quarters of the year. As I said, sales are increasing. We are happy that in this waiting market, we are increasing to almost double the number of sold homes. In the first nine months, we have sold 2,204 homes. We have also been able to start production more, and we have started 1,504 homes, which is also almost double compared to previous years. Unfortunately, the number of homes in ongoing production is decreasing after projects that started a few years ago have been completed. Our fine building rights portfolio now amounts to 37,000 building rights. Even if sales in the third quarter and seasonally somewhat lower than in quarter two, it was significantly higher than in the same period in 2023. Both for private customers and investors, it has increased. For example, we have sold a rental project during this quarter. Lindblom in Uppsala with 134 homes. And in the quarter change now, we signed an agreement on the sale of a rental property containing 96 apartments in Igilstad in Södertälje. The good sale, as I said, has led to significantly more production starts in quarter three. The results and margins are, however, due to lower volumes in our ongoing production and higher cost levels combined with price reductions. However, I am very happy that while we start producing more housing, we continue to increase the proportion of sold and booked. Now we are up to 61% and therefore for the first time in a long time we are within the normal range of 60-65% booked and sold. The corresponding figure was 58% in quarter two and 55% in quarter one. If we look at the whole, we see that Norway and property development have delivered increased profits in the first nine months compared to previous years. In Finland, a little lower, while it is still more pressing in Stockholm and Riks. I will return in more detail to the different segments. If we look at the prices on the second market, or the background to them, it is positive that inflation is clearly decreasing in all of our markets. In Sweden and Finland, we also see that we are in a declining interest rate cycle. We have had the first interest rate drops and a clear expectation of declining interest rates in the future. In Norway, the interest rates are not expected to drop before 2025, unfortunately, but these clear signals that the interest rate peak has passed and that we can look forward to continuing to drop interest rates in the coming year create good conditions. Prices are clearly increasing in Norway, but they are a little more delaying in Sweden, and not least in Helsinki. The number of sold-out homes goes up to double compared to a year ago. We see that we are increasing in all business units, which is positive. If we look at the isolated third quarter, the same is true there. On production starts, we also see that we are up in the closest double compared to the previous year. We are up in 1,504 production starts so far this year. And if we go over there and look at the third quarter, we see that we are even more clearly have increased the number of starts compared to the third quarter last year. It is also a joy when we look at the production starts that we have increased the starts in Riks under quarter three. Bland våra starter så har vi startat ett projekt i Kungsliljan i Järvastaden. Vi har 89 bostäder i ett enligt mig, en av de bästa och trevligaste blandstäderna i närheten av Stockholm, Järvastaden. Vi har totalt byggt över 1000 bostäder i det här området. Järvastaden har också en fantastisk lekpark som heter Mullemäck. Så åk gärna dit om ni har barn. Det gjorde jag själv när mina barn var små, trots att jag bor söder om stan. Scenit is a project in Uppsala, in the central parts, with 46 homes that we also started here in quarter three. Even though it rained extremely much on the first spade, which I was on together with the mayor of the municipality, you really got the feeling that a project that lures you to take a bike or a walk to everything that makes Uppsala attractive. And this contributes to a sustainable living environment that our business idea also raises. Vi har också startat 60 bostäder i Örnafjället. Det ligger i Asköy i närheten av Bergen. På den här platsen har JM under många år uppfört området Stångafjället med närmare 400 bostäder. Ett mycket fint område med närhet till vatten som väldigt många områden har i Norge. This is a figure that we want to repeat, that we are happy about. We have 61% sold and booked homes in ongoing production. We are in a clear turnaround here, which is good. It is also a clear indication that the homes are attractive to consumers. As I said, we have fewer homes in ongoing production, but it plans out the number of homes in ongoing production from top levels at just over 7,000 to now just under 5,000. But if you read here or look at the figures in detail, we see that we are somewhat up with our own single homes since the latest report. We assess that the number of homes in ongoing production is on the way to be planned out. What we see this time is that the number of unsold housing in the balance sheet increases this quarter, but we are still on a balanced level. Now we are up to 221 homes. We are actively working to sell off the housing, as we have more homes in the final project. And even if the number of homes in ongoing production is lower than in previous years, we are, as I have mentioned, in a positive development in the level of booking. If we look at JN Bostad Stockholm, we see that the revenues, the result and the margin decrease compared to previous years and that the result and the margin are negative in the first half of the year due to price adjustments and high cost picture. But we see a weak positive trend in quarter three. We have clearly more sold and more production started and also a somewhat improved result in quarter three compared to the first half of the year. The demand on the second-hand market is very high, but the joy is that more businesses are closing and the demand for newly produced apartments is still low. What we also see this year is that customers' willingness to sign a contract early continues to increase, which indicates that the ongoing rent reductions and the forecast for the future give more positive expectations for the future for customers. We also see a continued improved cash flow in the quarter, since we have started a project in Solna and Nacka and thus booked out land, and we have also reduced investments in exploitation properties compared to previous years. During the quarter, we also sold a property in Frihamnen in Stockholm, which contributed positively to both results and cash flow. Within Bostad Riks, we also see lower revenues, results and margins due to price adjustments and high cost levels. Even at Riks, the supply on the second-hand market is high, while the supply of newly-produced apartments is low, with the exception of Gothenburg, which has somewhat deviating situations. The customer's willingness is also here, strong to sign a contract earlier or increasing. We therefore see an increase in sales. It is also a joy that we have started several projects in quarter three, including in Mölndal, Västerås and Uppsala. At the same time, we have acquired building rights in both Sigtuna and Göteborg within the country. In Norway, we see that revenues are decreasing, but at the same time, the movement result and margin increase compared to previous years. We have also increased sales and number of start-ups compared to last year. The cash flow is also improved in Norway, mainly due to lower investments in operating assets. We have also sold a property in Tönsberg with a positive result impact of SEK 7 million. And during the quarter we have managed to acquire about 350 building rights on the island of Hön in Askier, just southeast of Oslo. In Finland we have somewhat higher revenues than last year. is 1.2 billion in the first nine months compared to 1.1 in the previous year. This is due to more housing in ongoing production. The result is slightly lower than in the previous year due to price drops in projects that are close to completion. Even if the activity on the housing market in Helsinki is low, it will increase somewhat during the third quarter. Unfortunately, we had no start-ups this quarter, but in total the first nine months we had a rapidly increasing sales in Finland and also many start-ups. Here we have also acquired a project on 770 building rights in Nokia in Tammefors. In terms of real estate development, we have increased revenues and results compared to previous years, mainly due to our ongoing office project in Karlberg. The result of the first nine months went up to 240 million SEK and the margin was 19%. In the quarter, we signed a conditional agreement on the sale of Igilstad tree crowns in Södertälje. This gave a result of minus 16 million SEK, which burdens the third quarter. Vi har nu tre projekt i pågående produktion som kontinuerligt resultat- och intäktsredovisas. Precis som inom våra andra enheter förbättrades kassaflödet, bland annat på grund av frånträde av fastigheten kvarter 8 i Söderdalen i Järfälla. Vi har en fortsatt mycket fin portfölj med byggrätter i attraktiva lägen på 37 000 bostäder nu, något lägre än föregående år. Vi är restriktiva avseendeförvärv, men vi är också, som ni har hört några exempel på, redo att köpa. Då vi ser möjlighet att köpa till rätt pris. Då är det din tur, Tobias.

I'm going to start by showing the balance sheet for our export properties. As Mikael said, we are a bit more careful with new purchases. What came in in the quarter was Finland and a bit in Gothenburg and Stockholm. But it's a lower level than what we've had before. And as we increase our starts, we see that the balance has dropped somewhat. But we still have 22,100 builders in the balance sheet. Now the production starts have started a little bit, and then we see that the turnover has dropped now below 10 years. And we see that we are slowly moving towards our real value in five years. And it is still the case that we have a very strong and fine balance sheet where we can be selective in new acquisitions. A post that has increased in the quarter and that we have under very strong surveillance is of course the number of unsold housing in the balance account. Now we are up to 221 units and the equivalent of 948 million. It is a high level for JM. But even though we have this high volume, we have not had to move our RCFs and we still think that is a strength. And that is also an effect of that the customers buy late to the process, then it can happen that more and more homes have to get into the balance bill before we can sell them. But what is important for us here is that we see that we always have a change in the balance, that we get a movement, that they do not lie for very long and we see that the level of homes that lie longer than six months is still relatively low. So even if the level is high, we see no source of concern. The cash flow was happy this quarter. Den var upp på 418 miljoner från den löpande verksamheten och det är bland annat en effekt av att vi är försiktiga med våra markinvesteringar men också på att vi varit duktiga med finansieringen i våra projekt. Vi har fått igång mycket projekt och fått in ett positivt kassaflöde från våra projekt så att vi får ett starkt kassaflöde i kvartalet. This also means that we have an improved payment capacity. We have now not had to move our RCF or Czech loans and in total we have unused loans of 3 billion 150 million. This means that we have a stable and good financial situation. If we go over to the result calculation, you can clearly see the effect of having fewer homes in production, where the cost-based effect, which is how much we have processed the results from the processing, given the forecast we had at the beginning of the quarter, we see that the lower processing gives a lower cost-based effect. At the same time, we have an improvement in the effect of revaluation. We have certainly made price adjustments in this quarter, but not on the same level as before. We can see that we can meet those price adjustments with positive revaluations in other projects, which means that we have a total of 97 million results from the effect of revaluation. And with that, I would like to go back to Mikael to talk about sustainability.

Vårt arbete med hållbarhet fortgår såklart intensivt. Vi genomför nu exempelvis tester av klimatförbättrad betong på nivå 4. Det innebär betong med 40 procent reducerat koldioxidutsläpp. Testerna hittills är positiva och jag ser fram emot fortsatta tester under den kalla säsongen. We are also working to accelerate the industry's climate change by investing in innovative technology to reduce climate impact. This year, we have been part of a company that works with unique technology to adapt biochar to CO2-negative building materials. And we are now also, through our sustainability chief, represented in the delegation for circular economy. It is an advisory body for the Swedish government that aims to facilitate and drive the transition to a circular economy. If we summarize the current situation, We continue to work actively to have a really attractive customer service and deliver quality housing. This is reflected in satisfied customers, both end customers and investors, as well as acquisitions of ready-made rental properties from us. As I mentioned earlier, we have continued to have a very nice portfolio with many building rights in attractive conditions. And in our countries, I think that in the future we will continue to need new, quality housing. There is a small discussion about exactly how many we need, but at the same time it is built for few homes, which is sad for society. So we will need housing in our countries and in the places we are. At JM, as a company, we have competent and committed employees, as well as a good structure and processes. Together with our financial position, this creates very good conditions for us in the future. We are also actively working to contribute to sustainable social development, as I said. In addition to climate work, which is important, we also work with the working environment, which is completely central. We also want to contribute more housing to more citizens in our countries. In this way, we work with more sustainable social construction in all ways. We also want to contribute to speed up the government processes, where we still think it takes too long to get affordable land for new housing. In recent times, we have seen several positive signals on the housing market, in the form of declining inflation, we have interest rates in Finland and Sweden, and we have clear signals of several drops in the future, hopefully even drops in Norway by 2025. This will lead to increasing prices for housing, but at the same time there is a very large exchange rate on the second-hand market, and the purchasing power of consumers is still reduced since a few years ago. In addition, the challenge of the industry comes with a strongly increased cost picture. Therefore, I think that there is a long way to go to what can be considered a normalized housing market, with regard to both costs and revenues. But with that said, I am also happy that we have increased sales now during 2024, and I think that the market will gradually improve in the future. As Tobias mentioned, we have a well-balanced and balanced risk profile, and we have adapted and will continue to adapt to the current market situation. We are adapting to the personal strength, where we unfortunately have had to go down a little in strength. We believe in a gradual recovery of the markets, but the assessment is that further interest rates are required for more consumers to be able to buy newly produced housing. A strong structural capital and an industrial production process have led to a market-leading position, but we will not wait for the market to return to previous record levels. We need to handle this increasing cost picture in the industry that puts pressure on the margins for a longer time, and we will therefore now and further intensify our work by reducing lead times and costs in the project in order to speed up the recovery. Thank you for your attention. We are ready for questions.

We now start the Q&A session. Those who want to ask a question can press the arrow and 1 on their phone. Du kommer att höra en ton som bekräftar på att du har ställt dig i kö. Om du vill ta bort dig själv från frågekund kan du trycka på stjärna och två. Alla som har en fråga kan trycka stjärna och ett ny. Första frågan kommer från Erik Randström, Carnegie. Varsågod.

Tack så mycket. Jag hade några frågor så jag tänkte jag börjar med att ställa lite frågor kring möjligheterna för ytterligare startar framöver. Mikael, du lyfter ju fram att ni har ju startat mer nu här under Q3 och lyfter även fram investerarobjekt som ni har startat framförallt i Riks- och utlandet, tror du var i Norge. Kan du säga något om balansen mellan möjligheten att starta project in BRF form vis-à-vis starter till investerare och hur ni ser på den kalkylen?

Hej Erik. Vi ser positivt på starter framöver egentligen mot båda parter. Vi ser ju under året här att The housing market, in contrast to private customers, is on its way to start recovering. Customers are more willing to sign early steps, which means that we can start more projects that are housing rights projects, if we look at Sweden, or property ownership projects abroad and in Sweden. But we are also constantly looking at the opportunity to sell to investors if it is not sold well enough to private customers. But we see that it is good conditions to continue to start more homes, Erik.

Okay, and the target of 25 percent of the investment in your own capital, do you feel meets the mix of the housing for private customers and the housing for investors that you are starting now?

For the time being, we are fighting with an increased cost level, which will unfortunately take a period to weigh the results. This weighs the margins, so we are starting the project now at slightly lower margins than what is desirable in the long term. So we are not really there, but we are working to raise the margins in the future.

Is there any difference in cost? the base or the cost pressure in the different units? Is it that Sweden has experienced a higher inflation on the construction side than, for example, Norway and Finland? Or can you describe a little if there are any differences on the cost side?

There is a very high cost pressure in Norway, where we still have quite high inflation as well. But otherwise, you can't say that in general, there is a high cost pressure on all of our markets. So there are no essential differences. Norway may have slightly higher costs than Finland and Sweden.

Okay, thank you. And then finally, I just wanted to ask a question. If you were to make a assessment of De bostäder som ni har återfört i balansräkningen, ni var ju lite inne på att de har kommit upp, och här är ni ju naturligtvis, ni har ganska stor frihetsgrad att göra vad ni vill med dem. Ser ni behovet av att prisjustera de bostäderna som har tagits in i balansräkningen nu för att kunna sälja dem, eller känner ni att de har kommit in i balansräkningen med en prisbild som ni helt enkelt kan omsätta dem i marknaden?

We work continuously with price adjustments. We've often already done that when it comes into the balance sheet. But we'll keep an eye on it. If we see that what hasn't happened yet, that they're still there for a long time, then we might have to do more price adjustments. But right now we don't see that. We see that we're reversing the balance. Even in projects that have a lower sales rate, it still moves a little bit so that we don't have to do anything drastic. Right now, we don't see any dramatic price adjustment effects in those projects.

Okay, thank you. Those were my questions.

The next question is from Fredrik Stinsved, ABG.

Please go ahead. Thank you. Good afternoon. First, I have a question about the sales in Södertälje. When do you expect it to be approved by the municipal authority?

We expect the municipal authority to make a decision in October.

It's also a complaining process that has to run out. The municipal authority has approved it, if I'm not mistaken.

Then I have a question about property development. I think if we go back a quarter or two, you mentioned that the Q1 movement result would be representative of the profit statement in Carlberg, as if it had been so lumpy before. Now it looks like you have a movement result exclusive to this decline in sales in the quarter of about 60 million. against 100 million in Q1. Is there anything that has happened or changed? And how do you think we should think about the remaining quarter here, Q4-Q1?

Yes, it will never be exactly the same. It also has a lot to do with the processing in the project, which is not exactly the same. But we still see that the project for Q1 will end, in all essence, in Q4. So we will continue to get good results from that project.

Okay, but the level from Q1, as I think you said, the Q1 conference call, that it would be representative, that is no longer representative? Or is there something that has changed? Or is it just the processing per quarter?

Yes, it has a little more to do with processing issues.

Alright, then I thought I would follow up on the start. I know that you mentioned it already during the presentation and in a previous question, but you have previously said that you will start more homes this year than you did last year. Now we are not so far from last year, we are at 1,500 versus 1,600. more concrete or closer guidance that you can work on.

We feel very comfortable with starting more. We don't say an exact number, but it will be more than previous years.

Yes, we hope so too. It was a bit of a question, that the guidance doesn't say much anymore.

We can say that as long as the market doesn't get worse, we will be able to keep a higher level of running than we had last year.

Okay. Then the last question also at the start, but maybe not so, so, so low, but a little more if we look out. Now you are at 61 percent booked sold. You say that customers are more inclined to sign up for your step. If I understand correctly, you also believe in continued recovery in the face of interest rates. At the same time, you say that there is a long way to go to some kind of normal housing market. So if you try to sum this up and summarize a little, what do you think? That you can get back to, say, 3,800 starts, which is still some kind of target level.

How far is that? We assess that it will continue to be started more and more over the next year. We also assess that the revenues will increase over the next year, or the price level of housing over the next year, when the interest rates get a full impact. Then there is the cost level we will handle in relation to this as well. So we assess that it will take time. Det tar något år till innan vi är uppe i det, men det går rätt kraftigt uppåt i antal starter apropå tidigare frågan.

Jättebra. Det var allt från mig. Tack så mycket.

Återigen, för att ställa en fråga, tryck stjärna och ett på din telefon. Stjärna och ett. Nästa fråga kommer från Simen Mortensen, DNB Markets. Varsågod.

Thank you for the opportunity. I have a couple of questions. The first is that you are doing a lay-off. You have 150 employees. At the same time, we see that the sales of housing are going up. How do you think the recovery speeds in the market will be in the future? And the rationale for this, to reduce production capacity, does that mean that You do not see any close recovery in the market in total. Can you please tell us a little about the background when we see that you expect more start, more sales, and then at the same time you choose to take down the staff?

There is a reduction in the number of starters compared to when the staff is needed in different stages. And what we see now is that we are down to historically low levels of production, or housing in ongoing production. This is what makes us unfortunately have to scale down the production capacity, especially in Sweden, during a period in the future. If we manage to increase the number of starters as we hope in the future, then of course we hope that we don't have to do... In the quarter, do you think...

there we were a lot.

Again, housing prices haven't gone up much, especially not enough to meet the cost levels that we have. And that makes it difficult to start right in that range that was historically when we were at record levels. We assess that housing prices will go up next year, which is in line with most experts. So from that, hopefully we can start more later.

The number of unsold apartments, 449 in total, 221 in the balance sheet. Can you tell us where they are located? And if you look at discounts, and if there have been many discounts in the quarter before the sale of unsold apartments.

Right now, it's more in Sweden than it might be in Norway and Finland, which have been sold out. But as I said earlier, we haven't made any drastic price adjustments in this quarter. You can also see that in the evaluation effect that we provide. But we have made price adjustments in this quarter as well. That's something we do regularly. But as I said, we haven't made any drastic price adjustments to this balance, and we see that it is constantly moving. And as long as it does that, we don't even need to make any drastic price reductions. So we're keeping a close eye on it to see if we can keep it intact until it's completely re-established. But in the coming quarter, we will also have large orders coming in. And it may happen that the mail is moving up and down, depending on how much we can sell to these ordered units. But as long as we see that it's moving, we don't have to do anything drastic. We have financial capacity for even a higher volume of ordered unsold. We can use our RSCF to cover up a bigger balance in order not to have to lower prices.

Another question is the situation on the development ground. What have you seen in terms of both price and volume that is for sale in the market at the moment? I see that you have been a bit active.

We see that many competitors have it tough out there, so there is ground for sale. However, the prices do not generally fall in that range on the ground, which might be needed to be able to start in a larger range and acquire more. But as we have said before, we are ready to buy when the right type of acquisition appears. And during this quarter, we have also made some acquisitions, as you can see. So we continue to look at potential acquisitions in the future, even if we are restrictive and they should be really good acquisitions.

Maybe just a comment on the dividend that was issued. What do you think of the financial liquidity situation? You have some buffers, but How do you lower the dividend in the future for 2025 in relation to the capital gain in the balance sheet?

Yes, we have a strong financial position, and the fact that the board chose not to share it now means that we should be able to maintain such a strong position and also be able to act if possible investments appear. But I can't make a forecast for the allocation for next year, but it's clear that if this continues, the development right now, Det finns ingen anledning att det ska bli sämre framåt. Vi får se hur resultatet utvecklas och hur försäljningen går. Tack.

Det var min fråga.

Mina damer och herrar, det var den sista frågan. Jag återlämnar ordet till Mikael Åslund för avslutande kommentarer.

Thank you all for your attention and smart questions. Thank you very much.