Kjell Group AB (publ)

Good morning and welcome to this Q1 presentation for the first quarter of 2025 from Shell Group. In normal order, it is me, Andreas, together with our CFO, Thomas Persson, who will go through today's presentation. And similarly, we have a relatively short agenda with En kort uppdatering om kvartalet innan Thomas går igenom lite mer siffrorna i detalj. Och så avslutar vi med en Q&A. If we look at the first quarter, we can see that sales in the quarter went up to 561 million compared to 591 in previous years. The gross margin was improved somewhat with 0.2 points to 42.1, which led to a gross profit in the quarter of 236 million. Even the adjusted results in the quarter were improved somewhat and fell to minus 2.3 compared to minus 5.6 per year. If we look at the quarter in general, we are affected on all markets by an increased concern in the consumer leadership. The lighting we saw at the end of 2024 and the beginning of January this year has changed dramatically, and we saw consumer confidence during the month of March, especially in Sweden and Denmark, have fallen sharply. Osäkerheten hos konsumenterna har relaterat för vår del i lägre andel trafik till våra kanaler, främst då i Sverige och Norge, medan trafiken i de norska delarna av verksamheten är relativt oförändrad jämfört med föregående år. We see that we now, in the future, will have to deal with a greater uncertainty in the market, which makes it even more important for us as a company to be close to the consumer and focus on the things we ourselves can influence. During the beginning of the quarter, we have continued with the work and the initiatives that we have previously presented, where we focus on the things we can influence. connected to a lot of costs, but above all to develop assortment and offers to be close to the customer we have in the market. We look forward to more efficient cost base, it is incredibly important to come back to growth and find new customers, but above all to find profitable customers. In the meantime, the gross margin has had a negative trend, and for our part, it has been a great focus to turn back and find a stronger gross margin. Over time, we see that we will come back to the figures we have historically had of over 45%, and the joy that we see in the quarter is a reversal of the gross margin, and the positive work we have done within the assortment, but also pricing, gives results. Even in the future, it is back to what I just mentioned, to work with the assortment and get a more positive mix in the assortment in order to strengthen the margins further. And when it comes to pricing, just in an uncertain market that we see at the moment, pricing is incredibly important for our part to catch the consumers in the mentality that the customer is at the moment. And continue to work hard to continue to strengthen the gross margin forward. Then you can also say and comment a little about the margin in the future. And unlike many other companies, we may benefit from selling some of a stronger Swedish crown in the future. The majority of what we buy, and especially home electronics, comes from China. and is traded for the absolute largest part in USD. And as our business looks, we have a majority of our sales in SEC and NOC, which have been relatively weak for some time. We have seen here now, actually after the quarter's start, levels on SEC and USD, which are back on levels from 2020, which over time is a positive impact for för oss om den bibehåller den delen även framåt. Så vi är glädjande att se att bruttomarginalen vänder uppåt igen också. During the quarter, we have also carried out a priority emission. Even if it was a guaranteed emission from the start, the interest was great and something that we are grateful for. And the trust from both larger owners and from the rest of the stock market has been fun to see and something that gives us great confidence in our initiatives. It also gives us a turning point in strengthening our balance sheet, being able to focus on new opportunities. Because it is not only in an uncertain market that there are negative parts, but there are also great opportunities. And we see that with a strong balance sheet, we also give ourselves the opportunity to operate on new opportunities in the market that is given. Our new central warehouse is, of course, a clear example of this and an important piece of the puzzle for our future growth and profitability. During the quarter, we have started building both warehouses and automation, and it also creates great joy and faith in the organization, something that is important for us to continue to grow. If we look forward and at the initiatives we have previously communicated to drive up profitability in large, then it is just the assortment where we focus on the content in the assortment, adjust it to the consumer, pricing, but also the availability in the store, the availability of the right things when the consumer's mindset changes, something that is a major priority. The new central storage will give us the opportunity to become even more efficient through the entire supply chain and be more relevant to consumers with faster and better availability. We also see, if not that we have already made a lot of efficiencies in the central direction and in our stores, the possibility to continue screwing and above all create a better base when we come back to increased growth, we can also see a greater emphasis on the initiatives we have previously carried out. Internally, we also work a lot with processes to create an organization that is more effective moving forward. And finally, regardless of whether the market is worried at the moment, we see digitalization as a trend that will continue regardless of the market situation. The technology in everyday life is something that successively also becomes more difficult and more challenging for many consumers. There we see a clear way for Kjell to continue to work in this and drive development in home technology for people as a key for continued growth as well. And with that introduction, I think I'll hand it over to Thomas, and Thomas will go through the figures for the quarter in a little more detail.

Thank you, Andreas. Then we start with the sales, which increased to 5.61 million in the quarter, which is a decrease of 5.1% compared to the previous year. The sales and turnover are in line with the previous year, with a decrease of only 1%. Segment distribution of sales in the quarter corresponds to Sweden by 72%, Norway by 17% and Denmark by 11%. Compared to the same quarter last year, Sweden maintained its share, while Norway increased by 3% at the expense of Denmark, which is corresponding. Channel distribution for the group remains relatively unchanged compared to last year, where service points increased by 2% at the expense of online and other channels. The adjusted EBITDA quarter goes up to negative 2.3 million, which is 3.3 million better compared to the previous year's negative 5.6 million. The margin increased in the quarter by 0.5 percentage points, among other things due to the better gross margin. Comparison and increasing postage, which adjusts EBITDA, goes up to 4.9 million for the quarter. This is due to restructuring costs, reform of personnel changes and emission costs. We see a positive currency effect, as Andreas mentioned, of about 12 million when compared to the same quarter last year. The effect is explained by a strongly stronger currency and a stronger quarter. If we go over and see how our segment has performed, we see that Sweden decreased sales by 3.9% to 407 million. The decrease is primarily driven by fewer transactions in our service points, which is compensated by an increased average rate. Den justerade bitamarginalen förbättrades med 2,4 procentenheter. Norge ökade starkt med 8,8 procent till 94 miljoner. Tillväxten förklarades av ett ökat snittkvitto jämfört med föregående år, vilken delvis motverkade av marginell minskning av transaktioner. Den justerade bitamarginalen försvagades med 4,1 procentenheter. Segment Danmark minskade med 25,6 procent och uppgick till 61 miljoner i kvartalet. The reduction is explained by the low number of transactions, which is partly compensated by a higher average rate. The adjusted beta margin was weakened by 1.8 percent. The segment is still an integration to the Swedish organization, which has led to a temporary negative impact on the turnover. In the long term, however, we see opportunities for increased traffic acquisition and improved learning. The quarter was lower at the end of the year as well as the share of net revenue compared to the previous year. The cash flow from running businesses improved by 14 million compared to the previous year. The net debt increased by 28 million compared to the previous year. The financial net debt relation to the rolling 12 adjusted EBITDA after leasing rose to 4.7 from last year's 3.7 due to lower adjusted EBITDA after lease. Efter kvartalets slut, som Andreas nämnde, så förändrades vår fullt garanterade företagsemission. Totalt tecknade 27,8 miljoner aktier, motsvarande ungefär 99,2 procent av erbjudandet med stöd av täckningsrätter. Resterande aktier tilldelades investerare som tecknat utan stöd av täckningsrätter. Genom emissionen tillförs Shell Group 199,1 miljoner kronor för emissionskostnad. Detta stärker vår finansiella ställning och nettoskuldsättningen förväntas förbättras under kommande kvartal. Det var den finansiella delen, så går vi tillbaka till Andreas.

Tack så mycket Thomas. Bara kort summerar jag det jag sa innan, det är ju verkligen för källsdel och vårt laserfokus just nu ligger ju i We are close to the customer, understand the customer in this type of market with great uncertainty and our ability to adapt our offer to be relevant in it. As I said, we still see a underlying demand for electronics and the belief that it will continue to be strong is something that we are completely convinced of. Another focus for the business is profitability and to be more effective in what we do. We see opportunities to reduce costs, but above all to be more effective in the organization in general, and consequently to get a better margin the more we sell forward. So, as we mentioned two times now, one capital contribution also gives us an increased future faith, or above all increased turning point for us in the way forward. And the faith from the owner and staff in it is something that also gives us great strength in the work ahead. And we see with En försiktig positivitet på året framåt och framför allt kanske senare delar av året som vi hoppas vi kan få igenom ännu mer av de initiativen som påbörjats att ge effekt. Så det var en kort uppdatering av kvartal 1 från vår del och med det så lämnar vi över och tar emot de frågor som finns.

Under frågestunden kan deltagarna ställa frågor genom att trycka fyrkant 5 på sin telefon. Om du vill dra tillbaka din fråga, vänligen tryck fyrkant 6. Den nästa frågan kommer från Adrian Elmlund från Nordea. Varsågod.

Hej, god morgon på er. Adrian här från Nordea. A quick question. Regarding this powerful stage in Denmark, you describe the reason behind it being the integration of the central business. But I was going to look at how the competition situation looks in Denmark. I know that it has been quite tough there before. Is there anything that has changed?

No, but you can say, to give a little more light on that, just as you say, the competition situation in Denmark is still tough. And it has been above all that, unlike Sweden and Norway, both Amazon and Temu have gone even harder in Denmark. And maybe cables is a little more of a price product compared to the core part of the business. and that has affected more. But also what we have done with the Danish business and an important part of being able to integrate has been to change platforms. both ERP and e-commerce platforms in Denmark. So both front-end and back-end is completely new in the Danish business, which also affects the traffic flow and traffic. So this has been a great work to work with the Danish platform and get it up to the same level as before. It is something that has progressed. We see a A careful positive trend in Denmark, but it is mainly at the result level that we expect to be more profitable in the Danish business when it is fully integrated. In addition, we are making a change where the Danish business previously bought a unique range in Denmark, which will also be included in the core business in the future, which over time will lead to an improved gross margin as well, or an improved competitiveness in the prices we can offer on the Danish market as well. So that's really what it has been. In addition, we see, especially in Denmark, if we look at the Nordic countries, then it is Denmark where consumer confidence has really dipped here during the month of March. We see absolutely the worst development of the Nordic countries in how consumers are doing at the moment. So that's probably an answer to that question.

Topen, tack. Om vi går in lite på det där, men kanske snackar om hela gruppen istället. Kan du ge någon form av indikation på hur början av Q2 gått i termer av kundtrafiken och sådant? Du sa att mars här var väldigt svagt. Man kan gissa att det kanske fortsätter in i Q2 då?

Yes, but we have some differences on the markets, as I said. We talked about it earlier, that Norway might be a bit more positive. We also saw that in quarter one, that the customer flow, despite being a generally quite pessimistic Norwegian consumer, it is still, for our part in Norway, we see the most positive growth. We also see a bit of a schizophrenic behavior with the consumer, where the consumer is on the money, but you are careful in the purchase decision, so we strengthen the average purchase in the quarter goes up on all markets.

Okay, and a final question here. The gross margin has increased, which is always fun to see. Can you give us some kind of guidance on what we can expect in the coming years? Is it the same increase or is it hard to see?

Det är svårt att spekulera i exakt hur det kommer att vara. Det är ett viktigt fokus för oss att stärka bruttomarginalen över tid. Vi jobbar med allt från prissättning till sortimentsmix men såklart också på inköpssidan i att få ner kostnaderna på inköpen. Man ska komma ihåg att hemelektronik i stort kommer från Kina och handlas i dollar. Det finns en underliggande The next question comes from Lukas Mattsson from Inderes, please.

Hello, Andreas and Thomas. Thank you for a good presentation. Lukas here from Indres. I thought we could go back a little bit to the gross margin. It increased despite a decrease in sales. You were talking about it a little earlier, but could you elaborate a little bit on what are the biggest drawbacks behind the gross margin during the quarter and how much impact the currency has in this?

I would say that in Q1, the currency may not have any impact in the quarter, but for our part, it takes a while to roll in. And it is mainly in our own brands that the currency breaks through. It takes a little longer to break through in our own brands. So I think you need to see the currency as something successive and it is also very dependent on how it develops, but of course it is a positive if we see the development that we have had now, that we have gone from the beginning of the year, a slow dollar at 11 to It was down to the lowest levels here, 9.50 today, so of course that will benefit us over time. Then it is important to remember that we have a storage capacity that affects how fast it goes and how fast it goes through. But over time, as I said, you have to remember that in one way or another, the purchase affects the dollar. Another factor that is very important for us is the product mix. It is about increasing the share of our own brands. For our part, it is also about creating competitiveness in it. It's not the same competition within our own brands as an Apple product, for example. It's not the same price transparency, which makes it easier for us to take out the prices in our own brands than, for example, a brand like Apple or Samsung or something like that. So it's a big focus to increase the share of our own brands as well.

Thank you so much. If I understand correctly, you experience competition from Chinese actors. Do you feel that the competition has become more intense in the Nordic countries due to the trade war between, above all, the US and China?

No, it's hard to say that it has changed in the short term. Then it is important to remember, and we ourselves drive that debate very much, that it is an unhealthy competition, or above all unfair, where several of these Chinese and also other larger actors do not have to relate to the same regulations as we who operate on the domestic market, mainly related to product security and so on, which means that we put an incredible amount of costs for developing quality products and something that is imported directly into in the EU without the controls that we who operate on the market or who are in the market need to maintain. And that is something that is important to continue to drive that debate, but also to create an understanding in the consumer led in how these things can be so cheap. And to be completely honest, home electronics has not at all come up i debatterna på samma sätt som till exempel textilindustrin och liknande har haft. Så det är väl någonting som vi har levt med här under ett tag och framförallt kanske under 2024 har det varit en stor påverkan och vi ser ju fortsatt den påverkan in i 2025 också.

Tack för ett bra svar där och avslutningsvis om vi blickar framåt lite. Ni känner ju lite här tidigare då. That you have as a goal that the growth will exceed 5% and adjust it in pieces between 6 and 8. What are the biggest risks that you do not achieve these financial goals and do you see an increased risk that the demand for consumers weakens due to the increased economic insecurity with taxes and so on?

In the short term, on the growth side, there are always challenges in a tough market. If you look at our nyckelaffär, vilket handlar mycket om digitalisering och utvecklingen i det teknologiska samhället, så ser vi en konstant tilltro till det här. Jag tror inte att digitaliseringen kommer att avtas, snarare tvärt emot. Vi ser den typen av produkter som kommer ut på elektronikmarknaden bli mer och mer avancerade. Det finns en stor mängd människor där ute som har ett behov av en stor support kopplat till det. So over time, we feel very confident about the demand in our market. For our part, as I said earlier, it's a lot about adapting, understanding the consumer, understanding the consumer's mindset to adapt our business, our product offer to that consumer in the market. We have some good examples of friends in the market, such as Claes, for example, who has done an incredibly good job in his kind of advertising, as a good proof that it is possible to attract customers even in this market, which gives us a lot of hope and something that we work very hard with, to adapt our products to be relevant to consumers.

Ja, tack så mycket. Det var allt jag hade. Tack.

Toppen. Det var, om det inte finns några ytterligare frågor, så tror jag att det var de frågorna vi hade idag. Jag vet att vi har fått några skriftliga frågor, men jag tror att vi har svarat på exakt de frågorna där också. Så stort tack för alla som har lyssnat in i dagens call och så får jag önska en fortsatt fin torsdag. Tack så mycket. Ha det bra.