Meko AB (publ)

Thank you. Good morning, everyone, and welcome to MEKO's presentation of our year-end results for 2024. As I said, I'm here with our CFO, Christer Johansson, and together we will walk you through our performance and current position. 2024 was a year when we continued to build a stronger MEKO. We announced these initiatives in November 23 with a clear goal that we want to become more profitable by achieving more synergies, savings and optimizations. We approached this work from a position of strength. Meaqo is the market leader in Northern Europe and we strive to be the most comprehensive partner for everyone who drives, repairs and maintains vehicles. We rely on a stable business model adapted to all types of vehicles, regardless of fuel type. Looking back at 2024, we can confirm that our efforts are paying off. We reached the highest adjusted air bit in our history. Adjusted air bit was up more than 13% compared to 23%. The improvement has occurred despite costs related to integrating Elite Polska, a milestone in our geographic expansion. We have also secured a strong financial position. Our leverage stands at 2.6, well within our target range. In addition, we improved cash flow, driven by strong results and good working capital development. And as planned, we have prioritized profitability over growth, yet we achieved a steady growth of 8%, of which 4% was organic. We have also reduced costs as share of our sales and maintained our gross margin. This development enables the board to propose a dividend of 3.9 SEC per share to be paid into equal installments half in May and half in November. Looking at Q4 in isolation, we conclude that the market conditions varied across the business areas. As I mentioned on the Q3 call a couple of months ago, Q4 tends to be a bit softer, unless there is an unusually harsh winter. This time, we saw a more typical start to the winter season, and in the summer, this affected our organic growth, which was flat compared to Q4 2023. But in total, we grew 6%. We also note a robust EBIT development in the quarter and our adjusted EBIT increased slightly. And Krister will go into more details just in a few minutes. But before that, I'd like to give you a short update on some of our key projects for 2025. So let's move on to slide three. And as you know, we are in the final stages of completing our new automated central warehouse in Denmark. This facility also houses our Danish headquarters and training centers. In short, it will streamline our goods handling and improve service levels for customers across Denmark. And just to give you a glimpse of the capacity, today an employee can pick 20 to 30 order lines per hour, but a person at the automated picking station can process up to 10 times as many. In addition, we are able to enhance our customer offering, for example, through later cut-off times for same-day deliveries. The facility is complete and will receive the keys in the end of this month, and we will then begin the move-in process and expect the warehouse to be fully operational in August. We are facing similar important steps in Norway. So let's have a closer look on slide four. Actually, tomorrow we will receive the key to the building, as you see, the building you see in this picture, our new automated central warehouse outside Oslo. Until now, our Swedish central warehouse in Strängnäs has supplied Norway, but this new logistics center will be dedicated for Norway. and significantly improve both service levels and efficiency in the market. The investment into our out of store automation is, as far as we are aware, the largest new build in Norway. We expect approximately 100% overall warehouse productivity gain per warehouse worker with the new system. With this investment, we can house around 100,000 automatically retrieved storage locations we are also well placed for future growth. Everything is progressing according to plan, and we expect the warehouse to be fully operational by June. And then let's move on to slide five. Our central warehouse in Helsinki has needed renovation, and with a new auto store system, we will significantly improve performance. Efficiency has measured by order lines picked per warehouse worker in an hour and is expected to increase by 80%. We have loaded the automation with no less than 65,000 empty bins. Considering weight and space constraints, we foresee up to 70% of the SKUs could pass through the automated workflows. New consolidation area significantly reduces the use of packing materials and ensures services that better meet customer demands. The renovation has gone as planned, even slightly ahead of schedule, and the warehouse will start early operations now in Q1. In sum, we are heading into an eventful and intense 2025, and everything is progressing as expected, and we are well prepared for the next step. And then let's move to slide six and some positive news about our board of directors. And at our extraordinary general meeting in December, Merco's board was strengthened with two new members. Jörn Werner is an experienced leader with extensive expertise in the independent automotive aftermarket. He has previously served as CEO of major industrial and retail companies and holds several board positions. And then we have Marie Björklund, who brings deep financial expertise and is currently the CFO of the publicly listed company Knowit. She has had several similar roles in the past and has also worked as an auditor. We're very pleased to welcome Jørn and Marie to the board and the great valued expertise they are bringing. With that, let's take a closer look at the financials.

Thank you. So as Per described, we saw a somewhat modest quarter closing out a strong year. And in our last earnings call, we mentioned that Q4 is, financially speaking, seldom the strongest quarter. That was true in 2023, where we had some help from proper winter. And it's also true for 2024, which has been warmer. In combination with many days off or partly off, Q4 was sales-wise an uphill battle. This comes through in the week organic growth, which was well below our 5% target. In isolation, a single quarter is easily affected by specific items. In Q4 2023, we provisioned for large changes in Norway, explaining the low EBIT in that comparison period. This year, Q4 was burdened by updated assessments of full year tax, explaining the low EPS. Now, on a full year basis, the effective tax rate was 25%, which is a bit above the 23% we expect going forward. There are signs of strength in Q4, as I will illustrate in more detail in a minute. Gross margins improved. And we are also pleased to see healthy cash flow where working capital continue to be relatively helpful. Looking at the year as a whole, we see a development which is well aligned to our financial targets. Organic growth was close to 5% up. Adjusted EBIT increased by 13% versus our target of 10. And this increase was also converting into cash flow, which was up by 10%. That in turn helped leverage and dividends both matching the targets we have committed to. Turning to page eight, gross margins has had a positive development in 2024. And this is despite incorporating the business of elite, which on its own correspond to a dilution of almost a percentage point. Mix and currency effects were modest and the improvement is stemming from price adjustments. I would want to add two observation here on this note. So firstly, price adjustments include benefits coming from improved purchasing. And the improved purchasing is quite an important area, of course, and ultimately it's an enabler of organic growth. Secondly, the average development hides significant variation by market. In fact, moving on to the next page, page nine, this page shows the adjusted EBIT bridge and the development in Poland, which is a negative outlier, is in part linked to pricing. I will get back to more details on Poland in a later page. Finland is mostly a matter of a week comparison period, but for Sweden and Norway, the improvement is certainly both real and quite encouraging.

And this is primarily the result of cost savings across both Norway and Sweden. Turning to page 10 and leverage, the picture is similar to previous quarters.