New Wave Group AB

Okay, welcome to this presentation of New Wave Groups, quarter four and the full year 2025 figures. My name is Göran Härstedt and I'm the vice president of New Wave. And together with me, we have Anna Guldmarsland, CFO at New Wave. New Wave Group, we are a growth-orientated international company And we are focusing on acquiring, developing and creating brands for free business segments. And that's the promo, the sport and leisure and home and gifts furnishings. Here we have a slide about the growth in net sales and profit during the years. And we have a good development, especially regarding the turnover the last years. Logistics and sourcing is one of the main drives for New Wave and our activities and one of our most impressive strengths compared with the competitors. big sourcing operations in Asia where we had a head office in Shanghai and working in a number of countries and now also in Africa in order to source our products in a competitive way and also in a sustainability way. has our free operating segments and sales channels. And you can see here the brands that we are using in these segments. It's especially the sports and leisure and gifts at home furnishings brands that are known for the public due to that the corporate brands are more service brands for the concept towards the resellers who sell it to the companies who then is using their own logos or message on the items. A brief summary of the quarter. We signed a new financing agreement in December. And it has a prolongation for three and up to seven years. And it amounts to 3.8 billion SEK, of which 2.7 billion are used at the moment. Cotton Classic is consolidated for the full quarter for the first time in Q4. And during the last quarter, we also finalized the discussions and negotiations with the US Department of Justice regarding the forgiving PPP loans. And the result was in line with the cost that we were taking in Q3. We also have quite huge effects on the currency for the year and especially the quarter. Then we have the financial information.

Yes, thank you. So the quarter in brief, we have in short growth in both sales channels and all three segments. In local currency, we grow by 17.7%, of which 11.7 is from the acquisition of Kotlin Classic and 6% from organic growth in local currency. And as Göran mentioned, we have a headwind from currency, which is minus 6.5, but still reporting a growth of 11.2. Looking at this, I think, given the tough times and a bit troublesome times, we're quite happy with the 6% organic growth and feel that it's proof maybe of the model that we have with diversified diversification and different sales channels and are happy to show 6% organic growth. Looking at the operating profit, it was 435, which is a bit lower than last year and the operating margin ended at 13.8%. And going into the details, I can see here about the sales per sales channel. The sales were 3.145 billions for the quarter, which is, as we mentioned, quite higher than last year. And as you can see, we have increased in both promo and in retail. and of course in promo cotton classic is one of the big parts but we also have growth within several brands like both both Katrin Back and Kraft are doing really well and we also see growth in the trading and Tencent has also had a good quarter. So, and this is the sales per operating segment. Again, currency has been tough on us this quarter, but we show increase and growth in all three segments. as shown, and again, of course, incorporated fine cotton classic. The currency, we keep coming back, but this is a picture where we can illustrate. This is the sales divided by the geographic areas that we report on. And as you can see, looking at this, it even looks like there are three areas that we might have a decrease instead of a growth. And if we look, talking about currency, you can see the American dollar has been really tough in this quarter, it's minus 13% to us. And the Euro, not as much, but it's all, this is what makes up the net of the minus 6.5. So taking that into account, this is the organic change and the change in local currency. So what started as a mine, as you can see, we have a really good development in North America, which we're really happy for. And also looking at this, it's actually only one area where it's still a minus, and it's the other Nordic countries. And that is actually explained quite easily. I think many of you remember that in the beginning of 2025, there was a Nordic Ski World Championships in Trondheim. And if Thorsten would have been here, he would have told you exactly how many athletes were competing in Kraft, winning some kind of medal. I don't remember that number. But of course, in Norway, we had a lot of sales in the end of 2024. We did not only dress the athletes, a lot of other sales as well. So that kind of sale, we didn't have it at the end of 2025. So that is mainly what explains other Nordic countries. Move on to... The gross margin for the quarter, it's 48.5, which is lower compared to last year of 50%. And this is the first quarter that we have included Cotton Classic, an entire quarter. And they've affected the gross margin by 2.8%, which is natural because they have a different kind of business. So looking at like for like, gross margin would have been 51.3%, which we think is really good because it's actually better than what we had last year. Looking like for like. Moving down to external costs and personnel costs, they amounted to 1 billion compared to 887 million last year, which is an increase of 118 millions. And of this Cotton Classic, the acquisition is half of the explanation of this increase. And in the fourth quarter, we also have a lot of costs regarding our new ERP system. It's actually an investment. But as accounting regulations are these days, instead of putting it in the balance sheet and taking it through 10 years, for example, this comes as a cost day one. So it's not anything that makes the ERP more expensive, but the cost is shown much earlier in the P&L. So these two items together make up for 80% of the increase in external costs and personnel costs. Yes, as we said earlier, operating profit 13.8% in operating margin. And the operating result is divided like this. as you can see here on the slide between the three segments. Yes. Nothing to add there. Cash flow for the quarter. 534 from operating activities. And what's worth to mention, it's fairly in line with last year. It's worth to mention here that all the investments that we make in the ERP system, no matter if they are directly in the P&L or if it's somehow accrued in the balance sheet, It's always in the operating activities. So that never goes as investing. That can be good to know. And as you can see, investing activities, we also have a lot. And we have been investing both in optimization of inventories and buildings. And that's mainly... We can see by the end of December or by the end of the year, in December really, we started, we've told you that we are building a new fulfillment center in Dallas. So the first investment in that took place during December. So we're looking ahead. We're also looking at Ireland for a new warehouse.

And also the warehouse in France was completed in December. And we're also building a new facility for Top Point in Poland with printing, etc. It's a larger, big establishment we're making in Poland that will be ready during late spring this year.

So investment. Happy to have a new finance agreement. Okay, so the full year, you know about this really now when you know the quarter, but it's happy to have Torsten here too, on picture at least. For the first time, above 10 billion in sales, which is a milestone and encouraging, as he says, and we're looking forward to a journey of growth many years ahead. And looking at the sales divided by sales channels for the year. We have for the year it's the increase is. 5.1. reported increase, which gives an organic growth of 9.5 in local. currency since currency effect. and is minus also for minus 4.3 for the year. So Proma has an increase and retail is fairly even compared to last year. Looking at the segments we have, even though it's small for gifts and home furniture and growth, despite the currency again through the year. Corporate, of course, includes four months now of Cotton Classic, since they are included as from September 1st. This is the same way we can see the geographic areas and I haven't added the currency here, but it's the same, of course, and I had wind, but in local currencies, we show growth and you see rest of Europe, it seems like there's a lot of growth, but it's, of course, one important matter that is that that's where Cotton Classic is included. So looking at the P&L for the entire year, gross profit, 49%, which is compared to 49.4 last year. Looking like for like again, we've actually improved the gross margin compared to 2024. since that would have been 50.1, which we're really happy about. External costs and personnel costs have increased by 6.9%. And again, they are affected by investments in the ERP system, but also other IT related or investments like Göran mentioned, warehouse optimization. In the fourth quarter, we also see some increase in legal expenses. It's not in general specific areas, for example, that we finalized the, we'll be working with finalizing the deal with the District of Justice Department in the US and such. Operating profit is 1.141 millions, which is a bit lower than last year. gross margin is for the year is 11.4 compared to 13 last year. Gross margin here of course at the year result also includes the 66 million that we informed you about and took the cost for in Q3 regarding this DOG match up with the previously forgiven PPP loans. So net result 783 millions, which gives us a result for this year of 5.90 Swedish kronas per share. A little bit about cotton classic and they've been included for four months. In 2025 since we acquired them the September 1 and. From mid-September, we introduced the first brands. In 2025, we introduced five brands. Printer, James Harvest, Katrin Back, Click and Harvest and Frost. And as from 2026, We will also add parts of teamwork for craft. We will also introduce some parts of untag movement and also pro job. They will not have full collections but part of it will be introduced. So we are really happy with the start in Cotton Classic. who are included within the year, sales of 429 millions and an operating result of about 34 millions. And yes, and this is... not sales, but the results per operating segment. Looking at the balance sheet, it's really strong. The equity ratio is 53%, well above our targets. And again, also, as well as P&L, also the balance sheet, of course, is affected by the changes of currency with the negative translation effects, which affects, for example, the equity ratio actually by minus 2.5%. So it's quite big changes in currency this year. Cash flow, same as in the quarter really, shows that we are investing quite heavily. This also shows the investment in Q3 in Cotton Classic. Lunghete share. We have just below 35,000 shareholders as of December. And earnings we mentioned is 5.9 per share. And the board has suggested a dividend of three kronas, Swedish kronas per share, which is compared to the year end price, a dividend yield of 262%. This is the development of this year and the past 10 years. So we're still happy about that. We're looking to the future, hoping for more. So even though he's not here, we let Torsten summarize this with his comment that he's very optimistic about the future. We're stronger than ever and have managed to maintain profitability despite an exceptional volatile period, a challenging market and high level of investment. That very much summarizes this year in closing. Thank you.

Thank you. Any questions?

Niklas Skogman, Nordea. A couple of questions from me, please. Maybe we can start off where we ended on the high level of investments. Where do you see 2026 compared to 25 in terms of investments in both systems and Salesforce and marketing and et cetera?

Yeah, regarding the system, I think Torsten mentioned already last quarter that we see that we will continue to invest in IT through 2026. We have been investing in a model, a template for the group, but it needs adjustment in each country where we come. like i mentioned in the beginning we take this uh the greatest part of this which put directly in the pnl so uh through 2026 we we still expect to have additional costs regarding it

So higher next year or just additional cost?

No, additional in regard to what's normal, but we've had additional the entire year. Okay. So I think the level will stay with IT cost through 2026. Okay.

And the other parameters there, marketing and sales force, et cetera.

Of course, those are more guided of what we see that we think is profitable at the time. So it's harder, but the legal advice was specific to this year. So that's not anything that we plan for next year. And specific areas like the PPP loans, for example. So we expect those to be lower.

Yeah, great. And then on the, I think the growth in the sports and leisure division was the big positive surprise in this report, at least for me. What did you see? I estimate almost, I think, 12% organic growth. You can correct me if I'm wrong, but what do you see driving this growth in this quarter specifically?

In the fourth quarter, we can see I mentioned both Karin Back and Kraft doing really well. Good sales, good margin. So they've done, I think they are driving it in sports and leisure.

We can also say that the sports retail was quite bad also during Q4, but our sports brand were quite good in the teams, Kraft's team were developing very, very good, not connected in that way to the sports retail. So I would say that the main factor that we increased quite good in sport was due to Kraft Teamwear and also Katrin Back. Yes.

Okay, perfect. But then, I mean, the profitability in that division was down a lot.

So what's going on there then? Partly it's the investments. We took some marketing costs and that was mostly in sports and leisure in the quarter.

Okay, so... Did you have any negative impacts from tariffs in the court?

It's really hard to say exactly what the effects from tariffs are, but I'd say not that we haven't had any negative impact at the P&L for 2025. prices were increased in June. So we could take up the prices and that has very much faced the incremental tariffs that we have had. So altogether, we don't think that has had an impact.

Okay, great. And then the last one, just looking at your markets generally for all segments, do you see any changes in the last couple of months or so?

He's nodding or shaking. What we could say is that we think that the fourth quarter gave us some positive feelings. It's always hard to tell what that will bring us in the future. But looking at the last quarter, we saw some positive signals. For example, like we mentioned Kraft and Karin Back. who had a really good sale.

Okay, thank you.

Hi, Alice Beer, ABG here. Just a quick follow up on the margin in the sports and leisure sort of segment. The margin hasn't been great all year. Could you talk a bit about the dynamics there and what needs to happen for that to change going forward?

The gross margin or?

The EBIT margin in the sports and leisure.

Well, it's been a tough market. You all know, especially in retail. So I think today, if you look in Sweden, all big chains have had some kind of reconstruction or like. So of course, it's been tough. Again, that's why we are happy to see that the fourth quarter, and especially for us, we see that our competition, competitors, they have... uh even lost sales and we are actually growing both reported and organically so we're quite happy about that but it is a tough market of course so we're happy to we spoke about our business model And what we see now is that it gives us strength, having these different channels where we can offer our products to more customers in more ways. And also, like Göran mentioned, teamwork, not being as sensitive. for market changes, since you're going to let your kids do sport. You take away many things before you take away that. So that's why we think we've seen positive trends for our sake.

Okay, great. Just a couple more for me then. Unemployment rates have been very high in the quarter and they're grown year over year. But still, I mean, 16% promo growth. It's quite impressive given that. Could you just speak a bit about the demand and the promo channel? What's the appetite like there?

Yeah, of course, there is including an acquisition of Codon Classic. It's in the promo, but it's good to see. We're happy to see because we've been discussing this, that unemployment rate is tough for the promo, of course. But we've been successful and we see that there is... different demands like for uh in in us uh the promo business with the uh embroidery and everything uh it's also in sporting areas and events and there are many uh different uh not only companies and company names um so uh yes we're happy about the growth in promo

Okay, great. And then just about Cotton Classics, have you learned anything in the quarter that might change your view on how long it will take to get the margins up there? And also just could you remind us of the EBIT systemality in Cotton Classics?

Well, we've only had them for four months, so we're still learning. And I think, to a bonus, I guess these are the four best months of the year. We've had the honor to include Cotton Class in our group. We're learning consistently and we're very happy to, only four months into owning them, we have already introduced five brands, which have been very well received and are introducing more brands. So yes, if we've learned something from that, maybe we learned more from the BTC, which make us faster this time. I'd say what you've been around longer. Do you have a comment?

uh yes we we can say that that what we learned from btc uh it's it's the same thing with the cotton classics and we see that they really are the same so we can use the knowledge that we have received from btc awesome cotton classics and we also learned from btc that it takes a bit longer time to get the turnover on our own brands through their through their customer base than what we thought when we acquired B2C. And that's the same thing here. But as Anna mentioned, it's been very well taken by the customers and the cooperation with the management and the old owner is really working well. So yeah, we are confident that we will have a good development there.

Just a final one then. Inventories were up in the quarter. Should we view this as you expecting higher demand, or are you just preparing to fill up the new warehouses?

Both, really. We are expecting higher demand, and we have learned that having the stock is the key to getting the sales. For example, now Cadron Back has done really well, and they built up the inventories, which is one of the key success factors to giving them this growth in the fourth quarter. or during entire year 2025 actually so but also of course uh having new stocks we are setting up also the brands that need to go to cotton classic for for our brands so and setting up ireland jordan mentioned france so a combination really okay thank you

I can also comment there that it's a bit, quite many inbounds deliveries are at the end of the year and how much comes in December and how much comes in January could be, so I think this year it was a bit more in December than it was last year that came a week later in January instead. So that also affects. Yeah. Any more questions?

Some from the YouTube audience?

Yes. No tricky ones now.

Well, I guess, yeah. Can you please provide more detailed seasonal variations for Cotton Classic? I think I recall you said in Q3 that the result would have been negative if they have been consolidated from January. What should we expect now going on to Q8 from quarter to quarter?

We don't have that data, so we cannot elaborate in detail. But of course, if you look at the market in general, the way promo works, the first quarter is generally a tougher one. And the fourth, a better one. So we expect Cotton Classic to follow the same pattern.

Yeah, thanks. Can you give more color on the improved organic growth and discuss the demand since both in promo and in retail? What does that mean for the 2026 outlook?

How do we color the organic growth? Organic growth is color. No, we're of course very happy to have organic growth and that we show it in all areas. We have increased inventory, which of course is a sign that we are expecting and not only hoping, but, or maybe both hoping and expecting for continuously good sales in 2026.

Yeah. What's the reason for the decrease of the dividend?

Actually we have this dividend policy of 40% of the result over a cycle and this year we're just sticking to the policy really and this year looking at the result of course we had an additional cost for the PPP loans. We've been doing a lot of investments and we also I believe we do a lot of good things with the cash within the company. But sticking to the policy really.

Thank you. Have you seen some effect during the first quarter or even the quarter we just experienced with the considered the cold in the Europe, in the Nordic due to winter weather?

Yes, we'll be freezing every morning. No, of course, that came after the year end. So we don't give any forecasts information, but it's not hard to guess that we have had better sales in winter clothing in the beginning of 2026 than we had in 25.

I understand. Can you also tell us a little bit more to understand the view of the operational expenses in 2026, including certain temporary high costs for ERP, automation, IT and marketing?

Yes, the ERP is easier because we are, we do know that we are gonna go in, we are launching, we launched France January 14th, we're launching US during spring in second quarter and we're also launching in Belgium texted companies so we do have erp costs going through 2026 and that's for sure marketing of course is more to a situation we can choose if it's good i'm going to have the cost or if it's not good we're not going to have it so that's more we have to see what what happens in the market

Thank you. How is the Cotton Classic acquisition split across the segments, as in how much is in corporate and how much in sports?

Everything is in corporate.

Investments for future growth have been high in 2025 and the operating margin continued down. What can we expect in terms of cost level in full year 2026 relative to 2025?

We don't give any forecasts, of course, but again, Cotton Classic will be included for an entire year. That will have an effect, of course, but also on sales. And regarding ERP, I think we have additional extra costs, like we mentioned, and that's probably going to stay about the same through 26. But apart from that, it's more from what happens in the market.

And a follow-up question on the first one. Will there be more focus on improving the operating margin ad?

Yes, I think that's the long-term goal, of course. I'm happy to see that that doesn't make us scared to make short-term decisions or long-term decisions that have short-term impact like these investments have had. We do them, of course, for a good reason that we see future growth, future profit, future increase in the EBIT margin. Looking at a really short period of time, it might have a negative impact, of course. But we, for the long run, this is actually, we're of course looking to improve the margin by doing this.

IT investments alone impacting this quarter's result by approximately 32 million SEC. Could you provide some guidance on when we can expect these investment levels to normalize?

Actually 32 is external expenses, so including the personnel costs, it's even 35. We are, as mentioned earlier, we are expecting to have, the fourth quarter I need to mention was extra high on this IT cost, but we are expecting to have, like we mentioned earlier, additional costs for IT through 2026. especially maybe the first three quarters, but let's say 2026.

A question about the Capex. Capex level Q4 was high. How does this look for 2026?

the Capix included also, apart from optimization, because the Capix doesn't include the ERP, as we mentioned earlier, it's not in there. So it's, Jana mentioned that we have a new, facility in Poland that affected quite a lot in Q4. We also have started to build the fulfillment center in Dallas. It was almost 30 millions and almost 100 million for Poland. So those are, of course, we have also a new facility in holland or in the netherlands as it's called now which were the premiere was in november so we have and also like jaron again mentioned france so yes lots of investments how do you view the current inventory levels looking at your growth ambitions for next year for this year 2026 If Thorsten would have been here, he always thinks they are too low, doesn't he? So now, like we said earlier, the level of the inventory is meant to reflect what we're expecting, what we want to sell. So what's the question again? Sorry. um how do you view levels looking on the current inventory levels for for your how does that affect your growth ambitions for 2026 hopefully we have the inventory that will help us grow and it's a key to growth to have the inventory that's the line of business that we have having the inventories and the way we can serve our customers and it's the service we are paid for so um

Is the ERP system delivering as promised in countries where it has been operational?

Actually, it's only operational in one country yet, and it's been all well. And after year end, it's another country. We also, of course, we don't only do the ERP when we are doing things. We also... improve on our warehouse management system and in both Holland and in France, which we went went live here. Two weeks ago, they have a new optimization system called high robotics, which is implemented at the same time. But so far, it works really well. So it's gonna be even better, the more when we get all the companies, of course, in the same system, because then we're going to really see the use of being in this new system. But it's been really so far so good.

We're nearing on our last questions here. Seeing Kraft Teamwork growing, is that negative for sports and leisure margin at the moment, given investments in the US?

Teamwork, say it again.

seeing craft teamwork seeing the craft team where is growing is that negative for sports and leisure margin at the moment no the sports and leisure margin is doing well and the gross margin is up and the follow-up questions is from the same guy here is can you give us some more details on the development in team your team where us and in germany

We don't give as much specifics, but as we mentioned, I have mentioned earlier, TeamWare in the US is quite in its, not birth, but it's in the beginning. So it takes time to process a market like that to open all the doors. But they're working on getting new clients. It's only about... Plus one year ago, we had only one clients. Now we have many clients which then are working on their clients. So it takes time, but so far it's positive.

Thank you. And this is the last question. Can you give any hint about the development for Tenzone Q4 and ahead of 2026?

Yes, hints we gave. Tencent was, I think the expectation of Tencent has been quite high and we've been hoping for this to come sooner, but we now see, even though we still think that we should be bigger by now, we see growth in the fourth quarter, both in retail and in corporate. our promo and we are really looking forward in to 2026 to hopefully see some more growth within also within promo. Tencent is gonna be launched in the US as well. So yes, positive ending for Tencent 2025.

And that was all the questions. I leave the microphones to you for a final remarks, both of you.

Thank you. Yes, as mentioned, we think that we made a quite good year last year, both margin wise with the gross margin and especially the turnover. And we think that we have a good base for continuing to take market shares. We invested more in marketing activities and took marketing costs on the corporate side last year. because we saw the opportunity to take market share, and that we've been successful with, and we will gain very much from that in the coming years. Thank you for your interest, and thank you for coming.