Nilörngruppen AB

First of all, a big excuse for the concern regarding the technical issue we had with the teams this morning. We're doing this completely ourselves, so we don't have an agency and so on. So I hope you – and I think it was some sort of update with what I heard regarding teams. So there was some concern there. But now I'm really glad that you all are on this call. And usually this call will be recorded. So we put that out on the webpage later on. And also, as usual, Maria Fogelström, our CFO, joined this call and will help me answer questions and so on, if any. And also, Maria, yes, for questions, how to do when you want to ask questions.

Yes, if you have any questions, please use the Q&A function. The chat is turned off during the meeting, but you can still use the Q&A.

Super good. Thank you. Thank you. And I will start by sharing my screen. And I hope you all see the screen now. Jumping directly into the numbers here for the Q1 reporting, and as you can see or saw that the order intake is decreased by 18%. We have a big currency effect in the quarter, and I will come back in a separate slide about the currency effect and how that is calculated and why and so on. That's been quite cautious. Also, the Q4 last year in order intake was quite strong. That also impacted the Q1 order intake this quarter. But as I said, big currency effect. Looking at the sales, sales number was down, actually, in consolidated Swedish krona numbers by 16%. And actually, the currency effect stands for... 10%. And sales, the calendar effect was minus 60%. And then there's also another specific order that last year came in in Q1 and this year it will come in Q2. So it's nothing that we have lost and so on. It's a calendar effect depending on if it comes in Q1 or in Q2. This year, it comes in Q2. And after all these adjustments, there was a quite set quarter. It's still a bit cautious out in the market, luxury and also outdoor, and I think what's happening in the Middle East doesn't improve the situation. So I think in general, the end consumer is a bit more cautious also affecting our first quarter. Coming back to the current effect, how that is calculated, there is a consolidation in financial numbers. And the balance sheet is consolidated using the balance sheet end of date and the 31st of March numbers. And the loss is calculated by using the average numbers for the quarter. And the way we calculated the currency effect, you know, we don't have almost no invoicing in Swedish krona. All invoicing is done abroad. either in euro or in Hong Kong dollar or in US dollar and so on. And the way we calculated the currency is the fact that we, first of all, of course, we're consolidating the group by using the average rate for the P&L and the balance sheet for the balance sheet. And then we got the consolidated numbers. And then we do the similar consolidation again, but using the rate we had end of March last year and the difference that we kept there. is the currency effect, the way we calculate it. That means that in Hong Kong, we calculate by Hong Kong dollar. In China, we change Chinese yen, and Bangladesh will be the key, et cetera. And on these slides, you can see here the big impact. If you compare first quarter last year with the quarter this year, and here on this table, you have the average rate, and the below table, you have the balance sheet rate. And the balance sheet is for the balance sheet at the end of date rate. And here is the average rate during the quarter. And as you can see, as you most likely know, the Swedish krona has been quite volatile during the quarter from being really strong in the beginning and getting weak in the end. So that also has a big impact if you take like Hong Kong dollar, 40% in average. And stronger Swedish krona and the Indian rupees and so on. And if you look at the balance sheet rate, the Hong Kong dollar here is 5.9% as per balance sheet date end of March. So these rates here impact the P&L and these rates here impact the balance sheet. So it's a difference. The reason I explain this is that I sometimes get questions how, because some look at only this end of the quarter rate can compare, but here is the average rate during the quarter, which has an impact on the P&L. We had an operating profit of 15.4 million versus 23 last year. We had some non-recurring cost. of 2.3 million, where 1.8 is related to structural projects cost. And what is that? It is, I mean, we want to grow, so we have taken cost for project. I'm not going into detail. I cannot do that now. And will something good come out of this? What will come out of this? It's too early to say, and I will come back on that if and when it happens. And if it happens, I don't know yet. But this is something we're working on, and we're taking calls for this project. But it is that we want to grow, so that is part of that. And then the other personal cause is that we want to move, and we need to have them focusing on the right things. So that means that we are... Decreasing costs in some areas, increasing costs in some areas, and during this change there will be one of costs, and that was here in the quarter. It was not much, nobody probably not would mention that, but these two together with this one make 2.3 billion. So I thought to be transparent for you, I think it was worth mentioning. And adjusted for this, the operating profit is 17.7%. This year, we also have some other costs, also, I would say, offensive growth costs that we've taken. Hopefully, the intention of this will bear fruit in the coming quarters. Holland, we started up a new company, taking the cost here. US, we employed three more employees last year. That was not in the Q1. And Sri Lanka, we started up a new company as well. So we are putting effort in for the future growth. We have a strong balance sheet with the net cash position of 56 million Swedish that we need for the growth and what we are aiming for. The income, as you know, most likely is very much volume driven. A quarter with lower volumes also gives less operating profit and operating margins. The goal here is to be between 10% to 12% minimum. So we have a way to go, and that is how to reach that is by both volume driven, but also looking at the cost side. So this is exercise we are working on. Looking at 2022, compare on product with 2026. There has been a decrease in packaging from 20 to 14%. At the same time, if you remember, I used to say that now we're putting more effort into packaging, so this is contradictory, but the order that I mentioned in Q1 that will come in Q2, that is a packaging order, so that will mean that this packaging will be stronger in Q versus the Q1. Look at it quarterly here. the Q1, we had a really strong gross margin. If you compare to the history, the last years, the strong gross margin depends on the things. One is the product mix, as we didn't get this packaging order. The packaging has, in general, lower margin. That will only be impacted on the Q2, lower gross profit in the Q2. But in Q1, that also made it opposite to the was a really strong gross margin. So the product mix has one thing. Also, the more in-house production we get, the higher gross margin we also get. So we had, yeah, especially in Bangladesh and Portugal. And then, of course, also that the U.S. dollar has some impact here. The weaker U.S. dollar, as we are selling some in euro, there will be some that we are buying in U.S. dollar. That has also some dollar effect cost side as i mentioned we are looking now to move costs from one side to another and we will do some sort of cost saving program but at the same time we will spend efforts in other areas as well so it's it's to be having having the right resources the right areas Operating margin, as I mentioned, we are not pleased with that in the quarter, and the goal is to be 10% to 12% in the future. This is showing the numbers, but in the graph with the lower sales in Q1, and also the lower operating profit here. Jumping further, and here is the balance sheet, Maria.