Nobia AB (publ)

Good morning everyone and thank you for calling in to NoBSQ for results presentation. Today of course the presentation will be conducted by our president and CEO, Mr. Kristoffer Jungfeldt and our CFO Mr. Henrik Skogsfors. And with those words, please Kristoffer, the floor is yours.

Thank you Tobias. Good morning, everyone. Welcome and thank you for joining. I would like to start off by saying it was a good quarter for the group. We're especially pleased with the Nordics where we took important steps towards improved profitability despite the continued large volume decline that we see in the product market. In the UK, the operating income is not yet where we want it to be, but we have taken important steps towards our asset-side model in the quarter by exiting large pool of unprofitable stores

and

consolidated more businesses under the Magnus brand and also consolidating supply chain during the year. In terms of the overall market, we still experience a very soft project market and even if we have some more optimism from builders, we don't see any obvious signs of recovery in the short to midterm. On the other hand, we continue to see gradual improvement in the consumer market, albeit it's from a very low base. We definitely see an improved footfall in most markets and we experience strong growth in design appointments and are building our growth bank in a good way. Net sales was down organically by 7% where the Nordics was down 14% and UK was flat. Volume drop to the product market was the main contributor to the negative growth while consumer sales grew somewhat in both volume and value. On a positive note, we continue to strengthen our gross margin in the quarter by mixing up to higher average order values and being disciplined with a price volume mix all in line with communicated plans. We have also done a good job in reallocating resources to the consumer segment where we are confident we have gained market shares, even if I expect that we can close order even more successfully going forward. Growth in the consumer segment also supports a better margin profile for us. Adjusted gross margin came in at 38.7 which is slightly less than one percentage point improvement versus the same period last year. I'm also happy to announce the good returns from our cost programs initiated earlier in the year. Savings of roughly 140 million text materialized in the quarter, which is on top of the already delivered 400 million text cost savings from 2023. We will get back to that a little bit later in the presentation as well. We however see that we have an additional 150 million Swedish crowns run rate savings to expect from the programs from now up until Q3 2025. Adjusted operating income improved to 48 million text on the back of the improvements already mentioned. Operating cash flow improved to 138 million text which Henrik will come back to later in this presentation. In the quarter we also reached a very important milestone as we delivered our first assembled kitchen to customers from the new Nordic factory in Jönköping. And it was with great delivery performance and great quality even though the volumes are yet quite low. We are very proud of the team that's worked day and night for so many years now to come to this very important point in time. In the quarter we also received payment of 190 million Swedish crowns from the Sämenlids back transaction of the building which also Henrik will mention. And as I said before we took important measures towards the asset light model in the UK that we are targeting by closing an additional 14 stores and consolidating our product business Commodore which we acquired back in 2015. We are consolidating that brand with our Magnet B2B business. And the cost for this transaction amounted to roughly 600 million text of which 500 million roughly of that was a goodwill impairment which is non-recurring obviously. During the quarter we also have amended terms and conditions for our long time financing with our long-term partnering lenders to provide great flexibility during continued difficult market conditions. Next slide please. So looking into the market in more detail and updated the consumer market is gradually recovering in the Nordics. We experienced higher interest in our category of products, higher footfall, higher design appointments and growing volumes. We also see continued recovery of house prices and housing transactions which we believe will support our markets also going forward. However, and important to repeat the consumer market only represents a small share of our business today with about 20% of total volume. So about 80% of our total volume is due to the project market which remains very challenging. It's really only in Denmark where we see trade and some smaller construction sites picking up from the low levels that we have had over the course of these last two years. And again, but some more optimism around recovery of the housing starts, but we have on average a 12 month lag to the housing start as well. So we don't yet see any recovery in our order books. Then if we look into the UK market, unfortunately the consumer confidence looked a little bit weaker again in January. We believe it's a consequence of the high interest rates still in the country and high degree of uncertainty that put the drag on the overall temperament. However, we remain optimistic that things could start to improve and we have amongst others seen mortgage approvals increasing and it's now the highest stock of outstanding mortgages, mortgages loans since Q1 2023. We also see the house prices in UK trending upwards, catering for slight optimism of a recovery. As for the Nordics, the UK product market remains soft driven by low housing starts compared to historic averages. We are however slightly optimistic in the recovery due to the huge temps of demand in that market and some tangible measures by the government to increase housing starts as of late. So next slide, please. Let me update a bit on our strategic priorities. So again, we are pleased with many of the improvements made over the course of the year and the quarter, but we have a lot left to do on our strategic agenda and to get profitability in line with our financial targets of 10%. Maximizing cost efficiency and reduction on net debt remains a top priority. We have done well in this space, I believe, but we need to materialize another 150 million Swedish crowns in the latest program. And as long as we see challenges in the product market, we will need to revisit our fixed cost base on an ongoing basis going also going forward. Realizing full Nordic potential, we have a very important spring in front of us as we ramp up manufacturing and jönköping and roughly a quarter of Tidahorn colleagues will transfer to the new factory during this quarter with the majority of the staff then transitioning during Q2 somewhat ahead of the time. And then last, the transformation in UK and again, we're taking important steps towards this Applite operating model. With the latest program, we have reduced store space by roughly 20% in total over the course of the year. From 2 million square feet, we're now down to about one and a half million square feet in the store network. In the quarter, we also consolidated the brand Komodo as I referred to, but we also made further advancements in the new franchise and build a merchant partnerships which are still under trials, but we're optimistic about it. So a little bit more detail on the jönköping if you go to next slide, please. So again, we are progressing nicely according to planning jönköping and we have started to transfer the staff from Tidahorn to the new site and it's very impressive to see what our colleagues accomplish every day given that it's the most advanced manufacturing unit in the industry. And today we are staffed for some certain manual processes, but we have tested the automated flows end to end and are also utilizing the automated flows end to end so we can gradually up our game in both dispatch of assembled kitchen and productivity towards fully automated flows then by summer. And to the left here, you can see some of the benefits that we expect from the facility. To mention a few, higher efficiency, customization capability and sustainability through a lot of echo labeling. But also we would be able to have growth over time by utilizing the factory. And let me just finally reconfirm that we are very firm on our commitment to deliver to the savings expected from the factory with three and a half percent EBITDA improvement when fully operational which we also described on the right hand side here. And if we take the next one, we reached a huge milestone in January where we had the first shipment of complete kitchens to external customers. Just to shed some light on what we're doing, we also have industrialized the frontal manufacturing and we are both cutting and edging frontals and painting frontals with new technology in the factory. Hugely exciting. We are doing full kitchen assembly automatically and also have developed an order consolidation in the factory now. Again, new technology has been implemented with promising results and we have also started up our intercompany flows where primarily the factory is delivering now component to both Norway and Sweden, elsewhere in Sweden. The remaining investment is about 300 million Swedish crowns capex to finalize the whole project. Then let's move over to UK again and you have seen this one before for you that follow up and of course we are not pleased with running with losses in the UK, but again, we have made considerable changes to the business in 2024 which puts us at the much better place where we now enter 2025. And we have done this in various places where the majority of the activities has been towards end of 2023 into 2024 where we are changing our operating model to target the mass premium segment with higher average order value with the trusted Magnus brand. We have launched new products in this space that have been well received by customers. We are trying the partnership models of which some are very exciting and we have also during the year made the what we call the second phase of the clutch consolidation which was closing the manufacturing in Halifax. And we now look at capitalizing on the shift that we have done and consolidate further where we can. So Henrik, over to you to highlight some of the financials in the region.

Thank you, Christoffer. Just as a clarification, all the amounts I will mention are in Swedish crowns. So for the Nordic region in the fourth quarter, the organic sales declined by 11% which is the same -over-year development as in the previous quarter. Despite the lower volumes in the product market, the adjusted EBIT rose to 115 million driving a margin increase from 2.8 to 8.2%. This represents a strong performance in a challenging market environment and the market is, as Christoffer just mentioned, largely thanks to internal initiatives such as cost out the efforts, supply chain productivity and focus on the consumer part of the market. The average order values benefited from a favorable mix shift between professional and consumer which supported the top line. However, the overall decline in volume negatively impacted sales performance across all countries in the Nordic region. The gross margin improved by .1% reaching .5% despite the substantial decline in volume. This increase was driven by improved productivity in the Nordic supply chain and the favorable mix segment I just mentioned but also between mix between countries and products with consumer sales performing better than the product segment. Despite the uplift in the gross margin, the actual gross profit declined slightly primarily due to the lower professional volume. However, the savings in selling and admin expenses driven by our cost reduction initiatives on top of our strict no-spend policy improved the adjusted EBIT from 44 million last year to 115 million this quarter which gives them equivalent as mentioned before an EBIT margin increase of .4% to 8.2%. Strong performance in Denmark was the key contributor to this improvement with market share gains in consumer sales. Norway and Sweden achieved gradual margin improvement supported by higher average order values, productivity gains and reduced FDNA expenses. Meanwhile, the Finnish market remains highly challenging and we will continue optimizing our cost base here to protect our profitability. In the quarter, we recorded 36 million cost as items affecting comparability primarily related to the Nordic supply chain and particular the transition to the new factory in Jönköping. So please if we can move over to the next slide, region UK. The market in UK reflect the same underlying trends as in the Nordics where we see growth in the consumer and decline in the professional segment. The organic sales in the UK remain flat for the quarter compared to a 21% decline last year. The consumer segment achieved double-digit growth partly then offset by double-digit decline in both the project and the trade segment. The gross margin was impacted by the under absorption in the supply chain. However, average order values in the consumer segment are gradually improving driven by pricing and mix-up initiatives introduced in the third quarter. The gross margin declined by 1.8 percentage points to 41.2 as the positive segment mix was offset by the under absorption. In currency adjusted terms, the FDNA expenses decreased by approximately 35 million. The cost reduction initiatives implemented earlier during the 2024 are delivering savings according to plan. Though inflationary pressures have offset part of these gains. EBIT for the quarter came in in line with the fourth quarter of last year. As part of our strategy to reduce fixed costs, we are shifting to a more asset-like model as Kristoffer was talking about in the UK with fewer owned stores, fewer factories and increased focus on franchises and partnerships. This approach aims to lower our fixed cost base and reduce vulnerability to large volume fluctuations. During the fourth quarter, we took further steps to move to a more asset-like operating model and close an additional 14 underperforming stores. As outlined in the quarterly report, we recorded 109 million as items affecting comparability, which includes the cost of the additional store closures. Additionally, during autumn, Commodore product sales that operates mainly in the London area was fully integrated into Magnus project organization. Triggering a non-cash goodwill impairment of 478 million. The goodwill write-down is not recorded in the UK region in the segment specification. Next slide, please. Financial position. Cash flow from the operating activities was positive, 332 million. Slightly lower EBITDA compared to last year was mitigated by favorable change in the working capital. Lower sales in the Nordics resulted in a positive impact on accounts receivable. The accounts table increased on back of timing effects compared to last year. As previously communicated in our calls, we are intensifying our focus on operational excellence through the new operational structure. One key component of this is our ongoing initiative to reduce inventory balances. These efforts positively impacted cash flow, primarily driven by UK and also Denmark. Which offset the planned inventory increase in Jönköping during the ramp-up phase of the new factory. Overall, our inventory levels have decreased by 12% -over-year. The operating cash flow, including investments, amounted to 138 million compared to a negative 188 last year. Of this, the investments in the quarter, which still mainly are related to machinery for the Jönköping factory, total 198 million, down from 508 million last year. The net debt, excluding leasing and pension obligations, decreased -over-year by approximately 1.2 billion to 2.2 billion. And driven then by the measures that we took last year, the divestment of our subsidiaries in Austria and in the Netherlands. The sale and leaseback transaction and of course the rights issue for them last year. Net debt decreased by 99 million compared to the end of the third quarter. The quarterly improvement is primarily attributed to the operating cash flow, in addition to an outstanding receivable payment during the quarter, just short of 200 million from the buy of the property that Kristoffer mentioned in his section. Approximately 100 million SEK remains outstanding from this transaction and we anticipate that we will receive the full balance during the course of 2025. Thank you. That was all for me and over to you again, Kristoffer. And next slide, please.

Thank you. Yeah, thank you. So summary of the priorities going forward and we remain very clear on what we have to do from here. First of all, advance of our strategic agenda, which is a ramp up of Jönköping factory during spring and it's highly exciting and we're in a good place to do so in a good way. We continue with our turnaround plan of the UK operations as you have seen also from this quarter and that work will continue into 2025 and very importantly deliver on our cost out programs. In addition then we will leverage on our strong brand in the organization and leverage on the new organization, which I think is working very, very good. So here it's more about looking at the leverage our operations through capture the growth in consumer sales and continue the good efforts that we have done during Q4 into 2025. With that it entails an increase in average order values and really push further on the mass premium product portfolio. We are also looking into productivity enhancing activities where supply chains are starting to deliver good returns on the productivity side, but also productivity within administration of tasks. We will carry on with a very disciplined cost control, usually in the autumn also for the cost out program and as Henrik mentioned we have institutionalized strict working capital governance across the whole business. So with that,

Tavia. Operator, we can open up for questions, please.

Thank you. As a reminder to ask a question you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

We will take our first question.

Your first question comes from the line of Mona Kilsgaard from Nordea. Please go ahead. Your line is open.

Hey Christopher, Henrik and Tavia, thank you for taking my questions here and I hope you can hear me well as well. Firstly with regards to the Nordic region you commented that you are transitioning resources to the consumer segments, which seems like a follow-up move given the prolonged weakness in the project segment. However, could you elaborate a bit on what this transition actually means in reality and also if you believe it to have an effect on your position in the project segment once it's returned?

Well, you have a couple of things to drive more consumer sales. One is of course out in the store network. So we have had designers focusing on product and trade business, which we can then, they know the kitchen business inside out and they can support with the consumer sales in a much better way. And that's also the opportunity for us to retain our designers in a good way. Secondly, when it comes to the whole system supports, etc. We're looking at ways to drive footfall, to drive design appointment, to have digital toolboxes that helps our designers to sell more but also to get the right customers through the doors. And that I will say is the main thing. That doesn't mean that we don't, I mean we keep an eye, a close eye on what's happening on the product business obviously and we still have our product sales teams out and about and best in locking on doors of the builders.

That's very clear. Thanks. And you have previously also commented that low volumes in the Nordics have led to some price pressure in the market, especially then on the consumer side and mainly in the Danish market, if I recall it correctly. Given then that always basically fighting for the same volumes. Have you seen any improvements here during the quarter and what would you say is the main reason to why Nordia managed to make, to take market share primarily in the Denmark

market? Yeah, well, there's been, I think what I have commented on before is that there are more stronger tactical messages in the market than before, not necessarily that the prices are dropping. One very important strategy from our side is to sell higher average order values and mix up the customers to more premium nice products rather than to buy the low end product. I think that we've done a really good job in basically all brands to drive that performance. In addition, we also tried to capture a higher share of the basket size when we are selling to these customers and they've done some really good work on that, not least in Denmark where we've seen a big gap in also the basket sizes. So there are multiple ways to keep both gross margins up and sales up in that channel, even if the tactical messages is a little bit stronger than before.

Okay, so we should not be worried that prices will drop, if I recall that correctly.

I believe we have a very strong position with our brand and we are not going to drop our prices in our brand. But rather mix up to the cannibalizer type of product in our portfolio. So I don't foresee that prices will come off on the consumer side.

Perfect, thanks. And then in the UK you closed 14 stores during the quarter, but then given the lease agreement on the remaining stores, could you comment anything about how many of these that are up for closure during the coming year or what is the reason of expectations to have here?

Yeah, so given the circumstances and what we could see in the crystal ball from the market, we knew that there was going to be some tough times in the retail segment and especially in the UK. So we have acted swiftly and quite aggressively on the non-performing stores. I think that we would continue and we always look at the opportunity to do more and right size the business. However, the pace in which we will do that will be slightly lower than what we have seen before. But it's always been reviewed and being an important retailer in the UK. This is something that is being done all the time obviously. But I would say that we have done more aggressive store closures than would have been normal in a normal market situation.

That's perfect. I was surprised of the 14 stores. So that's why. And then one last question for me then on the cash flow side, you highlight that some 300 million in cash that's related to the gun trapping factory remains to be paid during 2025 and that the total outflow that is estimated to around 500. Could you provide some color on what these investments relate to more specifically? Is it still primarily machinery and also timing wise how you expect these investments to be distributed throughout the year?

I can answer that one. It's correct. It's related to completing the factory. We're talking about machinery here. You know, we are not the owner of the building anymore because we did a 7-day factor section. So everything that Christoffer mentioned is related to the machinery to fund rising the machinery equipment in the factory. So we have approximately 300 in 2025 as a copy. It's not yet booked but then we also have the cash flow outflow is slightly bigger because some of those copies booked end of the year have not yet been paid. And then on top of that that I mentioned and Christoffer showed on his slide, we are expecting to receive the residual payment from the buyer of the property in Jönköping after all the terms all the obligations that we need to do to receive those money have been done. It will happen during 2025.

Perfect. I think that was all for me. So I thank you so much for taking my question.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. Your next question comes from the line of Marceler Klang from Handelsbanken. Please go ahead. Your line is open.

Good morning gentlemen and congratulations to Nobia on being today's winner on the Stockholm Stock Exchange. A couple of questions from me as well. Now that Complete Kitchens are leaving the Jönköping factory is the most critical part of this project behind you or and which are the most important milestones throughout the year? You mentioned fully automated flows. Sorry to interrupt, but we

lost you for a little while. So could you please repeat the question?

Is the most critical part of the Jönköping factory project behind you and which are the most important milestones during 2025? You mentioned fully automated flows by summer. Will all production be transferred by year 2025?

Hi, Marceler. It's nice to have you back. It's difficult to say what's been the most challenging parts of this project because when you stand in front of something you always believe that that's the highest risk just in front of you. However, I would see that I'm very comfortable in that the manufacturing will be up and running smoothly by 2025 and that comfort has obviously taken time to get to but the way the machineries are running now how the machineries are talking to each other and the setup that we have and have tested it all makes a lot of sense and it's very comforting to see that it's working properly. So I'm in no doubt that it will be up and running by 2025. So in that sense, you could say that the major obstacles have been surpassed but on the other hand, we still stand in front of a quite complex transition from the Tidahom factory to Jönköping factory with all the different parameters that they need to go in motion. So there's still a lot to be done to have this fully operational.

And in terms of volume, do you expect all production to be transferred by year-end 2025 from Tidahom to Jönköping?

The majority of the flow definitely will go from Jönköping. There will be some elements of the kitchen that might end up in both Tidahom but also the other factories around in the network throughout the year. But by far the majority of the flows.

Sounds good. You also announced the amendment to terms for your funding agreement without further details regarding the covenants but how comfortable are you with your covenants right now?

If I start and then maybe you, Henrik, can fill in. We have worked with both lenders and owners over the course of this couple of years to weather the storms in the market. And I would say that I'm first very pleased about the support that we have got from both lenders and owners but also think that we have come to good arrangement that puts us in a good space with higher flexibility. And also this that was announced by December before Christmas is a good step for us which also gives us much better flexibility. But of course it's up to us also to deliver on what we promise and I think that Q4 gives us a kind of a good foundation for continuing our improvement here now. And with that, I think that we also put the business in a better space. I don't know Henrik if you want to add something to that. I

think it was a good summer. It could suffer and then we regard to the covenant levels. We don't disclose those because it's something between us and the banks. But as we mentioned in the press release, so December 23, we have extended the terms we had during 2024 as we are looking at the EBTA rolling 12. And then during 2026, we will go with two more normal depth monitoring covenant like leverage etc.

Thank you. Further questions. You mentioned cost savings of 150 million left to be delivered. Can you tell us more about which areas you're targeting where cost savings will come from?

Again, I start and then Henrik you can fill in but we're looking at cost savings across all parts of our business. It will come both from the Nordics, the UK both within ourselves, commercial entities and supply chain. So and it's mainly related to the program that we announced in back in Q2 and Q3. Then on top of that, we of course looking at given the very soft project business, we're still looking at opportunities to you know, where we can reduce cost to a larger extent.

Henrik, do you want to? No, I think it was important to say also that some of it is related to what we already did in 2024, but I also think it's important to say again what I mentioned in my part that we have a strict no-spend policy because of the soft product market that you are talking about.

Thank you so much. That was all from me and once again well done.

Thank you. Once again, if you wish to ask a question, please press star 1

and 1 on your telephone. There seems to be no further questions at this time. I will hand back for

closing remarks.

Well, we're good and once again, thank you all for calling in and see you all on the 29th of April when we report the first quarter results. Thank you.